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Business Ethics, 8e Jennings
UNIT TWO – SOLVING ETHICAL DILEMMAS AND PERSONAL
INTROSPECTION
True/False Questions
standards.
comes to ethics.
parking fines and violations is unethical.
just wait and see if anything happens before taking any action.
agree to do it but remind him that I can't make it a habit.
ride in them. It would be unethical to use a company car to drive you and your spouse to
a movie.
your duties at work. Each week you must submit case analyses to your professor. Using
work time to complete the analyses would be unethical.
would be unethical.
purchasing, you were largely responsible for awarding that supplier the contract. The
supplier's sales representative has just called and would like to take you to lunch to thank
you for the support. Going to lunch with the sale representative does not present any
ethical problems.
Under county regulations, all steps in plumbing construction from the initial dig to the final
installation of sink and bathroom fixtures requires an inspection sign-off. Your plumbing
contractor friend has just called and wants to take you to dinner for your birthday at a
five-star restaurant. Because you are friends anyway, the dinner presents no ethical
problems.
Business Ethics, 8e Jennings
using. You have taken one home and set it up for personal use. This is unethical
conduct.
in the district and supervise construction and remodeling and assess various building
needs. When you are traveling around to the various schools, you use a district vehicle
that is clearly marked as such. One day you stop at the country club and have lunch
before heading to the next school since the country club is on the way. You also stop at
the bank drive-thru teller to do some personal banking business. Both the lunch and the
bank stop are ethical breaches.
co-worker who is very bright and capable and hardworking. Your supervisor has asked
you to document everything Jane does and says that will help build a case for
termination. You should do as your supervisor tells you.
husband is not paying the child support the temporary court order requires. As a result,
Alice is broke until she can get her court hearing. Alice has been able, through diverting
checks returned to the company, to take about $2200 from the company to "temporarily
help her cover her bills," as she has explained to you. You must report Alice's
embezzlement.
stadium. The mayor has a conflict of interest and should not vote on the location of the
stadium when the city council takes action on the site.
major flaw in the company's new paper-thin solar calculator. The calculator adds when
the subtract button is pressed if there are more than three figures to the right of the
decimal point. Since it is not your area, you should do and say nothing.
problem or refund money for those who already own the new calculator.
Organists. Alice has been placed in charge of the Guild's national convention. Each time
you pass by Alice's desk or go to her to have some work done, you notice she is on the
phone discussing or working on the convention. Alice's work on the convention during
work hours is an ethical violation.
his desk for several months. A secretary spotted the calendar and commented to your
supervisor that it was not appropriate for an office. Your supervisor took down the
calendar and has asked you to back him up if any complaints are filed. He has asked
you to say that you never saw the calendar. It would not be unethical for you to do as
your supervisor requests because he has removed the calendar.
member of Congress. You have indicated you have information about his private life but
will not share it. The reporter responds, "Tell me, just between you and me." You share
the information and a quote from you on the private life of the member of Congress
appears in the newspaper the next day. The reporter was unethical in violating a trust.
Business Ethics, 8e Jennings
through.
accepted employment with a particular firm.
company headquarters building for Smithco. A friend you have known since high school
works in Smithco's capital budgeting area and has full knowledge of all the bids from all
firms. It would be unethical for your friend to share that information with you before you
submitted your bid.
information to your company.
other teams compete. The order of presentation is by luck of a draw. The team that is
the last to present left during one of the presentations, went to the computer room and
redid its PowerPoint slides and restructured its presentation based on what other teams
had presented. This team has done nothing wrong.
of the game of business.
cheating.
authorities.
Business Ethics, 8e Jennings
debt instruments sold in the 2000s.
simply a shifted norm.
Multiple Choice Questions
1. Ben Small, a sole practitioner, has just decided to form a law partnership with his lifetime friend,
Harvey Steptoe. They agree to name the firm Steptoe and Small and to split all profits. Ben is
also a director for a publicly-traded telecommunications firm, NewVector, Inc. Ben has just
learned that Harvey is lead counsel is a lawsuit against NewVector. Ben continues to serve as a
board member and participates in sensitive discussions about the lawsuit. Ben does not disclose
that Steptoe is his partner. Ben’s feeling is that he and Harvey are as honest as the day is long
and neither would compromise their duties to NewVector and client, respectively.
