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Business Ethics, 8e Jennings
37. Who named BP the world’s most admired company?
38. What industry practice had BP failed to follow for its Prudhoe Bay pipeline maintenance?
39. One newspaper headline, following Prudhoe Bay and the refinery explosion read, “BP = Big
Problems for Oil Giant.” Who of the following would feel a connection with the headline test?
40. What was the total cost to Malden Mills of paying Malden employees for six months while the
factory was down?
41. Which of the following did Malden Mills not do in 2004?
42. What was Captain Hazelwood’s condition when the Valdez ran into a reef?
43. Evaluate the following statement from a doctor, “I always do what’s best for my patients, and
these gifts and dinners do not influence me.”
44. Jack Grubman made a deal with Sandy Weill that affected his analysis of what company?
45. Jack Grubman made his deal with Sandy Weill on his stock analysis:
46. How was the Grubman/Weill deal discovered?
47. What issue affected Grubman’s relationship with Bernie Ebbers?
48. The Oil Spill Act:
49. What is at issue when government officials take gifts from those they regulate?
50. Jack Grubman, a financial analyst, committed which ethical breach(es) in order to earn a slot for
his children in a preschool?
51. The perks furnished by pharmaceutical companies to physicians:
52. Which of the following has been documented as an employer practice in order to meet safety
numbers on injuries?
53. Which of the following is a correct statement about employer liability for sleepy employees who
fall asleep on the way home and cause accidents?
54. Which of the following influenced the behaviors of Cintas employees?
55. What did Hughie Elbert Stover do at the Upper Big Branch mine that resulted in criminal charges
against him and Massey Coal?
56. Why did the SEC require Peter Lynch of Fidelity to pay a fine?
57. Jack Grubman was involved in which of the following activities at Citi?
58. What company did Jack Grubman of Citi write a positive evaluation of in order to obtain a favor
from Sandy Weill?
59. What motivated Sandy Weill’s offer to do a favor for Jack Grubman?
60. Which of the following activities by Taser resulted in newspaper reports about company
practices?
61. What was the problem with the research and resulting publication on aspirin resistance?
62. What did hospital administrators report to the editors of Bone and Joint Surgery that resulted in
the withdrawal of a previously published article?
63. What was Medtronic’s involvement in the research on its Infuse bone product?
64. The Kodak employee had an arrangement with:
65. In the Darlene Druyun/Boeing case, what laws were violated?
66. Why was Ms. Druyun’s sentenced increased from six- to nine-months?
67. Where did Ms. Druyun first cross an ethical line in her relationship with Boeing?
Short Answer/Essay Questions
1. Discuss the risks of avoiding confrontation of a problem employee.
SUGGESTED ANSWER:
2. Fifty-nine auto dealers around the country were fined $200,000 by the Department of Labor for
child labor violations. The car dealers hire 16- and 17-year olds to move cars from service bays
to customer pick-up areas and from lots to show rooms. They are also employed to wash cars.
The teenagers move the cars literally only hundreds of feet in the process, but they are driving
the cars.
Under the Fair Labor Standards Act and the federal regulations, only those employees who are
age 18 or above are permitted to drive as part of job requirements. The fine for a violation is
$1,100.
The Department of Labor contacted dealerships and asked for the names of their employees
under the age of 18. Once the Department had the names, it contacted the young employees to
question them about their job duties. Upon discovery of the driving, the dealerships were fined.
About one-half of the dealerships have paid the fines and the remainder are protesting. The
result has been that dealerships will now employ only those who are 18 and older because it is
impossible to have an employee responsible for washing cars and not be able to move the car.
The result has been that many special job programs for minority students and students in
vocational schools have been eliminated.
a. Do you think this type of driving was intended to be covered in the child labor statutes?
b. Are auto dealers taking advantage of children or helping them?
SUGGESTED ANSWERS:
3. What factors contribute to the failure in necessary confrontation?
4. Alan S. Noonan was fired from his job as a salesman at Staples, Inc. for allegedly padding
expense reports. A Staples executive then sent a mass e-mail to about 1,500 employees
informing them that Noonan had been fired for violating the company's travel and expense policy.
