Question 1 (a)
According to Carroll & Buchholtz (2003, p.70) that the stakeholder to a firm may be thought as any individual or group who can affect or is affected by the actions, decisions, policies, practices or goals of the organization. On the basis of the case the stakeholders involved in are shareholders, employees, consumers, local government and competitors.
Shareholders are often the key stakeholders of one organization and in this case we can see the initial consideration of the shareholders in the firm of natural spring water is to gain profit and the rising of share price (Crane & Matten 2007). So once the incident of contaminated water is exposed, it may affect the profit of these shareholders. Firstly, the reputation of the company will be influenced so much which will directly affect its sales and reduce the profit of the shareholders. Secondly, the process of dealing with the various problems aroused by the contamination would be complicated such as regaining reputation and confidence from the society. And it may also affect the share price of the company and the income of these shareholders.
These employees are also the stakeholders because they have a closely integrated relationship with this firm both in the legal and economic side (Crane & Matten 2007). Due to the contacts with the company, these employees have to share the risks of the incident of contaminated water. Though the recent strike may result in the increasing of their wages, the contaminated water incident may change this situation. Even if this company dealt with this incident very successfully, it would still be a profit-losing result. The reputation of the firm may be affected which even worse may make it go bankrupt. So the employees may face layoff, income decreasing or even worse situation.
In the case, consumers of the firm are also the stakeholders. As the case mentioned 120,000 bottles of the spring water were contaminated. Although no consumer could possibly suffer harm unless drinking a lot in a long period, the consumers have the right to know the truth which is directly related to their self-interest. Just as Crane and Matten (2007) mentioned in their book, if a company wants to maintain its success, it had better motivate the sustainable consumption from the customers. So the consumers are also crucial stakeholders to the firm.
In the case, the government can be also the stakeholder, due to its role as the elected representative of citizen’s interests (Crane & Matten 2007). The government has the responsibility to protect the interest of its citizen and protect the local economy, but if the case of contaminated water is exposed, it may affect reputation of local government and the citizens may blame its negligence of its duty.
Meanwhile, the competitors of the firm are also the firm’s stakeholders. The performance of the firm has influence of these competitors. For example if the firm has a big market share, the competitors of it would have less market share relatively. So if the contamination incident affects the performance of the firm such as the sales, the competitors’ sales may be increased relatively. So we can conclude the relationship between the firm and its competitors is subtle. The loss of the firm may result in the gain of its competitors indirectly.
Question 1 (b)
In my view, and according to the case, the employees of this firm may suffer most, especially the senior management. Firstly, all of the employees of this company have signed contracts with this firm, which means they have to share the risks with the company together. So if the contamination can’t be dealt with appropriately, there may be lots of side effects. For instance, if the incident of contamination is exposed, the reputation and product sales may be affected dramatically, it will directly decrease the income and bonus of the employees, even worse it may lead to a great number of layoffs due to the financial dilemma of this firm. Secondly, for the senior management, they have already devoted so much on the new ad campaign to help the firm gain more. But the incident of contamination may destroy all of their effects and also affect their financial situation as other inferior employees. So we can see that the employees are the most suffered groups as the company’s stakeholders.
And meanwhile, for these shareholders of this company, they may also suffer a lot just ranking behind the employees. As the above mentioned the initial aim of them is to gain profit, and the incident of contamination will obviously affect the financial situation of the company, which would indirectly affect the profit of the shareholders.
And on the part of consumers, the loss suffered by them is also a lot just ranking behind the shareholders. Although till now there is no news about the sickness of consumers due to the contamination, it is still a malignant event for the consumers. As Trevino and Nelson (2007) mentioned in their book that the consumer has four rights including the right to safety, the right to be heard, the right to choose, and the right to be informed. So since the incident of contamination took place, the rights of the consumers were hurt, because the safeties of the consumers, the right to be heard and to be informed are insulted.
