The Concept of Ethical Dilemmas

• Apply at least two theoretical concepts from managerial ethics to examine this dilemma critically.
• Go on to examine and critically evaluate how these theoretical concepts influence managerial practices in the chosen organisation.
• In conclusion, reflect critically on how leaders may ensure organisational decisions are made ethically.

An ethical dilemma implies a confusing situation when the ethics of a person are applied. This situation is often complicated and arises from the disagreement between a person’s moral imperatives. In certain circumstances, this confusion arises in a professional sense when the moral principles of a person are unable to figure out the correct course of action. It may also manifest itself between people due to conflicting ideologies. Ethical dilemmas can occur anytime and in any place but are most often witnessed in workplaces. This can be attributed to the ethical diversities exhibited by the workers (Shapiro & Stefkovich, 2016). People in the workplace hail from different moral and cultural backgrounds and these increases the chances of conflict (Kim, 2016). Workplaces exhibit definite action patterns that may conflict with a person’s ideologies. The result is a confusing situation where the person involved is not sure on the right course of action to undertake (Sherif et al., 2016).

In this essay, the author will discuss the ethical dilemma faced by the Apple Company at Foxconn. In this context, the author will discuss the two theoretical concepts from managerial ethics to examine this dilemma critically. Further, the author will review and critically evaluate how these theoretical concepts influence managerial practices in the chosen organization. A thorough literature review will be performed to support the arguments in the essay. Later, in conclusion, the author will reflect critically on how leaders may ensure organizational decisions are made ethically.

Apple is a multinational corporation of America popular for designing and development of personal computers and computer software (Browning et al., 2012). The popular hardware products of this company include iPod, iPhone, iPad and Mac line. After Samsung, It is the world second largest IT Company (Yoffie, D. B., & Rossano, P2012). As Tim Cook took over as Apple’s new CEO, in 2012, from the late Steve Jobs, he was almost immediately bombarded with an ethical dilemma with Chinese company Foxconn. Employees threatened suicide as a means of protecting their working conditions (Moritz, 2014).

Recently, articles reported that the new CEO earned over 350 million US dollars in 2011 (Lashinsky, 2012). His remarkable success was attributed to his inheritance over the global technology company, renowned for its innovation and creativity; the company worth well over 90 billion dollars in cash reserves (Chan et al., 2013). Nevertheless, one cannot overlook the serious problems facing Foxconn, one of the company’s leading suppliers. Recently, employees threatened to engage in mass suicide hence posing a massive ethical dilemma for Tim Cook (Jensen & Puri, 2016).

The Apple-Foxconn Dilemma

As an article of the Telegraph reported, around 150 employees at Foxconn, the largest global electronic manufacturer, threatened to engage in the mass suicide by leaping from the roof of the factory as a protest over harsh working conditions (Rushe, 2015). However, the employees were eventually convinced to abort the threat after two days on the roof the company’s managers and officials from a Chinese communist party. Despite the risks, Tim Cook focused more on the enterprise’s products and profit (Kim & Ledingham, 2015). As their product has high demand in the market, there is pressure on them to fulfill the needs of consumers. Therefore, the working hours were increased to meet the target eventually affecting the manufacturers in Foxconn, China (Jensen & Puri, 2016).). Many organizations have a tendency of highlighting progress in their annual reports against merits on corporate social responsibility (Northouse, 2015). Even though commendable, it is vital to go beyond corporate fanfare and glossy brochures. Increasingly, social-economic considerations are coming in to play hence creating conflicting priorities that oppose financial merits (Huxham & Vangen, 2013).

