Video Case Study
Each week, you will be asked to respond to the prompt or prompts in the discussion forum. Your initial post should be 300 words in length, you should respond to two additional posts from your peers.
For this discussion please respond to BOTH of the following questions:
From your readings in Chapter 6, please review the Video Case Study on Theo Chocolate Company. After your review of the video case study, please post a summary on your thoughts about the case study. Please correlate your thoughts to the readings from the chapter and one peer-reviewed article from the GU library.
Please provide 1-2 examples to support your viewpoints that other learners will be able to assess and debate within our weekly discussion forum.
From your weekly readings, please review the Case Study on CVS: “Fired Up” about Social Responsibility. After your review of the video case study, please post a summary on your thoughts about the case study. Please correlate your thoughts to the readings from the chapter and one your personal ethics assessment results. You are encouraged to share some specific examples of your assessment results to support your opinion. However, if you would like to keep your results private, you can speak to your results in general terms.
Please provide 1-2 examples to support your viewpoints that other learners will be able to assess and debate within our weekly discussion forum.
Chapter 06: Video Case – Theo Chocolate Company
>> It’s rich, it’s velvety, it’s almost sinful. But creating the perfect bar at this Seattle chocolate factory is about more than just the ingredients on the wrapper.
>> I feel that everybody in the whole supply chain, all he way back to the farmers, should be better off as a result of this delicious food that we use to share with the people we love.
>> So these are these are the beans.
>> These are the beans; this is cacao.
>> At Theo Chocolate, owner Joe Whinney pays farmers two to three times more than the going rate to buy this cacao from the Democratic Republic of Congo, or DRC.
>> Where does cocoa come from? It’s coming from farmers in Africa, and in Indonesia, and in Central and South America.
>> Whinney believes that Americans will be willing to pay more for chocolate if they know that, in turn, impoverished farmers will earn more.
>> Of all places, why Congo
>> Why Congo? Well, it was really Ben Affleck’s fault.
>> Yes. That Ben Affleck.
>> Like this?
>> Like — yeah. See that’s really well fermented, this isn’t.
>> Earlier this year, we joined Ben Affleck and Joe Whinney on a trip to the DRC. Cacao can only grow within a narrow climate zone close to the equator. In 2009, Affleck started a charity called Eastern Congo Initiative to spur economic development in this war-torn region. Five million people have died here due to decades of conflict.
>> As I was reading and I just sort of stumbled upon some of the statistics, and I was struck not only by the numbers, but by the fact that, you know, I hadn’t heard about it.
>> So Affleck decided to use his celebrity as a sort of currency to attract investment. He led a small group of philanthropists, protected by armed guards, through jungles where cacao trees thrived and farmers struggled.
>> The cocoa industry here has potential if the value can be increased.
>> For the last two years, Affleck’s Eastern Congo Initiative has worked with Whinney and local groups to train farmers to improve the crop. Cacao grows in these greenish-yellow pods that are cracked open to harvest. It’s quite slimy, huh?
>> It is. But when you suck on it, it’s absolutely delicious.
>> It doesn’t taste like chocolate at all.
>> Not at all, does it.
>> It tastes like passion fruit or something.
>> Theo Chocolate has now committed to buy 340 tons of cacao from the DRC —
>> This is really good quality.
>> — creating a dependable export market.
>> We have brought these people together. They’re selling to a chocolate company in the United States. Those markets had been completely closed off to them in the past. And it’s not just aid, it’s investment.
>> We have security guards around us. There have been attacks recently. This is a tough place to do business.
>> It is, but that’s also a place that really needs this kind of business.
>> Business in Seattle is a little sweeter these days. Theo is raising money for charity with its $5 Congo bar, which may make indulging in this piece of chocolate —
>> It’s delicious, really.
>> — just a little less sinful.
>> You’ve never tasted chocolate?
>> We’re trying to make sure that there’s a connection between the farmer and the consumer, because when they care about each other, that’s when real change starts to happen.
