ACTIVITY#1 – CASE STUDY: 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 a decentralized center is measured on the basis of profit
contribution, market penetration, and return on investment. Failure to meet the objectives
established 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 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 encouraged 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: 10 pts each

1. What are the ethical problems mentioned in this particular case and what are the probable
causes of these problems? 

 The ethical problem in this case is that in order to achieve the target profit, market penetration,
and return on investment, those managers must do some sort of in appropriate plan to avoid
demotion or dismissal of position. The quality of the products disregarded. And the sales
personnel taught of improper tactics. All of these is because of the corporate management who
established the decentralization form in which the objectives might not be roughly equal into
other center

2. Is it all right to do something illegal or unethical to maintain the company’s image and
profitability?

 It’s never been right to do illegal

and unethical things to make the company’s image better, it might be their only option to make
it through but if only they could focus and established much greater plans to avoid such
irresponsible decisions.
3. If you are the CEO of the company, what would you do and why?

 As a CEO of the company, I will still go for Decentralization Form of organization. A decentralized
organization for the sake of clarity is one in which most decisions are made by mid-level or
lower-level managers (manager centers), rather than being made centrally by the head of the
company. It’s the opposite of a centralized
organization in which all decisions are made at the top. So meaning, managers are also open to
suggest better plan to make the company even more competitive and not to pressure those
center managers. I will make it to some sort of leveling each center from the highest given
objective since not every center has the same production output. This decision comes from
ethical standard in a profitable way