Indeed, Apple is well placed to have an influence over matters at Foxconn. Despite Cook’ assurances that the company is focused on achieving high social responsibility standards across its global chain of supply (Pathak, 2014). An online article published in January 2012 noted the apparent silence of Apple Company but highlighted ongoing investigations by New York Times. The article is a testament of the problems surrounding Foxconn. The situation at Foxconn had not developed overnight. The Guardian reported in January 2012 that the problems had been there since 2010. In that year, eighteen employees at Foxconn Company attempted suicide and fourteen died. Labor organizations blamed long working hours, inhuman treatment, and low wages as the main factors of the protest (Moritz, 2014).

It is imperative to understand that leaders have to embrace ethics. In January 2012, Apple Company submitted a report of the company’s financial results for the first quarter of the financial period (Lashinsky, 2012). The figures beat the expectations of many analysts. Investigators shifted their focus on the merits of the company’s results- approximating dividend payments and revenue forecasts (Denning & Dew, 2015). This news is good the shareholders of the enterprise but in no way benefited the employees especially those in Foxconn. Borrowing from the dilemmas associated with leadership, ethical matters come as unwelcome interruptions in search of economic success (Chan & Selden, 2013). The financial success of Apple Company cannot be underestimated. However, it’s handling of ethical matters such as employees’ welfare is clearly dwindling. Constant negative coverage by the media on the issue ultimately began to influence the perceptions of the company. This posed a negative impact on the economic success (Jensen & Puri, 2016).

The Impact of Managerial Ethics on Company Practices

The New York Times, however, noted that the company had been working on several initiatives designed to quell pressure (Moritz, 2014). In response to the issue, the company for the first time published a report on 158 of its suppliers, representing a major portion of its supply chain (Jia et al., 2015). The company also became a member of Fair Labor Association, making it the first technological company on that level. Apple also works hand in hand with environmental groups, labor rights advocating groups, and agreed to permit external monitors in the supply factories (Lashinsky, 2012). The challenges witnessed at Foxconn provided an opportunity for the company to show an example that it can excel social matters rather than financial.

One has to commend Mr. Cook for the way he handled the matter. He managed to quell the challenge professionally and the protest by the employees was aborted (Chan et al., 2013). Then followed the recommended protocols on means of approaching and dealing with an ethical dilemma, evaluate the appropriate course of action, identify the consequences, and make a decision. However, I cannot help but think that he could have done more. In this case, if it were up to me, I would have engaged the employees in an orderly meeting where a selected member would air their grievances. A team of managers would benefit from the officials in the meeting, and a final decision would be made in the best interests of the employees.

Apple Inc. claims that they have enhanced the working conditions at the Foxconn, at the demand of the employer. The Fair Labor Association, a nonprofit organization in the US, states that Apple has fulfilled actions needed to improve the work environment at “Shenzhen and Chengdu” that is famous for its iPhone and iPad products (Kim, 2016). However, the story of the employees is different who still complain about work culture and that the organization is mainly bothered about accomplishing target, and there is no motivation for them to work with full potential (Ferrell & Fraedrich, 2016).  Also, workers complained that, although their workplace is well-equipped tennis courts, TVs, swimming pools and interest clubs, they are unable to enjoy any due to long working hours and improper maintenance (Chatterji & Toffel, 2016). It was reported in one such study where employees complain that the Foxconn never publicizes the problems in the factories. For example, ” fire in one of the factories was hushed up; gas poisoning was brushed off without providing proper care for employees” (Weinzimmer & Esken, 2016). Further, there were also reports of workers complaining of inadequate medical facilities on the premises (Jiraporn et al., 2016). According to the BBC News, 2012 before the suicide scandal occurred, 260 workers were sick.

Literature Review

Being a multinational company the organization has obligation towards their consumers and the whole world business market. Their business chains are spread across the world and have gained trust and loyalty from the people (Kim, 2016). Therefore, they need to maintain the same and deliver its responsibilities, image and services appropriately and honestly to ensure high production and good quality at the same time maintaining standards of integrity and not only on profit-making (Windsor, 2016). In the next section, the author discusses theoretical concepts from the managerial ethics.

