Chapter 2: Business Ethics
Solution and Answer Guide
Mann/Roberts, Business Law and the Regulation of Business, 14e, (c) 2025,
9780357987650; Chapter 2: Business Ethics
TABLE OF CONTENTS
Answers to Questions and Case Problems ................................................................................... 1
ANSWERS TO QUESTIONS AND CASE 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?
Answer: 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. You find an appropriate time to speak with
her and determine that she is extremely distraught. She tells you that her family has
1
© 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
, Chapter 2: Business Ethics
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? Explain.
Answer: 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 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, as
it 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 Mary performs in a
generally incompetent manner, and you would be delighted to see her take another job.
You give her a glowing reference. Is this right? Explain.
Answer: 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
2
© 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
, Chapter 2: Business Ethics
members. A reporter asks if you have seen the report, and you say no. Is your behavior
right or wrong? Explain.
Answer: 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: 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 to $15 million. Omega owns three aluminum plants, which are
profitable, and one plastics plant, which is losing $4 million a year. Because of its very
high operating costs, the plastics plant shows no sign of ever becoming profitable, 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
existing employees. Would it be ethical for Omega to turn down Gold's bid and keep the
3
© 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
, Chapter 2: Business Ethics
plastics plant operating indefinitely for the purpose of preserving the employees' jobs?
Explain.
Answer: 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 it has begun to be profitable. In large
part, the profitability is due to the aggressive and talented sales force you recruited.
Two months ago, you hired Alice North, an honors graduate from the 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
salesperson, 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 do not 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 don't want to jeopardize your company's
ability to survive. Explain what you should do.
4
© 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
Solution and Answer Guide
Mann/Roberts, Business Law and the Regulation of Business, 14e, (c) 2025,
9780357987650; Chapter 2: Business Ethics
TABLE OF CONTENTS
Answers to Questions and Case Problems ................................................................................... 1
ANSWERS TO QUESTIONS AND CASE 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?
Answer: 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. You find an appropriate time to speak with
her and determine that she is extremely distraught. She tells you that her family has
1
© 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
, Chapter 2: Business Ethics
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? Explain.
Answer: 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 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, as
it 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 Mary performs in a
generally incompetent manner, and you would be delighted to see her take another job.
You give her a glowing reference. Is this right? Explain.
Answer: 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
2
© 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
, Chapter 2: Business Ethics
members. A reporter asks if you have seen the report, and you say no. Is your behavior
right or wrong? Explain.
Answer: 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: 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 to $15 million. Omega owns three aluminum plants, which are
profitable, and one plastics plant, which is losing $4 million a year. Because of its very
high operating costs, the plastics plant shows no sign of ever becoming profitable, 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
existing employees. Would it be ethical for Omega to turn down Gold's bid and keep the
3
© 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
, Chapter 2: Business Ethics
plastics plant operating indefinitely for the purpose of preserving the employees' jobs?
Explain.
Answer: 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 it has begun to be profitable. In large
part, the profitability is due to the aggressive and talented sales force you recruited.
Two months ago, you hired Alice North, an honors graduate from the 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
salesperson, 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 do not 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 don't want to jeopardize your company's
ability to survive. Explain what you should do.
4
© 2025 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