For the competitors, who are also as one group of the stakeholders may gain more than others. The loss of the natural spring water company can’t avoid, so whether the loss is on the reputation or money, it is good news for the competitors of the firm, because these losses will affect the competitiveness of this company, such as the loss of marker share, consumers and so on. This will let the competitors gain more from this firms’ lost territory including the consumers, market and so on.
While to the government, it may suffer less. The rise and fall of a firm may affect the economy of that region while to the government, which may just be an indirect influence. And it may be relatively easy for the government to use its power to control the fluctuation of the economy in the region.
Question 1 (c)
According to the situation in the case, it is wise for the company to call back the 120,000 contaminated bottles of the spring water. The reasons are as follows. Firstly, supposing the contamination is exposed, in another word, the company didn’t call back of the contaminated water. There would be two possibilities. One is that all the business of the company can go smoothly as it has planned. The other is that the incident of contamination is leaked out or revealed by some one purposely, which may direct hit the business of this company. And for a company who plans to have a continuous development, it can’t ignore any possibility. So to weight the benefit and cost based on the consequentialist theories (Trevino & Nelson 2007), it is better to call back the contaminated water than just keep it secretly. Although the calling back of the contaminated water may affect the business at some degree, the cost is less than just ignoring the incident. Secondly on the basis of deontological theories (Trevino & Nelson 2007), it is the moral obligation of the firm to call back the contaminated water.
Although, calling back of the 120,000 contaminated bottles of the spring water is obvious a risk for the business, it may be not as worse as some people thought. Let‘s just take the callbacks of Toyota and Johnson & Johnson for example. After the Toyota officially announced its decision of calling back its faculty cars in the U.S., the Toyota customers maintain their brand loyalty partly due to the calling back action (Admin 2010). Because of the calling back, Toyota advocates its image of “security” “Reliability” and “quality” to some degree, which will also help it gain confidence from its consumers (Admin 2010). And meanwhile the calling back of the Tylenol in 1982 has even helped Johnson & Johnson build good trust and reputation (Rehak 2002). So generally speaking, calling back of the 120,000 contaminated bottles of the spring water may be a relatively appropriate approach for the spring water company, which can help it build a good reputation of trustworthiness.
According to these practical steps in managing crises of business week magazine, this paper will thoroughly discuss the strategy of calling back issue for the natural spring water company in the following (Carroll & Buchholtz 2003).
The first step is to indentify the areas of vulnerability. In this case the vulnerable point is obvious the contaminated water (Carroll & Buchholtz 2003).
The second step is to develop a plan to deal with the trouble which I advocate the following steps.
At first, the full communication is very vital. So the company should inform all the inside stakeholders including the employees and key shareholders the contamination and the importance of calling back of the contamination water. And then it can call up all the employees and key shareholders to work together so as to get through the plight.
And the next step is to mollify consumers. As it mentioned above the consumers have the rights to safety, the right to be heard, the right to choose and the right to be informed (Trevino & Nelson 2007). So the consumers should also be informed the incident of contamination. The press conference may be a proper way. And as the case mentioned the new ad campaign of this natural spring water company is to emphasize the purity of its products, so the press conference is a proper means for the company to reemphasize its concept of the purity of its products and let that be the main reason of calling back. And meanwhile the firm can also declare the nearly no risk of harm to drink the water and give credible evidence. Under this precondition, the company can announce that the decision of calling back is due to its deep rooted concept of product purity. This kind of action may win and regain the confidence and reputation from the society just as Johnson & Johnson did in 1982 (Rehak 2002).
At last, the company should also take the compensation into account. There may be some consumers have already bought some bottles of the contaminated water. So the company should make some plans to deal with this situation.
After the second step, it is crucial for the firm to form crisis team to carry out the above approach as the second step mentioned (Carroll & Buchholtz 2003). So it is important to indentify executives who are qualified enough to deal with panic situation under heavy stress.
