ANSWERS TO PROBLEMS
1. You have an employee who has a chemical imbalance in the brain that causes him to be
severely unstable. The medication that is available to deal with this schizophrenic
condition is extremely powerful and decreases the taker’s life span by one to two years
for every year that the user takes it. You know that his doctors and family believe that it
is in his best interest to take the medication. What course of action should you follow
and why?
Answer: Arguments Against Social Responsibility. This question illustrates one scenario
where arguments against corporate social responsibility could come into play. If you
take the “anti-social responsibility” position that a corporation has — as its primary
2. You have a very shy employee who is from another country. After a time, you notice that
the quality of her performance is deteriorating rapidly. You find an appropriate time to
speak with her and determine that she is extremely distraught. She tells you that her
family has arranged a marriage for her and that she refuses to obey their contract. She
further states to you that she is thinking about committing suicide. Two weeks later, after
her poor performance continues, you determine that she is on the verge of a nervous
breakdown; and once again she informs you that she is going to commit suicide. What
should you do? Consider further that you can petition a court to have her involuntarily
committed to a mental hospital. You know, however, that her family would consider such
a commitment an extreme insult and that they might seek retribution. Does this prospect
alter your decision?
Answer: Arguments For Social Responsibility. A good, responsible manager would be
hard-pressed to demand that the employee either improve her on-the-job performance or
3. You receive a telephone call from a company that you never do business with requesting
a reference on one of your employees, Mary Sunshine. You believe that Mary is
generally incompetent and would be delighted to see her take another job. You give her
a glowing reference. Is this right? Explain.
Answer: Utilitarianism. Pawning off an incompetent employee would certainly help the
profitability of an employer. However, relatively accurate referrals are expected, and
good corporate citizenship would impose a moral responsibility to act properly. The
4. You have just received a report suggesting that a chemical your company uses in its
manufacturing process is very dangerous. You have not read the report, but you are
generally aware of its contents. You believe that the chemical can be replaced fairly
easily, but that if word gets out, panic may set in among employees and community
members. A reporter asks if you have seen the report, and you say no. Is your behavior
right or wrong? Explain
Answer: Utilitarianism. Weighing the arguments for profitability to shareholders and
fairness to shareholders and employees against the arguments for good corporate
citizenship and long-run profits, an appropriate response might be that you are aware of
5. You and Joe Jones, your neighbor and friend, bought lottery tickets at the corner
drugstore. While watching the lottery drawing on television with you that night, Joe
leaped from the couch, waved his lottery ticket, and shouted, “I’ve got the winning
number!” Suddenly, he clutched his chest, keeled over, and died on the spot. You are the
only living person who knows that Joe, not you, bought the winning ticket. If you
substitute his ticket for yours, no one will know of the switch, and you will be $10
million richer. Joe’s only living relative is a rich aunt whom he despised. Will you switch
his ticket for yours? Explain.
Answer: Fundamentalism. Perhaps an advocate of utilitarianism or social egalitarianism
might feel that switching the ticket would be morally appropriate on the premise that it
6. Omega, Inc., a publicly held corporation, has assets of $100 million and annual
earnings in the range of $13–$15 million. Omega owns three aluminum plants, which
are profitable, and one plastics plant, which is losing $4 million a year. The plastics
plant shows no sign of ever becoming profitable, because of its very high operating
costs; and there is no evidence that the plant and the underlying real estate will increase
in value. Omega decides to sell the plastics plant. The only bidder for the plant is Gold,
who intends to use the plant for a new purpose, to introduce automation, and to replace
all present employees. Would it be ethical for Omega to turn down Gold’s bid and keep
the plastics plant operating indefinitely, for the purpose of preserving the employees’
jobs? Explain.
Answer: Egalitarianism. Indefinite maintenance of the plastics plant may strike one as
being the morally correct thing to do. The moral basis for such a decision would be
essentially egalitarianism where the wealth generated by many is redistributed to benefit
7. You are the sales manager of a two-year-old electronics firm. At times, the firm has
seemed to be on the brink of failure, but recently has begun to be profitable. In large
part, the profitability is due to the aggressive and talented sales force you have
recruited. Two months ago, you hired Alice North, an honors graduate from State
University who decided that she was tired of the research department and wanted to try
sales.
