Ethics and Social Responsibility in Business and Society

Part A

Question 1

As the world gradually becomes a global village as more innovative technologies are being universally accepted and integrated in our day to day lives, there is the inherent need for a universally accepted codes defining globally acceptable ethical standards (Carroll & Buchholtz, 2011). Cultural differences are slowly being done away with as more people enjoy better living standards as a result of better educational infrastructure which has allowed for more robust socioeconomic reforms and development the world over. This has ultimately been made possible by an improving political climate (Carroll & Buchholtz, 2011).

As the new millennium dawned, Google sought to improve its global foothold by make headway in to China by launching Google China. Google is the world’s best search engine, but Google China was faced with major challenges based on the communist system adopted by the Chinese people in 1949 after the defeat of the Japan in the Second World War.  The People’s Republic of China has made significant economic progress which has seen the country become the world’s second superpower (Carroll & Buchholtz, 2011). The cultural values of communist China are such that there is a high degree of nationalism making Chinese brands better positioned in satisfying the needs of the more than a billion citizens. This is what has dogged Google China’s progress as Baidu, a Chinese search engine is better placed to understand the needs of the Chinese people. Google had to use its remote servers to connect the Chinese people to the internet. The servers automatically translate internet content into the Chinese language (Carroll & Buchholtz, 2011). However, the Chinese Government heavily censors internet use and this has resulted in difficult times for Google China. Baidu has the larger market share as it is perceived by the Chinese as a national brand and is better placed to meet the needs of China’s many internet users.  It is only prudent for Google China to maintain its position in China as more of the Chinese people begin to adopt the internet experience and technological innovations faster than any other country in the world. Thus by continuing with its “ Don’t be evil” informal corporate motto, Google’s ethics and social responsibility in business and society long-term strategy is bound to improve the experience of its customers (Carroll & Buchholtz, 2011).

Question 2

In my opinion corporations should not have the right to influence the ethics in those countries in which they operate. Corporate social responsibility and ethical business practices should be formulated such that the multinational corporations should make better approaches in realizing profitability (Carroll & Buchholtz, 2011). There has always been a high level of opposition to the corporate social responsibility initiative who argue that it tends to submerse profits. This is not entirely true as such corporations already have huge capital inflows and are able to sustain profitability in other parts of the world where cultures are more responsive to their marketing campaign (Carroll & Buchholtz, 2011)s.

As the level of information flow, communication and education flourish in this millennium there is a need for corporates to understand that imperialism is no longer an option. Innovation is the most dynamic way with which corporations can ensure that their business continue to flourish in foreign countries (Carroll & Buchholtz, 2011). For instance, Google in China has opted to play by the rules and laws held dear by the Chinese government. There stay in China may not have been rosy but they have definitely learnt a lot as to what the Chinese people really want without alarming their government. In this way even as Google continues to be an online flagship corporation for the US, it is bound to realize customer satisfaction as it incorporates the needs of the Chinese people in its strategies (Carroll & Buchholtz, 2011).

Part B

Corporations importing toys from manufacturers in China, given the discovery of lead in some toy products produced in that country.

Introduction

Prior to 2007, China had a reputation as the global manufacturer of safe products. In 2007, all hell broke loose as the US and Europe provided credible documents indicating that Chinese manufactured products were most prone to product recalls, standing at a mean of 67% in the US and nearly 50% in Europe (Chen, 2007). Such recalls not only signify that the quality produced then in China were not only substandard but in some cases turned out to be dangerous for use. Nearly 60% of all US consumers reported not to be confident when using products made in China (Chen, 2007). This resulted in a massive crackdown by the Chinese government targeted at closing down all manufacturing companies that have dented the global popularity of Chinese products. This report is an attempt to analyze and discuss corporate social responsibility and related ethical issues in the US society with regard to the importation of toys with paint containing the hazardous heavy metal Lead (Chen, 2007). The paper will attempt to look into ways with which market power enjoyed by US importing companies has played a role in making Chinese manufacturers to cut costs at the expense of ethical considerations and corporate social responsibility.

As the 90’s decade progressed, China also progressed on to become what was then referred to as the world’s factory. At the time, manufacturing costs in China were much lower than in the developed and developing world due to cheap capital as well as numerous labor alternatives (Chen, 2007). Mattel, a US company opted to outsource more than two thirds of its manufacturing from China by effectively closing down all its US based manufacturing plants. Most outsourcing models applied by profit oriented companies tend to provide a rather translucent information asymmetry which as in Mattel’s case laid the basis for Chinese manufacturers to use hazardous chemicals as were found in toys imported into America by Mattel (Chen, 2007). In many instances, Chinese companies are known to manipulate corrupt and capricious official more than being efficient in their manufacturing and logistical processes.