2. Randy White is the executive director of a non-profit preschool for special needs children. Part of
Randy’s responsibilities include fundraising for the preschool. Because of his experience and
success in operating specialty pre-schools, Randy is sought after as a consultant at locations
around the country to assist in the start-up and operation of such facilities. Randy does so quite
frequently. Randy does not take vacation time for this work, and his consultant fees (which range
from $750 - $1500 per day) are kept by him as personal income. Randy uses his secretary at the
preschool to book his travel arrangements and prepare his consultant reports and bills for these
outside engagements.
3. Beth Williams is an exercise physiologist who serves as an expert consultant for Women’s
Walkers, Inc., a shoe company specializing in manufacturing walking shoes for women. Dr.
Williams is paid an annual consulting fee along with additional fees for drafting reports and
making media and public appearances for the company. Executive Woman, a national
magazine, has asked Dr. Williams to serve as one of three experts on a panel that will evaluate
the full market range of women’s walking shoes. Dr. Williams will be paid a consulting fee by
Executive Woman as well.
4. Which of the following is not a conflict of interest?
5. Jeff Sanders, head of finance for Components, Inc. has just interviewed Laura Dern, an employee
from the finance department of InChip, Components’ chief competitor. Laura has explained that
she has been passed over one too many times for a promotion at InChip and is thus in the job
market. As Laura is leaving she whispers to Jeff, “Look, I have no contract at InChip that
obligates me in anyway. I can begin immediately. Further, I have been able to obtain copies of
our newest computer chip designs. You’ll have them before InChip even begins production.”
6. An application for graduate school admission at Arizona State University includes the following
request for information:
Please list all institutions attended since graduation from high school.
Marie Davis, a returning student, is applying for admissions to the Masters in Architecture
program. Marie attended the University of Arizona for one semester in 1976. Marie had a
substance abuse problem and did not attend many of her classes. She left the University of
Arizona before classes ended that semester. She did not take her final exams and earned 15
credit hours of “E” for that semester. After 8 years, the policy of the University of Arizona is to
expunge the records of non-matriculating students. Marie’s record was expunged in December
1994.
a. Marie need not disclose her attendance at the University of Arizona.
7. A radar detector:
8. A professor for one of your courses has assigned reading materials from various publications. He
tells you that the materials are on reserve and that each student should go and copy the materials
Business Ethics, 8e Jennings
individually. He notes that for him to copy the materials for students and then sell them or
distribute them would be a violation of copyright law. The professor's conduct:
9. You had quite a night last night of partying. Because of excessive drinking, you are unable to get
to work today. When you call your supervisor you:
10. Professor Reba McGintry is the head of the Student Conduct Board. Charges have been brought
against 3 students who are also members of the university basketball team. The charges are
based on the criminal charges brought by the local district attorney against the 3 men for sexual
assault. Professor McGintry’s husband was one of the staff attorneys in the DA’s office who
made the decision to go forward with the prosecution. Professor McGintry:
11. Medical Purchasing Agents (MPC) is a company that represents groups of hospitals as their
agents for purchasing medical supplies. MPC is able to obtain discounts for the hospital group
because of their sheer volume needs when they are grouped together. MPC’s CEO, CFO and
general counsel own 51% of the stock of a company called Medi-Pump. Medi-Pump is the sole
supplier to the hospitals for feeding pumps, IV pumps and other forms of hi-tech medical pumps
and supplies. MPC has negotiated a low-cost supply contract from Medi-Pump to the hospitals.
MPC:
12. Mary Pickford is an analyst for Munford Stanley, an investment banker. She has touted the stock,
an initial primary offering (IPO), of an obscure biotech firm as a “must buy.” Munford Stanley is
the underwriter for the IPO. Pickford:
13. Suppose, with reference to #12 above, that Pickford already owns an interest in the biotech firm,
but Munford Stanley is not the underwriter. Pickford:
a. Does not have a conflict of interest.
