Solution and Answer Guide: Mann/Roberts, Smith & Roberson's Business Law, 18e, 9780357364000;
FULL Solution and Answer Guide FROM CHAPTER 2-50
Chapter 2: Business Ethics and the Social
Responsibility of Business
Solution and Answer Guide
Mann/Roberts, Smith & Roberson's Business Law, 18e, 9780357364000; Chapter 2: Business
Ethics and the Social Responsibility of Business
Table of Contents
Answers to Problems ........................................................................................................................................................... 1
Answers to Problems
1. You have an employee who has a chemical imbalance in the brain that causes him to be severely
emotionally 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?
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 objective—a fundamental responsibility
to maximize profits, the employer could make the medication a requirement for the employee to
remain in the workforce. It could be argued that this decision may also decrease the possibility of
injury or deterioration in working conditions for other employees. The other side of the argument,
however, is that this type of decision is too personal for a corporation to make. The ultimate
determination should reside with the employee and it should be his free decision to take or not take
the medication. This puts the responsibility back where it belongs, on the employee and his family.
2. You have a very shy employee 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 face dismissal. However,
initiating an involuntary committal to a mental hospital could constitute an improper invasion of rights
1
© 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 1
website, in whole or in part.
,Solution and Answer Guide: Mann/Roberts, Smith & Roberson's Business Law, 18e, 9780357364000;
with many legal repercussions. An interim step of providing appropriate psychological social
counseling (perhaps at company expense) would seem to best fit into the concept of good corporate
management. This would benefit not only the individual, but the corporation may be able to keep a
valued employee. The cost of counseling is likely to be less expensive than hiring and training a new
employee.
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 employer would be better advised to give a more
accurate, but not overly negative, description of Mary‘s job performance (while staying within the
conditional privilege of avoiding a defamation action), rather than generate animosity and gain a
reputation as a liar among other businesses in the area.
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 the report but haven‘t thoroughly read
or studied it. Proceeding with a course that acknowledges (at least internally) past dangerous
practices, while immediately correcting the current problems, and correcting future problems in a
timely manner, may be an appropriate legal as well as moral response to this problem. This is one of
the reasons many corporations have a corporate spokesperson to give appropriate and consistent
responses.
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 maximized pleasure and was
an appropriate distribution of wealth. However, such a moral rationalization would demonstrate the
flaws in both theories. There is no escaping the fact that switching the tickets would be improper
under the law and most moral theories.
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.
2
© 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 2
website, in whole or in part.
,Solution and Answer Guide: Mann/Roberts, Smith & Roberson's Business Law, 18e, 9780357364000;
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 others. However, as the basis for an economic
system, such an approach may be doomed to ultimate failure in that it does not rectify anything and
only prolongs a perhaps snowballing problem that could taint and impair the job security of everyone
employed by Omega. If managerial and operational changes truly cannot rectify the net loss situation
suffered by the plastics plant, sale of the plant to Gold may, in a broader context, be the morally
correct thing to do.
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 brink of economic failure, ignoring
the requirements and whims of customers can amount to economic death. From a legal standpoint,
the Equal Opportunity laws operate harshly against an employer that discriminates on the basis of
sex or race in hiring and promotional activities. Employees are frequently aware of their rights, yet
wishing to help the business of an employer and otherwise acting as a good ―team player.‖ A possible
response might be (with the consent of Alice) attempting to divide sales accounts to give to Alice
those accounts where her sex would be a neutral or perhaps positive factor, while retaining for Brad
oversight of the ―good old boy‖ accounts. Such an approach would acknowledge both her legal rights
and her justifiable expectations while not undermining the profitability of a company whose very
existence is at issue. Best utilization of employees is critical to any corporation, and this includes
sensitivity to both the employees‘ needs and the customers‘ needs.
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 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.
3
© 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 3
website, in whole or in part.
, Solution and Answer Guide: Mann/Roberts, Smith & Roberson's Business Law, 18e, 9780357364000;
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 withhold payment. Situational ethics will come
into play when you decide whether or not to give Start-up more time to complete the work. If the start-
up fee was not paid, and it was Major‘s failure to pay on schedule that caused Start-up to divert their
personnel, then Major needs to take some share of the blame.
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 which 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. What should you do: fix it, ship it, or inform the customer?
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 customer of all factors.
The ultimate decision should be made by the customer. However, you have the obligation to comply
with the legal and governmental responsibilities within your industry.
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 is subjectively right for
you. You also need to check the company code of conduct and any other applicable policy.
(b) Again applying the doctrine of ethical relativism, if you feel strongly enough you may have to quit
your job or request a transfer to another division. If this activity is not legal you have the obligation to
report it to your company's superiors.
(c) The Utilitarianism cost–benefit analysis will allow you to first quantify this in monetary terms and
then compare the direct and indirect costs and benefits. This process may achieve the most profit but
may ignore justice in the process.
