Report of a Current Ethical And/or Sustainability Issue in Business
How it works
Business organizations need to be ethical so as to achieve the sustainability of the businesses in the industry. For a business to be ethical it must do what is right and avoid what is wrong towards its stakeholders. When a business organization is ethical to its stakeholders it enhances the organization to have a competitive advantage and customer satisfaction which leads to more sales hence growth and sustainability of the organization.
Business can be ethical to its stakeholders. Some of the stakeholders that are addressed by ethical issues include ” the business should be ethical t its customers (Carroll, 2014, 250). For the business to be ethical to the customers it should provide the goods and services which are of good quality and quantity. The company should not terminate the supply of goods or provide inferior goods to the consumers. The products provided should have affordable prices for the customers to be able to buy conveniently. The business should not try to increase the prices anytime.
How it works
Provision of quality and quantity products by the business will enhance the company to sustain its business. This is because the company will have customer loyalty which will increase its competitive advantage hence its sustainability in the business it should act ethically towards the shareholders. The shareholders are the owners of the business and should be treated ethically. They can be ethically treated by the business making more sales so as to produce more goods and services which will lead to more sales hence maximizing the shareholder’s wealth (Ferrell, 2015, 95).
Nevertheless, the business should extent ethical concerns to the employees. The employees should be paid the right amount of the salary and at the right time. They should be provided with the good working environment where there is no discrimination of the workers. The employees should also be motivated on the merits. This will make them employees to work hard so as to enhance the growth of business hence its sustainability.
The suppliers of the business are other stakeholders which can be treated ethically. They can be ethically treated by paying them at the right time and the required amount of money (Carroll, 2014, 250). The ethical treatment of the shareholders will enhance the competitive advantage, customer satisfaction and all this will result in high profits which will enhance the growth of business hence its sustainability. This study will discuss one of the corporate scandal and how it affects the ethical and sustainability of the business.
Business organizations are being faced with so many scandals nowadays. Some scandals today are related to finances and pricing of the products by the organizations. For instance, in 2016 there was a corporate scandal in a company in the United States. The Mylan company which deals with EpiPen medicine tried to perform a scandal which is so-called the Mylan’s Epipen price gouging scandal the company made a decision to increase the price of the Epipen medicine by 400%. The medicine is used by the people suffering from allergic reactions from food allergies.
The increase in the price of the medicine was an abrupt activity. This made the families in the United States to struggle so as to afford the live-saving drug. The company was almost a monopoly controlling the supply of the Epipen medicine in almost all the parts of the United States. This made the consumers to experience a hard time in trying to make the survival after they were infected by the diseases.
The company chief executive officer was called to the congressional oversight committee so as to answer the questions of raising the price which was not a good decision. The publicity and the reputation of the company were affected. This made the company products to loss demand in the market leading to low sales in the organization. The consumers shifted from buying the company products to buying thee products of the competitors. The scandal made the attorney general to investigate whether or not the company committed an antitrust violation.
The company committed the Medicaid fraud in the pricing of the drugs. The scandal involved the management of the Mylan Company where it increased the price of the Epipen drugs in America. The high pricing affected the consumers negatively as they struggled to afford the medicine. This lead to poor publicity of the organization. The poor publicity affected the stock of the Epipen Company.
This led to low sales in the organization.Analysis The decision of the Mylan Company of rising the price led to unethical issues which affected the sustainability of the business. First, it was an unethical and unsustainable issue for the company to raise the price of the medicine which was crucial for the health of the customers. The business should provide affordable prices to the customers. This affected the health of customers and reduced the stock of the organization (Ferrell, 2015, 95).
Again, the shareholders were unethically affected by the action of the management. Their organization reputation was injured which affected the performance of their organization. This affected the shareholder’s goals of profit maximization. The decision of the company le to trust violation in the United States. This made the public to develop the bad reputation in the industry.The unethical decision of the Mylan Company affected the customers negatively. The consumers who managed to buy the product were exploited by the organization. T
his made them spend more money on medicine than it as expected. The budget of the consumers was affected by the rising price of the medicine making the life of the customers to be hard. The customers experienced both economic and physical hardship. They were physically affected since some did not afford the medicine hence suffering from pain. This was unethical since it brought pain instead of happiness to the customers. According to utilitarian theory, the decision is unethical if it leads to pain instead of happiness.
