You have been hired by Multi-LimbTech, International, Inc.,(MLTI) a cutting edge designer and seller of
artificial limbs. You are excited about this job since it not only pays well but the company also provides a
valuable service to humanity that results in amazing scientific advances that enhance peoples� lives.
However, after several months, you discover that one of the top selling leg prosthesis has a design
defect. You are told not to be concerned since the product is not regulated by the government. Another
inquiry is met with no response. You learn that the company has donated $100,000 to a local medical
board that endorses this product. In one country where this product is distributed, gifts are very common
to secure business transactions. Use course materials as you answer the following questions:
Can you identify conflicts and pressures?
What kinds of questions should you ask?
What are the various stakeholder interests?
Is what is legal here also ethical?
How can this company �do good and make a profit� (synergies of ethics and earnings)?
Do ethical norms vary across cultures?
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Question 1
I disagree with Johnson’s argument. Stakeholder theory argues that the principle aim of a
business/organization is to create optimum value for stakeholders. In order for a
business/organization to be sustainable and successful, executives should uphold the interests of
consumers, employees, suppliers, shareholders and communities aligned with and moving
towards the same direction. In relation this, innovations to make these interests aligned is more
significant than the simple approach of trading off stakeholders’ interests against each other 1 .
Therefore, by focusing on the management of stakeholders, executives will manage to create
optimum value for shareholders and other financiers 2 . For instance, an IT business may conduct
a campaign against cybercrimes such hacking the business’ systems. When such a campaign
succeeds by reducing the levels of cyber crimes, such a business shall have satisfied the interest
of stakeholders such as policemen who are in charge of handling criminal issues.
1 Carroll, Archie. “Ethical Challenges for Business in the New Millennium: Corporate Social
Responsibility and Models Management Morality.” Business Ethics Quarterly 10, no.1 (2000):
34-42.
2 Freeman, Edward. “The Politics of Stakeholder Theory: Some Future Directions.” Business
Ethics Quarterly 4, no.4 (1994): 410-421.
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In relation to the aspect of profits, upholding the interest of consumers by offering
services or goods that meet their expectations can lead to the generation more customers. As a
result, the business can generate more revenues, which in turn can increase its profit margins.
Fiduciary duty refers to a legal obligation to act solely in a given party’s interest. Since
the stakeholder theory aims at satisfying the interests of stakeholders, this theory is in line with
the fiduciary duty, which advocates for acting according to the interest of other parties. Thus,
both the social corporate responsibility and stakeholder theory do not contravene the
management and board of directors’ fiduciary duties to optimize shareholder’s wealth.
Milton Friedman would agree with this concept. Friedman advocated for free market. The
aspect of free market implies that all players within the industry are at liberty to act according to
their interests. As such, according to Friedman’s view upholding the interests of other parties or
stakeholders denies a business the opportunity to act according to its interest, which is against the
concept of free market that advocates for lack of interference in business activities 3 . In this
scenario, stakeholders act as a hindrance to the business in terms of meeting its interests.
Edward Freeman would disagree with Johnson’s argument. Freeman was the founder of
the stakeholder theory and believed that this theory could operate in social theory. Freeman
believed that this concept could offer optimum value for stakeholders as it was aimed at
upholding their interest.
Question 2
I agree with Steve Kelman’s assessment. Cost-benefits analysis argues that individuals
should only adopt those measures whose benefits exceed their expenses/harms. In relation to
3 Carroll, Archie & Shabana, Kareem. “The Business Case for Corporate Social Responsibility:
A Review of Concepts, Research and Practice.” International Journal of Management Review,
(2010): 105
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this, the cost-benefit theory tends to monetize everything including human life, thereby leading
to the incommensurability problem. Taking into consideration aspects of commensurability and
comparability, Kelman’s critique/analysis can be considered appropriate. Kelman challenges the
cost-benefit evaluation’s action of assigning or giving monetary values to commodities that are
not marketable/non-marketed goods. This argument is right as issues such human life cannot be
granted monetary values. The technique that is employed in surfacing the values that are
assigned to nonmarketable commodities may not grasp the value that goods hold for individuals
in an adequate manner.
According to Kelman, cost-benefit operates by creating equivalencies that exist between
the items in questions, and the result is determined by mathematics/arithmetic. As such, the
outcome obtained from such an operation may be surprising in case such outcomes are close
calls or some of them are long division. Such an occurrence only serves to create confusion. The
primary component of cost-benefit evaluation can be considered a consequentialist evaluation. In
relation to this, cost-benefit analysis leads to a situation in which a judgment is assessment based
on the benefits and costs that are associated with its consequences 4 . At the primary level, such an
evaluation can include diverse goods that take into consideration human costs such as duties,
rights and environmental costs. In this way, the cost-benefit analysis happens to be incompatible
with the ethical frameworks as it can lead to flawed outcomes.