>> What do you think?
>> It’s okay.
>> It’s okay? Just okay?
[ Laughter ]
Chapter 06: Individual Factors: Moral Philosophies and Values – Reading
Moral philosophy refers to the set of principles or rules people use to decide what is right or wrong. These principles or rules provide guidelines for resolving conflicts and for optimizing the mutual benefit of people living in groups. Businesspeople are guided by moral philosophies as they formulate business strategies and resolve specific ethical issues, even if they may not realize it.
Teleological, or consequentialist, philosophies stipulate that acts are morally right or acceptable if they produce some desired result such as the realization of self-interest or utility. Egoism defines right or acceptable behavior in terms of the consequences for the individual. In an ethical decision making situation, the egoist chooses the alternative that contributes most to his or her own self-interest. Egoism can be further divided into hedonism and enlightened egoism. Utilitarianism is concerned with maximizing total utility, or providing the greatest benefit for the greatest number of people. In making ethical decisions, utilitarians often conduct cost–benefit analyses that consider the costs and benefits to all affected parties. Rule utilitarians determine behavior on the basis of rules designed to promote the greatest utility rather than by examining particular situations. Act utilitarians examine the action itself rather than the rules governing the action, to determine it results in the greatest utility.
Deontological, or nonconsequentialist, philosophies focus on the rights of individuals and the intentions behind an individual’s particular behavior rather than its consequences. In general, deontologists regard the nature of moral principles as permanent and stable and believe compliance with these principles defines ethical behavior. Deontologists believe individuals have certain absolute rights that must be respected. Rule deontologists believe conformity to general moral principles determines ethical behavior. Act deontologists hold that actions are the proper basis to judge morality or ethicalness and that rules serve only as guidelines.
According to the relativist perspective, definitions of ethical behavior derive subjectively from the experiences of individuals and groups. The relativist observes behavior within a relevant group and attempts to determine what consensus group members reach on the issue in question.
Virtue ethics states that what is moral in a given situation is not only what is required by conventional morality or current social definitions, however justified, but by what a person with a “good” moral character would deem appropriate. Those who profess virtue ethics do not believe the end justifies the means in any situation.
The concept of justice in business relates to fair treatment and due reward in accordance with ethical or legal standards. Distributive justice is based on the evaluation of the outcome or results of a business relationship. Procedural justice is based on the processes and activities that produce outcomes or results. Interactional justice is based on an evaluation of the communication process in business.
The concept of a moral philosophy is not exact; moral philosophies can only be assessed on a continuum. Individuals use different moral philosophies depending on whether they are making a personal or a workplace decision. Moral philosophical theory rejects the good, better, best concept that Kohlberg uses. According to Kohlberg’s model of cognitive moral development, individuals may make different decisions in similar ethical situations because they are in a different stage of moral development. In Kohlberg’s model, people progress through six stages of moral development:
1. punishment and obedience;
2. individual instrumental purpose and exchange;
3. mutual interpersonal expectations, relationships, and conformity;
4. social system and conscience maintenance;
5. prior rights, social contract, or utility; and
6. universal ethical principles.
Kohlberg’s six stages can be further reduced to three levels of ethical concern: immediate self-interest, social expectations, and general ethical principles. Cognitive moral development may not explain as much as people once believed.
White-collar crime occurs when an educated individual who is in a position of power, trust, respectability, and responsibility commits an illegal act in relation to his or her employment, and who abuses the trust and authority normally associated with the position for personal and/or organizational gains. White-collar crime is not heavily researched because this type of behavior does not normally come to mind when people think of crime; the offender (or organization) is in a position of trust and respectability; criminology and criminal justice systems look at white-collar crime differently than average crimes; and many researchers have not moved past the definitional issues. New developments in technology seem to be increasing the opportunity to commit white-collar crime with less risk.
Individual factors such as religion, moral intensity, and a person’s professional affiliations can influence an employee’s decision making process. The impacts of ethical awareness, biases, conflict, personality type, and intelligence on ethical behavior remain unclear. One thing we do know is that the interrelationships among moral philosophies, values, and business are extremely complex.
