Abstract
Business ethics and dilemmas are common in organizations and require people to make informed decisions to ensure they do not compromise the quality of goods or services offered. Lovell, Fisher, and Valero-Silver argue that human behavior is usually motivated by the desire to meet their needs. This paper examines two scenarios and evaluates the application of different ethical approaches to offer solutions to the dilemmas facing victims.
The first scenario involves a company that plans to establish a chemical plant in a region that has high poverty and unemployment. The stakeholders are in a dilemma and unable to make decisions that will ensure poverty and unemployment are eradicated without polluting the environment. The second scenario involves a financial institution that wants to increase its profits by offering high-risk loans to the poor without disclosing the regulations governing them.
Scenario One: BASF Chemical Firm
This company plans to build a chemical farm in South Carolina. However, it was faced with various dilemmas because the plant was a threat to the existence of the tourism industry due to the high rate of water and land pollution. The manager of this company knew that it was not going to be easy to control pollution so the local administration had to be persuaded to accept the company to build its plant even though it knew of the risks associated with it.
On the other hand, the local population, which consists of poor and unemployed people wanted the plant to be established there because there will be job opportunities for them. Shareholders were also ready and willing to invest in this region because of the expected high profits since the place was located in a strategic position with a reliable and efficient road, rail, and water transport. The local administration is ready to compromise and relax its environmental laws to allow this company to establish its plant in its land. However, the manager is undecided about what he should do because he has to ensure the company makes high sales without compromising the health of the local population and the survival of the tourism industry.
Definition
Deontology refers to the practice of judging the morality of an action based on its obedience to the regulations set to govern the behavior (Marquis, Soares, and Lee 2011). This means that it is a duty or obligation that binds individuals or institutions to their duties. This gives people the right to decide right or wrong based on the consequences of their actions. Discourse ethics involve arguments presented by individuals to establish and explain normative truths by evaluating the appropriateness of a discussion.
Lovell, Fisher, and Valero-Silva explain that there are four types of deontological ethics that guide human behavior, they include “divine command, duty theories, rights theories, contractarianism, and monistic deontology” (Lovell, Fisher and Valero-Silva 2013). Divine command refers to the adherence to the rules set by supreme beings to ensure people behave morally (Royce 1908). The advantage of this perspective is that it enables people to understand that they are equal before their supreme being and nobody should discriminate against others because of their social, economic, or political situations (Johnson 2002).
In addition, this morality perspective ensures people respect each other and thus they cannot do what they would not like to be done to them (Bok 2000). This enables them to live as brothers and sisters and eliminate issues that may cause conflicts amongst them. Therefore, the arguments presented by people in judging morality depends on how they are in agreement with the rules and duties established by their supreme beings.
The duty theories explain that human action is right only if it follows the rules and duties established by the society to guide their behavior. All societies have rules that govern the behavior of their members; therefore, this enables people to behave morally by observing and following procedures set and duties allocated to them. The rights theories are important in ensuring that people respect the freedoms and rights of others. Therefore, their morality is judged depending on how their actions show respect for others.
It is necessary to explain that this approach enables people from different backgrounds to live together and interact freely because everybody respects the rights of others. Therefore, people are free to do what they want to be provided they do not violate the rights of their neighbors. Contractarianism is a perspective that establishes rules of morality based on the contracts that people sign and agree to enter into a social responsibility for mutual benefit (Kraemer 2011).
The disadvantages of these approaches are varied depending on various issues. First, deontology and discourse ethics do not offer a clear way of solving conflicts between moral duties of lying and keeping others away from harm (Kraemer 2011). Lovell, Fisher, and Valero Silva argue that most people are usually left with no choice except to choose the lesser of the two evils. This means that they are not effective in solving conflicts and people are usually compelled to choose an option that has less negative consequences. Therefore, people do not choose the right option but a better one compared to others. This means that people make choices based on their consequences and not their deontological basis.
Secondly, these authors argue that deontological and discourse ethics are usually established after a long application of the policies that ensure people choose options that have fewer evils. This means that they ignore these evils and assume that the preferred choices are morally right (Rodgers 2012).
