Responsible Business: A Case of GM Motors

As Marcoux (2008) noted, business ethics can be traced back to the beginning of trade itself. If law is to be regarded as a rough guide to held moral values, the Code of Hammurabi (1700s B.C.) can be regarded as civilization's first attempt to create some level of moral values for commercial activities in relation to prices and tariffs, and it defined both the rules of commerce and harsh penalties for noncompliance.In essence, responsible business is defined as businessmen and businesswomen adhering to codes of conduct that will assist them in gaining public trust in relation to the products and services they offer to interested stakeholders (Smith, Smith, and Mulig, 2005).This is clearly reflected in the GM case, where the issue of "public confidence" clearly prevailed in the whole case due to the company’s inability to effectively and efficiently address faults linked to its products—which later resulted in 13 deaths and numerous damages to its concerned stakeholders.

ARTICLE REVIEW

What did GM do? The article centers on GM’s negligence regarding safety issues in its Cobalt (car) product. Immediately after production was complete, a number of issues were noticed with the product in relation to consumers’ safety. It was found that the car can turn off its ignition on its own, can shift the drive key if drivers mistakenly hit it hard, and doesn’t deploy the airbag due to electrical faults related to its ability to turn off the ignition on its own. A case file was issued to the management of GM, detailing these safety issues, and the company even verified some of these issues during a test drive. However, the manager refused to address it, stating that the timeframe required was large, it would be expensive, and it would have negative effects on their financial performance. In essence, the management of GM Motors decided to leave faulty cars on the road and risk the lives of its stakeholders in general (just that they might satisfy their shareholders’ interest in profit maximization). This is total negligence from a brand that has been trusted over the years.

How did GM do it? If the management wasn’t alerted to these issues, it would have been a different case. However, the management was duly alerted on different occasions, and even ramifications were provided as necessary, but they neglected these remedies and focused on profit maximization. The management tried to postpone the recall for up to ten years and only did so after numerous lawsuits were filed.According to the American safety standards, it is mandated that any automobile manufacturer should report any safety issues within 5 working days and finalize decisions on repair or recall while reporting such cases. The GM’s management neglected this and risked the lives of its stakeholders. Even when the legal battle started and the decision was made to recall these cars, the manager did not present any official statement or answer calls in relation to the issue. The only statement issue was viewing their website, and all interviews had the management in absentia.

How do you feel after reading the case? – From the reader's perspective, this is a very discouraging experience.It is a case no one would expect about such a great brand as GM, and it does have a negative influence on the brand's image. As a reader, this case has reduced the level of trust one has for the brand to a very great extent, and the experience from this case does put a huge doubt on the chance of owning a GM car in the future. No one would want to risk his or her life, especially when such a person has been fully informed of where such risk comes from.

 

On what other occasions have you felt like this? – Besides the case of GM, as highlighted above, there are also numerous other occasions in which one has felt disappointed by the attitude of corporations in terms of how they address issues raised by their stakeholders. Take Malaysia, for instance. There have been times when we had issues with our internet connection and called the network provider a number of times, but their response was slow and shady. As a result, we ended up choosing a different network provider. This is the impact that response patterns, approaches, and strategies can have on consumers’ brand loyalty.

If you were the CEO of GM, what would you have done differently? As a GM CEO, I would have done the exact opposite of what the CEO did. Firstly, there is no way I would be presented with these safety issues, knowing the consequences of not reporting them to the American Safety Association within five working days, and yet neglect them. I don’t think the life of any consumer is worth being risked for the success of a brand. This is because the brand would not exist if it were not for the consumers.In fact, it is the consumers who make the process of production complete with their purchases of the finished goods. Thus, they should be treated with love and respect. Second, I would have given a public speech and conducted an interview about the recall so that the general public was aware of it and understood the risks involved.Thus, my response would have been much more rapid, effective, and efficient. The only purpose would be to protect the brand image by first protecting the lives of the consumers.

How can GM explain what happened? At the moment, the best way for GM to address their negligence would be to make a public appearance and conduct an interview section in which questions about the issue would be asked and answered.They should publicly apologize for their faults and pledge to better serve the interests of the stakeholders in the future.

What are the effects of the differences generated by GM's practice? – The way the management addressed the issues has had a negative impact on their overall brand image as well as consumers’ loyalty. This is because consumers will now view the brand as being negligent and slow to act. Considering the deaths and damages involved, consumers will also be pushed further away from patronizing the brand. The management should also expect to incur a number of financial damages and losses from the legal suits as consequences for their negligence.

When & what differed from the expected?  Firstly, the company was expected to make a public appearance and be present in interviews, but they didn’t. On the same hand, it was expected of the manager to address calls in relation to the issue, but all calls were not returned. As a strong brand in the automobile industry, one would have expected GM to take the report seriously once it reached its desk, but the decision was to neglect it and risk the lives of consumers. Finally, one would expect a public apology from the company following the issue, but none has been heard of till this moment. This is a poor corporate strategy.

Utilitarianism: A Case of Malaysia

Utilitarianism is a normative ethical theory. It can be considered a prevalent form of consequentialism (Anderson and Davis, 2000). The theory of utilitarianism is based on "making the world as happy as possible" (communal happiness) (Becker and Fritzsche, 1987). In much more precise terms, classical utilitarianism is based on three principles: 1) consequentialist principles: actions are considered right or wrong not on their own but based on the consequences produced by such actions; 2) happiness principles: the only important consequences are those that make people happy; and 3) the principle of equity: happiness is equally important to everyone (Chi and Llo, 2003).

