Large companies want large profits, but can business ethics get in the way?

When a company mass produces, there is the possibility that the product could turn out to be flawed. A malfunction can cause serious injury to the consumer, or even death. For example, in constructing cars, many factors can result in the malfunctioning of the end product. These include faulty construction facilities, risks due to aggressive company growth, human error, or even unforeseeable problems. Thus, for many large car companies, it is not a question of if it will malfunction, rather when will it malfunction?

But how should a car company respond to such a situation?

The obvious ethical answer is to call a recall on the product and try to fix it. However, this can be substantially damaging to a company, not only through loss of large profits, but also to the perceived quality of the brand. Such was the case for Toyota in 2010 when they called a mass recall on over a million cars worldwide, costing billions of dollars in lost revenue. On the other hand, when Audi encountered a safety issue similar to Toyota’s, Audi took the position that “it was the driver’s fault,” David Cole, Director of the Center for Automotive Research, told Design News. While Audi’s reputation was hurt in the long run, Toyota can be commended for accepting responsibility.

Should short term losses be incurred in order to maintain a long lasting ethical business reputation?

Is there value in making ethical decisions that can make up for lost profit?

http://business-ethics.com/2010/01/31/2123-toyota-recall-five-critical-lessons/

http://www.ctvnews.ca/autos/toyota-recall-of-rav-4s-lexus-sedans-affects-100-000-vehicles-in-canada-1.1447775