Download - Chapter 6 Applying Ethics to the
Chapter 6Chapter 6Applying Ethics Applying Ethics
to theto thePurchasing,
Marketing, and Sales Functions
Two monetary inducementsfor unethical behavior
The temptation to enrich yourself at the expense of your organization
An employer, protecting its self-interest, pressures an employee to engage in unethical conduct
Case: A Trip to Las Vegas The players:
– Brent Wiggly, Purchasing Director, Commander Hotel chain (78 hotels)
– Tom Penney, a top salesperson, Linens of Today Company
– Another salesperson from Advantage Linen Supply Company
The issues
Mr. Penney offered Mr. Wiggly bed sheets at $8.00 apiece
The other salesperson offered the same bed sheets at $7.90 apiece
Minimum loss to Commander would be $1500 if Wiggly purchased from Penney only one sheet per room
Mr. Penney’s offer
Mr. Penney offered Mr. Wiggly an all expense paid vacation for two in Las Vegas
Mr. Wiggly thinks, “What’s an extra $1,500 to the Commander Hotel Chain anyway?”
Bribes and Kickbacks
Are always immoral Another form – using influence
inappropriately The moral basis of any business
relationship is trust
Act Utilitarianism
Which action brings the greatest good for the greatest number of people?
Look at the consequences for everyone who works at the company: what are all of the consequences of my actions?
Should all of the employees be subsidizing Mr. Wiggly’s vacation?
Costs
Long term costs – less efficient organization; leading to higher consumer costs
Shareholders would lose money Lower morale among employees “If he can get away with it, so can I”
Rule Utilitarianism
A rule utilitarian would ask, “What if everyone operated this way?”
If it is acceptable for one person to accept kickbacks, is it all right for everyone to accept kickbacks?
Society as a Whole
What would your day be like if you had to bribe everyone from whom you asked something?
Kant and the Categorical Imperative
Remember: actions are moral or immoral based solely on their nature and not on the consequences
If someone takes an action out of a sense of duty, their motivation is a moral one
The vacation? Kant would not find anything
moral about accepting the vacation What should Mr. Wiggly do in order to do
the right thing?– Universalize the decision to accept vacations– If it would be ok for everyone to accept a
vacation, then it is ok for him to accept the vacation
Second formulation of the Categorical Imperative
When you engage in deceptive business practices, you are treating others as means, not as ends; you are not giving them the same status as you give yourself – a person, not a thing
Deceiving others, along with other dishonest business practices is immoral, because you are denying others their humanity
The Ethic of Justice
John Rawls said that in order to decide what is fair, rational people had to decide what would be reasonable from all points of view
Also, people had to consider issues as if they did not know where they would alight in society
Consider Mr. Wiggly
To act justly, he would have to behave according to rules that would seem fair no matter what his position were within the hotel chain
Is it fair for Mr. Wiggly to take a vacation attained deceptively that will cost the hotel chain money it need not spend?
Bribery according to Rawls
Bribery is contrary to Rawls’ principle of equal liberty
Among other things, this principle states that it is wrong for a business or person to engage in bribery because it takes away the liberty of others
Is this the same thing?
If a purchasing agent accepts a case of liquor from a salesperson at Christmas time, could this be considered a bribe?
If an event coordinator is offered free services and hotel expenses so that he will select a hotel for his client’s convention, could that be considered a bribe?
Aristotle and theEthics of Virtue
With the ethics of virtue, we judge a person’s character
How will we judge Mr. Wiggly’s character if he takes the bribe?
Remember: Mr. Penney is also committing an injustice
Deceitfulness
Shows that both men have dishonest characters
Both men lack the virtue of honesty
Religion on Honesty Judaism, Book of Leviticus: “You must not
steal; you must not act deceitfully nor lie to one another.”
Christianity, Ephesians 4:25: “Put away falsehood; let everyone speak the truth with his neighbor, for we are members one of another.”
Islam, Koran: “And give full measure when you measure out, and weigh with a true balance; this is fair and better in the end.”
Additional World Scripture Let your conduct be marked by truthfulness in word, deed,
and thought.Hinduism. Taittiriya Upanishad 1.11.1
Be honest like Heaven in conducting your affairs.Taoism. Tract of the Quiet Way
Straightforwardness and honesty in the activities of one's body, speech, and mind lead to an auspicious path.Jainism. Tattvarthasutra 6.23
He who utters gentle, instructive, true words, who by his speech gives offense to none—him I call a brahmana.
Buddhism. Dhammapada 406 Master Tseng said, “Every day I examine myself... In
intercourse with my friends, have I always been true to my word?” Confucianism. Analects 1.3
Case Study: Spilled Coffee
The PlayersAndy, owner/manager, Global Coffee HouseJohn, Andy’s assistantNancy, regular customer at Global
The issues The lid popped off a very hot cup
of coffee, burning Nancy so badly that she had to be taken to the hospital
Andy had recently changed cup purveyors in order to save money and now realizes that he made a poor decision
Andy purchased thousands of the new cups and lids; and Andy has a binding contract with the new purveyor
Case Questions What would you do in Andy’s place? What are the ethical issues involved in this case? Would any of the philosophers tell Andy to keep
the cups? Would an act utilitarian’s decision regarding this
case be different from a rule utilitarian’s decision? If so, how? Specify what those decisions would be.
Case: The Board of DirectorsVenue
Fairview Country Club Private club 265 affluent members Initiation fees begin at $100,000 60 years of history in community Recently fallen on hard times
The Players Mr. Widga, Director of Golf 10 members of Board of Directors Mr. Smith, General Manager (25 Years) Mr. Patrick, board member responsible
for golf department Ms. Nuñez, controller
The issues Mr. Widga found several line
items and expenses on his profit and loss statement
After reviewing back reports, Widga realized his department was not receiving proper income credit
He also noted several irregular expenses After being denied access to financial
statements, Widga approached Mr. Patrick
Issues continued Patrick said he would bring it to the board In following months, Widga felt Smith’s
dissatisfaction even though his department was doing well
Widga told by Club President and Smith that if he wanted to keep his job, he would refrain from speaking about his budget irregularities
Also, he was to stop looking at the club’s financial status
Case questions Why would Mr. Smith and Mr. Patrick insist
on keeping their meeting a secret? Two weeks later, Mr. Widga discovered that purchases
from other departments had been attributed to his department and that revenue that his department generated had also been attributed to other departments. He knew the exact whereabouts of all of the money and reported it to Mr. Patrick. The next day he was fired for not following instructions. What are the issues to be considered?
If you were Mr. Widga, would you have done anything different? Why or why not?
What was Mr. Widga’s main responsibility in this case?
Policy Development ChallengeImagine that you are the General
Manager of the Lighthouse Restaurant & Grill. Develop a list of policies that would ensure that your operation is run in an ethical and aboveboard manner. Include policies that cover the following functions: restaurant purchasing, restaurant sales, and restaurant marketing.
Case Study: The Ride to Paradise
The Players Charles and Hilda Erskind, cruise
passengers Lawrence Gonneff, Cruise Escort
The issues
Lawrence Gonneff sells van tickets to incoming cruise line passengers at the airport; he receives a commission
If passengers took a taxi to the cruise ship, it would cost them less than the van tickets
Gonneff mentions to passengers only the van service
Case Questions Is Mr. Gonneff conforming to competitive
business practices or is he “ripping off” the cruise passengers?
Has Mr. Gonneff made a sound business decision? Why or why not?
Would any of the ethical theories support his decision? If so, which ones? Explain your answer.
Would it change your evaluation if Mr. Gonneff told customers there was no other way to get to the port? Why or why not?