Almost immediately after you sent Alice out for training with Brad West, your best
salesman, he began reporting to you an unexpected turn of events. According to Brad,
“Alice is terrific: she’s confident, smooth, and persistent. Unfortunately, a lot of our
buyers are good old boys who just aren’t comfortable around young, bright women. Just
last week, Hiram Jones, one of our biggest customers, told me that he simply won’t
continue to do business with ‘young chicks’ who think they invented the world. It’s not
that Alice is a know-it-all. She’s not. It’s just that these guys like to booze it up a bit, tell
some off-color jokes, and then get down to business. Alice doesn’t drink, and although
she never objects to the jokes, it’s clear she thinks they’re offensive.” Brad felt that
several potential deals had fallen through “because the mood just wasn’t right with
Alice there.” Brad added, “I don’t like a lot of these guys’ styles myself, but I go along to
make the sales. I just don’t think Alice is going to make it.”
When you call Alice in to discuss the situation, she concedes the accuracy of Brad’s report,
but indicates that she’s not to blame and insists that she be kept on the job. You feel
committed to equal opportunity, but do not want to jeopardize your company’s ability to
survive. What should you do?
Answer: Utilitarianism. This is a common problem with a myriad of legal and moral
implications. From a profitability standpoint, especially in the case of a company on the
8. Major Company subcontracted the development of part of a large technology system to
Start-up Company, a small corporation specializing in custom computer systems. The
contract, which was a major breakthrough for Start-up Company and crucial to its
future, provided for an initial development fee and subsequent progress payments, as
well as a final date for completion.
Start-up Company provided Major Company with periodic reports indicating that
everything was on schedule. After several months, however, the status reports stopped
coming, and the company missed delivery of the schematics, the second major milestone.
As an in-house technical consultant for Major Company, you visited Start-up Company
and found not only that they were far behind schedule but also that they had lied about
their previous progress. Moreover, you determined that this slippage put the schedule for
the entire project in severe jeopardy. The cause of Start-up’s slippage was the removal of
personnel from your project to work on short-term contracts in order to obtain money to
meet the weekly payroll.
Your company decided that you should stay at Start-up Company to monitor their work and
to assist in the design of the project. After six weeks and some progress, Start-up is still
way behind their delivery dates. Nonetheless, you are now familiar enough with the
project to complete it in-house with Major’s personnel.
Start-up is still experiencing severe cash flow problems and repeatedly requests payment
from Major. But your CEO, furious with Start-up’s lies and deceptions, wishes to “bury”
Start-up and finish the project using Major Company’s internal resources. She knows
that withholding payment to Start-up will put them out of business. What do you do?
Explain.
Answer: Situational Ethics. We don’t know if the development fee was ever paid to
Start-up Company. Major had an obligation to pay the initial development fee. If it was
paid, and Start-up did not produce the required progress reports then Major is correct to
9. A customer requested certain sophisticated tests on equipment he purchased from your
factory. Such tests are very expensive and must be performed by a third party. The
equipment was tested and met all of the industry standards, but showed anomalies that
could not be explained.
Though the problem appeared to be very minor, you decided to inspect the unit to try to
understand the test data—a very expensive and time-consuming process. You informed
the customer of this decision. A problem was found, but it was minor and was highly
unlikely ever to cause the unit to fail. Rebuilding the equipment would be very expensive
and time-consuming; moreover, notifying the customer that you were planning to rebuild
the unit would also put your overall manufacturing procedures in question. Should you
fix the problem, ship the equipment as is, or inform the customer? Explain.
Answer: Fundamentalism. You must inform the customer. The customer apparently has
the right to request such testing and as such you have ethical responsibility to inform the
10. You are a project manager for a company making a major proposal to a Middle Eastern
country. Your major competition is from Japan.
(a) Your local agent, who is closely tied to a very influential sheik, would receive a 5 percent
commission if the proposal were accepted. Near the date for decision the agent asks
you for $150,000 to grease the skids so that your proposal is accepted. What do you
do?
(b) What if, after you say no, the agent goes to your vice president, who provides the money?
What do you do?
(c) Your overseas operation learns that most other foreign companies in this Middle Eastern
location bolster their business by exchanging currency on the gray market. You discover
that your division is twice as profitable as budgeted due to the amount of domestic
currency you have received on the gray market. What do you do?
Answer: Ethical Theories. (a) This may cross the line from ethical to legal requirements. If
this is not illegal, then applying the doctrine of ethical relativism, you must decide what