The intent of this paper is to briefly discuss ethics as it relates to the field of operations management. Ethics, Operations Management and ProfitabilityEveryday decisions are made that affect shareholders and employees

Ethics, Operations Management and Profitability

Everyday decisions are made that affect shareholders and employees. Reducing costs may increase a shareholder's value and help sustain a company's employability. Consequently, with the loss of money come decisions on how to save money, reduce costs or increase cash flow (Brealey and Myers, 2001). As a consequence many Unites States based companies have sought to establish operations in foreign countries like Mexico, Thailand and Indonesia to reduce labor, production and operations costs. Respectively operations management must still work to ensure profitability by governing the processes that produce products and services.

Ethics in Operations Management

As evidenced in the real world of business management, those that manage the finances and operations of a business may not always make the best decisions, interpret information correctly or behave ethically. A number of examples can be given to illustrate this point however, what is paramount to understand is that many ethical dilemmas or issues that are faced by individual decision makers (e.g.: operations managers, financial managers et cetera) are often centered on the proverbial bottom line-making money. With the entity's primary goal being profitability (i.e.: making money and generating revenue), the role of an operations manager often extends beyond managing the production of goods and services. There are ethical considerations and other related factors that should be acknowledged.

Operations in Foreign Countries

A key example of an ethical dilemma commonly faced by American companies and their respective managers is that of cheap labor and less restrictive labor laws found in many foreign countries. In many foreign countries labor is inexpensive; supplies more abundant, and consequently operations expense are decreased thus decreasing profitability. However, certain working conditions may lead to the creation of modern day sweat shops and an operating environment slightly above the standards of illegal slavery (http://www.sweatshopwatch.org/ and http://www.studentsagainstsweatshops.org/). The ethical dilemma lies in the fact the company may achieve increased profitability due to decreased operations expenses; help the local economy by providing jobs and resources in poorer countries; and even produce a better quality product. However, the expense saved in operations costs is often at the sacrifice of human dignity and human rights as a result of poorer working conditions and standards not typically observed or acceptable in the United States. Although a full discourse of "sweat shops" and comparative analysis of foreign labor laws and practices is beyond the scope of this paper it is important to note the relationship between operations management and the ethical issues concerning profitability and human rights faced by those who manage a business' operations.

Conclusion

Conclusively, in addition to the multitude of operations management roles and responsibilities, operations managers should have other concerns that extend beyond generating revenue. Operations management and the respective managers must practice sound business management that inculcates the best business practices with ethics. Within this contextual relationship there are other factors that come in to play when referring to the relationship and dynamics between operations management, a business, its shareholders and related stakeholders; however, operations management exist to help a company achieve profitability.

References

Brealey, R.and Myers, S.C. (2001). Principles of Corporate Finance 6th ed. McGraw-Hill Companies. New York

Siegel, J. and Shim, J. (2000). Dictionary of Accounting Terms 3rd ed.. Barron Financial Guides. Barron's educational Series Inc.

slavery (http://www.sweatshopwatch.org/ and http://www.studentsagainstsweatshops.org/).

Operations Management