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INDIAN INSTITUTE OF MANAGEMENTAND ENGINEERING
MARKS : 80 COURSE : DBA

SUB: GENERAL MANAGEMENT N. B.: 1) 2) Attempt any Four Cases All cases carries equal marks.

Case: 1
TRI ± STATE TELEPHONE

John Godwin, Chief executive of Tri ± State Telephone, leaned back in his chair and looked at the ceiling. How was he ever going to get out of this mess? At last night¶s public hearing. 150 angry customers had marched in to protest Tri ± State¶s latest rate request. After the rancorous shouting was over and the acrimonious signs put away, the protesters had presented state regulators with some sophisticated economic analyses in support of their case. Additionally, there were a number of emotional appea ls from elderly customers who regarded phone service as their lifeline to the outside world. Tri ± State Telephone operated in three states and had sales of over $3 billion. During the last five years, the company had experienced a tremendous amount of change. In 1984, the AT & T divestiture sent shock waves throughout the industry, and Tri-State Telephone had felt the effects, as pricing for long distance telephone service changed dramatically. The Federal Communications Commission instituted a charge to the effect that customers should have ³access´ to long ± distance companies whether or not they were in the habit of making long distance calls. Consumer groups, including the Consumer Federation of America and the Congress of Consumer Organizations, had joined the protest, increasing their attention on the industry and intervening in regulatory proceedings wherever possible. The FCC was considering deregulating as much of the industry as possible, and congress was looking over the commissioner¶s shoulder. Meanwhile, the Department of Justice and Judge Harold Greene both of whom were responsible for monitoring the AT & T divestiture) continued to argue about what business companies like Tri ± State should be engaged in. In addition, technology was changing rapidly. Cellular telephones, primarily used in cars, were now hand-held and could be substituted for standard phones. Digital technology was going forward, leading to lower casts and requiring companies like Tri ± state to invest to keep up with the state of the art. Meanwhile, rate increases negotiated during the inflationary 1970s were keeping earnings higher than regulators would authorize. New ³Intelligent´ terminals and software developments gave rise to new uses for the phone network (such as using the phone

- 15 for an a arm system), but as long as customers paid one flat fee, the phone company could not benefit from these new services. Godwin¶s company has recently proposed a new pricing system whereby users of local telephone services would simply pay for what they used rather than a monthly flat fee. All of the senior managers were convinced that the plan was fairer, even though some groups who used the phone with netable frequency (like real estate agents) would pay more. It would give t he company an incentive to bring new services to their customers, and customers would be able to choose which ones to buy. None of them had anticipated the hue and cry from the very customers who would save money under the new plan. For instance, Godwin¶ s studies showed that the elderly were very light users of local service and could save as much as 20 percent under the new plan. After the debacle at the hearing the previous night, Godwin was unsure how to proceed. If he backed off the new pricing pla n, he would have to find a different way to meet the challenges of the future ± may be even different businesses to augment company income. Alternatively, the company could not stand the negative press from a protracted battle, even though Godwin thought that the regulators were favorably disposed toward his plan. In fact, Godwin himself believed the company should help its customers rather than fight with them. Questions:
1. 2. 3. 4. 5. Who are the stakeholders in this case? Which stakeholders are most importan t? What are the critical trends in Tri ± State¶s environment? Why do you think Tri ± State¶s customers are so upset? What should John Godwin do?

CASE NO. 2 FRESH IDEAS AT FRESH FIELDS

Fresh Fields may be a supermarket, but what it¶s super at selling is its image: ³Good for you foods.´

baked goods.. The team included 33 year old Mark Ordan. dairy products. suppliers. Whereas at other stores. Actually. not from coastal waters threatened by pollution. an extensive selection of supplements. friendly caring culture that begins w ith Kahn and travels through to all stakeholders: employees. because it carries a wider variety of foods including fresh pasta. and seeks out fish caught in deep. Fresh Field¶s locally grown organic produce can even cost less than produce sold at other supermarkets. to avoid the growth ± promoting drugs often used. not factories. Fresh Fields falls somewhere between a health food store and a traditional supermarket. health ± conscious trend of the 1990s. by mid ± 1994 Fresh Fields had opened a total of 14 stores in the four states. founder of Staples. skin enriching cosmetics and natural health care products and environmentally friendly household goods. Here we¶re building an organization that zeroes in and keeps customer satisfaction in mind. baked goods from an in ± store bakery. In addition. 90 percent of shoppers say that health has become a factor in determining the food they buy. community members. The customer is smarter than all of us. A team of entrepreneurs began Fresh Fields in 1991. and seafood and deli selections. The company screens growers to find those who use natural methods of pest management and apply the least amount of agricultural chemicals. such as Jell ± O and Oreos. What Fresh Fields offers is ³ organic and conventional produce. that they can purchase at other supermarkets. there is a . Within the first 19 months. According to a 1992 survey by Health Focus. the key to Fresh Field¶s success lies in pleasing the customer. deli items gourmet and vegetarian prepared foods. as chairman and 44 year old Jack Murphy. ³Everybody says the same things please the customer ± but while everybody says it. a wide array of cheese. former Goldman Sachs investment banker as CEO and President. former manager of the Heartland supermarket chain in New England . for Fresh Fields shoppers will not find foods containing lots of preserv atives and artificial flavorings.´ Instilled in Fresh Fields is a warm. and when in season. seafood.15 A New Age grocery store. as Chief operating officer. Fresh Fields also makes an effort to get to know the people who catch the seafood. Expanding into Pennsylvania and Illinois. 75 years Old Leo Kahn. Fresh Fields seeks meat and poultry from farms. and the company has not hesitated in taking advantage of consumers¶ new whopping preferences resulting from the trend. Much of Fresh Field¶s success can be attributed to the fact that the company offers only the freshest produce. This perhaps accounts for why many Americans are willing to pay up to 20 percent more for natural foods. the prosperous office ± supply sores. According to Kahn. with more in the planning stages. customers. the Fresh Fields pr emium tends to hover closer to 5 percent. such as Wal ± Mart. What distinguishes Fresh Fields from supermarkets lies in what is absent from the shelves. meats. rather than what is present.´ The arrival of Fresh Fields coincides with that of the New Age. clean waters. five Fresh Fields locations opened in Maryland and Virginia. a Pennsylva nia ± based research firm. not too many practice it. a full grocery department. It is not merely a health food store. though. often from local growers.

