Business Ethics Now Study Set 4

Business

Quiz 2 :
Defining Business Ethics

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Quiz 2 :
Defining Business Ethics

Case summary: Car FP of Company FR is remembered as the dangerous car even after the car was discontinued in 1980. The major reason the car was considered as dangerous was because of its tank wherein the gas would enter the passenger's compartment if the car meets with an accident. As per regulations of State CN, every car should be sage enough for drivers and passengers. Although, FP car was as per the safety regulations of the State CN, still it was not considered as one of the safest cars in the overseas market. In one of the accidents that took place in FP, the three women died of burning owing to the fire that took place in the car after its accident with another vehicle. The court made Company FR completely responsible for this accident and its reckless attitude towards the designing of the car. When around 1.5 million FP cars were called back by the company, the CEO of the firm Person LE maintained that there was no problem with the car, instead it is the controversy attached with legal and public relations issue. As per this case, it can be said that a manufacturer should go beyond government standards if it feels that there could be a potential safety hazard with its products. This is because it is only the manufacturer that can confidently say that the product manufactured by it completely is safe for the use of its customers. The reason behind this is that the manufacturer is properly aware of the in and out of its product and no one apart from the manufacturer can be able to pinpoint the defects or faults in its products. Owing to this, it is the duty of the manufacturer to highlight the safety hazards in its products even if this action will affect the sales of the product. The manufacturer should think that if the product is continued to be sold in the market inspite of having a potential hazard, then it will not only risk the life of its users but will also generate bad reputation for the firm. thus, to safeguard the life of the users of the defective product, it is the duty of the manufacturers to go beyond government standards if it feels that there could be a potential safety hazard with its products.

Case summary: An individual works for an insurance firm Company AG that has received almost $180 billion from the bailout from the federal government owing to the fact that if the company is declared to be bankrupted, it will panic the customers. With the decline in the financial markets, the insurance policies that customers had with AG was claimed back. However, the firm soon realized that it is not possible for it to satisfy all the claims owing to the defaults in the financial bonds and risky subprime mortgages. In the given case, an individual is authorized to sign the bonuses of the senior executives of Company AG giving more than $4 million to every executive totalling the bonus of $165 million. When the news of bonus given to the executives came up, it led to the public outcry mentioning that it is not fair to pay bonus to executives who brought the firm to bankruptcy. However, the supporters of the bonus said that if the executives are not paid, then they might move to the competing firms of Company AG. In this, it can be said that this defense that executives should be paid with bonuses to prevent them to move to the competitor's firm is not a valid defense. This is because it is because of the incorrect managerial decisions made by the senior executives that the firm is struggling to meet its financial targets and it is only because of their mistakes that the firm was standing at the level of bankruptcy. On this basis, the firm should not make them obtain huge bonuses for mistakes they made in the firm, and should allow them to move to a new firm if they wish. This way the firm can make use of the bonus money in satisfying the accounts of its customers and other debtors and the executives will be punished for their mistakes.

Case summary: Person NR works a shift leader in a local fast food restaurant, and although her job requires her to work hard, still likes her job because the customer rush makes her forget about her hardwork she delivers ate her work. In a meeting, her store manager Person RF informed the staff that the restaurant is planning to add new healthy items including salads, and new healthier options apart from fries and burgers that are sold heavily at their place. Owing to huge demand from the customers, the restaurant is adding these items to its menu. However, RF also mentioned that the new healthier items will be in limited number and once they get finished, the customers will be offered regular items from the menu. He also added that with every order of salad and other healthy item, customer should be tempted to order dessert or ice-creams so that the restaurant's sales are not declined and continuous to provide benefit to its shareholders. Over this, Person NR felt little confused because at the first place the restaurant is adding new menu of healthy items and alongwith this it is also asking customers to buy ice-creams and sweets with that. There are several stakeholders to the firm including shareholders, employees, customers, suppliers, retailers/wholesalers, federal government, creditors, community who directly or indirectly gets affected by the firm's decisions and actions. The following are the stakeholders that will be directly impacted by Person RF's plan to sabotage the new healthy menu : • Shareholders : When the new healthy options will be sabotaged, the restaurant will be successful in selling its most profitable items like ice-creams and other desserts. As a result, the restaurant's profits will increase and it will be able to continuously provide shareholders with return on their investments and dividends. This way the shareholders will get positively affected by Person RF's plan to sabotage the new healthy menu. • Employees : When the restaurant will be able to continue to earn profits with regular sales, it will be able to continue to pay its employees their salaries and other benefits. Even the employees will be offered promotions and increase in their wages if Person RF's plan to sabotage the new healthy menu becomes successful. • Customers: It is the customers who would be negatively affected with Person RF's plan to sabotage the new healthy menu. This is because the customer will order healthy food item in order to eat healthy and avoid junk. However, when the customers will be attracted to order desserts and ice-creams alongwith healthy food, it will affect them negatively by depriving hem to eat healthy. • Community : It is the community that will also get negatively affected when Person RF will plan to sabotage the new healthy menu. This is because when customers belonging to the community will eat unhealthy food items alongwith healthy ones, it will not make them successful to achieve their health goals and they would not be able to live a healthy life. This way the community will get negatively affected by Person RF's plan to sabotage the new healthy menu.

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