Smith & Wesson for years has been one of, if not the most successful gun manufacturers in the United States. It was formed in 1852 and has found its success in manufacturing guns while constantly innovating and updating design to appeal to it’s audience.
Smith & Wesson, along with other gun manufacturers were under a lot of heat in 1999, as they were catching the blame for gun violence being at an all time high in the country. All the companies were facing many lawsuits, which Smith & Wesson escaped by agreeing to a settlement with the government to reform guns. The way their guns would be manufactured and distributed would now have to be done with much less freedom. This agreement did not make the National Rifle Association (NRA) happy in the slightest. They immediately published an article bashing Smith & Wesson for their decision. This led to a massive boycott of Smith & Wesson, rapidly driving them out of business. Their owners had to sell the company just a year later. If they approached this a different way, it is possible they could have kept their business alive.
This controversy can be analyzed differently by all the ethical theories of individualism, utilitarianism, Kantianism, and the virtue theory. Using components from each of these, I have created my own opinion on if I feel the controversy was ethical or not, which I found it to be unethical. I also created an action plan on my opinion of what the company should have done immediately following the controversy. The action plan would help them remain profitable, while also following ethical criteria.
Controversy
Smith & Wesson (S&W) was formed way back in 1852, when Horace Smith and D.B Wesson had decided to form a partnership to manufacture a firearm that had the ability to fire a fully self-contained cartridge. They have always been known for being able to create some of the most reliable and high-quality products, while seemingly always innovating their designs to fit public interest. From here, the business had come an extremely long way, as it grew into what is the largest, and the oldest, gun manufacturer in the United States. Smith & Wesson headquarters are currently in Springfield, MA, and the brand has an estimated net worth of approximately 1 billion dollars. Yet, success wasn’t always an absolute given within this company, as they nearly went bankrupt just 19 years prior in 2001, large in part because of a major disagreement with the NRA.
Both sides of the disagreement, being the NRA and Smith & Wesson, had partaken in very controversial actions. The decisions made on both sides were controversial on an ethical level. The case of controversy had started on March 17, 2000, when current president Bill Clinton had announced a settlement made with Smith & Wesson. This settlement that Smith & Wesson had agreed to was pertaining to gun reform. They had agreed to a long list of voluntary reforms regarding the protocol in which they had to manufacture and distribute guns moving forward. These reforms of manufacturing guns included the need for child safe locks coming with each gun, a second, hidden, serial number on their guns making it harder for criminals to scratch off, and also implementing what was called “smart gun technology”, which would only allow the authorized gun owner to fire the weapon. In terms of distribution, the reforms included a “code of conduct”, where Smith & Wesson could only sell their guns at gun shows if the buyer had a background check done. They also had a rule put in place to try to help with gun trafficking, where if a client had purchased more than one gun from them, they could only bring one home that day, and would have to return 14 days later to obtain the rest of them. They had agreed to this long list of reforms because it allowed them to escape many of the lawsuits that were being put into effect after the Columbine shooting in 1999, which was the deadliest high school shooting the country had then seen. After this shooting, gun control activists saw this as a prime opportunity to enforce gun control, so 30 different state and city governments had threatened to sue Smith & Wesson on the grounds of negligent business practices, and holding them liable of violent crimes committed with their products. Yet, because of the reforms Smith & Wesson had agreed to, 15 of the 30 lawsuits had been dropped.
