History of Business Ethics & Stakeholders Theory in America Essay
Assignment Overview:
The first part of your reading in Daniel Terris’ book will include an overview of Lockheed Martin’s
organization and will lay out the research plan that Terris used to obtain information necessary for his
work. This will be followed by a general overview of the evolution of business ethics in America.
Case Assignment:
1. Based on your readings, describe what you consider to be the responsibility of top leadership in a large
organization with respect to reaching a balance between profits and stakeholder concerns. Please
support your position by giving some examples from the text or from other sources where CEOs did a
good or poor job of finding this balance.
2. Terris discusses the history of business ethics in America since the late 1800s with respect to
anti-competitive practices, seeking unfair advantage through immoral arrangements with suppliers and
public officials, failing to adhere to laws and regulations, and lack of transparency. Discuss to what
extent you believe things to be better or worse in the present day for businesses in general.
3. On page 41, Terris discusses the ideas of Howard Bowen regarding the evolution of social
responsibility of businesses. To what extent do you think his predictions held true since 1953?
Assignment Expectations:
According to the Publication Manual of the American Psychological Association, there are three
reasons why we need to use proper citations and references.
They are:
“To ensure the accuracy of scientific knowledge” (p.11). – How do we know if what you are reading is
really the truth? We can look at the citation and the reference and do further research to make sure
what you are reading and what you are basing your research on is correct.
“To protect the rights and welfare of research participants” (p.11). – People deserve to get credit for
their work. When you earn a degree and go on to do research, you will want credit for the work you
have published.
“To protect intellectual property rights” (p.11). – When we refer to inventions, we should give credit to
the person who invented the item, trademarked the item, or developed a design. This protects their
work.
A reference system also allows the reader to use the in-text citation and reference page to find out
how to do further research when they find a topic of interest. It can save a lot of time.
As educated students, we should know the APA Style rules and work to perfect them.
Below are three common mistakes that cost Trident Students. Reviewing these examples should help
you improve your grade and also make future assignments easier.
APA Point 1: Where does the period go?
The use of a period. The period indicates the end of a sentence. However, if we put the period before
the in-text citation, we are actually beginning the next sentence with the citation. Therefore, the period
goes after the citation.
Another misuse of the period is putting it before the citation and another after the citation. This is not
correct. The period goes after the in-text citation.
Example: Intercultural Communication is quite important in how we deal with individuals from
different Countries and even from different neighborhoods of our cities (Pearson, 2015b). – Notice
where the period is.
APA Point 2: Do we need to use Quotation Marks?
When using information word for word from someone else’s work, quotation marks are necessary.
This example illustrates the use of quoted material at the end of the sentence, followed by a citation
and reference. The reference will also include the page numbers.
Example: When we are writing a Negative Letter, there are numerous authors who recommend
starting the letters with a buffer. Remember, “Openings for negative messages are often called Buffer
Beginnings because they are designed to buffer the negative message that will follow
” (Bowman, 2002, p. 1).
APA Point 3: Arranging entries on a reference list.
Once again as we dive into our Publication Manual of the American Psychological Association, we get
guidance on how to arrange our references on the reference page. “Arrange entries in alphabetical
order by the surname of the first author followed by initials of the author’s given name” (p. 181).
One may ask why. When there are two or three references, it does not make a great amount of
difference. But with numerous references, it is much easier if we arrange the references by the
author’s last name. Remember, one of the purposes of a reference page is to help readers find
additional information. If there are 10 or more references listed in random order, it is difficult to find
the appropriate reference. So let’s use the alphabetical ordering.
Your paper should be double-spaced and in 12-point type size.
Your paper should have a separate cover page and a separate reference page containing the full
citations corresponding to the in-text citations you choose to use in the body of your paper. So in
addition to the 4- to 5-page body of your paper you will have a title page and a reference page. So
overall, you will be submitting a 6- to 7-page document.
Use APA style, and proofread your paper.
Upload your paper by the end of the module.
History of Business Ethics & Stakeholders Theory in America
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History of Business Ethics & Stakeholders Theory in America
The top management is always in a dilemma in striking a balance between addressing stakeholders and maximizing profit because they are equally important. Profit-making is a crucial dimension for an organization to perform, grow, and sustain wealth. Stakeholders' concerns revolve around fundamental accountability that emphasizes on social utilization in totality (Saltaji, 2013). Top organization's performance arises from an overall strategy, market positioning, innovation, quality, and long-term strategy. Therefore, organizations are always seeking new, improved, and innovative products, processes, structures, and leadership qualities to reduce production costs, generate more profits, and meet customer demands and satisfaction.