There are six major rules that govern the application of utilitarianism, as follows:

• Define the type of pressure—each action has a form of happiness it creates, so first determine the form of happiness created by the action taken.
• Neutrality of pleasure: the happiness of a sadist should be made equal to that of an altruist. No preferentialism.
• Greater happiness code: in cases where choices and value vary, the higher group should be made happy (democracy).
• At all costs, one must do whatever it takes to make the general public happy.
• Pleasure is the ultimate value; one should ensure that the consequences of any given action increase people's pleasure.
• Focus on consequences and results—the focus should be on ensuring that consequences produce positive results for the entire world (Enderle, 1997).

Andre (2012) presented a clear demonstration of utilitarianism in the Malaysian concept. The case features the refugee exchange between Australia and Malaysia in 2011, in which the government of Malaysia reached an agreement with the Australian government to accept 800 refugees from Australia in exchange for 4,000 refugees moving from Australia back to Malaysia. The author argued that this is a common good for the 4,000 since Malaysia cannot be verified as a trustworthy nation in terms of taking good care of refugees, but this does raise utilitarian issues as the safety of the 800 being exchanged for the above figure now becomes a big question. Risking one's life (even if it means saving another's) is not considered right in a utilitarian context.Thus, this posed a big issue for the Australian government. Thus, utilitarianism is also a common issue in the Malaysian setting, as foreign governments find it hard to trust the Malaysian government in the case of "providing general happiness" to the entire population of Malaysia. The consequences of their action meant that Australia had to later decline the offer. Therefore, utilitarianism can be considered an important aspect of our daily lives as it paves the way for equality. If not for utilitarianism, the Australian government would have exchanged the refugees with Malaysia. While the 4,000 would eventually become happy in Australia, it would be at the expense of the 800 being transferred back to Malaysia. The idea of lives not being used to make lives happy can, as such, be justified in this case. In the stakeholders’ views, this is a bad decision by the Australian government as they should have focused on bettering the lives of 4,000 people against those of 800 people, but the Australian shareholders would prefer the decision made by the government as a reverse case would have increased their financial burden.

Utilitarianism: A Case of GM Motors

In the case of GM, as discussed above, the consequences have both a positive and negative impact on society. On the positive side, the decision to recall the cars has reduced the chances of further deaths, but on the negative side, the late decision did result in numerous deaths and damages. In general, the GM brand did not act in accordance with utilitarian values. This is because they "risked the lives" of consumers in order to better the lives of shareholders. This is a poor decision from the side of the management, and it actually ended up making the lives of shareholders worse due to the numerous financial losses the company has been forced to incur as a result of their decision.

 

A CRITICAL REFLECTION OF MY NATURE FRAMEWORK

In accordance with Iloka (2014), different individuals have different values that define who they are, what they do, and how they do it. These values are ingrained principles that shape their way of life and how they interact with the world around them.The core values in my case include:

• Orderliness
• Timeliness
• Obedience to rules
• Decency

The values above can be linked to "rule utilitarianism." This is a form of utilitarianism that is based on constantly abiding by existing rules and regulations. For example, if GM had followed the established rule of informing the American Safety Association and resolving the issues within the established 5 working days, the deaths reported above would not have occurred. These values are more in line with the stakeholders’ view, and they represent my own thoughts. I do believe that the general purpose of any business should be to meet the needs of stakeholders because without them, the business won’t exist. GM should have focused on safely guiding the consumers instead of maximizing profit for the shareholders, and if such was the case, the negative consequences wouldn’t have resulted.

REFERENCES

Anderson, S. K., and Davis, T. G. (2000). An ethical decision making model: A necessary tool for community college presidents and board of trustees. Community College Journal of Research and Practice, 24, 711–728.

Andre, Dao . (2012). The moral philosophy of the Malaysia Solution. Available at: http://theconversation.com/the-moral-philosophy-of-the-malaysia-solution-7983 [Accessed on: 16th -10-2015].

Becker, H., and Fritzsche, D. J. (1987). A cross-cultural comparison of managers' attitudes. Journal of Business Ethics, 6, 286–296,

Chi, S. C., and Lo, H. H. (2003). Taiwanese employees' justice perceptions of coworkers' punitive events. Journal of Social Psychology, 143, 27–42.

Enderle, G. A. (1997). Worldwide survey of business ethics in the 1990's. Journal of Business Ethics, 14, 1475–1483.

Iloka, Benneth., C. (2014). Importance of teamwork in the medical line: a personal review based on Gibb's model.  Available at: http://ilokabenneth.blogspot.com.ng/2014/02/importance-of-teamwork-in-medical-line.html [Accessed on: 16th -10-2015].

Marcoux, Alexei (2008). Business Ethics, the Stanford Encyclopedia of Philosophy (fall 2008 Edition), Edward N. Zalta (Ed.).

Smith, M. L., Smith, K. T. and Mulig, E. V. (2005). Application and assessment of an ethics presentation for accounting & business classes, Journal of Business Ethics, 61: pp. 153-64.