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6. Pepsi iPhone App Stereotypes Women (Chapter 1, pages 37-38)
What this case has to offer
This case is an example of divergent beliefs among various stakeholders. Pepsi launched an iPhone
Teaching suggestions
A good way to start the class discussion is to ask what a company should do before launching a public
Discussion of ethical issues
1. Do you find it interesting that most of the critics were women and the media, but those who
considered the app to be funny were young men?
From a marketing perspective, this iPhone application was appealing to some target consumers.
2. The target market of AMP Energy is males between the ages of 18 and 24. If this group of consumers
found the iPhone app to be funny and acceptable, then why did Pepsi withdraw the app?
Pepsi’s intention was probably to attract some attention but this campaign ended up becoming
4. Are advertising campaigns that are in bad taste also unethical?
A number of factors might affect people’s reaction to an advertising campaign, for example how
relevant the advertising is to the product and its target market, the campaign’s style and
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Business & Professional Ethics for Directors, Executives & Accountants, 8e
7. Should Porn Be Sold by Cell Phone Companies? (Chapter 1, pages 38-39)
What this case has to offer
This case permits students to discuss the trade-offs between activities that increase profits and activities
Teaching suggestions
This is a good case for discussing ethical relativism. Many students find ethical relativism appealing
Discussion of Ethical Issues
1. If selling pornography is legal, profitable, and readily available elsewhere, should Telus shut down its
adult service? Why or why not?
The argument in favor of permitting adult content on cell phones is ‘freedom of expression.’
Some students will try to use an ethical relativism approach. That is, they will argue that
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2. Telus said that it wanted to be Canada’s premier corporate citizen. Should companies such as Telus
feel obligated to give back to society?
Some will argue for a false dichotomy, that a firm can either be socially responsible or it can be
profitable but it cannot be both. However, there is no strong empirical evidence to show that
firms that are socially responsible are any less profitable than those firms that are not socially
citizen” and withdrew the service.
Useful Articles, Links and Videos
Mclean, Catherine (2007) “Why Telus ditched its plans to profit from porn” Globe and Mail, February 22.
Fournier, Chris (2007) “Telus Stops Selling Porn After Protests From Catholic Church” Bloomberg,
February 21.
Austen, Ian (2007) “Canadian Company Offers Nude Photos via Cellphone” New York Times, February 19
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Carew, Sinead (2008) “Porn to spice up cell phones” Reuters, January 30th
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8. Virgin Mobile’s Strip2Clothe Campaign: Exploitive, Risqué, and Worthwhile
(Chapter 1, pages 39-40)
What this case has to offer
This case allows students to discuss the issue of freedom of expression, freedom of choice as well as
pornography. More importantly, it provides an opportunity to illustrate that having a right also entails
having an obligation.
Teaching suggestions
The class should begin with a general discuss of the pervasiveness of pornography. It is readily available
Discussion of ethical issues
1. The Strip2Clothe campaign may have been in questionable taste, but it did raise tens of thousands
of pieces of clothing for the homeless. Does the end justify the means?
The theory that the end justifies the means is a political theory, often attributed to Nicole
2. Virgin Mobile has a history of using cutting edge advertisements. It poked fun at religion in its 2004
holiday commercial Christmas-hanukwanzakah”, and it had the company’s founder, Sir Richard
Branson, stand in a nude suit in New York’s Times Square as part of a “Nothing to Hide” campaign.
Are marketing tactics that are tasteless and risqué also unethical?
One of the purposes of marketing is to make a company or product known to potential
consumers. Marketing that is in poor taste offends some stakeholder’s preferences or values.
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3. Social awareness advertisements – Some years before, the Benetton Group S.p.A. developed the
United Colors of Benetton Campaign, originally to draw attention to prejudice against black people.
The campaign broadened over time to include other prejudices and consist of a series of shocking
pictures published in unexpected venues. For example, there were pictures of a nun kissing a priest,
a bombed car in a street, a white dog kissing a black lamb, an AIDS activist on his death bed in front
of a picture of a crucified Christ, and a white girl portrayed with an angelic halo and a black boy with
hair like horns. Is the Virgin campaign substantively different that the Benetton campaign of 1992?
Some advertisements not only market products but they also remind all of us of our ethnic
diversity. The United Colors of Benetton drew attention to ethnic and cultural differences.
4. What rule would you put forward that would differentiate ethical from unethical advertising
campaigns?