After the news of this game changing settlement was announced, the NRA took quick action against Smith & Wesson. Just three days after the announcement, on March 20, 2000, the NRA wrote a statement called “The Smith & Wesson Sellout”. A quote from the statement reads, “Smith & Wesson, Inc., a British-owned company, recently became the first to run up the white flag of surrender and run behind the Clinton-Gore lines, leaving its competitors in the U.S. firearms industry to carry on the fight for the Second Amendment.” (NRA). Along with saying this, they also stated how their move was solely based on cowardly self-interest. The statement then just went on the explain the term of the settlement and what it would mean for the gun industry, urging other manufacturers not to join. Being such a powerful group that the NRA is, no other groups joined, leaving S&W as the sole gun manufacturer to agree to a settlement with the government enforcing gun control. In processing the previous sentence, it is certainly to no surprise that Smith & Wesson was now viewed as an enemy to the gun industry altogether. Starting as soon as a week after the NRA’s statement, many gun wholesalers and retailers, along with individual gun owners, had began to boycott Smith & Wesson. One of these wholesalers, RSR, had reportedly accounted for 25% of S&W’s sales. (Gunowners.org). This alone can already foreshadow the severity of the loss of sales in which S&W would encounter. Along with all the boycotting, S&W’s previous law firm had decided to drop them as clients, and some shooting match organizers told S&W they were not welcome to their events. Because of all of this going on, there was investigations of an illegal antitrust movement happening against S&W. Yet, all parties had claimed that they made their decisions solely out of their business’s best interest. From all of this, S&W went on to see sales drop insurmountably, forcing them to sell their business, which they did in Spring of 2001, selling it to an American Startup for $15 million, when it was once worth over $112 million.
Stakeholders
The stakeholders and key decision makers in this controversy include Smith & Wesson, the NRA, the government, the gun wholesalers/retailers, and the Pro-Gun public. The national government made the key decision of offering the settlement of gun reform to Smith & Wesson, and certain state and city governments made key decisions of agreeing to drop their lawsuits on S&W, if they agreed to the settlement. Smith & Wesson then made a very key decision of the controversy by agreeing to this gun reform settlement the government offered. They were in turn, impacted from this controversy by losing an extreme amount of business because of the key decisions made by the NRA, wholesaler/retailers, and the Pro-Gun public. The NRA made the key decision of writing about Smith & Wesson’s settlement deal and slandering their business. This led to many wholesale and retail companies to drop S&W products, and also for the pro-gun public to boycott their products as well, which was basically both their key decision, and the way they were impacted. The usual consumers of S&W products, whether it be on a wholesale, retail, or individual level, all had to find a new manufacturer to go to in order to replace/ purchase new products.
Individualism
Within the individualism theory of ethics, the goal is to maximize the profit for themselves and their stakeholders and make actions that work in their best interest, while being in line with the law. Based on this theory, the major decisions made by both Smith & Wesson and the NRA would be viewed as unethical. When Smith & Wesson decided to make this deal with the government to reform guns, they anticipated that it would help them save money. They felt that obtaining the ability to get a lot of the lawsuits they were facing to go away, then that would help them save a lot of money. Yet, what they didn’t consider enough, was the way that the NRA and the rest of the pro-gun community would respond to their agreement. Their response, being the mass boycott of all Smith & Wesson products, had led to Smith & Wesson’s sales plummeting and driving them close to bankruptcy, ultimately forcing the owners to sell the company. From an individualistic perspective, it would likely be seen that maximizing profit was not the entire motivation behind the choice made by Smith & Wesson by agreeing to the gun reform deal with the government. If they were solely concerned about profit, it can be argued that they would just continue to make new products that appeal to the community who buys your weapons, rather than the community who disagrees with what your company does, and likely still would even with these reforms made. This choice of gun reform was in part motivated by feeling responsible for the gun violence occurring in the country. According to Milton Friedman, who has initiated the idea of individualism, claims that “business should not attempt to be ‘socially responsible’”. Smith & Wesson being the only company to agree to this settlement to reform guns, in the midst of all gun violence happening at an extremely high rate in the country, shows that Smith & Wesson felt socially responsible, which is against the idea of individualism.
Utilitarianism
The rule of utilitarianism is that “business actions should aim to maximize the happiness in the long run for all conscious beings that are affected by the business action.” (Salazar 19). It is also stated that the basic method of utilitarianism is to analyze the costs and benefits that would likely come from making the decision. The “likely outcome” has a lot to do with the evaluation of a decision from a utilitarian standpoint.