If for any reason you are less than completely satisfied with something you purchase at Fresh Fields. Black customers asserted that they were not receiving the same treatment at Denny¶s as white customers. In the early 1990s. Virginia. How would you reinvent your organization to meet the challenges posed by Fresh Fields? Case: 3 RESPONDING TO ALLEGATIONS OF RACISM : FLAGSTAR AND THE PLEDG The 1990 s have witnessed an increased emphasis on valuing diversity. I bought organic produce and spent $25 to $30 every week or two. ³Then I tried the baked goods and upped my spending by $60. symbolic greeter by the door. is often more difficult than managers might first believe. we will cheerfully offer you a full refund. every employee at Fresh Field is a sort of ³greeter´.´ Says Merri Mukai. At Denny´s for example. Denny¶s found itself the target of numerous allegations of racism. a homemaker in Annandale. With both the marketplace and the workforce becoming more and more diverse. Much of what Fresh Fields is about is relationship building.´ Questions: 1. As shoppers walk through the stores. Now I¶m buying meats and eyeing the fish. The warm relationship between the company and associates lies at the heart. You can consider our guarantee as an opportun ity to be adventurous and to try new products. promoting multiculturalism required a reworking of its corporate culture from top to bottom. associates build relationship with suppliers to add the personal touch that is integral to the Fresh Fields quality image. however. From there. without risk. They¶ve definitely got me hooked. many managers have redesigned their company¶s cultures to reflect and encourage multiculturalism. ³We guarantee your satisfaction unconditionally. and he or she looks up. Some complained . Within the company. ³Originally.15 single. smiles and says ³hello´ to shoppers as they pass by. numerous samples are offered. there are no employees.´ Says Fresh Fields. What economic and social factor s should Fresh Fields managers watch? Suppose you manage a local supermarket and Fresh Fields comes to town. 2.. there are only ³associates´ many of whom Kahn knows by name. Changing a company¶s culture. by both customers and employees.

of Flagstar¶s more than 120. F urthermore.´ Richardson admitted. The agreement. represented a breakthrou gh in relations between minorities and businesses. California. 1993. and Flagstar CEO Jerry Richardson dropped the cover charge and pre-payment policies and explained that they had been intended to prevent late night ³ dine ± and ± dash´ theft and that any discriminatory implementation of them was in direct violation of corporate policies. The six men claimed that while they received deliberately slow service. Flagstar reached an historic agreement with the NAACP. but only 4. Flagstar also signed a consent decree issued by the Justice Department that required spot testing of Denny¶s restaurants for discriminatory practices as well as an anti -discrimination training program for all Denny¶s staffers. Richardson began talks with civil rights groups such as the NAACP. but not from white customers. 1993.15 that they were either forced to wait for their food longer than white customers or denied service entirely.´ Richardson assured all. however. In addition. 1993. others said that they were forced to pre -pay for their meals while white customers in the restaurant were not. ³Our company does not tolerate discrimination of any kind. In a late May Richardson issued an internal memo that marked the beginning of Richardson¶s pledge to change. by a group of minority customers in San Jose. on May 24. Flagstar. None of this garnered much attention. six black Secret Service agents filed suit against Denny¶s for allegedly having denied them service at a Denny¶s in Annapolis. This is my personal pledge to them to restore their pride in Denny¶s. The highly publicized suit served as a catalyst that set off a whirlwind of changes throughout Flagstar. formally apologized to the customers. Denny¶s was accused of discriminatory hiring practices as well as preventing blacks and other minorities from reaching management and franchise positions.´ he wrote. and his actions seemed to support his words. For example. however. ³Hearing the allegations made yesterday by Six African ± American Secret Service agents on national television that they were not treated fairly at Denny¶s was a painful experience for our company. There were also allegations that Denny¶s restaurants would close if there wer e too many black customers. On July 1. ³ The past year has been a trying experience. who made the all ± too ± familiar allegation that Denny¶s had required cover charges and pre payment of meals from minority customers. Maryland. Richardson stopped promising change and started creating it.4. 20 percent were black. until a suit was filed on March 24. Richardson admitted. at least 12 percent of Flagstar¶s managers will be black by the 2000. their white counter parts were served in a timely fashion. The company also wanted to increase the . Under the agreement. which was the most far-reaching arrangement the civil ± rights organization had ever signed.. Percent of its managers were black. that he had been unaware that the cover charge and pre payment policies even existed within the company. particularly for many of our African ± American employees who are embarrassed by what happened. In response to these charges. Then. The plan targeted several specific problem areas within Flagstar. ³I am distressed that some people in our company haven¶t gotten the message that we will not tolerate unfair treatment of customers. Denny¶s parent company.000 workers.

15 number of black-owned franchises. Richardson also undertook efforts to restore Denny´s reputation as well as his own.´ said Petty.. Flagstar¶s senior vice president of marketing. Food and Recreation Service accounts. Flagstar also agreed to direct more marketing funds toward minority advertising and to begin purchasing more goods and services from minority ± owned businesses. The community¶s response to the allegations against Denny¶s confirm that multiculturalism can no longer be ignored.´ ³The whole idea for the µpledge¶ started with our desire to express support for our own employees. president of the NAACP in Rockville. 200 Quincy¶s steak houses. Den ny¶s also set up a hot line for employees to use to report possible instances of discrimination. had taught Flagstar that mere policy statements do little good in the absence of training and monitoring. 120 El Pollo Loco outlets and more than 2. In the entire plan will direct more than one billion dollars in jobs and economic benefits to minority workers and companies by the year 2000. not only because of the model the company has set for other companies. Flagstar reaffirmed its commitment to its agreement with the Department of Justice by steping up its multicultural training programs and agreeing to allow the NAACP to conduct its own inspection of Denny¶s restaurants. and Hill came on board to oversee field hiring. however. How would you describe the organizational culture at Flagstar ? . In it. At the forefront of his efforts was ³The Pledge´.000 employees endorsed a solemn pledge to treat customers with ³respect.´ Explained David Hurwitt. and fairness. only one of Denny¶s 405 franchises was owned by a black person as of 1993. ³There are opportunities outside of the way we¶ve normally done business. Joe Russell. diginity. Flagstar promised to appoint a t least one minority to its board of directors. 1. ³The Pledge´ was the name given to a 60 ± second TV spot. Jerry Richardson and a representative sample of Flagstar¶s 46. In addition. ³Our phone has been ringing off the hook since Denny¶s aired this ad. including 530 Hardee¶s fast food units. Maryland.´ said W.area. the largest branch in the Washington. I¶m going to cond uct my business the same way I¶ve always conducted my business. response to ³The Pledge´ was favourable. ³ About 90 percent of our members approve of the commercials and the steps Denny¶s has been taking to improve relations with people of color. ³These people have been very much under the gun.000 Canteen Corp. and Ron Petty. Russell was appointed head of the diversity training program. D. which aired in 41 television markets and on the Black Entertainment Television network during a two -week period in June 1993. ³ And then there are enlightened companies that say. Flagstar made significant management changes during the summer of 1993 by installing three executives considered particularly sensitive to diversity in the workplace: Norman Hill.400 Denny¶s family restaurants. In addition. Overall. Questions : 1. ³ There are companies that bury their heads in the sand and say. Gregory Wims. We chose television for this special campaign because we felt it was important to show people exactly who the Denny¶s employees are´.´ The steps taken by Flagstar have been significant. but also because of Flagstar¶s own holdings. but Flagstar planned to have at least 53 black-owned franchises by 1997. Experience.C. With this in mind.

