Case Study On General Motors Professional Ethics
General Motors has being doing business in India from 1928 where they were assembling Chevrolet cars, buses and trucks, however they ceased assembly operations in 1954 and in 1994 they re-entered forming a 50-50 joint venture with Hindustan Motors in wherein they produced and sold the Opel brand vehicle. Subsequently in 1999 GM took full control of production and sales when they bought out the Hindustan Motors interest. Their production facility is located at Halol, Gujarat. It was at this location that they started the production of Chevrolet in the year 2003. They are headquartered at Gurgaon and have their technical centre operations in Bangalore that is including research and development along with vehicle engineering activities. This technical centre now includes purchasing and handles the financial support services for General Motors operations located outside of India including vehicle engine, transmission design and engineering with a vehicle design studio. They also have a second vehicle assembly plant located in Talegaon, Maharastra that produces Chevrolet vehicles from September 2008. Their Halol and Talegaon Manufacturing facilities have a combined Production Capacity of 385, 000 vehicles annually. GM has their independently owned dealers who sells, service and market vehicles produced by them. Founded in 1911 in Detroit, Chevrolet is one of the world's largest car brands, doing business in more than 140 countries.
Chevrolet is the worlds-fastest growing major automotive brand having sold more than 4. 95 million vehicles in 2012 that is a global sales record driving their global sales to more than 9. 2 million vehicles that is a 2. 9 percent increase compared to their 2011 sales. The United States was the largest individual market for Chevrolet with vehicle sales of 1. 85 million however 60 percent of their sales came from markets like Brazil (643, 000), China (627, 000), Russia (205, 000), South Korea (125, 000) and India (92, 000). As Don Johnson, Vice President of U. S. sales and service said “ Chevrolet is most aggressively rolling out new products that has helped GM deliver their ninth-consecutive quarter of record global sales”, as this is guided by a new global vision, “Find New Roads”, that has its roots in the brand’s legacy of ingenuity. Chevrolet is poised for continued growth in 2013 with around thirteen new or significantly redesigned products expected to be launched in the United States and around the world. Chevrolet has global presence by virtue of delivering small cars like the Cruze and Sonic/Aveo.
Tough times call for creative solutions, and the widespread failure of our leaders and the rest of us to take ethics seriously create a problem. According to the 2009 USA Today/Gallup Poll, less than 25% American in four rated highly the ethical standards of business executives. Irrespective of you being a CEO of a global corporation or a midlevel manager you need to set high standards in your organization and need to live up to them. The development of technology has bought up an array of ethical issues that are related to work. In a study on systems that are technology related with an over-reliance on systems that are computer controlled systems there are several issues of management responsibilities and responses. Cordeiro, W. suggested a five-step process for managing these ethical issues effectively. This mainly involved being aware, consistent, and most important to communicate clearly Beck has defined ethics as “the universal practical philosophy dealing with the intrinsic goodness found in most of the actions. Sullivan explained that moral decision making is mainly using rational intellect instead of rules prescribed by Thomas Mathew Lawmakers, Flew defined rationalism wherein humans can gain knowledge of the something and ethical decisions are guided by deductive reasoning.
S. A. Bowen studied two global pharmaceutical organizations using the Kantian model for practical implementation dealing with ethical issues. In Kantian philosophy, a decision is truly moral only if made by an autonomous, rational decision maker. Rationality is the guide used by all humans with free choice to fulfil the moral law the practical implementation of the model asks the decision maker to rule out prudential self-interest, greed, and selfish motives by asking the questions “Am I acting alone on the basis of reason? Can I rule out influence of politics, money, and self-interest?” If the answer is “yes, ” then the issue manager proceeds to the next step toward decision making that involves the group consensus. The model then proceeds to the most rigorous test of deontological philosophy that is Kant’s categorical imperative. This imperative is universal, an absolute standard of principles that applies consistently across time, cultures, and societal norms. This includes the principle of reversibility that means would the decision maker see merit in the decision if he was on the receiving end of this decision. Kant’s argument of actions undertaken from duty is in opposition to the utilitarian school of ethics. Utilitarianism looked at the consequences of an action that create the greatest good or happiness for the greatest number of people.