Cost-benefit analysis can be considered sustainable. This concept can inform opportunity
cost in offers a systematic procedure for monetizing, calculating and comparing economic
benefits and costs that are associated with certain processes, regulations and actions. Some other
concepts that can be used as complements to cost-benefit analysis are opportunity cost, cost of
4 Donaldson, Thomas, & Dunfee, Thomas. “When Ethics Travel: The Promise and Peril of
Global Business Ethics.” California Management Review 41, no.4 (1999): 45-63
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intangible assets and cost of externalities. For businesses, opportunity cost happens to be the best
concept.
Question 3
The Ford Pinto’s case, which involved the explosion of Ford Pinto as a result of a
defective fuel system, can be addressed using the Hosmer Model/Framework for of moral
assessment. In order for a party achieve an effective completion of a moral issue, such a party
should ensure determine the economic consequences, legal requirements and ethical duties that
are associated with a given action 5 . Taking into consideration the aspect of economic
consequences, the action of Ford’s management resulted into economic gains to the company.
The firm’s management acted in accordance to the principle of cost-benefit analysis in that it
focused on an action whose economic gains exceeded its costs. By moving ahead to manufacture
Ford Pinto vehicles, the company generated more revenues. On the other hand, the company
could have not realized these economic gains in it had heeded to the engineers’ advice. Heeding
to such advice meant that the company was to spend more on improving the Ford Pinto’s gas
tank 6 . Such an undertaking could have led to more costs than benefits, thereby disobeying the
principle of cost-benefit analysis. Ford’s management failed to adhere to the legal requirement
that all vehicles that were manufactured by then (1972) to meet the 20mph test, so that by 1973
all vehicles could meet 30mph 7 . Despite the Ford Pinto failing to meet this requirement, the
company’s management went ahead to manufacture these vehicles, thereby contravening he law.
5 Donaldson, Thomas. “Values in Tension: Ethics Away from Home.” Harvard Business
Review, 4-12
6 Danley, John. “Polishing Up the Pinto: Legal Liability, Moral Blame, and Risk.” Business
Ethics Quarterly 15, no.2 (2005): 205-236.
7 Becker, Paul & Bruce, Alan. “The Pinto Legacy: The Community as an Indirect Victim of
Corporate Deviance.” Justice professional 12, no.3 (2000): 305
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Ethical duty is an obligation that is owed by a party to another party within the same society. In
relation to this, the Ford Company owned members of the public a duty to ensure their safety
when using the company’s vehicles. The company should have ensured that their vehicles are
fitted with proper gas tanks that cannot expose individuals to risks such as fire or explosions.
Despite the organization’s management being notified by the firm’s engineers about the default
associated with Ford Pinto, the management went ahead to the production of those cars for next
six years 8 . In this manner, the company’s management failed to act in accordance to their ethical
obligation.
Question 4
In this case, there are several pressures and conflicts. The first conflict involves me and
the Multi-Limb Tech. In case I decide to make the public aware of the defects associated with the
company’s top selling product, I risk losing my job. Besides, my action can lead to the company
losing its revenues. The second conflict involves the company and the local medicinal board that
endorses its products. Multi-Limb Tech is pressured to cooperate with the board or risk being
defamed 9 . As such, the company has to engage in corruptive measure such as issuing bribes,
which are disguised as donation to the company. The third conflict involves Multi-Limb Tech
and the public. It is the ethical duty of the company to protect its patients/clients. The last
conflict is between the local medicinal board and public. It is the ethical duty of this board to
ensure that manufacturers deliver safe products to the public.
8 Jones, Kristen & Geller, David. “Beyond the Business Case: An Ethical Perspective of
Diversity Training.”Human Resource Management 52, no.1 (2013):55-74
9 Porter, Michael & Kramer, Mark. “How to Reinvent Capitalism-and Unleash a Wave of
Innovation and Grow.” Harvard Business Review, (2009): 63-79
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I would ask myself the following questions: Have I identified the issue correctly? How
would I have defined the problem if I were on the other side of the fence? What is my intention
in making my decision? How does my intention compare with the possible results? Whom could
my judgment injure? 10
The legal issue in this case is not ethical. The endorsement of Multi-Limb Tech’s product
by the local medicinal board has a superficial appearance of being legal. However, this action is
illegal as the board is aware of the default in Multi-Limb Tech’s product.
The company can act rightly and continue to make earning by informing the public about
the benefits and harms of its product. In this manner, the company shall have created awareness
about this product’s default 11 . Being that this product attracts many buyers, consumers that will
purchase it will have acted according to their interests. Therefore, the company will not be
blamed for any harm associated with its product.
10 City of San Diego Office of Ethics and Integrity. “ Nash’s 12 Questions.”
11Porter, Michael & Kramer, Mark. “How to Reinvent Capitalism-and Unleash a Wave of
Innovation and Grow.” Harvard Business Review, (2009): 63-79