control over the animators who c reate and design beloved characters and adventurous scenarios . Projects assigned to the staff ³ imaginers´ seem impossible at first glance. Teams of imaginers gather together in a brainstorming session known as the ³Blue Sky´ phase. 3. an uninhibited exchange of wild. But in conjunction with the pre determined responsibilities. and all ± out dreaming are at the core of the company philosophy. In fact. People at the company have adopted the phrase ³Dream as a Team´ as a reminder that whimsical thoughts.15 2. managers at Disney do more than encourage innovation. Although control pervades the company. outrageous ideas. managers at Disney encourage independent and innovative thinking. The over all control over each department is tempered by this concept. adventurous ideas. Disney managers strive to empower their employees by leaving room for their creative juices to flow. At Disney. Employees in each department are well aw are of their objectives and the parameters established to meet those objectives. it is not too strong a grip. Under the ³Blue Sky´.. They demand it. control over the engineers who construct the fabulous theme ± park rides. How does Flagstar deal with diversity ? What challenges could Flagstar face in its near future ? Case: 4 DISNEY¶S DESIGN The Walt Disney Company is heralded as the world¶s largest entertainment company. It has earned this astounding reputation through tight control over the entire operation : control over the open ± ended brainstorming that takes place 24 hours a day . and control over the talent that brings the many concepts and characters to life. doing the seemingly impossible is part of what innovation means. . both ³ good´ and ³ bad´. ludicrous.

There are even plans to form two spin ± off companies to be owned and operated by Cin -Made employees. ³Employee empowerment is one part of the answer. Ten years later. He offered to restore worker pay to its previous level by the end of the year.Made came to work each day. What environmental factors influenced management style at Disney ? What kind(s) of organizational structure seem to be consistent with ³Dream as a Team´ ? 3. 2. performed the duties required of their particular positions. Eisner realized that managers at Disney needed to let their employees brainstorm and create with support. Toward this end. and absenteeism has virtually disappeared. you do it.´ he realized. Having recently suffered a pay cut. and returned home-nothing more. Cin -Made was recognized by President Clinton as one of the best ± run companies in the United States. Profit sharing is another. no matter where it comes from. Ohi-based manufacturer of paper packaging had not altered its product line in 20 years. the company was near ruin.15 continues until solutions are found and the impossible is done. On-time delivery of products has reached 98 percent. How and where might the informal organization be a real asset at Disney ? Case: 5 ³THAT¶S NOT MY JOB´ ± LEARNING DELEGATION AT CIN-MADE When Robert Frey purchased Cin ± Made in 1984. The Cin ± Made workforce is both flexible and deeply committed to the success of the company. you know it. ³If a good idea is there. employees at Cin . Cin ± Made is producing a new assortment of highly differentiated composite cans. The Cincinnati. In fact. Management and workers were at each other¶s throats. relations between manag ement and labor had reached rock bottom. ³ How did we achieve this startling turnaround ?´ mused Frey. A solid quarter of the company¶s shipments were late and absenteeism was high. he offered something no one expected : a 15 percent share of Cin - .´ Questions : 1.. and pre -tax profits have increased more than five times. Frey decided to call a meeting with the union. Frey could see that his company was su ffering. As Disney president Frank Weds says. ³To survive we needed to stop being worthy adversaries and start being worthy partners.´ In the late spring of 1986. at the one day ³Future of the American Workforce´ conference held in July 1993. you feel it. Current Disney leader Michael Eisner has established the ³Dream as a Team´ concept. By demanding so much of their employees. Labor costs had hit the ceilin g. On top of that. Disney managers effectively drive their employees to be creative. while profits were falling through the floor.

It¶s what they¶d been trained for.´ ³We thought he was trying to rip us off and shaft us. however. She still runs that same machine. ³ (Employees) wanted generous wages and benefits. and union relations began to improve. I was determined to press ahead and make them come true. of course. did not give up. ³Because that¶s not my job either.´ they¶d say.´ The workers also resisted the idea of extending themselves beyond the written requirements of their jobs. It¶s what made them good managers. Cin Made employees were taking responsibility for numerous tasks. He therefore proposed a new arrangement that would encourage a collaborative employee management relationship ³Employee participation will play an essential role in management. ³ How can we cut the waste on his run ?´ I¶d say. ³Once I had made my two grand pronouncements. but now is also responsible for ordering almost $ 100.. Managers began sharing more information with employees. Moreover. but they did not want to take responsibility for anything more than do ing their own jobs the way they had always done them. certainly not in d ecision making. and he eventually convinced the union to agree to his terms. one of many Cin-Made employees who distrusted Frey¶s plans. or ³How are we going to allocate the overtime on this order ?´ ³That¶s not my job.´ Frey proclaimed at the meeting. Empowerment began to happen. ³ I wouldn¶t take no for an answer. Managers who were unable to work with employees left. ?´ Gradually. they were not used to participation in any form. I asked them.´ But still ahead lay the considerable challenge of convincing employees to take charge : I made people meet with me. ³My three managers felt they were paid to be worthy adversaries of the unions.´ I¶d say. Frey. They resisted.15 Made¶s pre-tax profits. By 1993.´ he asserted. then instead Of telling them what to do.´ Managers within the company were among the first people to oppose Frey¶s new idea of employee involvement. ³How in the World can we have participative management If you won¶t participate? ³I don¶t know. Frey made progress. ³But I need your input. Williams.000 in supplies. .´ explained Ocelia Williams. That¶s your job. Frey was able slowly to expand the responsibilities workers would carry.´ Frey noted. ³ I do not choose to own a company that has an adversarial relationship with its employees. for example. used to operate a tin-slitting machine on the company¶s factory floor.´ Frey recalled. Employees were therefore skeptical of Frey¶s overtures toward ³employee participation.´ they¶d say.

materials. empowerment and delegation are more than mere buzzwords. How were principles of delegation and decentralization into Cine ± Made operations? 2. Frey has delegated so much of the company¶s operations to its workers that he now feels little in the dark.. In fact. What were some of the barriers to delegation and empowerment at Cin ± Made? 4. At Cin-Made. company secrets have virtually disappeared. is charged with setti ng hours. as workers.´ Frey rema rked. designating layoffs. not just have input.´ Under Frey¶s new management regime. on a day -to-day basis. from entry-level employees all the way to the top. is responsible for interviewing applicants and deciding whom to hire.15 Williams is just one example of how job roles and duties have been redefined throughout Cin-Made. production runs. ³I just coach.Made¶s corporate safety director. and delivery. What are the sources and uses of power at Cin ± Made? 3. it¶s offered to us. What lessons about management in a rapidly changing can be learned from the experience of Cin ± Made? marketplace incorporated .´ Questions: 1. but now also serves as Cin . ³If we want to take leadership. take part in running the company. Joyce Bell. staffed by three hourly employees and two managers. packing. ³We. ³We empower employees to make decisions. An employee committee performs bo th short ± and long ± term planning of labor. The hiring review team. The company¶s scheduling team. have a lot of opportunities. they are the way of doing business ± good business. still runs the punch press she always has. All Cin -Made employees. Employees even meet daily in order to set their own production schedules. composed of one manager and five lead workers from various plant areas.´ he confessed. equipment. president of the local union. and deciding when temporary help is needed. ³I now know very little about what¶s going on.´ said Williams.

