Study Guide

Taylor’s University Undergraduate

Programmes
August 2017

BUS 2014 / BUS 60204

Business Ethics and Values

NOTE : Tutorial activity(ies) stated in this Study Guide is/are subject to change
depending on students’ progress.

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 TUTORIAL 1 (WEEK 2)
LEARNING OUTCOMES
• Identify the nature of ethical problems and issues in business and their implications to
organizations and society in general.
• Explain the reasoning for making ethical judgments in business settings

READING
 Fisher, C., Lovell, A. and Valero-Silva, N (2013) Business Ethics and Values (4th Ed) Pearson.
 Shaw W.H. (2013) Business Ethics, 8th Edition. Cengage/Wadsworth

Make sure you are familiar with the following terms:

• Moral and non-moral standards
• Religion and morality
• Ethical relativism and moral principles
• Morality and personal values
• Moral reasoning

Group Activity

ACTIVITY 1

Questions:

1) In your view, is it always wrong to break the law ? Give example of those exceptional circumstances.

Activity 2

Each person, working in their group, should think of as many reasons as they can why an
organisation should behave ethically and socially responsibly.
Prepare power point slides and present in the class.

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ACTIVITY 2
Your Cynicism Quotient
Answer the following questions as honestly as you can. Circle the number between 1 and 5
that best represents your own beliefs about business.
Strongly Strongly
Disagree Agree

1. Financial gain is all that counts in business 1 2 3 4 5

2. Ethical standards must be compromised in 1 2 3 4 5

business practice.

3. The more financially successful the 1 2 3 4 5

businessperson, the more unethical the
behaviour.

4. Moral values are irrelevant in business 1 2 3 4 5

5. The business world has its own rules. 1 2 3 4 5

6. Business persons care only about making 1 2 3 4 5

profit.

7. Business is like a game - one plays to win. 1 2 3 4 5

8. In business, people will do anything to 1 2 3 4 5

further their own interest.

9. Competition forces business managers to 1 2 3 4 5

resort to shady practices.

10. The profit motive pressures managers to 1 2 3 4 5

compromise their ethical concerns.
Scoring Procedures
* Add the total number of points. The maximum is 50 points. Total _____.
The higher your score, the more cynical you are about ethical business practices. Think about
the reasons for your responses. Be prepared to discuss them in class.

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 TUTORIAL 2 (WEEK 3)
_________________________________________________________________________________________________________________

Topic: Moral Philosophies

LEARNING OUTCOMES
 Explain the role and implication of a socially responsible business entity.
 Infer the rationale for the approach adopted in response to an ethical dilemma.
 Adopt the range of moral philosophies towards resolving ethical dilemma in organizations.

READING
 Fisher, C., Lovell, A. and Valero-Silva, N (2013) Business Ethics and Values (4th Ed)
Pearson.
 Shaw WH (2013) Business Ethics (8th Ed). Cengage/Wadsworth

Make sure you are familiar with the following terms:

 Consequentialist theories and non-consequentialist theories
 Moral decision making
 Nature of Justice and rival principles of distribution
 Different views on Justice: Utilitarian, Libertarian and Rawl’s Theory of Justice

ACTIVITY 1

Authentic Biscuits from Australia.

Helena is a Malaysian graduate got a job as trainee executive, As trainee executive she will be
rotated on the job to all the departments to gain exposure and appreciate the nature of the
business. Helena’s first assignment is to assist Madam Marina, a qualified buyer in the Food and
Beverages Department. Buyers play a critical role in the management of the department store. They
select the goods to be offered, negotiate purchase terms and conditions, set retail prices, arrange
displays, organize promotions and are generally responsible for the operations of the departments
within the store.

Helena was extremely happy on the first month of her employment. Marina respected her as an
employee. On several occasions she received praise for good discipline.Her views and opinions have
been well considered and workload is just right. However, an event occurred that threatened to
destroy all her contentment. According to Marina, the department store has received a shipment
of imported biscuits from Australia with an authentic chocolate cream filling. They are well packed
in attractive foil covered boxes, but somehow some of them have become infested with moulds and
insects. Not all the boxes were infested, since only few customers have returned the item after
purchase. But the point is some people did return their purchased packs. Obviously, said Marina,
“We cannot continue to sell the biscuits at our department store to uphold our good image. We also
do not have the time to inspect every package and keep the ones that are not infested. Marina went

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on to discuss cost implications. She uttered, “What about the losses that we have to incur? We have
already committed a capital cost of almost RM50,000. The biscuit manufacturer will not refund us
since it is doubtful whether the infestation had occurred during shipment, or even during storage
at our warehouse.” After a serious discussion, Marina asked Helena to get rid of the biscuits.

