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Ethical Problems in Organizations

Ethical Problems in Organizations

Ethical Problems in Organizations


There are six elements that have caused ethical issues in certain industries that pertains to conflict of interests, advertisement, product safety, shareholders and other parts of the community. In this paper we discuss different solutions on how the conflict of interests between companies has resulted from smaller companies being pressured to offering their products to larger companies. This paper is based on the solutions that can be used to overcome product safety issues that have been based on the issues where companies have difficulty determining whether the products are safe for customers and alternatives that could be used to determine whether food products in the industry are safe in order for the product to be successful. A company’s advertisements experienced issues where customers are manipulated by employees through advertising contaminated water to make them think that the spring water is clear. r. Many issues have also involved issues that are faced by shareholders and how the companies can protect significant stakeholder groups (Levin & Nelson, 2017).

Case 1-Conflict of Interest

Conflict of interest is a large concern in the reformation in the healthcare industries. The government’s healthcare industry has an excellent reputation. However, Wall Street is not happy about the government’s idea of reforming the healthcare system since the health care industry’s stock has decreased by 30 percent. People are in doubt about how important the idea is for combining big and small healthcare companies. As a result of this, small healthcare industries are being pressured to recommend their health products by large healthcare industries ( Zetlin, 2018).

The main issue is that there is not enough stakeholders to maintain a responsible healthcare industry, to make sure health care products are meeting governmental rules, specifications and regulations (Trevino & Nelson, 2017). In order to overcome this issue, shareholders should help to maintain an excellent reputation, trust among the health care industries to prevent the loss of stock price value, protect funds, to seek ways to help the industry strive and to give proper service to customers (Trevino & Nelson, 2017). The other thing that I would consider would be determining whether the customers are willing to purchase health care products. Businesses could also question themselves on whether the customers are willing to purchase the health care products from their industry and how much it will influence other businesses that are being pressured to selling their products to larger healthcare industries. (Trevino & Nelson).

As an employee, my obligations would be to report issues that occur between the small a big company during the reformation. The employees would be responsible for making sure that the operation in the companies are meeting government rules, and regulations and societal standards (Rodriguez-Dominguez, Gallace-Avarez, Sanchez, 2009). The provisions that I would include in the ethics codes for a little company would be to educate employees by developing a guide that explains future behavior, strategies for employees to increase social responsibility, improve in management and ethical culture in the healthcare industry. If I were working in a healthcare industry, I would try to emphasize the importance of an employee’s confidentiality, work-place safety, health and to make sure that employees are following the laws in order to develop responsible behavior (Rodriguez-Dominguez, Gallegao-Avarez, Garcia-Sanchez, 2009). The other key element that I would consider would be

As a senior executive in charged with bringing a little company into the corporate fold, I would search to identify if there are ethical components to this issue (Kelley & Elm, 2003). It would make it easier for me to see if the issue is being led by the decisions that are being made by certain organizations, private sector firms, and between other employees and customers (Kelley & Elm, 2003). Private sectors would be a great source for both companies to investigate as a result of being able to offer products that are exchanged between other companies and are able to expose any goals or achievements made by consumers or employees (Kelley & Elm, 2003).

Case 2-Product Safety

Food industries have had issues with determining whether their food products are safe. Employees who work in the food industry labs have complained that the products have caused dizziness in many people who have tried their food. However, some results from the lab does not indicate whether or not the food will have harmful effects on humans (Trevino & Nelson, 2017). Most labels are misleading by failing to state the facts about the ingredients of the food without considering the consequences that may result from the uses of harmful substances in foods. My stakeholders in this situation is any employee in the position would be the consumers and the researchers. In this type of situation, I have the responsibility to offer stakeholders is moral decisions about determining problems that are related to food safety (“Stakeholders in the Food Regulatory,” 2016).
The main issue is that some of the facts on the labels and assumptions that are made by companies about the food products are misleading to customers. In order to make products safer and information more precise, I would consider labeling the ingredients of the product to make employees more aware of the possible harmful effects that the ingredients could have on a customer’s health (Merill, 2016). If none of these strategies work, I would be to list the facts on the labels to prevent customers from being misled (Merrill, 2016). I would test the food to see if it is safe and consider the consequences from receiving many complaints from customers about the reactions that they have from the food, such as dizziness. If I found that the products causes dizziness, I would reject the product (Trevino & Nelson, 2017). The other solution would be to communicate the issue to the employees, employers and to the public. They should make employees aware that they could gain a lot of support to build efficient requirements, how food production should be handled, (Modin & Harson, 2011).
I would check to see that all product, ingredients and materials meet government regulations. As a manager, I would be responsible for making sure that notifications are included on the labels warning customers of the possible harm effects that that the ingredients could have on the customer (Trevino & Nelson, 2017). The place where the food is made also matters to those who are willing to make decisions based on the food that they are willing to buy depending on the information of the products (Streiffer & Rubell). If lab results are inaccurate, customers, I would educate them on how to see if the ingredients in the food are safe (Streiffer & Rubell).

