Utility Test

Be sure that you follow each step of the Utility Test (use a separate section heading for
discussion of each step of the test):
A. Introduce the test.
B. Briefly discuss why utility ethics is a valid way of deciding right and wrong.
C. Apply the test
Step 1: Identify the alternative actions that are possible and the persons and groups (the
stakeholders) who will be affected by these actions.
Step 2: For each of the most promising alternatives, determine the benefits and costs to
each person or group affected.
Step 3: Select the action in the current situation that produces the greatest benefits over
costs for all affected.
Step 4: Discuss what would happen if the action were a policy for all similar situations.
D. Draw a conclusion. If the same action is selected in Steps 3 & 4, then the action is an
ethical one. If different actions are selected, decide whether the individual action will
produce the greatest good and the least harm, for all affected, over the long term.

  1. Be sure to use at least two sources from the library to support your discussion and
    analysis (choose sources that are not included in the Background section of Module 3).

501 CASE 3 2

501 CASE 3
Ethical issue

Mattel’s case study raises some questions that can be helpful to students who may be interested
in understanding how ethics applies to organizations in the global business environment. One of
the ethical issues raised by the case is the distribution of children’s toys contaminated with lead
paint. Lead paint has negative impacts on health, and its presence on the toys expose children to
unsafe and unhealthy conditions. After identifying traces of lead paint on their children’s toys,
parents have responded harshly because they believe that selling toys with lead paint is a sign of
irresponsible behavior on the side of the company (Sethi, Veral, Shapiro and Emelianova, 2011).
An ethical concern that may arise from the case is whether Mattel has acted in a socially
responsible manner by allowing unsafe toys to get into the hands of customers. In case it did not,
the company should take appropriate actions to ensure that it distributes toys which are safe for
children. The company can rely on assumptions of utility ethics to make an ethical decision.

Utility Test

A. Introducing utility test
Utility test is an approach towards an ethical behavior and a tool that is used by
individuals and organization to make moral decisions. Before applying utility test in solving any
given problem, it is important to assess whether the current behavior maximizes good and
minimizes harm for the victims. Utility test originates from a Utilitarian ethical principle that
assumes that morality of an action is determined by its consequences, and not by the means
through which a given result is achieved. In utility ethics, ethical behavior is that which

501 CASE 3 3
generates the best outcomes for the victims. In this regard, a moral act results into happiness and
can be preferred by many people to be the best one (Chakrabarty and Erin, 2013).
B. Why utility ethics is a valid way of deciding right and wrong
Utility ethics is a valid way of determining right and wrong because it produces the best
and most preferred outcome for all victims affected by a specific action. When a decision is
made based on the assumptions of utility ethics, there is maximum certainty that only the best
outcome will be realized out of it. When this happens, all victims will prefer an action that brings
about supreme happiness and will tend to avoid those that generate unhappiness. Utility ethics
guides people to view an action’s consequences not on an individual basis but by everyone else
who might be affected by the same acts (Chakrabarty and Erin, 2013).
Applying the test
Step 1: Identification of alternative actions
There are two possible alternative actions that can be taken to solve the ethical issue
raised in the Mattel case. The company can choose to either; ignore patents’ complaints and
continue producing toys as usual, or issue a recall of all distributed toys, assess the validity of the
presented claims, and make necessary changes to its production process to facilitate production
of lead-free toys. These two actions have got different consequences on the victims or
stakeholders. The stakeholders who will be affected by these measures include children and their
parents, shareholders, investors, debtors, creditors, safety organizations, agencies responsible for
formulating environmental laws, contractors, suppliers, and vendors.
Step 2: Assessment of benefits and costs associated with the chosen alternatives

501 CASE 3 4
There are costs and benefits associated with each of the alternative actions identified.
Suppose Mattel chooses to ignore parents’ complaints and continue to produce and distribute
toys, as usual, the company will avoid extra expenses that it may incur in making changes to its
production process. However, such a decision may be very costly for the company in the end
because it might record a reduction in sales due to unsolved customer complaints. This may
negatively affect its bottom line in the short run and may result in its closure in the long run
(Shim, 2013).
In case Mattel decides to issue a recall of all distributed toys, assess the validity of the
presented complaints, and make necessary changes to its production process, the company will
record an increase in sales. This will enable it to earn additional profits and revenue. Also, taking
such an action will help the company to avoid facing lawsuits associated with non-compliance
with environmental laws. Moreover, the organization will acquire a positive reputation in the
face of the public and eventually attract potential customers. Additionally, Mattel will avoid
similar allegations in future by choosing to make changes to its current production process.
However, the only cost associated with making this move is the high expenditure involved in
changing the current manufacturing process (Shim, 2013).
Step 3: Selection of the most appropriate action
The most promising alternative and that will make the organization continue thriving in
the toy industry is issuing a recall of all distributed toys, assessing the validity of the presented
complaints, and making necessary changes to its production process to facilitate production of
lead-free toys. Making changes to the production process is more appropriate than ignoring
parents’ complaints because its benefits outweigh costs. This means that the company and its

501 CASE 3 5
stakeholders can realize the greatest net good suppose the toys that are already in the market are
recalled, when parents’ complaints are assessed, and when appropriate changes are made to the
production process (Shim, 2013).
Step 4: Results of making the action policy for all similar situations
Making changes to the production process to facilitate the manufacture of lead-free toys
would make Mattel a socially responsible organization. Manufacturing organizations can become
socially responsible if the chosen action is made a policy for all similar situations. If these
agencies receive customer complaints about goods already distributed into the market, they will
be guided by this policy to improve the safety of their products and to maximize benefits for
their customers. Specifically, they should issue the mass recall for all products that are already in
the market, conduct an investigation to determine the validity of the complaints presented, and
make appropriate changes to their production processes to facilitate manufacture of safe items
(Shim, 2013).

C. Conclusion
Out of the possible actions that could be taken to solve the moral issue in Mattel’s case,
the only ethical behavior is to issue a recall of all distributed toys, assess the validity of the
presented complaints, and make necessary changes to its production process to facilitate
production of lead-free toys. This action is ethical on Mattel’s case because it will maximize
benefits and minimize harm to all the affected victims, both in the short run and in the long run.
Although the ethical issue raised in the case study may raise questions as to whether the
organization is socially responsible, Mattel can still come up with an ethical decision that can
help it to become a socially responsible organization. While doing so, the company should rely
on Utility Test to make a valid action.

501 CASE 3 6

References

Chakrabarty, S. & Erin, B. (2013). Comparing virtue, consequentialist, and deontological ethics-
based corporate social responsibility: Mitigating microfinance risk in institutional voids.
Journal of Business Ethics, 126(3):487-512.
Sethi, S., Veral, E., Shapiro, H., & Emelianova, O. (2011). Mattel, Inc.: Global manufacturing
principles (GMP) – A life-cycle analysis of a company-based code of conduct in the toy
industry. Journal of Business Ethics, 99(4), 483-517. Retrieved from ProQuest.
Shim, K. (2013). The role of ethical evaluation of corporate social responsibility in the
perception of corporate hypocrisy, the intention of opinioned communication and
behavior toward a firm. Syracuse: Syracuse University Press

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