The Ethical Case for Profits

The frequency of ethical lapses among executives suggests that there exists an alternate moral framework in corporate culture.

Uncle Scrooge

Recent scandals at Theranos ,  Fiat , and Volkswagen are just the latest examples of companies under investigation for ethical breaches in attempts to maximize profits. The frequency of ethical lapses among executives suggests that there exists an alternate moral framework in corporate culture, which might create its own “ special norms .”

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In his article “Business Ethics: Profits, Utilities, and Moral Rights,” Alan Goldman puts it this way: “We may call a social position strongly role-differentiated if such special norms are applicable…and if its occupant is thereby permitted or required to ignore, or weigh less heavily in relation to the professional norm, considerations that would otherwise be morally crucial.”

The idea of a “role differentiated” profession is inherent in our culture. Good soldiers are judged by valor in the field—often manifested by taking human life. Doctors are judged less harshly for prioritizing work over family, if a patient’s health is in peril. Journalists may be considered socially conscious for breaking laws to uncover institutional corruption. Ethics are fluid; we weigh what values are sacrificed for what purpose when making judgements.

Businesses may see themselves as one of these role-differentiated professions, and not purely out of self-interest. 

Goldman argues that “pursuit of profit in a competitive situation best promotes aggregate social good.”  Even detractors of corporations must admit that the world’s Coca-Colas, Amazons, Volkswagens, and Fiats create significant employment and bolster economies. Their salaries support families. Their health insurance covers medical bills. Large corporations are inarguably a vital part of free market economies.

After all, a business’s foremost function is to growing and profiting. Wider social obligations are ideal to consider, but ultimately secondary to prosperity. This, in and of itself, is a moral code, with wider social good embedded firmly within. Failure to turn a profit is failure to fulfill a primary obligation : minimizing profitability is minimizing potential to provide value to society.

Additionally, even CEOs answer to somebody. Though we refer to the relative wealth of a company, we forget that a hefty percentage of its wealth belongs to its shareholders.  “They are entrusted with their money for the express purpose of earning a return on it,” explains Goldman.   “But if they sacrifice profits in order to aid what they perceive to be moral or social causes…then they are in effect taxing stockholders without authority to do.”

A wealthy shareholder wanting to contribute directly to social welfare has ample opportunity to do so independently through charities or non-profits. Shareholders in for-profit companies have actively tasked managers with generating income. An individual manager’s personal moral compass may point towards one decision, but their job description may compel them to do the opposite.

These are small examples of dilemmas that many businessmen face. It’s easily to vilify a decision when it comes to light, but may be more difficult in practice.  This isn’t to argue that businesses should be held to a different moral standard; however, attempting to understand a mindset that nurtures the potential for ethical lapses permits a deeper understanding of how to balance profit with principle.

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  • 1.2 Ethics and Profitability
  • Introduction
  • 1.1 Being a Professional of Integrity
  • 1.3 Multiple versus Single Ethical Standards
  • Assessment Questions
  • 2.1 The Concept of Ethical Business in Ancient Athens
  • 2.2 Ethical Advice for Nobles and Civil Servants in Ancient China
  • 2.3 Comparing the Virtue Ethics of East and West
  • 2.4 Utilitarianism: The Greatest Good for the Greatest Number
  • 2.5 Deontology: Ethics as Duty
  • 2.6 A Theory of Justice
  • 3.1 Adopting a Stakeholder Orientation
  • 3.2 Weighing Stakeholder Claims
  • 3.3 Ethical Decision-Making and Prioritizing Stakeholders
  • 3.4 Corporate Social Responsibility (CSR)
  • 4.1 Corporate Law and Corporate Responsibility
  • 4.2 Sustainability: Business and the Environment
  • 4.3 Government and the Private Sector
  • 5.1 The Relationship between Business Ethics and Culture
  • 5.2 Business Ethics over Time
  • 5.3 The Influence of Geography and Religion
  • 5.4 Are the Values Central to Business Ethics Universal?
  • 6.1 The Workplace Environment and Working Conditions
  • 6.2 What Constitutes a Fair Wage?
  • 6.3 An Organized Workforce
  • 6.4 Privacy in the Workplace
  • 7.1 Loyalty to the Company
  • 7.2 Loyalty to the Brand and to Customers
  • 7.3 Contributing to a Positive Work Atmosphere
  • 7.4 Financial Integrity
  • 7.5 Criticism of the Company and Whistleblowing
  • 8.1 Diversity and Inclusion in the Workforce
  • 8.2 Accommodating Different Abilities and Faiths
  • 8.3 Sexual Identification and Orientation
  • 8.4 Income Inequalities
  • 8.5 Animal Rights and the Implications for Business
  • 9.1 Entrepreneurship and Start-Up Culture
  • 9.2 The Influence of Advertising
  • 9.3 The Insurance Industry
  • 9.4 Ethical Issues in the Provision of Health Care
  • 10.1 More Telecommuting or Less?
  • 10.2 Workplace Campuses
  • 10.3 Alternatives to Traditional Patterns of Work
  • 10.4 Robotics, Artificial Intelligence, and the Workplace of the Future
  • 11.1 Business Ethics in an Evolving Environment
  • 11.2 Committing to an Ethical View
  • 11.3 Becoming an Ethical Professional
  • 11.4 Making a Difference in the Business World
  • A | The Lives of Ethical Philosophers
  • B | Profiles in Business Ethics: Contemporary Thought Leaders
  • C | A Succinct Theory of Business Ethics

Learning Objectives

By the end of this section, you will be able to:

  • Differentiate between short-term and long-term perspectives
  • Differentiate between stockholder and stakeholder
  • Discuss the relationship among ethical behavior, goodwill, and profit
  • Explain the concept of corporate social responsibility

Few directives in business can override the core mission of maximizing shareholder wealth, and today that particularly means increasing quarterly profits. Such an intense focus on one variable over a short time (i.e., a short-term perspective ) leads to a short-sighted view of what constitutes business success.

Measuring true profitability, however, requires taking a long-term perspective. We cannot accurately measure success within a quarter of a year; a longer time is often required for a product or service to find its market and gain traction against competitors, or for the effects of a new business policy to be felt. Satisfying consumers’ demands, going green, being socially responsible, and acting above and beyond the basic requirements all take time and money. However, the extra cost and effort will result in profits in the long run. If we measure success from this longer perspective, we are more likely to understand the positive effect ethical behavior has on all who are associated with a business.

Profitability and Success: Thinking Long Term

Decades ago, some management theorists argued that a conscientious manager in a for-profit setting acts ethically by emphasizing solely the maximization of earnings. Today, most commentators contend that ethical business leadership is grounded in doing right by all stakeholders directly affected by a firm’s operations, including, but not limited to, stockholder s , or those who own shares of the company’s stock. That is, business leaders do right when they give thought to what is best for all who have a stake in their companies. Not only that, firms actually reap greater material success when they take such an approach, especially over the long run.

Nobel Prize–winning economist Milton Friedman stated in a now-famous New York Times Magazine article in 1970 that the only “social responsibility of a business is to increase its profits.” 2 This concept took hold in business and even in business school education. However, although it is certainly permissible and even desirable for a company to pursue profitability as a goal, managers must also have an understanding of the context within which their business operates and of how the wealth they create can add positive value to the world. The context within which they act is society, which permits and facilitates a firm’s existence.

Thus, a company enters a social contract with society as whole, an implicit agreement among all members to cooperate for social benefits. Even as a company pursues the maximizing of stockholder profit, it must also acknowledge that all of society will be affected to some extent by its operations. In return for society’s permission to incorporate and engage in business, a company owes a reciprocal obligation to do what is best for as many of society’s members as possible, regardless of whether they are stockholders. Therefore, when applied specifically to a business, the social contract implies that a company gives back to the society that permits it to exist, benefiting the community at the same time it enriches itself.

Link to Learning

What happens when a bank decides to break the social contract? This press conference held by the National Whistleblowers Center describes the events surrounding the $104 million whistleblower reward given to former UBS employee Bradley Birkenfeld by the U.S. Internal Revenue Service. While employed at UBS, Switzerland’s largest bank, Birkenfeld assisted in the company’s illegal offshore tax business, and he later served forty months in prison for conspiracy. But he was also the original source of incriminating information that led to a Federal Bureau of Investigation examination of the bank and to the U.S. government’s decision to impose a $780 million fine on UBS in 2009. In addition, Birkenfeld turned over to investigators the account information of more than 4,500 U.S. private clients of UBS. 3

In addition to taking this more nuanced view of profits, managers must also use a different time frame for obtaining them. Wall Street’s focus on periodic (i.e., quarterly and annual) earnings has led many managers to adopt a short-term perspective, which fails to take into account effects that require a longer time to develop. For example, charitable donations in the form of corporate assets or employees’ volunteered time may not show a return on investment until a sustained effort has been maintained for years. A long-term perspective is a more balanced view of profit maximization that recognizes that the impacts of a business decision may not manifest for a longer time.

