Professional Documents
Culture Documents
Chapter 10 Overview
Introduction Managing Stakeholders Ethics and Consumers Ethics and Employees Ethics and Shareholders Ethics and the Community Why Are These Ethical Dilemmas and Costs Conclusion
+ Stakeholders
What is a stake?
Consumer Rights
To To To To
Conflicts of Interest
Product Safety
Toyota
Advertising
Pharmaceutical industry
Employee Safety
Johns Manville
McWane, Inc.
Employee Downsizings
Exxon
+ Conflict of interest
Big Insurance Company is a large supplier of health care services which is under fire from the government to lower costs and increase efficiency. Big Insurance has an excellent reputation and is widely acknowledged as one of the best-managed companies in the country. In spite of its reputation, however, Wall Street has reacted negatively to government efforts to reform the industry as a whole, and Big Insurance's stock price has lost 30% of its value in the last year. To counter the effect of possible government intervention, Big Insurance has just purchased Little Company, a discount health care supplier and traditionally one of Big Insurance's feistiest competitors. Wall Street has greeted the acquisition with enthusiasm and Big Insurance's stock price has rebounded by more than 10% since news of the acquisition was made public. While this acquisition could provide Big Insurance with a foothold in tomorrow's health care industry, a real problem lies in the mission of Little Company. Little has made its reputation by providing objective health care advice to its customers. Now that it's owned by Big Insurance, customers have expressed doubts about how objective Little can be in recommending health care services if it's owned by a health care provider.
+ Product Safety
As a brand manager at a large food manufacturer, you're positioning a new product for entry into the highly competitive snack food market. This product is low-fat, low-calorie, and should prove to be unusually successful, especially against the rapidly-growing pretzel market. You know that one of your leading competitors is preparing to launch a similar product at about the same time. Since market research suggests that the two products will be perceived as identical, the first product to be released should gain significant market share. A research report from a small, independent lab - Green Lab - indicates that your product causes dizziness in a small group of individuals. Green has an impressive reputation and their research has always been reliable in the past. However, the research reports from two other independent labs don't support Green's conclusion. Your director of research assures you that any claims of adverse effects are unfounded and the indication of dizziness is either extremely rare or the result of faulty research by Green Lab. Since your division has been losing revenue because of its emphasis on potato chips and other high-fat snack food, it desperately needs a low-fat money maker. Since you were brought into the division to turn it around, your career at the company could depend on the success of this product.
+ Advertising
As a bottler of natural spring water, your advertising department has recently launched a campaign that emphasizes the purity of your product. The industry is highly competitive, and your organization has been badly hurt by a lengthy strike of unionized employees. The strike seriously disrupted production and distribution, and it caused your company to lose significant revenues and market share. Now that the strike is over, your company will have to struggle to recoup lost customers, and pay for the increased wages and benefits called for in the new union contract. The company's financial situation is precarious to say the least. You and the entire senior management team have high hopes for the new ad campaign, and initial consumer response has been positive. You are shocked then, when your head of operations reports to you that an angry worker has sabotaged one of your bottling plants. The worker introduced a chemical into one of the machines, which in turn contaminated 120,000 bottles of the spring water. Fortunately, the chemical is present in extremely minute amounts - no consumer could possibly suffer harm unless they drank in excess of 10 gallons of the water per day over a long period of time. Since the machine has already been sterilized, any risk of long-term exposure has been virtually eliminated. But, of course, the claims made by your new ad campaign could not be more false.
+ Downsizing
The new CEO, who has a reputation as a turn-around artist, is known for his propensity to make deep cuts in personnel, and to radically alter organizational structures. The employees are reeling from the layoffs, insecurity, and critical press accounts which suggest that Giant is having an identity crisis that could put it out of business if change doesn't happen fast. As a result, Giant's CEO asks you, the head of human resources, to design a plan to cut the oldest -- and most highly-paid and experienced -- employees from the company. He supplies you with a target number that he says will accomplish his goal and yet keep government regulators at bay. Giant Company is a large company that has experienced significant decreases in sales and profits. It has become apparent to key stakeholders -- employees, customers, and the financial community -- that Giant has focused on the wrong product lines. Consequently, numerous small competitors have eroded Giant's place in its industry, and Giant's sales and profits have plummeted. Over the last year, Giant's board of directors has reduced the company's dividend, replaced Giant's CEO with someone from outside of the industry, and has demanded strict cost controls, including reduced employee benefits and headcount reductions. The experts suggest that 30% of Giant's employees will be terminated.