- April 1, 2020
Ethical Framework to Decision-making Process
EthicalFramework to Decision-making Process
Allemployees (including the company executives) should be guided bymoral principles and ethical values when making decisions (Balc &Simionescu, 2012). The ability of executives to make ethicaldecisions can be influenced by their cognitive bias (Zeni, Buckley,Mumford & Griffith, 2015). Utilitarianism is one of theframeworks that can be used to address ethical dilemmas.Utilitarianism holds that decision makers should take alternativesthat maximize the happiness of the majority of the stakeholders (Choe& Min, 2011 and Marques, 2015). This presentation will discusshow the 8-step ethical decision making process can be applied whenaddressing a dilemma using the utilitarianism framework. Thepresentation will also guide the executives of Toyota on how toaddress the negative publicity associated with the production of carswith faulty acceleration system.
Slide3: Real Life Potential Ethical Dilemma
Anethical dilemma arises when there is a conflict between the interestof the company and the rest of the stakeholders (Withey, 2012).Toyota is a profit making company that released millions of cars intothe market without knowing that they could accelerate themselvessuddenly. The Congress was mandated to investigate the matter, but 40out of the 125 members of the relevant committee had receivedcampaign funds from Toyota (BBC Worldwide Americas, Inc., 2015).Toyota had also spent $ 25 million lobbying the federal government.The dilemma arises from the fact that Toyota has the opportunity tocover up the matter with the help of the congress and federalgovernment, but also has an obligation to inform and protect itscustomers.
Slide4: Steps Used To Evaluate the Dilemma Using the UtilitarianismFramework
Thedilemma facing the Toyota Company will be evaluated using the 8-stepdecision making process that was proposed by Trevico & Nelson(1995). The first step involves the gathering of facts, which leadsto the determination of laws, policies, and regulations that havebeen violated. Secondly, ethical issues that are relevant to thedilemma are defined. Third, all parties that are affected by a givenaction or decision are established. Fourth, the consequences ofactions on each of the stakeholders are identified. In the fifthstep, the obligations of different stakeholders and their reasons aredetermined. In the sixth step, decision makers consider theircharacter and integrity. Seven, decision makers engage in a creativethinking about the potential actions. Lastly, the decision makersshould check their actions against their intuitions.
Slide5: Gathering of Facts
Thefirst step, which involves the gathering of facts, is expected toreveal the ethical as well as the legal issues that pertain to thedilemma. In addition, the first step help decision makers identifythe key policies, laws, and regulations that were violated (Trevico &Nelson, 1995). In the case of Toyota Company, it is evident that thefirm violated its code of ethics. Chapter 2 of the code mandates thecompany to prevent disasters (Toyota Company, 2016). The release offaulty cars indicates that the company did not prevent potentialdisasters. In addition, the use of lobbying techniques to preventscrutiny by the government and the Congress indicates that Toyota didnot put its customers first as it states in the list of core values(Toyota Company, 2016).
Slide6: Definition of Ethical Issues
Thereare two major ethical issues in the dilemma that is facing Toyota.First, the company has been lobbying legislators and the federalgovernment (BWA, 2015). This limits the ability of the government andthe Congress to make objective decisions that will result in theprotection of consumers from faulty cars. Secondly, the executives ofToyota have decided to conceal the information about the cause of thesudden acceleration of the cars. This has created informationasymmetry between the company and other stakeholders. There are twoalternative courses of action. First, the executives of Toyota candecide to announce the cause of sudden acceleration and recall thefaulty cars. Secondly, the executives can choose to cover-up thematter and avoid the same fault in the newly manufactured cars.
Slide7: Identification of the Affected Parties
Therightness or the wrongness of an action should be based on its impacton the relevant stakeholders (McLean, 2016). The two alternativecourses of action that are proposed in the case of the dilemma facingToyota can affect many stakeholders, including the company, investorsor the shareholders, customers, employees, government, and themanagement. These external and internal stakeholders are affected indifferent ways. Some of them are affected positively while others areimpacted in a negative way. The utilitarianism framework will provideguidance on the determination of the impact of each alternative onthe happiness of these stakeholders. The executives should use thetheory to clear the gray areas and select the best course of action(Welker & Berardino, 2014).
