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• BP not only ignored a number of red flags, but also paid large amounts of money to
possible whistleblowers to keep quiet about BP’s poor safety practices that led to
numerous accidents;
• BP repeatedly ignored red flags, including:
o An accident at the company’s Texas City refinery in 2005, were 15 people lost
their lives, over 180 people were injured, and the company spent $1 billion in
2. Why has BP`s culture developed as it has?
There could be several factors influencing BP’s culture:
• Lack of ethical leadership and clarity about the importance of safety as a fundamental
value for the company;
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3. How would you suggest changing its culture?
As explained in Chapter 5, appropriate guidance reinforced by feedback mechanisms must be
given to management, and that must be reinforced by an ethical corporate culture, or else
management can honestly say that no one told them what boundaries they should be operating
A number of things have to change within the company:
• Management needs to change its attitude towards operating controls, including their
views on safety. The company should not try to down play any red flags pointing out
The company needs to invest in safety measures and commit to meet or exceed industry
standards.
• The company should establish a strong foundation for monitoring of internal controls,
including:
o Support from top management (tone at the top);
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4. What roles should the CEO and the Board of Directors play in making this change?
The Board of Directors has the responsibility to oversee the company’s management in
developing and implementing a turnaround program to change the company’s culture, to
considerable risk, as will be the corporation’s.
5. How could this change in culture be measured?
One way to measure the change in culture is by conducting an extensive investigation that
determines the main issues and maybe benchmark the company against some desired target
Useful Articles, Links, and Videos
Committee of Sponsoring Organizations of the Treadway Commission (COSO) (2009). “Effective
Enterprise Risk Management Oversight: The Role of the Board of Directors.”
Committee of Sponsoring Organizations of the Treadway Commission (COSO). (2004). “Enterprise Risk
Deepwater Horizon Study Group (DHSG) (2011). Final Report on the Investigation of the Macondo Well
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13. Toyota’s Recall Problems (Chapter 7, pages 577-580)
What this case has to offer
Teaching suggestions
A good way to start the case discussion is to enquire if anyone in the class owns or drives a Toyota.
Discussion of ethical issues
1. Did Toyota handle its recalls ethically? Why and why not?
Toyota was slow to respond to complaints and to develop specific recall programs. In the case of
the allegations of stuck gas pedals and/or faulty accelerator linkages, the company did not
effectively counter the many harrowing stories of jammed gas pedals so that the prevailing opinion
2. What changes would you recommend to Toyota’s crisis management approach? Why?
An effective crisis management approach depends upon a rapid and effective response to control
the problem, minimize the impact, and begin remediation of damaged reputation. Preplanning is
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3. Do you think that Mr. Toyoda’s testimony on February 24, 2010 was effective? How might it be
improved?
Yes, I do. He was contrite, and took the blame, with a potential explanation and a pledge to do
4. Toyota did not immediately disclose that each car carried an airplane-style “black box” that
recorded details on how the car was functioning. Was this timing appropriate?
I would argue that the existence of the black box should have been disclosed earlier, but if the data
5. What possible reasons could account for Toyota’s delay in advising the NHTSA of the problems
known on September 29, 2009?
Several reasons could account for the delay in reporting:
• A belief that the faults were driver-related, not auto-related.
• A desire to gather more evidence before reporting unnecessarily
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6. Can Toyota recover from these recall problems? If so, how long will that take? What would Toyota
have to do to recover fully?
Toyota can recover, but only if it can restore its reputation for trustworthiness and safety.
Customers who would have bought a Toyota, may have switched to another brand, and will not
Useful Articles, Links, and Videos
Costello, Tom (April19, 2010). “Toyota to pay record $16.4 million recall fine .” NBC News,
Akio Toyoda, Prepared Testimony of Akio Toyoda, President, Toyota Motor Corporation, February 24,
Chapter 7.
Business & Professional Ethics for Directors, Executives & Accountants, 8e
14. Digoxin Overdose – The Need for Skepticism, Courage, and Persistence (Chapter
7, pages 581–583)
What this case has to offer
This case is about what is required to prevent and mediate many crises. It describes a tragic crisis that
took some time to unfold. If any of the people in the chain of action (and therefore chain of decision
making) had done the job expected of them, in terms of the following characteristics or virtues, the baby
would be alive today:
• Doctor – accuracy, skepticism, due care
• Resident – accuracy, skepticism, due care, persistence
After the original mistake was made, 6 other people had a chance to correct it and failed to do so,
although two were quite concerned (Pharmacist, Nurse 1). Prevention and mediation of crises often
depends on finding and rectifying problems before they become critical. That in turn depends upon the
Teaching suggestions
An interesting way to start the discussion would be to ask which of the people who made decisions had
a chance to correct the problem before it became critical. That would lead to the list above.
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Discussion of ethical issues
1. What should the individuals involved have done?
They should have exercised adequate or due care to ensure the calculations were accurate, and
2. How can the Hermann Hospital ensure that individuals do what they should?
3. Should the doctor, residents, pharmacist and nurses involved in this tragedy be fired? If not, should
they be sanctioned, and if so, how?
This should provoke a good debate that should expose the following issues:
• People make mistakes, so firing is too harsh a punishment in this case unless the
individual has a record of mistakes.
4. Should such health care failures be made public?
I would argue yes, because of the positive impact on the rest of the health workers who would
take greater care and exercise greater diligence, and other hospitals would improve their culture
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15. The Exxon Valdez (Chapter 7, pages 583–586)
What this case has to offer
The Exxon Valdez case presents the story of a legendary environmental tragedy. It offers an opportunity
to review the multiplicity of problems that often incredibly occur when a crisis hits. In this case,
negligence and unpreparedness are evident on shipboard, in Exxon’s HR policies and oversight, in
Alyeska the oil spill recovery consortium, by the Coast Guard, and by the government decision makers.
