Session 4

Business Ethics & CSR

 Session Plan

S. No. Time Experiential Learning

1 15 Minutes Recap of previous session
Readings & Video Analysis
2 15 Minutes Class Activity – 1
Heinz Dilemma
3 15 Minutes Group Discussion
Level of Moral Development (Kohlberg’s Model)
4 15 Minutes Class Activity – 2
Briefcases –Theories of Ethical Conduct
5 15 Minutes Group Discussion
6 15 Minutes Food for thought:
Next Session
Revise & Recap
Discussion on readings & links of Session 3
Class Activity 1
Heinz Dilemma
Heinz Dilemma
Moral
Development
Level of Moral Progress
Relationship
between
Ethics &
Law
Level of Moral
Development
Class Activity 2
Brief Illustrations
 Home Depot: Good Ethics or Shrewd Business?
When weather forecasters predicted that Hurricane Andrew would strike the Miami area with full force, customers
rushed to stock up on plywood and other building materials. That weekend the 19 Home Depot stores in southern Florida
sold more 4-foot-by-8-foot sheets of exterior plywood than they usually sell in two weeks. On August 24, 1992, the
hurricane struck, destroying or damaging more than 75,000 homes, and in the wake of the devastation, individual price
gougers were able to sell basics like water and food as well as building materials at wildly inflated prices.
But not Home Depot. The chain’s stores initially kept prices on plywood at pre-hurricane levels, and when wholesale
prices rose on average 28 percent, the company announced that it would sell plywood, roofing materials, and plastic
sheeting at cost and take no profit on the sales. It did limit quantities, however, to prevent price gougers from reselling
the goods at higher prices. In addition, Home Depot successfully negotiated with its suppliers of plywood, including
Georgia-Pacific, the nation’s largest plywood producer, to roll back prices to pre-hurricane levels.

Georgia-Pacific, like Home Depot, has a large presence in Florida; the company runs 16 mills and distribution centers in
the state and owns 500,000 acres of timberland. Although prices increased early in anticipation of Hurricane Andrew,
Home Depot was still able, with the cooperation of suppliers, to sell half-inch plywood sheets for $10.15 after the
hurricane, compared with a price of $8.65 before, thereby limiting the increase to less than 18 percent. Home Depot
executives explained their decision as an act of good ethics by not profiting from human misery. Others contend,
however, that the company made a shrewd business decision.
 Toys “R” Us: Fair or Foul?
Hardball tactics are often applauded in business, but when Child World was the victim, the toy retailer cried foul. Its
complaint was directed against a major competitor, Toys “R” Us, whose employees allegedly bought Child World
inventory off the shelves during a promotion in which customers received $25 gift certificates for buying merchandise
worth $100. The employees of Toys “R” Us were accused of selecting products that Child World sold close to cost, such as
diapers, baby food, and infant formula. These items could be resold by Toys “R” Us at a profit, because the purchase price
at Child World was barely above what a wholesaler would charge, and then Toys “R” Us could redeem the certificates for
additional free merchandise, which could be resold at an even higher profit.
Child World claimed that its competitor bought up to $1.5 million worth of merchandise in this undercover manner and
received as much as $375,000 worth of gift certificates. The practice is apparently legal, although Child World stated that
the promotion excluded dealers, wholesalers, and retailers. Executives at Toys “R” Us did not deny the accusation and
contended that the practice is common in the industry. Child World may have left itself open to such a hardball tactic by
slashing prices and offering the certificates to increase market share against its larger rival.
 Illustration
The Sales Rep.
A sales representative for a struggling computer supply firm has a
chance to close a multimillion-dollar deal for an office system to be installed over a two-year
period. The machines for the first delivery are in the company’s warehouse, but the remainder
would have to be ordered from the manufacturer. Because the manufacturer is having difficulty
meeting the heavy demand for the popular model, the sales representative is not sure that subsequent
deliveries can be made on time. Any delay in converting to the new system would be
costly to the customer; however, the blame could be placed on the manufacturer.
Should the sales representative close the deal without advising the customer of the problem?
 Illustration
The Research Director.
The director of research in a large aerospace firm recently
promoted a woman to head an engineering team charged with designing a critical component for
a new plane. She was tapped for the job because of her superior knowledge of the engineering
aspects of the project, but the men under her direction have been expressing resentment at working
for a woman by subtly sabotaging the work of the team. The director believes that it is unfair to
deprive the woman of advancement merely because of the prejudice of her male colleagues, but
quick completion of the designs and the building of a prototype are vital to the success of the
company.
Should he remove the woman as head of the engineering team?
 Illustration
The Marketing Director.
The vice president of marketing for a major brewing company is aware that college
students account for a large proportion of beer sales and that people in this
age-group form lifelong loyalties to particular brands of beer. The executive is
personally uncomfortable with the tasteless gimmicks used by her competitors in the
industry to encourage drinking on campuses, including beach parties and beer-
drinking contests. She worries about the company’s contribution to underage drinking
and alcohol abuse among college students.

Should she go along with the competition?

 Illustration
The CEO.
The CEO of a midsize producer of a popular line of kitchen appliances is
approached about merging with a larger company. The terms offered by the suitor are very
advantageous to the CEO, who would receive a large severance package. The shareholders of the
firm would also benefit, because the offer for their stock is substantially above the current market
price. The CEO learns, however, that plans call for closing a plant that is the major employer in
a small town. The firm has always taken its social responsibility seriously, but the CEO is now
unsure of how to balance the welfare of the employees who would be thrown out of work and
the community where the plant is located against the interests of the shareholders. He is also not sure how
much to take his own interests into account.
Should he support a merger that harms the community but benefits the shareholders and himself?
News Excerpt
According to the National Women’s
Law Center, women have lost 5.4
million jobs since the pandemic began.
The pandemic is reversing decades of
progress with the percentage of women
in the workforce as low as it was in
1988. Childcare and pay equity are more
important than ever before and it's up to
companies to create policies that help
everyone thrive!
 News Excerpt
• Amazon’s Jeff Bezos To Step Down As CEO This Summer
• https://www.businessleader.co.uk/amazons-jeff-bezos-to-step-down-as-ceo-this-summer
/109310/

• McKinsey Settles for Nearly $600 Million Over Role in Opioid Crisis
• https://www.nytimes.com/2021/02/03/business/mckinsey-opioids-settlement.html
• Business schools slow to practice what they teach on sustainability
• https://www.ft.com/content/2fb62c5a-fc27-40e6-b23e-9881c25084db?desktop=true&
segmentId=d8d3e364-5197-20eb-17cf-2437841d178a
Task for Next Session
 Readings

• Harvard Business Review

• An Intern’s Dilemma
• How (un)ethical are you?
• Ethical breakdowns. Good people often let bad things happen. Why? Harvard
Business Review R1104C-PDF-ENG
• Brief Cases
• Global McEthics: should McDonald’s ethics be standardized across the globe?
• Canada’s oil sands: ‘most destructive project on Earth’ or ‘ethical oil’?
 Binge Watch

• Super Size Me (2004)

• https://www.youtube.com/watch?v=wSZWxjeua3g
• Super Size Me 2 Returns to McDonalds 15 Years Later
• https://www.youtube.com/watch?v=3QHkwU-fgLk
• SUPER SIZE ME 2 Official Trailer (2019) Holy Chicken
• https://www.youtube.com/watch?v=oAjsBZEOnVw
 Thank you.
You may write to me at anshu@jgu.edu.in