Ethical Scenario

Ethical Scenario

Ethical Scenario # 9 (9)
You are the CEO of a baked-goods plant located in the South Bronx. You have gotten into the doughnut business and your
marketing Vice President suggests using a brand name that suggests that the doughnuts are made in the old fashioned way.
She suggests using the brand name, “Grandma’s Old-Fashioned Bakery” to evoke the image of a simple bakery using healthy
ingredients. Should the company should use the brand name “Grandma’s Old-Fashioned Bakery” or not? Identify at least 3
courses of actions or alternatives.
1 What is the ethical dilemma or issue?
2 What are the alternatives or possible courses of action? Identify at least 3 alternatives.
3 What are your recommendations? In other words, of the several alternatives you identified, what do you think the company
should do?
4 What is your rationale for your recommendations? In other words, why do you recommend this course of action?

Ethical Scenario # 10
(10) You are Chairman of the Board of a fairly successful company. Many of the shareholders have been complaining about
excessive compensation for the CEO of your firm, especially since employee wages are very low. They cite a statement by
Warren Buffett that “the ability of corporations to rein in skyrocketing CEO pay is the ‘acid test’ of corporate
governance reform.” You find that the CEO earns $22 million a year and the lowest paid worker in the company earns
$22,000. This ratio of 1000:1 seems a bit high to you. A recent study published by the Economic Policy Institute indicated
that CEOs at large firms in the United States make about 300 times more than the typical worker. Other members of the
Board feel that since the stock has been going up, the salary for the CEO should be raised. Should the salary of the CEO
be raised or not? If it should be raised, by how much? Should the salary of the CEO be decreased? Identify at least 3
courses of actions or alternatives.
1 What is the ethical dilemma or issue?
2 What are the alternatives or possible courses of action? Identify at least 3 alternatives.
3 What are your recommendations? In other words, of the several alternatives you identified, what do you think the company
should do?
4 What is your rationale for your recommendations? In other words, why do you recommend this course of action?

Ethical Scenario # 11
(11) You are Chairman of the Board of a successful technology firm. There is a nominal federal corporate tax rate of 35
percent, yet the effective tax rate of the typical corporation is about 12.6%. Your firm has been clever with use of
transfer pricing and keeping money abroad and has barely paid any taxes over the last 5 years; during this same time
period, profits were $28 billion. One member of the board feels that it is un-American to use various accounting
strategies in order to avoid paying taxes. Others feel that these are legal loopholes and corporations have a fiduciary
responsibility to minimize taxes. One board member quoted what the CEO of Exxon once said: “I’m not a U.S. company and I
don’t make decisions based on what’s good for the U.S.” Should the company should continue or discontinue using accounting
strategies to avoid paying income tax? Identify at least 3 courses of actions or alternatives.
1 What is the ethical dilemma or issue?
2 What are the alternatives or possible courses of action? Identify at least 3 alternatives.
3 What are your recommendations? In other words, of the several alternatives you identified, what do you think the company
should do?
4 What is your rationale for your recommendations? In other words, why do you recommend this course of action?

Ethical Scenario # 12
(12) You are CEO of a small company that manufactures sophisticated drones. Your company’s drones are used for non-
military purposes such as fighting wildfires, monitoring borders, aerial photography, and law enforcement (finding
criminals). You have just received a huge order worth millions of dollars from a firm located in a country ruled by a
vicious dictator. This dictator has been known to suppress human rights and has been waging a war against a group fighting
for democracy. In the past, he has even used chlorine gas against his own people. The company assures you that the drones
will not be used for military purposes. You suspect that the company is a front for the government and may modify the
drones as weapons so that they can be used to target freedom fighters and terrorize civilians throughout the country.
Should the company should sell or not sell the vicious dictator the drones? Identify at least 3 courses of actions or
alternatives.
1 What is the ethical dilemma or issue?
2 What are the alternatives or possible courses of action? Identify at least 3 alternatives.
3 What are your recommendations? In other words, of the several alternatives you identified, what do you think the company
should do?
4 What is your rationale for your recommendations? In other words, why do you recommend this course of action?

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