Teaching suggestions/Discussion of ethical issues
I would suggest giving a brief introduction to the class discussion that covers the material in the
paragraph above.
1. Who was responsible for the accident?
2. What were the responsibilities of the company, the government authorities, and the employees of
the company, that were not properly discharged?
Question 1 is intended to provoke debate on the relative responsibilities involved in the tragedy
• Captain – failure to provide adequate supervision on shipboard
• Exxon failed to:
o act on knowledge of captain’s loss of drivers license for drunkenness
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• Coast Guard failed to:
o staff fully (radar and pilots)
3. Should Exxon abide by the Valdez Principles?
Answers will vary for Question 3. Initially the reactions by companies asked to sign off the
Principles and commit to observing them were based on caution because many feared:
• commitment to public release of environmental information prior to an inventory and
understanding of the company’s record and exposures
4. Could a better code of conduct have prevented this accident?
No, not without an effective ethics program involving awareness, training, reinforcement
5. If Exxon had known, before the accident, about the captain’s alcohol problem, what actions should
have been taken, if any?
In fact, Exxon did know and did nothing. Some students will argue that what the captain did on
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Exxon should have:
• removed the captain, or had an overseer on hand to check on him, on his crew and
practices
Another issue that should be considered is the high cost of cleaning up. The fines and clean-up
are only part of the total cost that should include lost gross margin on sales not made to angry
consumers.
In addition, it should be noted that the CEO of Exxon committed a big public relations gaff when
Update/Subsequent events
The Justice Department and the state of Alaska “…asked [ExxonMobil] to pay another
$92 million to further clean up shorelines … which still contain oil from the 1989 Exxon
Valdez oil spill”:
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“The action was taken under a provision in a $900 million damage settlement in 1991
allowing the government to reopen the agreement in 2006 to consider issues
unforeseen at the time.”
Useful Articles, Links, and Videos
“1999: Exxon Valdez, 10 Years Later.” (May 25, 2010). CBC 60 Minutes,
Vicini, James (June 26, 2008). “Exxon Valdez $2.5 billion oil spill ruling overturned.” Reuters,
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16. The Brent Spar Decommissioning Disaster (Chapter 7, pages 586-588)
What this case has to offer
The Brent Spar oil storage vessel decommissioning story is one that shows how a company can get into a
crisis without expecting it, and can make it worse in a hurry because it doesn’t understand what it’s up
against, and how to manage a crisis. Shell UK was dealing with public outrage caused by a very adept
Teaching suggestions/ Discussion of ethical issues
1. What would you have done if you were calling the shots at Shell UK? When?
Actions of Shell UK
With regard to question 1, I use the case on a surprise basis (no prior reading) if I can, and, using
an overhead version of the case, only let the class read up to the date at which I want them to
Business & Professional Ethics for Directors, Executives & Accountants, 8e
2. What would you have done if you were calling the shots at the parent Shell head office?
Actions of Shell Head Office
For a discussion of question 2, I ask the class what they think. Usually they suggest that Head
Office insist that Shell UK take advice to consider a worldwide stakeholder view, or transfer the
Further Discussion of ethical issues
Greenpeace created outrage
This is a favorite tactic of special interest groups, some of which have been known to bend the
truth, only to admit it later after the company had responded or the crisis had passed. The
public should react with skepticism at all times, but does not, particularly when the special
Shell needed a website
Only when Shell put their scientific research on a website for all to read uninterpreted by the
Moral imagination
This is an important issue that the class should be sensitized to. Management should push and
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important part of the decision process.
Crisis management
This is an excellent case for showing how a company could have vastly reduced the impact of the
crisis by early recognition, preplanning, recognition of the need for wide stakeholder
Useful Articles, Links, and Videos
In recognition of the need to change Shell UK’s approach in its operations, the company created
a dossier which provides historical archives of the decommissioning of the Brent Star, press
releases and articles published during the disaster. [In 2017, information on this website
became difficult to find.]
Business & Professional Ethics for Directors, Executives & Accountants, 8e
17. Wind River Energy Inc. (Chapter 7, pages 588-590)
What this case has to offer
This case involves the relatively frequent occurrence of multiple crises happening at more or less the
same time. This forces the decision makers to sort out which are the more important and solve those
Teaching suggestions/ Discussion of ethical issues
Although role-playing could be effective, I would ask the class to recap the case, and then to consider
the following questions, in sequence:
a) What are the crises that Lynn faces?
After discussing these questions, Question 1 in the text (1. What would you do if you were Lynn?) can be
posed.
a) What are the crises that Lynn faces?
Lynn faces the following crises by Thursday:
• Toronto – An IPO is being prepared for launch one week away, but representations
• Ontario hydro station:
• The input pond was judged to be stagnant and a possible breeding ground for
mosquitoes that could spread West Nile virus. The plant was to be closed.
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b) What order should the crises be considered in? (i.e., Which are the most serious?). Why?
Generally, the crises that should be ranked as worst are those that can negatively impact life
and health, followed by other impacts, including financial. This approach to ranking is likely to
c) What solutions can they offer?
Here the class will demonstrate their ingenuity. Here are some suggestions:
• West Nile virus issue – many communities have been spraying a substance deadly
• Freeman’s electricity
1. Ask your manager to check if the local mines could cut back their power
2. Ask for someone thin to take a camera back into the pipe to take digital
pictures of the stuck hinge pin and email them to you in Toronto, and to an
• Relations with the Mayors and the IPO team
• It is best to advise these folk of your problems before they find out from
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d) How would they guard against and prevent such crises in the future?
• Pre-planning