Organizational Legal & Ethical Framework: Critical for Success - Research Paper

Paper Type:  Research paper
Pages:  7
Wordcount:  1888 Words
Date:  2023-04-12


In organizations, legal and ethical issues are interlinked very closely. The legal framework of a company depends on the morals and ethical rules of society. An organization's level of interest is determined by the ethical and legal frameworks set out by the community and country at large. Therefore, a business must abide by the legal and social norms that link together to control any operations taking place in the organization. Legislations that are flexible to allow the occurrence of unethical practices by a business should be judged prudently. Many situations give a company the chance to undertake unethical activities. The research paper examines the legal and ethical issue in a chosen company to show the ethical dilemma in making decisions by the management, how Milton Friedman's philosophy may have influenced the leadership of the company and an alternative ethical framework that the company could have used in the situation and an application of three legal topics associated with the issue.

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The Chosen Company

The Ford Motor Company is one of the businesses that have experienced loopholes in its operations to allow happening of unethical practices that compromise the legal and ethical responsibility of the company towards the society and nation as a whole. The legal and ethical issue in Ford Motor Company has driven the company to compromise its products to the customers. The ethical dilemma faced by the company will be discussed in a way that reveals the way the management made decisions by weighing the costs and benefits of taking one action over another. An alternative ethical framework to that of Milton Friedman's free-market ethics will be discussed concerning the ethical dilemma in the Ford Motor Company. Additional three legal topics concerning the Ford Motor Company will also be addressed.

Ethical Dilemma in Ford Motor Company

An ethical dilemma is a conflict between available alternatives that one choice must be made over another, and the alternative is not the best option. Making one choice over another will compromise the benefits of the other. Ford Motor Company faces an ethical issue of choosing between spending more than what the company is gaining from the consumers after producing the Ford Pinto car model. Ford Motor Company decided to build the Ford Pinto car with the management having full knowledge that the car would end into an explosion when the rear-end collides with the gas tank. It was as a result of failing to install a plastic block in front of the gas tank whose cost is only $13 (Case Study: Ford's Pinto: Collective Welfare versus Rights and Freedom, 2014). In an internal memo released by the Ford management, the company made estimations that it would cost more lives of about 200 lives every year when the plastic block is not installed in front of the gas tank that would only cost the company $13. The cost of each life would further cost the company $200,000, and that would be more than what would be used to install the blocks in every car. Such costs are more than the price of saving the 200 lives every year.

The company concluded that more of Pinto cars would be produced without the plastic blocks at the expense of saving 200 lives each year. It means that Ford pinto cars will contribute to losing more lives every year, a decision that was made based on the company's policy, which seems to be very wrong when considering matters of ethics. It was the right thing as per the organization's system. It was unethical not considering the many lives to be lost at the end due to uninstalled plastic blocks in front of the gas tanks. The management had the choice of considering the impact of the decision in the broader society. The government needed to stop the production of the Ford pinto model of a car by the company as it would cost more lives for the nation when compared to the amount that the company would incur in installing the plastic blocks. The benefit of the decision was only for the Ford Motor Company at the expense of losing many lives all over the world every year (Washington, 2020). Instead of recalling the safety retrofits for the car, the cost-benefit analysis by the management revealed it would be cheaper to pay off any possible lawsuits that will occur as a result of crash victims and undertake in and out of the court settlements when the accidents take place.

How Milton Friedman's Philosophy May have Influenced the Company Leadership

Milton Friedman's philosophy advocates from the free market for businesses in the United States (Wilcke, 2004). According to Milton, companies are free to choose their activities that promote profitability (Friedman & Rose, 1980). The view compromised the aspect of business-ethics among organizations and the best choice on course of action when critical decisions affecting the society must be made. Milton Friedman argued that the social responsibility of an organization is increasing its profits (Friedman, 1970). The business ethical standard of the free-market is direct to promote even activities that compromise morals to be undertaken in companies. The organization is regarded as having the right to seek profits based on its set policies and principles, being private property, individual freedom, and voluntary exchange (Wilcke, 2004).

Milton Friedman's philosophy that advocates for free-market ethics and freedom of choice for businesses can be said to have influenced the leadership of the company. At Ford Motor Company, the management behavior of choosing an action that will cost the lives of many citizens all over the world and the business gaining more profits is an unethical decision. Strother (2018) described the Ford Pinto case as one where the management of the company regarded money as more important than saving the lives of people. The Pinto model of car would compete effectively in the motor industry with other brands such as Volkswagen and Toyota. Lee Iacocca, the president of Ford Motor Company, only considered the significant changes that the Pinto model of car would bring to the automotive sector in America (Wilcke, 2004).

