Reference no: EM132922623

Case Study Analysis:

Ethics vs. Profit

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

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

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

Questions: (Max of 5 sentence each)

1. What are the ethical problems mentioned in this particular case and what are the probable causes of these problems?
2. Is it all right 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?