Question

When executives in charge of San Polegate’s supermarket chain learned of Delectable’ offer, they demanded a payment of $250,000 before agreeing to purchase the questionable peanut butter for their supermarkets. The explanation was that their supermarket shelves are already full and that there are costs related to making room for Delectable’ products. Furthermore, if Delectable wants to place its product on the “eye level” shelves, that would cost an additional $25,000.

Delectable has also learned that the head of San Polegate security, a highly placed government official, requires a $100,000 payment to assure “safe passage” of Delectable’ goods to their intended destinations in San Polegate. If payment is not made, the goods may be “lost,” perhaps to thieves, calamity, or some other “tragedy”. Delectable further learns that San Polegate Customs officers regularly receive payments of $500 each to “facilitate” entry of goods into the country.

Part D Questions (based on Parts A, B, C and D Background Facts):

D1. Advise Delectable on what it should do in response to the situations in Part D Background Facts.

You should refer to what you have learned about law and business ethics in this course. Do any of these situations raise issues of actions that might be considered legal but unethical? Under what conditions is it possible for a business decision/action to be legal but still possibly not be ethical?

Answer 1

I would advise Delectable to reconsider selling their products in San Polegate, corruption is widely rampant in the country and for Delectable to be successful in that market it would need to facilitate such practices like making payoffs and bribes. It is not possible to carry out ethical business practices while staying competitive in a country like San Polegate. If the company agrees to various conditions like regular payments to government officials and extortion, it's reputation would be impacted due to these unethical business practices. It is my opinion that Delectable withdraw from this country as the damage to the company by operating here would be far greater than any potential profits.

Some of these situations raise issues of actions that might be considered legal but unethical, the payment of $250,000 and $25,000 to the supermarket executives is unethical as it is demanded for stocking the company's goods and for better placement but it is legal. The payment of $100,000 to the security head and $500 to customs officials is unethical as well as outright illegal.

Conditions for legal but unethical business actions:

-Decisions that don't conform to the acceptable standards of business operations.

-Failing to do what is right and morally correct.

-Making false statements to achieve business objectives