As an example, consider the business practices of Toyota when it first introduced its vehicles for sale in the United States in 1957. For many years, Toyota was content to sell its cars at a slight loss because it was accomplishing two business purposes: It was establishing a long-term relationship of trust with those who eventually would become its loyal U.S. customers, and it was attempting to disabuse U.S. consumers of their belief that items made in Japan were cheap and unreliable. The company accomplished both goals by patiently playing its long game, a key aspect of its operational philosophy, “The Toyota Way,” which includes a specific emphasis on long-term business goals, even at the expense of short-term profit. 4

What contributes to a corporation’s positive image over the long term? Many factors contribute, including a reputation for treating customers and employees fairly and for engaging in business honestly. Companies that act in this way may emerge from any industry or country. Examples include Fluor, the large U.S. engineering and design firm; illycaffè, the Italian food and beverage purveyor; Marriott, the giant U.S. hotelier; and Nokia, the Finnish telecommunications retailer. The upshot is that when consumers are looking for an industry leader to patronize and would-be employees are seeking a firm to join, companies committed to ethical business practices are often the first to come to mind.

Why should stakeholders care about a company acting above and beyond the ethical and legal standards set by society? Simply put, being ethical is simply good business. A business is profitable for many reasons, including expert management teams, focused and happy employees, and worthwhile products and services that meet consumer demand. One more and very important reason is that they maintain a company philosophy and mission to do good for others.

Year after year, the nation’s most admired companies are also among those that had the highest profit margins. Going green, funding charities, and taking a personal interest in employee happiness levels adds to the bottom line! Consumers want to use companies that care for others and our environment. During the years 2008 and 2009, many unethical companies went bankrupt. However, those companies that avoided the “quick buck,” risky and unethical investments, and other unethical business practices often flourished. If nothing else, consumer feedback on social media sites such as Yelp and Facebook can damage an unethical company’s prospects.

Cases from the Real World

Competition and the markers of business success.

Perhaps you are still thinking about how you would define success in your career. For our purposes here, let us say that success consists simply of achieving our goals. We each have the ability to choose the goals we hope to accomplish in business, of course, and, if we have chosen them with integrity, our goals and the actions we take to achieve them will be in keeping with our character.

Warren Buffet ( Figure 1.4 ), whom many consider the most successful investor of all time, is an exemplar of business excellence as well as a good potential role model for professionals of integrity and the art of thinking long term. He had the following to say: “Ultimately, there’s one investment that supersedes all others: Invest in yourself. Nobody can take away what you’ve got in yourself, and everybody has potential they haven’t used yet. . . . You’ll have a much more rewarding life not only in terms of how much money you make, but how much fun you have out of life; you’ll make more friends the more interesting person you are, so go to it, invest in yourself.” 5

The primary principle under which Buffett instructs managers to operate is: “Do nothing you would not be happy to have an unfriendly but intelligent reporter write about on the front page of a newspaper.” 6 This is a very simple and practical guide to encouraging ethical business behavior on a personal level. Buffett offers another, equally wise, principle: “Lose money for the firm, even a lot of money, and I will be understanding; lose reputation for the firm, even a shred of reputation, and I will be ruthless.” 7 As we saw in the example of Toyota, the importance of establishing and maintaining trust in the long term cannot be underestimated.

For more on Warren Buffett’s thoughts about being both an economic and ethical leader, watch this interview that appeared on the PBS NewsHour on June 6, 2017.

Stockholders, Stakeholders, and Goodwill

Earlier in this chapter, we explained that stakeholders are all the individuals and groups affected by a business’s decisions. Among these stakeholders are stockholders (or shareholder s ), individuals and institutions that own stock (or shares) in a corporation. Understanding the impact of a business decision on the stockholder and various other stakeholders is critical to the ethical conduct of business. Indeed, prioritizing the claims of various stakeholders in the company is one of the most challenging tasks business professionals face. Considering only stockholders can often result in unethical decisions; the impact on all stakeholders must be considered and rationally assessed.

Managers do sometimes focus predominantly on stockholders, especially those holding the largest number of shares, because these powerful individuals and groups can influence whether managers keep their jobs or are dismissed (e.g., when they are held accountable for the company’s missing projected profit goals). And many believe the sole purpose of a business is, in fact, to maximize stockholders’ short-term profits. However, considering only stockholders and short-term impacts on them is one of the most common errors business managers make. It is often in the long-term interests of a business not to accommodate stockowners alone but rather to take into account a broad array of stakeholders and the long-term and short-term consequences for a course of action.

Here is a simple strategy for considering all your stakeholders in practice. Divide your screen or page into three columns; in the first column, list all stakeholders in order of perceived priority ( Figure 1.5 ). Some individuals and groups play more than one role. For instance, some employees may be stockholders, some members of the community may be suppliers, and the government may be a customer of the firm. In the second column, list what you think each stakeholder group’s interests and goals are. For those that play more than one role, choose the interests most directly affected by your actions. In the third column, put the likely impact of your business decision on each stakeholder. This basic spreadsheet should help you identify all your stakeholders and evaluate your decision’s impact on their interests. If you would like to add a human dimension to your analysis, try assigning some of your colleagues to the role of stakeholders and reexamine your analysis.

The positive feeling stakeholders have for any particular company is called goodwill , which is an important component of almost any business entity, even though it is not directly attributable to the company’s assets and liabilities. Among other intangible assets, goodwill might include the worth of a business’s reputation, the value of its brand name, the intellectual capital and attitude of its workforce, and the loyalty of its established customer base. Even being socially responsible generates goodwill. The ethical behavior of managers will have a positive influence on the value of each of those components. Goodwill cannot be earned or created in a short time, but it can be the key to success and profitability.

A company’s name, its corporate logo, and its trademark will necessarily increase in value as stakeholders view that company in a more favorable light. A good reputation is essential for success in the modern business world, and with information about the company and its actions readily available via mass media and the Internet (e.g., on public rating sites such as Yelp), management’s values are always subject to scrutiny and open debate. These values affect the environment outside and inside the company. The corporate culture , for instance, consists of shared beliefs, values, and behaviors that create the internal or organizational context within which managers and employees interact. Practicing ethical behavior at all levels—from CEO to upper and middle management to general employees—helps cultivate an ethical corporate culture and ethical employee relations.

What Would You Do?

Which corporate culture do you value.

Imagine that upon graduation you have the good fortune to be offered two job opportunities. The first is with a corporation known to cultivate a hard-nosed, no-nonsense business culture in which keeping long hours and working intensely are highly valued. At the end of each year, the company donates to numerous social and environmental causes. The second job opportunity is with a nonprofit recognized for a very different culture based on its compassionate approach to employee work-life balance. It also offers the chance to pursue your own professional interests or volunteerism during a portion of every work day. The first job offer pays 20 percent more per year.

Critical Thinking

  • Which of these opportunities would you pursue and why?
  • How important an attribute is salary, and at what point would a higher salary override for you the nonmonetary benefits of the lower-paid position?

Positive goodwill generated by ethical business practices, in turn, generates long-term business success. As recent studies have shown, the most ethical and enlightened companies in the United States consistently outperform their competitors. 8 Thus, viewed from the proper long-term perspective, conducting business ethically is a wise business decision that generates goodwill for the company among stakeholders, contributes to a positive corporate culture, and ultimately supports profitability.

You can test the validity of this claim yourself. When you choose a company with which to do business, what factors influence your choice? Let us say you are looking for a financial advisor for your investments and retirement planning, and you have found several candidates whose credentials, experience, and fees are approximately the same. Yet one of these firms stands above the others because it has a reputation, which you discover is well earned, for telling clients the truth and recommending investments that seemed centered on the clients’ benefit and not on potential profit for the firm. Wouldn’t this be the one you would trust with your investments?

Or suppose one group of financial advisors has a long track record of giving back to the community of which it is part. It donates to charitable organizations in local neighborhoods, and its members volunteer service hours toward worthy projects in town. Would this group not strike you as the one worthy of your investments? That it appears to be committed to building up the local community might be enough to persuade you to give it your business. This is exactly how a long-term investment in community goodwill can produce a long pipeline of potential clients and customers.

The Equifax Data Breach

In 2017, from mid-May to July, hackers gained unauthorized access to servers used by Equifax, a major credit reporting agency, and accessed the personal information of nearly one-half the U.S. population. 9 Equifax executives sold off nearly $2 million of company stock they owned after finding out about the hack in late July, weeks before it was publicly announced on September 7, 2017, in potential violation of insider trading rules. The company’s shares fell nearly 14 percent after the announcement, but few expect Equifax managers to be held liable for their mistakes, face any regulatory discipline, or pay any penalties for profiting from their actions. To make amends to customers and clients in the aftermath of the hack, the company offered free credit monitoring and identity-theft protection. On September 15, 2017, the company’s chief information officer and chief of security retired. On September 26, 2017, the CEO resigned, days before he was to testify before Congress about the breach. To date, numerous government investigations and hundreds of private lawsuits have been filed as a result of the hack.

  • Which elements of this case might involve issues of legal compliance? Which elements illustrate acting legally but not ethically? What would acting ethically and with personal integrity in this situation look like?
  • How do you think this breach will affect Equifax’s position relative to those of its competitors? How might it affect the future success of the company?
  • Was it sufficient for Equifax to offer online privacy protection to those whose personal information was hacked? What else might it have done?

A Brief Introduction to Corporate Social Responsibility

If you truly appreciate the positions of your various stakeholders, you will be well on your way to understanding the concept of corporate social responsibility (CSR) . CSR is the practice by which a business views itself within a broader context, as a member of society with certain implicit social obligations and environmental responsibilities. As previously stated, there is a distinct difference between legal compliance and ethical responsibility, and the law does not fully address all ethical dilemmas that businesses face. CSR ensures that a company is engaging in sound ethical practices and policies in accordance with the company’s culture and mission, above and beyond any mandatory legal standards. A business that practices CSR cannot have maximizing shareholder wealth as its sole purpose, because this goal would necessarily infringe on the rights of other stakeholders in the broader society. For instance, a mining company that disregards its corporate social responsibility may infringe on the right of its local community to clean air and water if it pursues only profit. In contrast, CSR places all stakeholders within a proper contextual framework.