Staples also denied Noonan his severance benefits and refused to allow him to exercise his stock
options, claiming that, under the terms of the agreements setting forth the right to these benefits,
Noonan was ineligible because he had been fired “for cause.” Discuss the ethical issues of both
the employer and the employee.
SUGGESTED ANSWER:
5. Discuss the similarities between the Westland/Hallmark case and the Cintas and OSHA case.
SUGGESTED ANSWER:
6. Kyphon employees sold, sold, sold Kyphon’s products for spinal fracture repairs. One rep took
his territory’s sales from $16,000 a month to $200,000 per month in less than a year. Incentive
programs do produce miracles.
Kyphon, now Medtronics Spine, faced Medicare fraud allegations when two former employees
brought suit under the False Claims Act. Medtronics acquired Kyphon in 2007 while the former
employee suits for Medicare fraud were pending. According to documents in the case, Kyphon
sales reps didn’t just tout the benefits of Kyphon products, and indeed there are many. The sales
reps offered the doctors and hospitals a way to keep patients overnight. Helping docs and
hospitals bill Medicare for an overnight stay on what was only a one-hour, walk-away outpatient
procedure was a boon. Kyphon created a mutually beneficial triangle: more sales for Kyphon,
more commissions and bonuses for reps, and more revenue for docs and hospitals.
Discuss the ethical issues in this scenario. Was it a violation of the law in terms of Medicare
reimbursement?
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7. Company A’s executives are members of the board of a charity. Company A may even itself be a
major donor to the charity. The charity may even benefit many of the company’s customers. The
charity holds a golf tournament to raise money. The executives participate in the tournament. In
some cases, Company A even pays the executives’ participation fees (good for company image).
Company B is a supplier to Company A or a vendor that would like to be a supplier. Enter the
desire for face time. In some tournaments, Company A executives turns to every Company B
executive in the supply chain and asks for participation. And participate they do. They pay their
entry fees because Company A executives ask. But sometimes Company B folks want and get
more. Company B antes up the dough for primo participation in the tournament. If a VP of
Company A is playing a round with a celebrity, Company B pays enough to get its VP in the same
foursome.
Discuss the ethical issues.
SUGGESTED ANSWER:
8. List those at BP who were aware of maintenance and inspection issues with respect to the
Prudhoe Bay pipeline.
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9. Explain the findings of the government and private reports on BP operations at its Texas refinery.
SUGGESTED ANSWER:
10. An environmentalist stated, following the BP Prudhoe Bay pipe problems, “These companies
simply cannot behave responsibly,” and went on to voice objection to opening up ANWR for
drilling. Discuss the long-term implications of BP’s decision to keep maintenance costs low.
SUGGESTED ANSWER:
11. Discuss the similarities between a teen’s decision to text-message whilst driving and an
executive’s decision to not perform routine maintenance in the interest of saving on costs at a
plant.
SUGGESTED ANSWER:
12. Discuss the ethics of the pension accounting processes companies used prior to the Pension
Protection Act of 2006.
SUGGESTED ANSWER:
13. Discuss the impact when researchers do not disclose their financial ties to companies whose
products they are researching.
14. 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.
Business Ethics, 8e Jennings
Does Ms. Caldwell have a conflict of interest?
15. 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,
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:
16. Discuss the benefits for a company of not downsizing, as in the case of Aaron Feuerstein and
Malden Mills.
SUGGESTED ANSWER:
17. An engineer for the Shaw Group managed a project that Shaw was doing for the U.S.
government. Under the terms of the contract, Shaw stood to earn a $2.2 million bonus on the
contract if it kept the reportable injuries and lost-work days below certain levels during the course
of the project. The project engineer, who received a bonus if the company met the federal bonus
goals, misclassified injuries, failed to report others, and made those who were injured wait to
seek medical treatment so that he could meet quarterly injury goals. Discuss the engineer’s
behavior in light of what you learned in Unit 4 on culture.
SUGGESTED ANSWER:
18. List all who were affected by the Kodak employee’s deal on the valuation of Kodak’s property.
SUGGESTED ANSWER:
