Business Ethics And Law Number

BusinessEthics And Law


BusinessEthics and Law

1.In the recent times, managers in business organizations have beenrequired to adhere to laws which have been established to identifywhat is ethically accepted and what isn’t not accepted. There havebeen laws and ethical standards that businesses must abide by, in thecourse of business operations. Laws and ethics have almost become anessential element in decision making in businesses’ (Joseph,2015).This paper analyzes Johnson’s argument in his article (NaturalLaw and the Fiduciary Duties of Business Managers),that the stakeholder’s theory is effective in theory but not inpractice.

A).With reference to the article by Johnson, his reasoning towardsfiduciary duty is that, the entrusted should always out the trusteedemands first instead of his. In the scenario of a corporation, theauthor has denoted that, in any case of fiduciary duty any corporatedirector has a bigger obligation to the corporation and thestakeholders than he has to other employees (Joseph,2015).This is due to the fact this duty entails affirmative duties of goodfaith, care and loyalty. With reference to the stakeholder theory, itwas initiated or developed to help management satisfy thestakeholder’s interests in a business entity (Mihai &amp Alina,2013).

Withreference to the author, he sees this theory as just a theoreticalstatement. This is due to the fact that, it’s hard for themanagement to just keep the stakeholder interests first, and in turnit becomes hard for the theory to be observed. With reference to theauthors stand, I agree with this, it’s hard for the managers toexclusively to the corporation or the business and the stakeholders.This in turn explains why this is only applicable theoretically. As amanager, one should not misrepresent,but should fulfill their professional obligations, and be as open asnecessary with your clients. In the case of profits, thestakeholders’ theory promotes economic efficiency, and in turnfocusing of maximization of profits from the business (Bridoux&amp Stoelhorst, 2014).

B).Maximizingprofits is also being socially responsible, according to Milton. Thisis because business activities benefit society in many ways, orbetter still, it increases social welfare. With reference to theideas of Milton Friedman, he would agree with the article by Johnson.According to Milton, management requires to follow rules of thebusiness, and if it fails to maximize the profits or doesn’tinterests of those shareholders, then it shouldn’t be implemented(Blodgett,2011).Adecent business in Friedman’s opinion is not one that assumesundertakings only because they are ethically upright, but for thereason they are economically worthy. In addition, EdwardFreeman would agree, as he supports the manager’s idea that,managerswould not make main resolutions for an organization withoutconsidering the impact on each of these specific stakeholders. Thismeans the stakeholders are essential in any business organization(Tashman&amp Raelin, 2013).

C).Withreference to the stakeholder theory and the corporate socialresponsibility and the content behind fiduciary duties of management,there is a conflict between the two. With reference to the socialresponsibility, an organization is supposed to promote positivesocial and also environmental change. On the other hand, thestakeholder theory advocates for stakeholders control and benefitthrough profit maximization, hence the two conflicts in terms ofapproach to management.

2.The Ford Pinto case is a case that entails the explosion of FordPintos, as a result of defect fuel system. This led to a number ofissues surrounding the production of the car entailing cost benefitanalysis and the ethics behind the decision not to rectify the fuelsystem. With reference to the Hosmer moral analysis model, and thecase in focus, the economic outcomes of the case entails, the carefficiency in fuel consumption as well as financial returns to thestakeholders. The main ethical dilemma for the case is was itpossible for the use of risk/benefit analysis in situations where adefect in design/manufacturing could result to death or earnestlyphysical harm, as it was the case with the Ford Pinto situation. Itwas in turn the ethical duty of ford to produce product that was bothacceptable to the society (no negative image), as well as maintaineconomic benefit both to the client and to the company. The moralproblem behind the case is recognition of the problem and the way toaddress it, at the same time maintaining the interest of all theparties involved which entails, the environment, shareholders,suppliers, government, consumers, management and the employees.


Mihai,B., &amp Alina, A. N. (2013). Business Ethics Implementation In TheOrganizational Culture Of Companies.AnnalsOf The University Of Oradea, Economic Science Series,&nbsp22(1),44-53.

Blodgett,M. (2011). Substantive Ethics: Integrating Law and Ethics inCorporate Ethics Programs.&nbspJournalOf Business Ethics,&nbsp9939-48.

Bridoux,F., &amp Stoelhorst, J. W. (2014). Microfoundations for stakeholdertheory: Managing stakeholders with heterogeneous motives.&nbspStrategicManagement Journal,&nbsp35(1), 107-125.

Tashman,P., &amp Raelin, J. (2013). Who and What Really Matters to the Firm:Moving Stakeholder Salience beyond Managerial Perceptions.&nbspBusinessEthics Quarterly,&nbsp23(4), 591-616.

JosephF. Johnston Jr, ‘Natural Law and the Fiduciary Duties of BusinessManagers’. Retrieved on 31stMar 2015. From,d.ZGU