I have identified three ways in which the issue of the toys shipment can be resolved. I have indicated each of the alternatives below together with their impact on financial, legal, and ethical perspectives.
The company can decide to overlook the toy that has small traces of lead so that it can deliver the toys in time and avoid incurring losses associated with re- production and packaging. The process used to select such an alternative is cost- benefit analysis. The company may decide not to reproduce and repackage the toys since the cost would be higher than it would be to simply allow one pupil in an elementary school to be affected.
Advantage
1. Timely delivery of the toy collection to the elementary school and short- term profitable way of handling the situation since the company will not incur the costs of re production. The shipment needs to be delivered at the end of the week, just in time for the beginning of the school year.
Disadvantages
1. The move is against the United States of America’s rules and regulation that states the limits of lead in a whistle for children aged 7 years and below.
2. The above action is not ethical on the basis of moral perceptions.
Thus, the alternative can be termed as financially economical because the company will not incur the costs involved during reproduction and repackaging of the toys. The cost of reproduction and repackaging is quite expensive ($100,000) and the company could realize profits by selling the toy collection. This could be a short term goal for the company since the ethical and legal repercussions of the move could result in bigger losses when discovered. Legally, such a move is not legal since it acts against the laws of United States. An illegal action can result into major losses caused by enormous court fines and may also cause a reduction in customer loyalty. According to ethical behavior, such a move is also not ethical since it may lead to the death of a young innocent child meaning it is not morally acceptable (Dubbink, 2010). It would not be ethical to put a young child in danger simply because the company wants to realize enormous profits from its sales. If discovered, most people would lose their trust and loyalty to the company’s future products.
Reproduce and Repackage the toy collection and incur the costs involved
This alternative decision can be selected on the basis of moral- rights and behavior in business ethics. In this case, the company may decide to spend the $100,000 on the incurred costs, and ultimately ensure that the toys are of the required standards. In ethical terms, it is not morally upright to endanger a fellow human being intentionally.
Advantages
1. The move is morally upright since it is based on what is good or right.
2. Also, such a move will ensure that the company does not get into legal tussles with the government since it will be acting in accordance to the law.
Disadvantage
1. Such a decision will lead to increased costs that had not been planned for. The cost of reproduction and repackaging is quite expensive ($100,000).
Thus, the move will affect the company financial status due to the emergency costs incurred in re- production. The cost of reproduction and repackaging is quite expensive ($100,000). This may lead to internal issues involved in trying to meet the required emergency budget, and the company may need to implement several cost- cutting measures across its departments (Ferrell 2011).However, the advantages are more since the company will deliver high quality products and retain the company loyalty, and it will avoid breaking the law by creating products that are in accordance to the country’s standards. Ethically, the move would be morally right since none of the innocent children will be put in danger of the poisonous substance. The company will not have to live with the guilt of endangering fellow human beings just for the sake of making profits. Legally, the company will not face fines that the government implicates on organizations that break the U.S laws and regulations. The company will be protecting the children’s lives, and also it will be protecting its image among the customers.
The company may decide to stop the shipment and also not reproduce new toys
This action may be based on fairness in making ethical decisions. This is in regard to the moral, legal and financial factors involved in making company decisions. If the company goes ahead with this move, none of the parties will be harmed financially or health wise. The children will be safe since none of them will be exposed to the harmful toy that contains lead and the company will not incur $100,000 used in re production and re packaging.
Advantages
1. The move will be legal since the company will not expose elementary school children (who are 7 years and below) to dangers associated with lead.
2. The action will ensure that the company does not get disoriented from its functions due to expensive re production of new toys.
Disadvantages
1. The company’s image may be affected due to their failure to deliver the toy collections as the customers had anticipated.
2. The company will not get the initial profits that they had expected to get from the sale of the toys.
Legally, the company will be acting in accordance to the U.S laws and regulations, and therefore, it will not face fines that are usually imposed on those who do against the stipulated rules. The organization will be legal in its operations and will not need to worry about court tussles. Financially, the company will not incur the extra costs of re production and re packaging, meaning it will save the expected $100,000. However, it will still deal with the destroyed toy collection that will be of no use, and the company will not get the initial profits that it has been expecting from the sale of the current toy collection. Ethically, the move is morally good since the company puts protection of the young children before its own profit- making business. However, the schools might not understand why the company failed to deliver the toys as everyone had expected. Thus, some people may feel that the company is not ethical in its dealings due to its failure to deliver the stock as agreed. The company may reverse these thoughts by giving timely notice of failure to deliver the toy collection.
Recommended Alternative
The best recommendation that I can give among the three alternatives would be to reproduce and repackage the toys, and be ready to incur the costs involved. This is because the advantages of this action are stronger than the ones for the other two alternatives. Customer trust and loyalty should come first when it comes to ethical business dealings and decisions since it leads to long term benefits for the company. Using extra $100,000 and maintaining the company’s image is worth since the long term benefits will be seen in customer loyalty and satisfaction.
This recommendation can affect customer relations in several ways that are inclined to customer retention. First of all, the move will lead to customer satisfaction du to the quality of the toys. Studies show that happy customers always become repeat customers. Selling low quality products or harmful products would lead to customers who are not satisfied and such a reputation would not assist the company in retaining customers. If the harmful product was discovered in the elementary school, parents and teachers would not purchase the toys from that particular company since their needs would not have been met. It is clear that no teacher or parent would want their child to be harmed in such a manner.