Utilitarianism is a teleological - or consequentiality - based philosophy as opposed to Kantian deontology’s non consequentiality, duty-based approach. Utilitarianism is mostly used in cost–benefit analysis. Kant placed the highest worth on performing moral duty based on rational decision making. The actions undertaken from duty rather than from compulsion or law are important. “GOOD WILL” according to Kant is a necessary condition for ethical decision making. Baron explains that good will manifest in actions done from duty. People need to be treated as an end in them and never as a means to an end. Every human person has objectives and intrinsic worth or dignity that is accomplished by providing the necessary knowledge to make their own decisions, this is the “Ethical Consideration Triangle” used to discuss issues in management teams. Each point of the triangle is based on one of Kant’s formulations of the categorical imperative: duty, dignity and respect for others, and intention or a morally good will. Inside the triangle, are the group’s issues managers should consider with respect to their dignity and respect, duty, and their intentions these groups are publics, stakeholders, self, the organization, and society. Managers need to consider all these groups individually to conduct a thorough analysis of the perspective of each group involved in an issue.
Symmetrical communication, according to J. E. Grunig , is when “practitioners use dialogue to bring about symbiotic changes in the attitudes, and behaviours of both their organizations and publics”. According to J. E. Grunig and Dozier the symmetrical approach to communication is inherently more ethical than the other approaches because it is based on dialogue. It is the moral duty to engage in dialogue. The communication should be ongoing that is used to contribute to the decision-making process as well as to communicate with publics about the decision. Economic ImpactsA company’s brand name takes years to develop hence it the most valuable asset. If the trusted brand causes harm to the customer then it can irreparably harm the brand image. Product recalls have increased dramatically especially in the US as per the U. S. Consumer Product Safety Commission’s website. Among the various costs associated with a product recall the cost of losing customer goodwill is very crucial affecting the sales of the company. Based on the stock market reactions to automotive recalls in the U. S. from 1966-2011 there is evidence that the firms initially experience abnormal returns of -0. 6%. Furthermore the customers future purchase decision would depend on the extent to which the company can show the reliability of the specific aspects of their goods and services.
D. Vogel clearly shows the distinctive differences of the United States as compared to the rest. Americans consider the individual as critical for the source of ethical values compared to the other nations where the corporation is the locus for ethical guidance. This means the managers when facing a moral dilemma in non US nations would make decisions based on their shared understanding of the scope and nature of the company’s responsibilities. This is based on the norms of the community thus resulting in “consensual” business ethics rather than on their personal values. Furthermore United States businesses have increased protection from the whistle blowers especially for violation of regulatory statutes by slack company policies. Instead non-US companies have the greater emphasis on informal control mechanisms within the firm.
Another crucial area is that Americans tend to believe that the American procedures and rules should be applied universally. This “universalism” makes a distinction between “us” and “them”, wherein the American business culture treats everyone in the same arm’s length. The others in contrast define their ethical responsibilities wherein they place less value on treating everyone equally and attach more importance in fulfilling the obligations to those institutions that they have long standing relationships. The application of business ethics in any situation of global integration needs the better appreciation of the differences in the legal and cultural context of the business environment between United States, Western and the Asian economies.
E. D. Jaffe and A. Tsimerman, studied Russian managers who are not adopting an ethical modicum of behaviour as they have very low ethical threshold and they believe that it is necessary to compromise one’s ethics for self-interest rather than that of one’s organization or their society. This is mainly due to failure of proper ethical education at the business school level. P. T. Heyne, G. Brennan, and A. M. C. Waterman, argues that the ethicist or market sceptic suffers from The Fatal Conceit: "The widespread moral suspicion that economists specialize in the analysis of social systems that no one controls and that produce results that no one intended" There is the fear of the unknown (and unknowable) that explains their distrust of the market economy and their enthusiasm for planning. Sometimes people's opportunities are so poor that we should offer them somewhat better opportunities?