Helena thought that Marina asked her to throw them away at the rubbish bins provided by the KL
municipality near the store but Marina further clarified to Helena to call Mr.Maniam, who operates
a mini market at the outskirts of the Klang Valley where majority of the residents are in the low
income groups.

Helena protested openly, but Marina further assured that there is nothing wrong with our actions.
The residents of these areas have never had high quality of this nature. If we sell these imported
biscuits very cheap, most of the people will buy it. It will be an opportunity for try something really
good. Only a few people will get the infested boxes. They will not be very happy, but at such remote
areas, they expect this especially when they see a low price on an expensive product. Let them make
a choice. We don’t. Helena is in surprised on Marina’s decision on dumping in Klang Valley.

Source: Adapted from Business Ethics by Khalid et al.,(2014)

Questions

1. Evaluate Madam Marina’s actions towards consumers based on egoism and Kant view.

2. What would an ethical relativist say about this action of dumping?

3. If You were Madam Marina, What would you do in this situation? Will you arrange for the
delivery of the biscuits to Mr.Maniam? Justify your actions.

ACTIVITY 1

Discuss the strength and weakness of the following theories.

 Utilitarian theory
 Kant theory.
 Theory of rights

TUTORIAL 3 (WEEK 4)
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 Topic: Corporate Ethical Responsibilities
LEARNING OUTCOME
 Explain the role and implication of a socially responsible business entity.
 Adopt the appropriate conceptual framework to evaluate the impact of ethical issues on business and
society.
 Ability to communicate awareness to all level of the society

READING

 Fisher, C., Lovell, A. and Valero-Silva, N (2013) Business Ethics and Values (4th Ed) Pearson.
 Shaw WH (2013) Business Ethics (8th Ed). Cengage/Wadsworth

Make sure you are familiar with the following terms :

 Capitalism
 Socialism
 Welfare state
 Adam Smith free economy

Activity 1: Discussion Questions

1. Examine the critical arguments for and against corporate social responsibility.

2. Compare and contrast the key characteristics in the capitalism and socialism market.

TUTORIAL 4 (WEEK 5)

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 Topic: Marketing
LEARNING OUTCOMES

• Understand the basis for business’s responsibility to consumers and the imbalance of power
between sellers and buyers.
• Identify and evaluate the systems that have been put in place to regulate products and services,
protect consumers, and ensure corporate compliance.
• Delineate the responsibilities of business with regards to advertising

READING

 Chapter 6 : Shaw WH (2013) Business Ethics (8th Ed). Cengage/Wadsworth

Make sure you are familiar with the following terms:

 Deceptive
 Kaldor theory
 Galbraith theory

Group Activity

Choose ONE advertisement from YouTube and assess the extent to which they meet what you
would consider inadequate ethical standard for adverting. Prepare to defend your standards.

Activity2: Group Assignment (20%)

**Please refer to the Group Assignment file posted on the TIMeS**

You will be guided by the Tutor on how to complete the Group Assignment.Consultation / Q&A
session for Group Assignment

TUTORIAL 5 (WEEK 6)

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 Topic: Product and Safety

LEARNING OUTCOMES

 Understand the business responsibilities to consumers and the imbalance of power

between sellers and buyers.
 Delineate the responsibilities of business with regard to safety, product quality and fair
pricing.