Slide8: Identification of Consequences
Ethicaldecisions affect the stakeholders in different ways since all of themhave dissimilar interests (Albert, Reynolds & Turan, 2015). Thefirst course of action, the revelation of the cause of suddenacceleration, will have short-term and long-term consequences. Someof the key consequences include the loss of the shareholder wealthfollowing the recall of cars, damage on the company’s image, andthe loss of employment following the decline in profitability of theToyota. The long-term consequences of the action include an increasein the safety of customers since the faulty cars will be eliminatedfrom the market. Being honesty by acknowledging the past mistakeswill enhance the image of the organization in the long-run.
Slide9: Identification of Consequences (Cont.)
Thesecond course of action, which is the cover-up of the matter, willalso have long-term as well as short-term consequences. Toyota hasthe capacity to cover-up the matter by collaborating with the parties(including the federal government and the Congress) that havereceived financial benefits from the company in the past (BWA, 2015).However, this action will subject millions of customers to the riskof car accidents. The action will protect the image of the company inthe short-run. However, the image will be damaged in the long-runwhen customers realize that the company knew about the fault in thecars, but failed to take the correct actions before the occurrence offatal accidents.
Slide10: Identification of Obligations
Stakeholdersinvolved in a given dilemma can assume different obligation in theprocess of resolving it. However, there are stakeholders who bearmore responsibilities than others (Gubler, Kalmoe & Wood, 2015).In the case of Toyota’s dilemma, the company executives shouldassume two responsibilities. First, the executives should inform thecustomers about the cause of sudden acceleration of the cars.Secondly, the executives should announce the company’s plan ofaction that will ensure that faulty cars are not released into themarket in the future. Some of the key reasons used to justify theaforementioned obligations include the fact that the customers’safety is at stake and the image of the company has been damaged. Inaddition, the action will give Toyota an opportunity to resolve thenegative publicity by owning up its mistakes and making an actionplan to correct them.
Slide11: Character and Integrity
Characterand integrity are assessed by considering the possible reaction ofthe people who will hear about a given action (Trevico & Nelson,1995). A decision to reveal the cause of the sudden acceleration willplease several stakeholders, including the customers and thegovernment. This decision will also maximize the happiness of theshareholders in the long-run, since their wealth will increase whencustomers learn that Toyota is an honest company that put itscustomers ahead of profits. A decision to cover-up the matter willindicate that Toyota does not observe integrity. It will also showthat executives consider to the interests of the stakeholders.
Slide12: Creative Thinking and Checking the Intuition
Creativethinking about all potential actions helps the decision makersdiscover other solutions to the underlying dilemma (Trevico &Nelson, 1995). For example, creative thinking indicates that Toyota’sdilemma can be resolved by replacing the aggressive growth plan thatforced the company to sell faulty cars with realistic goals. Trainingof employees as well as executives and an increase in the strength ofinternal controls can result in the discovery of faults before thecars are released into the market. Intuition can also help decisionmakers in determining whether their actions are morally acceptable.For example, a decision to inform customers about the actual cause ofsudden acceleration and recall the cars is the most satisfying actionbecause it will maximize the majority of the stakeholders.
Slide13: Conclusion and Recommendations
Theutilitarianism approach is the most suitable framework that should beused in addressing the dilemma facing the Toyota Company. Thisapproach should help the executives make the decision that willmaximize the happiness of the majority of the stakeholders. Thealternative course of action that is selected should also causeminimum harm to the stakeholders compared to other options that areavailable. For example, the application of utilitarianism indicatesthat a decision to recall the cars will maximize the happiness ofmillions of customers who are at the risk of fatal accidents.
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