Profit Maximization and Ethical Responsibility
Profit maximization is undoubtedly the fundamental objective of any organization since any entity aspires for its profit margin to be as large as possible. However, the desire to grow profits can at times plunge an entity into an ethical dilemma especially in instances where the pursuit of a profit maximization opportunity, while legal, will bring about more damage than good in the long-term. The primary role of a business in the society is the provision of the required goods and services to satisfy the consumer needs and wants. However, as the stakeholder theory posits, an entity operating in the modern business environment answers not only to its shareholders but to external stakeholders in the community who are affected by its actions (Beauchamp, Bowie, & Arnold, 2014). Consequently, in the satisfaction of these needs, an organization has an ethical responsibility to ensure that it does not knowingly inflict harm on these stakeholders, an example of whom are the consumers.
The Decision to Decline the Distribution Offer
As a director, my advice to the corporation would be to turn down the offer to distribute its lead paint contaminated wooden toys in a South American country. Despite the potential profitability of the idea, the potential of irreparable harm being caused to the organization's reputation should the truth about the deal leak out renders the opportunity unviable. In a globally competitive business environment, an entity's image and reputation are integral to success and engaging in such a deal would soil the company's image and make it appear uncaring towards its customers. Besides this, whereas the export of these toys is borderline legal, the company can still be sued for any health problems that arise from usage of the toys because it was aware of the potential health hazards and still proceeded to sell the products. The corporation could then end up having to pay substantial sums in compensation to the victims whereas the directors could also be held criminally liable thus providing further incentive not to engage in such dealings.
References
Beauchamp, T. L., Bowie, N. E., " Arnold, D. G. (2014). Ethical Theory and Business
(9th ed.). Upper Saddle River, NJ: Pearson : Prentice Hall.