Business Ethics, 8e Jennings
14. James Dodgsen is a student in a graduate course in business. The professor in the course has
given Dodgsen and his classmates a surprise quiz in class. Dodgsen did not do the reading for
class that day because he had been grading papers as part of his TA position. He has been
prepared for every other class that semester. As he glances as the quiz questions, he realizes
that he does not know any of the answers. However, he sees that Jane Frampton, the student
who sits next to him, is well prepared and answering the questions with great ease. He can see
her answers because of her large, block-style printing. Dodgsen copies her answers.
15. Into which of the following categories do patent and copyright infringement fall?
16. Which of the following would be a breach of trust and ethics?
17. An ad contains the following: “Restaurant Critic, Jose Winfrey, on Mama Leone’s Italian Eatery,’
Mama Leone’s is simply the best. It is a surprising new entrant into the competitive Italian bistro
market and it is a mighty one.’” Jose Winfrey is the cousin of the owner of Mama Leone’s and
knows restaurants, but is not a critic for any publication or other media outlet. The ad:
18. Stephen Ambrose, a popular historian with many books to his credit, admitted that some
segments of one of his recent books had language taken from the books of other historians that
was not in quotes. Mr. Ambrose did footnote the work of authors he relied upon in doing his book.
19. Which of the following feels that business is like a big poker game and that bluffing in business is
expected and acceptable?
20. Primum non nocere is associated as an ethical philosophy of:
21. Which company uses primum non nocere as its credo?
22. Which of the following is NOT a Goldman cultural philosophy?
23. As a result of the Goldman “trading huddles”:
24. In the Goldman Abacus deal, who determined what mortgages went into the investment pool?
25. How did Goldman avoid violation of SOX in advancing cash to two of its officers?
26. What was AIG’s role in the Goldman stock offerings?
27. CDOs:
28. What category of ethical dilemma applies to the use of cell phone alibis?
a, Balancing ethical dilemmas
29. Edith O'Brien:
31. Which of the following is an example Albert Carr uses to illustrate bluffing?
32. When a company announces that an executive is "Leaving to spend more time with his family":
33. Who of the following objected to Mr. Corzine's risky venture into Greek debt?
34. How much of the lost money at MF Global did investors receive back in the bankruptcy?
35. Which of the following was a characteristic of the culture at Galleon?
36. In the Penn State case, who was charged with criminal activity?
37. Who was the key witness against Mr. Sandusky at his trial?
38. What was the allegation made about HGTV's "House Hunter" show?
39. What was the allegation about the TV show "Breaking Amish"?
40. What did the Freeh report on Penn State conclude?
41. What were the NCAA sanctions imposed on Penn State?
42. What statutory duty did the Penn State University officials have regarding Mr. Sandusky's
conduct?
Business Ethics, 8e Jennings
43. Who said, “What’s good for me is good for all shareholders”?
44. Who said a corporation has no conscience?
45. What is Mr. Rajaratnam, the former head of Galleon Hedge fund, accused of doing?
Short Answer/Essay Questions
1. Paul Babcock gave the following advice to Standard Oil Company executives who were going to
testify before Congress about the business practices of Standard Oil, “Parry every question with
answers which, while perfectly truthful, are evasive of bottom facts.” Apply ethical analysis to the
advice and the statement.
SUGGESTED ANSWER:
2. Why do companies issue press releases when executives depart that indicate the executives are
leaving to spend more time with their families? What are the ethical issues in issuing such
statements if they are not true?
SUGGESTED ANSWER:
3. Dr. Phil Hayes has received an offer of full funding for his research on a new drug manufactured
by Eli Mentin. The drug would be a competitor for Prozac without the questioned side-effects of
possible violent behavior. Eli Mentin has, however, attached a condition to the funding. That
condition is that Dr. Hayes may not publish his findings until Eli Mentin executives and its
attorneys have had the opportunity to review them.
List the ethical issues Dr. Hayes faces with this offer.
SUGGESTED ANSWER:
4. Data Processing, Inc. is a service firm that performs word processing functions for law firms,
corporations and government agencies. Their facilities consist of 120 office units with a word
processor in each unit.