The fourth step is to stimulate crisis drills, which means using the experience or practice such as the contaminated incident to educate the company members and learn a lesson from it (Carroll & Buchholtz 2003). This step can help the company avoid the same problem and assess effectiveness from the crisis strategies.
Question 1 (d)
As the case mentioned, the hot potato for the natural spring water firm to deal with is the contamination. And the financial situation usually becomes one of the main factors for companies to handle their ethical dilemmas. In the case, the financial situation of the company is a crucial factor for it to deal with the contamination incident. Meanwhile the sound financial situation and bad situation will have different degree influences on the company’s approach and attitude to deal with the contamination incident.
Firstly, supposing that the financial situation of the natural spring water company is sound that the company has enough liquidity to meet the challenge. So it is easy for the company to make a decision on how to handle the contamination accident. The easiest way is to call back all of the 120,000 bottles of the spring water. Let’s just take Toyota’ calling back for example. Toyota has called back 3.8 million vehicles in the US to alter a part of accelerator pedals on these vehicles (Mainstream Media EC 2009). This big action of calling back faulty cars has obviously cost Toyota so much. But on the other hand it is an action to show their care on quality and credibility. So lots of consumers says that they still believe Toyota even after the calling back. And from this example we can see that the calling back of problematic products for a company may not be so bad. It is also a means to show the reliable reputation of the company since it takes the quality of its products so seriously. So for the natural spring water company, it can call back the 120,000 bottles of the spring water and show its care of product’s quality since its financial situation is sound. So the loss of the calling back for this company is almost on money. But the company can use its sound financial capability to meet this challenge and at the same time, the company can also use its strong financial power to propagandize its credibility of products’ quality due to the calling back case, which can be used as a means to strengthen the convincing degree of the new ad campaign on emphasizing the purity of its products. All in all under the sound financial situation, the problem of calling back of contaminated water for the natural spring water company can be handled out smoothly.
Secondly, as the case mentioned the strike of unionized employees of the company has already made its financial situation in a panic. So in fact the financial situation of the company may not be sound. Under this circumstance, all of the means to deal with the contamination incident should be considered deliberately to avoid further money losing. In my personal view, there are two ways for it to deal with the contamination. The first option is still to call back the 120,000 bottles of the spring water. And obviously, the company will suffer a lot such as the money losing on the 120,000 bottles of the spring water, the compensation asked by the consumers who have bought the contaminated water. To deal with this, the company may have to downsize to keep it business running. In the short term run, this calling back action is really a heavy hit for the development of the company. While from the other aspect, it can also help the company to build a reputation of quality care, which may convince consumers’ confidence and bring profit. But the reputation building is a long term project. So in the building course, the company has to suffer a lot.
The other option for the company is to keep silence of the contamination, since no consumer could possibly suffer harm unless he or she drank too much and the machine has already been sterilized, any risk of long-term exposure has been virtually eliminated. So it is reasonable for the company to keep silence. If it goes smoothly, the company will face almost no loss, while we can’t ignore other possibility that the contamination incident may be exposed by others. If the incident of contamination is exposed by others not the company itself, it will be a fatal blow for the company not only on its reputation but also on its financial situation, which worse still even make the company go bankrupt. Generally speaking this option has a higher risk than the former one when the company under bad financial situation.
This part, the paper will evaluate Kant’s theory deliberately. It will focus the three parts of his theories including “act only on maxims which you can will to be universal laws of nature”, “always treat the humanity in a person as an end, and never as a means merely” as well as “so act as if you were a member of an ideal kingdom of ends in which you were both subject and sovereign at the same time” (Donaldson, Werhane & Cording 2002). And meanwhile it will use some examples in the business world to describe Kant’s theories thoroughly and at the same time it will also analyze these limitations of his theories.