With that stated, this case would be deemed unethical. This case had ultimately brought happiness to no one in the end. It is quite clear that Smith & Wesson did not analyze the costs and benefits of making this decision of agreeing to a gun reform settlement, which already goes against utilitarian beliefs. Smith & Wesson making this choice of agreeing to the gun reform settlement had also brought unhappiness to all parties, which is exactly the opposite of what utilitarianism values. Their agreement made the NRA very unhappy, as they felt like they had been betrayed by one of the top gun manufacturers in the country, who had also been one of their top supporters The NRA felt that Smith & Wesson was making a very selfish move as well. All the wholesalers and retailers, along with individual that are gun consumers who had purchased and used Smith & Wesson products were now unhappy with the company, as they were all supporters of the 2nd amendment, which they felt Smith & Wesson was violating. In the end, Smith & Wesson’s choice didn’t lead to much happiness or them either, since their sales plummeted quickly forcing the company to get sold for a fraction of the price that it was once worth.
Kantianism
The basic principles of Kantianism include acting rationally, respecting people’s individual needs and differences, and also being motivated by good will, seeking to do what is right because it is right. Kantianism focuses a lot on the thought process of the action, rather than the result of the action, “Kantianism does not make decisions based on consequences, but rather on what Kant calls the ‘Good Will.’”( Salazar 21). Another major aspect of Kantianism is what is called the formula of humanity, which states that, “it is wrong to use people as a mere means to get what you want.” (Salazar 22).
From a Kantian perspective, Smith & Wesson’s choice would be considered unethical. Smith & Wesson’s decision to accept the gun reform agreement does not meet all the criteria of Kantian ethics. One way to show this is simply by the fact that they only made this decision of agreeing to the settlement if they got something in return. While hoping to keep society safe by increasing gun control within the company may have potentially been one of their goals, it surely was not the only one. In return for taking these gun reform measures, many lawsuits had to be dropped against Smith & Wesson, so clearly part of their motivation for making this decision was to help save their company money. This shows that they weren’t fully doing what is “right” because they felt it was “right”, they also had a selfish motivation driving their decision. This was even said by their chief executive, Ed Schultz, as he stated, “I believed we needed to eliminate these lawsuits.” (PBS Frontline). Also, their choice did not comply with the rules of the formula of humanity. Smith & Wesson had used the government just to get what they desired, which would be have the lawsuits on them dropped.
Virtue Theory
The virtue theory values character traits that promote wellness of individuals within a society. The rule of this theory is to make actions embodying a variety of virtuous or good character traits, all while avoiding bad character traits. To answer whether or not something is ethical under the virtue theory, you must ask about the character of the person making the decision, and assess whether their character is virtuous or not. “This approach differs strongly from the previous three ethical theories because the previous three theories analyze individual actions whereas virtue theory analyzes a person’s character.” (Salazar 23). Some cardinal virtues that the virtue theory looks for are courage, honesty, wisdom, and justice.
I believe that from a virtue theory standpoint, when looking at Ed Schultz, who was the chief executive of Smith & Wesson at the time of the deal, then this would be deemed ethical. Ed Schultz had stated right after making the decision that because of the atrocities happening in the country involving gun violence, he had started to change his opinion on gun control. In an interview with Newsweek Schultz has said, “‘I changed,’ Shultz told Newsweek, as the Smith & Wesson boycotts entered their third month. ‘I said, Okay, we have to find another solution.… You can’t just say, I made it, I shipped it, it’s out of my hands.’” (The Washington Post). This quote from Schultz shows that he is making this choice out of virtuous character, as he is looking to change the way they manufacture and distribute guns to help with all of the violence. His choice also displays courage, for he is probably aware of how this could impact his company. He also mentions the Columbine shooting and another school shooting in Jonesboro, Arkansas that had previously occurred, to emphasize the fact that something needs to change. This shows how a driving factor in making this decision was to lower the amount of violence happen, while risking his personal success within his company, which embodies good character.
