Utilitarian ethics and the pacemaker supplier dilemma

Utilitarian Ethics

Business Ethics 3825

Case of the Sole Remaining Supplier

Relevant stakeholders

Internal stakeholders

External stakeholders

Utilitarian ethics: Action plan

Desired aims

Specific Actions

Raising the quality control standards

Develop elaborate Standard installation and operation procedures (SIOP)

Right of revoking supply contract unilaterally in case of non-compliance to SIOP

Optimal good achieved

Case of the Sole Remaining Supplier

The case of 'sole remaining supplier' is regarding a firm that manufactures heart pacemakers. The pacemaker is a modern device that is used by the heart patients who have a medical problem of skipping heart beats. If regular heart beat (averagely after each 1.2 seconds) does not take place, the pacemaker stimulates the heart and it beats regularly. In its earliest years of invention, patients solely depended upon pacemaker whereas their own heart normal heartbeat was suspended. There were serious reservation in public, doctors, and the supplier company as to the ethical aspect of selling a 'medical device' that ran the risk of failing and depriving the patient of life. Since the installation of this device required extremely delicate handling, doctors were also least adept at installing pacemakers. Some specific stories about patients dying of issue related to the pacemaker also made the management of supplying company to immediately decide upon whether or not to continue supplying the product (Shanks, n.d.). Since there were several ethical dilemmas involved in both sides of decision, continuing or suspending the supply, all this gave rise to heightened tension within the board meeting as to what should be the most appropriate ethical stance of the company to follow.

Relevant stakeholders

There were several stakeholders involved in this case scenario. These belonged from both within and outside the case organization.

Internal stakeholders

The internal stakeholders involved in this case were the Chief Executive Officer (CEO) board of directors (BOD), the engineering team of supplier organization, and the legal team responsible for handling the law suits. The biggest stake within the organization was that of the employees of this organization whose employees depended on organization's earning for their salaries. Thus, in case that a law suit was filed after failure of a pacemaker, the supplier company as a whole including its directors, employees, CEO, and engineering team, was to face the consequences.

External stakeholders

The external stakeholders engaged in this case scenario were the buyer company to which supplier was delivering the pacemakers for sales, the patients that were being installed with the pacemakers, doctors performing the installation, and the shareholders of the company. In case of a negative consequence of installing the pacemaker, patients was the most effected stakeholder group as there was a threat of losing the life. Secondly, doctors were the most imminently threatened group of stakeholders under the threat of law suit from patient relatives. Shareholders of the company were to lose significant earnings in form loss of cash dividends and fall in the share price should there occur an incident of law suit on the supplier company. The buyer company was also directly under the threat of law suit and should the supplier suspend the delivery of pacemakers, the buyer company would have immediately run out business. On the other hand, in case of law suit also, the buyer company's business prospects would have become bleak.

Utilitarian ethics: Action plan

Utilitarian ethics are the basis of normative theories of ethics that guide business actions. According to the classical utilitarian theories, the action that promotes and ensures greatest good for greatest possible number of people can be termed as the 'ethical action' (Driver, 2009) that a firm may follow while conducting business operations.

Raising the quality control standards

The BOD under the leadership of CEO of the company should raise the quality control standard at the 'development and manufacturing' phase of business operations (Q I.C.T. Task Force, 2000). Thus, if during the design phase, the engineers of the firm are able to deploy more rigorous and quality oriented standards of design testing (Fries, 2012), the company will be able to improve the performance quality of Pacemakers they sell to the buyer company.

Develop elaborate Standardinstallation and operation procedures (SIOP)

After conducting a thorough empirical research regarding the most common and widely reported circumstances, both at the doctor and patients end, that cause failure of the pacemaker, the company should develop a standard installation and operating procedures (SIOP) manual that outlines that under what circumstances and how the doctors and patients should use the pacemaker with elaborate handling guidelines (Haider, 2006). Specific protocols should be listed that doctors have to follow while installing the pacemaker in order to ensure a successful installation. The company should attach a disclaimer with the product that not complying with the SIOP will acquit the company from any legal consequences.

Right of revoking supply contract unilaterally in case of non-compliance to SIOP

The BOD should draft a policy under which the legal team of the firm should arrange for the publication of a clause in the contracts with buyer firm that should there be any violation of SIOP at the buyer end, the supplier holds the right to unilaterally revoke the supply contract with only one show cause notice served to the buyer. This will enable the supplier firm to maintain a business pressure on the buyer to comply with the SIOP guidelines for handling the device while storage and transportation. By taking these specific steps, the company will be able to minimize the risk associated with selling the Pacemakers, both from patient and company perspective.

Optimal good achieved

I have decided not to close down the supply of Pacemakers as this will amount to sever loss for three major stakeholders. Firstly, the patients will be left with no option to get the heart beat skipping issue treated. This will amount to leaving the patients leaving at circumstantial mercy. Further, the supplier company will lose share of a growing market segment that could well become potentially lucrative market segment for the company in coming years. Thirdly, the buyer company will also face unprecedented consequences through the revocation of supply contract. However, to keep the firm operation in this segment while not risking internal stakeholders of the supplier firm, greater diligence will be practiced in engineering, operations, and sales of the device. Engineering standards would be raised and sales liabilities of pacemakers will be reduced through publication of SIOP. By giving supplier firm with the right of revoking the supply agreement in case of non-compliance by buyer, further risk mitigation is achieved. Thus, from a utilitarian perspective of business ethics, greatest good of all the stakeholders have been ensured by the proposed actions plan. It would not have served greatest amount of good had the supply contract been revoked. It would only have provided safety from potential law suits while disregarding the interest of patients and buyer firm.