In other instances, Chinese firms contracted by US multinationals have had working relations spanning over decades and in the process some of the inspection of final products got to become lax as ethics and social responsibility to the American people was left to wither (Donaldson, 1996). Mattel had contracted the Early Light Industrial Company and the Lee Der Industrial to manufacture toys for the American market for nearly two decades (Chen, 2007).

The long duration with which such contracts have existed have led the US corporations assume a relaxed position considering China as a primarily safe and stable environment for efficient production (Donaldson, 1996). As such safety precautions such as surprise visits on Chinese companies to check for compliance had been ignored at the peril of the American consumer (Chen, 2007). It has also been suggested that since the Chinese export market is highly competitive, there is the high probability that legally contracted toy making companies in China may have subcontracted production to smaller Chinese companies. One of Mattel’s Chinese manufacturers is known to have subcontracted a supplier who supplied them with lead based paints which are not only poisonous but cheap (Chen, 2007).

Outsourcing multinationals corporations from foreign countries are not as preferred as US firms in China (Donaldson, 1996). According to one of the thousands of Chinese companies contracted by Mattel, known as Wealthwise Industrial Ltd., indicated that Mattel’s market power was enough to ensure that it realized continued profit making (Chen, 2007). US companies effectively have the power to push down prices which is essentially not feasible in a conventional market. A growing number of Chinese executives in the manufacturing sector pointed out that some western companies have the tendency to push down prices and weak local regulations (Chen, 2007). This in many cases serves to encourage greedy or desperate Chinese companies to progressively cut costs when such a chance avails itself.

Rationale

In essence, not many professional are aptly trained to provide solutions for social ills that may result from poor business practices whether from an external or internal source. Business people are primarily well versed in marketing, production, finance, accounting, and personnel management or information technology (Carroll & Buchholtz, 2011). As such, in the instance that a business professional is placed in charge of providing solutions for social problems may end up in poor but also expensive approaches which can result in a more compounded social problem.

However, it has been argued that the virtue of having ethical considerations while making business oriented decisions is based on systematic values that form a good character. There is however a major challenge to this argument with regard as to whether a moral individual can decide to close down a plant and cause more socioeconomic desperations among people in a given society (Carroll & Buchholtz, 2011).

Utility

One approach towards realizing ethical business practices relates to utility which is basically the total good a decision or action can have on a society. This is referred to as utilitarian reasoning or the cost benefit analysis approach (Carroll & Buchholtz, 2011). This approach basically seeks to make a conclusive comparison on the both the costs and the benefits that a policy, decision or an action can have on human psychology, economic or social effect on a given populace.

Business executives total up net costs as well as net benefits, compare them conclusively and in the case when the net benefits overshadow net costs then a decision, action or policy is ethical. This is because if the costs outweigh the benefits then the implication is that a policy action or decision is much likely to cause social ills rather than social good and is thus unethical (Carroll & Buchholtz, 2011). In the case where there are multiple options, it is only prudent for decision makers to implement the option that would bring about the greatest benefit to a society.

The major drawback with the cost benefit approach is that as much as some costs and benefits can be calculate conclusively in monetary value, others such as human satisfaction or dissatisfaction or the cost of human life cannot be conclusively calculated (Carroll & Buchholtz, 2011).  This limitation provides a basis for concluding that it is not a very good method as when values are non-monetary is the approach is inconclusive in measuring cost or benefits.

This is the most commonly adopted approach as much as it has some major drawbacks thus implying that an executive applying it lacks consideration for the means to an end. When applied in measuring financial and economic parameters, it tends to give quite conclusive decision making outcomes (Carroll & Buchholtz, 2011). As such when deciding on whether to close a manufacturing plant, an ethical utilitarian thinking will be based on benefits which may include better wealth creation or better returns on investments against costs which may include early employee retrenchments or low economic activity among a local population (Carroll & Buchholtz, 2011).

Rights

Human rights as embodied in the United Nations Universal Declaration of Human Rights are widely accepted as a foundation for promoting ethical judgments in businesses decision making processes. The most critical human rights include the right to life, free speech, safety, property, and freedom (Carroll & Buchholtz, 2011). Denying human beings in any society on earth is considered a violation of human rights which is unethical. Individuals are therefore valuable by essence of being human and using human beings to achieve one’s own selfish ends is considered as being unethical as their goals are setback.

One main limitation as to the use of human rights to protect human entitlements is that rights tend to conflict with one another. In the case of Mattel which closed all its US manufacturing plants in favor of low overseas labor costs at the expense of unemployed Americans at home. However, human rights are a universally accepted benchmark applied widely in judging the conduct of organizations as well as individuals (Carroll & Buchholtz, 2011).  An ethical man on the basis of the application of universal human rights would decide whether or not to close a plant on the basis of whether the society can cope with high levels of unemployment or continue with production and cause damage to the communities around the plant.