The customer lost the trust with the company this made the demand for the mylan medicine to drop (Ferrell, 2015, 95). The drop in sales contributed to fewer sales revenue hence the profit. This lead to less growth of the company hence interfering with the sustainability of the business. In addition, the unethical action affected the shareholders negatively. The shareholders are the owners of the business. The poor performance of the business affects the shareholder’s goals in the business. The shareholders have an objective of maximizing their wealth. The damage of reputation of the company led to the competition and less demand for EpiPen medicine in America. The sales declined below the normal.
The decline in sales led to a reduction of the profits by the organization. If the profits decreased the wealth of shareholders was not achieved hence affecting the shareholders negatively. The shareholders business was faced with the uncertainties which threatened its sustainability in future (CARROLL, 2018, 200). The shareholders are faced with the risk of losing the investment.The unethical decision of the Mylan company management affected the company employees negatively. The employees depend on the performance of the business so as to get paid their salaries and other benefits which are termed as fringe benefits. The company was, therefore, reducing the sales due to competition and damaged a reputation in the society.
This means that the profit has reduced. This will make the employees not to be paid their benefits and any other incentive which is attributed to performance in the organization. The employees are also at a risk of losing the job if the situation of the business will not revive after some period of time. Therefore unethical decisions in the organization can affect the employees as the stakeholders in the business (Carroll, 2014, 250). Nevertheless, the suppliers to the Mylan Company can be affected negatively if unethical decisions are made in the organization. The reduction of sales due to low demand of company’s medicine4 b leads to low supply and production of the medicine by the Mylan Company.
This will affect the volume of the low materials needed for the production of the medicine products in the company. This means the suppliers will supply a few the raw materials which will decline their business and amount of money received by the suppliers (CARROLL, 2018, 200). In some other cases, the suppliers are at risk of losing their tender if the business sustainability fails in the business process. The action of the unethical decision by one company is an advantage to the other competing partner. When the company makes an unethical decision, its reputation and demand for its product are affected negatively. The company loses its competitive advantage in the industry. This will make the competitor’s product to develop high demand in the market.
The high demand leads to more sales in the competing company. This will lead to the company making more profit hence its growth. The company should embrace on being ethical so as to maintain its competitive advantage in the industry (CRANE, 2018, 105). This will affect the sustainability of the business by the unethical company. Example, the competitors have competitive advantage over the Mylan Company. This has affected the sustainability of the business due to steep competition. The loss of business to the competitors will affect the goal of shareholders of wealth maximization. This is due to the reduction of the sales hence profit as the demand for the Epipen drugs will shift to the competitor’s products.
This will eventually affect the sustainability of the business in the industry. The company making the unethical decision affects the government and political expectation on the company. The organization should make sure it is ethical to its customers so that it can be on the right side of the law. When the company like Mylan makes an unethical decision it risks its business since legal consequences will follow. Example, the rising of the price by the Mylan Company made it possible for the attorney general to investigate the matter. This had a negative impact on the business as reputation was damaged (CARROLL, 2018, 200). It, in turn, affect the sustainability of the business organization in the industry.
The unethical acts of the Mylan Company affected the sustainability of the business in the industry. The company reputation was injured which affected its competitiveness in the industry. This made the demand of the company products to reduce in the country (CRANE, 2018, 105).The customers shifted to other suppliers of the Epipen hence affecting the sustainability of the business in the industry.
According to the case study, it is recommendable for the business to act ethically so as to sustain the operation of the organization in the industry. The company which embraces ethical issues enhances the benefit to its stakeholders which contributes to the business sustainability. The shareholders will be able to achieve their wealth maximization goals. The ethical organization has a good reputation and competitive advantage over the competitors. This will make the company produce goods and services which are highly demanded by the customers. Due to the more demand, more sales will be made by the organization. The more sales will contributes to profit maximization. The more the profit the more wealthily the shareholders will be. This will enhance the shareholders to achieve their goals. Therefore it is recommendable for the company to undertake the ethical decisions in all its undertakings. The ethical organization is recommendable in the business operations.
