Discuss about the Ethical Approach To Effective Management.
Summary of Scenario
Ethics is all about being legitimate and doing thing right in the general terms. Ethics determine what an entity should formulate in its business policies that have a far reaching impact on the society in positive manner. In simple words, ethics could be defined as rightful acts which not only assist in doing the right things but also eliminate the wrongful doings of the people. The potential investors are a major source of success in any business and being ethical is a way to attract them to invest in the company. Ethical practices build a trust and make it stronger day by day. Consumer is the king of the market and to retain the consumer base, the entity needs to shift its focus on making a market share that is sustainable in the longer run. In this report, application of stakeholder theory and the impact of the undertaken strategic program of the McDonald Company on the stakeholders have been analyzed. Apart from that in the end of this report, several other alternative solutions on being ethical are not compromised with have been taken into consideration. Several recommendations that shower a light over how an ethical framework can be established are mentioned. The series of ideas is well balanced with appropriate focus on the importance of being stakeholder centred (McDonald Company, (2017).
The way the report is formatted shows the meaning of stakeholder theory and how it could be used by the McDonald Company in the best interest of the society and economic at large. Stakeholders are those persons who directly and indirectly get impacted or impact the McDonald Company. It is analyzed that McDonald Company needs to keep its business more transparent for the effective business functioning so that stakeholder could analysis this information to take their decisions. Legitimacy of the existence of any business is dependent on the acts done in light of stakeholder theory. Analysis of the ethical issues that are widespread sin almost every organisation is done. The different frameworks that identify the solutions to the ethical issues that an entity faces are researched for and explained thoroughly. The whole scenario is to formulate a basis for McDonald Company on how to be ethical for the particular undertaken work (Trevino, & Nelson, (2016). This above given scenario reflects how well McDonald Company could make the business effective and stakeholder’s more satisfied (McDonald Company, (2017).
Description of Stakeholder Theory
Stakeholder theory is guiding most of the principles of governing business nowadays. The basis of this theory is the existence of business to create maximum values for its stakeholders who include customers; suppliers; employees; communities; shareholders; financers etc (Weiss, 2014). This theory reflects how McDonald Company could establish the nexus between the organization’s development and stakeholder’s growth (Barnett, Henriques, & Husted Corregan, 2018). The ultimate objective of the organization should be to create value on the investment and increasing value of the invested capital (McDonald Company, 2017).
The emphasis is on value creation for all the stakeholders instead of focusing on particular one shareholder. This is the merely single way to keep the business more sustainable. This theory believes that businesses are not all about making money but to grow sustainably. The responsibility of McDonald Company towards the stakeholders who have no say in the company’s decision making is analysed. It is analyzed that accountability of the managers and employees towards these stakeholders determines the sustainable business functioning. Accountability of companies towards the different stakeholders is emphasised and the way the managers should balance the diverging interests is specified (Jensen, 2017).
The stakeholder theory makes the corporations ethically acceptable. The society is also undertaken under the criteria of stakeholder for McDonald Company in order to become socially acceptable needs to extend valuable help to the society. The management needs to be answerable to the stakeholders and every action taken needs to be disclosed. This theory guides the McDonald Company to make responses to the economic, commercial, social and environmental trends in light of stakeholder benefit, even if they are heterogeneous (Bridoux, & Stoelhorst, 2014).
McDonald Company can be sustainable only when it is ethical in the long run. Each and every organization should take proper ethical work functions if it wants to be sustainable in long run. Therefore it stands no question of sustainability without being ethical (Ferrero, Michael Hoffman, & McNulty, 2014). The major questions of ethics and sustainability that McDonald Company faces involve how to ensure integrity, understanding, excellence, unity and responsibility and on how to make the operations move in a manner that enables even the future generations to reap the benefits of resources as the current generation is doing. These issues largely affect the way businesses are conducted. McDonald Company needs to conduct day to day activities with ultimate responsibility of the outcome that shall prevail (Crane, & Matten, 2016). There needs to be a real understanding of what the business goals of McDonald Company are in market. The actions need to be integrated with the goals identified. Everyday transactions are to be maintained transparently. Excellence is required to be achieved in all the business transactions. To be sustainable, the business houses needs to work every day in this aspect. It is not a one day job. Sustainability goes a long way to help in achieving excellence. Along with personal benefit, activities need to focus on social and environmental welfare too (Crane, & Matten, 2016).
There is a need to develop an ethical framework in the McDonald Company that wants to be ethical. Stakeholder theory focuses on identifying the ethical issues that prevent the company from serving the needs of stakeholders. For the development of the ethical framework a list of ethical issues is required to be formulated (Harrison, Freeman, & Abreu, 2015). McDonald Company needs to see where the business is currently going with these issues and where it wants to reach as far as goals are concerned. The ethical questions itself are the ethical issues that the businesses face in their value chain activities. Some of the challenges which are accompanied with the ethical issues include conducting business with integrity and trust and facing the ethical dilemma in the process. However, more complexity arises on issues such as accommodation of diversity, compassionate decision making, and consistency of company’s compliance and governance with core values (Goodpaster, 2015).
