Read “AL” and “THE HONDA AUCTION.” For each incident, you must identify the pertinent facts, the ethical issue(s), all relevant stakeholders and determine how they could be impacted by the decision that will be made, identify and apply at least one principle for ethical reasoning, and then consider alternative courses of action and choose the best course of action based on stakeholder impacts and the outcome of the application of the ethical principle. Use A Framework for Ethical Decision Making or the Eight Steps to Ethical Decision Making (found in the Ethics Module) as a guide.
Your textbook defines stakeholders as an entity that is benefitted or burdened by the actions of a corporation or whose actions may benefit or burden the corporation. Some common examples of stakeholders would include customers, employees, suppliers, stockholders, and the community.
Businesses will almost always have multiple stakeholders, and many times their interests will conflict. This means that a business decision-maker will frequently have to make a decision in the face of competing claims from different stakeholders. The question of whose interests should be prioritized requires the exercise of judgment. This skill—examining competing claims and deciding which one is the strongest—is called evaluation. You will want to consider the power, urgency, and legitimacy that each stakeholder presents.
You should put yourselves in each stakeholder’s position—Why do they care about the outcome of the decision? How will they be affected? What outcome would they prefer? What are their arguments in support of their preferred outcome? You will want to consider the power, urgency, and legitimacy that each stakeholder presents. Two of the videos below will give you a brief review of stakeholder theory and give you an idea of what skills you will be expected to demonstrate when you complete this assignment. Additionally, writing mechanics and grammar are graded as part of this assignment. A video on improving mechanics in business writing is provided below to help refresh your memory.
https://sorrell.mediasite.com/mediasite/Play/9fd4b218dd0946ef92d6e6739273355d1dA Framework for Ethical Decision Making
Recognize an Ethical Issue
1. Could this decision or situation be damaging to someone or to some group?
Does this decision involve a choice between a good and bad alternative, or
perhaps between two “goods” or between two “bads”?
2. Is this issue about more than what is legal or what is most efficient? If so, how?
Get the Facts
3. What are the relevant facts of the case? What facts are not known? Can I learn
more about the situation? Do I know enough to make a decision?
4. What individuals and groups have an important stake in the outcome? Are some
concerns more important? Why?
5. What are the options for acting? Have all the relevant persons and groups been
consulted? Have I identified creative options?
Evaluate Alternative Actions
6. Evaluate the options by asking the following questions:
Which option will produce the most good and do the least harm? (The Utilitarian
Which option best respects the rights of all who have a stake? (The Rights
Which option treats people equally or proportionately? (The Justice Approach)
Which option best serves the community
as a whole, not just some members?
(The Common Good Approach)
Which option leads me to act as the sort of person I want to be? (The Virtue
Make a Decision and Test It
7. Considering all these approaches, which option best addresses the situation?
8. If I told someone I respect-or told a television audience-which option I have
chosen, what would they say?
Act and Reflect on the Outcome
9. How can my decision be implemented with the greatest care and attention to the
concerns of all stakeholders?
10. How did my decision turn out and what have I learned from this specific
EIGHT STEPS TO SOUND ETHICAL DECISION MAKING IN BUSINESS
STEP 1: Gather the facts.
How did the situation occur?
Are there historical facts that I should know?
Are there facts concerning the current situation that I should know?
STEP 2: Define the ethical issues.
Don’t jump to a solution. Think through the ethical issues. Recognize that multiple
ethical issues may exist.
STEP 3: Identify the affected parties (the stakeholders).
You may have to think beyond the facts of the case to identify all stakeholders.
STEP 4: Identify the consequences.
After identifying the stakeholders, consider the potential consequences for each party that
have a relatively high probability of occurring.
What are the long-term and the short-term consequences?
What are the symbolic consequences?
What are the consequences of secrecy?
STEP 5: Identify the obligations.
Identify the obligations involved and the reasons for each one.
STEP 6: Consider your character and integrity.
Think about yourself as a person of integrity. Ask yourself what a person of integrity
would do in this situation.
New York Times Test
STEP 7: Think creatively about potential actions.
Be sure that you haven’t unnecessarily forced yourself into a corner. Are you assuming
that you only have two choices, either A or B? Look for creative alternatives. Perhaps
there’s another answer: C.
STEP 8: Check your gut.
We are all hardwired to be empathetic and to desire fairness. If your gut is sending up red
flags, give the situation more thought.
Source: Trevino, L.K, & Nelson, K.A. (2014). Managing business ethics: Straight talk about how to do it
right (6th ed). Hoboken, NJ: John Wiley & Sons.
The CEO of a Midwestern manufacturing company
tells the following story.
I was looking over recent performance reviews in
the household products division and one thing that
struck me was the review of a star sales rep named
Al. I know Al because he handles our Walmart
account. Al had the highest annual sales for the past
five years and last year nearly doubled the next
highest rep’s total. The sales manager’s written
evaluation was highly laudatory as expected, but
cautioned Al to adhere strictly to discount policy,
shipping protocol, and billing protocol. I got curious.