Their facilities were formerly a shoe manufacturing plant, and all of the office units are located in
one large room. Over the past 14 months, 7 of the 120 word processors have been diagnosed
with breast cancer. In six of the seven cases diagnosed, there is no family history of breast
cancer. Jane Quinn, the owner and CEO of data processing, has seen a cluster study that links
employment as a word processor to a higher rate of breast cancer. Ms. Quinn does not disclose
the study to her employees and takes no further action. Discuss the ethical issues.
SUGGESTED ANSWER:
5. Susan Wade is the president of the Illinois Hospice Organization (IHO). IHO is a state
organization affiliated with a national non-profit organization, the National Hospice Organization.
Both the state and national organizations have members from both for-profit and non-profits
hospices. Susan Wade is the director of a non-profit hospice in Illinois.
A Chicago newspaper has printed a story about hospices and what they do. Susan was
interviewed extensively for the piece. In one quote in the article, Susan expressed her concerns
about for-profit hospices. "It has become the sort of franchise of the decade. They're not all bad,
but I think the original spirit of hospice is becoming very adulterated. There's one time in a
person's life when he shouldn't be looked at as a number, as a piece of an actuarial problem. If
your first and last priority is making money, it flies in the face of what hospice is all about. It's the
end of the health-care chain. It's the place of last hope for patients. Dollars should not be the
issue here."
A chief operating officer of a for-profit hospice has written to Susan complaining that her remarks
are libelous and misinform the public about for-profit hospices.
Business Ethics, 8e Jennings
a. Does Ms. Wade have a conflict of interest?
b. Is Ms. Wade properly executing her role as the president of the state organization?
SUGGESTED ANSWERS:
6. James and Jennifer Stolpa and their five-month old son, Clayton, were stranded outdoors in a
snowstorm for 8 days. They were rescued after James left Jennifer and Clayton in a cave and
hiked 30 miles in subfreezing temperatures to get help.
During the time they were stranded, the Stolpas ate Doritos-brand corn chips that they had with
them in their car. When they were rescued and taken to the Washoe Medical Center for
treatment of severe frostbite, they were visited by boxing champ, George Foreman. Mr. Foreman
is a spokesperson for Doritos. His visit to the Stolpas earned national press and television
coverage that emphasized the Doritos consumption.
If you were an executive with Doritos, would you have sent Mr. Foreman to the hospital?
SUGGESTED ANSWER:
7. Henry Rauzi, the controller for Sunbeam, issued an offer to Linda Croce for an entry-level
accounting position at Sunbeam at a salary of $34,000 per year. Ms. Croce accepted the offer
and gave notice to her employer. When then-CEO of Sunbeam, Paul Kazarian, was informed of
the offer, he demanded that Mr. Rauzi rescind it because Kazarian had not approved it prior to it
being made. Mr. Rauzi called Ms. Croce at 10:00 P.M. three days before she was scheduled to
being work and told her of Mr. Kazarian's action. Ms. Croce had no job and remained
unemployed for several months while she searched for a new job.
Evaluate the legality and ethics of Sunbeam's officer's actions with respect to Ms. Croce.
SUGGESTED ANSWER:
Business Ethics, 8e Jennings
extension of the offer to Ms. Croce. Ms. Croce had no way of knowing that there were limitations
on Mr. Rauzi's authority. Certainly she had no way of knowing that he could not issue an offer.
Sunbeam's actions with respect to Ms. Croce were unfair, unbalanced and unethical.
8. In 1991, James McElveen fell 30 feet from a waterfall and broke his back. He was employed by a
small business and had no medical insurance. His lifetime friend, Benny Milligan, was with him
when the fall occurred. Benny took James to the emergency room. Moved by his friend's severe
injuries and pain and suffering and realizing that James did not have insurance, Benny switched
IDs with James in the hospital emergency room. James required surgery to fuse his back to
avoid what doctors said would have been certain paralysis. The cost of the surgery and
hospitalization was $41,107.45. Neither James, employed as a mechanic, nor Benny, employed
as a painter, could have paid for the surgery and follow-up care. Benny's employer's insurance
paid for the surgery because the hospital took the information from Benny's ID found in James'
pockets.
