American Red Cross

Determine the impact of this event on ARC’s “benefits of business ethics” (employee

commitment, investor loyalty, customer satisfaction, and bottom line).

Clara Barton founded the American Red Cross (ARC) in 1881. Clara was inspired by the work of the International Red Cross while she visited Europe during the Franco-Prussian War. Bringing the organization to the United States was a good move because it for the domestic and international relief missions. The ARC follows seven fundamental bylaws they are: humanity, impartiality, neutrality, independence, voluntary service, unity, and universality (Ferrell, Fraedrich, & Ferrell, 2011).

Business ethics comprises the principles values and standards that guide the behavior in the world of business. Business ethics may not always be right or wrong, but the judgment influences it reputation in society (Ferrell, et.al. 2011, p. 7). Ethics contribute to employee commitment, investor loyalty, customer satisfaction, and profits. The American Red Cross (ARC) was criticized due to its ethical behavior during the disasters of both September 11th and Hurricane Katrina. The employee commitment harmed the organization because of the mishandling of funds, the sudden resignations of the president and chief executive officer due to unscrupulous actions of employees. ARC’s reputation had become severely damaged because of this misconduct. Investor loyalty was diminishing due to ARC not following what it said it would do. Following September 11, funds were raised in an astonishing amount, and was set up in a separate fund for the victims and the ARC decided it would only disperse approximately one-third of it to victims and use the other two-thirds to increase the organizations preparedness for and to respond to other future catastrophes. This caused an uproar because the monies raised was supposed to go to the victims of this disaster and they found it necessary to try to justify why they should keep a majority of those funds. But, in the end the monies were distributed to the victims and their families. Customer satisfaction is one on the most important factors in a successful business strategy (Ferrell, et.al. 2011). With the changes that were happening within ARC the organization should have been developing its employees and volunteers in order to keep victims and their families from the mishandling of funds and miscommunications in their slow response to these natural disasters.

Determine and discuss the role that ARC’s stakeholder orientation played in this scenario.

The role that the stakeholders orientation played was when Senator Charles E. Grassley filed legislation to make ARC more transparent. Although charitable organizations do not seek to make a profit per se they do hope to make a profit