6-7cResolving Ethical Business Challenges
Dr. Robert Smith owned his family practice for over 20 years. He came from a family of success. His father was a brain surgeon and his mother a well-known author. His younger brother, Saul, owned his own accounting firm for several years, but came to work with Dr. Smith after he sold it for a modest amount.
After graduating at the top of his class from Johns Hopkins University, Dr. Smith was awarded a cardio thoracic surgery fellowship in New York. He spent a few years there and was well on his way to fulfilling his dream of becoming a heart surgeon. During this time, however, his father became ill. Dr. Smith decided to return to his hometown of Zoar, Ohio, to take care of him. Under Dr. Smith’s care, his father started showing signs of improvement. He was glad not only for his father, but that he could go back and continue his pursuit of becoming a heart surgeon. On the day he was set to leave, his mother became ill and died a few days later from a rare form of cancer that showed no symptoms. The devastation hit the family hard. Saul was still in college, and Dr. Smith’s father needed someone to be with him at all times. Dr. Smith decided to stay in Zoar to take care of his father. He opened up a family practice in the town, thus putting his dream of becoming a heart surgeon on hold indefinitely.
Over the years, Dr. Smith sometimes felt regret that he never achieved his dream, but his job as the town doctor had been fulfilling. Now Saul was working with him, helping with the business. This made things significantly easier for Dr. Smith, who haphazardly kept his own books and patient files. One day, as Saul organized Dr. Smith’s piles of paperwork, he noticed there were charges to Medicaid that must be a mistake. While most of the population of Zoar, Ohio, was considered low-level income and qualified for Medicaid, this was not the case for all patients. There were several elderly middle- and higher-income families who regularly visited the office and usually paid with a check or cash. Saul assumed his brother’s administrative office skills were poor and aimed to fix it. However, as Saul organized the paperwork and checked files, these charges to Medicaid appeared to increase, dating back at least five years.
Saul approached his brother. “Robert, are you aware you charged Medicaid for Mr. and Mrs. Bennett’s visits?”
“Hmmm. Let me see the paperwork,” Dr. Smith asked. Saul handed it to him. Dr. Smith glanced at the document and said, “Yes, they are over age 65, so I made a bill for Medicaid.”
“But we have records they paid you with cash,” Saul replied. He handed Dr. Smith an old receipt. “And there are similar instances with some of your other patients. Besides, Medicaid is for low-income patients, not the elderly. Mr. and Mrs. Bennett are clearly not low-income.”
Looking a little bit flustered, Dr. Smith replied, “Saul, you know how I am with details. I’m no good at it. That’s why I hired you. Thanks for catching my mistake.” Dr. Smith walked back into his office and shut the door, leaving Saul standing in the hallway with a stack of files.
Saul knew what his brother gave up for their family and the good he did for the families in this small town, but he was convinced these charges were not accidental. There were too many of them and the amount of money charged exceeded $75,000.
“What happened to all that money?” Saul wondered. He also wondered how to handle the situation. He thought to himself, “How can I report this without sending Robert to jail? If I don’t report it and Medicaid finds out, I could go to jail and lose my accounting license. This is such a small town. If anybody finds out, we’ll never live it down.” At that moment, the phone rang, and Saul was the only one there to answer it.
Questions | Exercises
1. Describe Saul’s ethical dilemma.
2. Why would Medicare fraud be a white-collar crime?
3. How should Saul approach the situation?
Chapter 07: Organizational Factors: The Role of Ethical Culture and Relationships – Reading
Corporate culture refers to the set of values, beliefs, goals, norms, and ways of solving problems that members (employees) of an organization share. These shared values may be formally expressed or unspoken. Corporate cultures can be classified in several ways, and a cultural audit identifies an organization’s culture. If an organization’s culture rewards unethical behavior, people within the company are more likely to act unethically. A company’s failure to monitor or manage its culture may foster questionable behavior.