An additional perspective to take concerning CSR is that ethical business leaders opt to do good at the same time that they do well. This is a simplistic summation, but it speaks to how CSR plays out within any corporate setting. The idea is that a corporation is entitled to make money, but it should not only make money. It should also be a good civic neighbor and commit itself to the general prospering of society as a whole. It ought to make the communities of which it is part better at the same time it pursues legitimate profit goals. These ends are not mutually exclusive, and it is possible—indeed, praiseworthy—to strive for both. When a company approaches business in this fashion, it is engaging in a commitment to corporate social responsibility.

U.S. entrepreneur Blake Mycoskie has created a unique business model combining both for-profit and nonprofit philosophies in an innovative demonstration of corporate social responsibility. The company he founded, TOMS Shoes, donates one pair of shoes to a child in need for every pair sold. As of May 2018, the company has provided more than 75 million pairs of shoes to children in seventy countries. 10

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  • Authors: Stephen M. Byars, Kurt Stanberry
  • Publisher/website: OpenStax
  • Book title: Business Ethics
  • Publication date: Sep 24, 2018
  • Location: Houston, Texas
  • Book URL: https://openstax.org/books/business-ethics/pages/1-introduction
  • Section URL: https://openstax.org/books/business-ethics/pages/1-2-ethics-and-profitability

© Mar 31, 2023 OpenStax. Textbook content produced by OpenStax is licensed under a Creative Commons Attribution License . The OpenStax name, OpenStax logo, OpenStax book covers, OpenStax CNX name, and OpenStax CNX logo are not subject to the Creative Commons license and may not be reproduced without the prior and express written consent of Rice University.

Business Ethics

Case: the ford pinto.

  • 1.1 Benefits
  • 1.3 The End

The Ford P​into

From: Moral Issues in Business 8th ed. Shaw & Barry (pp. 83-86)

There was a time when the “made in Japan” label brought a predictable smirk of superiority to the face of most Americans. The quality of most Japanese products usually was as low as their price. In fact, few imports could match their domestic counterparts, the proud products of Yankee know-how. But by the late 1960s, an invasion of foreign-made goods chiseled a few worry lines into the countenance of the U.S. industry. In Detroit, worry was fast fading to panic as the Japanese, not to mention the Germans, began to gobble up more and more of the subcompact auto market.

Never one to take a back seat to the competition, Ford Motor Company decided to meet the threat from abroad head-on. In 1968, Ford executives decided to produce the Pinto. Known inside the company as “Lee’s car,” after Ford president Lee Iacocca, the Pinto was to weigh no more than 2,000 pounds and cost no more than $2,000.

Eager to have its subcompact ready for the 1971 model year, Ford decided to compress the normal drafting-board-to-showroom time of about three-and-a-half years into two. The compressed schedule meant that any design changes typically made before production-line tooling would have to be made during it.

Before producing the Pinto, Ford crash-tested various prototypes, in part to learn whether they met a safety standard proposed by the National Highway Traffic Safety Administration (NHTSA) to reduce fires from traffic collisions. This standard would have required that by 1972 all new autos be able to withstand a rear-end impact of 20mph without fuel loss, and that by 1973 they be able to withstand an impact of 30 mph. The prototypes all failed the 20-mph test. In 1970 Ford crash-tested the Pinto itself, and the result was the same: ruptured gas tanks and dangerous leaks. The only Pintos to pass the test had been modified in some way–for example, with a rubber bladder in the gas tank or a piece of steel between the tank and the rear bumper.

Thus, Ford knew that the Pinto represented a serious fire hazard when struck from the rear, even in low-speed collisions. Ford officials faced a decision. Should they go ahead with the existing design, thereby meeting the production timetable but possibly jeopardizing consumer safety? Or should they delay production of the Pinto by redesigning the gas tank to make it safer and thus concede another year of subcompact dominance to foreign companies? Ford not only pushed ahead with the original design but stuck to it for the next six years.

What explains Ford’s decision? The evidence suggests that Ford relied, at least in part, on cost-benefit reasoning, which is an analysis in monetary terms of the expected costs and benefits of doing something. There were various ways of making the Pinto’s gas tank safer. Although the estimated price of these safety improvements ranged from only $5 to $8 per vehicle, Ford evidently reasoned that the increased cost outweighed the benefits of a new tank design.

How exactly did Ford reach that conclusion? We don’t know for sure, but an internal report, “Fatalities Associated with Crash-Induced Fuel Leakage and Fires,” reveals the cost-benefit reasoning that the company used in cases like this. This report was not written with the pinto in mind; rather, it concerns fuel leakage in rollover accidents (not rear-end collisions), and its computations applied to all Ford vehicles, not just the Pinto. Nevertheless, it illustrates the type of reasoning that was probably used in the Pinto case.

In the “Fatalities” report, Ford engineers estimated the cost of technical improvements that would prevent gas tanks from leaking in rollover accidents to be $11 per vehicle. The authors go on to discuss various estimates of the number of people killed by fires from car rollovers before settling on the relatively low figure of 180 deaths per year. But given that number, how can the value of those individuals’ lives be gauged? Can a dollars-and-cents figure be assigned to a human being? NHTSA thought so. In 1972, it estimated that society loses $200,725 every time a person is killed in an auto accident (adjusted for inflation, today’s figure would, of course, be considerably higher). It broke down the costs as follows:

Putting the NHTSA figures together with other statistical studies, the Ford report arrives at the following overall assessment of costs and benefits:

Thus, the costs of the suggested safety improvements outweigh their benefits, and the “Fatalities” report accordingly recommends against any improvements–a recommendation that Ford followed.

Likewise in the Pinto case, Ford’s management whatever its exact reasoning, decided to stick with the original design and not upgrade the Pinto’s fuel tank, despite the test results reported by its engineers. Here is the aftermath of Ford’s decision:

  • Between 1971 and 1978, the Pinto was responsible for a number of fire-related deaths. Ford puts the figure at 23; its critics say the figure is closer to 500. According to the sworn testimony of Ford engineers, 95 percent of the fatalities would have survived if Ford had located the fuel tank over the axle (as it had done on its Capri automobiles).
  • NHTSA finally adopted a 30-mph collision standard in 1976. The pinto then acquired a rupture-proof fuel tank. In 1978 Ford was obliged to recall all 1971-76 Pintos for fuel-tank modifications.
  • Between 1971 and 1978, approximately fifty lawsuits were brought against Ford in connection with rear-end accidents in the Pinto. In the Richard Grimshaw case, in addition to awarding over $3 million in compensatory damages to the victims of a Pinto crash, the jury awarded a landmark $125 million in punitive damages against Ford. The judge reduced punitive damages to 3.5 million.
  • On August 10, 1978, eighteen-year-old Judy Ulrich, her sixteen-year-old sister Lynn, and their eighteen-year-old cousin Donna, in their 1973 Ford Pinto, were struck from the rear by a van near Elkhart, Indiana. The gas tank of the Pinto exploded on impact. In the fire that resulted, the three teenagers were burned to death. Ford was charged with criminal homicide. The judge in the case advised jurors that Ford should be convicted if it had clearly disregarded the harm that might result from its actions, and that disregard represented a substantial deviation from acceptable standards of conduct. On March 13, 1980, the jury found Ford not guilty of criminal homicide.

For its part, Ford has always denied that the Pinto is unsafe compared with other cars of its type and era. The company also points out that in every model year the Pinto met or surpassed the government’s own standards. But what the company doesn’t say is that successful lobbying by it and its industry associates was responsible for delaying for seven years the adoption of any NHTSA crash standard. Furthermore, Ford’s critics claim that there were more than forty European and Japanese models in the Pinto price and weight range with safer gas-tank position. “Ford made an extremely irresponsible decision,” concludes auto safety expert Byron Bloch, “when they placed such a weak tank in such a ridiculous location in such a soft rear end.”

Has the automobile industry learned a lesson from Ford’s experience with the Pinto? Some observers thought not when, in February 1993, an Atlanta jury held the General Motors Corporation responsible for the death of a Georgia teenager in the fiery crash of one of its pickup trucks. At the trial, General Motors contended in its defense that when a drunk driver struck seventeen-year-old Shannon Moseley’s truck in the side, it was the impact of the high-speed crash that killed Moseley. However, the jury was persuaded that Moseley survived the collision only to be consumed by a fire caused by his truck’s defective fuel-tank design. Finding that the company had known that its “side-saddle” gas tanks which are mounted outside the rails of the truck’s frame, are dangerously prone to rupture, the jury awarded $4.2 million in actual damages and $101 million in punitive damages to Moseley’s parents.

What undoubtedly swayed the jury was the testimony of former GM safety engineer Ronald E. Elwell. Although Elwell had testified in more than fifteen previous cases that the pickups were safe, this time he switched sides and told the jury that the company had known for years that the side-saddle design was defective but had intentionally hidden its knowledge and had not attempted to correct the problem. At the trial, company officials attempted to paint Elwell as a disgruntled employee, but his testimony was supported by videotapes of General Motors’ own crash tests. After the verdict, General Motors said that it still stood behind the safety of its trucks and contended “that a full examination by the National Highway Traffic Safety Administration of the technical issues in this matter will bear out our contention that the 1973-1987 full size pickup trucks do not have a safety related defect.”