The two rules that most advertisers follow are:
Useful Articles, Links, and Videos
Lavallee, Andrew (2008) “Virgin Mobile Pulls Back Racy Campaign” The Wall Street Journal, July 21
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Cases Involving Financial Transactions
9. Goldman Sachs and the Greek Veil (Chapter 1, pages 40-41)
What this case has to offer
This case constitutes an example of a company aiding a client to enter into a business transaction that
appears legal, but is not necessarily ethical. Goldman Sachs helped the Greek government to set up
Teaching suggestions
An interesting way to introduce this case is to talk about the size and potential consequences of
Discussion of ethical issues
1. Did Goldman Sachs do anything wrong legally or ethically? Explain your answer.
Structured finance transactions are part of normal government treasury operations. European
governments obtain funds from investors around the world by issuing bonds in yen, dollar or
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2. Would it make a difference if other investment bankers were also providing such services?
Arguably, if Goldman Sachs had not aided Greece’s government to set up these transactions,
some other Bank would have done it. Most large investment banks offer these services to public
3. What subsequent impacts could the transactions described above have on Goldman Sachs?
Because these deals were not recorded as government loans, they may have misled investors
and regulators about the depth of the Greece’s liabilities. The credit swap enabled Greece to
5 Story, Louise, Thomas Jr., Landon, and Schwartz, Nelson D. (February 13, 2010). “Wall St. Helped to Mask Debt
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debt crisis, creating potentially more public relations troubles for Wall Street firms, already
troubled by their role in the U.S. financial crisis of 2008.
Useful Articles, Links, and Videos
For additional information on the “Goldman Sachs and the Greek Veil” case included in Chapter 1, see
10. Martha Stewart’s Lost Reputation (Chapter 1, pages 41-45)
What this case has to offer
Martha Stewart is an icon. She represents successful women who are smart, astute, and hard-driving in
a male-dominated industry. Although she was once a stock broker, actually becoming a director of the
New York Stock Exchange, she is best known for creating a billion dollar empire (Martha Stewart Living
Omnimedia Inc.) based on the style, good taste and frugality she delivered daily on television, through
Teaching suggestions
Martha was as revered as she was reviled. Too perfect to be true, she was often the target of mocking
comedy, only because she set unattainable standards for perfection in whatever she set her talents to—
yet her huge following tried, and her companies were very successful. So while Martha was innocent
Discussion of ethical issues
1. What was the basis of Martha Stewart’s reputation?
2. Why did MSO’s stock price decline due to Martha Stewart’s loss of reputation?
Martha was the dominant individual in the formation and delivery of value in the MSO business
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3. Who is Martha Stewart’s target market?
Martha’s target market is made up of women (and men) who are respected and are interested
4. What qualities were associated with the Martha Stewart brand, before the controversy? Which of
these were affected by the accusations of insider trading, and how? How would you find out for
sure?
Refer to the list of characteristics listed above, and to PowerPoint (PPT) slide 4 for a framework
and qualities to start the discussion. Obviously, the trust in Martha and her products was
5. What level of sales and profits would MSO have reached if Martha’s reputation had not been
harmed? Refer to the SEC or websites with historical prince information (such as Historical Stock
Price.com) for information on financial trends.
This is a matter of projection based upon observed trend for MSO and for the industry. The
6. What range would the stock price have been in at the end of 2002 based on your estimates?
This follows from the analysis in question 5, and from projecting the price/earnings multiple that
7. Martha’s overall net worth was huge relative to her investment in ImClone. Assuming she did not
have inside information, was there any way she could have avoided the appearance of having it?
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8. How could Martha have handled this crisis better?
In addition to the answer to question 7, Martha could have donated the modest saving of
9. Why is insider trading considered harmful? Should insider trading be banned if it assists in moving a
stock price to a new equilibrium quickly, so that non-insiders are trading at appropriate prices
sooner?
Insider trading is harmful because it is evidence that privileged insiders with access to
information before the rest of the market hears can make an unfair from unknowing investors.
10. If you wished to sell an investment in a company where one of your friends is an insider, or even a
significant employee, should you call your friend to advise him you are about to sell? Why, or why
not?
Subsequent Events
Check for further information:
In August 2006, Stewart agreed in a settlement of the related civil case brought by the SEC to a five-year
ban on serving as a director or officer of any public company.
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The stock price of MSO fluctuated since Martha’s problems surfaced in 2002, and traded below $5 in
2009. MSO was subsumed as a subsidiary of Sequential Brands Group in 2015, which trades on NASDAQ
as SQBG.
