Business ethics is a kind of applied ethics, which examines the moral and ethical principles of a business environment (May et al., 2014). This study will highlight the ethical dilemma of a reputed car manufacturing company of United State. The organization wanted to compete with the low carbon emission car companies. However, their diesel cars actually used to emit high rate of carbon, which use to violate the stringent environment laws of USA. In such situation, the organization started to use fraudulent software insight the cars, which neutralizes nitrogen gas during car testing for showing less car emission rate. However, such unethical action has been publicized among the media and led to organization crisis.
The study will describe the importance of ethical course of action and demonstrate the information about the unethical action of the organization. The study will demonstrate the impact of this unethical decision on the organizational stakeholders. Furthermore, the study will demonstrate the duties and obligations, which the organization should fulfill for behaving ethically in this crisis situation. Apart from that, some ethical actions will also be demonstrated in this study for deciding upon the best action leading to the greatest good. Lastly, the study will arrive at a suitable ethical solution for resolving the crisis situation.
An ethical course of action is extremely important for maintaining greatest balance between good and evil (Arenas & Rodrigo, 2016). It sets the moral principles for guiding the social norms, cultural practices, religious influence and organizational practices. Michaelson et al. (2014) opined that an ethical course of action can bring fair and justice in the organizational practice. It can foster adequate amount of good and wellbeing for the stakeholder associated with the organization. On the other hand, Fryer (2016) opined that an ethical course of action facilitates an organization towards choosing between right and wrong. Hence, such action directs an organization towards right direction in conducting fair business and gaining sustainable business growth. In case of the emission scandal of the reputed automotive company, ethical course of action can help in adopting fair measures for protecting the stakeholders from the harmful effect of the emission and harassment.
Wang and Calvano (2015) stated that organizations can be more concentrated on making only their own profit even by harming the stakeholders, if no ethical action is taken. In case of the automotive company, the organization can continue with its unethical emission rate in USA, if no ethical action is taken. Moreover, unethical continuation will even lead to legal constraint in future, if no ethical action is taken for preventing the unethical action.
The car manufacturing company wanted to compete in USA market with the low carbon emission car companies. It is quite tough for the car manufacturing companies to pass the test of stringent pollution regulations. The car manufacturing organization initially passed the test of pollution regulation in USA. However, later on, it has been found the organization has actually used defeat software for demonstrating less carbon emission during the car testing. Moreover, the cars actually used to produce high rate of carbon emission, which use to breach the stringent carbon emission standard of USA (Michaelson et al., 2014). In such satiation, the organization has used fraudulent software for showing less carbon emission rate during car test.
Such software neutralizes the nitrogen oxide during emission test for showing less carbon emission rate of the cars. In this way, the organization is actually showing lack of transparency with the organizational stakeholders leading to unethical action. Furthermore, the actions of these cars are actually polluting the surrounding environment and harmfully effecting people with high carbon emission. The organization is also trying to hide this information from the stakeholders for their own benefit of gaining competitive edge over less emitting car companies (Wang & Calvano, 2015). In this way, the fraudulent activity of the organization is leading to unethical action. The information collected from the customers and employees can support this information of ethical dilemma.
The unethical action of the automotive company will have huge impact of the organizational stakeholder. The customers, employees, managers, community and surrounding environment will have stake in the outcome of the ethical issue. The information of unethical action of the organization gets publicized. Moreover, the information has been spread out to media, which will lead to harassment for the organizational stakeholders. The customers or the owners of the cars may face the harassment of the retesting their cars for assuring the carbon emission rate. Moreover, their cars may be banned by the authoritative bodies after exploration of its high carbon emission rate, which lead to major financial loss to the customers.
The media and regulatory bodies have asked several questions to the employees for investigating the matter of defeat software. Such investigation can lead to the risk of annoyance and harassment for the employees, which can lead to employee de-motivation. The managers can also be harassed and annoyed in the same way like employees. Moreover, the managers will be harassed more by the authoritative bodies, as the issue is actually regarding the unethical decision making made by the management. On the other hand, the unethical action will also have significant impact on the environment and community people. Moreover, high rate of car emission will pollute the environment, which will have severe impact on the health of the community people.
In such organizational crisis, the managers of the organization need to fulfill certain duties and obligations for behaving ethically. Moreover, the managers would need to be transparent in communication with the organizational stakeholders (Rupp et al. 2015). Organizational transparency maintains fair relationship of an organization with its stakeholders even in crisis period (Su, 2014). They should apologize for the unethical action and clarify the reason for the happening of such action. The mangers should also assure no repetition on such action. The management board should behave honestly for managing such situation. They should allow the employees in further decision making process and discuss with them openly for getting ideas of managing the situation.
The organization should deal with the customers in a fair and honest manner. It should assure the customers that it would take immediate action for compensating their loss. In this way, the managers of the organization should behave honestly fairly for both the organizational stakeholders as well as the organization itself. Organizations can only overcome their crisis period both by resolving the issues of stakeholders as well as themselves (Giacalone & Promislo, 2013). Likewise, it would be the duty of the car manufacturing company to maintain fairness with the stakeholders. At the same time, they should think of their organizational profit in a fair manner. Moreover, organizational profit is only dependent on the support and cooperation of the stakeholders. Therefore, there would not be any conflict among these duties.