Case 3-Advertisement

The issue in advertisement is based on the false advertisements where the industries have manipulated people to buying pure spring water that was actually contaminated water. As a result of this, it has caused people to suffer from significant health issues and has cost a loss of revenue. The stakeholder’s who are involved in the advertising issues are consumers and managers. The case suggests that consumers health is at risk from drinking contaminated water. The main issue is that more consumers would become involved and stakeholder groups would have more to lose than others.

This issue could cause the company could lose customers, profit and there would be less positive responses from consumers based on the advertisements of the product (Trevino & Nelson, 2017). The best option that I would choose would be to have customers to share their concerns that they have about the product through phone, letter, e-mail or to state or counter consumer protection organizations, such as fraudulent sales practices (Yoo, 1987). I would educate the company based to increase consumer safety on water quality, utilities, and to have tests done before advertising the spring water (Yoo,1987).

As a manager, I would help employees resolve ethical conflict among the company by demonstrating the proper way to behave to employees. The other strategy would be to help employees resolve ethical conflict among the organization by drafting corporate codes of conduct, and teaching employees about the importance of honesty and integrity. The other issue with advertisements is that a person’s rights can be abused by the invasion of privacy and the lack of consideration for respondents. Confidentiality in marketing is important for one to protect any data that is confidential and is a common ethical concern (Hunt, Chonko & Wilcox). People can do their best to do things in their best interest against a researcher’s responsibilities for treating clients in an ethical manner. Making the effort to treat suppliers fairly creates the problem of customers wanting to be given special treatment, such as receiving certain gifts for purchases resulting in legal issues and issues with pricing (Hunt, Chonko & Wilcox).

Case 4: Product Safety & Advertisement

Product safety and advertising is very important when employing a product into the public. The goal for any organization ethically is to produce high quality products and service for its consumers with advertising that is very truthful and ethical providing consumers with facts and warnings so they know the risks of taking the product. There are many similar cases that apply to this case such as the Johnson & Johnson case with Tylenol and the Merck case with Vioxx. Within these two cases there is much to learn from when thinking of the ethical decisions that was employed within this case with arthritis. The most common mistake of ethical decision making is ignoring the long term consequences of a decision made (Trevino & Nelson, 2017). Because of the decision Big Pharma made on recalling their product later than they should it caused an increased risk of cardiovascular events within the community. This resulted in everyone being stakeholders but the citizens of the community were most important due to their health risk.

The risks of taking prescription drugs are high and all consumers should be aware of all risks before taking certain prescribed drugs. According to the FDCA (Food Drug Cosmetic Act) prescription drugs must have a balance of risks, benefits, side effects, contradictions, and effectiveness all presented on the prescribed drug (West, Squiers, McCormack, Southwell, Brouwer, Ashok, Sullivan, 2013). By having all of this it could communicate risks and side effects to consumers but not all information is put into a clear format easily understood by the average consumer (West, Squiers, McCormack, Southwell, Brouwer, Ashok, Sullivan, 2013). When drug companies aren’t able to communicate risks to their consumers this is too much risk. The FDA focused on communicating quantitative information being the easiest way of communicating information about drugs to their consumers (West, Squiers, McCormack, Southwell, Brouwer, Ashok, Sullivan, 2013). I believe that if Big Pharma employed this technique of communicating quantitative information that numerically addresses the risks and side effects of their drug it would educate consumers about the risks displayed before taking these drugs. A doctor’s responsibility is to make sure consumers are aware and understand these risks. In many cases consumers usually just read the benefits of drugs and pass the risks and effects. Doctors should have the knowledge of how much they should prescribe consumers despite of the demand consumers have on a certain drug which is why I highly believe marketing straight to the consumer is a good thing with the reassurance of a doctor.

I believe that drug companies job are to be able to communicate all risks and side effects clearly to their consumers. By employing a direct to consumer marketing strategy it gives consumers reassurance when seeing a doctor for these medications. The reaction to the decision to recall Big Pharma’s arthritis prescription was different to the Tylenol situation because of the time it took for Big Pharma to recall their product. Johnson & Johnson’s recall of Tylenol was when they found out about the first poisoning issue. This is said to be hailed as a benchmark for how all organizations should react to a crisis (Trevino & Nelson). Big Pharma did not recall their product once they have found out about the first incident of heart attacks. Senior management should have expected the reaction they’ve got from consumers because of the time it took for them to recall their product. Johnson & Johnson reaction to their crisis proved that their number one priority was the health of their consumers, employees, community, and stakeholders. If Big Pharma had made the same decision to recall earlier they would have about the same reaction as the Tylenol situation. Stakeholders are not always shareholders but shareholders are also stakeholders. The Big Pharma organizations performance and decisions had helped them perform well short term but not so well long term.

