Making ethical decisions in organizations is never an easy task. Therefore, companies constantly face with ethical dilemmas. The difficulty of such issues is brought forth by the fact that the price of doing good usually results in the company losing immediate benefits of what they are trading off. On the other hand, Ferrell, Fraedrich, and Ferrell affirm that failing perform ethically correct actions can be extremely harmful for the future survival of the organization as a scandal and loss of reputation can come about if the organization’s drawback is revealed. Toyota Motor Corporation is one of the most successful companies to ever act ethically by recalling its defective vehicles from the market hence going a long way to protect its consumers.
A positive example of a business organization whose leaders acted ethically when they encountered an ethical dilemma is Toyota Motor Corporation, an automotive manufacturer. The company discovered that some of its vehicles had defective power window switches. According to the company’s management, this issue could be attributed to the fact that the window switches could have been manufactured with insufficient lubricant grease. Such a shortcoming could pose danger to customers who bought the vehicles as the window switches could short circuit, overheat, and melt consequently causing a fire. The researcher further report about 11 incidents where the switches burned and led the company to an ethical dilemma. On the one hand, the vehicles which had already been bought by customers could get in accidents that might cost the lives of their customers. On the other hand, if the company would recall the vehicles in order to fix the problem, it may suffer a large financial loss and other negative effects that come with recalling a product. After many meetings and deliberation on the situation at hand, the company’s management made the ethical decision of issuing a recall of a total of 6.5 million vehicles around the world. The recall targeted vehicles manufactured during January 2005 to August 2006 and August 2008 to December 2010.
In order to reach the aforementioned decision, the organizational leadership applied an ethical decision making framework to guide the process. An ethical decision making framework is an effective tool that organizations can use to make ethical decisions. In particular, Toyota used IDEA as an organizational ethical decision framework. The model is composed of four steps which the company followed carefully before reaching its decision. The first step is identification of the facts. This factor involved the company’s leadership investigating the situation to understand what caused the defects in the window switches. Organizational leadership has a large role to play in guiding the organization in reaching ethical decisions. They investigated how much damage was caused so far. As a result, 11 cases were identified. After successfully completing of this step, the company embarked on the second step, namely, determining the relevant ethical principles. The leadership of the corporation discussed the main values and principles the company held. To further identify this values and principles, they explored the nature of the listed set of beliefs. Moreover, considerable relative weights were assigned to the values and principles to help the management reach a decision in a fast and ethical manner. Exploring the available options was the next step. In this respect, the Toyota leadership brainstormed and reflected on a number of potential alternatives for the company’s course of action. It is advisable for decision-makers to strive to make at least 3 options in this case. After exploring the strengths and weaknesses of each option, the automotive manufacturer undertook the final step, namely, acting. In this regard, the company took on the most ethically justifiable option that was identified in the third step. To be more precise, the option that was recommended was recalling the vehicles sold in the market during the period when the defect was identified. An implementation plan for the decision was then decided.
Based on the automotive maker’s decision to recall its vehicles manufactured in the specified period, both positive and negative consequences followed. According to the positive outcomes of the company’s decision, the corporation was able to save the lives of many people around the world. Another significant factor was that the company could enhance its relationship with its customers while, at the same time, augment its reputation and public image. Though many buyers were not happy about being forced to return their vehicles due to the shortcomings in design, the customers were nonetheless pleased with the company’s strategy. When organizations make ethical decisions that are in the best interest of the public, they are usually rewarded with public loyalty.
Despite the above positive outcome of its decision, the company was not completely spared of the negativity that comes with recalling a product from the market. In the first place, Toyota suffered a great challenge after making the decision to recall its vehicles. There was also the negative consequence of brand degradation after the information disclosure that the recall was due to defects that threatened consumers’ life. Finally, the company encountered the misunderstanding with its shareholders losing confidence in it and to small period the stock prices of the corporation slightly plummeted before rising again. The company had to make a decision between gaining profits by keeping the vehicles in the market and foregoing profit by pulling the vehicles out of the market. A tradeoff was made to forego profit.
In conclusion, ethical dilemmas are a common occurrence for organizations as in one time or another they must prepare themselves to deal with them. Thus, in doing so, it is wise to use a verified ethical decision-making framework, or plan to apply so as to make the best possible ethical decision. It is imperative to note that, when making ethical decisions, the outcome may or may not be positive. In any case, it is the best for an organization to anticipate the most likely outcome and prepare for it.
About the Author: Olivia Green is a writer and a blogger of the writing company. She enjoys reading composing her ideas in her blog, where she shares her opinion concerning certain phenomena. You may find more useful Olivia's articles at the https://primeessays.com