While Benny was contemplating telling his employer, someone notified the insurance company of
the switch. Benny, James, and Benny's wife, Tammy Milligan were charged and convicted of
mail fraud, wire fraud and conspiracy. Tammy, because of the Milligans' three young daughters,
is serving her sentence through home confinement, Benny is serving 9 months and James is
serving 7 months. All three were serve three years on probation and pay restitution.
Benny states, "I know what I did was wrong. But I look back on it, and I feel that I had to do it at
the time. I don't feel like I'm a criminal in the sense of rapers, muggers and murderers." Benny
said he did not understand that a hospital has an obligation to treat someone who is dying.
Friends testified that as they were racing James to the hospital they told Benny that hospitals in
the area had routinely refused to provide medical treatment.
Benny said he wanted to tell his employer, but he was afraid he would be fired and then be stuck
with the bill. Tammy adds that the government is right to demand restitution but wrong to
imprison them. James asked the judge if he could go to prison for all three of them, "I would be
lost without my friendship with Benny. I probably would be dead."
a. Benny and James committed an illegal act. Was it unethical?
b. What punishment is appropriate in the case?
c. If you were Benny's employer, what would you have done?
SUGGESTED ANSWERS:
9. Althea Caldwell is the director of Arizona's Department of Health Services (DHS). DHS is
charged the administration of the state's behavioral health system and is responsible for
contracting with private providers for millions of dollars of mental health care each year for eligible
patients.
Ms. Caldwell accepted a $20,000 per year director position for a hospital group corporation. One
of the hospitals in the group was one to which state contracts for mental health treatment had
been awarded.
One month after accepting the position, Ms. Caldwell asked the state's attorney general for an
opinion as to whether she had a conflict of interest.
Does Ms. Caldwell have a conflict of interest?
SUGGESTED ANSWER:
10. Stanford University medical researchers conducted a study on the correlation between the use of
fertility drugs and ovarian cancer. Their study, published in the American Journal of
Epidemiology, concludes that the use of the fertility drugs, Pergonal and Serophene, may
increase the risk of ovarian cancer by three times. The lead author of the studies, Professor Alice
Whittemore, stated, "Our finding in regard to fertility drugs is by no means certain. It is based on
very small numbers and is really very tenuous."
FDA Commissioner David Kessler would like the infertility drug manufacturers to disclose the
study findings and offer a warning on the drug packages. He notes, "Even though the
epidemiology study is still preliminary, women have a right to know what is known. We're not
looking to make more of this than there is."
If you were a manufacturer of one of the drugs, would you voluntarily disclose the study
information?
SUGGESTED ANSWER:
11. Raymond Randall is an attorney with the Federal Trade Commission. A 19-year veteran with the
agency, Mr. Randall was known as a good trial attorney. The FTC charged William Farley, the
chairman of Fruit of the Loom, Inc., with violations of the reporting provisions of the Hart-Scott-
Rodino Act, when he purchased shares of West Point-Pepperell Corporations prior to a Fruit of
the Loom takeover bid. The Hart-Scott-Rodino Act requires investors to notify the government
when their holdings in a firm pass $15 million.
The FTC sought a fine of $10,000 per day against Mr. Farley, for a total of $910,000. Mr. Farley
did notify the FTC once Fruit of the Loom made its decision to acquire West Point-Pepperell.
Randall was assigned the Farley case. The FTC took a position of refusing to disclose to Farley
and his attorneys documents relating to the case. Mr. Randall felt that the documents pointed to
weaknesses in the FTC case and supported Mr. Farley's point that he notified the FTC once the
takeover position was announced. Mr. Randall leaked the documents to Mr. Farley's lawyer.
Mr. Farley's lawyers were concerned that they should not be in possession of government
documents returned the documents and resigned from the case because they had seen the
documents. Mr. Farley's new attorneys went to court demanding production of the documents.
The documents were ordered produced by the court. When the FTC refused to produce them, the
case against Mr. Farley was dismissed by a federal district judge.
a. Did Mr. Randall do the right thing in disclosing the documents to Farley's attorneys?
b. Did Mr. Farley's lawyers do the right thing in returning the documents to the FTC?