Leadership has a significant impact on the ethical decision making process because leaders have the power to motivate others and enforce both the organizations rules and policies and their own viewpoints. A leader must not only gain the respect of his or her followers but also provide a standard of ethical conduct. Leaders exert power to influence the behaviors and decisions of subordinates. There are five power bases from which a leader may influence ethical behavior: reward power, coercive power, legitimate power, expert power, and referent power. Leaders attempt to motivate subordinates; motivation is an internal force that focuses an individual’s behavior toward achieving a goal. It can be created by the incentives an organization offers employees.
The structure of an organization may create opportunities to engage in unethical behavior. In a centralized organization, decision making authority is concentrated in the hands of top managers, and little authority is delegated to lower levels. In a decentralized organization, decision making authority is delegated as far down the chain of command as possible. Centralized organizations tend to be more ethical than decentralized ones because they enforce more rigid controls, such as codes of ethics and corporate policies, on ethical practices. However, unethical conduct can occur in both types of structures.
In addition to the values and customs that represent the culture of an organization, individual groups within the organization often adopt their own rules and values and even create subcultures. The main types of groups are formal groups—which include committees, work groups, and teams—and informal groups. Informal groups often feed an informal channel of communication called the grapevine. Group norms are standards of behavior groups expect of their members. They help define acceptable and unacceptable behavior within a group and especially the limits on deviating from group expectations. Sometimes group norms conflict with the values and rules prescribed by the organization’s culture.
Sometimes an employee’s personal ethical standards conflict with what is expected of him or her as a member of an organization and its corporate culture. This is especially true given that an organization’s ethical decisions are often resolved by committees, formal groups, and informal groups rather than by individuals. When such ethical conflict is severe, the individual may have to decide whether to leave the organization.
7-7cResolving Ethical Business Challenges
Candace always tried to do the right thing, but did not know what to do in this dilemma. She knew someone would get hurt. All because of an overzealous supervisor, she thought sadly.
Two years ago Candace took a job at ABCO Corporation in its public relations division. Although new to the corporate world, Candace quickly learned the ropes of the highly bureaucratic organization and excelled at many of her projects. As a result, her bosses assigned her more lucrative responsibilities.
The only downside to the job Candace could see was many people appeared to be promoted based more upon their relationships with their superiors than their merit. While Candace knew her work was excellent, she could not help but wonder whether her friendly repertoire with her immediate supervisors had anything to do with her success so far.
A few months ago, Candace learned her division would be getting a new supervisor. Britney transferred to her division from a similar position in another subsidiary of the company because of her proven talent for organizing and improving the efficiency of operations there. A no-nonsense type of manager, Britney was experienced and determined to be successful in this assignment as well. Candace knew from Britney’s reputation that her success had everything to do with hard work and a commitment to make sure everyone else was working just as hard.
On the day Britney assumed her responsibilities as the new division manager, the company held a reception for her to meet the employees. At the reception, Britney circulated throughout the room, introducing herself to people and asking each of them if they had any suggestions that would make the section a better place to work. When she approached Candace, Candace decided to let her know what was bothering her.
“I don’t want to make waves or anything, but one thing I’ve noticed happening recently is some people seem to gain promotions and are given opportunities to work overtime based on who likes them and not on the quality of their work,” Candace told her. She quickly continued. “It’s not that people here don’t work hard or anything. It’s just that I noticed there might some favoritism going on in some of the major personnel decisions.”
Britney looked concerned, but smiled at Candace. “Thank you for telling me, Candace. I assure you I will do everything in my power to make sure this problem does not continue. This kind of thing has no place in the team I’m going to lead.”
The next day, Britney requested Candace meet with her. As Candace entered Britney’s office for the meeting, Britney looked her straight in the face and said, “I will not tolerate individuals in this organization who are not team players. Yesterday afternoon you led me to believe there are people in this office who are not acting in the best interests of the company, and I want to know who. These people have no place in this division.”
