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At the end of the week, elementary toy collection is planned to be shipped to South America. However, after the conducted testing, the quality assurance department found that whistles, which were a part of collection, did not meet the legally acceptable standards.
In dealing with this issue, the following alternatives can be chosen by the company:
1) To cancel the shipment;
2) To reproduce the product and repackage toy collections;
3) To continue with the shipment and do not disclose information about whistles.
When selecting one of the proposed alternatives, I took into account possible effects they can have on:
- our company in the form of financial issues that may arise, including profit and costs ratio, legal implications, effect on the market share, and reputation of the company relating to the social responsibility issue;
- our clients: elementary school pupils, their families – impact that our decision will cause to their health and perception of the company as a reliable and responsible seller.
With the aim to make the right decision, I would like to underline the advantages and disadvantages of each alternative. The advantage of the cancelling shipment is taking a conscious position and declare the company a socially responsible market player. However, this alternative has many disadvantages. They are large incurred costs of production and the cost of disposal of obsolete parts, loss of profits and market share whereas delivery was calculated to meet the shopping boom before the beginning of the school year.
The second alternative will allow the company to meet the requirements of the US law. The company will still earn profit and will not lose its customers. Disadvantages of this alternative are additional costs for the reproduction and repackaging, possible shift in the delivery schedule, and failure to fulfill the sales plan.
Third option has obvious financial advantages. The shipment will be made on time. The sales will be high, and revenues and profits will meet the forecasted figures. However, it is necessary to underline that this alternative is unethical and may cause health issues among children. Moreover, if the fact of low quality of whistles is discovered, it may lead to the legal proceedings that will certainly damage the reputation of the company. Finally, a big financial effect that was achieved will be reduced to zero.
It is also important to emphasize what impact the above-mentioned alternatives will have in the realm of financial, legal, and ethical issues. Positive factors of the first alternative are legal and ethical. Cancellation of shipment will be in accordance with the US law. This decision will be ethical and the company will promote its image of a socially responsible company. A negative factor is financial – loss of the profits and market share.
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The second alternative is the most moderate among three dimensions. The company will act in accordance to the US law after the reproduction of whistles. It will be an ethical decision not to endanger health of target market customers. However, it may have some negative consequences in terms of additional costs for the reproduction and repackaging as well as loss of the profit percent due to the change in shipment schedule.
The third alternative as well as the first one is a radical decision but from the negative point of view. Both legal and ethical concerns arise. The company will break the US law and will make an unethical decision that may damage its reputation. At the same time, the company may enjoy short-term financial advantages.
Taking into consideration the above mentioned advantages and disadvantages, opportunities and threats that the company can meet, I will recommend choosing a second alternative. I believe that the company should not take any decision based on short-term considerations. By pursuing profit goals by making a decision, which is contrary to the highest ethical standards, the company may lose trust of its target audience. It will cost more in the the future to restore its reputation than to incur the cost of reproduction of the toy collection. The second alternative will allow a company to follow ethical standards, make the planned shipment of the toy collection, obtain revenues and maintain the market share.
I am sure that after CEO of the company will make a decision to reproduce and repackage the toy collection, employees will obtain a confirmation that top management of the company makes ethical decisions. Furthermore, employees must be guided by such an attitude in their decision-making process. Naturally, it will have a positive affect on children, their parents, and schools because they will receive high quality goods.
Moreover, the company will confirm its status of a socially responsible business entity. According to Gitman & McDaniel (2008), “a social responsibility is the concern of businesses for the welfare of the society as a whole” (p. 53). It has two dimensions: responsibility and legality and goes beyond the profit issue. I think that choosing the second option will show that the company pursuits not only material goals, but also thinks what impact their activities will have on the target market and community as a whole. The company will try to avoid any damage that its products can cause to the target market.
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Subject: Implementation of ethical standards and procedures within the toy company
To: CEO of the toy company
The main goal of this business report is to draw attention of the representatives of the top management to the importance and necessity of the implementation of ethical standards inside the company. It should be stated that the most crucial steps that should be taken with the aim to create an environment where unethical decisions will be reduced are the following:
- Develop, publish, and distribute the corporate code of ethics among all employees;
- Conduct regular meetings with employees and provide obligatory training session for new employees to explain ethical procedures that are adopted by the company.
I think these strategies will decrease the number of cases of unethical behavior of employees. The code of ethics will give a definite description of how employees should behave in a complicated situation, what is considered unethical, and point where he/she can seek assistance to prevent unethical behaviors from taking place.
I am convinced that code of ethics is a guide that must be used in everyday practice of the organization. All employees have their perceptions about whether certain activities are ethical or not. Therefore, ethical standards that will be written in the code of ethics will provide employees with a map on how to react to possible unethical situations and establish a responsible commission that will resolve conflict situations. The code of ethics allows the company to keep the morale of employees high to ensure trust and confidence of a public in the company. This will improve company's reputation as a reliable partner and a responsible corporate citizen.
An illustrative example of the code of ethics is the code of business conduct adopted by Coca Cola Company (2009). This document is user friendly. It is written in a simple language, but at the same time, it describes the most important milestones of ethical culture of the company. The thing that I like the most is that it begins with the encouragement of employees to be honest, act with integrity, follow the law, be accountable, and of course, to follow the code. I think that this code helps form a special attitude to the working process in a big corporation.
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The code includes sections dedicated to acting with integrity around the globe, acting with integrity in a company, effectively solving conflicts of interest, and acting with integrity while dealing with stakeholders, in particular governments, customers, suppliers, consumers, and competitors. It is concluded by the section "Administration of the Code", where the investigation process of potential code violations is described. The section also describes decisions and disciplinary actions that will be taken in cases of violations (Coca Cola Company, 2009).
I think that our company should take this code of ethics as an example. Emphasis should be put on such sections as initial procedures within the company, conflicts of interest, and dealing with others. Initial procedures will discuss ethical considerations about the use of company’s equipment, working time, various details concerning non-disclosure of confidential information in particular business, and financial records. Conflicts of interest section will discuss outside investments, outside employment, outside service as a director or an officer, employment of relatives and friends as well as other important questions relating to possible conflicts of interest. The main and the most important section will discuss ethical standards in dealing with other counterparties, consumers, and the government. Anti-bribery procedures will be described, the main postulates of ethical background in dealing with clients and suppliers will be clearly defined, and competitive intelligence will be promoted.