READING

 Chapter 6 : Shaw WH (2013) Business Ethics (8th Ed). Cengage/Wadsworth

Make sure you are familiar with the following terms:

 Due Care Theory
 Strict Product Liability
 Price Gouging

Group Activity

Hot Coffee at McDonald’s

TO AFICIONADOS OF THE BEAN , THERE’S IS NOTHING like a piping –hot cup of coffee to get the
day off to a good start ,and nothing more inspired than Luke- warm coffee. That’s what McDonald’s
thought, anyway until it learned differently, the hard and expensive way, when seventy –nine year
old Stella Liebeck successfully sued the company after she was burned by a spilled cup of hot coffee
that she’d bought at the drive through window of her local McDonald’s. The jury awarded her
$160,000 in compensatory damages and a whopping 2.7 million in punitive damages. After the trial
judge reduced the punitive damages to $480,000, she and McDonald’s settle out of court for an
undisclosed sum.

Unlike the outcome of the most other lawsuits, the hot coffee verdict received nationwide
attention, most of it unfavorable. To many ordinary people, the case epitomized the excesses of a
legal system out of control. If hot coffee is dangerous, what’s next: soft drinks that are too cold? To
conservatives, the case represented the all too familiar of consumers to take responsibility for their
own conduct to blame business rather than themselves for their injuries. More policy –oriented
pundits used the case as an occasion to call for reform of product liability law. In particular, to make
winning frivolous suits more difficult and to restrict the punitive awards that juries can hand down.
However, those who examined the facts more closely learned that the Liebeck case was more
complicated that it first appeared. For one thing, Liebeck suffered third degree burns on her thighs
and buttocks that were serious enough to require skin grafting and leave permanent scars. After

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her injury, she initially requested $10.000 for medical expense and an additional amount for pain
and suffering. When McDonald’s refused, she went to court, asking for $300,000.Lawyers for the
company argued in response that McDonald’s coffee was not unreasonably hot and that Liebeck
was responsible for her own injuries.
The jury saw it differently; however First McDonald’s served its coffee at 185 degree Fahrenheit,
significantly hotter than home brewed coffee. The jury was persuaded that coffee at that
temperature is both undrinkable and more dangerous than a reasonable consumer would expect.
Second before, Liebeck’s accident, the company had received over seven hundred complaints about
burns form its coffee. In response to the complaints, McDonald’s had in fact put a warning label on
its cups and designed a tighter fitting lid for them. Ironically the new lid was part of the problem in
the Liebeck case because she had held the coffee cup between her legs in an effort to pry it open.

Questions

1) In serving such hot coffee ,did McDonald’s act in a morally responsible way? What ideals,
effects and obligations should it have taken into considerations? Apply Due Care theory.

2) In your opinion who should be responsible in this case, the customer or McDonald serving
hot coffee? Apply moral theories.

TUTORIAL 6 (WEEK 7)
Topic: Corporate Governance
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LEARNING OUTCOMES

 To reinforce the meaning of corporate governance

 To understand the relationship agent relationship in the context of corporate governance.
• To identify weak areas that needs further rectification before continuing the rest of the
syllabus

READING

 Chapter 7:Fisher, C., Lovell, A. and Valero-Silva, N (2013) Business Ethics and Values (4th Ed)
Pearson.
 Shaw WH (2013) Business Ethics (8th Ed). Cengage/Wadsworth

Make sure you are familiar with the following terms:

 Corporate Moral Agency
 Corporate Governance
 Agency Theory
 Stake holders theory

ACTIVITY

Case study: Super Logistics

Super logistics is listed on the Bursa Malaysia Securities Bhd. The company is a medium sized
developer of infrastructure projects with their offices in Kula Lumpur, Penang and Johor. The
founder and chief executive officer, David is high profile entrepreneur spent RM550,000 on gold
watches as gifts and installed gold vases in the living room and gold taps in the bathroom in his
luxurious office. David is a very dominant personality in the company. He has strong hold on the
company by virtue of holding both the chairman and chief executive officer (CEO) posts.

His views are not challenged or debated during board meeting. Shareholders are very concerned
about David’s lavish lifestyle at the company expense. Last year, 20 percent earnings were decline.
He boasted that he knew how turn the profits of the company around this year.

The board of directors comprises David as chairman cum CEO, Six executive and three non-
executive director and three independent directors. All the executive directors are David’s close
family members and independent directors are his friends. The company has established
remuneration, nomination committees and audit committees. These two committees hardly meet
to discuss issues such as the board’s nomination and executive remunerations packages. It is widely
known amongst board members and top executives that David regards corporate governance as
irrelevant to real business.