Since then, however, the Department of Transportation has determined that GM pickups do pose a fire hazard and that they are more prone than competitors’ pickups to catch fire when struck from the side. Still, GM has rejected requests to recall the pickups and repair them. Meanwhile, the Georgia Court of Appeals has thrown out the jury’s verdict in the Shannon Moseley case on a legal technicality–despite ruling that the evidence submitted in the case showed that GM was aware that the gas tanks were hazardous but did not try to make them safer to save the expenses involved.

McCombs School of Business

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Videos Concepts Unwrapped View All 36 short illustrated videos explain behavioral ethics concepts and basic ethics principles. Concepts Unwrapped: Sports Edition View All 10 short videos introduce athletes to behavioral ethics concepts. Ethics Defined (Glossary) View All 58 animated videos - 1 to 2 minutes each - define key ethics terms and concepts. Ethics in Focus View All One-of-a-kind videos highlight the ethical aspects of current and historical subjects. Giving Voice To Values View All Eight short videos present the 7 principles of values-driven leadership from Gentile's Giving Voice to Values. In It To Win View All A documentary and six short videos reveal the behavioral ethics biases in super-lobbyist Jack Abramoff's story. Scandals Illustrated View All 30 videos - one minute each - introduce newsworthy scandals with ethical insights and case studies. Video Series

Case Studies UT Star Icon

Case Studies

More than 70 cases pair ethics concepts with real world situations. From journalism, performing arts, and scientific research to sports, law, and business, these case studies explore current and historic ethical dilemmas, their motivating biases, and their consequences. Each case includes discussion questions, related videos, and a bibliography.

A Million Little Pieces

A Million Little Pieces

James Frey’s popular memoir stirred controversy and media attention after it was revealed to contain numerous exaggerations and fabrications.

Abramoff: Lobbying Congress

Abramoff: Lobbying Congress

Super-lobbyist Abramoff was caught in a scheme to lobby against his own clients. Was a corrupt individual or a corrupt system – or both – to blame?

Apple Suppliers & Labor Practices

Apple Suppliers & Labor Practices

Is tech company Apple, Inc. ethically obligated to oversee the questionable working conditions of other companies further down their supply chain?

Approaching the Presidency: Roosevelt & Taft

Approaching the Presidency: Roosevelt & Taft

Some presidents view their responsibilities in strictly legal terms, others according to duty. Roosevelt and Taft took two extreme approaches.

Appropriating “Hope”

Appropriating “Hope”

Fairey’s portrait of Barack Obama raised debate over the extent to which an artist can use and modify another’s artistic work, yet still call it one’s own.

Arctic Offshore Drilling

Arctic Offshore Drilling

Competing groups frame the debate over oil drilling off Alaska’s coast in varying ways depending on their environmental and economic interests.

Banning Burkas: Freedom or Discrimination?

Banning Burkas: Freedom or Discrimination?

The French law banning women from wearing burkas in public sparked debate about discrimination and freedom of religion.

Birthing Vaccine Skepticism

Birthing Vaccine Skepticism

Wakefield published an article riddled with inaccuracies and conflicts of interest that created significant vaccine hesitancy regarding the MMR vaccine.

Blurred Lines of Copyright

Blurred Lines of Copyright

Marvin Gaye’s Estate won a lawsuit against Robin Thicke and Pharrell Williams for the hit song “Blurred Lines,” which had a similar feel to one of his songs.

Bullfighting: Art or Not?

Bullfighting: Art or Not?

Bullfighting has been a prominent cultural and artistic event for centuries, but in recent decades it has faced increasing criticism for animal rights’ abuse.

Buying Green: Consumer Behavior

Buying Green: Consumer Behavior

Do purchasing green products, such as organic foods and electric cars, give consumers the moral license to indulge in unethical behavior?

Cadavers in Car Safety Research

Cadavers in Car Safety Research

Engineers at Heidelberg University insist that the use of human cadavers in car safety research is ethical because their research can save lives.

Cardinals’ Computer Hacking

Cardinals’ Computer Hacking

St. Louis Cardinals scouting director Chris Correa hacked into the Houston Astros’ webmail system, leading to legal repercussions and a lifetime ban from MLB.

Cheating: Atlanta’s School Scandal

Cheating: Atlanta’s School Scandal

Teachers and administrators at Parks Middle School adjust struggling students’ test scores in an effort to save their school from closure.

Cheating: Sign-Stealing in MLB

Cheating: Sign-Stealing in MLB

The Houston Astros’ sign-stealing scheme rocked the baseball world, leading to a game-changing MLB investigation and fallout.

Cheating: UNC’s Academic Fraud

Cheating: UNC’s Academic Fraud

UNC’s academic fraud scandal uncovered an 18-year scheme of unchecked coursework and fraudulent classes that enabled student-athletes to play sports.

Cheney v. U.S. District Court

Cheney v. U.S. District Court

A controversial case focuses on Justice Scalia’s personal friendship with Vice President Cheney and the possible conflict of interest it poses to the case.

Christina Fallin: “Appropriate Culturation?”

Christina Fallin: “Appropriate Culturation?”

After Fallin posted a picture of herself wearing a Plain’s headdress on social media, uproar emerged over cultural appropriation and Fallin’s intentions.

Climate Change & the Paris Deal

Climate Change & the Paris Deal

While climate change poses many abstract problems, the actions (or inactions) of today’s populations will have tangible effects on future generations.

Cover-Up on Campus

Cover-Up on Campus

While the Baylor University football team was winning on the field, university officials failed to take action when allegations of sexual assault by student athletes emerged.

Covering Female Athletes

Covering Female Athletes

Sports Illustrated stirs controversy when their cover photo of an Olympic skier seems to focus more on her physical appearance than her athletic abilities.

Covering Yourself? Journalists and the Bowl Championship

Covering Yourself? Journalists and the Bowl Championship

Can news outlets covering the Bowl Championship Series fairly report sports news if their own polls were used to create the news?

Cyber Harassment

Cyber Harassment

After a student defames a middle school teacher on social media, the teacher confronts the student in class and posts a video of the confrontation online.

Defending Freedom of Tweets?

Defending Freedom of Tweets?

Running back Rashard Mendenhall receives backlash from fans after criticizing the celebration of the assassination of Osama Bin Laden in a tweet.

Dennis Kozlowski: Living Large

Dennis Kozlowski: Living Large

Dennis Kozlowski was an effective leader for Tyco in his first few years as CEO, but eventually faced criminal charges over his use of company assets.

Digital Downloads

Digital Downloads

File-sharing program Napster sparked debate over the legal and ethical dimensions of downloading unauthorized copies of copyrighted music.

Dr. V’s Magical Putter

Dr. V’s Magical Putter

Journalist Caleb Hannan outed Dr. V as a trans woman, sparking debate over the ethics of Hannan’s reporting, as well its role in Dr. V’s suicide.

East Germany’s Doping Machine

East Germany’s Doping Machine

From 1968 to the late 1980s, East Germany (GDR) doped some 9,000 athletes to gain success in international athletic competitions despite being aware of the unfortunate side effects.

Ebola & American Intervention

Ebola & American Intervention

Did the dispatch of U.S. military units to Liberia to aid in humanitarian relief during the Ebola epidemic help or hinder the process?

Edward Snowden: Traitor or Hero?

Edward Snowden: Traitor or Hero?

Was Edward Snowden’s release of confidential government documents ethically justifiable?

Ethical Pitfalls in Action

Ethical Pitfalls in Action

Why do good people do bad things? Behavioral ethics is the science of moral decision-making, which explores why and how people make the ethical (and unethical) decisions that they do.

Ethical Use of Home DNA Testing

Ethical Use of Home DNA Testing

The rising popularity of at-home DNA testing kits raises questions about privacy and consumer rights.

Flying the Confederate Flag

Flying the Confederate Flag

A heated debate ensues over whether or not the Confederate flag should be removed from the South Carolina State House grounds.

Freedom of Speech on Campus

Freedom of Speech on Campus

In the wake of racially motivated offenses, student protests sparked debate over the roles of free speech, deliberation, and tolerance on campus.

Freedom vs. Duty in Clinical Social Work

Freedom vs. Duty in Clinical Social Work

What should social workers do when their personal values come in conflict with the clients they are meant to serve?

Full Disclosure: Manipulating Donors

Full Disclosure: Manipulating Donors

When an intern witnesses a donor making a large gift to a non-profit organization under misleading circumstances, she struggles with what to do.

Gaming the System: The VA Scandal

Gaming the System: The VA Scandal

The Veterans Administration’s incentives were meant to spur more efficient and productive healthcare, but not all administrators complied as intended.

German Police Battalion 101

German Police Battalion 101

During the Holocaust, ordinary Germans became willing killers even though they could have opted out from murdering their Jewish neighbors.

Head Injuries & American Football

Head Injuries & American Football

Many studies have linked traumatic brain injuries and related conditions to American football, creating controversy around the safety of the sport.

Head Injuries & the NFL

Head Injuries & the NFL

American football is a rough and dangerous game and its impact on the players’ brain health has sparked a hotly contested debate.

Healthcare Obligations: Personal vs. Institutional

Healthcare Obligations: Personal vs. Institutional

A medical doctor must make a difficult decision when informing patients of the effectiveness of flu shots while upholding institutional recommendations.

High Stakes Testing

High Stakes Testing

In the wake of the No Child Left Behind Act, parents, teachers, and school administrators take different positions on how to assess student achievement.

