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Business ethics consists of standards and regulations that can help and guide
individual or groups in the business world. Business ethics is very important because
everybody has a different set of values and beliefs, therefore ethical conflicts may occur.
It involves learning what is right and wrong, and then doing the right thing for the
organization for the sake of the greater good. Understanding the moral decision-making
process and/or ethical principle can help the company to prevent misconduct and to make
better decisions in the future. Two of the theories that provide explanations to some
hotly-debated ethical principles are Utilitarianism and Deontology theories. While
utilitarianism argues that the better action is one that benefited the most numbers of
people, deontology principle argues that a moral action should be based on one’s
intentions and not on the consequences of that particular action.
This essay will analyze those two theories by looking at General Motor Corporation
(GM)’s case as one of the relevant examples regarding violation of business ethics in the
business world. GM has moved in the field of cars and other automobiles and has since
been one of the leading companies in its field. Nevertheless, GM’s case in giving defect
products to its customers has since raised many debates in business ethics since their
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defect products had reportedly caused some deaths and accidents. According to
Immanuel Kant’s utilitarianism principle, an action is good because it is done according
to the moral law/duty and not because of the consequences it produces. However, GM’s
decision surely was against Detonrology theory, where its intention is aboselutely
immoral. In this essay, I will discuss about the GM scandal and how its utilitarian
calculation of cost vs. benefit had actually steeply discounted the value of human lives
and thus not following the moral rules of Deontology.
General Motors Corporation (GM) was the third largest automaker industry
incorporated in August 11th, 2009. The company designs, manufactures and sells cars
and automobiles parts globally. Currently, the company employs about 216,000 peoples
and operates in 37 different countries worldwide. The company has experienced a huge
loss since its recent product recall of 28 million vehicles. It is largely due to ignitionswitch problem which result tremendous fall in their company's earnings. As of February
2015, the incident had cost the company around 4 billion dollars. This incident was
casued by the faulty ignition switch which the company had installed to its automobiles
products; the faulty switch could shut off the engine during driving and prevent the air
bag to deploy during accidents.
As a result of the faulty ignition, there are 13 deaths and 32 crashes reported that
are associated with it. Even though GM engineers knew about the faulty switch since
2004, however the defective vehicle did not get recalled until 2014.
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The late recall has caused the company to have further investigation. First, the
internal investigation was being led by one of the most influential men in the auto
industry, Anton Valukas, who is also chairman of Chicago law firm, Jenner. According to
the investigation done by Antony Valukas, It was later found out that during 2002, The
GM engineer has made a fatal decision to choose an ignition switch which was below
their own company's specification. The fact that it had failed to keep its powered on was
actually known at the earliest stage of their production. However, the failure to keep the
powered on has led to failure of airbag deploys. GM had received complaints from
customers, dealers and their employees and yet GM chose to dismiss the case.
One of the biggest business ethis violation that it had done is that GM knew about
the faulty ignition switch since 2004, but it did not give their customers warning about
their defective vehicles. In 2005, various committees considered proposed fixes but were
also rejected because those proposals were too costly. The 2005 email leaked that the
final decision was not to replace the switch because it would cost the company 90 cents
per switch and it was also time consuming to replace it (Foorohar, 2014). Thus it can be
said that if the company had done the proposed recall earlier, it would cause less injuries
and accidents with its manufactured, defective cars.
Clearly, GM’s decision in delaying its product fixation followed Mill's
Utilitarianism principle. In Utilitarianism, an act is assumed to be right when it can bring
the greatest happiness for the greatest number of people. One of the main reasons for the
company to delay the recall was because of the proposition’s high cost. It will cost 90
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cents per switch to replace each and every faulty ignition. If doing the recall would cause
the company a huge loss, then they could just ignore the product recall proposal since this
decision would benefit the company.