Candace was stunned. She did not want to hurt anyone. She just wanted to express her concerns in the hopes certain practices would change.
When she did not answer right away, Britney looked at her with annoyance. “Look,” she said, “I want you to tell me the names of the managers you were referring to now, and keep me informed if you see anyone hurting this company, or I’ve got to think maybe you’re part of the problems around here.”
Candace tried to explain. “I’m sorry,” she said. “I didn’t want to implicate anyone in particular. I just wanted to alert you to some concerns I’ve been having…”
Britney cut Candace off before she could continue. “Candace, you seem like a smart person. I’m trying to create an example here. There are no shortcuts in this job. You work hard, or you get out. I’ve got no room for slackers. Now once again, who are the managers you were talking about?”
Candace’s heart raced in her chest and she felt close to tears. Britney noticed because she sighed exasperatedly “Fine. Here’s what I’ll do. We’ll set up another meeting tomorrow and talk then. That’ll give you time to think about where your priorities lie.”
Candace sat at her desk, her work forgotten. She could not believe the mess she had gotten herself into. If she told Britney what she wanted, certain managers would get disciplined or perhaps even fired. Of course, it would be her word against theirs, so Candace knew she faced the risk of being thought of as someone who was just trying to make trouble. At the very least, the managers she named would dislike her for reporting them. But if she refused Britney, she risked the ire of her new boss.
Questions | Exercises
1. Describe the organizational structure of ABCO Corporation.
2. Which type of leadership power is Britney using? Do you feel it is effective in this situation?
3. Does Candace have any other alternatives than the two that she is considering?
Chapter 08: Developing an Effective Ethics Program – Reading
Ethics programs help sensitize employees to potential legal and ethical issues within their work environments. To promote ethical and legal conduct, organizations should develop ethics programs, establishing, communicating, and monitoring ethical values and legal requirements that characterize the firms’ history, culture, industry, and operating environment. Without such programs and uniform standards and policies of conduct, it is difficult for employees to determine what behaviors a company deems acceptable.
A company must have an effective ethics program to ensure employees understand its values and comply with its policies and codes of conduct. An ethics program should help reduce the possibility of legally enforced penalties and negative public reaction to misconduct. The main objective of the Federal Sentencing Guidelines for Organizations is to encourage companies to assess risk and then self-monitor and aggressively work to deter unethical acts and punish unethical employees. Ethics programs are organizational control systems that create predictability in employee behavior. These control systems may have a compliance orientation, which uses legal terms, statutes, and contracts that teach employees the rules and the penalties for noncompliance, or a values orientation that consists of developing shared values.
Most companies begin the process of establishing organizational ethics programs by developing codes of conduct, or formal statements that describe what an organization expects of its employees. Codes of conduct include a company’s code of ethics and/or its statement of values. A code of ethics must be developed as part of senior management’s desire to ensure the company complies with values, rules, and policies that support an ethical culture. Without uniform policies and standards, employees have difficulty determining what qualifies as acceptable behavior in the company.
Having a high-level manager or committee responsible for an ethical compliance program can significantly enhance its administration and oversight. Such ethics officers are usually responsible for assessing the needs and risks to be addressed in an organization-wide ethics program, developing and distributing a code of conduct or ethics, conducting training programs for employees, establishing and maintaining a confidential service to answer questions about ethical issues, making sure the company is complying with government regulations, monitoring and auditing ethical conduct, taking action on possible violations of the company’s code, and reviewing and updating the code.
Successful ethics training is important in helping employees identify ethical issues and in providing them with the means to address and resolve such issues. Training can educate employees about the firm’s policies and expectations, available resources, support systems, and designated ethics personnel, as well as relevant laws and regulations and general social standards. Top executives must communicate with managers at the operations level and enforce overall ethical standards within the organization.
