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2.8 Cases and Problems

Learning on the Web (AACSB)

Lessons in Community Living

Executives consider it an honor to have their company named one of Business Ethics magazine’s “100 Best Corporate Citizens.” Companies are chosen from a group of one thousand, according to how well they serve their stakeholders—owners, employees, customers, and the communities with which they share the social and natural environment. Being in the top one hundred for five years in a row is cause for celebration. Two of the twenty-nine companies that enjoy this distinction are Timberland and the New York Times Company.

The two companies are in very different industries. Timberland designs and manufactures boots and other footwear, apparel, and accessories; the New York Times Company is a media giant, with nineteen newspapers (including the New York Times and the Boston Globe), eight television stations, and more than forty Web sites. Link to the Timberland Web site ( and the New York Times Company Web site ( to learn how each, in its own way, supports the communities with which it shares the social and natural environment. Look specifically for information that will help you answer the following questions:

  1. How does each company assist its community? To what organizations does each donate money? How do employees volunteer their time? What social causes does each support?
  2. How does each company work to protect the natural environment?
  3. Are the community-support efforts of the two companies similar or dissimilar? In what ways do these activities reflect the purposes of each organization?
  4. In your opinion, why do these companies support their communities? What benefits do they derive from being good corporate citizens?

Career Opportunities

Is “WorldCom Ethics Officer” an Oxymoron?

As you found out in this chapter, WorldCom’s massive accounting scandal cost investors billions and threw the company into bankruptcy. More than one hundred employees who either participated in the fraud or passively looked the other way were indicted or fired, including accountant Betty Vinson, CFO Scott Sullivan, and CEO Bernard Ebbers. With the name “WorldCom” indelibly tarnished, the company reclaimed its previous name, “MCI.” It was put on court-imposed probation and ordered to follow the directives of the court. One of those directives called for setting up an ethics office. Nancy Higgins, a corporate attorney and onetime vice president for ethics at Lockheed Martin, was brought in with the title of chief ethics officer.

Higgins’s primary responsibility is to ensure that MCI lives up to new CEO Michael Capellas’s assertion that the company is dedicated to integrity and its employees are committed to high ethical standards. Her tasks are the same as those of most people with the same job title, but she’s under more pressure because MCI can’t afford any more ethical lapses. She oversees the company’s ethics initiatives, including training programs and an ethics hotline. She spends a lot of her time with employees, listening to their concerns and promoting company values.

Higgins is a member of the senior executive team and reports to the CEO and board of directors. She attends all board meetings and provides members with periodic updates on the company’s newly instituted ethics program (including information gleaned from the new ethics hotline).

Answer the following questions:

  1. Would you be comfortable in Higgins’s job? Does the job of ethics officer appeal to you? Why, or why not?
  2. Would you find it worthwhile to work in an ethics office for a few years at some point in your career? Why, or why not?
  3. What qualities would you look for if you were hiring an ethics officer?
  4. What factors will help (or hinder) Higgins’s ability to carry out her mandate to bolster integrity and foster ethical standards?
  5. Would the accounting scandals have occurred at WorldCom if Higgins had been on the job back when Vinson, Sullivan, and Ebbers were still there? Explain your opinion.

Ethics Angle (AACSB)

Is Honesty Academic?

Just as businesses have codes of conduct for directing employee behavior in job-related activities, so too do colleges and universities have codes of conduct to guide students’ academic behavior. They’re called various things—honor codes, academic integrity policies, policies on academic honesty, student codes of conduct—but they all have the same purpose: to promote academic integrity and to create a fair and ethical environment for all students.

At most schools, information on academic integrity is available from one of the following sources:

  • The school Web site (probably under the tab “Dean of Students” or “Student Life”)
  • The student handbook
  • Printed materials available through the Dean of Students’ office


Locate information on your school’s academic-integrity policies and answer the following questions:

  1. What behavior violates academic integrity?
  2. What happens if you’re accused of academic dishonesty?
  3. What should you do if you witness an incident of academic dishonesty?

