Typical Ethics ProblemsBusiness Law I: Ethics in Our Law—Chapter 1

Ethics in the business world is an issue faced daily—by employers, employees, investors, customers, community members, etc.

How much thought have you given to their dilemmas?

Problem A:• You are the chief executive of a fairly

large automobile supply company. Your sales department manager informs you that your largest customer has just gotten a price 15 percent lower than yours from a foreign competitor.

Problem A continued:• You have been thinking for some time of

moving your production facility to Mexico where you will be able to pay much lower wages. What is the ethical thing to do?

• Consider the following options. Which would you choose? Why?

Problem A—Option 1:• Give your workers three months’ notice

of the plant closing. Offer to pay expenses for those workers who want to go with you to Mexico at the new wage schedules.

• Discuss this option.

Problem A—Option 2:• Negotiate with your workers over an

equal sacrifice program to prevent the company from having to move. The following are some elements that might be included in such a proposal. Which would you agree to?

Problem A—Option 2 continued:• Lower employee wages enough to make

the company competitive.

Problem A—Option 2 continued:• Increase productivity to make the

company competitive.

Problem A—Option 2 continued:• Lower profit margins on the products to

make the company competitive.

Problem A—Option 2 continued:• Lower executive salaries and bonuses

to make the company competitive.

Problem A concluded:• Suppose the steps are all agreed to and

the company still loses customers . . . . • Suppose workers are not willing to

contribute toward these cost-lowering suggestions.

• Is it then ethical to move to a foreign site?

Problem B• It is generally known now that asbestos

fibers, if inhaled, can cause cancer of the lungs. Yet for years, top executives of a principal producer suppressed evidence that asbestos was killing its own employees. Was this unethical?

Problem C• Oliver Smith was Southern United

States sales manager for a large business machines company. He was aware that his division had fallen half a million dollars behind its sales goal for the year. It was now early December.

Problem C continued:• He knew he would receive a reprimand

and the chances of his getting a raise were poor. With some imaginative changes in records and his annual report, he presented the idea that his division had made a small profit.

Problem C continued:• Then came the auditors and his duplicity

was revealed. His superior in the company, after a hearing, told Oliver he could have forgiven the profitless year but not the fraudulent accounting. What would you have done if confronted with Oliver’s duplicity?

Problem D• You are an engineer for one of the “Big

Three” automotive companies; and a new car, the Excelsior, is about to go into production. You discover that the latch on the trunk compartment is imperfect and once in a million times will fly open and obstruct vision behind you.

Problem D continued:• This could cause an accident and

possible loss of life. You go to the head of the engineering department, then to the president of the company and complain. Each tells you production is about to start and your discovery is much too late.

Problem D continued:• Should you now tip off the press, or would

being a “whistle-blower” be too disloyal to the company?

Problem D continued:• Does it make any difference in your

decision if it is the front hood latch instead that is the problem?

Problem E• You are president of a large company

with six divisions, each of which makes its own product. One of these divisions is running at a large loss which could endanger the profitability of the whole company.

Problem E continued:• This division is located in a small town

where it is the chief source of employment. If you close down, you could be responsible for much suffering in this community.

• What do you do?

Problem F• The company of which you are president

has been asked to make a substantial gift toward the building of a new library for your community. This gift would be considered a business expense to the company, but certainly not enough to turn the expense into a profit.

Problem F continued:• You are about to go to your board of

directors with the request.• What reasons can you think

of in favor of this gift?• What reasons can you think

of in opposition of the gift?

How would you handle each of the following cases?

Case 1• Lorna is an administrative assistant in the

Human Resources Department. Her good friend, Bill, is applying for a job with the company and she has agreed to serve as a reference for him. Bill approaches her for advice on preparing for the interview.

Case 1 continued: Lorna has the actual interview questions

asked of all applicants and considers making him a copy of the list so he can adequately prepare.

Case 2• Emily works in Quality Control. Once a

year, her supervisor gives away the refurbished computers to the local elementary school. No specific records are kept of this type of transaction and Emily really needs a computer for her son who is in college. Her supervisor asks her to deliver 12 computer systems to the school.

Case 3• Marvin is the secretary in the Facilities

Management Department. He has just received a new computer and wants to try it out. Though his supervisor has a strict policy about computer use for business purposes only, he wants to learn the e-mail software more thoroughly than his training

Case 3 continued: can provide. One good way to do this, he

figures, is to write e-mail messages to his friends and relatives until he gets the knack of it. He is caught up on all his work and only has 30 minutes left to work today. His supervisor left early.

Case 4• Richard and Conway are talking in the

hallway about the employee benefits program. Conway, who has had some recent financial trouble, explains to Richard how the benefits program has a loophole that will allow him to receive some financial assistance that he really needs to help pay

Case 4 continued: health care costs for his mother. Cathy, a

fellow worker, overhears the conversation. Later, Cathy is approached by her supervisor who says he heard a rumor that some people were taking advantage of the company benefits program.

Case 5• Jennie was recently hired to work as a

receptionist for the front lobby. As receptionist, she is responsible for making copies for the associates. Her son, Bruce, comes in and needs some copies for a school project. He brought his own paper and needs 300 copies for his class. If he

Case 5 continued: doesn’t bring the copies with him, he will

fail the project. The company copier does not require a security key nor do they keep track of copies made by departments.

It’s not necessarily so easy to make such critical decisions, is it?

How effective would you be?