Ethical theories are useful in providing a base while judging the “ethical content” of an act. The two fundamental types of ethical theories are “Teleological and Deontological” (Ho et al., 2016). Both these theories help in deriving different conclusions in respect to the scenario under consideration. The teleological approach focuses on the outcome of an action and its importance (Northouse, 2015). Utilitarianism is the widely studied teleological theory in business context and public policy. According to Murphy & Lascznaiak, (1981), the concept of Utilitarianism refers to ethical choices that provide “greatest benefits to the greater number of people”. In this perspective, one believes that the “ends justify the means” (Denning & Dew, 2015).  For example, It is good to save the lives of five people by killing one person; the Utilitarianism theory believes that it ethical to save others by killing one person as in this scenario more number of individuals are benefitted. In short it explains that an act is to be performed only when the utilities it produces is greater than that produced by utilities of other action performed by an agent.

According to (Shapiro & Stefkovich, 2016) the deontology theory mainly deals with “duty of doing good for society with intention and that the actions are not justified by their consequences”. In addition to the good outcome, there are many factors determining the righteousness of the action, which may be non-consequential but helps increase morality of an individual. In the present case, Apple has made the significant contribution in the field of technology and retail chain and has the large impact on society. However, it failed regarding ethics.

Tim Cook did what is best for the business that is profit making although it affected the employees but only if it cared little extra for the workers and was wise in the decision that it would have come out the ethical dilemma. This case is dealing with ethical issues and in this context, the author refers to primary ethical approaches that are “consequentiality approach, deontological approach, and virtue ethics.”

Leadership and Ethical Decision-Making

This case can be categorized into deontological approach (Shapiro & Stefkovich, 2016). Apple Inc. initially took care of excessive working hours, child labor and other safety related issues with their suppliers. However, with the increasing media exposure in regards to ethical behavior, the organization concerned more about the impact of this negative publicity on their shares and profits. Suddenly the “audits and policies” started rising eventually increasing the working hours and pressure between the suppliers to accomplish its objectives in given time (Weinzimmer & Esken, 2016). According to (Chatterji & Toffel, 2016) “act should be ethical to immediate relations and should be conditional”. In this case scenario, Apple was never ethical with their suppliers, although it had immediate relation with them. Asian labor was used due to low bargaining power and because they were cheaper. The major concern of this company was not to lose business and to reduce cost and meet the production target anyhow (Ferrell & Fraedrich, 2016). Sherif et al., (2016) said: “an act should be universally acceptable.” A Recent study showed that Apple discriminated between their own and supplier’s employees. It reported on supplier’s involvement in child labor issues. Therefore, such act of Apple is not universally acceptable. Conclusively, the management of Apple although maintained the utilitarianism but failed in implementing the deontological approach.

The profit making of the company is mainly dependent on its workers, therefore; the CEO should be more concerned about the satisfaction and health of the employees (Kim, 2016). Else, the organization will get a black spot on its image. The organization if applied consequentiality approach, then the situation would have been in control (Steiber & Alänge, 2016). As a CEO of this company I would be inclined more towards employee satisfaction, which will maximize the profit eventually. Low job satisfaction, on the other hand, decreases the willingness to work and increase the absenteeism, which in turn will reduce the production both regarding quantity and quality (Sherif et al., 2016). (Windsor, 2016) describes the condition of these workers as cramped and unpleasant. This ethical dilemma is no good and downregulates the reputation of the organization.

According to (Elsbach, 2012) with this kind of treatment to the workers, it is apparent that the “decision is not going to further sustainable development”. If there is no change in Foxconn’s attitude towards their employees, there will be more media attention. Consumers are more concerned with the social behavior of the company rather than the profit made (Northouse, 2015). Eventually, consumers realize that the manufacturers work at the cost of their life, which is more than the overcharged devices prepared by them. It is obvious that Apple will lose valuable clients and might not undergo sustainable development due to its decision and chosen managerial system (Pathak, 2014).