Justified Ethics Evaluation
In my opinion, the decision made by Smith & Wesson was overall unethical from a business standpoint. Their decision to agree to this gun reform settlement was a selfish move to try to save money and avoid legal issues. This then also pressured many other gun manufacturers to join this settlement, because now they are facing political pressure about gun control even more than before, because Smith & Wesson had agreed to join the settlement. Many of these companies who considered joining would have very likely considered the terms of the agreement to be against those in their belief of the 2nd Amendment in the United States Constitution. Even while Ed Schultz’s decision could have very likely been in part due to him trying to help decrease gun violence, solid reasoning is also presented to allow a strong belief that a major factor in him agreeing was due to the legal trouble he could avoid, and money he and the company could save from it. Just the overall fact that Smith & Wesson went behind the rest of the gun industry and the NRA’s back seems unethical to me. If it wasn’t for the NRA putting up the constant fight against gun control, then it is likely that Smith & Wesson wouldn’t even be in business at all, most definitely wouldn’t have been as successful.
The decision overall lead to a general unhappiness for pretty much all stakeholders involved, whether it be Smith & Wesson themselves, the NRA, gun wholesalers and retailers, and even any previous owner of Smith & Wesson guns. Smith & Wesson’s choice was selfish, as they did not fully consider what was ethically correct in the situation by just about any means. To top it all off, they ended up losing mass amounts of money as well, which is something no business wants.
Action Plan
This whole controversy had taken place in the very early 2000’s so Smith & Wesson is not facing the issues they once were. The owners at the time sold their business and the new owners rebuilt it back up to being very successful today. But I am going to give my company action plan on what I feel they should have done right after their gun reform decision, allowing them to not sell the business, and to grow once again.
Therefore, the current issue would be that Smith & Wesson has agreed to a settlement with the government to reform the way they manufacture and distribute guns, and the NRA was unhappy with this, and called out Smith & Wesson for this. This had done some help in leading to a major boycott on Smith & Wesson products. The problem now is sales will start to plummet with many of our previous partners not willing to purchase out products anymore. In order to fix this issue, the first step that must be taken is to realize your situation. You must realize how difficult it will be to continue to operate as one of the largest gun manufacturers in the country, when you have the very powerful NRA against you and many of your previous distribution partners boycotting you.
Once you have done this, the next step would be to focus on scaling down. As much as a big and very successful company wouldn’t want to, it would be essential for them to begin scaling down the company right away instead of fighting to survive as a massive gun manufacturer. Sell buildings, equipment, and fire employees now when you have control to, rather than when you will be forced to. This will allow you to gain some money and reallocate these newly gained resources in other areas.
A main area it would be beneficial to use these resources would be in a really good marketing group, because the next step would be to establish a new company mission statement and create new values. A new mission statement could be, “Create and distribute safe, high quality guns in a way to help protect all.” Some core values it would be beneficial to have alongside this is innovation, public safety, and responsibility. These core values along with the mission statement shows you are now committed to taking measures where you want to keep the public safe.
This, along with a top of the line marketing team can help your company focus on somewhat of a new target market, which would be the next step. If you can convince a new audience of how improved the safety of your guns now are, along with the measures you’re going to in order to ensure of this, it can help draw in many people to the idea of owning a gun. This can lead to a whole new wave of people supporting guns that never would have before these reforms were made. This new market would fully belong to your company, as you are the only company who has agreed to take these reform measures. It could end up taking a while for this market to grow, but the scaling down would make it possible to stay afloat while this takes time to happen.
The next step would just to be focusing on growing your company to increase profit, as this new market of people supporting reformed guns grows. It has been a pattern over time for gun control to steadily increase, so over time most other companies will very likely have to take these measures that you currently are, but you would just have a head start on it. Sticking to the mission statement and core values of making proper reforms with the guns, and always having the public’s safety in mind would help keep your business profitable, as it now would likely conform better than ever with the new gun laws present. It would be beneficial as well throughout this process and in the future to just focus on having ethics in mind when making decisions. You can do so by following your mission statement and core values, and informing all employees of these, and also taking your last decision that almost destroyed your company as a well learned lesson.
Bibliography
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