Management Chapter 1 Homework Your Previous Position Was With Major Producer

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SIMULATIONS

WHY USE SIMULATIONS?

The behavioral simulation is an exercise in which the class is divided into teams of five to six students

each. The students read a short case situation and are then assigned roles in the organization portrayed

in the case. Their roles provide them with varying levels of information about an ethical issue. The

teams then interact to provide recommended courses of action for the short-term, mid-range, and long–

term. Each team experiences the group dynamics and tension that can occur between different

departments seeking to protect their own interests.

These simulations were developed to offer an additional technique for enhancing the learning outcomes

of business ethics-related courses. The simulation addresses important issues that companies,

Specific learning objectives of simulations include:

1. Increasing students’ awareness of the ethical, legal, and social dimensions of business decision

making

2. Legitimizing ethical issues as a necessary part of business decision making

136 Simulations

INSTRUCTIONS FOR CLASSROOM USE

The simulation complements and enhances traditional approaches to business learning because it:

1. Gives students the opportunity to practice making decisions that have business consequences

2. Recreates the power, pressures, and information sharing that affects decision making at upper

levels in an organization

Option 1: Implementation in a 50–75 minute class period

1. Develop teams of five members (depending on roles used). If only three to four participants are

available per team, then the more important and complex roles should be selected for the members

of the team.

2. As an introduction to the exercise, have each person read the role-play simulation background

page.

5. Depending on the outcomes specified above, allow the teams to proceed without interruption for

at least 45 minutes. The instructor may visit teams to answer questions and stimulate discussion

on key issues.

Option 2: In class and outside independent work

1. Follow step #1 from Option 1.

2. Follow step #2 from Option 1.

Simulations 137

discussion session to be held in class. At this second in-class meeting, each participant brings in a

short, written position statement and rationale to inform the discussion. This statement should be

based on the participant’s role and understanding of the situation and its consequences.

5. Let the teams meet during class for brief discussion sessions (30 minutes or so) over the next two

weeks. Indicate that outside meetings are permissible and encouraged.

138 Simulations

TEACHING OVERVIEW ON SOY-DRI

The Soy-DRI behavioral simulation was designed with the goal of improving student skills, confidence,

practice, and efficacy with respect to ethical decision making. The simulation centers on a product

misuse allegation and the pending broadcast of an investigative report examining the case. To

complicate the situation, the CEO is out of town and has given decision authority to a group of five to

seven employees. Specifically, Soy-DRI involves a firm that manufactures three products, all soybean

derivatives, and markets them to three distinct target markets.

Simulations 139

SIMULATION ONE

Soy-DRI*

Background

(Everyone reads)

Two former employees of a large chemical manufacturer founded Soy-DRI (Soybean Derivative

Research Initiatives) in 1985. One of the company’s product lines consists of three soy-based powders

with additives to enhance their moisture-absorbing properties. The products are used to absorb and

eliminate excess moisture in a variety of consumer and organizational settings. In their powdered form,

Soy-DRI products can absorb as much as ten times their weight in moisture. The products are

environmentally friendly, a critical value of Soy-DRI. The company has been acknowledged for

accomplishments in the area of environmental sensitivity.

In 1990, Soy-DRI expanded its product line with two new products targeted at distinctly different end

users. The first of these new products is Pet-Dri, which is used in pet litter boxes to facilitate moisture

and odor absorption. Pet-Dri has the same formulation as Slab-Dri, but the product is beige so that it

blends with other pet litter products. The product is available in a 32-ounce plastic container with an

adjustable lid for application. Pet-Dri is distributed through major discount stores such as Wal-Mart,

Target, Kmart, and supermarkets. The suggested retail price is $4 per 32-ounce container, with a

product cost of $1.25. Pet-Dri has become Soy-DRI’s best-selling product.

140 Simulations

General Council

(Only the student assigned to this role reads this page)

You are the general counsel for Soy-DRI. You report directly to the CEO and work closely with the

human resources managers who deal with compliance issues (that is, equal employment, safety) as well

as the vice president of international operations. You have just been informed by the CEO that

consumers are buying Pet-Dri and, in some instances, Slab-Dri for use as a baby powder on their

children. The CEO wants an action plan from several key executives and managers within the

organization to address this issue.

Right now, you are checking to see what the company has done to prevent any product

misunderstanding:

1. Different labeling

2. Different packaging

3. Different pricing

Your greatest concern lies in the fact that the company was aware that Slab-Dri and Pet-Dri are too

harsh for use on babies, but the products are not specifically labeled to discourage customers from using

them on their children. Looking at the list of ingredients on the packaging, the products appear basically

the same in composition and formulation.

Simulations 141

Chief Financial Officer and Vice President of Finance

(Only the student assigned to this role reads this page)

You are the chief financial officer for Soy-DRI. You have traditionally managed the company’s

financial, accounting, and auditing operations with a firm hand. You were hired right after the company

introduced Slab-DRI and deftly guided the company through its initial public offering three years ago.