000. Rollerblade was able to increase the number of customer orders processed daily from140 to 410 and eliminate order backlog. The answer for Rollerblade was found in technology. Rollerblade has bee n one of the leading firms in the fast growing high performance roller skate marketplace. The managers found that workers were not able to ship products because. overcrowded aisles. based in St. it matters a great deal for Rollerblade managers whether demand and inventory are in balance.000 to $30. ³Now we have a different business. what customer competitive imperatives could be affected by Rollerblade¶s inventory problems? . Paul. The product literally could not be shipped out the door. the answer lies in making more goods. ³The new layout has taken us from being in a crunch. But what if a company management finds that they just do not know which situation applies? This is the situation that recently confronted management at Rollerblade.´ said Ian Ellis. or not. Rollerblade was in a bind. Once they were found. With the help of layout Master IV simulation software.15 - CASE NO.. as a result of poor storage structures. As a result of the distribution improvement. in addition to other space constraints. to being able to plan. ³ Basically. When a manager finds that inventory exceeds demand. the popular skate manufacturer based in Minnetonka. there was no more useable space left in the warehouse. and picking errors were clearly in the unacceptable range. they could not find the products. that assist managers in generating effective facility designs. ranging in cost roughly from $10. a severe backlog of customer orders. High -tech companies have introduced a collection of computer simulations. 6 HIGH-TECH ANSWERS TO DISTRIBUTION PROBLEMS AT ROLLERBLADE When a manger finds that demand exceeds inventory.´ added Ram Krishnan. sti ll prevented efficient shipping because the workers could barely manage to get the products out the door. Minnesota. ³We were out of control because we didn¶t know how to use space and didn¶t have enough of it. Minnesota. Questions: 1. Principal of NRM Systems. With retailers as their primary customers. the answer lies in making fewer goods.´ says Ellis. developed by NRM. director for facilities and safety. Rollerblade Management was able to implement a new distribution design.

and the Publius network would reassemble the file for him at his request. an antipornography activist for the National La w Center for Children and Families. the creators of P ublius. stated : ³It¶s nice to be anonymous. terrorists. law courts. the reality is very different. instead of simply roller skates ? INDIAN INSTITUTE OF MANAGEMENTAND ENGINEERING MARKS : 80 COURSE : DBA SUB : BUSINESS ADMINISTRATION N. child pornographers. a software program that enables Web users to encrypt (translate into a secret code) their files ± text. No : 1 PUBLIUS Although many people believe that the World Wide Web is anonymous and secure from censorship. Governments. however. How appropriate might a just ± in ± time inventory system be for a product such as roller skates?´ What opportunities are there fore Rollerblade managers to see themselves? as selling services. : 1) Attempt any Four Cases 2) All cases carries equal marks. A person authorized to retrieve the file. pictures. B. would look through a directory of his files posted on a Publius ± affiliated website. and the files in the servers would be encrypted and fragmented in a way that would make the pieces impossible to identify without the help of the person who created the file. As a result. however.15 2.. and store the encrypted pieces on many different servers scattered all over the globe on the World Wide Web. Using their subpoena power. or music ± break them up like the pieces of a jigsaw puzzle. hoped that their program would help people in countries where freedom of speech was .´ Aviel Rubin and Lorrie Cranor. or trace a file of materials on the Web need merely go to the server (the online computer) where they think the file is stored. they can comb through the server¶s drives to find the files they are looking for and the identify of the person who created the files. child molesters. Researchers published a description of Publius at Although many people welcomed the way that the new software would enhance freedom of speech on the Web. examine. any one wanting to examine or censor the files or wanting to trace the original transaction that produced the file would find it impossible to succeed because they would have to examine the contents of dozens of different servers all over the world. many others were dismayed. 3. however. On Friday June 30. Bruce Taylor. researches at AT & T Labs announced the creation of Publius. 2000. hackers and e -mail virus punks. but who wants to be more anonymous than criminals. and other officials who want to censor.

In your judgment. The ideal user of Publius. should governments all ow the implementation of Publius ? Why or why not ? 2. rights. . 3. is it ethical to market Publius ? Explain Are the creators of Publius in any way morally responsible for any criminal acts that criminals are able to carry out and keep secret by relying on Publius ? Is AT & T in any way morally responsible for these ? Explain your answers. In your judgement. and caring. justice. they stated. was ³a person in China observing abuses of human rights on a day ± to ± day basis.´ Questions : 1. Analyze the ethics of marketing Publius using utilitarianism..15 repressed and individuals were punished for speaking out.

Greece. was arrested on charges of taking bribes ($ 1. it was re vealed that the CIA had been informed at the time (by an American embassy employee) that Lockheed had made several bribes while negotiating the contract. former prime minister of Japan. were accused of accepting bribes from Lockheed in connection with the purchase of $ 100 million worth of aircraft in the late 1960s.. Lockheed Aircraft¶s involvement in the Japanese bribes was revealed to have begun in 1958 when Lockheed an d Grumman Aircraft (also an American firm) were competing for a Japanese Air Force jet aircraft contract. William Findley. In Holland that same year. Tanaka¶s secretary and serial other government officials were arrested with him. The reason : He was alleged to have accepted $ 1. Scandinavia. South Africa. All were excluded from government. both prime ministers.8 million) from Locjheed Aircraft Company to secure the purchase of several Lockheed jets. a partner in Arthur Young & Co. This bleak situation all but dictated a strong push for sales in the biggest untapped market left-Japan. (auditors for Lockheed). Such a cash inflow would go a long way towards helping to restore . an ultra right ± wing war criminal and reputed underworld figure with strong political ties to officials in the ruling Liberal Democratic Party. president in 1970. Kukeo Tanaka. In 1972. and Nig eria were also among the 15 countries in which Lockheed admitted to having handed out payments and at least $ 202 million in commissions since 1970. Carl Kotchian. This push. they had ousted Tanaka¶s successor. who was widely believed to have been trying to conceal Tanaka¶s actions. Takeo Miki. With Kodama¶s help. In Italy. 2 A JAPANESE BRIBE In July 1976. husband of Queen Juliana. and Aldo Moro and Ma riano Rumor. if successful. military. Giovani Leone. Only through a controversial emergency government loan guarantee of $ 250 million in 1971 did the company narrowly avert disaster. Mr. and private organizations. The Japanese public reacted with angry demands for a complete disclosure of Tanaka¶s dealings. resigned from 300 hundred positions he held in gove rnment. Lockheed secured the Government contract. A.1 million in bribes from Lockheed in connection with the sale of 138 F ± 104 Starfighter jets. Cost overruns on a government contract had pushed Lockheed to the brink of bankruptcy in 1970. According to the testimony of Mr. Turkey. Lockheed was desperate to sell planes to any major Japanese airline because it was scrambling to recover from a series of financial disasters. in 1958 Lockheed engaged the services of Yoshio Kodama. president of Lockheed from 1967 to 1975. Prince Bernhard.15 - NO. Lockheed again hired Kodama as a consultant to help secure the sale of its aircraft in Japan. By the end of the year. might well bring in revenues upward of $ 400 million. Seventeen years later. was especially anxious to make the sales because the company had been unable to get as many contracts in other parts of the world as it had wanted.