Bearing in mind that the company is consisted of all their shareholders and
employees, which is about 216,000 people, while their faulty switch had only caused
about 13 deaths, it could be said that the company’s decisions support the utilitarian
theory that it had benefitted the greatest number of people within the organization. This is
because, within the utilitarian point of view, the right thing to do is to ignore the product
recall proposal. As a big company, it is understandable that GM strive to stand tall
amongst its competitor by calculating costs and benefits carefully; its investors are also
expecting superior return on their investments, and thus GM needs to consider these
things in order to maintain its credibility and standing.
The company also uses cost benefit analysis so that in the event of the cost
outweighs the benefits; the company should know that the action causing that event is
considered losses and that it should avoid or prevent those losses from happening. If GM
encountered losses, logically they should cut down their workers in an effort to minimize
outgoing budget due to that particular losses. In the case of the event that we talked in our
analysis above, had the company redesigned and/or replaced its faulty products, the
action would cost a lot of money and it would also be time consuming. In short, had the
company done what were proposed out of them, it would generate less revenue or even
suffer some losses. Therefore, according to this analysis, utilitarian perspective would
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argue that the best solution in this event is for the company to not replace their products
and just continue on with launcing their faulty products, since it will bring benefits to the
greatest number of people (GM’s employees and shareholders) compared to the loss
suffered by 13 people.
On the contrary, according to the book of Conscious Capitalism, "Business must
consider their customers as human beings to be served, not as consumers to be sold to."
Businesses would not exist without the presence of its customers. However, GM failed to
give their customers the product qualities their customers would hoped for. Establishing a
good customer relationship is essential for business to progress; without their loyal
customers, GM would not be able to succeed into one of the largest automakers in the
automobile industry.
Moreover, philosophers would argue that the right thing is to implement
Deontology principle because Deontology supports the idea of intentions as one’s moral
compass rather than calculating with the consequences of some actions which we
typically do not have control over. A good will is good because of the intentions, not of
the consequences it produces. Giving their customers defective products is also one of the
actions GM did that violates the moral law. If the company implements the moral concept
of Deontology, it would certainly chose to do the product recall since it would value
human lives and its morals would prevent it from harming humans for its own profits.
Human lives should not be used for the company to make profits. They are valuable and
have absolute moral worth.
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Thus, I am going to support the moral justice theory of Deontology in analyzing
the GM situations. According to Kant’s utilitarianism, the right thing is when you do
something because it is the right thing to do, not because it gives you pleasure or
advantage. If GM’s motive was to decrease their cost of production and increase their
profits from customers, then they would be unethical in doing their business. One of the
GM spokesman said that there are two crashes that involved Chevrolet’s impalas because
of the failure of airbags to deploy. However, the company said covered it up by saying
that there is no conclusive evidence that the defect actually caused those crashes. Giving
customers defect products has placed GM against their mission statement which is
mentioned in their website, "The Company is dedicated to provide products and services
of such quality that our customers will receive superior value." If GM had followed their
mission statement to give their customer high quality products, they would have had
redesigned their switch and directly warned their customers of the potential dangers of
driving with their defected vehicles. Therefore, looking from Deontology theory, it can
be said that utilitarianism monetized the value of people’s lives, making GM’s action
immoral because of its intentions and its motivation.
In conclusion, I think Deontology’s pricinple is the way to go in analyzing the GM
situations over utilitarianism. In my opinion, the company should not sell defective
products to its customers, because that is first and foremost is against their mission
statement. Second, using customers as a means to reduce costs and maximizes profit is
unreasonable and unjust. Third, human beings have their own moral worth and "absolute
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value" which is an end in themselves; human lives cannot be compared to cost of
replacing the ignition switch and should not be used as a measure to money as what the
principle of utilitarianism would state. Customers should be treated as the company’s first
priority and therefore GM should provide them with the greatest customer satisfaction.
GM, especially being one of the largest automaker industries, should give their customers
their superior value to achieve higher sales and profits. It should not give unsafe products
to its customers. In addition to that, GM should improve their quality management to
ensure that every customer receive safe products. In conclusion, a truly ethical company
would act according to law and not to utilitarinism principle that undermines the value of
human lives.