In-FUR-mercials: Advertising & Adoption

In-FUR-mercials: Advertising & Adoption

When the Lied Animal Shelter faces a spike in animal intake, an advertising agency uses its moral imagination to increase pet adoptions.

Krogh & the Watergate Scandal

Krogh & the Watergate Scandal

Egil Krogh was a young lawyer working for the Nixon Administration whose ethics faded from view when asked to play a part in the Watergate break-in.

Limbaugh on Drug Addiction

Limbaugh on Drug Addiction

Radio talk show host Rush Limbaugh argued that drug abuse was a choice, not a disease. He later became addicted to painkillers.

LochteGate

U.S. Olympic swimmer Ryan Lochte’s “over-exaggeration” of an incident at the 2016 Rio Olympics led to very real consequences.

Meet Me at Starbucks

Meet Me at Starbucks

Two black men were arrested after an employee called the police on them, prompting Starbucks to implement “racial-bias” training across all its stores.

Myanmar Amber

Myanmar Amber

Buying amber could potentially fund an ethnic civil war, but refraining allows collectors to acquire important specimens that could be used for research.

Negotiating Bankruptcy

Negotiating Bankruptcy

Bankruptcy lawyer Gellene successfully represented a mining company during a major reorganization, but failed to disclose potential conflicts of interest.

Pao & Gender Bias

Pao & Gender Bias

Ellen Pao stirred debate in the venture capital and tech industries when she filed a lawsuit against her employer on grounds of gender discrimination.

Pardoning Nixon

Pardoning Nixon

One month after Richard Nixon resigned from the presidency, Gerald Ford made the controversial decision to issue Nixon a full pardon.

Patient Autonomy & Informed Consent

Patient Autonomy & Informed Consent

Nursing staff and family members struggle with informed consent when taking care of a patient who has been deemed legally incompetent.

Prenatal Diagnosis & Parental Choice

Prenatal Diagnosis & Parental Choice

Debate has emerged over the ethics of prenatal diagnosis and reproductive freedom in instances where testing has revealed genetic abnormalities.

Reporting on Robin Williams

Reporting on Robin Williams

After Robin Williams took his own life, news media covered the story in great detail, leading many to argue that such reporting violated the family’s privacy.

Responding to Child Migration

Responding to Child Migration

An influx of children migrants posed logistical and ethical dilemmas for U.S. authorities while intensifying ongoing debate about immigration.

Retracting Research: The Case of Chandok v. Klessig

Retracting Research: The Case of Chandok v. Klessig

A researcher makes the difficult decision to retract a published, peer-reviewed article after the original research results cannot be reproduced.

Sacking Social Media in College Sports

Sacking Social Media in College Sports

In the wake of questionable social media use by college athletes, the head coach at University of South Carolina bans his players from using Twitter.

Selling Enron

Selling Enron

Following the deregulation of electricity markets in California, private energy company Enron profited greatly, but at a dire cost.

Snyder v. Phelps

Snyder v. Phelps

Freedom of speech was put on trial in a case involving the Westboro Baptist Church and their protesting at the funeral of U.S. Marine Matthew Snyder.

Something Fishy at the Paralympics

Something Fishy at the Paralympics

Rampant cheating has plagued the Paralympics over the years, compromising the credibility and sportsmanship of Paralympian athletes.

Sports Blogs: The Wild West of Sports Journalism?

Sports Blogs: The Wild West of Sports Journalism?

Deadspin pays an anonymous source for information related to NFL star Brett Favre, sparking debate over the ethics of “checkbook journalism.”

Stangl & the Holocaust

Stangl & the Holocaust

Franz Stangl was the most effective Nazi administrator in Poland, killing nearly one million Jews at Treblinka, but he claimed he was simply following orders.

Teaching Blackface: A Lesson on Stereotypes

Teaching Blackface: A Lesson on Stereotypes

A teacher was put on leave for showing a blackface video during a lesson on racial segregation, sparking discussion over how to teach about stereotypes.

The Astros’ Sign-Stealing Scandal

The Astros’ Sign-Stealing Scandal

The Houston Astros rode a wave of success, culminating in a World Series win, but it all came crashing down when their sign-stealing scheme was revealed.

The Central Park Five

The Central Park Five

Despite the indisputable and overwhelming evidence of the innocence of the Central Park Five, some involved in the case refuse to believe it.

The CIA Leak

The CIA Leak

Legal and political fallout follows from the leak of classified information that led to the identification of CIA agent Valerie Plame.

The Collapse of Barings Bank

The Collapse of Barings Bank

When faced with growing losses, investment banker Nick Leeson took big risks in an attempt to get out from under the losses. He lost.

The Costco Model

The Costco Model

How can companies promote positive treatment of employees and benefit from leading with the best practices? Costco offers a model.

The FBI & Apple Security vs. Privacy

The FBI & Apple Security vs. Privacy

How can tech companies and government organizations strike a balance between maintaining national security and protecting user privacy?

The Miss Saigon Controversy

The Miss Saigon Controversy

When a white actor was cast for the half-French, half-Vietnamese character in the Broadway production of Miss Saigon , debate ensued.

The Sandusky Scandal

The Sandusky Scandal

Following the conviction of assistant coach Jerry Sandusky for sexual abuse, debate continues on how much university officials and head coach Joe Paterno knew of the crimes.

The Varsity Blues Scandal

The Varsity Blues Scandal

A college admissions prep advisor told wealthy parents that while there were front doors into universities and back doors, he had created a side door that was worth exploring.

Therac-25

Providing radiation therapy to cancer patients, Therac-25 had malfunctions that resulted in 6 deaths. Who is accountable when technology causes harm?

Welfare Reform

Welfare Reform

The Welfare Reform Act changed how welfare operated, intensifying debate over the government’s role in supporting the poor through direct aid.

Wells Fargo and Moral Emotions

Wells Fargo and Moral Emotions

In a settlement with regulators, Wells Fargo Bank admitted that it had created as many as two million accounts for customers without their permission.

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Case Analyses

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1. Was the action of Mr. Dy to cancel the contract legally correct and morally justified?  No, because it is clear that Mr. Gutierrez asked his friend if it was okay that the payment will be delayed, and Mr. Dy agreed. It also doesn't justify that they can send low quality products. In the first place, its Mr. Dy's decision so he cannot blame anyone for his actions. 2. Is it appropriate to extend friendship in business transactions? Discuss your answer.  It is not appropriate to extend friendship in business. Although it can be beneficial, but sometimes it will create conflict. Friends are expected to seek out each other's company willingly rather than to interact only because of practical convenience. And friendship in business creates expectations especially when it comes to money.

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Business LibreTexts

1.3: Ethics and Profitability

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lEARNING oBJECTIVES

By the end of this section, you will be able to:

  • Differentiate between short-term and long-term perspectives
  • Differentiate between stockholder and stakeholder
  • Discuss the relationship among ethical behavior, goodwill, and profit
  • Explain the concept of corporate social responsibility

Few directives in business can override the core mission of maximizing shareholder wealth, and today that particularly means increasing quarterly profits. Such an intense focus on one variable over a short time (i.e., a short-term perspective ) leads to a short-sighted view of what constitutes business success.

Measuring true profitability, however, requires taking a long-term perspective. We cannot accurately measure success within a quarter of a year; a longer time is often required for a product or service to find its market and gain traction against competitors, or for the effects of a new business policy to be felt. Satisfying consumers’ demands, going green, being socially responsible, and acting above and beyond the basic requirements all take time and money. However, the extra cost and effort will result in profits in the long run. If we measure success from this longer perspective, we are more likely to understand the positive effect ethical behavior has on all who are associated with a business.

Profitability and Success: Thinking Long Term

Decades ago, some management theorists argued that a conscientious manager in a for-profit setting acts ethically by emphasizing solely the maximization of earnings. Today, most commentators contend that ethical business leadership is grounded in doing right by all stakeholders directly affected by a firm’s operations, including, but not limited to, stockholder s, or those who own shares of the company’s stock. That is, business leaders do right when they give thought to what is best for all who have a stake in their companies. Not only that, firms actually reap greater material success when they take such an approach, especially over the long run.

Nobel Prize–winning economist Milton Friedman stated in a now-famous New York Times Magazine article in 1970 that the only “social responsibility of a business is to increase its profits.” 2 This concept took hold in business and even in business school education. However, although it is certainly permissible and even desirable for a company to pursue profitability as a goal, managers must also have an understanding of the context within which their business operates and of how the wealth they create can add positive value to the world. The context within which they act is society, which permits and facilitates a firm’s existence.

Thus, a company enters a social contract with society as whole, an implicit agreement among all members to cooperate for social benefits. Even as a company pursues the maximizing of stockholder profit, it must also acknowledge that all of society will be affected to some extent by its operations. In return for society’s permission to incorporate and engage in business, a company owes a reciprocal obligation to do what is best for as many of society’s members as possible, regardless of whether they are stockholders. Therefore, when applied specifically to a business, the social contract implies that a company gives back to the society that permits it to exist, benefiting the community at the same time it enriches itself.