SUGGESTED ANSWERS:
12. Frank Hoffman is the CEO of Triple Plus, Inc., a group of four successful restaurants in the
Southwest. One member of the Triple Plus board of directors, Sam Wasson, has a daughter,
Business Ethics, 8e Jennings
Chelsea Wasson, who has just started Chelsea’s Cloths, a business that supplies restaurant
linens. Wasson has approached Hoffman to explain Chelsea’s business. Chelsea’s Cloths has
adopted an environmental emphasis in its operations as a way of countering the industry trend
toward the use of paper products in restaurants. Sam Wasson initially recruited Hoffman as CEO,
was instrumental in having the board select Hoffman, and is one of Hoffman’s strong backers.
Wasson supported Hoffman when other board members were impatient with his new procedures,
policies, and changes.
Ordinarily, when someone approaches Frank Hoffman with information on a new supplier, he
takes the information and refers it to the purchasing/supply area or refers the person directly to
the manager of purchasing. In this case, Frank personally presented the information to Triple’s
purchasing manager, Deidre Hall. Frank offered Deidre the Chelsea’s Cloths brochure and card
and explained, “She is Sam Wasson’s daughter. She just graduated in marketing from State
University last June and now has her own firm. See what you can do. Our contract with Lila’s
Linens is up for renewal. Maybe we can do something.”
Deidre evaluated Chelsea’s and Lila’s proposals as well as that of an additional firm in making the
purchasing decision. Although the pricing between Chelsea’s and Lila’s is equivalent, Chelsea’s
is too young a firm to have a track record, and Deidre is not convinced that Chelsea’s can handle
Triple’s large account. Given Mr. Hoffman’s interest, however, Deidre is confused about what
recommendation to make.
a. Should Deidre recommend Chelsea’s firm or offer her true recommendation?
b. Would it be ethical for Hoffman to change Deidre’s decision?
c. What if Wasson had requested bid information so that his daughter could be competitive?
Should Deidre supply it? Should Hoffman direct Deidre to supply it?
d. Can you solve the conflict without offending the director?
e. Does Hoffman need to be concerned about how his intervention would reflect the “tone at
the top”? Could employees misinterpret his actions?
SUGGESTED ANSWERS:
Business Ethics, 8e Jennings
Legal Issues
Both Sam Wasson and Frank Hoffman are fiduciaries of Triple Plus. The transactions they enter
into must be in the best interest of the corporation. Since the purchasing manager's decision has
been made, neither should use their authority or influence to change that decision. Further, the
disclosure of bid information in advance would be a violation of those fiduciary duties.
13. Lee Iacocca, chairman and CEO of Chrysler Corporation, announced on January 27, 1988, that
the automaker would be closing its Kenosha, Wisconsin, plant. Iacocca and his board of directors
were under significant pressure from shareholders due to Chrysler’s continuing poor financial
performance. Chrysler had acquired the Kenosha plant when it purchased American Motors
Corporation in 1987. In his announcement, Iacocca blamed national trade policy for Chrysler’s
declining sales and resultant earnings problems.
At the Kenosha plant, which manufactured the Dodge Omni and the Plymouth Horizon, 5,500 of
the 6,500 workers were to be laid off and production moved to a Detroit plant. Kenosha, a city of
77,000 on the shores of Lake Michigan, depended heavily on Chrysler’s presence.
The announcement of the closing came at a critical time. Chrysler was negotiating to renew its
contract with the United Auto Workers (UAW). Also, the Kenosha plant carried a history of union
financial assistance. The UAW had loaned American Motors over $60 million to keep the
Kenosha plant running, and Chrysler had assumed the loan obligations as part of the acquisition.
Also, Wisconsin had paid $5 million for job training at the Kenosha plant in 1987 after Chrysler
promised that the plant would build Omnis and Horizons for at least five more years.
Peter Pfaff, a member of the UAW Local 72 of Kenosha and an employee at the plant since 1972,
said: “I was there. We’ve got it on tape and in writing. They said they’d stay. Greenwald (then
Chrysler Motors chairman) keeps saying Chrysler never said that, but I was there when he said
it.”