4
© 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 4
website, in whole or in part.
FULL Solution and Answer Guide FROM CHAPTER 2-50
Chapter 2: Business Ethics and the Social
Responsibility of Business
Solution and Answer Guide
Mann/Roberts, Smith & Roberson's Business Law, 18e, 9780357364000; Chapter 2: Business
Ethics and the Social Responsibility of Business
Table of Contents
Answers to Problems ........................................................................................................................................................... 1
Answers to Problems
1. You have an employee who has a chemical imbalance in the brain that causes him to be severely
emotionally 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?
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 objective—a fundamental responsibility
to maximize profits, the employer could make the medication a requirement for the employee to
remain in the workforce. It could be argued that this decision may also decrease the possibility of
injury or deterioration in working conditions for other employees. The other side of the argument,
however, is that this type of decision is too personal for a corporation to make. The ultimate
determination should reside with the employee and it should be his free decision to take or not take
the medication. This puts the responsibility back where it belongs, on the employee and his family.
2. You have a very shy employee 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 face dismissal. However,
initiating an involuntary committal to a mental hospital could constitute an improper invasion of rights
1
© 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 1
website, in whole or in part.
,Solution and Answer Guide: Mann/Roberts, Smith & Roberson's Business Law, 18e, 9780357364000;
with many legal repercussions. An interim step of providing appropriate psychological social
counseling (perhaps at company expense) would seem to best fit into the concept of good corporate
management. This would benefit not only the individual, but the corporation may be able to keep a
valued employee. The cost of counseling is likely to be less expensive than hiring and training a new
employee.
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 employer would be better advised to give a more
accurate, but not overly negative, description of Mary‘s job performance (while staying within the
conditional privilege of avoiding a defamation action), rather than generate animosity and gain a
reputation as a liar among other businesses in the area.
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 the report but haven‘t thoroughly read
or studied it. Proceeding with a course that acknowledges (at least internally) past dangerous
practices, while immediately correcting the current problems, and correcting future problems in a
timely manner, may be an appropriate legal as well as moral response to this problem. This is one of
the reasons many corporations have a corporate spokesperson to give appropriate and consistent
responses.
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 maximized pleasure and was
an appropriate distribution of wealth. However, such a moral rationalization would demonstrate the
flaws in both theories. There is no escaping the fact that switching the tickets would be improper
under the law and most moral theories.
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.
2
© 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 2
website, in whole or in part.
,Solution and Answer Guide: Mann/Roberts, Smith & Roberson's Business Law, 18e, 9780357364000;
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 others. However, as the basis for an economic
system, such an approach may be doomed to ultimate failure in that it does not rectify anything and
only prolongs a perhaps snowballing problem that could taint and impair the job security of everyone
employed by Omega. If managerial and operational changes truly cannot rectify the net loss situation
suffered by the plastics plant, sale of the plant to Gold may, in a broader context, be the morally
correct thing to do.
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 brink of economic failure, ignoring
the requirements and whims of customers can amount to economic death. From a legal standpoint,
the Equal Opportunity laws operate harshly against an employer that discriminates on the basis of
sex or race in hiring and promotional activities. Employees are frequently aware of their rights, yet
wishing to help the business of an employer and otherwise acting as a good ―team player.‖ A possible
response might be (with the consent of Alice) attempting to divide sales accounts to give to Alice
those accounts where her sex would be a neutral or perhaps positive factor, while retaining for Brad
oversight of the ―good old boy‖ accounts. Such an approach would acknowledge both her legal rights
and her justifiable expectations while not undermining the profitability of a company whose very
existence is at issue. Best utilization of employees is critical to any corporation, and this includes
sensitivity to both the employees‘ needs and the customers‘ needs.
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 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.
3
© 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 3
website, in whole or in part.
, Solution and Answer Guide: Mann/Roberts, Smith & Roberson's Business Law, 18e, 9780357364000;
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 withhold payment. Situational ethics will come
into play when you decide whether or not to give Start-up more time to complete the work. If the start-
up fee was not paid, and it was Major‘s failure to pay on schedule that caused Start-up to divert their
personnel, then Major needs to take some share of the blame.
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 which 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. What should you do: fix it, ship it, or inform the customer?
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 customer of all factors.
The ultimate decision should be made by the customer. However, you have the obligation to comply
with the legal and governmental responsibilities within your industry.
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 is subjectively right for
you. You also need to check the company code of conduct and any other applicable policy.
(b) Again applying the doctrine of ethical relativism, if you feel strongly enough you may have to quit
your job or request a transfer to another division. If this activity is not legal you have the obligation to
report it to your company's superiors.
(c) The Utilitarianism cost–benefit analysis will allow you to first quantify this in monetary terms and
then compare the direct and indirect costs and benefits. This process may achieve the most profit but
may ignore justice in the process.
4
© 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 4
website, in whole or in part.