In addition to Kodama.S. which was actively competing with Lockheed for the same sales. I would most certainly have sacrificed commercial success«. A. Much of money allegedly went to then ± prime minister Kukeo Tanaka and other government officials. According to Mr. investigations by the U. Lockheed pleaded guilty to concealing the Japanese bribes from the government by falsely writing them off as ³marketing costs´. (Statement of A. Carl Kotchian. in part. When he told me ³ five hundred million yen is necessary for such sales. If the payment constitutes an illegal bribe or kickback. Carl Kotchian) In August. Marubeni. which acted as Lockheed¶s official representative.3 billion in contracts for Lockheed. an official of the private trading company. (Statement of Carl Kotchian) Kodama eventually succeeded in engineering a con tract for Lockhed with All ± Nippon Airways. such disbursements did not violate American laws . persuaded that. by paying the money.. In June 1979. directly or indirectly. of course. I should also like to stress that my decision to make such payments stemmed from my judgment that the (contracts) «« would provided Lockheed workers with jobs and thus redound to the benefit of their dependents.´ He was. in that case. he was sure to get the contract from All-Nippon Airways. even beating out McDonnell Douglas. the company was convinced. (If) Lockheed had not remained competitive by the rules of the game as then played. government led Lo ckheed to admit it had made $ 22 million in secret payoffs.S. Lockheed plead ed guilty to four counts of fraud and four counts of making false statements to the government. save the jobs of thousands of firm¶s employees. I should like to emphasize that the pa yments to the so-called ³ high Japanese government officials´ were all requested y Okubo and were not brought up from my side. The negotiations eventually netted over $1. law forbidding bribery was not enacted until 1978. were in keeping with local ³ business practices. Japan subsequently canceled their billion dollar contract with Lockheed. however..15 Lockheed¶s fiscal health. Mr. Lockheed had also been advised by Toshiharu Okubo. Subsequent senate investigations in February 1976 made Lockheed¶s involvement with Japanese government officials public.¶ Lockheed was not charged specifically with bribery because the U. Mr. as I¶ve noted. for any payment made. and stockholders of the corporation. The payments. and it would. we would not have sold (our planes) ««« I knew that if we wanted our product to have a chance to win on its own merits. Kodama asked for and received from Lockheed about $9 million during the period from 1972 to 1975. their communities. we had to follow the functioning system.´ Further. The Internal Revenue Code states. Kotchian was not indicated. However. which he saw as one of many ³Japanese business practices´ that he had accepted on the advice of his local consultants..´ from a purely ethical and moral standpoint I would have declined such a request. ³ I knew from the beginning that t his money was going to the office of the Prime Minister. to an official or employee of any government «. ³ No deduction shall be allowed«. but . To ensure the sale. 1975. who were supposed to intercede with All ± Nippon Airlines on behalf of Lockheed. Carl Kotchian later defended the payments.

Fully explain the effects that payment like those which Lockheed made to the Japanese have on the structure of a market. 3 THE NEW MARKET OPPORTUNITY In 1994. In Japan. the government of China invited leading auto manufacturers from around the world to submit plans for a car designed to meet the needs of its massive population. anxious to show off the benefits of a communist regime. issue. Kotchian morally responsible for his actions? Was he. China was now eager to enter joint ventures with foreign companies to construct and operate automobile manufacturing plants . Busi ness Week argued that every corporation has a corporate culture ± that is. NO. values that set a pattern for its employee¶s activities. Kotchian¶s actions. in the end. 3. A wave of rising affluence had suddenly created a large middle class of Chinese families with enough money to buy and maintain a private automobile.. and on the distribution of benefits and burdens among the groups involved. if you can. 1980. 2. treated fairly ? In its October 27. the cor porate culture of Lockheed and relate that culture to Mr.148 -60) Describe. Describe some strategies for changing that culture in ways that might make foreign payments less likely. he was forced to resign from Lockheed.) In your judge-ment. In your judgment. opinions and actions and that are instilled in succeeding generations of employees (pp. Kodama was arrested along wit h Tanaka. was Mr. 4. A. did Mr. In your view. on the right and duties of the various parties involved. Carl Kotchian act rightly from a moral point of view ? (Your answer should take into account the effects of the payments on the welfare of the societies affected.15 under pressure from the board of directors. were Lockheed¶s payments to the various Japanese parties ³bribes´ or ³extortions´ ? Explain your response fully. Questions : 1.

the United States consumes one forth of the world¶s total annual oil supplies. to build a clean car for under $5000. however.2 billion people and almost double digit annual economic growth rates. In 1994. The world market for energy. be composed of parts that were predominantly made within China. With a population of 1. Engineers pointed out that it would be difficult. and be manufactured through joint ± venture agreements between Chinese and foreign companies. Critics pointed out that if China were to eventually have as many cars on the road per person as Germany does. China would be consuming twice the amount of oil the United States currently uses. The Chinese government specified that the new car had to be priced at less than $5000. generate a minimu m of pollution. Even clean cars would have to generate large amounts of carbon dioxide as they burned fuel. was using relatively low levels of energy. particularly oil. as well as for the leading Japanese. If China were to reach even the modes per person consumption level of South Korea. thus significantly worsening the greenhouse effect. The Chinese market was an irresistible opportunity for General Motors. rugged enough to endure the poorly maintained roads that criss crossed the nation. The plants would not only manufacture cars to supply China¶s new internal market. Upgrading all its refineries so they could make low-lead gasoline would require an investment China seemed unwilling to make. alone cost over $200 per car to manufacture. they pointed out. and a craze for cars had led more than 30 million Chinese to t ake driving lessons despite that the nation had only 10 million vehicles. which diminished pollution. Environmentalists.15 inside China. about half of which it must import from foreign countries. but could also make cars that could be exported for sale abroad and would be sure to generate thousands of new jobs. No matter how ³ pollution ± free´ the new car design was. China estimated that in the next 40 years between 200 and 300 million of the new vehicles would be purchased by Chinese citizens. if not impossible. most of them government ± owned trucks. Experts anticipated that the plants manufacturing the new cars would use a minim um of automation and wuld instead rely on labor ± intensive technologies that could capitalize on China¶s cheap labor. the world would contain twice as many cars as it currently does. Ford and Chrysler. China¶s oil refineries were designed to produce only gasoline with high levels of lead. Catalytic converters.. . with its large population. the cumulative environmental effects of that many more automobiles in the world would be formidable. Already cars had become a symbol of affluence for China¶s new rising middle class. were opposed to the auto manufactures¶ eager rush to respond to the call of the Chinese government. At the present time. China saw the development of a new auto industry as a key step in its drive to industrialize its economy. be small enough to suit families with a single child (couples in China are prohibited from having more than one child). In addition. was based in part on the fact that China. the per -person consumption of oil in China was only one sixth of Japan¶s and o nly a quarter of Taiwan¶s. European and Korean automobile companies.