B. A. B. Blonigen, C. R. C. Knittel, and A. Soderbery, have studied the product redesigns happening across virtually all types of products and analyzed the redesign activity in the U. S. automobile market. They found that automobile model designs become obsolete quickly resulting in frequent model redesigns despite an estimated average redesign cost of around $1 billion. Their model estimates showed that companies‟ redesign decisions depend crucially on competition for market share and the planned obsolescence of the existing model design. Redesigns lead to substantial profits based on the strong preferences of the customer. Therefore companies are very keen to increase their market share for strategic reasons. It is estimated that the cost of redesigning automobiles varies between $500 million and $1 billion dollars. If the customers‟ expectations of quality are high then the manufacturers may find that they are unable to shift expectations of product quality as they have to cover such large redesign costs, thus losing their market share to reputable higher-quality producers. This can be further confounded by the country attribution to the quality of the product.
R. G. Hammond, studied consumer responsiveness to large-scale product recalls that are caused by safety problems of the automobile industry, where 22. 4 million recall notices were issued during 2010. In fact more new and used vehicles were recalled in 2010 than were sold in 2010. The most widely covered recall was of Toyota Motors vehicles due to safety issues called “sudden unintended acceleration. " He compared the recall of Toyota vehicles to those of the Audi vehicles during the 1980s. An analysis of the Toyota recalls in 2009-2010 in comparison to similar recalls for the Audi 5000S in the late 1980's showed a larger drop in Audi brand vehicles during their major recall. This was because customers were much less familiar with Audi who were a relatively new entrant to the U. S. market. Thus the more familiar customers are with the company generally; the less does a recall affect the product quality expectations. The comparison between the two recalls highlighted that the recall on Toyota had small effects on the consumer demand primarily due to Toyota’s reputation that was more established in the American market.
J. E. Alvey, showed the relationship between ethics and economics. “Human ends” are subjective and beyond rational debate whereas “means” are subject to rational debate and economics focuses on them. It is claimed that goals can be altruistic or public spirited. The scientification of economics has led to a separation of economics from its ethical roots as science is concerned with “facts”. J. C. Lere and B. R. Gaumnitz, studied the impact of the code of ethics in decision making and observed that the individual behaviour is not much affected by the code of ethics, however the likelihood that an individual will select an action that is ethical based on code of ethics increases if such a code is supplemented with sufficient provisions to enforce them coupled with extrinsic deterrents provided by the organization. Unethical behaviour depends on amount of benefits that an individual gets coupled with the imposing pecuniary and non-pecuniary penalties that the organization would impose on those individuals. C. Barnes emphasized the pragmatist view of leadership in understanding both the strengths and weaknesses of our economic and political system to make ethical decisions thereby fostering an ethical culture that will make organizations more successful.
The commitment to ethics must come from the top to motivate, empower and encourage employees to achieve. Pragmatism in leadership necessitates a look at the consequences of the changing environment and incorporates their implications into policies which reflect the real world experience. This reflects a greater moral understanding that influences the global economic life. A. Jamnik, studied the integration of ethics and economics in the modern world.
Business ethicists identify consistent rules that align with rights and justice standards. This is based on the deontological or duty-cantered ethics. The neo-classical economists use the "greatest good" concept of utilitarianism. Traditionally ethics emphasizes the greatest happiness as a moral principle when choosing a course of action simultaneously trying to maximize the good for all. In this case, utilitarianism is used as a moral precept or rule to all situations a priori. There is a conflict between deontological ethics and economic utilitarianism. Economic utilitarianism focuses on self-gain employing the cost-benefit rule to measure whether a desirable net gain accrues to individuals in markets, or to the stockholders as profits. In contrast, the deontological ethics asserts the primacy of duty to others with an emphasis on moral motivation. There is a trade-off between self-interest and other-concern in which economic goals (of stockholder or company profits) may exist in tension with duty to others (as standards of rights and justice). This conflict between ethics and economics needs to be resolved.