Useful Articles, Links, and Videos
McFadden, Cynthia and Steven Baker (November 18, 2009) “Martha Stewart Looks to Complete
Naughton, Keith (March 14, 2004). “Martha’s Fall,” Newsweek. Retrieved from
Toobin, Jeffrey (2004). “Lunch at Martha’s: Interview with Martha Stewart” The New Yorker. Retrieved
Toobin, Jeffrey (October 1, 2004). “A Bad Thing: Why did Martha Stewart Lose?” The New Yorker.
Reputation Institute (October 22, 2008). “Reputation Institute Announces 2008 Most Admired U.S.
Hancock, David (March 7, 2005). “Martha Back In Business” CBS News. Retrieved from
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Cases Involving the Control of Information
11. Google versus China (Chapter 1, pages 46-47)
What this case has to offer
This case is an example of conflicting interests between Google’s operating philosophy and its for-profit
objective, as well as a case where how business is done in a foreign country may cause a dilemma
between what is legal and what is ethically acceptable.
Teaching suggestions
A good way to introduce this case is to ask whether acting legally is the same as acting ethically for a
company doing business in a foreign country. I ask the students to discuss the various ethical dilemmas
Discussion of ethical issues
1. When it began operations in China in 2006, Google had agreed to have the search engine Google.cn
censor information. Did Google have an ethical right to renege on its agreement in 2010 by directing
its Chinese users to the uncensored search engine Google.com.hk?
When Google took its search engine into China, it was criticized by human rights groups for
allowing the censoring of search results. In response, Google argued that it was better for the
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2. Google derives its revenue by selling advertising. Should Google be concerned about the type of
information that users access through the various Google search engines?
Google is concerned about the contents delivered by its search engine, particularly regarding
advertising contents. The company’s policies state that:
“Google is a business. The revenue we generate is derived from offering search technology
to companies and from the sale of advertising displayed on our site and on other sites
We believe that advertising can be effective without being flashy. We don‘t accept pop–up
advertising, which interferes with your ability to see the content you’ve requested. We’ve found
that text ads that are relevant to the person reading them draw much higher click through rates
than ads appearing randomly. Any advertiser, whether small or large, can take advantage of this
highly targeted medium.
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3. Do for-profit businesses, such as Google, have an ethical responsibility to lobby for human rights and
against censorship in the various countries in which they have commercial operations?
Google’s ethical responsibility may be conflicting with the views on censorship and human rights
in several countries. By actively stopping the censorship and potentially leaving the Chinese
market, the company exposed itself to a loss of business. Google had to balance its ethical
4. After the December 2009 attack, Google enhanced the security for all its users. Does Google have
any additional ethical responsibility to human rights activists to provide them with even more
sophisticated architectural and infrastructure improvements so that their specific Gmail accounts
cannot be compromised?
As part of the company’s privacy policy, Google states that:
“A greater challenge is to make sure that Google demonstrates respect for users’ right to
control their own data. Google is transparent about how it uses information and how that
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Other Issues
Baidu.com, Google’s primary search engine competition in China, is not noted for its ethical scruples as
is illustrated in the case: China’s Tainted Baby Milk Powder in Chapter 1.
References
BBC News. (March 23, 2010). “Google stops censoring search results in China,” BBC News. Retrieved
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12. China’s Tainted Baby Milk Powder: Rumored Control of Online News (Chapter 1,
pages 47-49)
What this case has to offer
This case offers the opportunity to review many of the main issues in the chapter. It presents two
instances of unfettered profit-only behavior:
• Unknowing or uncaring manufacturing profiteers who:
o misrepresented a very harmful ingredient, and
Consequently, the case offers the opportunity to review:
• the limits and consequences of profit-only thinking, and the need for balance with stakeholder
interests;
Teaching suggestions
It is useful to start out by asking what the role of a corporation is. This usually produces the response –
To earn or maximize profits – as well as something like – Yes, but not at any cost – and I promote a short
debate between these factions to get the profit-only group to open their minds to alternatives.
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Discussion of Ethical Issues
1. Given strong profit growth, has there been any damage to Baidu.com’s reputation?
I would argue yes. Stock price changes reflect who the condition (profit) of the company will be
2. What would future reputational damage affect, and how could it be measured?
Reputational damage will undermine the support of stakeholders such as customers,
3. What steps could Baidu.com take to restore its reputation, and what challenges will it have to
overcome?
Baidu must restore its standing on the 4 determinants of reputation in Fig. 1.3 by proving (a)
that it was not guilty of the allegations, or (b) that it was guilty, but will not transgress again.
4. Governments throughout the world have been slow to react publicly to serious problems such as
SARS, mad cow disease, and now melamine contamination. Who benefits and who loses because of
these delays?
Unfortunately delays in reacting lead to delays in publicizing serious problems, thus causing