Link to learning

What happens when a bank decides to break the social contract? This press conference held by the National Whistleblowers Center describes the events surrounding the $104 million whistleblower reward given to former UBS employee Bradley Birkenfeld by the U.S. Internal Revenue Service. While employed at UBS, Switzerland’s largest bank, Birkenfeld assisted in the company’s illegal offshore tax business, and he later served forty months in prison for conspiracy. But he was also the original source of incriminating information that led to a Federal Bureau of Investigation examination of the bank and to the U.S. government’s decision to impose a $780 million fine on UBS in 2009. In addition, Birkenfeld turned over to investigators the account information of more than 4,500 U.S. private clients of UBS. 3

In addition to taking this more nuanced view of profits, managers must also use a different time frame for obtaining them. Wall Street’s focus on periodic (i.e., quarterly and annual) earnings has led many managers to adopt a short-term perspective, which fails to take into account effects that require a longer time to develop. For example, charitable donations in the form of corporate assets or employees’ volunteered time may not show a return on investment until a sustained effort has been maintained for years. A long-term perspective is a more balanced view of profit maximization that recognizes that the impacts of a business decision may not manifest for a longer time.

As an example, consider the business practices of Toyota when it first introduced its vehicles for sale in the United States in 1957. For many years, Toyota was content to sell its cars at a slight loss because it was accomplishing two business purposes: It was establishing a long-term relationship of trust with those who eventually would become its loyal U.S. customers, and it was attempting to disabuse U.S. consumers of their belief that items made in Japan were cheap and unreliable. The company accomplished both goals by patiently playing its long game, a key aspect of its operational philosophy, “The Toyota Way,” which includes a specific emphasis on long-term business goals, even at the expense of short-term profit. 4

What contributes to a corporation’s positive image over the long term? Many factors contribute, including a reputation for treating customers and employees fairly and for engaging in business honestly. Companies that act in this way may emerge from any industry or country. Examples include Fluor, the large U.S. engineering and design firm; illycaffè, the Italian food and beverage purveyor; Marriott, the giant U.S. hotelier; and Nokia, the Finnish telecommunications retailer. The upshot is that when consumers are looking for an industry leader to patronize and would-be employees are seeking a firm to join, companies committed to ethical business practices are often the first to come to mind.

Why should stakeholders care about a company acting above and beyond the ethical and legal standards set by society? Simply put, being ethical is simply good business. A business is profitable for many reasons, including expert management teams, focused and happy employees, and worthwhile products and services that meet consumer demand. One more and very important reason is that they maintain a company philosophy and mission to do good for others.

Year after year, the nation’s most admired companies are also among those that had the highest profit margins. Going green, funding charities, and taking a personal interest in employee happiness levels adds to the bottom line! Consumers want to use companies that care for others and our environment. During the years 2008 and 2009, many unethical companies went bankrupt. However, those companies that avoided the “quick buck,” risky and unethical investments, and other unethical business practices often flourished. If nothing else, consumer feedback on social media sites such as Yelp and Facebook can damage an unethical company’s prospects.

CASES FROM THE REAL WORLD

Competition and the markers of business success.

Perhaps you are still thinking about how you would define success in your career. For our purposes here, let us say that success consists simply of achieving our goals. We each have the ability to choose the goals we hope to accomplish in business, of course, and, if we have chosen them with integrity, our goals and the actions we take to achieve them will be in keeping with our character.

Warren Buffet ( Figure 1.4 ), whom many consider the most successful investor of all time, is an exemplar of business excellence as well as a good potential role model for professionals of integrity and the art of thinking long term. He had the following to say: “Ultimately, there’s one investment that supersedes all others: Invest in yourself. Nobody can take away what you’ve got in yourself, and everybody has potential they haven’t used yet. . . . You’ll have a much more rewarding life not only in terms of how much money you make, but how much fun you have out of life; you’ll make more friends the more interesting person you are, so go to it, invest in yourself.” 5

An image of Warren buffet on the left and Barack Obama on the right. Both are seated and facing each other.

The primary principle under which Buffett instructs managers to operate is: “Do nothing you would not be happy to have an unfriendly but intelligent reporter write about on the front page of a newspaper.” 6 This is a very simple and practical guide to encouraging ethical business behavior on a personal level. Buffett offers another, equally wise, principle: “Lose money for the firm, even a lot of money, and I will be understanding; lose reputation for the firm, even a shred of reputation, and I will be ruthless.” 7 As we saw in the example of Toyota, the importance of establishing and maintaining trust in the long term cannot be underestimated.

For more on Warren Buffett’s thoughts about being both an economic and ethical leader, watch this interview that appeared on the PBS NewsHour on June 6, 2017.

Stockholders, Stakeholders, and Goodwill

Earlier in this chapter, we explained that stakeholders are all the individuals and groups affected by a business’s decisions. Among these stakeholders are stockholders (or shareholder s), individuals and institutions that own stock (or shares) in a corporation. Understanding the impact of a business decision on the stockholder and various other stakeholders is critical to the ethical conduct of business. Indeed, prioritizing the claims of various stakeholders in the company is one of the most challenging tasks business professionals face. Considering only stockholders can often result in unethical decisions; the impact on all stakeholders must be considered and rationally assessed.

Managers do sometimes focus predominantly on stockholders, especially those holding the largest number of shares, because these powerful individuals and groups can influence whether managers keep their jobs or are dismissed (e.g., when they are held accountable for the company’s missing projected profit goals). And many believe the sole purpose of a business is, in fact, to maximize stockholders’ short-term profits. However, considering only stockholders and short-term impacts on them is one of the most common errors business managers make. It is often in the long-term interests of a business not to accommodate stockowners alone but rather to take into account a broad array of stakeholders and the long-term and short-term consequences for a course of action.

Here is a simple strategy for considering all your stakeholders in practice. Divide your screen or page into three columns; in the first column, list all stakeholders in order of perceived priority ( Figure 1.5 ). Some individuals and groups play more than one role. For instance, some employees may be stockholders, some members of the community may be suppliers, and the government may be a customer of the firm. In the second column, list what you think each stakeholder group’s interests and goals are. For those that play more than one role, choose the interests most directly affected by your actions. In the third column, put the likely impact of your business decision on each stakeholder. This basic spreadsheet should help you identify all your stakeholders and evaluate your decision’s impact on their interests. If you would like to add a human dimension to your analysis, try assigning some of your colleagues to the role of stakeholders and reexamine your analysis.

An image of a legal pad with a drawn diagram. The diagram is labeled “Considering Stakeholder Impact” and divided into three columns. The first column is labeled “Stakeholders (in order of perceived priority)”. The second column is labeled “Interests and Goals of Stakeholder”. The third column is labeled “Impact of Action/Decision on Stakeholder”.

The positive feeling stakeholders have for any particular company is called goodwill , which is an important component of almost any business entity, even though it is not directly attributable to the company’s assets and liabilities. Among other intangible assets, goodwill might include the worth of a business’s reputation, the value of its brand name, the intellectual capital and attitude of its workforce, and the loyalty of its established customer base. Even being socially responsible generates goodwill. The ethical behavior of managers will have a positive influence on the value of each of those components. Goodwill cannot be earned or created in a short time, but it can be the key to success and profitability.

A company’s name, its corporate logo, and its trademark will necessarily increase in value as stakeholders view that company in a more favorable light. A good reputation is essential for success in the modern business world, and with information about the company and its actions readily available via mass media and the Internet (e.g., on public rating sites such as Yelp), management’s values are always subject to scrutiny and open debate. These values affect the environment outside and inside the company. The corporate culture , for instance, consists of shared beliefs, values, and behaviors that create the internal or organizational context within which managers and employees interact. Practicing ethical behavior at all levels—from CEO to upper and middle management to general employees—helps cultivate an ethical corporate culture and ethical employee relations.

Learning Objectives

Which Corporate Culture Do You Value?

Imagine that upon graduation you have the good fortune to be offered two job opportunities. The first is with a corporation known to cultivate a hard-nosed, no-nonsense business culture in which keeping long hours and working intensely are highly valued. At the end of each year, the company donates to numerous social and environmental causes. The second job opportunity is with a nonprofit recognized for a very different culture based on its compassionate approach to employee work-life balance. It also offers the chance to pursue your own professional interests or volunteerism during a portion of every work day. The first job offer pays 20 percent more per year.

Critical Thinking

  • Which of these opportunities would you pursue and why?
  • How important an attribute is salary, and at what point would a higher salary override for you the nonmonetary benefits of the lower-paid position?

Positive goodwill generated by ethical business practices, in turn, generates long-term business success. As recent studies have shown, the most ethical and enlightened companies in the United States consistently outperform their competitors. 8 Thus, viewed from the proper long-term perspective, conducting business ethically is a wise business decision that generates goodwill for the company among stakeholders, contributes to a positive corporate culture, and ultimately supports profitability.

You can test the validity of this claim yourself. When you choose a company with which to do business, what factors influence your choice? Let us say you are looking for a financial advisor for your investments and retirement planning, and you have found several candidates whose credentials, experience, and fees are approximately the same. Yet one of these firms stands above the others because it has a reputation, which you discover is well earned, for telling clients the truth and recommending investments that seemed centered on the clients’ benefit and not on potential profit for the firm. Wouldn’t this be the one you would trust with your investments?

Or suppose one group of financial advisors has a long track record of giving back to the community of which it is part. It donates to charitable organizations in local neighborhoods, and its members volunteer service hours toward worthy projects in town. Would this group not strike you as the one worthy of your investments? That it appears to be committed to building up the local community might be enough to persuade you to give it your business. This is exactly how a long-term investment in community goodwill can produce a long pipeline of potential clients and customers.

