Reference no: EM131567456

Please help me with the following.

Another Ethical Dilemma

George Wilson, the operations manager of the CornCo plant in Phoenix, Arizona, has a dilemma. He is in charge of buying corn and producing chips marketed by CornCo in the US and elsewhere. Several months ago, George's supervisor, CornCo's vice president, Jake Lamont, called to tell him that corn futures were on the rise, which would ultimately increase the overall costs of production. In addition, a new company called Abco Snack Foods had begun marketing chips at competitive prices in CornCo's market area. Abco had already shown signs of eroding CornCo's market share. Jake was concerned that George's production costs would not be competitive with Abco's--hence profitability would decline. Jake had already asked George to find ways to cut costs. If he couldn't, Jake said, then layoffs would begin.

George scoured the Midwest looking for cheap corn and finally found some. But when the rail cars started coming in, one of the company's testers reported the presence of aflatoxin--a naturally occurring carcinogen that induces liver cancer in lab animals. Once corn has been ground into corn meal, however, the aflatoxin is virtually impossible to detect. George knew that by blending the contaminated corn with uncontaminated corn he could reduce the aflatoxin concentrations in the final product, which he had heard other managers sometimes did. According to U.S. law, corn contaminated with aflatoxin cannot be used for edible products sold in the U.S., and fines are to be imposed for such use. So far, no one has been convicted. No law, however, prohibits shipping the contaminated corn to other countries.

George knows that, because of his competitors' prices, if he doesn't sell the contaminated corn, his production costs will be too high. When he spoke to Jake, Jake's response was, "So how much of the corn coming in is contaminated?"

"It's about 10%," replied George. "They probably knew that the corn was contaminated. That's why we're getting good deals on it."

Jake thought for a moment and said, "George, call the suspected grain elevators, complain to them, and demand a 50% discount. If they agree, then buy all they have."

"But if we do, the blends will just increase the contamination!" said George.

"That's okay. When the blends start getting high, we'll stop shipping into the U.S. market and go foreign," Jake told him. "Remember, there are no fines for contaminated corn in Mexico."

George learned that one other person, Lee Garcia, an operations manager for the breakfast cereals division, had sold the contaminated corn once.

"Yeah, so what about it? I've got a family to support and house payments. For me there was no alternative. I had to do it or face getting laid off," Lee said.

As George thought about the problem, word spread about his alternatives. The following notes appeared in the plant suggestion box: 

Use the corn, or we will get laid off!

Process it and ship it off to Mexico!

It's just wrong to use this corn!

When George balked at Jake's proposed solution, Jake said, "George, I understand your situation. I was there once--just like you. But you've got to look at the bigger picture. Hundreds of workers would be out of a job. Sure, the FDA says that aflatoxin is bad, but we're talking rats eating their weight in this stuff. What if it does get detected--so what? The company gets a fine, the FA tester gets reprimanded for screwing up, and it's back to business as usual."

"Is that all that will happen?" asked George.

"Of course, don't worry," replied Jake.

But George's signature, not Jake's, was on the receipts for the contaminated rail cars. "So if this happens, at what aflatoxin percentage do I stop, and will you sign off on this?" asked George.

"Look," said Jake, "that's up to you. Remember that the more corn chips that are produced for the U.S. market, the more profit the company gets and the higher your bonus. As for me signing off on this, I'm shocked that you would even suggest something like that. George, you're the operations manager. You're the one who's responsible for what happens in the plant. It just isn't done that way at CornCo. But whatever you do, you had better do it in the next several hours because, as I see it, the contaminated corn has to be blended with something, and the longer you wait, the higher the percentages will get."

• Find and discuss all of the ethical issues in this scenario.
• Discuss the corporate ethical issue of providing questionable products to other markets.
• Discuss the suggestions submitted in the suggestion box in light of the decision that George must make. Should the suggestions have an influence?
• Identify the pressures that have caused the ethical and legal issues in this scenario to arise.