Case Study: Ethics

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[. . .] This is the identity of the company and a mark of its excellence as well. The company has been known to produce products that have helped businesses reduce their pollution levels. The company can use this as social capital against arguments that it supports industries that increase environmental pollution. The company can then diversify into other products based on its research and development competency. The company can argue for its environmentally responsible goals by stressing scientific evidence from its research and development efforts. Letting go of a key market and core competency would damage the credibility and reputation of the company as it would be perceived as erratic and marred by knee-jerk responses to ethical challenges.

The second alternative for The Lubrizol Corporation is to follow the sentiments of the society and to withdraw its operations that are linked to the oil and petroleum industries. It can enter into building components for firms that invest in alternative energy development. This would enable the company to attract investment for the long-term through ethical investors. This would also result in the company losing out on important clients and customers, for which the investors will have to be taken on board. Despite this risk, the management should demonstrate confidence in its decision making and ethics policy because companies can improve their bottom line while pursuing ethical decisions and strategies (Nelson, 2003). The management would also have to appoint a spokesperson to articulate the change and explain its justification to the shareholders and to the public.

A third alternative for the company is to prioritize its values as given on its website (The Lubrizol Corporation, 2012). These values include statements about the importance of various stakeholder groups such as customers, investors and employees. The company needs to prioritize which stakeholders are most important so that it can use this as a justification for its policy decisions. Therefore, if the board of directors decide that the investors are the most important stakeholder group, then decisions can be made to maximize shareholder value by staying within the existing product categories and markets or by exploring new ones.

3.3 Reasons for Rejection

For Susan Komen, the first and second alternatives are rejected because these would result in undesirable negative consequences for the acceptability and positive image of the organization. Also, these alternatives would reflect an opportunistic and myopic view of the effect of the organization's decisions on the stakeholders. These alternatives do not reflect honesty and passion that are my core values for managing an organization as well. They also do not reflect a balance between compassion and objectivity that are essential for a not-for-profit organization. These two alternatives would result in significant loss of donations to the organization because it would alienate important sections of the donating public. This does not have to be the case as nonprofit organizations too are responsible to their constituents for increasing their funding progressively (Kohnen, 2010).

For The Lubrizol Corporation, the second and third alternatives are rejected because they do not support the economic objectives of the business. The primary objective of a business is to provide goods and services that are valued by its target market (Fieser & Moseley, 2012). The two alternatives do not measure up against this criterion and therefore do not make economic sense for the business. Furthermore, these alternatives reflect an escapist mindset and a shying away from the ethical challenge, which also goes against my personal values for running a business enterprise. They also do not reflect loyalty towards existing customers and clients by failing to stand by them during an ethical crisis. I believe that these alternatives shy away from the reality while I believe that the issue should be faced at the frontlines by finding a middle path between the two alternatives.

4.0 Proposed Solutions

The sections below describe the proposed solutions that can be adopted by Susan Komen and The Lubrizol Corporation to resolve their ethical challenges.

4.1 Proposed Solution for Susan G. Komen for the Cure

For Susan G. Komen for the Cure, the proposed solution is to articulate an unambiguous and clear policy for funding decisions. It is common among not-for-profit organizations like Susan Komen to face policy challenges in terms of funding decisions (MacDonald, McDonald, & Norman, 2002). The particular challenge for Susan Komen can be overcome by developing an objective criterion for funding research and charitable organizations like Planning Parenthood. The criterion should be made public by the CEO Nancy Brinker in the capacity of chief director and spokesperson for the company to build confidence of the donors, the media and the people served by the organization. Had the role of spokesperson been performed effectively by Ms Brinker, the controversy would not have grown as rapidly as it did because of the delayed response and conflicting statements made by the company (Ryan, 2012). As stated by Pies, Beckmann, and Hielscher, (2010), ethics should be a part of management competenccies and should reflect clear values shared by organizational members as it helps the organization to grow. This capacity should be inculcated within the management at Susan Komen.

Furthermore, the donation policy should then be implemented across the board without exceptions. All organizations undergoing investigation by local, state or federal agencies should be excluded from Susan Komen funding regardless of their activities or association with the organization for the sake of credibility and dependability. It is also important to empower the board of directors to take up such issues before they become public and damage the credibility of the organization. As noted by Green (1997), because not-for-profit organizations have assumed a number of social service functions and control over significant resources, there needs to be control over management decisions so that management oversight can be compensated for.

4.2 Proposed Solution for The Lubrizol Corporation

On the basis of the analysis of the alternatives available to the Lubrizol Corporation, he proposed solution for the company is to continue to work within its traditional markets and product categories, while continue to explore new ones as part of its diversification strategy. The success of the company is based on its efforts at enabling consumers to use their machinery, equipment and fuel more efficiently, which has helped them to reduce releasing pollutants into the environment. In this way, the company has played an important role in reducing environmental pollution rather than colluding with others in creating it.

The company should employ an effective spokesperson, preferably from the company leadership, to increase the effectiveness of the message and to inspire confidence that the company is committed to the cause of being environmentally responsible. Moreover, because of its long association with the local community, The Lubrizol Corporation has been successful at creating a family culture (Feldman, 2007) where the company is respected and accepted by its employees and the management. Its success is also evidenced by the fact that Warren Buffett acquired the company at a value of $9 billion (Frye, 2011).

The company is primarily a profit making organization and has as its primary responsibility the duty to continue as an economically viable entity. In doing so, it has to continue to maintain profitable operations. It cannot do so by withdrawing from its core products and markets. While it is capable of investing in other environmentally-friendly sectors, there is no evidence to support the claim that current practices of the organization are damaging to the environment. Moreover, the return from investment in alternate fuels may be realized over the long-term and the company may face difficulty in keeping investors satisfied during the period. By pursuing the first alternative, the company will continue to maintain its competitive advantage by retaining its core products and markets while convincing the stakeholders of its ability to pursue socially and environmentally ethical decisions.

5.0 Recommendations

For Susan Komen, the recommended strategy is to convene the board of directors and develop an ethical framework and policy for donations and funding decisions. This policy should be developed after gathering the viewpoints from various stakeholders. The policy should be aligned to the values and strategic vision of the organization. The exercise should be headed by the chairman of the board so that personal interests do not influence the shape of the policy. The policy should then be articulated by the CEO Ms Brinker to the media so that all stakeholders remain clear about the fact that the organization is not going to fund any organization that is under investigation by state or federal agencies. Further steps may be taken by withdrawing funding from organizations that are under investigation and are still receiving funding and donations from Susan Komen.

For The Lubrizol Corporation, the recommended course of action is that it should develop a convincing and persuasive argument for continuing to say in its current product category and market on the basis of principles of core competency and economic efficiency. It should build a coherent business case to… [END OF PREVIEW]

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Ethics.  (2012, September 27).  Retrieved May 23, 2019, from https://www.essaytown.com/subjects/paper/ethics-case-study-report/2942653

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"Ethics."  Essaytown.com.  September 27, 2012.  Accessed May 23, 2019.
https://www.essaytown.com/subjects/paper/ethics-case-study-report/2942653.