Although the United States imported some of its oil from Venezuela and Mexico. anticipating heig htened tensions. Rising demand for Middle East oil would push oil prices sharply upward. 3. and other nations that were already drawing on these sources to supply their own booming economies. In short. the Phillippines. which would send major shocks reverberating through the economics of the United States and those of other nations that relied heavily on oil. If China were to become a major trading partner with Iran or Iraq. government intervene in any way in the negotiations between U..S. from an ethical point of view. particularly their navies.15 Some of the car companies were considering submitting plans for an electric car because China had immense coal reserves which it could burn to produce electricity. This would diminish the need for China to rely on oil. China might also turn to tapping the large reserves of oil that were thought to be lying under Taiwan and other areas neighboring its coast. because world supplies of oil were limited.S. would have to import all its oil from the same countries that other nations relied on. Taiwan. State Department officials worried that China would begin to trade weapons for oil with Iran or Iraq. increasing demand seemed likely to increase the potential for conflict. If China were to increase its oil consumption. is it wrong. which approach sheds most light on the e thical issues raised by this case ? Explain your answer. South Korea. were already puring money into their military forces. Of course. How ever. heightening the risks of major military confrontations in the region. which would create large political. However. because coal is a fossil fuel. Thailand. China did not have sufficient coal burning electric plants nor an electrical power distribution system that could provide adequate electrical power to a large number of vehicles. Building such an electrical power system also would require a huge investment that the Chinese government did not seem particularly interested in making. Should the U. economic and military risks. Singapore. for the auto companies to submit plans for an automobile to China ? Explain your answer ? 2. auto companies and the Chinese government ? Explain. Moreover. which it would have to import. Many government officials were also worried by the political implications of having China become a major consumer of oil. . Many of these nations. this would bring it into competition with Japan. Of the various approaches to environmental ethics outlined in this chapter. most of its imports came from the Middle East ± an oil source that China would have to turn to also. this would also create closer ties between these two major power centres of the non -Western world ± a possibility that was also laden with risk. In your judgment. switching from an oil ± based auto to a coal ± based electric auto would still result in adding substantial quantities of carbon dioxide to the atmosphere. Questions : 1.

The clothing in the men¶s department was generally of a higher and more expensive quality than the clothing in the women¶s department. The personnel of th e store were sexually segregated because years of experience had taught the store¶s managers that. 4 WAGE DIFFERENCES AT ROBERT HALL Robert Hall Clothes. Competitive factors accounted for this : There were few other men¶s stores in Wilmington so the store could stock expensive men¶s clothes and still do a thriving business. Because of these differences in merchandise. owned a chain of retail stores that specialized in clothing for the family. the frequent physical contact between clerks and customers would embarrass both and would inhibit sales. The departments were physically separated and were staffed by different personnel : Only men were allowed to work in the men¶s department and only women in the women¶s department. the store¶s profit margins on the men¶s clothing was higher than its margins on the women¶s clothing. unless clerks and customers were of the same sex. One of the Chain¶s stores was located in Wilmington. whereas women¶s clothing had to be lower priced to compete with the many other women¶s stores in Wilmington. Delaware.. The Robert Hall store in Wilmington had a department for men¶s and boy¶s clothing a nd another department for women¶s and girl¶s clothing.15 - NO. Inc.. .

447 111.92 37.11 wo men personnel brought in lower sales and profits per hour.12 and 7.612 49.55 Female Gross Profits Per Hour ($) 9. and responsibilities required of male and female clerks were ³substantially´ the same.663 316. However. the female clerks argued.00 9.190 79. the management of Robert Hall paid their male salespersons more than their female personnel.608 89.20 41. Management learned after a Supreme Court ruiling in their favor in 1973 that it wa s entirely legal for them to do this if they wanted. 12 Sales ($) 177. 13 Year Male Gross Profits per Hour ($) 15.58 63.680 230.49 Excess M Over F (%) 1963 1964 72 74 .639 178.14.608 55.788 148.6 44.31 40.9 46.498 123.36 33.5 33.31 36.472 217.31 30. they were not as large as the percentage differences between male and female sales and profits.867 206.5 33.4 Year 1963 1964 1965 1966 1967 1968 1969 Male Sales per Hour ($) 38.77 59.5 46.00 Female Sales Per Hour ($) 27. TABLE 7.463 69.252 166.479 206. In fact male salespersons brought in substantially more than the females did (see Tables 7.846 91. Although the wage differences between males and females were substantial.681 248.8 TABLE 7.15 As a result..242 Gross Profit ($) 85.001 Percent Profit ($) 40.5 41.687 Percent Profit ($) Year 1963 1964 1965 1966 1967 1968 1969 32.22 54. Wages in the store were set on the basis of profits per hour per department.742 142. Robert Hall set the wages given in Table 7.11.2 43. the men¶s department consistently showed a larger dollar volume in gross sales and a greater gross profit.52 16.328 73.2 33. with some slight adjustments upward to ensure wages were comparable and competitive to what other stores in the area were paying.930 97.7 36.5 34.156 254. Because of the differences shown in Table 7. The management of Robert Hall argued that their female clerks were paid less because the commodities they sold could not bear the same selling costs that the commodities sold in the men¶s department could bear.27 73. the skills.18 62.9 31.765 244. Over the years.547 44.379 Women¶s Department Gross Profit ($) 58.26 Excess M Over F (%) 40 32 64 73 71 70 77 As a result of these differences in the income produced by the two departments.30 34.13) Men¶s Department Sales ($) 210. sales effort s.7 45.922 263. as is indicated in Table 7.

