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Importance of ethical decision making in business
The importance of ethics within the decision-making process
Making ethical business decisions in business
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Merck had developed an antibiotic, Ivermectin that was used to treat parasites in animals. Dr. William C. Campbell, a Merck senior researcher, found evidence that the same drug might be effective against the parasitic worm that causes river blindness. After much consideration, Merck decided to research Ivermectin’s effectiveness in preventing river blindness. That research, including human clinical trials, showed that the drug indeed was effective with no side effects. After searching for an organization that would pay for the distribution of the human version of the drug, called Mectizan, without success, Merck decided to give the drug itself, at no cost, to everyone who needed it and set up its own committee to oversee distribution. In the little more than a decade since that announcement, river blindness has been virtually eliminated as …show more content…
a threat in several areas. Merck has an ethical obligation to develop the drug, and has also decided to act on the Corporate Social Responsibilities duty towards the wider community. Ethical responsibilities go beyond legal responsibilities to encompass the more general responsibility to avoid harm and do what’s right, again relying on ethical decision-making processes to make these decisions. There are many good examples of companies going beyond legal requirements to fulfill what they perceive to be their ethical responsibilities. Philanthropic responsibilities center on the corporation’s participation in activities that promote human welfare or goodwill generally through donations of time and money or products and services.
Because many people consider philanthropy to be a completely voluntary or discretionary aspect of corporate social responsibility, failure to be philanthropic is generally not considered as unethical; some may question whether it is a corporate ‘‘responsibility’’ at all. (Brian K. 2005) The caring approach seems much more realistic to use in terms of how people in business actually make decisions, as well as how they should make decisions. Managerial experience and observation of managers leads to conclude that morally and economically effective managers consider possible effects on other individuals, not amorphous groups, unless those groups are very homogeneous in nature. These managers think about themselves as well as others. When faced with conflicts they try to find the actions that fit the particular situation the best, intuitively understanding that each situation is different and deserves full consideration itself, and not some
routinized application of principles. Thus, the caring approach will challenge pushes people to put themselves in the manager’s place, to consider all that the manager considers, to decide based on their own understanding of caring what should be done, and to learn from the differences between their decision and the actual manager’s decision about what it means to care in a business context, to think about being effective in terms of helping their employees find meaning and purpose, and in helping people who really need help and thus fulfilling their own needs. Instead of seeing a conflict of principles, they see a conflict of desires and needs. Instead of putting groups of people in boxes, they will think about the relationships involved in the case and the people who, although perhaps silent, are forced into their consciousness through the “I must” feeling response. These differences may or may not lead to different conclusions regarding the proper action in a case. Through the caring approach individuals will examine the situation as it is, in all its complexity, which will benefit them much more than the naturally simplifying method of teaching principles. In fact, the best way to understand the complexity of a business decision in a moral context using a principles approach is to overlay parts of the caring approach; the breaking down of groups, the focus on what stakeholders need, the consideration of the individual manager’s place.
Miguel, Maria Fernanda, ProfessorH. Kent Bowen. Ophthalmic Consultants of Boston and Dr. Bradford J. Shingleton. Harvard Business School. Rev. May 20, 1997.
Nonprofit organizations are usually assumed to carry out their interactions with donors, employees, clients and other partners in an ethical manner, primarily because not-for-profit organizations are seen as serving altruistic purposes (Ingram, n.d.). True altruism focuses on an ethical behavior that results in doing good to people without expecting anything in return. Thus, leaders in non-profits are expected to make decisions that result in the benefit of their clients, rather than themselves. Unfortunately, nonprofits have recently come under a lot of scrutiny because of historical lapses in carrying out the decision-making process in an ethical manner. Non-profit leaders are usually tempted to carry out decisions in the same way as their
Many companies are now looking into their business practices and how it benefits society. Corporate responsibility continues to be impacted as consumer awareness to global issues grows. For example, a small locally owned grocery store located in a metropolitan area just closed the doors to two stores located in high-crime-rated areas of the city due to no financial gains. The store just added a health conscious section for consumers that requested a need for it in the store, even though the cost and marginal is higher than most options in the store. With all of that going on the owner of the store was approached by a local food bank for one day old products that can be donated to them to help the community. The owner declined to help by citing that he feels by help he is opening a chance for loss of revenues due to employees not being honest. He thinks that his employees will just say that products are being donated when they are stealing.