Conducting business with integrity involves being honest in business dealings and involvement of fairness while dealing with customers and other stakeholders. McDonald Company can achieve stronger commitment from the customers when it is ethically committed. Apart from being ethically correct for the customers, a framework needs to be devised by the entity to deal with the diversities that are prevailing in the employees. Trainings programmes are required to be conducted to create a safe and courteous working environment for the employees (Benn, Edwards, & Williams, 2014).
The three broad ethical frameworks include the consequentialist framework, the duty framework, and the virtue framework. The consequential framework is based on the idea of fabricating the most good by taking such actions that shall focus on the future outcomes that a particular action taken shall give. The people who are most affected by the action are analysed and a decision is taken which shall reap best consequences to them. The ethical issues are solved in the light of creating a good end result (Weiss, 2014).
The duty framework guides McDonald Company to solve the ethical issues by deciding on the most ethical obligation that a person has in a given situation. It is analysed what a person should never do when an ethical issue pops (Miles, 2017). The aim is to the right thing by focusing on the moral rues and not on the outcomes that a certain action shall have. Any single expectation is not favoured and the decisions taken are impersonal. The end result may turn out to be bad, but that’s not a concern if things are done ethically correct as per this framework (Trevino,., & Nelson, 2016).
The virtue framework tends to be person specific. In this framework the positive or negative traits of the employees of McDonald Company are identified that acts as a motivating factor in a given situation for a person. In this framework, an ethical behaviour is determined by the act that a person full of virtues shall do in a certain situation (Miles, 2017).
- The company’s respective team involved in ethical issue solving should objectively review report presented on ethical issue and separate investigation at the team level should be done to enquire if the report is all true. His method also involves identification of the affected parties. The exact ethical principles that are violated must be identified and help of expert must be taken if needed (Pearson, 2017).
- Whistle blowing technique should be promoted in McDonald Company. It should promote the issues pit forward by the employees at the minor level as they can provide a lot of information regarding certain things that the company is not aware of. It is the mechanism which not only lowers down the complexity of the work but also keep employees and directors vigilant about the wrong doings in the business process (Jensen, 2017).
- McDonald Company should conduct seminars and educational trainings for the employees to make them aware of what is called ethical and what is not. They should be promoted to raise questions on the same and their queries should be solved considering the ethical principles that they are confused in (Trevino, & Nelson, 2016).
In order to establish an ethical framework, McDonald Company needs to follow certain steps to get done it rightly. Before taking any decision, the organisation should analyse the ethical issue that is creating a problem. After the issue is identified all the parties that are affected by the same should be identified. The information related to issue and the sources it has been gathered from should be verified. After everything is done in this manner, different decision plans should be formulated. Every alternative should be analysed based on the outcomes, actions to be taken, parties to be affected etc. Best decision should be selected from and the consequences of such results should be monitored. McDonald Company needs to understand whether the undertaken work is accompanied with the ethical issues or not. If managers and directors do not take these ethical issues effectively then it will not only impact the process system but also lower down the overall outcomes of the business process (Fassin, De Colle, and Freeman, 2017).
Ethics and sustainability are the key term which needs to be undertaken by McDonald Company while operating its business. The far reaching conclusion of the whole scenario is that, the biggest problem is not that the entity faces ethical issues, but it is the lack of understanding that prevails regarding the ways in which an ethical dilemma can be solved. If these problems could have been undertaken in effective manner by the time then it would have resulted more positive output for the business organization. Many a people in the entity are unaware that they are following unethical practices. McDonald Company must focus on the stakeholder theory and also make the employees and other staff members aware of the same. The benefits of the whole list of stakeholders should be kept as the top most priority and the company should not compromise with the benefits of all the stakeholders for the motive of profit making.
Barnett, M. L., Henriques, I., & Husted Corregan, B. (2018). Governing the Void between Stakeholder Management and Sustainability.
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Bridoux, F., & Stoelhorst, J. W. (2014). Microfoundations for stakeholder theory: Managing stakeholders with heterogeneous motives. Strategic Management Journal, 35(1), 107-125.
Crane, A., & Matten, D. (2016). Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press. 37(1), 17-91
Fassin, Y., De Colle, S. and Freeman, R.E., 2017. Intra?stakeholder alliances in plant?closing decisions: A stakeholder theory approach. Business Ethics: A European Review, 26(2), pp.97-111.
Ferrero, I., Michael Hoffman, W., & McNulty, R. E. (2014). Must Milton Friedman embrace stakeholder theory?. Business and Society Review, 119(1), 37-59.
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Jensen, M. C. (2017). Value maximisation, stakeholder theory and the corporate objective function. In Unfolding stakeholder thinking (pp. 65-84). Routledge.
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