91 15.02 2.85 26.97 3.46 2. Would it make any difference to your analysis if. Suppose that there were very few male s applying for clerks¶ jobs in Wilmington while females were floo ding the clerking job market.16 11. do the managers of the Robert Hall store have any ethical obligations to change their sa lary policies ? If you do not think they should change. In your judgment.88 2.14 1143 12.18 2.21 34.98 2.92 2.66 28. one for men and one for women ? Would it make a difference if two stores (one for men and one f or women) owned by different companies were involved ? Explain each of your answers in terms of the relevant ethical principles upon whic h you are relying.75 1.16 Excess M Over F (%) 114 134 133 127 127 1963 1964 1965 1966 1967 1968 1969 25 32 48 50 45 47 45 Questions : 1. instead of two departments in the same store. 14 Year Male Earnings per Hour ($) 2.03 TABLE 7.86 1. Would this competitive factor justify paying males more than females ? Why ? Suppose that 95 percent of the women in Wilmington who were applying for clerks¶ jobs were single women with children who were on welfare while 95 percent of the men were single with no families to support.15 1965 1966 1967 1968 1969 23.95 1.36 12.67 2.. Would this need factor justify paying females more than males ? Why ? Suppose for the sake of argument that 2.74 29. . then explain why they have an obligation to change and describe the kinds of changes they should make.80 1.13 Female Earnings Per Hour ($) 1. it involved two different R obert Hall Stores.

he had developed both a webs ite that let users locate other users who were willing to share whatever music files they had in MP3 format on the hard drives of their computers and a software program (called ³Napster) that let users copy these music files from each other over the Internet.. If you think the managers of the Robert Hall store should pay their male and female clerks equal wages because they do ³substantially the same work´ then do you also think that ideally each worker¶s salary should be pegged to the work he or she individually performs (such as by having each worker sell o n commission) ? Why ? Would a commission system be preferable fr om a utilitarian point of view considering the substantial book keepin g expenses it would involve ? From the point of view of justice ? What does the phrase substantially the same mean to you ? NO.000 hits and was named ³Download of the week. in a family of four half -brothers and half-sisters. Fanning had taught himself programming and had held several summer programming jobs.com) in San Mateo. then a freshman at Northeastern University. Two months earlier. and in May 2000. California in May 1999. the son of a nurse¶s aid and the stepson of a truck driver. The company Shawn helped establish gave the Napster program away for free and charged users nothing to use its website to post the URL addresses where . When an early free version of the program he posted on Download. Shawn¶s company received $ 15 million of start ± up funds from venture capital firms in California¶s ³Silicon Valley. would this justify different salaries ? 3. 5 NAPSTER¶S REVOLUTION Eighteen ± year old Shawn ³NAPSTER´ Fanning.´ Fanning grew up in Brockton. dropped out of school and founded Napster Inc.w.napster. The final version of his version of his program was officially released August 1999.´ he decided to devote himself full time to developing his program and website. He got the nickname ³Napster´ during a basketball game when a player commented on his closely cropped sweaty head of hair.com received more than 300. (website was at w. with more than 10 million people ± most of them students on college campuses where Napster was especially popular ± signed up at its website.15 men were better at selling than women.w. Massauchettes. working in his college dorm room.

the band Metallica hired consultant PDNet to electronically ³evesdrop´ on users who assumed they were anonymously accessing Napster¶s website. On June 12. so Napster actually helped the music companies. Napster was not doing anything illegal. Dre. a month later.15 personal copies of music could be downloaded. College students were outraged. The music companies countered that an individual had no right to give multiple copies of their music to others even if the individual had paid for the original CD. Dre. The f ollowing week the band¶s lawyers handed Napster a list with the names of 300. But this sensational program has allowed peopl e to take music without paying «««. Moreover.. a survey of 2555 college students showed a correlation between Napster use and decreased CD purchases. that Napster and the Web gave them a way to put their music before millions of potential fans without having to beg the music companies to sponser them. In March 2000. was one of his musical heros. Dre). Shawn found himself embroiled in a legal and ethical controversy when two record tables. Much of the music that was downloaded using Napster. according to Fanning. however. Shawn probably had no idea of the legal ramifications of what he created. the la w explicitly stated that an individual could make a copy of copyrighted music he or she had purchased to hear the music on another player. According to the two groups. Other musicians claimed. especially fans of Metallica and Dr. ³If they want to steal our music. Fanning complied with the de mand of Metallica. was in the p ublic domain (i. the two industry trade groups filed preliminary injunctions against the company demanding that it remove all the songs owned by their member companies from Napster¶s song directories. they charged. After all. Supporters of Napster also argued that individuals had a moral and legal right to lend other individuals a copy of the music on the CDs that they had purchased. they claimed. stated that ³I don¶t know Shawn Fanning but he seems to be a pretty good kid who came up with a sensational program. they argued. whose drummer. two musicians (Metallica and Dr. eventually the music companies would stop producing music and musicians would stop creating it.´ said Ulrich. Supporters of Napster argued that Napster allowed people to hear music that they then went out and purchased.not legally owned by anyone) and was being legally copied. ³ why don¶t they just go down to Tower Records and grab them off the shelves ?´ Many young people protested that the bands should not be alienating their own fans in this way. but the music companies claimed that this was a result of a booming economy. and the company was not responsible if other people used its software and website to copy music in violation of copyright law any more than a car company was responsible when its autos were used by thieves to rob banks. Lars Ulrich. Music sales had increased by over $500 million a year since Napster had started to operate. I¶m sure the though never crossed his mind. They made a fortune off us and now they accuse us of steal ing from them. One fan posted a note on an MP3 chat room : ³Give me a break ! I have been dropping 16 bucks an album for Metallica¶s music since I was a teenager. Nevertheless. What nerve !´ Howard King.´ .e. and two industry trade groups of music companies (the National Music Publishers Association and the Recording Industry Association of America) filed suits against his young company claiming that Napster¶s software was enabling other to make and distribute copies of copyrighted music that the musicians and companies owned. 000 people that Metallica claimed had violated its copyrights using Napster¶s service and that Metallica now wanted removed from Napster¶s services. a Los Angeles lawyer for Metallica and Dr. If everyone w as allowed to copy music without paying for it.

morally responsible ? Wash shawn Fanning morally responsible ? Was any employee of Napster. make their music easily available on the Internet. then how would you defend your views against t he claim that such copying is stealing ? Assume that it was not illegal for an individual to copy music using Napster. these software products did not require a central website to connect users to each other. Who. The software program named ³Gnutella´ let individuals swap any kind of files ± music. 2001. or visuals ± over the Internet. responded to the suit against Napster. 2. The company attempted to circumvent the ruling by negotiating agreements with the music companies that would pay them certain annual fees in return for withdrawing the suit. a federal judge in San Francisco.. Judge Patel¶s ruling would have shut down the company¶s website immediately. would be morally responsible for this person¶s wrong doing ? Would only the person himself be morally responsible ? Was Napster. The judge ordered Napster to remove all URLS from its website that referenced material that was copyrighted. Marilyn Patel. What are the legal issues involved in this case. Napster was not the only software that allowed individuals to swap files from One personal computer to another over the Internet. On Monday February 12. Questions : 1.com provided free copies of Gnutella and many other Napster clones that users could download and use to share digital music files with each other. text. the 3. the company. . Unlike Napster.15 In August 2000. numerous underground websites would be created providing the kind of listing service that the co mpany had earlier provided on its website. but Gnutella did not operate a centralized index like the website that Napster had established. and completely change their business models. corporate and individual issues´ involved in this case. The reprieve was only temporary. was it morally wrong for Shawn Fanning to develop and release his technology to the world given its possible consequences? Was it morally wrong for an individual to use Napster¶s website and software to copy for free the copy righted music on another person ¶s hard drive ? If you believe it was wrong. making it impossible for music companies to find and target single entity whom they could sue. Many observers predicated that Napster was only the beginning of an upheaval that wou ld revolutionize the music industry. then. If you believe it was not morally wrong. forcing music companies to lower their prices. an appeals court reversed Judge Patel and allowed the company to continue operating. But a few days later. Already a website named zeropaid. and how are they related to each other ? Identify and distinguish the ³systemic. Judge Patel called Shawn¶s company a ³monster´ and charged that the only purpose of Napster was to copy pirated music without paying for it. Would there be anything immoral with doing so ? Explain ? Assume that it is morally wrong for a person to use Napster¶s website and software to make a copy of copyrighted music. and what ar e the moral issues ? How are the two different kinds of issues different from each other. the Ninth Circuit Court of Appeals in San Francisco affirmed Judge Patel¶s ruling. In your judgment. Observers predicated that if Napster was put out of business. then explain exactly why it was wrong.