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Super logistics recently appointed an external auditor upon recommendation by David. This
appointment received great attention in the financial press because the same audit firm also
provided consultancy services on David acquisition strategy about ten years ago.

Questions

1) Explain the nature of agency problem that exists in super logistics.

2) Critically evaluate the corporate governance structures in Super Logistics.

3) Recommend your suggestions to improve super logistics.

TUTORIAL 7 (WEEK 8)
Topic: Sustainable Growth: Ethical Leadership And Culture

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LEARNING OUTCOMES

 Understand the corporate culture on business ethics

 To assess organizational structure and its relationship to business ethics

READING
 Chapter 7 :Ferrell, O., Fraedrich, J., & Ferrell, L. (2014). Business ethics and policy. Singapore:
Cengage Learning.

Make sure you are familiar with the following terms:

 Corporate culture
 Ethical Decision Making

Group Activity

Leadership and Culture

IKEA is a favorite among customers searching for well-designed products at low prices. IKEA stores
sell ready-to-assemble furniture, appliances, and household goods. Today the firm is the largest
furniture retailer in the world, with 139,000 employees operating in 43 countries. Germany is the
firm’s largest market, followed by the United States and France.
IKEA was founded by Ingvar Kamprand in Agunnaryd, Sweden in 1943 when he was only 17. His
father had given him money as a reward for doing well in school, and Kamprand turned around and
opened a business selling small items such as pens, wallets, and watches at reduced prices. He
derived the name IKEA from the initials of his name I and K, as well as E for Elmtaryd and A for
Agunnaryd, the farm and village where he grew up.
At IKEA our vision is to create a better everyday life for the many people. Our business idea supports
this vision by offering a wide range of well-designed, functional home furnishing products at prices
so low that as many people as possible will be able to afford them.
Core Values of Leadership
leadership by example. Our managers act according to IKEA values, create an atmosphere of well-
being and expect the same of IKEA co-workers.
Constant desire for renewal. We know that adapting to customer demands with innovative
solutions contributes to a better everyday life at home.
Togetherness and enthusiasm. Together, we have the power to solve seemingly unsolvable
problems. We do it all the time.
Cost-consciousness. Low prices are impossible without low costs, so we proudly achieve good
results with small resources.
Humbleness and will power. We respect each other, our customers and our suppliers. Using our
willpower means, we can get things done.

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Daring to be different. We question old solutions and, if we have a better idea, we are willing to
change.
Accept and delegate responsibility. We promote co-workers with potential and stimulate them to
surpass their expectations.
Simplicity. We take an easy-going, straightforward approach when solving problems, dealing with
people or facing challenges.
Additionally, IKEA has developed a sustainability strategy that encompasses people and planet. The
strategy consists of a number of long-term strategic goals to enhance IKEA’s impact on communities
and the environment by 2020. For instance, IKEA wants to produce as renewable energy as it
consumes by 2020. To ensure that it is on track, IKEA has developed milestone goals that it can use
to measure its progress in shorter time periods. For instance, by 2015 the company wants to
produce renewable energy that is at least 70 percent its rate of consumption. Throughout this
process, IKEA wants to be transparent with its stakeholders, providing frequent disclosures about
its progress.
KEA has performed a number of unique events to display their appreciation for employees. In 1999
the company held “The Big Thank You” event in which the total of all sales on that day worldwide
was divided among all employees. The total was approximately 84.85 million euros. Because IKEA
wishes to demonstrate that it values employees, it refuses to designate them as such. Instead,
everyone at IKEA is called a co-worker, no matter their position in the company. The company
provides co-workers with uniforms free of charge, including the typical IKEA yellow polo shirt.
KEA wants to understand its employees and their views toward the workplace. The company uses
an independent third company to conduct VOICE, a co-worker survey to determine employee
viewpoints and their satisfaction with the firm’s business operations.
IKEA supports UNICEF programs in India and is a strong supporter of education for children across
the world. The company has collaborated with another organization to develop social
entrepreneurship opportunities in India. IKEA also works to help its farmers improve both their
incomes and sustainability;
In terms of its suppliers, IKEA has developed a number of standards codified in its IWAY supplier
code of conduct. The first requirement that potential suppliers will notice before they can even do
business with IKEA is that the supplier cannot use forced or child labour. Additionally, IWAY calls for
the suppliers themselves to assign at least one person whose responsibility will be to ensure that
the supplier is complying with IWAY expectations.
Despite IKEA’s popularity and its many ethical initiatives, the company has faced a number of ethical
challenges in the past few decades. Many of these challenges are the result of ethical lapses that
IKEA allegedly made when dealing with its stakeholders. The following section describes some of
the bigger criticisms levied against IKEA.
IKEA prides itself on its strong corporate responsibility, especially in terms of human rights.
However, a recent allegation surfaced that revealed some questionable practices involving the
Communist regime more than 30 years ago. IKEA admitted that during this time period, it had used
East German political prisoners to build some of the components of its furniture. Prisoners who
refused were punished. Even though it occurred many years ago, this revelation has put a blight on
IKEA’s human rights track record. On the other hand, the fact that it acknowledged its wrongdoing
and updated its values on issues such as prison labour is a good sign that the firm wishes to avoid
the semblance of any similar type of misconduct in the future.