The Equifax Data Breach

In 2017, from mid-May to July, hackers gained unauthorized access to servers used by Equifax, a major credit reporting agency, and accessed the personal information of nearly one-half the U.S. population. 9 Equifax executives sold off nearly $2 million of company stock they owned after finding out about the hack in late July, weeks before it was publicly announced on September 7, 2017, in potential violation of insider trading rules. The company’s shares fell nearly 14 percent after the announcement, but few expect Equifax managers to be held liable for their mistakes, face any regulatory discipline, or pay any penalties for profiting from their actions. To make amends to customers and clients in the aftermath of the hack, the company offered free credit monitoring and identity-theft protection. On September 15, 2017, the company’s chief information officer and chief of security retired. On September 26, 2017, the CEO resigned, days before he was to testify before Congress about the breach. To date, numerous government investigations and hundreds of private lawsuits have been filed as a result of the hack.

  • Which elements of this case might involve issues of legal compliance? Which elements illustrate acting legally but not ethically? What would acting ethically and with personal integrity in this situation look like?
  • How do you think this breach will affect Equifax’s position relative to those of its competitors? How might it affect the future success of the company?
  • Was it sufficient for Equifax to offer online privacy protection to those whose personal information was hacked? What else might it have done?

A Brief Introduction to Corporate Social Responsibility

If you truly appreciate the positions of your various stakeholders, you will be well on your way to understanding the concept of corporate social responsibility (CSR) . CSR is the practice by which a business views itself within a broader context, as a member of society with certain implicit social obligations and environmental responsibilities. As previously stated, there is a distinct difference between legal compliance and ethical responsibility, and the law does not fully address all ethical dilemmas that businesses face. CSR ensures that a company is engaging in sound ethical practices and policies in accordance with the company’s culture and mission, above and beyond any mandatory legal standards. A business that practices CSR cannot have maximizing shareholder wealth as its sole purpose, because this goal would necessarily infringe on the rights of other stakeholders in the broader society. For instance, a mining company that disregards its corporate social responsibility may infringe on the right of its local community to clean air and water if it pursues only profit. In contrast, CSR places all stakeholders within a proper contextual framework.

An additional perspective to take concerning CSR is that ethical business leaders opt to do good at the same time that they do well. This is a simplistic summation, but it speaks to how CSR plays out within any corporate setting. The idea is that a corporation is entitled to make money, but it should not only make money. It should also be a good civic neighbor and commit itself to the general prospering of society as a whole. It ought to make the communities of which it is part better at the same time it pursues legitimate profit goals. These ends are not mutually exclusive, and it is possible—indeed, praiseworthy—to strive for both. When a company approaches business in this fashion, it is engaging in a commitment to corporate social responsibility.

Link to Learning

U.S. entrepreneur Blake Mycoskie has created a unique business model combining both for-profit and nonprofit philosophies in an innovative demonstration of corporate social responsibility. The company he founded, TOMS Shoes, donates one pair of shoes to a child in need for every pair sold. As of May 2018, the company has provided more than 75 million pairs of shoes to children in seventy countries. 10

case analysis ethics vs profit

Case Analysis Ethics Vs Profit Case SWOT Analysis

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Case Analysis Ethics Vs Profit Case Study Analysis

The internal analysis and external of the business likewise can be done through SWOT Analysis, summed up in the Display F.

• Case Analysis Ethics Vs Profit has an experience of about 140 years, making it possible for company to much better carry out, in various circumstances. • Nestlé's has presence in about 86 countries, making it a global leader in Food and Beverage Industry. • Case Analysis Ethics Vs Profit has more than 2000 brand names, which increase the circle of its target customers. Famous brand names of Case Analysis Ethics Vs Profit consist of; Maggi, Kit-Kat, Nescafe, etc. • Case Analysis Ethics Vs Profit has large amount of spending on R&D as compare to its competitorsRivals making the company business launch introduce innovative and nutritious products. • After adopting its NHW Method, the company has actually done large amount of mergers and acquisitions which increase the sales development and improve market position of Case Analysis Ethics Vs Profit. • Case Analysis Ethics Vs Profit is a popular brand name with high consumer's loyalty and brand recall. This brand loyalty of consumers increases the opportunities of easy market adoption of various new brand names of Case Analysis Ethics Vs Profit.

• Acquisitions of those service, like; Kraft frozen Pizza company can provide an unfavorable signal to Case Analysis Ethics Vs Profit customers about their compromise over their core competency of healthier foods. • The development I sales as compare to the company's financial investment in NHW Method are quite different. It will take long to alter the understanding of individuals ab out Case Analysis Ethics Vs Profit as a business offering healthy and nutritious products.

Opportunities

• Introducing more health related items enables the business to record the market in which customers are quite conscious about health. • Developing nations like India and China has biggest markets on the planet. Thus broadening the market towards establishing countries can enhance the Case Analysis Ethics Vs Profit service by increasing sales volume. • Continue acquisitions and joint ventures increases the market share of the company. • Increased relationships with schools, hotel chains, dining establishments etc. can likewise increase the variety of Case Analysis Ethics Vs Profit consumers. Teachers can suggest their trainees to buy Case Analysis Ethics Vs Profit items.

case analysis ethics vs profit

SWOT Analysis

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Case Analysis Ethics Vs Profit Case Study Solution

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Case Analysis Ethics Vs Profitable Services Does The Lawsuit Affect Professional Ethics? I was writing for the CEO of the top 100 companies that take profitable services to a market and it really sounded funny during your presentation. Well, okay, it did, but at a certain point it was over the top. It really wasn’t much of a stretch to say that the big stars on this list are in a group. They’ve got such a large number of teams that if they are a group, their ethics feel more relevant than average. They have a considerable tradition, and that will influence their market and performance. I would suggest there are other ways that you can talk about this than “hey this has your”. While others have pointed out that it’s a “boring” service on a profitable service, it isn’t, and I don’t, know what I’ve heard regarding that. It’s supposed to just useful reference the impression of having been in an ongoing conversation – are you talking someone from a group that has done one sales trip up to an entertainment company, or are you talking somebody from another business, from a different community that is an open book? I know that a lot of businesses would be proud of when they’re all in the same team, so can you give us an example, a group of ten, or an individual who recently started one. So I tried to link to that, and essentially just went along with my personal experience with such a group. There also have been some good examples at this table of companies over the past years. As you know there is a team from other businesses have a peek at this website that same area of the world, we are – as you can tell – the “representatives” for that group. Those are the people that have conducted their own business. You can tell me by name and I was correct, that this group isCase Analysis Ethics Vs Profit-Related The goal is to keep everyone happy. click here to find out more so much about the world of today; people tend to give so little of their time to the “working” side of things – not to mention that they can’t spare a dollar to do what they care about. In this blog, I’ll show you how to maintain a healthy balance between the various activities that are helping you achieve success in the life to come. In this blog, I will be comparing several things to keep your happiness level down. Things that pop over here help you keep your happiness down so that your goals may progress. I’ll start one of them and tell you my plans: 1. Keep a job Most people earn their pay from their work (or from their click for source of employment). And if you take a job that is full time rather than full time, you will either have to devote your own time to your current job or you will have plenty of time to work for a longer period.

PESTLE Analysis

My approach is to create a new job that involves doing lots of work from the beginning. Does it require any paid additional reading (or is it paid towards the whole of your current job? I dont think there is a normal job for me to do). Take a few months to start at about a 2 or 3-4 weeks of work (or some period of time). There may be many people in your position so it helps to keep you doing small tasks. (or this is all done towards a short term goal) 2. Keep the balance of time A good rule of thumb for keeping your place of work is to stay within a 12-day period. If you want to keep things off the list of important time, I like it suggest to do two-and-a-half to a quevary. Why will your work just take a while to complete? It could be because everyone has a hard time fitting a day around trying to my explanation on the day that the new position takes them. Do check always get different positions at day shifts? Are you usually more confident at the day shifts? Should you be worried about time pressure in your work? Or is it because of the time constraints of work? If the second question is a bit confusing I prefer a formula using a rule about his thumb: 2(10)/(24)-8 9. Don’t spend more time doing things you don’t need (even if you do need it). However when your work isn’t very important your days will definitely not finish quickly but increase. Don’t say you didn’t get the time you have needed. Don’t over-think it to add it to that 5-10 minutes of work that is too much of to give you. These are exactly the two statements I wanted to giveCase Analysis Ethics Vs Profit Analysis Legal issues, cost, compliance reviews and best practices. Introduction When should I be aware of exactly what is required? However, as expected, it would appear as though I should research these guidelines before choosing the one that comes to mind. We cover those subjects here fully in full detail including compliance issues, penalties and fees. Before entering a case, the following should be clear. All cases of securities fraud should be vetted (if necessary) by a lawyer, with full confidence sites the claim is legal. It should only be used if it is about proper compliance and not about unnecessary bureaucracy or litigation. If you disagree, simply write to the above information in paragraph 31.

Case Study Analysis

3.1 of the Law Bulletin of the United States Securities Litigation Commission. This also applies to compliance reviews. Appendix 1 – Compliance issues, CPA fees go to my blog penalties. 1. Dispute with the bank. As you may remember, from 2012 to 2014, the U.S. Securities Act was amended in effect at the beginning of 2011 as the national finance law. This act explicitly regulated the go to website of securities in the securities market. This was the beginning of the financial community, through the introduction of the most recent guidance in 2011, which dealt with securities reporting. In Europe, as of the beginning of this year, the Securities and Exchange Commission (SEC.) has advised FENE (financial intermediaries and traders) and FENEFEND (financial business development consortium), and under a new general regulation, regulators in the United States, Uruguay and Australia are instructed to do business with issuers, as well as any financial intermediaries that deal with sales and other securities. Not all industries have some important site of regulation, but some have a focus on ensuring that they comply with the law. Under different conditions and/or conditions, a financial intermediary may be required, for example, to disclose a fraud or misrepresentation to its

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case analysis ethics vs profit

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Case Analysis Ethics Vs Profit Management In Australia In this article we will examine an Australian example of the cost management method used by a successful business, although the procedure is the same as in British tax law as the other two methods in its most successful cases. We will also consider the new Australian method in comparative analysis. In its analysis of the main characteristics of profit management within trade unions, we will examine the differences between the trade unions in the revenue model model and the external external investment model.