The Kenosha local threatened to delay negotiations on renewing the national contract with 64,000
workers. After the threat, Iacocca announced that Chrysler would establish a $20 million trust
fund to aid the 5,500 Kenosha workers through housing payments and educational funding. This
fund would be in addition to severance pay, extended unemployment benefits, and repayment of
the UAW loans. While denying that Chrysler was setting a precedent, Iacocca declared it had a
“moral obligation” to Kenosha.
Wisconsin threatened to sue Chrysler over the job training program but agreed to hold off in
exchange for Iacocca’s promise to extend production at the plant for several months into the fall
of 1988.
Iacocca stated that Chrysler was “guilty as hell of being cockeyed optimists. Blame us for being
dumb managers, for spending $200 million to put two old cars (the Chrysler Fifth Avenue and the
Dodge Diplomat) in an eighty-six-year-old plant, but please don’t call me a liar when I’ve got to
Business Ethics, 8e Jennings
close it sooner than I thought.” Iacocca sought congressional support for converting the Kenosha
plant to defense work by Chrysler.
Chrysler and the UAW negotiated a contract that provided additional unemployment benefits for
the 5,500 laid-off workers and more job security for the 1,000 workers who would transfer to other
Chrysler operations. Ultimately, the plant closing resulted in 3,700 layoffs.
By mid-1990, Kenosha was enjoying unprecedented economic growth. At a July 1990 ceremony
in which engineers detonated explosives to destroy the 250-foot-high smokestack of the Chrysler
plant, dignitaries and former workers cheered. Kenosha resident T. R. Garcia said at the blasting,
“I think it’s about time they got rid of it. What we need to do is develop the lake front, and this
thing is the last to leave.” City planner Ray Forgianni, Jr., added, “The community’s image is
probably the best it’s been in 100 years. The closing was almost like a catalyst. The handwriting
was on the wall-the economy needed to diversify.”
a. Did Chrysler have a moral obligation to the Kenosha workers and Wisconsin, or was it
just responding to pressure?
b. Do arrangements like Chrysler had with the UAW loans and Wisconsin interfere with the
ability to make business decisions? Review Iacocca’s quote on business mistakes as
you evaluate the issue.
c. Were the shareholders required to pay twice for the closing – once in severance pay and
again in extended benefits?
d. Was Chrysler simply putting its duty to shareholders above its duty to Wisconsin,
Kenosha, and its workers? Is this proper? Is it ethical?
e. Was Chrysler’s action just a catalyst for needed economic development?
f. Iacocca, after having stepped down as chairman of Chrysler, made a takeover offer for
Chrysler in 1995. What would Chrysler’s ethical culture be like if Mr. Iacocca had
succeeded in his takeover bid?
SUGGESTED ANSWERS:
14. Discuss why Goldman Sachs was a disciple of Albert Carr’s theory of “business is a poker game
and we are all bluffing.”
SUGGESTED ANSWER:
15. In May 2010, Martha Stewart gave an interview to the New York Times magazine in which she
was asked, “Do you find it odd that the SEC investigated you for insider trading, which resulted in
your conviction in 2004, while letting a sociopath like Bernie Madoff run unchecked?” (Mr. Madoff
ran a $50 billion Ponzi scheme). Ms. Stewart responded, “Let me just say one thing. They
should have been paying closer attention to other things.” She then added that she never stole
anyone’s money like Madoff did.
Evaluate Ms. Stewart’s comments in the context of ethical analysis, a credo, and her attitude
about ethics in business.
SUGGESTED ANSWER:
16. Susan is interviewing for a position in purchasing with a major international retailer. Susan would
like to go into consulting and sees this job, if she gets it, as experience for joining a consulting
firm in 2-3 years. The interviewer asks Susan, "Where do you see yourself in five years?" Susan
replies, "Working here…and I probably would have moved up to head one area of purchasing."
Evaluate Susan's response, considering ethical categories and applying the readings from Unit 2.
SUGGESTED ANSWER:
