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Sustainable management features

SCENARIO 1

Introduction

Ethical behaviour is becoming more essential in social organisations especially due to the globalisation and diversity. Ethical behaviour is characterised by fairness and equity, and honesty in interpersonal, academic and professional activities (Gray, 2010). Ethical behaviour allows cohesion within an organisation because members have dignity, respects diversity, and rights amongst themselves. Ethics are perceptions beliefs and expectations that the society carries and expects individuals, business organizations and different groups to follow and adhere to in their daily activities and operations. This part will evaluate how the management of BASF can use ethical approaches and philosophies to decide on whether or not the company should go ahead and build its factory at Beaufort Country Park. This site has been encountered with controversial views where by some people welcome the factory to be build there while others are opposed to it. Those who welcome the factory view it as a potential employer to thousands of the poor residents in the community. Those who oppose to it view it as a pollutant and as interference tourism activities since it is a chemical manufacturing company and it might dump waste products in the near-by river (Walton & Duska, 2008).

Though the company sees this as a great opportunity for the company’s growth, it is concerned with the quality of the environment especially because the management is aware that maximum. This has become an issue that demands application of moral and ethical philosophies. This paper will therefore evaluate the advantages and disadvantages of deontology and discourse ethics in order to evaluate how they could be used by the management of BASF in making a decision as to whether to go ahead with the process of building the factory at the site.

Deontological Ethics

Deontological theory of ethics was developed by Immanuel Kant, and thus the name Kantianism. The theory places emphasis on the relationship between duty and the morality of human actions (Misselbrook, 2013). Kantianism focuses on ethics and logic, and works on the principle that one should act only on the principle which one could be willing to have others act upon. In explaining the theory, Kant states that actions are judged as good or bad, not by their consequences but the motive of the person that engages in the action. Therefore, unlike ethical egoism, Kantianism requires that the highest good done by an individual must be good in itself and without qualification (Rachels, 2012). An action is regarded as good in itself when it is intrinsically good if a situation cannot be made ethically worse with the addition of that thing.

Advantages of Deontology

Deontology provides framework through which individuals should act. This implies that an organisation can use deontology, as a universal maxim, to implement initiatives within a society. Within deontology, it is easy to establish whether an action is morally right and can be applied universally (Scott, 2006)

Another merit stems from the fact that deontology allows people to engage in actions that can be morally accepted universally, and maintain consistency in such actions. Deontology allows people to engage in actions in the same manner over and over so long as, in so doing, they meet their self-imposed obligations (Fisher, Lovell and Valero-Silva, 2013). However, individuals who engage in such actions often do so if the beneficiary of such an action is friend, relative or an acquaintance.

Disadvantages of Deontology

            Other that positive attributes to deontological ethics stated in the preceding section, there are several drawbacks that challenge the applicability of this theory as a moral maxim. One significant drawback to the theory is known as the ‘paradox of deontological constraints’. Deontology allows an individual to violate a duty or someone’s right in order to protect the duty and rights of other individuals (Fisher, Lovell and Valero-Silva, 2013). For instance, if violating the right of one individual would result into saving one thousand people, then deontology justifies such an action. If deontology can allow such an action, then it is not a good maximum to be applied in a social set up (Fisher and Lovell, 2009).

Another drawback to this theory is that duties or rights may conflict (Snoeyenbos, Almeder& Humber, 2001). If a person has a right to, say water, and another person has a right to land, then the person having right to water is justified to extract water from another person’s land, and thus violating his right to land. Therefore, as premised by Aboodi, Borer and Enoch (2008), deontology does not provide an appropriate way through which conflicts in duties and rights can be dealt with.

Advantages and Disadvantages of Deontology to BASF

BASF intends to invest in a new chemical plant in South Carolina in order to take advantage of the operational costs.  However, there is a conflict in the decisions that the management will make because the investment strategy has both good tidings for the community and drawbacks to other members within the very community. Among the advantages of the project would be creation of employment opportunities for the local population, which has been characterised by poor living standards and low per capita. In addition, the company will benefit from productive efficiencies and low costs of discharging waste products. Therefore, these are the major economic viability of the project, as it will result into financial stability for the company as well as economic growth for the local community.

BASF manager can use the deontological ethics theory to navigate around the situation. The theory provides the manager or any other member of the society should stick to the set moral standards without deviation. No matter how good an action or a business opportunity might be, it should not interfere with the environment and other living things. Setting the factory at Beaufort Country Park will definitely interfere with the environment since the management of BASF said they intent to dump chemicals and waste products at a nearby river. In addition, they also agreed to the fact that they will not be able to achieve maximum pollution control since it is extremely expensive and it will not give business value for its money. Therefore according to deontology, the company should do what is right by not building the factory and stick to moral rules and guidelines in the society (Wetherell, Taylor, and Yates, 2001).

Discourse Ethics

The principles of discourse ethics were first developed by Jurgen Habermas (1996). In its simplest form, discourse ethics outlines that the effortless force of the better argument prevails. This principle was re-defined by Hans-Georg, who stated that what other people are saying could be right. Discourse ethics is leveraged on three principles: cognitive, Justice vs. Good, and Universalism. According to the cognitive principle, even moral problems social problem can be solved in a cognitive and rational way (Fisher, Lovell and Valero-Silva, 2013). This implies that there is no social problem that cannot be solved rationally. According to the second presumption, questions of morality are defined as questions of morality are defined as questions of justifying norms. Moral questions arise in contexts of life-world, and as such, our beliefs and decisions are influenced by habits, values and prejudices. Lastly, universalism is an essential aspect of the discourse theory. Harbemas uses Kantian version of universalism, but reformulates it in terms of inter-subjectivity (Fisher and Lovell, 2009).

Advantages of Discourse Theory

The main advantage of the discourse theory is that the theory provides avenues that can be used in a society to make decisions in situations characterised by impasses, and thus opening the door al way. All that facts of the case are often placed on the table for discussion. This allows all parties to negotiations to meet a solution that befits everyone involved in the negotiations (Wetherell, Taylor, and Yates, 2001).

Secondly, discourse ethics can be applied in social a problem that appears to have no ready solutions. The theory provides that when a social dilemma is faced, the parties involved gather around and try to talk a way through (Fisher, Lovell and Valero-Silva, 2013).  However, the theory states that such discussion should be constrained by two basic limits: the conversation must be civil and reasonable, and the goal must be a peaceful and have a consensual resolution (Lozano, 2011).

Disadvantages of Discourse Ethics

            Discourse ethics has two main drawbacks that limit its application. The first disadvantage stems from the merit that everything is placed on the table (Aboodi, Borer and Enoch, 2008). As such, there is a chance that negotiations could result into potentially ugly solutions especially is what as morally acceptable has a broad scope. For instance, international bribery may be justified by this theory because colossal money give may be vied as a tip (Hanekamp, 2007).

The other advantage of discourse ethics is that every ethical dilemma faced should have facts and figures placed on table a fresh (Habermas, 2013). The basic idea of discourse ethics is to clear the dilemma at hand and take new resolutions. As such, anyone facing a number of ethical dilemmas will be involved in a constant process of clearing new issues and beginning others.

Using Discourse to Solve the Dilemma faced by BASF

            The project that BASF intends to undertake comes with moral issues that hinder its advancement. According to discourse there is no a set or any normality in solving an ethical issue or dilemma faced by an organization. Every situation is unique and the people or businesses involved should come under one table and lay everything clear, discuss and reach an agreed solution. BASF can use this philosophy to resolve this ethical dilemma by involving all the stakeholders in order to reach a decision on whether or not to build the factory at Beaufort Country Park. While applying the concept of discourse ethics philosophy, BASF should identify all the stakeholders and involve them through a discussion. The second step should be to establish the goal of the discourse and in this case is to reach at a peaceful solution agreed by every one or the majority. Discourse involves creating a problem solving scenario, developing alternative through brainstorming and selecting the best alternative to resolve the ethical or moral issue.  The action or solution that is agreed by all parties after being given the opportunity to talk, prose, reason and be listened is referred to as the most ethical action according to discourse. According to discourse, there is no fixed solution and thus BASF can build or fail to build its factory in Beaufort Country Park depending on what will be agreed by the conflicting parties.

Conclusion

Ethical considerations in any organization are important because lack of doing the right thing can lead to business failure. Therefore, although profitability is the ultimate goal for any organisation founded on profit-generating grounds, organisations should ensure that they attains highest level of business ethics and morality by doing what is right. The organizations should choose what is right by using either deontology or discourse philosophy ethics. Organisations should develop and implement effective strategies that focus on increasing profitability, welfare of its stakeholders and positive contribution to the environment while observing ethics and moral duties in order to achieve sustainability in the modern business environment that puts much emphasize on ethics, fair competition and corporate social responsibility. BASF should thus use the ethical theories discussed in this essay to do what is ethically right regarding its decision to build its factory in the area; which has been met with mixed reactions from different groups of people. The firm should seek to achieve profits by applying either discourse or deontological philosophies of ethics to make the right decisions that take human life, environmental protection and the views of the involved stakeholders into considerations.

 SCENARIO 2

Introduction

The organisation concerned is a global outfit that provides loans facilities to individual for their personal development. According to the new business model, the ‘bad risk’ segments of the market are targeted for loans because they experience difficulties in accessing loans from financial institutions. The organization is doing good because it advances loans to a group that would otherwise not be considered by any other bank for loan due to the high risk of payment default associated with this group of loan applicants. Unlike other market segment, this segment is characterised by high risks and high chances of default. Nonetheless, the organisation has decided to extend the credit facilities to the segment because of the mutual benefit that will accrue from both the clients and the business.

The business is offering its loans at an interest rate of 7.5% which is a percentage higher than the normal rate charged to client with good credit rating by 6%. Although is a high interest rate considering the rate charged on clients having good credit ratings, this is justified because of the credit rating of this segment of the market. Indeed, one of the clients charged such an interest rate has approached me with issues of being unable to repay his loans due to financial difficulties. This is the key reason why the high interest rate was pegged on these clients: the inability to repay the loans promptly. This is a situation which requires to be handled with high standards of morality and code of conduct according to bank and financial institutions (Aboodi, Borer and Enoch, 2008). Being the banker handling the client’s case, I have some specific moral obligations to my bank, profession and to the client and thus I have to choose my actions in the most ethical manner applicable to this situation.

Application of utilitarian and theological theories of ethics in this situation

According to the industry code of ethics, my company has the responsibility of disclosing all the relevant information to clients when advancing loan facilities. However, the company’s requirements are that strict procedures have to be followed when advising clients on their loan status, financial position and the position of the company concerning their applications and repayments. Therefore, I am bound to follow company procedure when dealing with these clients. The intent of these procedures, according to the company, is to minimize the chances of default and prolong their repayment periods. Dealing with this situation requires application of ethical theories. For my case, I will use teleological and utilitarianism theories to navigate around this issue.

Teleological theory

Teleological theory presents a moral system that focuses on the ends or consequences of an action (Fisher, Lovell and Valero-Silva, 2013). Therefore, when making decisions, teleological ethics requires one to determine the end results to that set of decisions before engagement.  This implies that when one makes decisions that would result in correct consequences, then one is acting morally. However, making choices that would result in bad outcomes, then that is an immoral act (Braddon-Mitchell and Jackson, 1997). There are various examples of teleological ethics, and the one that best fits the situation described above is ethical egoism.

Ethical egoism is supported by the principle that it is necessary for one to engage in action that maximize one’s self-interest (Fisher, Lovell and Valero-Silva, 2013). Proponents of the egoism theory of ethics include Adam Smith and A Rand. According to the ethical theory egoism, what makes something wrong or right, good or bad is influenced by whether it satisfies the desires of an individual (Gray, 2010). This implies that so long as a need or desire to an individual will be satisfied, then the person is justified to engage in an action. Ethical egoism is likely to result into centrism since it is unlikely the egoism can generate standard duties to others. As such, ethical egoism is quite different from other ethical theories.

An ethical egoist ranks duties prioritising those that bring the highest payoff (Gray, 2010). This is unlike other theories that determine the importance of an action based on impacts on other individuals. For instance, according to egoism theory, an individual would rather help repair a local Opera hall than engaging in famine relief in Africa. This is because assisting in the repair of a local Opera hall would result into more satisfaction as the outcomes benefit the individual. Contrary, assisting humanitarian organisation to deal with famine situation in Africa would have results benefiting other individuals than the person, although other social theories such as utilitarianism encourage the latter.