Thirdly, this approach does not allow for questioning the morality of action because they are based on absolute principles and conclusions. These authors argue that there can never be absolute white and black choices in life because people have conflicting duties and issues. Fourthly, there is no guideline that considers some actions moral or not and time makes them change. This means that some rules that were used to qualify which duties are moral or not have ceased to be in operation. Therefore, people do not refer to them when judging the morality of others in modern days. This complicates the belief that some deontology and discourse ethics are based on religious teachings because there is no way the rules of a supreme being can change.
Application to the Case Study
There is the need to explain that the case presented in scenario one has various dimensions that make it impossible to judge whether the decision to establish a chemical plant in South Carolina is appropriate or not. First, the locals need jobs to ensure they have sources of income to manage their daily needs. The local government seems to have ignored the need to create employment opportunities for its residents and this has exposed them to abject poverty.
The company will create job opportunities for many people and that is why 7,000 residents presented their support for it to establish its plant in the region. The company may go ahead and establish its branch in this region because this will offer jobs to the locals. The local administration is in agreement with its residents that the company should go ahead and build its plant because this will help them directly.
In addition, pollution is a global problem, and the fact that some people do not agree that the company should establish its plant in South Carolina will not help to alleviate this situation. Other companies in different locations are busy polluting rivers, lakes and other water bodies and nobody is questioning them. Therefore, there will be no impact of stopping this company from establishing its plant in South Carolina because that will not stop global pollution. There seems to be a general consensus that people should invest in economic activities regardless of their impact on the environment and that is why this company should follow suit.
Lastly, this company will compensate the local population for the damage it causes to the environment. This is a communal social responsibility that this company will fulfill and there is no need for alarm because it is ready to pay for the losses it causes to the environment. Therefore, the manager should advise shareholders to go ahead and establish the company’s plant in South Carolina.
On the other hand, two wrongs cannot make a right. The residents of this region need jobs desperately but this does not mean that their health should be compromised to create employment opportunities for them. The losses the local population will suffer because of pollution will have devastating drawbacks compared to the benefits they will get by being employed in this company if it is allowed to establish its plant.
The local authority should invite investors that engage in activities that do not pollute the environment. Secondly, the tourism industry is an important economic activity in South Carolina and it has less pollution compared to the planned chemical plant.
There is no need for ”killing” the tourism industry for the sake of creating job opportunities for the locals by authorizing the establishment of a chemical plant. Lastly, the local administration seems to apply double standards to investors in this region. Those that have invested in the tourism industry have been in existence for a long time and followed strict environmental policies. However, the local administration is ready and willing to relax its pollution policies to accommodate the establishment of a chemical plant in the region.
This shows that it is more concerned with generating more revenue through taxation and has ignored the future of the lives of its residents and the success of the tourism industry. Therefore, the manager should not recommend the commencement of establishing the chemical plant because it will have more harm than good to the locals.
Scenario Two: Loans for Sub-Prime Clients
Organisation X has started offering loans to individuals that cannot pay them as a way of expanding its business operations and survive in a competitive world. The interest rates charged are high (7.5%) because these loans are seen as bad risks. However, the organization believes that this is a better option compared to the interest rate charged by shylocks (50%). The company has issued strict rules not to disclose to potential clients that their loans will be sold to debt collectors (at 25% APR) if they default. The task here is to manage a situation where a client is finding it difficult to service his loan and has threatened to seek the service of a shylock. The company believes that it will generate more profits and control a large market if it follows this practice.
Case Analysis Using Ethical Categories
Lovell, Fisher, and Valero-Silva presented various ways of analyzing ethical issues using categories that define the cause and effect of various actions. This discussion will use ethical neutrality and Puzzle categories to discuss the case scenario presented above.
Ethical Neutrality
These authors argue that people have different reasons to justify their actions. They claim that most people believe that it is morally right to violate social norms in the pursuit of happiness that comes with promises of employment and other needs that must be met urgently (Fisher, Lovell, and Valero-Silva 2013). Therefore, they ignore the need to follow moral procedures that guide their behavior and do what they think is right and will put them in good positions (Hill 2006).
