It has come to my attention that the actions and functions of the Gumdrop Northern are not up to standards. The company besides afflicting the American citizens, particularly the military, has lacked a sense of corporate social responsibility to both their employees, customers and the natural environment. Notably, the business world faces the notion of corporate social responsibility in all aspects of business undertakings (Bitektine, 2011). In a wide assortment of issues, corporations get motivation of to behaving in a socially responsible manner. In the contemporary world, corporate businesses focuses on the interest of the society through taking responsibility for the effect of their actions on employees, shareholders, communities and customers in all facets of their operations (Bitektine, 2011).
Nevertheless, this is contrary to what Gumdrop Northern is doing to all its stakeholders. Predominately, the company focuses on profit gain, as opposed to corporate responsibility, obligation and quality. The behavior employed by the company top executives is worrying and more significantly questions the ethical principles of the company. From this perspective, this memorandum cites three principal ethical issues facing the company, their solutions and recommendations.
The ethical issues illustrate insensitive company that functions for profit preservation while violating ethical standards and legal requirements. More significantly, I wish to show the basis of ethical issues and their influence on corporate stakeholders and the citizens.
Analysis of Relevant Facts of the Case
Gumdrop Northern, a long-term military ammunitions manufacturer and contractor, employed a workforce of 105 employees and collected considerable profits of 500 billion dollars per year. The employees received a substantial salary package for a business well done. However, the company's bumper profits were as a result of clandestine operations that included manufacturing of landmines. The company manufactured landmines contrary to the international treaties and law, and exported them to Iran and Afghanistan where these products put at risk lives of many people, particularly children and soldiers. Besides their illegal manufacturing of defective landmines, Gumdrop manufactured substandard products, armored vehicles and body armor, in spite of getting a handsome pay from their customers. Evidently, the body armor was not protective enough and the company despite knowing the missing ingredients chose not to add flak jackets to avoid injuries.
More so, the company armored vehicles although sturdy and strong on the top and sides had a thin steel sheet on their undersides, an aspect that made the vehicles vulnerable to IED explosions. After their unscrupulous activities were exposed, the company laid off some of its employees to evade the legal requirement of collective bargaining agreement. To avoid paying the families of people injured and those who died because of the company's defective devices, Gumdrop management filed for bankruptcy. The company continued performing its devious activities in Colombia and Argentina where it established strong links with contractors. The company moved all its assets to foreign banks in order to maintain its share value and profits. Gumdrop executives bribed the officials concerned with environmental laws, labor laws in order to allow the company to conduct its business smoothly. More so, the company enjoyed minimal business restrictions notwithstanding the risks Gumdrop operations posed to people and the natural environment.
Ethical Issue 1: Violations of International Treaties and Law
Gumdrop Northern Company sold faulty armor to the United States' military. The Company knew exceedingly well that their products were defective but chose not to inform the militants regarding the need for flak jackets. The company concealed this pertinent information for trepidation of dropping the contract. Because of the need for immense profits, the company ignored the considerable advantage and value of disclosure so as to reap short-term profit benefits. The need for massive profit and the company's greed instigated several legal actions put forward by service members, families affected both directly and indirectly by the company's defective products and the United States military.
More so, the company illegally manufactured and exported landmines to rebels working against the interest of the American in the Arab world. The illegal business contributed enormously to the massive profits realized by the Company. Notwithstanding the high profit margins obtained from the landmines, the company manufactured also defective landmines. Notably, landmines are extremely risky and pose a threat to children and soldiers attempting to plant them (Pike, 2010). Given their risks, the international law outlaws landmines. Therefore, despite the short-term profit gains, the company faced legal troubles from production and selling of landmines.
With respect, to Gumdrop Northern, profit gain is a short-term enticement given that there were other serious consequences of behaving unethically. Firstly, the company gained nothing at all by failing to tell the importance of additional flak jackets. It is evident that the company through its sale of defective products experienced short-term benefits, which jeopardized its prospective operations in the United States. It is evident that the company's customers paid handsomely for armored vehicles and body armor. Therefore, through concealing crucial information regarding the weaknesses of their products, the company lost a considerable and valuable marketshare besides seizing its operations in the United States.
They should have disclosed to their customers the necessity of additional flak jackets. More so, the company should have sought for advice from their clients and other agencies, an aspect that would have helped them better their products and services, hence long-term gains supported by uninterrupted operations. The move to evade lawsuits and investigations by shifting to Colombia and Argentina demonstrates poor management in the company. The move was rather unnecessary and foolish given the record track of the company.
It is evident that the poor products the company sold to the United States Military and the defective landmines got into the hands of the Argentineans. The same way, these products were dangerous in the United States they would be even more dangerous in Argentina and Columbia, and the company will probably be questioned and held responsible.
The strongest recommendation would be to bring the managers and administrators of Gumdrop Northern to justice for various crimes committed. This will be made possible through talks between the Argentina government and the United States government.
Ethical Issue 2: Employees Layoff
To remove the company from WARN Act, Gumdrop Northern Board of Directors decided to layoff 5 employees without explanation besides providing early retirement benefits to 5 others to bring their labor force down to 95 from 105. The layoff of 10 employees helped in eliminating prior notice of layoffs and closure. This step helped the company in nullifying the needs and accountability it had to its employees simply by eradicating the requirement of the WARN Act. The Act protects employees from sudden dismissal and closure of companies. The WARN Act is applicable to companies employing more than 100 workers (U.S. Department of Labor, 2003). The WARN ACT required Gumdrop to offer suitable notification of 60 days regarding their shift to another country because the company had more than 100 employees.
Through dismissing some workers, the company rid itself from WARN Act obligations (U.S. Department of Labor, 2003). Moreover, bankruptcy declaration made by the top executives also rid the company from the lawsuits it faced. However, this step offered the company short-term benefits of leaving the country and evading lawsuits but how about its business performance in the foreign land. The board carefully crafted the move to Argentina. The country was a valid option as there are no extradition bylaws and no worker's unions. The move to Argentina shows how poor the company's management was. While the move yielded short-term benefits, the company would fall because of its incompetent management team that cannot handle issues and conflicts facing the company now and in the future.
Instead of shifting to a different country where their unscrupulous activities would surface, the company should have formed a proper management team to handle the issues facing the company in the United States. Such steps should have allowed the company to handle its issues and continue its operations in the United States.
Ethical Issue 3: Environmental Threat and Bribery
Gumdrop Northern highly rewarded officials in Argentina and Colombia, a strategy that allowed the company to violate labor and environmental laws in the country. They also bribed officials in order to enjoy minimal business restrictions. The chemical and radiation from the production of the armors and landmines posed a serious risk to the natural environment. The Columbia and Argentinean government officials overlooked the harm Gumdrop company was posing to their populations and the national environment. They viewed the chemicals and radiation affecting the environment as little price to pay for the reduced prices they got for military equipments. The equipment enabled them to fight union activists, drug dealers and insurgents. The countries got these short-term benefits from Gumdrop Company while they faced long-term effects to their natural environment.
Instead of accepting the bribes from Gumdrop Company, the Argentina and Columbian government officials should have allowed the company to put up measures and strategies to…