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Despite IKEA’s commitment to human rights, it is difficult for the firm to monitor its entire global
supply chain. A report conducted by a Harvard adjunct professor claimed that IKEA, along with a
number of other retailers, were sourcing rugs from a company in India that uses child labour.
After a document was published during a court case, it became known that IKEA was allegedly
conducting private investigations on certain employees in France. Further reviews of the situation
determined that IKEA had been using investigators to investigate potential job applicants, employee
misconduct, and even consumer complaints. One higher-level employee in France was let go after
an extended sick leave. According to complaints, IKEA assumed that this employee was not actually
sick and launched an investigation. Eventually, she was fired, when evidence of the investigations
proved, she pressed charges.
Another scandal that occurred at IKEA involved product quality. In 2013, the company pulled all of
its famous Swedish meatballs from stores in Europe. The company was accused of selling meatballs
that contained horsemeat. Authorities in the Czech Republic claimed they had tested the meat and
detected horse DNA. IKEA launched an investigation and found that the problem originated from
one Swedish supplier. They claimed the supplier had bought the meat from two slaughterhouses in
Poland. The company pulled the meatballs off the shelves throughout Europe, apologized to
customers, and reiterated that it does not accept ingredients that are not stated in its recipes. It
also made sure to assure people that horsemeat itself is not dangerous. Additionally, IKEA filed a
police report against the supplier in question (the supplier was also dropped). Soon Swedish
meatballs were once again being sold in stores, but to ensure they were not tainted IKEA provided
temporary DNA testing of the products.
IKEA has a strong reputation for selling quality products at low prices. The company’s ability to come
up with innovative design concepts and keep prices low provide it with a significant competitive
advantage. On the other hand, like most of the companies, IKEA also faces many ethical challenges.
Some of these challenges—such as the accusation it used special investigators to investigate
employees in France—represent serious ethical lapses if true. The horsemeat Swedish meatball
scandal caused a major outcry among consumers, reflecting the difficulty of carefully monitor a
business’s supply chain. IKEA reacted immediately to the revelation by pulling the products,
implementing DNA testing to reassure consumers, and dropping the supplier responsible. As a result
of this ethical challenge, IKEA’s supply chain management might significantly improve as the
organization is now taking greater measures to ensure the authenticity of its products.
1. Describe how IKEA’s values and treatment of stakeholders contribute to its ethical culture.

2. What might be some of the ethical issues with IKEA’s complex form of organization?
3. How does IKEA’s reaction to the Swedish meatball scandal demonstrate effective crisis
management?

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 TUTORIAL 8 (WEEK 9)
Topic: Ecology
LEARNING OUTCOMES

 Understand and discuss the moral problems associated with irresponsible use and abuse of
the environment.
 The rights of citizens, and the obligation to preserve the environment for future
generations.

READING

 Chapter 7 :Shaw WH (2013) Business Ethics (8th Ed). Cengage/Wadsworth

Make sure you are familiar with the following terms:

 Private Cost
 Social Cost
 Depletion of natural resources
 Blackstone’s Theory

GROUP ACTIVITY

Students are required to do the following tasks in a group.

