Free «Ethical Issues of Gumdrop Northern» Essay Sample

Ethical Issues of Gumdrop Northern


It is a fact that the major aim of business organization is to ensure that their activities have financial benefits to the organization. Thus, organizations undertake all the necessary measures to improve their financial position. However, there is a limit to organization’s activities in their pursuit of financial rewards. Organizations should ensure that their activities are ethically right. Various regulations ensure that the activities of organizations are ethically right. However, just like normal legislation, these regulations have loopholes. Organizations exploit the loopholes to their own benefit. In so doing, the organizations may be engaging in unethical activities but comply with the rules and regulation of the area of operation. Gumdrop Northern has various unethical practices. However, the company complies with various rules and regulations. Gumdrop Northern activities defy marketing management and finance ethics.

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Ethical Issues in Management

Organizations must have ethical management activities. Organizations must ensure that they treat employees, customers, public, and other stakeholders of the company in an ethical manner. Organizations may have immoral, amoral, or moral management practices. Immoral treatment of stakeholders refers to minimal ethical activities of organizations. In so doing, the company intentionally goes against the ethical principles of justice and equitable treatment of stakeholders (Weiss, 2008, p. 118).

Gumdrop Northern treats it employees immorally. The company lays off five employees for no reason at all. The company's main concern is reducing the number of its employees to remove the company from jurisdiction of the WARN act. The company lays off the employees regardless of the duration that they have worked for the company. Removal of the company from the jurisdiction of WARN would lead to lay off of the rest of the employees without notice. Instead of paying off employees after it lays them off without notice, the company files for bankruptcy to ensure that nobody will get anything. In addition, the company relocates to Argentina and Colombia, where it continues to engage in immoral management practices. The company bribes officials in those countries to ensure there is minimal supervision of its activities. This makes Gumdrop continue its activities while violating environmental, labor, and other regulations of the countries. The company starts its operations on the wrong footing. Therefore, it is evident that the problems that made it relocate from America will most likely recur in Argentina and Colombia.

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Amoral management refers to a situation where the management treats various stakeholders without caring about the consequences of their activities. However, the management willfully treats the employees wrongly (Weiss, 2008, p. 118). Gumdrop Northern knows that their products are defective, yet the company continues to sell the products to its customers regardless of the effects the products may have on the customers. Thus, Gumdrop Northern acts amorally.

Moral management refers to placing value on fair treatment of stakeholders of the company. Thus, companies with moral management would ensure that their activities are in the best interest of their stakeholders (Weiss, 2008, p.118). Such a company ensures that it has ethical codes that ensure the fair treatment of its stakeholders. Gumdrop does not have moral management practices. The company totally disregards the interests of its employees when firing five employees to ensure that it is not under the jurisdiction of WARN. The company only cares about the interest of the owners of the company. Gumdrop Northern ensures that its activities would not make it have dire financial implications.

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Ethical Issues in Marketing

Business organizations must ensure that their activities have a positive impact on society. Therefore, it is critical for organizations to ensure their activities do not have a negative impact on its customers or society. Ethical marketing behavior may force business organizations to change their marketing strategies to address the customers’ needs and preferences (Pires, Stanton, & Stanton, 2005, p. 226). Change of strategy by business organizations should aim at satisfying customer needs. This helps improve the competitiveness of the business organization.

Ignoring stakeholder demands for ethical marketing may have dire consequences on an organization. It may destroy the trust customers have in the organization and in some instances, even prompt legal action against the company. However, organizations with ethical marketing and social practices have a high reputation, which boosts their sales (Pride & Ferrell, 2010, p. 65). Thus, by engaging in ethical marketing, organizations not only avoid litigation by various parties but reap massive financial benefits due to improved sales of its products. Therefore, organizations should engage in ethical marketing and social practices, as it would ultimately be beneficial to the company.

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Gumdrop's activities are not ethical. This has exposed the company to litigation brought by various parties. Gumdrop faces imminent litigation that would be extremely expensive to the company. The company contravenes international laws and treaties by selling to Iran and Afghanistan. This illicit trade is a source of a large proportion of the company’s profits. In addition, all Gumdrop’s problems are defective. It uses substandard materials to make armored vehicles. This is despite the military paying it handsomely for the armored vehicles, due to which Gumdrop can afford to use high quality material to make the armored vehicles. However, greediness of the company does not allow it to use high quality material so that it maximizes its profits. In addition, it uses faulty switches to make explosives that it sells to the Taliban in Afghanistan. The company knows that its products are defective, yet it continues to sell them in their present condition, instead of doing minor adjustments to the devices to correct the faults. In addition, Gumdrop is unwilling to inform its customers on the defects so that it may not lose the customers. Thus, Gumdrop engages in unethical marketing activities.

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In addition, Gumdrop has little concern on how its products affect various people. The company sells explosives to the Taliban despite the fact that the explosives injure children. No company with a moral spine would sell explosives in full knowledge that the explosives would harm many children. Unethical marketing activities of Gumdrop make it be liable to litigation, which may drain the company vast sums of money or even lead to bankruptcy of the company.

Ethical Issues in Finance

Finance managers’ main goal is to maximize the wealth of the organization. Finance managers undertake various activities for the good of the organization. Thus, in the course of their activities, they may face various ethical dilemmas that necessitate them to take conflicting decisions (Moyer et al., 2012, p. xx). There are regulations that ensure financial managers do not engage in unethical financial practices, especially if the practices would fleece stakeholders vast sums of money. However, many organizations find methods of bypassing the regulations to engage in unethical financial practices. Unethical financial practices make the company be at risk of facing costly litigation.

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Gumdrop engaged in various unethical financial practices prior to its departure from America. The company is financially sound, yet it files for bankruptcy to avoid paying employees their benefits after laying them off. The company transfers its assets to banks in Argentina and Switzerland, where no creditors can access the money. Thus, the company intentionally deceives authorities to avoid paying its creditors.


Gumdrop engages in many unethical practices. In fact, it seems that all its activities are unethical. The company relocates to Argentina and Colombia to avoid costly litigation, which seems imminent. However, instead of starting its activities in Argentina and Colombia with a clean slate, the company exports its unethical practices to the countries. This makes the company be at risk of facing the same problems that made it move from America to its current location.

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