Question

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 center manager.

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 conflicts?

Answer 1

a. Stakeholders in the given case are the managers of decentralized investment center and the corporate management of American Products Corporation.

b. Ethical conflicts is for the management, is should they not set high and difficult targets for the employees but will that be economical fo the company? How to manage to get best from employees, should they be strict or be liberal to take care of their mental health? How will the company survive in such a dynamic and competitive environment if their employees are not competitive?

c The manageent cannot be completely liberal towards the employees as they have to run a business however.

The company can reduce the pressure on managers by-

- avoid firing them directly, if the are unable to meet the targets, give them a warning or two, if still it continues then take strict actions.

- hire more employees to share work load

- conduct some wellness programs for employees

- hire a psychologist for regular and routine counselling

- Hire HR personnel to keep a check on morale of employees.