You look forward to presenting information on Soy-DRI’s continued financial success with

shareholders at the annual meeting next month. In addition to the re-election of two officers (including

yourself), one of the issues on the agenda is the issuance of stock to support future research and

development efforts and expansion of the -Dri product lines and applications.

142 Simulations

Marketing Manager

(Only the student assigned to this role reads this page)

You are the marketing manager in charge of overseeing the design and implementation of marketing

strategies for Slab-Dri, Pet-Dri, and Baby-Dri. You have been with the company since graduating from

a prestigious business school and aspire to move into executive management. Additionally, your

grandfather is one of the founders of Soy-DRI.

You prefer a relationship-building approach with customers, rather than an insistence on immediate

sales, and you believe that the best way to build relationships with large retailers and wholesalers is by

developing new products and applications on a regular basis. You enjoy working closely with the

director of research and development on new product development. The director of research and

development actually came up with the idea that led to the start-up of Soy-DRI.

Last month, at a trade meeting, a few of your distributors indicated that some customers are using the –

Dri products in ways in which they were not intended to be used. Because you were aware of only a

few incidents, you did not report the misuse or document it in any manner.

Simulations 143

Director of Research and Development

(Only the student assigned to this role reads this page)

You are the director of research and development at Soy-DRI. Your mission is twofold:

(1) to locate and identify the best environmentally sensitive resources and processes for all of the

products Soy-DRI manufactures, distributes, and sells, and (2) to come up with at least one new product

(or derivative/alternative use for an existing product) every two years.

You were also a key figure in supporting the entire environmental initiative, and had to fight an uphill

battle to convince other executives that the cost to produce a line of environmentally sensitive products

was worth the endearment it would earn in the eyes of customers and the government. Your biggest

complaint now is that the global market has opened doors to some low-cost soybean growers whose use

of toxins is unrestricted. Soy-DRI has been purchasing soybeans in areas where certain pesticides and

herbicides have been linked with exceedingly high rates of certain cancers and skin ailments.

144 Simulations

Vice President of Sales and Marketing

(Only the student assigned to this role reads this page)

As vice president of sales and marketing, you are essentially responsible for the economic viability of

Soy-DRI. You find that not everyone in the organization recognizes how much pressure you are under

for the success and failure of new products such as Baby-Dri. With more than fourteen years of sales

and sales management experience, you have been with the company for more than six years. Since

joining Soy-DRI, you have risen from regional sales manager to vice president.

You were heavily involved with every aspect of developing and testing the Baby-Dri product. You

recognized the potential for the consumer application for such a product, and helped foster buy-in for

the product idea from many departments throughout the organization. In fact, you were instrumental in

rushing the product tests to get the introduction off on schedule.

Simulations 145

Vice President of International Operations

(Only the student assigned to this role reads this page)

You are vice president of international operations. You have been with Soy-DRI for six years, two in

your current position. Your job is to ensure Soy-DRI’s international profitability. Your area of

responsibility includes manufacturing, distribution, and sales in the European and Asian sectors. The

directors of sales, marketing, and manufacturing (one each in Asia and Europe) report to you.

In terms of the -Dri product line, Slab-Dri, Pet-Dri, and Baby-Dri are popular among Europeans. Baby-

Dri sells well in Asia, but Pet-Dri and Slab-Dri are not faring so well in Asian markets. The entire -Dri

product line can be manufactured in parts of East Asia at a fraction of domestic operations costs, such

that even with high distribution costs, it is still cheaper to manufacture the products in Asia and export

them to other markets.

146 Simulations

Assistant to the Chief Executive Officer

(Only the student assigned to this role reads this page)

You are the assistant to the CEO of Soy-DRI and have been with the company since its inception. Late

yesterday, you received a communication from the general counsel indicating there may be a potential

problem with customers’ misusing Slab-Dri and Pet-Dri. The CEO has requested that you meet in order

to come up with a comprehensive action plan to resolve this matter. The CEO is overseas and has

therefore instructed you to attend this meeting as her/his representative to ensure that Soy-DRI

stakeholders’ interests are represented. The CEO, remembering the scandal surrounding BeechNut, the

company that promoted fake apple juice as “100% natural,” is concerned about the impact any bad

publicity could have on the company.

Simulations 147

TEACHING OVERVIEW ON NATIONAL FARM AND GARDEN

The National Farm and Garden simulation was designed with the goal of giving students the

opportunity to use their knowledge and skills in solving an ethical dilemma related to a product defect.

The simulation centers on a garden tiller that has a safety protection guard that is difficult to reattach

after cleaning. There have been incidents of injuries to animals and children when the tiller is run

without the guard. Various functional members of the organization have to be prepared for a meeting to