The loan officer of this company knows too well that the organization is exposing poor people to worse situations. He knows that they cannot afford to get ordinary loans and the plan established by the company is aimed at stealing the little they have and leaving them for death.
However, he faces a dilemma of protecting his job or the rights of clients. The worst thing about the dilemma is that the loan officer has been advised not to reveal the plans of the company to defraud clients. Therefore, he is forced to watch them as they struggle helplessly to repay their loans. This means that he must make tough choices that will determine the success or failure of the company and the suffering or freedom of its clients (Fisher, Lovell and Valero-Silva 2013). It is necessary to explain that these clients are already overburdened by harsh economic situations yet the company wants to take advantage of this situation and suck the remaining life out of them.
The principle of ethical neutrality as discussed by Fisher, Lovell, and Valero-Silver stipulates that the loan officer must compel the client to repay his loan without fail. This means that he should look for alternatives to raising money to ensure the loan is repaid within the agreed period (Rodgers 2012). Therefore, the client will not be offered an alternative except to be compelled to look for money elsewhere unless they want their property to be auctioned. It is necessary to explain that the company faces a serious risk of underperformance if it does not collect the loans given to clients.
The loan officer has no problem enforcing the policies of the company and it is not his responsibility to advise clients about the conditions of acquiring high-risk loans (Taylor and Gaita1981). In addition, he has the organization’s immunity and this means that his actions will be treated as the responsibility of the organization and not him as an individual. Therefore, he can go ahead and threaten them to take appropriate action if the defaulter fails to repay his loan. He may sell his property to raise money to repay his loan or request a salary advance to ensure the loan is repaid within its period (Burchielli, Delaney, Tate, and Coventry 2009).
In addition, the person may decide to request a loan from another financial institution to ensure he settles this one because it has stiffer penalties. This will help the client to repay this loan and look for other ways of repaying the one that does not have stiff penalties. Lastly, the client may decide to stop repaying the loan and seek the services of a loan shark. This is the last option because there is no way the loan officer will force money out of the pockets of a defaulter. However, this will tarnish the reputation of this organization and discourage other potential clients from requesting loans (Fisher, Lovell, and Valero-Silva 2013). On the other hand, the loan officer should follow company policies and ensure every issue is given the attention it deserves.
He should seek the services of a loan recovery company to ensure his organization recovers its money together with the interest generated. This means that his job will not be at stake and the company will generate profits by ensuring that its high–risk loans are serviced properly (Kraemer 2011). There is a need for the loan officer not to expose the secrets of the company to clients because he was not the one who came up with the policies. The steps he takes are part of his duties in the organization and this will not affect his personal life.
On the other hand, he may decide to take moral responsibility and inform his boss that the company is not using the right thing by deceiving clients and then exposing them to severe poverty. He should advise managers that it is unethical to steal from people in the name of helping them. In addition, he can advise them to set low-interest loans to ensure more people access credit facilities and this will attract clients instead of cheating and stealing from them.
Moreover, he can advise the company to maintain the high-interest rates but extend the repayment period to enable clients to repay their loans when they get money (Fisher, Lovell and Valero-Silva 2013). He can advise managers to allow him to disclose the policies that govern these high-risk loans so that clients make informed decisions. Lastly, he can decide to explain to clients the regulations governing these loans and let nature take its course. He will have fulfilled his moral responsibility by telling the truth even if this will cost him his job.
Ethical Puzzle
Lovell, Fisher, and Valero-Silva define an ethical puzzle as a way of arriving at solutions that offer the best remedies to dilemmas. They explain that people should make proper calculations so that their decisions benefit all parties involved. It is necessary to explain that most ethical dilemmas do not give room for people to take time and think about the best alternatives (Fisher, Lovell, and Valero-Silva 2013). However, the ethical puzzle approach can be used depending on people’s speed in making decisions.
The case presented in this scenario means that the loan officer must make a decision that will benefit the company and its clients. The only available option for him is to advise clients about the conditions that govern the high-risk loans extended to them and ensure they understand them before they make any decision. This will ensure they do their best to repay their loans and will not blame anybody if they do not make prior arrangements not to default payments. The loan officer will be comfortable when managing these issues and this means that he will have fulfilled his moral responsibility.
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