Also, customer retention would be realized through customer loyalty due to the timely manner of delivering the shipment. If the company uses this decision of incurring costs with an aim of delivering high quality products within the deadline, the customers will be attached to the company since all customers appreciate consistency from suppliers. A study by the News and World Report shows that 68% of the reasons as to why customers leave a company for a competitor is because of a bad experience. The same report says that a customer will usually tell between 8 and 25 people of a negative experience, and the exposure is increased by the new internet technology. Also, such a good customer experience can lead to more new customers due to the excellent customer service.
Social responsibility in decision- making process
Social responsibility is an extremely crucial tool for a company whenever it is making business decisions. Social responsibility refers to the aspect of organizations and companies on not functioning amorally, but ensuring that their decisions are concerned with the well being of the community (Werther, 2011). Wise decision- making does not consider just the amount of money the company will deal with today; rather, it covers the impact of today’s choices on the future. In this case, the company has a social responsibility for the community, and that is why the best way to handle the crisis is to spend the $100,000 on re production and ensure the community is safe. Companies need to be more socially responsible since there has been an increase of incidences whereby consumers become upset due to harmful products being produced by various organizations and companies. The international Organization for Standardization has always stated that due to the increasing globalization, people have become more conscious in what they buy and how the products that they buy have been produced. Thus, companies that have long term goals and those who want to remain in the market making enormous profits need to base their decisions upon social responsibility and in accordance to the right- or- wrong norms.
REPORT:
Two strategies that the company can use to ensure ethical decision making at all levels of the organization
Create a code of ethics
The company should create a code of ethics that the employees can relate to during their daily deliberations of the jobs across all departments. A code of ethics consists of a set of rules that all workers of the company can use to make decisions faster and more conveniently. A formal code of ethics can be written in a general manner or can be specified as the stakeholders may prefer. The best way to format a formal code of ethics is to write it as a numbered list so that the employees can find it easy to refer to it. The code of ethics should be strategically place in the company at an accessible point where each worker can scrutinize it to check whether every decision they make adheres to the code.
Encourage consultations in making decisions
This is a commendable way of handling decisions that have serious or widespread consequences. A large company consists of many departments and their coverage in the distribution channels is usually very extensive. Thus, a decision made by an individual in a particular department may have widespread impact on many stakeholders. By consulting others, a worker can gain fresh perspectives of his dilemma and acquire more possibilities and choices to base his decision- making upon (Vilcox, 2007). Also, emphasizing on consultations will make people seek advice on any decisions they have made before implementing them.
Benefits of a code of ethics for this company
1. A code of ethics can assist the workers to make decisions based on ethical course of actions especially in situations where the decision is not definite.
2. The code can also help the stakeholders in understanding the organization’s expectations and in the process solicit feedback and queries. This can benefit the company by ensuring honest and open communication among employees and other stake holders.
3. A code of ethics enables a company to assimilate new employees effectively in to their culture values. This is because a formal code of ethics forms an environment full of excellence and integrity that can assist in absorbing new and old employees.
4. A code of ethics ensures consistency in the management guidelines because it articulates responsibilities of the staff members.
5. It also helps in reinforcing government rules by making the company to become compliant with complex state regulations.
6. A code of ethics helps to create public trust that in turn improves the organization’s reputation. A good code of ethics usually draws and attracts investors who are socially responsible.
7. A code of ethics helps in enhancing the pride of employees while working in a company, and also improves employees’ morale and loyalty.
8. A code of ethics is beneficial when it comes to legal issues since it can protect or defend the members against lawsuits.
9. A code of ethics can help in the promotion of constructive social changes through increased awareness of the society’s needs.
10. A code of ethics can be used to enhance market efficiency by acknowledging and rewarding the most ethical suppliers of goods and services.
11. It enhances social responsibility since every employee is guided by rules that lead to improved and high quality products.
Code of ethics for Ford Motor Company and how it can be applied in this company
After analyzing the code of business ethics for the Ford Motor Company, one can realize that there are several components that can be applied in the company’s code of ethics. For example, Ford Motor Company has a statement that explains types of conflicts that the directors must refrain from. In essence, directors should not engage in any activities that are not consistent with the company’s best interests or that may disrupt the company’s relationship with business persons or entities. Corporate opportunities is another aspect of Ford Motor Company that this company can borrow a leaf from since it states that directors are prohibited from using the company’s property or information for personal benefits. Also, the company may consider confidentiality issues such that employees must maintain the confidentiality of information unless when the disclosure is legally mandated.Also, just like Ford Motor Company, the employees must comply with laws, rules and regulations in order to carry out appropriate and correct policies and procedures. Ford Motor Company emphasizes on reporting of any suspected or noted unethical behavior. This is a component of its code of ethics that can be included in this company since it encourages employees to talk to their seniors whenever they doubt their decision- making capabilities in a certain situation. It also focuses on encouraging employees to report any violation of laws and regulations to the appropriate persons, and assures them that reports made in good faith remain confidential (Werther, 2011).
Dubbink, B. & Luijk, H. (2010).European Business Ethics Casebook: The morality of Corporate Decision Making. Berlin: Springer Netherland. Pp. 36- 67
Ferrell, O. & Fraedrich, F. (2012).Business Ethics: Ethical Decision Making & Cases.Cengage Publishers. Pp. 24- 45
Rowe, G & Guerrero, L. (2011).Cases in leadership: Code of Ethics and Communication. California: Sage publications. Pp. 14- 36
Werther, W. & Chandler, D. (2011).Strategic corporate social responsibility: stakeholders in a global environment. Los Angeles: Sage Publishers. Pp. 28- 56
Vilcox, M. & Mohan, T. (2007).Contemporary issues in business ethics. New York: Nova Science Publishers. Pp. 10- 14