The consumers in an ethical business are provided with the quality products and quantity products. The quality products bring about customer satisfaction and competitive advantage which leads to sustained business operation in the industry. Again in the ethical business, it provides the consumers with the affordable products. It reduces the exploitation of the customers. It reduces suffering situations by the customers due to the provision of the affordable product where everyone can buy the products to satisfy their needs reducing the suffering. For the ethical businesses, they consider the customers when making decisions. They make decisions which will make the customer happy according to utilitarian theory.
This implies that they will not increase the prices in a manner that they will embrace the customers. This will enhance the sustainability of the business as the customer will remain inclined towards consuming the company’s products. Ethically behaving companies are the recommendable ones today. The suppliers in such businesses are paid the right amount of the money at the right time as per the tender description. The suppliers are also involved in the supply of the goods without termination. This is due to the reason that the ethical companies have products which are highly demanded by the customers. This will make them require more raw materials for manufacturing the products. This will make the business of supplying raw materials to be successful.
This, in turn, will enhance the shareholders of such companies to maximize their wealth. On the other hand, the ethical business will maintain its suppliers. This will make the company be in a position to produce goods and services which will be supplied to the customers hence business sustainability.The labor relations in the world is advocating for the ethical companies who will respect the ethical issues of their employees. The employees in the ethical business organization are treated ethically. They are provided with a good working environment, they are paid the reasonable salaries. This, in turn, enhances the employees to be motivated to work hard for the interest of the business, shareholders, and customers in whole.
This will lead to the business providing the quality and quantity goods and services. The consumers will develop the loyalty to the business organization. This will enhance more sales in the business organization. More sales indicate more profits hence the growth of the business organization. The services rendered by the company employees enables it to develop the competitive advantage which will contribute to the growth of the company hence enhancing the sustainability of the business organization.
The government and the political leaders are interested in an ethical business organization. For the business organization to act optimally in delivering for the interest of shareholders it should get support from the government and political leaders. Therefore an ethical business will enhance its organization reputation. The company that adheres to laws and regulations will have a high demand for the goods due to its good reputation. This will enhance more sales being made in the business organization. The more sales will lead to the growth of the business hence its sustainability of the business operations in the industry. According to the case study, the organization’s unethical decisions can affect the sustainability of the organization in the industry.
The customers and shareholders have been affected negatively by the decision of the chief executive officer of the Mylan Company. The decision led to struggling of the customers since they were unable to afford the new prices for the products. Shareholders who are the owners of the business have been affected negatively. The damage of company reputation and loss of competitiveness of the company has affected the profit made by the company. This contributed to low sales in an organization. The low sales lead to reduced profits which is contrary to goals of shareholders of maximizing the wealth. All these have contributed to the affection of the sustainability of the business in the industry.
The ethical issues should be addressed in the business organization. The corporation scandals have been affecting the application of the ethics in a business organization. The application of business organizations will achieve their sustainability in their operation through making issues core in their operations. The business organization should be ethical to shareholders by ensuring that their goals of achieving wealth maximization are achieved. This is achieved by making sure the organization makes more sales hence more profit. The business should be also ethical to its customers. This can be portrayed by the company or organization ensuring that quality and quantity products are supplied.
The organization can also supply affordable products to the customers. The prices should not be raised to the extent that customers cannot afford. The ethical behavior of the organization will enhance the sustainability of the businesses organization in the industry. The organization will enhance the business to achieve the competitive advantage. The ethical action will make the organization to make decisions which will make it be competitive in the organization. Again, embracing of the ethical issues in the organization will enable the production of goods and services which satisfy the customer needs. This will lead to the organization making more sales hence the profit and growth of the organization.
This will enhance the organization to sustain its business operations. The business organization should, therefore, struggle to be ethical when dealing with all the stakeholders such as customers, employees, shareholders, suppliers, and employees. This will make the organization to satisfy such stakeholders which will enhance competitive advantage hence the sustainability of business organization in the industry.
Source data references. fortune.com/2016/12/27/biggest-corporate-scandals-2016/ Academic
Carroll, A. and Buchholtz, A., 2014. Business and society: Ethics, sustainability, and stakeholder management. Nelson Education.
CARROLL, A. B. (2018). Business & society: ethics, sustainability, and stakeholder management
CRANE, A. (2016). Business ethics: managing corporate citizenship and sustainability in the age of globalization. Oxford University Press.
Ferrell, O.C. and Fraedrich, J., 2015. Business ethics: Ethical decision making & cases. Nelson Education.