An effective ethics program employs a variety of resources to monitor ethical conduct and measure the program’s effectiveness. Compliance with the company’s ethical code and standards can be assessed by observing employees, performing internal audits and surveys, instituting reporting systems, and conducting investigations, as well as through external audits and review, as needed. Corrective action involves rewarding employees who comply with company policies and standards and punishing those who do not. Consistent enforcement and disciplinary action are necessary for a functioning ethical compliance program.
Ethical compliance can be ensured by designing activities that achieve organizational objectives using available resources and given existing constraints. A firm’s ability to plan and implement ethical business standards depends in part on its ability to structure resources and activities to achieve its objectives effectively and efficiently.
In implementing ethics and compliance programs many firms make common mistakes, including failing to answer fundamental questions about the goals of such programs, not setting realistic and measurable program objectives, failing to have senior management take ownership of the ethics program, developing program materials that do not address the needs of the average employee, transferring an “American” program to a firm’s international operations, and designing an ethics program that is little more than a series of lectures. Although an ethics program should help reduce the possibility of penalties and negative public reaction to misconduct, a company must want to be a good corporate citizen and recognize the importance of ethics to successful business activities.
8-8cResolving Ethical Business Challenges
Mary, a recent college graduate from Stanford University, works for JSYK Incorporated, a realty company that represents clients interested in either buying or selling businesses. As a “business broker,” Mary’s job is to arrange sales just like a normal realtor. On the outskirts of town, a small building used for manufacturing sat idle for over a year. The realtors called it Moby Dick because no one could find a buyer for it; either the price was too high or the building did not quite match the buyer’s needs. Dozens of potential buyers had come and gone. It did not help that the building was owned by Ted St. Clair, a 65-year-old miser that lived in the town all his life. The man had a reputation for hoarding every last dime. Ted made Dickens’s Scrooge look saintly. While JSYK Incorporated told Ted more than once he needed to lower the price if he wanted to sell the building, Ted always refused.
One hot afternoon Reverend Smith, a retired minister, contacted JSYK and asked if he could look at the property. Because Mary was in the office it was given to her. While they inspected the building, the conversation came around to what Reverend Smith would do with the building. He had recently formed a nonprofit corporation to aid troubled youth and wanted to convert the building into a recreation center. Mary knew Reverend Smith because she formerly attended his church. She knew of his honesty and integrity as well as his decades of service.
When Mary returned to the office, the Reverend was seriously talking about the building and how it could be refitted for his purposes. As they talked, the Reverend asked about the machinery still in the building. Some of the machines at the manufacturing plant were in poor condition and required an estimated $100,000 to repair. Reverend Smith had no use for them and would need them removed.
After preliminary discussions, Mary said she would contact the owner. “Reverend, I believe the seller is asking for a $250,000 down payment on this $1,000,000 sale.”
“I can’t afford that much,” replied the Reverend. “I’ve been saving donations for a number of years and I only have $150,000.”
“If I may ask,” asked Mary, “How are you going to pay the balance?”
“Well, I’ve spoken to some older church members, and they told me that if I could make the down payment, they would cover the rest.”
“I’ll try to work with you on this. Give me a few days and I’ll call you,” said Mary.
As Reverend Smith left, George, the owner and CEO of JSYK, came into the office. “What did Reverend Smith want?” asked George.
“He’s actually interested in Moby Dick, and I believe it matches his needs perfectly.”
“That’s great!” George replied. Then he noticed Mary’s face. “So what’s the problem?”
“You and I both know Ted will not come down on the price.” Mary quickly explained the situation, with George listening intently. After she was done, George said, “Mary, this is what you are going to do. I want you to convince Ted that repairing those machines is important to the buyer. DO NOT tell him who it is. Tell Ted the buyer wants the machines, but the repair estimate he calculated is $150,000. Tell Ted you know you can get the buyer to buy if the down payment was reduced to $150,000 and the asking price to $950,000. Finally, tell Ted he would be making an additional $50,000 for not having to do the repairs.”
“I don’t know about this,” said Mary. “It doesn’t feel honest, and besides Reverend Smith has no