The Role of Corporate Social Responsibility

According to (Huxham & Vangen, 2013) the management system at Foxconn is “machinelike”. Its power is centralized just like the central power source of a machine, therefore, making leadership vital in Foxconn. (Northouse, 2015) believes that without strong leadership, the policies may not be “accurate and precise” to the whole business. (Ki et al., 2015) analyzed the Foxconn views “leadership as the righteous dictatorship and decisive”. (Miner, 2015) Suggests that to overcome the issues with clients, Foxconn must adopt a post-bureaucracy involving “shared responsibility, trust between managers and workers, and empowerment.” The concept underlies that the responsibilities instead of a hierarchy are “assigned on virtue” and people are treated as individuals “rather than impersonally” (Ki et al., 2015). It is suggested that such an organization should be “morally superior” to their administrative precursors. As stated by (Yoffie & Rossano, 2012) “post-bureaucratic organizations are better represented as networks than as hierarchies.”

Ho et al., (2016) agrees with Ki et al., (2015) and believes that adopting this strategy will lead to the quick flow of decisions and brings close the authority and information towards the needs of the workers rather than thinking what it should be. To perform multi-skills task, the workers may be trained thus giving them the potential to handle future problems and making them more flexible (Elsbach, 2012). According to (Jia et al., 2015) Foxconn adopted ‘Bureaucratic domination’ where managers rule over the workers treating them as the slave. Despite the hardships, neither of the employees filed a lawsuit against the organization. They are well protected under the labor law of China and possessions of the workers (ID card and employment contract) have been kept by the company also rejecting the family’s request to take them back (Jiraporn et al., 2016). Such actions are not universally acceptable and again justify the ethical dilemma faced by Apple Inc.

Dr. Duane calls trust a “construct” as it is made of three components, which are: “the capacity to trust, the perception of competence and intentions” (Jia et al., 2015). Every workplace ethics follow the same route. If an organization has the code of ethics and conducts, then that must be strictly implemented by the leader. Failure to do so will make the organization appear as a big joke. A good leader can strongly influence actions of others by exhibiting his ethical behavior powerfully (Miner, 2015). Ethics refers to virtues and motives of an individual and the moral development impacts the choices of a leader. Leaders should know their values and the significance of ethical behavior. The best leader lives his value daily and exhibit values in their actions and style (Ki et al., 2015). It will ensure building trust. However, the trust is damaged forever, when one sentiment is said while other is performed.

Initiatives to Resolve the Foxconn Dilemma

Conclusion

The essay has analyzed the organization from multi-perspective view, concludes that Foxconn is best at maximizing their input and profit, and generate maximum products every day. As per the worker’s allegations and ethical dilemmas it can be commented that the organization has treated the employees as the slave. Based on a theory of “scientific management, bureaucracy, and administrative management”, Foxconn had managed their workers in a way where this maximize the production. Therefore, there is a growing incidence of the workers falling sick and much committing suicides every year indicating the level of their exploitation. There is a huge pressure on the CEO of the multinational company like Apple Inc. Tim Cook being new to the field ensured the well being of the company but in respect to treatment of his employees greatly failed to maintain ethics. Business world requires decision-making for overall development and better tomorrow, keeping aside personal and emotional attachments. A leader must take right decision focusing on satisfaction and development of their employees.

The essay has used “machine and domination metaphor” to develop a stronger view on the organization’s management about the workers and detailed the large picture of the company. In this essay, the author has discussed the two theoretical concepts from managerial ethics to examine this dilemma critically. Further, the author critically evaluated how these theoretical concepts influenced managerial practices in the chosen organization by performing a thorough literature review and supported the arguments. The essay ends with recommendations for leaders to ensure organizational decisions are made ethically. It was a fascinating subject to work on, and thorough literature search enhanced the key concepts of management, leadership theories, and an importance of business ethics and the consequences of the ethical dilemma.

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