At the end of Ch. 8 of your textbook (starting on p. 270 in the loose-leaf version) you will find Short Incidents for Ethical Reasoning. 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. You can use A Framework for Ethical Decision Making or the Eight Steps to Ethical Decision Making (found in the CSR & 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. Viewing statistics will be collected and counted as part of the assignment’s grade.
Before submitting the assignment, review the rubric attached to the assignment to ensure you have included everything in your paper that needs to be included. Your submission must be in a Word document or PDF, typed in size 12 Times New Roman font and double-spaced. Your submission must at least 5 pages and not exceed 10 pages.
As a reminder, for each incident, be sure to identify 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.
Short incidents:
1. AL
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 revealed 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 request.
The division head stuck up for Al. I didn’t press or request that any action be taken. Did I do the right thing?
How would you answer the CEO’s question?
2. THE HONDA AUCTION
Dave Conant co-owned and managed Norm Reeves Honda in Cerritos, California. Naturally, he worked closely with Honda marketing executives to get cars for his dealership. One day, one of these executives, Dennis Josleyn, the new zone sales manager, approached him, asking him to submit a bid on 64 company cars. These were near-new cars previously driven by corporate executives or used to train mechanics. Company policy called for periodic auctions
in which Honda dealers submitted competitive bids, and the high bidder got the cars to sell on its lot. It was Josleyn’s job to conduct the auction.
“I want you to submit bids on each car $2,000 below wholesale market value,” Joselyn told Dave Conant. Conant dutifully inspected the 64 cars and submitted the asked-for bids. Meanwhile, Josleyn busied himself creating fake auction papers showing that other Honda dealers bid less than Conant. Of course, others bid near the wholesale price, so their bids were higher. Completing the phony auction, Josleyn announced the winner—Conant’s dealership. The next day he showed up there and handed Conant an envelope.
“I have a little invoice for you,” he said.
Conant went to his office, opened it, and found a bill for $64,000 payable to an ad agency co-owned by Josleyn and his brother. The message was clear. Josleyn wanted a 50–50 split with the dealer on the $2,000 windfall each car would bring, so he was billing Conant for half the extra $128,000 the entire batch of cars would bring in.
Conant faced a decision. If the invoice was paid, the dealership would make a $64,000 windfall. If he refused to pay, the cars would be rerouted to a dealer who was a “player” and future shipments of new Hondas might be slower. He decided to pay the invoice. In his own words: “I believed I had no choice. If I hadn’t paid the amount, I would have incurred the wrath of Dennis Josleyn and possibly some of the other Honda gods, and I believe they would have taken our store down.”
Conant was not alone. Honda dealers around the country faced a dilemma. After investing large sums to build new showrooms and facilities and hire employees, they soon found themselves having to choose between two paths. If they gave bribes and kickbacks to Honda executives, they secured a copious flow of cars and made a fortune. On average, a favored dealer made almost $1 million a year in personal income. However, if they stayed clean, no matter how modern their dealership and well trained its sales force; they received fewer cars and less profitable models. If they went bankrupt, and many did, the Honda executives arranged for less scrupulous owners to take over their dealerships.
Many an honest dealer short on cars drove across town to see a rival’s lot packed with fast-selling models in popular colors. Over time, it also became clear that the highest Japanese executives at Honda knew what was going on but chose to do nothing.
Did Conant make the right decision? What would you do in his position?
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