Floyd et al. (2013) pointed out that deontological ethics places emphasis on the relationship between the duty or obligation and morality of human ethics. In such ethics, an action is considered to be morally good because of having some moral characteristics and not because it produce good action. On the other hand, Zheng et al. (2014) opined that deontological theory judges the morality of an action based on certain rules or duties. As per this theory, everyone has certain duties to be fulfilled based on certain moral principle, which fulfill their moral requirement independent of any consideration of consequences. In case of this automotive company, the cars used emit high rate of carbon, which was against the stringent environmental standard of USA. Furthermore, usage of fraudulent software for hiding the carbon emission rate was against the moral principle. Therefore, such action has violated the deontological ethics.
Teleological ethics judges an action based on its consequences and not on the moral principles. Lakshman et al. (2014) opined that best action always maximizes the utility, which enhances the wellbeing of the associated entity. On the other hand, Belle (2017) opined that as per Teleological right and moral action always enhances the pleasure of the people by minimizing their sufferings. In case of the automotive company, the usage of fraudulent software in the cars has actually harassed the organizational stakeholders, while it has investigated by the authoritative bodies. In this way, the consequence of such action has actually enhanced the sufferings of the organizational stakeholders, which violates the rules of teleological theory leading to unethical action.
Natural Law recognizes that laws and morality are deeply interconnected. Vogel (2014) pointed out that human laws are always framed by the morality and not by any authoritative body. Hence, human beings are guided by the human nature for deciding upon the human laws. On the other hand, Luetge et al. (2016) opined that natural law theory always ensure good and happy life of the human beings. Hence, the action, which wok against such law and prevent human beings from living happy and good life, is considered to be immoral. In case of this automotive company, the emission scandal and fraudulent software has led to harassment and monetary loss of the customers after the cars have been banned by the authoritative body. Therefore, such action has violated the natural law of ethics leading to unethical action.
Consequentialism ethics judges the right and wrong of an action based on the consequence of the action. Donaldson (2015) opined that Consequentialism ethics put more emphasize on the consequence of an action. As per this theory, the more good consequence an action produce, the more right and moral the action is considered (Michaelson, 2016). In case of this automotive company, emission scandal has led to negative consequence and harassment for the organizational stakeholders. Therefore, such action is proved to be an unethical action. On the hand, Vranceanu (2014) opined that virtue theory of ethics judges an action based on the characteristics of the decision making towards ethical thinking and not on the consequence of the action. However, in case of automotive company, the intension of the organization was to make fraud with the organizational stakeholder through installing fraudulent emission software. Therefore, this situation is considered as an unethical action.
As per deontological theory, the action of the organization would ensure moral principle, which will maintain ethical relationship of the organization with the interested parties. On the other hand, teleological theory would lead to organizational action, which will maximize the wellbeing of the stakeholders. This course of action will produce “the greater good” among the organizational stakeholders (Newton et al. 2013). Furthermore, natural law ethics would lead to organizational action, which will lead to happy and good life of the interested parties. This action represents absolute values, as the morality of the action is judged based on moral principles.
Maintaining Honesty and Transparency with Interested Parties
The automotive organization should honestly deal with the organizational stakeholders for resolving the ethical dilemma. Moreover, the organization should honestly apologize for the ethical problem of emission scandal. In this way, it can gain somewhat sympathy for the stakeholders. On the other hand, the organization should also maintain transparency with all interested parties. It should transparently share all further activities clearly and ethically with the interested parties. It would enhance the value of those interested parties through which the organization can regain their trust and sympathy. Apart from that, the organization should assure that they would compensate the loss of the interested parties occurred from the unethical occurrence.
The customers should be compensated by offering discounts in their further purchase of cars for compensating their monetary loss, while their cars have banned by the authority. It should also fairly demonstrate adequate profit projection for regaining the trust of the shareholders. On the other hand, the organization should also be fair and transparent enough with the employees and allow them the further decision making process for gaining their support in overcoming the crisis situation. In this way, honesty and transparency would help the organization in resolving the ethical issues occurred through emission scandal. It is the only necessary and justifiable way for resolving the crisis situation.
The organization could have been avoided such situation through focusing on their plan of car manufacturing. It could have been use actual technology for reducing the carbon emission rate of the cars. Moreover, it could have concentrated more on technological innovation through adopting advanced technology of reducing card emission. Such concentrated could have been prevented the organization from initiating such fraudulent technology for faking the reduced car emission rate. In future, the organization should also concentrate on technological innovation and ethical activities for avoiding such types of unethical action.
Conclusion:
While concluding the study, it can be said that ethical course of action is extremely important for conducting business in ethical way towards leading sustainable business success. Lack of ethical course of action can mislead the organizations towards conducting business unethically, which can hamper sustainable success of the organizations. The reputed automotive company is facing an organizational crisis due to its unethical activity of car emission scandal. The organization has used fraudulent software inside the cars, which demonstrates low carbon emission rate during car testing, where the cars used to emit high rate of carbon in actual scenario. The employees and customers have faced huge harassment due to the investigation from the authoritative bodies.
The customers have also faced monetary loss, while their cars have been banned by the authoritative bodies due to high carbon emission. In such situation, the organization should have honestly for answering the questions of the authoritative bodies. It should also be fair enough with other organizational stakeholders for marinating relationship with them. The actions suggested by the teleological theory ensure the greater good for the organizational stakeholders. The organization should act transparently and fairly with the interested parties for regaining their trusts and sympathy for reestablishing the corporate reputation in the market.
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