San Jose Community College

San Jose, Malilipot Albay

PRELIM EXAMINATION
(Good Governance and Social Responsibility)

Name: __________________________________ Course & Year: _____________ Time: _________

Ethics vs. Profit

A large American company participates in a highly competitive industry. To meet the

competition and achieve profit goals, the company has chosen the decentralized form of
organization. Each manager of decentralized center is measured on the basis of profit
contribution, market penetration, and return on investment. Failure to meet the objectives
establish by corporate management for these measures is not accepted and usually results in
demotion or dismissal of a center manager.

An anonymous survey of managers in the company revealed that they felt pressured to
compromise their personal or ethical standards to achieve the corporate objectives. For example,
certain plant locations felt the pressure to reduce quality control to a level that could not ensure
that all unsafe products would be rejected. Also, sales personnel were encourage to use
questionable sales tactics to obtain orders, including offering gifts and other incentives to
purchasing agents.

The chief executive officer is disturbed by the survey findings. In his opinion, the
company cannot condone such behavior. He concludes that the company should do something
about this problem.

Questions: (25 points each)

1. What are the Ethical problems mentioned in this particular case and what are the
probable causes of these problems?
2. Is it alright to do something illegal or unethical to maintain the company’s image and
profitability? Defend your answer.
3. If you are the CEO of the company, what would you do and why? Discuss your answer.