8 billion of drugs all over the world in 1995. and compensation to numerous homeless alcoholics who perform short-term work for the company. test subjects can make as $4500 ± an enormous sum to people who are otherwise unemployable and surviving on handouts. To secure test subjects. One of the reasons that Lily¶s rates are so low is because. housing. Headquartered in Indianpolis.3 billion.15 company. Darvon. The work these street people perform. Ceclor. and prisons all over the United States.S. does not advertise as widely and pays its volunteers only $85 a day plus free from and board. is a bit unusual.. the U. however. In Phase III. Interviews with several homeless men . Because they alcoholics. Eli Lilly. however. the discoverer of Erythromycin. Phase I testing is often the most difficult to carry out because most healthy individuals are reluctant to take a new and untested medication that is not intended to cure them of anything and that may have potentially crippling or deadly side effects. Before approving the sale of a newly discovered dru g. ³ the majority of its subjects are homeless alcoholics´ recruited through word of mouth that is spread in soup kitchens. 6 WORKING FOR ELI LILLY & COMPANY Eli Lilly. morally responsible ? Was the operator of the server or that portion of the Internet that the person used morally responsible ? What if the person did not know that the music was copyrighted or did not think that it was illegal to copy copyrighted music ? 4. a s a long time nurse at the Lily Clinic is reported to have indicated. In phase I. Because phase I testes can run several months. shelters. Because they are alcoholics. they are fairly desperate for money. and Prozac. In Phas e II. are these changes ethically good or ethically bad ? NO. Food and Drug Administration requires that the drug be put through three phases of tests after being tested on animals. the drug is given to a small number of sick patients to determine dosage levels. companies must advertise widely and offer to pay them as such as $250 a day. Minnesota . the company also provides food. Do the music companies share any of the moral responsibility for what has happened ? How do you think technology like Napster is likely to change the music industry ? In your judgment. the drug is taken by healthy human individuals to determine whether it has any dangerous side effects. they are fairly desperate for money. the lowest in the industry. giving it profits of $2. is a major pharmaceutical company that sold $6. the drug is given to large numbers of sick patients by doctors and hospitals to determine its efficacy.

by and large. justice and caring. During the 1970s. The idea is. In earlier years. in fact. ³Providing them with a nice warm bed and good medical care and sending them out drug ± and alcohol ± free was a positive thing to do.´ The same thing happened to another subje ct in the same test. one homeless drinker hired to participate in a Phase I trail said he had no idea what kind of drug was being tested on him even though he had signed an informed ± consent form. get drunk and buy the house a round.15 who have participated in Lily¶s drug tests and who describe themselves as alcoholics who drink daily suggest that they are. The manager at another cheap motel said that when test subjects completed their stints at Lily. that in light of the difficulty of securing test subjects. moreover. quite happy to participate in an arrangement that provides them with ³easy money´. provide enormous benefits for society.´ A homeless alcoholic indicated in an interview that when the test he was participating in was completed.´ Some have questioned whether the desperate circumstances of alcoholic and homeless men allow them to make a truly voluntary and uncoerced decision when they agree to take an untested potentially dangerous drug for $ 85 a day. The Federal Drug Administration requires that people who agree to participate in Phase I tests must give their ³ informed consent´ and must take a ³ truly voluntary and a uncoerced decision. they generally arrived at his motel with about $ 2500 in cash : ³ The guinea pigs go to the lounge next door. Some doctors claim that alcoholics run a higher risk because they may carry diseases that are undetectable by standard blood screening and that make them vulnerable to being severely named by certain drugs. some tests might be delayed or not performed at all if it were not for the large pool of homeless men willing and eager to participate in the tests.. When asked. It has been suggested. they can party for a couple of weeks and go back to Lily and do the next one. Discuss this case from the perspective of utilitarianism. ³ We were constantly talking about whether we were exploiting the homeless. drug companies stopped using prisoners when critics complained that their poverty and the promise of early parole in effect were coercing the prisoners into ³Volunteering´. a doctor at the c ompany is quoted as saying. The tests run on the homeless men. One former test subject indicated in an interview that the drug he had been given in a test several years before had arrested his heart and ³ they had to put things on my chest to start my heart up again. But there were a lot of them who were willing to stay in the hospital for four weeks. An advantage for Lilly is that this kind of test subject is less likely to sue if severely injured by the drug.´ Questions : 1.´ Moreover.´ He estimated that it would take him about two weeks to spend the $ 4650 Lily would pay him for his services. When Lilly first turned to using homeless people during the 1980s. Another man indicated that the drug he was given had made him unconscious for 2 days while others told of excruciating headaches. he adds. What insight does virtue theory shed on the ethics of the events described in this case ? . he would rent a cheap motel room where I¶ll get a case of Miller and an escort girl have sex. drug companies used prisoners to test drugs in Phase I tests. rights. The girl will cost me $ 200 an hour.

Q4. Q6. In your judgment. C. INDIAN INSTITUTE OF MANAGEMENTAND ENGINEERING TOTAL QUALITY MANAGEMENT-2 All the questions are compulsory .. 4.15 2.´ Discuss the statement in light of the Lily case.A What three different outcomes can benchmarking studies reveal? What course of action is appropriate for each outcome? B. What procedural changes would result in a more effective response? Q2. What are the basic difference among the quality systems discussed in the text? THANKING YOU. Explain how an organization might benefit from benchmarking organization in a completely different industry. The first five question shall be of 16marks each and the last question shall be of 20marks. is the policy of using homeless alcoholics for test subjects morally appropriate ? Explain the reasons for yourjudgment. Q1. Write a strategic planning goal and an annual objective. What is metric? How are metric used? Q5. ³ In a free enterprise society all adults should be allowed to make their own decisions about how they choose to earn their living.A Why is documentation the most common reason for noncompliance? B.A What is the best way to improve market share for a product or services? B.A What is overall aim of the EMS standers? B.A Are there any gaps between what you need and what you get? B Is the main concern of most consumers the price of the product of service? Explain. What does your judgment imply about the moral legitimacy of a free market in labor ? How should the managers of Lily handle this issue ? 3. .A What effect will e ± learning have on pub lic education from kinder garden through the 12 th grade? B. What are the advantages and disadvantages of wireless communication Q3.

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