American Products corporation participates in a highly
competitive industry. In order to meet this competition and achieve profit
goals, the company has chosen the decentralized form of organization. Each
manager of a decentralized investment center is measured on the basis of profit
contribution, market penetration, and return on investment. Failure to meet the
objectives established by corporate management for these measures has not been
acceptable and usually has resulted in demotion or dismissal of an investment
An anonymous survey of managers in the company revealed that
the managers feel the pressure to compromise their personal ethical standards
to achieve the corporate objectives. For example, at certain plant locations
there was pressure to reduce quality control to a level which could not assure
that all unsafe products would be rejected. Also, sales personnel were
encouraged to use questionable sales tactics to obtain orders, including gifts
and other incentives to purchasing agents.
The chief executive officer is disturbed by the survey
findings. In his opinion, such behavior cannot be condoned by the company. He
concludes that the company should do something about this problem.
(a) Who are the
stakeholders (the affected parties) in this situation?
(b) Identify the
ethical implications, conflicts, or dilemmas in the above described situation.
(c) What might the
company do to reduce the pressures on managers and decrease the ethical