According to Shaw (2005), the new Ford Pinto car model would provide riders with thirty-eight highway miles for each gallon of gasoline consumed; weigh only 2000 pounds and cost at a lower price than other similar brands at $2000. However, the high speed and low-cost vehicle would be manufactured and sold to users with a fatal defect. There was a 20 mph rear-end collision that collapsed the gas tank, and the fuel will spill to cause the ignition of the car. The doors of the car would not open when an accident occurs, and that means people would be trapped and die inside the vehicle (Washington, 2020). The decision of the management at Ford Motor Company may have been influenced by the limited view of Milton Friedman's corporate social responsibility that does not consider the effect of business activities on the environment and safety of the users of the manufactured products. Milton Friedman would have approved the decision of the management at Ford Motor Company since it promoted the organization's profitability when considering the view of free-market ethics. The interests of the shareholders in the company take precedence than that of other stakeholders.

When looking at the concept of corporate social responsibility, businesses have a duty towards the environment, the stakeholders, and the broader society (Fordham & Robinson, 2018). The management of Ford Motor Corporation recognized only the shareholders in the decision to manufacture the faulty Pinto car models. The interests of the broader society and the environment were left out of consideration. It was an unethical decision and business practice of the management at Ford Motor Corporation not to incorporate the CSR requirements when manufacturing the Pinto car model. Allen and Craig (2016) stated that organizations should consider the impact of their practices on climate change and the effect on the business in the long run. The Ford Motor Corporation did not oversee the impact of fuel spilling on the ground, gas spreading in the air, and ignition of the car to kill the people inside. The impact of the decision was detrimental to the environment and the broader society.

An Alternative Ethical Framework to Milton Friedman's Free Market Ethics

An alternative ethical framework is the PLUS ethical decision-making model. The PLUS ethical decision-making model is based on achieving four main principles of ethics in the business, including self-interest, honesty, rationality, and justice by the management of a company. The managers apply reasoning and intuition in the formation and practice of moral principles in all daily activities of the organization whenever a question of ethics arises. The PLUS gives the management four ethical filters when making decisions, including policies, legal, universal, and self (, 2020). In application, the managers use these values when making choices of the potential impact on the profitability of the company. The P is the policies and procedures followed in decision-making, L is the legal aspects considered to avoid a violation, U is the universal values and principles defined for the company and its operations that should be in tune with the core values as well as the corporate culture and S is a consideration of the self whereby fairness and justice standards should be met when making an ethical decision for a company (The Ethics Resource Center, n.d). The four components of the model have an ethical impact that is substantial to make correct decisions for the business.

There are seven steps in the PLUS ethical decision-making model, including a definition of the problem, seeking the necessary help, guidance and support, identifying alternatives, evaluating the other options, making the decision, implementing the resolution, and evaluating the decision (Ethics.or, 2020). The four PLUS filters apply in the first, fourth, and seventh steps of the ethical decision-making model. For the Ford Motor Corporation, the PLUS would have been a useful model to assist the management in making a sound decision that is ethical and beneficial to the company in the long run.

When considering the PLUS ethical decision-making model, the management at Ford Motor Company would have defined the problem in a way that does not violate the four considerations of the PLUS ethical framework. The management at Ford could have used the PLUS ethical framework to seek assistance, guidance, and support regarding the problem of addressing the faulty gas tank. For instance, by identifying available alternatives, the CEO would have obtained a better of the problem and how to solve it on time. Furthermore, an evaluation of the available options would have resulted in choosing the best choice among the possible solutions. When identifying the available alternatives, the PLUS framework would have assisted in ensuring that there are no violations of the PLUS filters, the chosen option does not create a new PLUS, and the ethical trade-offs are acceptable. The decision made, and implemented is evaluated based on the outcomes and no further PLUS considerations for addressing.

By using the PLUS ethical framework, the Ford Management could not exhaust all measures to ensure the company action achieved the corporate social responsibility needs to the environment, stakeholders, and the broader society. The takeaway lesson from the situation of Ford Motor Company for business managers is that a focus on achieving profits is not the ultimate goal for any business. When a company fails to consider the corporate social responsibility and act ethically, then, the decisions are detrimental to the company in th...

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