The German philosopher Emmanuel Kant is one of the key contributors of deontological theories, whose famous ethical theories are known as “Categorical imperative” (Crane & Matten 2007). He advocated that morality is a question of certain eternal, abstract, and unchangeable principles- a set of a priori moral laws- that humans should apply to all ethical problems (Crane & Matten 2007, p.97). And meanwhile, he held that ethics is an ethics of duty rather than an ethics of consequences, so good will is the only thing that is good in itself (Donaldson, Werhane & Cording 2002).
The categorical imperative of Kant includes three parts as the follows (Donaldson, Werhane & Cording 2002, p. 62). The first part is “act only on maxims which you can will to be universal laws of nature”. The second part is “always treat the humanity in a person as an end, and never as a means merely”. The last part is “so act as if you were a member of an ideal kingdom of ends in which you were both subject and sovereign at the same time”.
Evaluation and examples
The first part of Kant’s theory is “act only on maxims which you can will to be universal laws of nature” which means every action of an individual should be under the rules of the universal law and then it can be right and never arouse any conflict with itself including the business world (Donaldson, Werhane & Cording 2002). Let’s use the following example to understand the first maxim of Kant’s theory. And there is an example about the theft by workers, consumers and even the managers in business world which is a big problem (Donaldson, Werhane & Cording 2002). For instance, a worker in a business organization is often discriminated by other peers and has also been receiving unfair evaluation from the boss due to his race. So the employee considers stealing from the firm to make up for himself. Facing such kind of situation, most of the people may choose the same action as the employee. While according to Kant’s theory, the idea which leads to this kind of action couldn’t become the universal laws, because no maxim could permit stealing for any reasons (Donaldson, Werhane & Cording 2002).
So from the above example, we can see the essence of the first maxim of Kant’s theory is that the universal laws which guide individual’s ethical action should be morally obligated.
The second part of Kant’s theory is “always treat the humanity in a person as an end, and never as a means merely” (Donaldson, Werhane & Cording 2002). Although we always use people as means especially when we hire people or pay money to people to receive goods or services from them, we can’t only consider them as means to achieve ourselves’ interest. That means we should respect people with their autonomy and human dignity (Donaldson, Werhane & Cording 2002). And the following example will thoroughly help us understand this maxim.
Let’s just take layoffs of firms as an example. According to Kant’s theory, these employees are just being used as mere means to achieve their employers’ goals. But this kind of action really ignores the human dignity of the employees, their needs and expectations. So according to Kant, it is immoral.
The third part of Kant’s theory is “so act as if you were a member of an ideal kingdom of ends in which you were both subject and sovereign at the same time” (Donaldson, Werhane & Cording 2002). That means in the business world an organization should treat its employees with dignity and respect, and meanwhile the rules which govern the employees should also be accepted by them. So according to Kant’s theories, the organization is viewed as a moral community in which every member of the organization has a kind of moral relationship with others and there should be a proper kind of mutual respect between the employees and the organization (Crane & Matten 2007).
Generally speaking, Kant’s ethical theory held that the action only under the guidance of universal law has moral worth and moral action must be motivated by moral obligation alone (Beauchamp & Bowie 2004). The following example can help us understand Kant’s ethical theories deeper.
In order to help a patient who has suffered breast cancer, a physician told a lie to the organizer of a large scale multi-center study which focuses on the function of a new drug on survival patients of breast cancer. But it only allows the patients who have received surgery no more than 3 months to enter. While this physician’s patient has received the surgery 6 months ago and he knows that the new drug really can help the patient. So the physician changes the dates of the surgery for the patient and then the patient can enter the study to receive the treatment (Trevino & Nelson 2007). Although we know that the physician telling lies is due to a good will to help patients. But if other physicians also dealt with the study like that the whole result of the study can’t be trustworthy. So based on Kant’s ethical theories, this view guiding the physician’s action isn’t suitable to become the universal law for us to follow.
Although Kant’s ethical theories do contribute a lot to moral philosophy, which still have some limitations (Beauchamp & Bowie 2004).