Business performance of organizations are primarily steered through good ethics and corporate social responsibility, and such business practices have become an integral part in order to conduct successful business operations in today’s highly competitive and dynamic environment (Joyner & Payne, 2012). Ethical business practices are widely implemented in small or large enterprise as the growing need of social responsibility and environmentally proactive practices are recognized by these businesses. Hence businesses should be conducted in a way that it not only benefits the owners, employees or customers but the society and community at large (Smith, 2008).
Merck was one of the largest pharmaceutical companies in the world. Merck was about to lose patent protection of two of its best selling drugs, which had been a significant part of their $2 billion annual sales. Merck began putting millions of dollars into research (up to $1 billion) and within three years, Merck was able to discover four powerful medications. Profits weren’t all that Merck cared about; Merck’s founder believed that "medicine is for people. It is not for the profits." • He also believed that following the “medicine is for people” philosophy would lead to profits and had yet to fail.• River Blindness is caused by parasitic worms, which can be found in the Middle East, Africa and Latin America.• These places are developing, so many citizens are poor. • The worm larvae can enter the body through fly bites, with some people getting thousands a day. • Worms can cause grotesque growths, but the major problem lies in reproduction when millions of progeny are released in the system. •The resulting itching is so intense the infected have committed suicide. • Eventually, the larvae may cause blindness. • Two existing drugs could kill the parasite, but have serious, potentially fatal, side effects. • The only safe combative measure available was insecticides that eventually lose potency with immunity of the flies. • The average drug takes $200 million in research and 12 years time to produce. • In order for companies to stay in business (and ease human pain), they must make complex decisions about which drugs offer the most promise. • Investing time/money into drugs for rare diseases is risky (because the pool of recipients is small). • There are enough people with river blindness ...
The problem to be investigated is the conflict that can arise within companies between doing what is right (or moral) and doing what is often viewed as more important the attainment of corporate goals. This conflict is highlighted in the case study involving Fannie Mae (FM). (Jennings, 2009) In this case, corporate executives choose to focus on corporate goals and meeting the market expectations, ignoring any moral issued witch conflicted with the attainment of their goal. (Jennings, 2009) To understand the reasons for the executives actions and learn from their mistakes and misjudgments the following topics are reviewed: 1) ethics and social responsibility, 2) the importance of devolution, 3) the power and value of incentive plans, 4) the rational for legitimate income smoothing, and 5) the impact of pep talks.
Since its humble beginning as a small drugstore, Merck has placed a large amount of importance on improving the health and well-being of its customers. As drug patents expire and genetic forms of their top products become available, Merck’s strategy is to do the unexpected; instead of raising the price of their older products in favor of patent protected new drugs, Merck focuses on reducing their cost in order to better compete with their generic counterparts. Additionally, Merck’s plan for growth now encompasses a much more aggressive pursuit of new drugs in their pipeline through extensive research. Merck became the second largest health care company in the world after the merger with Schering-Plough in 2009 and has contributed great discoveries like the first cervical cancer vaccine and great resources like the Merck Manuals which are utilized as a source of information to doctors, scientists and consumers worldwide .
While going through my academic program, I have learned the importance of organizations having to integrate strategic planning in accordance with ethics and social responsibility practices; it is necessary for an organization’s survival. As such, an organization needs to implement its mission, strategy, and vision while considering the stakeholders and general public. My academic program has brought me to this realization and provided me with a means to effectively associate the implications of an organization’s ethics and social responsibility from a strategic perspective. When integrated effectively, establishing these components within the organization’s strategic plan has the capacity to largely benefit the organization's daily operations, which in turn, affect overall profit.