Case 5: Shareholders

Shareholders are ethically an organization’s obligation to serve their interest by performing well in the short term as well as the long term ( Trevino & Nelson, 2017). With many similar incidents in this case the only way to reward shareholders and owners are to utilize ethical behavior. I believe that my obligation to the shareholders of all organizations in this deal are to ethically make decisions that will help all organizations short term and long-term. Full disclosure of financial reports are very important because it shows important information that helps senior managers make decisions for a company (Lebied, 2017). Full disclosure of the financials is the only alternative and it is important for senior managers to know all information given before making decisions. When management has unobservable information and do not fully disclose the information it could alter stock prices putting one’s organization in a position of peculiar vulnerability (Evans,Perrault, & Jones (2017). If others do not agree with the decision to fully disclose all information, I would politely but firmly insist that a senior manager make the final decision.

The protection of stakeholders long term interest is an important part of a boards duty and when companies fail to manage their sustainability risks they become unprofitable in the long run (Medland, 2015). The survival of these three companies could all be at stake due to the idea of withholding certain financials. The decision to have full disclosure of all financials would help all three companies avoid the risk of having problems in the long run. Shareholders, customers and employees are all a consideration when making this deal because they are all affected with the long term success of all three organizations. I believe that having senior management make the final decision would help protect the interest of all stakeholders.



Conclusion: No organization has been immune from unethical behavior and unethical problems (Trevino & Nelson 2017). Managing business ethics creates a baseline to educate all managers and employees the importance of ethics within all organizations. Within all six cases previously examined and explained, unethical behavior was present. We made ethical decisions to avoid unethical problems that could have put all companies at stake in the long run. Being honest, fair and deserving of the public’s trust is what has allowed us to make these ethical decisions pertaining all six of these cases, Conflict of interest, Product safety, Advertising, Product safety & Advertising, Shareholders and Community.


Case 6: After reading through Chapter 10 and the case regarding community there are many stakeholders involved within this scenario. These stakeholders are the company itself, as well as its employees, the government, as the issue is regarding an entire city’s water supply/health, as well as the general population in that community. The company and its employees are two of the major stakeholders for the simple fact that the company is going to lose a significant amount of money from trying to solve this sludge issue and the employees may be out of jobs if the company is shut down and no job means no money to support their families. The second stakeholder would be the government as they are there to help protect the general public from things like this, so I see them as a major stakeholder as well because if a mass population gets sick from the water then the CDC, a government agency may step in to aid in solving the issue. The third stakeholder is the city’s general population as they are the ones that could potentially be consuming the contaminated water.

The first thing that the company may need to do in order to save up some money to solve this problem two years down the road, is to do an employee downsizing, otherwise known as laying off employees for the simple fact that you are going to be struggling financially for the next couple years. This would need to happen because relatively immediately after the next pay period there would be a substantial amount of money being saved for something other than employees wages. After I had some money saved up, I would release a press release stating the issue to the public to make them aware of the issue and inform them that we have waited to announce it so that we could save up some money form a plan for how to solve the sludge seepage issue. I would then reach use the resources that I have found such as contractors and other agencies that are going to help with solving the seepage problem and I would have them begin work as soon as we had enough funds to allocate in that area. I believe that morally it might be the wrong thing to do to tell the people right away when there is actually no plan yet because it could incite panic and/or fear throughout the city’s general population.

I believe that wall street will react negatively to this due to the fact that one of the main solutions I came up with was to lay-off employees and that always hurts the economy because regardless of how many employees we lay-off we will be negatively impacting the unemployment rate either way. This could also hurt the company’s stockholders as there will be a significant amount of profit lost due to this problem, thus potentially causing the price of the of the stocks that are being held to drop or even plummet. Even though Wall Street and the company’s stockholders may be upset not receiving an explanation I think that it is in fact very worth it to try to keep this issue under wraps until it is solved as it could incite panic as I mentioned before and then lawsuits may become an issue as well. All in all, this is a very tough situation to handle and it could have easily been avoided by the previous CEO’s as they were the ones that did not address this issue before they built a facility on top of it, but now there will need to be cut backs in certain areas to make up for this issue as fast as possible.


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