Purpose In The First Assignment You Have The Opportunity To

Purposein The First Assignment You Have The Opportunity To See How E

In the first assignment, you have the opportunity to see how ethics can play out in a real-world scenario. You will read the case scenario and answer the questions in a narrative format. Use headings for each question. Headings are not the question. You are required to use the course material to support your reasoning and the conclusions made.

Case Scenario: During the COVID-19 pandemic, the U.S. government implemented legislation including a stimulus package and the CARES Act. The stimulus provided direct payments to eligible individuals, while the CARES Act included the Paycheck Protection Program (PPP) to aid small businesses. USAA, an organization serving military members, offset some members' negative account balances using stimulus funds without prior notice, which resulted in some members losing access to their stimulus money. Shake Shack, a publicly traded restaurant chain, received a PPP loan shortly after applying, despite prominent executives' high compensation and the company's size. The actions of both companies raise ethical questions about their handling of government funds, transparency, and stakeholder impacts.

Paper For Above instruction

This paper explores the ethical dilemmas faced by USAA and Shake Shack during the COVID-19 pandemic, examining their actions through various ethical lenses, notably Kantian ethics and utilitarianism. It considers the stakeholders involved and recommends ethically sound actions grounded in ethical principles and reasoning.

Introduction

The COVID-19 pandemic triggered unprecedented economic challenges, prompting governmental intervention through legislation aimed at alleviating financial burdens on individuals and small businesses. This paper analyzes the ethical implications of the actions taken by USAA and Shake Shack in response to the crisis, specifically focusing on their handling of stimulus funds and Paycheck Protection Program (PPP) loans. The discussion begins with an overview of the scenario, the ethical issues involved, and how the actions of these organizations impact various stakeholders. Subsequently, the paper applies Kantian and utilitarian ethical frameworks to evaluate their conduct, followed by recommended actions that uphold ethical standards and corporate responsibility.

Ethical Issue(s)

The primary ethical issue centers on USAA's decision to offset members’ negative account balances with stimulus funds without prior notification, effectively denying some members access to the funds intended for emergency relief. This action raises questions about transparency, fairness, and the company's duty toward its customers. For Shake Shack, the issue revolves around accepting a PPP loan, despite its substantial market capitalization and executive compensation. This situation raises questions about corporate social responsibility, fairness in resource distribution, and whether accepting government aid during a crisis aligns ethically with corporate image and societal obligations.

Stakeholders and Implications

In USAA’s case, the stakeholders include its members, particularly those affected by the offset of stimulus funds, the company’s management, and regulatory bodies overseeing banking practices. Members experienced financial hardship and a loss of trust due to lack of transparency, potentially damaging customer relationships and brand reputation. USAA’s management faced ethical scrutiny regarding their decision-making process and communication strategy.

For Shake Shack, stakeholders encompass shareholders, employees, customers, government agencies, and the broader community. Shareholders might view the acceptance of PPP loans as justified for sustaining business operations, but public perception could be negatively affected if seen as exploiting government aid. Employees benefit from potential job preservation, but stakeholders might question whether the company’s actions align with societal expectations of corporate responsibility during a crisis.

The implications of these actions influence stakeholder trust, corporate reputation, and societal perceptions of fairness and integrity. Transparency and adherence to ethical principles are essential to maintaining stakeholder confidence and ensuring sustainable business practices during crises (Ferrell et al., 2019).

Kantian Viewpoint

Kantian ethics emphasizes acting according to moral duties and principles that can be universalized, asserting that actions are morally right if they respect the autonomy and dignity of all individuals involved. From this perspective, USAA’s decision to offset stimulus checks without prior disclosure may be considered morally wrong because it fails to respect members’ rights to transparent information and the purpose of the stimulus funds. Such actions could be viewed as using customers merely as means to preserve account balances, violating Kant’s principle to treat individuals as ends.

Similarly, Shake Shack’s acceptance of PPP funds, while legally permissible, could be ethically questionable if it is perceived as exploiting government aid during a crisis to benefit shareholders and executives while others in need are excluded. Kantian ethics would demand that actions uphold fairness and respect for all stakeholders, suggesting that both companies should have transparently communicated their intentions and ensured that their actions align with moral duties of honesty and fairness.

Utilitarianism Viewpoint

Utilitarianism evaluates actions based on their consequences, seeking to maximize overall happiness and minimize suffering. USAA’s decision to offset negative account balances with stimulus funds can be viewed negatively if it results in increased suffering for members who relied on that money for essential expenses. Although legally justifiable, this action might reduce overall welfare by eroding trust and causing financial hardship.

In the case of Shake Shack, accepting the PPP loan might increase overall utility if the funds help preserve jobs, sustain the business, and support the economy. However, if the perception arises that the company is capitalizing on government aid while large shareholders and executives benefit disproportionately, public backlash could diminish societal welfare overall. The utilitarian calculus suggests that actions should consider the broader impact on all stakeholders to ensure net positive outcomes.

Recommended Actions

Ethically, USAA should have proactively communicated its policy to offset stimulus funds before depositing them into members’ accounts. Offering transparency and giving members the option to allocate funds differently would demonstrate respect for their rights and maintain trust. Additionally, USAA could establish protocols ensuring that emergency funds are used solely for intended purposes, especially during crises, aligning with ethical standards of honesty and fairness.

Shake Shack, despite the legality of accepting PPP loans, should have assessed the moral implications of its actions, considering societal perceptions and stakeholder expectations. Ethically, the company could have prioritized demonstrating social responsibility by transparently indicating that it was applying for aid to sustain operations and protect employment. Alternatively, it might have voluntarily declined the loan or contributed some of the funds toward community relief efforts, reinforcing its commitment to societal well-being.

Both companies should implement ethical guidelines that emphasize transparency, fairness, and social responsibility. This would promote long-term stakeholder trust, uphold corporate integrity, and contribute positively to societal well-being during unprecedented challenges such as the COVID-19 pandemic.

Conclusion

The actions of USAA and Shake Shack during the COVID-19 crisis highlight complex ethical issues involving transparency, fairness, and stakeholder interests. Through Kantian and utilitarian perspectives, it becomes evident that ethical conduct during emergencies requires honesty, respect for individuals’ rights, and consideration of all stakeholders’ well-being. By adopting transparent policies and prioritizing social responsibility, both organizations can uphold ethical standards and foster trust amid challenging circumstances. Ultimately, ethical decision-making in business during crises is not solely about legality but about aligning actions with moral principles that benefit society as a whole.

References

• Ferrell, O. C., Fraedrich, J., & Ferrell, L. (2019). Business Ethics: Ethical Decision Making & Cases. Cengage Learning.
• Small Business Administration. (2020). Paycheck Protection Program (PPP). Retrieved from https://www.sba.gov.
• United States Congress. (2020). Coronavirus Aid, Relief, and Economic Security (CARES) Act. Public Law 116-136.
• Schwab, K., & Samans, R. (2020). How COVID-19 could reshape the nature of work. World Economic Forum.
• Bowen, H. R. (2013). Social Responsibilities of the Businessman. University of Iowa Press.
• Crane, A., Matten, D., & Spence, L. J. (2021). Corporate Social Responsibility: Readings and Cases in a Global Context. Routledge.
• Johnson, C. E. (2017). Meeting the Ethical Challenges of Leadership. SAGE Publications.
• Rapoport, A. (2020). Ethical Leadership during COVID-19. Harvard Business Review.
• Arkema, K. (2019). The Role of Corporate Ethics in Business Success. Journal of Business Ethics, 156(2), 265-278.
• Kant, I. (1785). Groundwork of the Metaphysics of Morals.