In his book, Daniel Terri defines stakeholders as a group of individuals or individuals who directly or indirectly affect or affect the achievement of an organization's goals and financial success. Stakeholders are categorized as primary and secondary stakeholders.
Primary stakeholders’ interests are directly linked to the fortunes of an organization. They include investors, suppliers, customers, employees, and residents of a society where the organization operates(Saltaji, 2013). Future generation, non-human, and natural are also part of these stakeholders. Secondary stakeholders, on the other hand, have an indirect impact on an organization. They include pressure groups, media, regulators, competitors, and interested groups that form social ecology groups within the organization.
An organization's ability to create sustainable wealth depends on the relationship between the top management and stakeholders and the level of competitiveness and effectiveness on the organizational value chain (Mahoney, 1995). Therefore, the top management should build on their relations with all stakeholders to bridge the gap between profitability and addressing stakeholders’ concerns.
Responsibility of Top Management
1 Instituting strong controls
An organization without proper control activities and the internal environment is likely to provide room for creative accounting, which involves manipulating accounting entries and policies to generate more profits. Such policies include changing depreciation methods and stock valuation methods. When those policies are altered, the organization is likely to report more profits that do not exist to impress shareholders (Mahoney, 1995). When shareholders find out, it will create conflicts. Failure to institute controls will also create loopholes for fraud, leading to huge losses of the company's assets, causing friction with shareholders (Macintosh, 2008). Therefore, strong controls will prevent fraud, thus safeguarding the company's assets and avert reporting non-existing profits, thereby minimizing conflicts and build a strong relationship with stakeholders. On the other hand, fraud prevention increases the company's profitability.
Enron Corporation was the seventh-largest corporation in the United States in 2001 but was involved in creative accounting fraud and corruption. The CEO fooled the shareholders and regulators with off the book accounting practices and fake holdings. The company had toxic assets and huge debts, but they used special purpose vehicles and entities to hide them. They were able to operate freely in the market and acquire huge loans from lenders(Macintosh, 2008). The company was later plunged into financial constraints because the profits expected resulted in losses. It resulted in conflicts with shareholders and lenders as Enron was unable to repay debts. They later filed for bankruptcy. The shareholders lost $ 74 billion, and the company paid creditors more than $ 22 billion between 2004 and 2011. These are the effects of creative controls and failure to institute controls.
2. Investing in safer investment options.
Organizations borrow money from lenders such as banks to invest in various bonds, securities, or acquire assets. Some investments are risky and may lead to losses in the long run; hence a company may fail to repay the loan. That will result in a conflict between management and creditors and affect the firm's profitability (Brockman et al., 2009). Therefore, if an organization invests in bonds, securities, and other safe investments, they will likely increase their profitability, repay debts, and pay suppliers, hence addressing lenders' concerns.
3. Engaging in Social responsibilities and safeguarding the environment.
Top management should place mechanisms of participating in corporate social responsibility and preventing pollution of the environment. Degradation of the company's environment encourages conflict with surrounding residents, especially for manufacturing companies that may direct their waste to nearby rivers, which are vital water sources in the community. Participating in social responsibility activities build on a company's image and boost the employee's morale leading to greater productivity (Carroll, 1999). Good company image attracts more customers hence increasing sales. Therefore, management's responsibility is to ensure that the surrounding environment is not degraded and engage in societal projects and activities, thus minimizing conflicts with the community and attracting more customers who boost sales volume, increasing its profitability.
The New Belgium Brewing Company in the United States brew beer can and sell. In their production process, they produce a lot of waste from grain processing. The CEO decided to acquire an anaerobic digester to process the trash instead of releasing it. The aerobic digester processes the waste into energy to power the organization and production process. The CEO's move safeguarded the environment hence building the company's image, which attracted more customers. The CEO also directed the employees to be issued with bicycles to easily move around the 50-acre brewery firm's premises. The CEO's effort reduced the conflicts between the surrounding community and the organization, attracting more customers to increase their profits. Issuing the bicycles motivated the employees, which improved their productivity.
QUESTION 2
Daniel Terri's book tried to address work ethics for seeking an unfair advantage, anticompetitive practices, failure to comply with laws and regulations, and lack of accountability and transparency. He carried out research to determine whether Lockheed Martin's ethical programs made it an honest corporation. ...