Justice

The third approach to determining ethical decision making is one that is pegged on maxims of justice. The main query that is proposed in ethical justice is whether human interactions are fair and just. When the US government suffered a depression in 2008 and 2009, it bailed out some multinational corporations (Carroll & Buchholtz, 2011). The executives in these corporations continued to receive huge salaries as well as astronomical bonuses yet the common employee felt the blunt of the economic depression as so did the American taxpayer who had to absorb the entire cost. It is important to note that fairness and justice can only be realized when there is an equitable distribution of burdens and benefits on the basis of accepted laws and rules (Carroll & Buchholtz, 2011).

Social justice implies that in a particular society wealth and income are shared among the populace in fair quantities. In some progressive Arab and European countries, this is done by considering a society’s needs, individual efforts abilities and contributions such that they cannot be the same across the society (Carroll & Buchholtz, 2011). Thus a just person will end to consider which member of society will pay for costs and who will benefit and if the exchange is fair then the decision can be considered as being ethical.

The application of ethical reasoning in business processes

It is important to note that all three bases for reaching ethical conclusions can be applied all at once as applying a single approach may lead to risk prone businesses. While applying all the three approaches, an analyst questions whether all lead to the same conclusion, and if this is the case is the outcome of a decision ethical? In the case where the conclusion is no then an action is unethical and vice versa (Carroll & Buchholtz, 2011).

In the event that the application of the three approaches tend to give deviating results, then an executive will decide on which result is most beneficial to an organization, employee or society based on a set priorities.

Impact of Mattel’s actions on my family

When the American families got to know of the findings of the US Consumer Protection agencies that Mattel’s toys were hazardous due to the application of lead based paints, I was in shock (Chen, 2007). Many young children preferred Mattel’s products then. The distress that a parent has when his or her child is at risk is quite damning. I was angry at the company for putting my child at risk for the sake of supernormal profits. I felt that it was unethical and weak of such a major brand to be so selfish by taking away jobs which only led to many people feeling worse and the economy reeling as the housing bubble burst. This had a direct impact on my family as I had to contend with throwing away toy from Mattel which are costly and bear the cost of an angry child (Chen, 2007).

mpact of Mattel’s actions on my community

Mattel’s activities in China came to light when many of the American citizens were grappling with difficult economic conditions. It was a time when people had lost jobs due to massive layoff and the capitalist nature of American nature. During these periods, people try al the best to hide the hard times from their children (Chen, 2007). At the time this happened, available incomes were spent on major necessities such as mortgage, food, medication and school fees. There are many day care centers in our community where parents leave their children while they proceed to work. This became a cause for alarm as many of these centers had play toys from Mattel causing alarm among members of our community.

Impact of Mattel’s actions on my Country

In the third quarter of 2007, the U.S. Consumer Product Safety Commission presented a report on its China Program Plan where Mattel was found to be one of the companies’ outsourcing from China whose toys were recalled from stores as they contained lethal doses of lead (Chen, 2007). This caused panic among the American people especially with the over reliance of outsourcing which presented the economy with numerous job cuts and rising unemployment rates. Influential politicians such as Barack Obama who was a presidential hopeful at the time called for a complete ban on all toys sourced from China (Donaldson, 1996).

The US government was indeed taken by surprise over the lack of ethical considerations and corporate social responsibility on the part of Mattel as well as a number of other American multinationals contracting parts or finished goods from mainland China (Carroll & Buchholtz, 2011).  The Chinese are known to compromise on quality given the chance and the laxity shown by the Mattel management was taken as appalling. Human rights of the American people are dear to them and the fact that an American company, especially an established brand name such as Mattel was basically a blow below the belt (Chen, 2007)). As much as Mattel had its management keen on realizing its business continuity strategies, it was unfortunate that the management showed laxity in it quality control and assurance department (Donaldson, 1996).  Those who led to such outcome should be brought to justice to ensure that such incidences do not occur in future.

References

Carroll, A. B. & Buchholtz, A. K. (2011). Business and Society: Ethics: Ethics, Sustainability, and Stakeholder Management. Mason, OH :Cengage Learning.

Chen, Y. A. (2007). A Study of the Chinese Toy Market: Does an Oligopsony Structure Force Manufacturers to Cut Costs? (Doctoral dissertation, University of Puget Sound).

Donaldson, T. (1996). Values in tension: Ethics away from home. Harvard Business Review, 74(5), Pp48–62.