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Social Responsibility

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Introduction:

In light of recent corporate scandals, the question has been raised whether an effective, enforced ethics program could have impacted the outcome of such massive instances of unethical corporate behavior. Because of the increased scrutiny of the actions of corporations and those who act on behalf of organizations, there has been additional attention placed on the ethical actions within organizations. Many organizations have responded to this increased scrutiny by establishing formal ethics programs to foster ethical decision making for business directors, officers, and employees. Effective ethics programs provide the opportunity for management to establish a culture that establishes ethical behavior, both inside and outside of the organization, as the business strives to eliminate unethical conduct.

Scenario:

Two weeks after you are hired as the elementary division manager by a toy company, you receive a memo from the manager of the quality assurance department. During routine testing, the quality assurance department identified a problem with one of the toys included in the elementary toy collection. The primary market for the elementary toy collection is elementary schools. A metal whistle that is included in the toy collection did not pass testing due to small traces of lead. The amount of lead included in the whistles was slightly above the U.S. legally acceptable limits for children ages 7 and younger. A large shipment of the elementary toy collection is scheduled to be shipped to schools in South America at the end of the week, just in time for the beginning of the school year. The approximate cost to reproduce the product and repackage the toy collections is $100,000.

Task:

A. Prepare a memo for the CEO and the executive team in which you do the following:

1. Present three possible decision alternatives to address the problem regarding the whistles.

a. Explain the process or method that you used for selecting each of the alternatives.

b. Discuss the advantages and disadvantages of each alternative.

c. Discuss the financial, legal, and ethical considerations of each alternative.

2. Recommend one of the three possible decision alternatives.

a. Justify your recommendation.

b. Analyze how your recommendation could affect customer relationships.

c. Discuss the role of social responsibility in your decision-making process.

B. Prepare a report on the importance of ethical decision making to be presented to the CEO and board of directors at the board meeting in which you do the following:

1. Discuss two strategies that the company could adopt to ensure that ethical decision making takes place at all levels of the organization.

2. Explain how the company could benefit from a code of ethics.

3. Analyze a code of ethics for another company of your choice to determine the components that are important to include in the development of a code of ethics.

Note: You may conduct a search online to find another companyâ??s code of ethics to analyze. It is not necessary for the company to be another toy company.

C. Include all in-text citations and references in APA format.

Note: Please save word-processing documents as *.rtf (Rich Text Format) files.

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Solution Summary

In light of recent corporate scandals, the question has been raised whether an effective, enforced ethics program could have impacted the outcome of such massive instances of unethical corporate behavior. Because of the increased scrutiny of the actions of corporations and those who act on behalf of organizations, there has been additional attention placed on the ethical actions within organizations. Many organizations have responded to this increased scrutiny by establishing formal ethics programs to foster ethical decision making for business directors, officers, and employees. Effective ethics programs provide the opportunity for management to establish a culture that establishes ethical behavior, both inside and outside of the organization, as the business strives to eliminate unethical conduct.

Solution Preview

Memo:

There are three possible alternatives to address this situation. Let us discuss each alternative one by one.

The first alternative is that company issues a warning that the toy is unsuitable for the children and thus, the whistle should be used with caution. The major advantage of this alternative is that it does not result in any financial losses as the toys can be shipped immediately. However, this alternative can attract legal consequences as the toy fails to pass the regulatory standards. Further, it is highly unethical for the company to ship the toys even without warning as it could be harmful for children. It is unethical for the company to ship the product which is unacceptable by US standards to another country, even though the regulations are not stringent in that country as it can harm the children in that country as well.

The second alternative to address this issue is to reproduce the product and meet the acceptable limits for lead and repackage it at a cost of $100,000. This alternative will result in numerous benefits. First of all, it will be a ethical decision on part of the company. Secondly, this decision will not attract any legal liabilities and will allow the company to maintain its reputation. However, the disadvantage is that this option will result in financial losses of $100,000 for the company.

The third alternative is to ship the manufactured product to a country where such product is legally accepted or meets the regulatory standard. This situation will allow the company to avoid financial losses by exporting it to another country and avoid any legal liabilities. However, it will again be an unethical approach as the ...

Solution provided by:
Sandeep Bardia, MBA
Education
  • BCom, SGTB Khalsa College, University of Delhi
  • MBA, Rochester Institute of Technology
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