 Give suggestions to make our Taylors university as a Green University

 Identify the ways to protect the environment for future generations in Malaysia
 Present your slides in the Tutorial class.

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 TUTORIAL 9 (WEEK 10)
Topic: Understanding Ethical Decision Making
LEARNING OUTCOMES
• Formulate plans and strategies towards maintaining both personal and professional
responsibility and integrity in business and society.
• Infer the rationale for the approach adopted in response to an ethical dilemma.
• Adopt the range of moral philosophies towards resolving ethical dilemma in organizations.
• Adopt the appropriate conceptual framework to evaluate the impact of ethical issues on
business and society.

READING
• Chapter 4, Ferrell O.C., Fraedrich J. and Ferrell L. (2011)
 Business Ethics and Policy : Ethical Decision Making and Cases. (1st Asia Edition). Singapore:
South-Western, Cengage Learning.

Make sure you are familiar with the following terms :

• Framework for ethical decision making in business
• Ethical-Issue Intensity
• Individual factors
• Organizational factors
• Opportunity

ACTIVITY

Melman is the director of nursing at a regional blood bank. The blood bank is constantly running
low, especially of rare blood types. One day, a large hypermarket chain offers to host a series of
blood drives at all of its outlet nationwide. The campaign will run for at least 2 weeks. Melman and
his nursing team set off for the campaign.

Soon after her arrival at the first site, Melman hears a disturbance. Apparently, a nurse called Gloria
was drawing blood from a male donor with a very rare blood type. During the process, he touches
her body. Gloria jumped back and began to cry. Marty, a male colleague, sprang to Gloria’s defense
and told the donor to leave the premise. To Melmans horror, the male donor is the company’s
director. He is worried that the donor will retaliate by cancelling the rest of the campaign.Later in
the afternoon, a potential donor approach Melman and asked if he can be paid RM200 for each pint
of blood drawn from him. “I’m unable to decide now. Let me think about it” reply Melman. He
knows that some less developed country practiced payment-for-blood system. But this has never
been practiced in Malaysia and is strongly prohibited among developed nations.
Task :

Solve Melman’s dilemma using the Trevino 7-steps ethical decision making method.

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 TUTORIAL 10 (WEEK 11)
Topic: Ethics at Workplace (Whistle Blowing)
LEARNING OUTCOMES

• Identify the nature of ethical problems and issues in business and their implications to
organisations and society in general.
• Evaluate the range and variety of ethical problems and issues affecting business and
society globally.
 Importance of privacy and data protection act.

READING

 Chapter 6 :Fisher, C., Lovell, A. and Valero-Silva, N (2013) Business Ethics and Values (4th
Ed) Pearson.

Make sure you are familiar with the following terms :

• Whistle-blowing
• Self Interest and Moral Obligation

ACTIVITY

You have worked as a bank teller for several months. One of the other tellers who has become your
good friend tells you that her daughter is extremely ill and that she must have an operation to survive.
She also tells you that she has no insurance and the operation will cost RM50,000. Sometime later
you ask her about her daughter and she tells you she is just fine now. She then confides to you that
she took RM50,000 from a dormant account to pay for the operation.

The annual account reveals that RM50,000 is missing from the account. The Bank Manager issued
an offer of RM8,000 to anyone who can provide information about the missing money.

a) You are not sure whether to whistle blow. Using De George’s SIX (6) essential conditions is it
justified to do so ?
.

b) Describe FOUR (4) consequences that you might face if your action of disclosing the
misconduct is not successful.

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 TUTORIAL 11 (WEEK 12)
Topic: Corporate Ethical Responsibilities (Corruption)
LEARNING OUTCOMES

 Explain the role and implication of a socially responsible business entity.

 Discuss on domestic and foreign bribery, gifts and kickbacks.
 Impact of bribery, gifts and kickbacks.

READING

 Chapter 10 : Shaw WH (2013) Business Ethics (8th Ed). Cengage/Wadsworth

Make sure you are familiar with the following terms :

 Ethical Relativism
 Corruption, bribes, kickbacks

ACTIVITY

Corruption is a despicable act in the western sense. However, corruption may be influenced by
cultures and cultural value systems that may endorse, rather than condemn, such activities. Discuss
the condemnation of corruption using Ethical relativism.