A conversation with the division manager re
vealed that Al ingratiated himself with workers on
the loading dock, socializing with them, sending
them birthday cards, and giving them small gifts
such as tickets to minor-league ball games. The
loading dock supervisor complained that Al was
requesting and sometimes getting priority loading
of trucks for his customers despite the formal first-in,
first-out rules for shipping orders. Second, Al had
given several customers slightly deeper discounts
than authorized, although the resulting orders were
highly profitable for the company. And finally, late
in December, Al had informally requested that one
big account delay payment on an order by a week so
that the commission would be counted in the next
year. This would have gotten him off to a running
start had not an accountant for the purchaser paid
promptly and written to Al’s manager in refusing
The division head stuck up for AL. I didn’t press
or request that any action be taken. Did I do the
How would you answer the CEO’s question?
262 Chapter 8 Making Ethical Decisions in Business
We finally finished the testing project and it was Conant for half the extra $128,000 the entire batch of
a success. But toward the end I did the lion’s share cars would bring in
of it. One day, Tom made me angry by ending a Conant faced a decision. If the invoice was paid,
capacitor test at 94 hours instead of the 100 hours
you really have to have for validity. He did it be
the dealership would make a $61,000 windfall. If he
refused to pay, the cars would be rerouted to a dealer
cause he was late for a privacy task force meeting.
Overall, I guess Tom helped a lot, but he didn’t do
who was a “player” and future shipments of new
his share all the way through.
Hondas might be slower. He decided to pay the in-
Last month the assistant manager of the radar
voice. In his own words: “I believed I had no choice.
project left the company and Tom and I both applied
If I hadn’t paid the amount, I would have incurred
for the position. It was a pay raise of several grades the wrath of Dennis Josleyn and possibly some of the
and meant getting a lot of recognition. They chose other Honda gods, and I believe they would have
Tom. The announcement in the company newsletter taken our store down.”
said that he was a “strong team player” and men- Conant was not alone. Honda dealers around the
tioned both the testing project and the privacy task
country faced a dilemma. After investing large sums
force as major accomplishments.
I don’t think it was fair.
to build new showrooms and facilities and hire em-
ployees, they soon found themselves having to
Was Tom fair to Mary? Was Tom’s promotion fair choose between two paths. If they gave bribes and
to Mary? Was the company wrong to promote Tom? kickbacks to Honda executives, they secured a copi-
ous flow of cars and made a fortune. On average, a
THE HONDA AUCTION
favored dealer made almost $1 million a year in per-
sonal income. However, if they stayed clean, no mat-
Dave Conant co-owned and managed Norm Reeves ter how modern their dealership and well trained its
Honda in Cerritos, California. Naturally, he worked sales force; they received fewer cars and less profita-
closely with Honda marketing executives to get cars ble models. If they went bankrupt, and many did, the
for his dealership. One day, one of these executives, Honda executives arranged for less scrupulous own-
Dennis Josleyn, the new zone sales manager, ap- ers to take over their dealerships.
proached him, asking him to submit a bid on 61 com- Many an honest dealer short on cars drove across
pany cars. These were near-new cars previously town to see a rival’s lot packed with fast-selling mod-
driven by corporate executives or used to train me- els in popular colors. Over time, it also became clear
chanics. Company policy called for periodic auctions that the highest Japanese executives at Honda knew
in which Honda dealers submitted competitive bids, what was going on but chose to do nothing.
and the high bidder got the cars to sell on its lot. It Did Conant make the right decision? What would
was Josleyn’s job to conduct the auction.
you do in his position?
“I want you to submit bids on each car $2,000 be-
low wholesale market value,” Joselyn told Dave THE TOKYO BAY STEAMSHIP
Conant. Conant dutifully inspected the 64 cars and COMPANY
submitted the asked-for bids. Meanwhile, Josleyn
busied himself creating fake auction papers showing The Tokyo Bay Steamship Company operated a
that other Honda dealers bid less than Conant. Of tourist ship between Tokyo and the volcanic island of
course, others bid near the wholesale price, so their Oshima 50 miles offshore. It also had a restaurant on
bids were higher. Completing the phony auction, the island. It was a modest business until February
Josleyn announced the winner-Conant’s dealership. 1933, when Kiyoko Matsumoto, a 19-year-old college
The next day he showed up there and handed Conant student, committed suicide by jumping into the cra-
ter of the volcano, which bubbled with molten lava.
“I have a little invoice for you,” he said.
Ms. Matsumoto left a poetic suicide note and, through
Conant went to his office, opened it, and found a newspaper stories, the Japanese public became
bill for $64,000 payable to an ad agency co-owned obsessed with her story.
by Josleyn and his brother. The message was clear.
Josleyn wanted a 50-50 split with the dealer on the
Quoted in Steve Lynch, Arrogance and Accords: The Inside
$2,000 windfall each car would bring, so he was billing Story of the Honda Scandal (Dallas: Pecos Press, 1997), p. 106.
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