In resolving the ethical issues associated with business conduct the “seeing-knowing-doing” model is very useful. In this case analysis, we scan all the Trans-American Paper Company’s (TAPC) proposed/potential business options for the ethical issues. First, we will identify the ethical issues involved and its ethical/business/legal implications. Second, we will see how we can resolve these ethical issues and come up with best/second-best options.
Finally, we develop an implementation strategy by leveraging ethical theories that identify (step one), resolve (step two) the ethical issues and implement (step three) our decision. In the proposed “Option 1”, the ethical issue is with the “generous gift or facilitation fee” that is to be paid to the government official to persuade the city to reduce its electricity price. This gift/fee is influencing the foreign official to use his influence with a foreign government to affect the decision. Hence such an act is in clear violation of FCPA (a. . B). While conducting business in host countries, a company should strive to uphold its highest possible legal standards above and beyond the required host country’s legal standards. In the proposed “Option 2”, the ethical issue is the plant’s continued emission of waste products into the river. Here “Theory of Relative Development” is particularly useful. Since Malaysia is a developing country, it may not seem fair to apply the same environmental standards that are applicable to developed countries like US.
One may argue that, in such developing countries, human survival is the immediate concern than the long-term effects on the environment. However the same theory also makes us think about the global consequences of this local action. Further, Deontological theories (specifically Kant’s categorical imperative) challenge’s us to reason “What if everybody acted this way? ”. If every company makes the same excuse, then its global environmental, economic repercussions is unsustainable (Kantian Ethics). There is a proper balance between economic progress and environmental protection.
This balance is not a zero-sum calculation where only one party benefits. Rather an ideal balance is where economic growth sustains environmental protection and vice versa. In making such calculations, long term effects should be considered rather than short term gains/losses. In the proposed “Option 4”, the major ethical issue is with closing the plant itself, which will bring devastation to the local workers, business and community, whose lives are intertwined with this 23 year old plant. Using Utilitarian doctrine, closing the plant does not bring “greater good to greater numbers”.
A company owes a higher degree of care to existing employees and they should not be treated as means to an end (Kant’s categorical imperative). Also, the negative publicity involved with closing the plant will not qualify the “Television Test”. In the proposed “Option 3”, all the facts points that this is a sound environmental, financial, operational and business decision. However the fact that Wei is planning on obtaining reduced priced electricity from the city using his connections is ethically/legally questionable.
Since TAPC will be a business partners with Wei, TAPC will be responsible not only for itself but also for its partners. Without this ethical issue “Option 3” is by far the second best option. “Option 3” is already an environmentally friendly (sludge recycle, recovery of chemical/biological agents) and socially responsible (long-term operation plans, efficient machinery, potential better jobs and higher pay) option. This option can be made better by making it more profitable and sustainable to TAPC.
Instead of agreeing with 51%-49% arrangement, TAPC should renegotiate so that it can manage the plant and not let an investment company run its business. Along with these modifications, setup of a clean power generation plant will make the plant self-sustained (Utilitarian views). All the major schools of ethics when properly applied produce the same result. Applying Utilitarian principles, not only is the “modified Option 3” beneficial to TAPC but also it is beneficial to all the direct/indirect stakeholders.
For example, TAPC gets a futuristic plant, WIG can expect a profit for its investment, local worker gets technologically advanced and stable employment, community gets more business, environment is protected, and consumers get competitive products. Also this option seeks alternatives that have greater net welfare effect (Ex. use of recycled sludge in cement applications). As per the Deontological approach, by not closing down the plant the company will be doing its share of the duty to the community in which it operates.
Also by being environmentally responsible, TAPC will be refraining from strict utilitarian calculations and will focus on net benefit to the society. As per the “Ethics of care”, by taking a long term approach the company is taking into account the impact on existing/ future loyal employees and owing them care instead of taking a quick and dirty fix to the issue. Through this integrated approach, by implementing “modified Option 3”, TAPC not only takes account of its benefits/harms but also of its stakeholders. However certain factors need to be considered in its implementation.
In an effort to increase the profitability of the company, TAPC should not discredit distributive concerns and infringing upon any basic human rights. TAPC must understand the difference between paying an “above market wage” and a “living wage”. While former may lead to social/economic disparity the latter often results in better quality of life for workers, which in turn show up positively on the profitability of the company. The latter approach bolsters the company’s relationship with the current and future employees and community in general.