You may make refer to the following articles. Reference to other sources is also encouraged:

 “Corruption as part of National Culture: The disconnect between values, ethics and etiquette”
by Michael Segon
 “Corruption and the Concept of Culture : Evidence from the Pacific Islands” by Peter Larmour

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 TUTORIAL 12 (WEEK 13)
Topic: Fairness at Workplace (Job Discrimination)

LEARNING OUTCOMES

 Explain the role and implication of a socially responsible business entity.

 Adopt the range of moral philosophies towards resolving ethical dilemma in organizations.
 Adopt the appropriate conceptual framework to evaluate the impact of ethical issues on
business and society.

READING
 Fisher, C., Lovell, A. and Valero-Silva, N (2013) Business Ethics and Values (4th Ed) Pearson.
 Shaw WH (2013) Business Ethics (8th Ed). Cengage/Wadsworth

Make sure you are familiar with the following terms :

 Job Discrimination
 Debating Corporate Responsibility

Group Activity

Coca-Cola Struggles with Ethical Crisis

In 1999, Coca-Cola’s reputation was dealt another blow when 1,500 African American employees
sued for racial discrimination. The lawsuit, which eventually grew to include 2,000 current and
former employees, accused the company of discriminating in areas of pay, promotion, and
performance evaluation. Plaintiffs charged that the company grouped African American workers at
the bottom of the pay scale and that they earned around $26,000 a year less than Caucasian
employees in comparable jobs. The suit also alleged that top management had known about
companywide discrimination since 1995 but had done nothing about it. In 1992, Coca-Cola had
pledged to spend $1 billion on goods and services from minority vendors, an action designed to
show the public that Coca-Cola did not discriminate, but the lawsuit from its own employees painted
a different picture. Although Coca-Cola strongly denied the allegations, the lawsuit provoked unrest
within the company. In response, Coca-Cola created a diversity council and the company paid $193
million to settle the racial discrimination lawsuit.
Coca-Cola ran into more trouble when Mathew Whitley, amid level Coca-Cola executive, filed a
whistle-blowing suit, alleging retaliation for revealing fraud in a market study performed on behalf
of Burger King. To increase sales, Coca-Cola suggested that Burger King invest in and promote frozen
Coke as a child’s snack. The fast food chain arranged to test market the product for three weeks in

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Richmond, Virginia and evaluate the results before agreeing to roll out the new product nationally.
When results of the test marketing began coming in to Coca-Cola, sales of frozen Coke were grim.
Coca-Cola manipulated the bad statistics by giving at least one individual $10,000 to take hundreds
of children to Burger King to purchase Value Meals including the frozen coke. Coca Cola’s action
boosted sales of frozen Coke and exhibited a positive result for the market study. However, when
the US attorney general for the North District of Georgia discovered and investigated the fraud, the
company had to pay $21 million to Burger King, $540,000 to the whistle-blower and a $9 million
pretax write-off had to be taken. Although Coca-Cola disputed the allegations, the cost of
manipulating the frozen Coke research cost the company considerable in negative publicity, criminal
investigations, a soured relationship with a major customer and a loss of stakeholder trust.

Questions

1. Identify the ethical issues.

2 . Describe the types of job discriminatory practices that might occur in a business organization like
Coca-Cola.

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 TUTORIAL 13 (WEEK 14)
Topic:Fairness at Workplace (Civil Liberties)
LEARNING OUTCOMES

 Identify, avoid, and suggest ways to resolve employment-related conflicts of interest.

 Understand employees’ obligation to operate within a legal and ethical framework on
behalf of their employers in ways that protect proprietary data.

READING
 Chapter 10 :Shaw WH (2013) Business Ethics (8th Ed). Cengage/Wadsworth

Make sure you are familiar with the following terms:

 Insider Trading
 Proprietary Data

ACTIVITY

Briefly discuss the conflict of interest in an organisation. Explain the possibilities of employees
abusing official position with examples and discuss the impacts of conflict of interest in an
organization with examples.

Integration of ethical theories and concepts in the business

environment

** Revision and preparation for Examination **

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