Although the net that is cast over those considered is large, attempting to appease everyone is not only a noble goal, but a sound one as well. It is not possible to make everyone happy, but the act of trying can alleviate concerns a stakeholder might have. This stakeholder theory shares many similarities to the humanity formulation of categorical imperative. The shareholder theory is using employees and such as only a means to an end whereas the stakeholder also holds these employees as an
An increasing large number of firms are developing mission statements that also attempt to define the social and ethical boundaries of their strategic domain. Some firms are actively pursuing social programs they believe to be intertwined with their economic objectives, while others simply seek to manage their businesses according to the principles of sustainability – meeting humanity’s needs without harming future generations. For example, Unilever has launched a variety of programs to help developing nations wrestle with poverty, water scarcity, and the effects of climate change. The firm’s motives are at least as much economic as moral. As environmental regulations grow stricter around the world, the firm must invest in green technologies or its leadership
Every business entity has social responsibilities. The four theories of social responsibility are the maximization of profits, moral minimum, stakeholder interest and corporate citizenship. Social responsibility goes hand in hand in regard to a company’s ethical standing. As a company, it’s crucial to have high ethical standards. The Ethisphere Institute ranks businesses annually to be named on their honorable and highly recognized list of the World’s Most Ethical Companies. These organizations are evaluated in terms of their ethics and compliance programs, corporate citizenship and responsibility, culture of ethics, governance and leadership, and innovation and reputation. One of the companies
Daniel Terris, chief of the International Center for Ethics, Justice and Public Life at Brandeis University, has given a fascinating portrayal and evaluation of a morals program at one of the world 's biggest protection temporary workers, Lockheed Martin. In 1996, another system that depended on a prepackaged game (much like Clue) that utilized characters from the Dilbert funny cartoon was presented. Terris respects much about this system, which was initiated by Lockheed 's CEO, Norm Augustine-even while he brings up that the putting of obligation on every specialist for the right measurements of his or her activities may occupy consideration from the ostensibly more vital moral obligations of senior administration and the ethical complexities of aggregate choice making. As it were, that affected individual, the organization itself, have its obligations to people, in general, great, despite the fact that it will be unable to appreciate the efforts of other individuals who plays their business activities in a righ way. (Terris, 2005)
In today’s fast paced business world many managers face tough decisions when walking the thin line between what’s legal and what’s socially unacceptable. It is becoming more and more important for organisations to consider many more factors, especially ethically, other than maximising profits in order to be more competitive or even survive in today’s business arena. The first part of this essay will discuss managerial ethics[1] and the relevant concepts and theories that affect ethical decision making, such as the Utilitarian, Individualism, Moral rights approach theories, the social responsibility of organisations to stakeholders and their responses to social demands, with specific reference to a case study presenting an ethical dilemma[2], where Mobil halts product sales to a garage, forcing the garage owner to stop selling solvents to young people. The second section of this essay will focus on advice that should be given to any manager in a similar position to the garage owner with relevance to the organisational strategic management, the corporate objective and the evaluation of corporate social performance by measuring economic, legal, ethical and discretionary responsibilities. It will address whom to think of as stakeholders and why the different aspect could cost more than a manager or an organisation could have imagined.
Research on ethical problems, however, has been largely confined to business organizations, no doubt because they are numerous, powerful, close to money and its potential evils, and strongly tied to other institutions in society. Serious studies of the ethics and ethical attitudes of businessmen reveal much uncertainty about what constitutes ethical behavior, and even about whether ethics are important. Ethical behavior does not consist of clear-cut choices between right and wrong. Managers incorporate ethical implications into decisions along with other criteria only if they... ... middle of paper ... ...
It seems obvious that large corporations have a tendency to ignore the negative effects of their actions in favor of profit. This example, although sensationalized, still says to me that with power comes responsibility. It affirmed my belief that a corporation’s goal cannot be just to provide profit to shareholders, but there must also be an element of social responsibility.