Firstly, Kant’s ethical theories have little consideration of human emotion and sentiment (Beauchamp & Bowie 2004). His theories are over based on rationale, which don’t fit every circumstance. Because human beings have emotion which can affect their actions and not every one at every moment is so intellectual. For example, it is a universal law that organ donation should be free which is on the basis of moral obligation. So if one guy wants to sell one of his kidneys to make money it is immoral. But if the guy who wants to sell his kidney really needs the money badly to pay for his mother’s surgery and at the same time the person who wants to buy this kidney is rich enough and does need the kidney so badly to save his life, this deal is reasonable to happen. But Kant’s ethical theories must go against such situation because it can’t become a universal law to sell one’s organ for profit.
Secondly, Kant’s ethical theories focus too much on the universal obligation but ignore some particular obligation of individuals (Beauchamp & Bowie 2004). Although Human beings have some universal obligations to answer for, they also have other motivations due to some kind of relationships. Sometimes it can’t avoid the conflict of the universal obligation and motivations, because people not only have the universal duties but some other duties as friends, spouse or a family member. For instance John is working in a bank as the manager, who is in charge of commercial loan. And there are two applications, one is from his friend’s company and the other is from another company. And both of the two companies are trustworthy but John can only choose one company according to the plan of the bank. John gives his friend’s company the loan offer because he knows this loan can help his friend and at the same time, the bank can also gain from the commercial loan. Although the decision making is based on John’s personal feelings and emotion, it is benefit for both his company and friend. So Kant’s theories that the behaviors of human beings should only under the guidance of universal laws are too narrow to cover every situation.
Thirdly, Kant’s ethical theories undervalue the outcomes (Crane & Matten 2007). Generally speaking, bribery is immoral. And of course, it goes against the universal law. But in today’s society some times there are so many things that can’t be decided by us. For example, to gain a business, you have to pay bribery to a key person. And according to Kant’s theory, it is obviously wrong to do so. But we sometimes should also consider the benefit and cost just as the consequentialist theories do (Trevino & Nelson 2007). If the briery can help your company and its employees, and this action won’t let you go to jail as well, you may choose to bribe the key person. So under such circumstance, it is difficult for you to sacrifice the benefit of your company to merely obey the moral obligation. Because if you obey the universal law and won’t conduct bribery, your company will suffer a big loss which may directly affect your life. So we can see sometime the outcome is also a crucial condition to consider, while Kant’s theories don’t refer much enough of this part.
This paper uses some examples of the real business society to elaborate Kant’s ethical theories which includes three basic parts. And it also analyses these limitations of Kant’s theories such as the insufficient consideration on human emotion and sentiment, undervaluing the outcomes and so on via examples. All in all, we can see although Kant’s theories have already contributed a lot to the deontological theories, which still have limitations. So when we adopt Kant’s theories to the real situation, we had better involve them into the most proper circumstance.
Admin 2010, Toyota is worried about his image after callbacks, Fortune 500 Global, viewed 9 March 2010,
Beauchamp & Bowie 2004, Ethical theory and business, 7th edn, Pearson Education，London.
Carroll & Buchholtz 2003, Business ethics: Ethics and stakeholder management, Thomson South Western, USA, p.70.
Crane & Matten 2007, Business ethics: Managing corporate citizenship and sustainability in the age of globalization, 2nd edn, Oxford university press, New York.
Donaldson, Werhane & Cording 2002, Ethical issues in business: A philosophical approach, 7th edn, Prentice Hall, New Jersey.
Mainstream Media EC 2009, Toyota to call back faulty cars, Brunei News.Net, viewed 20 March 2010,
Rehak 2002, Tylenol made a hero of Johnson & Johnson: The recall that started them all, The New York Times Company, viewed 19 March 2010,
Trevino & Nelson 2007, Managing business ethics: Straight talk about how to do it right, 4th edn, John Wiley & Sons, Inc, USA.