Therefore, the situation presented above is mitigated using teleological theory of egoism. This theory justifies the measures undertaken by the management to conceal some terms of the loan contact. In the first place, our company charges 7.5% interest rate on the loans advanced to customers from the high risk segment. According to financial theory, a higher risk is associated with higher returns. Therefore, the company has to be compensated for the risk it takes when advancing loan facility to clients with high risk of default. Charging an interest rate that is almost ten times lower than the next available alternative to the client is considered morally right, according to the teleological theory (Rachels, 2012). Therefore, the requirement by the company to inform clients that charging a 7.5 percent interest rate is a social good is actually justified. Clients should be aware of their high default risk, and thus should not expect to have a similar interest rate to those that have good credit rating.

Similarly, it is morally right for the company to conceal the information regarding debt Collection Company to the client. While applying for the loans, the clients should not have intention to default the loans. Outsourcing the debt collection process to another firm is in the best interest of the company since it intends to secure its financial resources. The concerns that the client might go to loan sharks is not a better solution because the products we offer have better terms than loan sharks. Therefore, we can re-negotiate with the clients on the repayment schedule so that more time is allowed to repay the loans. This will ensure that we retain the clients and reclaim the outstanding debts (In Fayolle & In Redford, 2014).

Utilitarian theory

Another category of ethics that could be used in dealing with this situation is the utilitarianism ethics. Utilitarianism is an ethical theory that was developed by Jeremy Bentham and endorsed by John Stuart Mill (Fisher, Lovell and Valero-Silva, 2013). The theory postulates that actions are considered as right if they promote happiness in the society, and wrong if they tend to provide the reverse of happiness. Mill states that what makes something good or bad is whether it produces the greatest amount of happiness, or lack of pain, to the largest number of people. Therefore, the basic principle for the theory is the greatest happiness principle. According to Stuart Mill (2007), happiness is pleasure and absence of pain. Utilitarianism, as a practical theory of ethics, produces outcomes that are in line with the natural sentiments originating from human’s social nature. This means that if utilitarianism was adopted as a universal ethical code, then people would internalise these standards as moral binding. According to Reconsidered (1997), the primary domain actions for the utilitarianism theory is the question what should I do? This question is guided by the sources of ethical values such as human happiness, pleasures of preferences, and the consequences of actions. The idea of utilitarianism is closely related with the philosophy of consequentialism (Fisher, Lovell and Valero-Silva, 2013). Just like the utilitarianism theory, consequentialism outlines that the ethical value of actions committed by an individual should be judged by the consequences of such actions. Therefore, an action will be deemed as useful if it is committed for the good of more people (Fernando, 2010).

The procedure undertaken by the company when processing the applications made by clients is considered as ethically upright. Many clients do not like being taken through lengthy processes of loan application and verification. It is a generally known fact that clients in this market segment have poor credit rating and screening their credit worthiness will bring the reverse of happiness to them, and thus what utilitarianism criticises (Rehg, 2007). Conversely, providing the loans to clients within the minimal tie possible (5-minute interview) is expected to provide happiness to the general community. Clients come to our institution because of the lower interest rates charged to their loans relative to what the loan sharks charge. Utilitarianism allows the company to provide such facilities to the community, and thus increase happiness. The option to seek services from loan sharks is the opposite of happiness, because the loans provided by such individual are exorbitant and have stricter repayment terms that what our company offers (Thyssen, 2009).

Conclusion

Ethical considerations are important in this case and thus as an employee of the bank i should choose the most ethical action considering the bank’s needs and policies as well as the clients by focusing on teleological and utilitarianism theories of ethics, I find it justified to follow the procedures and rules of the company in providing the loans and following up on their repayment. It is not morally wrong act to follow strategies that maximises the value of a business, so long as the practice is within the industry requirements. Offering the loans at 7.5% interest is justified by the fact that clients taking these loans have higher default risk exposure. In addition, the alternative source of financing is from loan sharks, who charge half the amount loaned as interest rates, with limited repayment arrangements. Therefore, teleology provides that one should engage in an action that maximizes one’s self interest. Concealing some terms to loan contract would maximize the interest of the business by increasing the absorption of such loans. On the other hand, utilitarianism allows the organisation to provide these loans with minimal processing requirements because the clients expected to take such loans have poor credit ratings. Making loans accessible to such individuals is considered as an action that will increase happiness to the people targeted.

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