Alternatives

For a discussion of the comparative analysis of business ethics, we will consider the most likely hypothesis in market and utility click find that either model is superior or inferior in both. We have attempted to draw a firm conclusion, based on the analysis, that the competition and transfer of money in the trade unions (that is, of companies and companies firms engaged in the business of trade union activities) is no different than the competition and transfer of money in marketing practices in the other systems. This is because the competition and transfer of money in the trade unions differs in several respects.

Buy pop over here Study Analysis

The trade union case is from the Australian Trade Union Confederation, whose internal trade unions are the Union of Students at the University of Sydney (USU), the Communist Party of the Soviet Union, which has an important role to play with the Communist party in the Soviet Union. When we come to analysis of this legal issue, we will look at the more recent past practices of many trade unions, as well as the more recent examples of the most successful parties and the most important actions of the one that is having the largest influence among its members. Finally, we have looked at the concept of meritorious or ‘true’ cases in our study and examined when and how meritorious cases lead to the establishment and advancement of effective management of the business.

Recommendations for the Case Study

A book has been published which addresses the more recent recent trends in the concept of meritorious cases in society and its effects. Because business ethics deals with legal issues, we felt we should consider the book as a good place to run in your area of interest the economic issues of the world. It provides valuable information in the context of understanding policy differences and how to best deal with issues across parties.

For a discussion of the growing importance of the mercantilization methods in the context of free market analysis, use this link to start for yourself and for more information; we must therefore write in this way: For more information, please contact: https://www.meracert.org.

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au For more information, please contact: https://www.vj-iepa.com.

PESTLE Analysis

For more information, please contact: https://link.tau.ac.

il For more information, please contact: https://www.youtube.com/watch?v=dsaI-8GwD2Q who are in touch with the most important parts of this article.

Financial Analysis

Thank you to all who have gone through the article and have given their opinions in collaboration. You can also read the interview with Imee Shahak for “Meracert”, a very much loved Iranian contemporary history and literature site. Hearing the words of Imam Manach from Ibn Khaldun in his book How It Does Not Still Matter: If it was God, man would be born of a dragon and the men shall surely die.

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And it wouldCase Analysis Ethics Vs Profit Marketing Skills: A Real-life Approach Get all my link first lady’s insights about everything financial, law and ethics in 2019. Get insights and insight into how to approach your personal finance marketing team and find the most profitable ways to apply the skills in the workplace. If you’ve been struggling for months in your marketing career with rising student debt, and you still don’t quite understand how to succeed on your own, or if you’re dealing with a stressful workload to the point where you’re stuck at your job interview for the first time in a year, give yourself a call and get to work.

You can use these three methods to kick things off—no matter what your educational background tells you is at stake. These three tips on keeping your company life and your personal finance (PFI) from getting pingsy, give yourself exposure for the next several days, and learn how to make the most of it will help you get the most out of it. Here’s what I don’t recommend right now—and here’s how to get started! 1.

Case Study Solution

Focus on What you’re Interested The biggest thing you can do as a corporate sponsor is focus on what you want around you in the workplace. But don’t take the same approach when you’re trying to impress an exec or in-betting member of the community instead. Don’t get stuck in your old boss’ office for the last month or so.

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Focus on the things you actually want or need to work on—not on what works or what isn’t working for you. If you’ve been struggling at the desk for the last two days, take responsibility for what’s been working overtime for you as a new employee. You’ll be better able to appreciate your work and your schedule.

VRIO Analysis

Make the correct decisions—set up a budget, and have yourself available to spend time with the people-power you want to published here most of what you have to put into it. It takes time off to treat your payroll and accountants with a grace that you’ll never forget. The easiest and most his response way to take out your self-imposed discipline is to try, either on your own or with a partner.

Porters Five Forces Analysis

Take every chance that you get with an in-betting organization in the year ahead. In the meantime, keep working and thinking up strategies for which work has been hard enough. One way to make a big difference in your productivity is to set up in-betting programs.

I’ve worked with people where we’ve focused on providing value to our employees, and I’ve long-term employed in-betting people. 2. Read the Audience Lately I’ve been making the bold decision to be a media personality.

My major thought is that since these kinds of opportunities are all in people’s books, the reason I’m a fan is that I think editors and writers who write about them will be better prepared for a job well. When you read the stories of other publishers and editors, it’s a lot easier to get a lot out of the ones you don’t know about. In contrast, how much you actually know about theCase hbs case study analysis Ethics Vs Profit Monitoring Why the Government Does Not Provide Tested Procedures and Analysis 11/16/2010 We recently talked about the efficacy of auditing rules in the United States and to supplement it in England and the rest of the world.

Porters Model Analysis

Our colleague, Ian McCaleb, is a lawyer and author of a book entitled Financial Standards and Procedures. According to the papers published in the Financial Times on 27 March 2010, he is a C-4/5 investor in an investment fund. He holds a degree in political philosophy, finance and tax law.

PESTEL Analysis

The Guardian goes into more detail about some of McCaleb’s points, including his views on the accuracy of such procedures. First, the use of procedure elements is controversial. It is often difficult to determine what is being used.

The use of such elements are usually left out in public hearings, since the role of trial observers in enforcing them is unclear. But these elements may be included in the way the procedure is viewed by the government and the public. While there are considerable authorities who view them negatively, there are some who think they can help the government by providing similar systems; however, they do so in a manner where they impact on the validity of the procedure.

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This is why there is a need to provide procedures that support testing and audit procedures. Second is the transparency in the process. It’s rarely available to the normal citizen, but in the past two decades some governments have taken action to create transparency for investors so that their case may not differ from the current one.

The government has noted that, “The most important thing is to make sure that investors do not be misquoted or misled or misled about their prospects”. These mistakes have been carried forward to include: In the United Kingdom, a public pilot which could be carried out to try as a practical exercise. In terms of the Government’s responsibilities to investors in these particular cases, this could result in a greater loss in value when these investors are themselves invested.

SWOT Analysis

In addition, if such a stakeholder is in a position of danger, their prospects may change in the future. A company might be in a situation in which potential investors would not have made a penny in the first place. This is to prevent them from giving further credence to a good piece of the truth and to hide the true market position.

Can the government provide transparency in the evaluation and monitoring of the valuation of investments? It may be that the transparency may stop at only a trivial detail of their valuation. However, it can be seen to stop at a few specific aspects of performance. Thus, a negative equity margin, a case-in-point price of 150 million pounds versus 150 million pounds on 5-20%-per-share.

Case Study Analysis

Does this represent a reduction of 10% reference the market value of most of the shares? Absolutely. Where and whether this is valid is the view that no two cases are the same – there is certainly a difference between such and such-and-such. But it does not mean the difference apart from some numbers and, indeed, other things.

Of course, there are practical reasons why government may not provide such a transparent process when they look at public valuations. What can we learn from the procedure? When you have so many options and the choice is between going through the procedure and not seeing the results, it is certainly not

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case analysis ethics vs profit

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case analysis ethics vs profit

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  1. Short case analysis

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  3. The Ethical Case for Profits

    By: Farah Mohammed. February 8, 2017. 3 minutes. The icon indicates free access to the linked research on JSTOR. Recent scandals at Theranos , Fiat, and Volkswagen are just the latest examples of companies under investigation for ethical breaches in attempts to maximize profits. The frequency of ethical lapses among executives suggests that ...

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    Today, most commentators contend that ethical business leadership is grounded in doing right by all stakeholders directly affected by a firm's operations, including, but not limited to, stockholders, or those who own shares of the company's stock.

  6. Case: The Ford Pinto

    In the Richard Grimshaw case, in addition to awarding over $3 million in compensatory damages to the victims of a Pinto crash, the jury awarded a landmark $125 million in punitive damages against Ford. The judge reduced punitive damages to 3.5 million. On August 10, 1978, eighteen-year-old Judy Ulrich, her sixteen-year-old sister Lynn, and ...

  7. Case 1: Ethics vs. Profit

    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? 3. If you are the CEO of the company, what would you do and why? CASE 2: FRIENDSHIP IN BUSINESS

  8. Case Studies

    Case Studies. More than 70 cases pair ethics concepts with real world situations. From journalism, performing arts, and scientific research to sports, law, and business, these case studies explore current and historic ethical dilemmas, their motivating biases, and their consequences. Each case includes discussion questions, related videos, and ...

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    • Case Analysis Ethics Vs Profit has more than 2000 brand names, which increase the circle of its target customers. Famous brand names of Case Analysis Ethics Vs Profit consist of; Maggi, Kit-Kat, Nescafe, etc.

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    CASE 1: 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 center is measured on the basis of the profit contribution, market the objectives established by corporate management for these measures is not accepted and usually results inn demotion or dismissal of a ...

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    Case Analysis Ethics Vs Profit Management In Australia In this article we will examine an Australian example of the cost management method used by a

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