Team-Building Skills (AACSB)

What Are the Stakes When You Play with Wal-Mart?

In resolving an ethical dilemma, you have to choose between two or more opposing alternatives, both of which, while acceptable, are important to different groups. Both alternatives may be ethically legitimate, but you can act in the interest of only one group.

This project is designed to help you learn how to analyze and resolve ethical dilemmas in a business context. You’ll work in teams to address three ethical dilemmas involving Wal-Mart, the world’s largest company. Before meeting as a group, every team member should go to the BusinessWeek Web site ( and read “Is Wal-Mart Too Powerful?” The article discusses Wal-Mart’s industry dominance and advances arguments for why the company is both admired and criticized.

Your team should then get together to analyze the three dilemmas that follow. Start by reading the overview of the dilemma and any assigned material. Then debate the issues, working to reach a resolution through the five-step process summarized in Figure 2.3 "How to Face an Ethical Dilemma":

  1. Define the problem and collect the relevant facts.
  2. Identify feasible options.
  3. Assess the effect of each option on stakeholders.
  4. Establish criteria for determining the most appropriate action.
  5. Select the best option based on the established criteria.

Finally, prepare a report on your deliberations over each dilemma, making sure that each report contains all the following items:

  • The team’s recommendation for resolving the dilemma
  • An explanation of the team’s recommendation
  • A summary of the information collected for, and the decisions made at, each step of the dilemma-resolution process

Three Ethical Dilemmas

Ethical Dilemma 1: Should Wal-Mart Close a Store because It Unionizes?


In February 2005, Wal-Mart closed a store in Quebec, Canada, after its workers voted to form a union. The decision has ramifications for various stakeholders, including employees, customers, and stockholders. In analyzing and arriving at a resolution to this dilemma, assume that you’re the CEO of Wal-Mart, but ignore the decision already made by the real CEO. Arrive at your own recommendation, which may or may not be the same as that reached by your real-life counterpart.

Before analyzing this dilemma, go to the Washington Post Web site ( and read the article “Wal-Mart Chief Defends Closing Unionized Store.”

Ethical Dilemma 2: Should Levi Strauss Go into Business with Wal-Mart?


For years, the words jeans and Levi’s were synonymous. Levi Strauss, the founder of the company that carries his name, invented blue jeans in 1850 for sale to prospectors in the gold fields of California. Company sales peaked at $7 billion in 1996 but then plummeted to $4 billion by 2003. Management has admitted that the company must reverse this downward trend if it hopes to retain the support of its twelve thousand employees, operate its remaining U.S. factories, and continue its tradition of corporate-responsibility initiatives. At this point, Wal-Mart made an attractive offer: Levi Strauss could develop a low-cost brand of jeans for sale at Wal-Mart. The decision, however, isn’t as simple as it may seem: Wal-Mart’s relentless pressure to offer “everyday low prices” can have wide-ranging ramifications for its suppliers’ stakeholders—in this case, Levi Strauss’s shareholders, employees, and customers, as well as the beneficiaries of its various social-responsibility programs. Assume that, as the CEO of Levi Strauss, you have to decide whether to accept Wal-Mart’s offer. Again, ignore any decision already made by your real-life counterpart, and instead work toward an independent recommendation.

Before you analyze this dilemma, go to the Fast Company Web site ( and read the article “The Wal-Mart You Don’t Know.”

Ethical Dilemma 3: Should You Welcome Wal-Mart into Your Neighborhood?


In 2002, Wal-Mart announced plans to build forty “supercenters” in California—a section of the country that has traditionally resisted Wal-Mart’s attempts to dot the landscape with big-box stores. Skirmishes soon broke out in California communities between those in favor of welcoming Wal-Mart and those determined to fend off mammoth retail outlets.

You’re a member of the local council of a California city, and you’ll be voting next week on whether to allow Wal-Mart to build in your community. The council’s decision will affect Wal-Mart, as well as many local stakeholders, including residents, small business owners, and employees of community supermarkets and other retail establishments. As usual, ignore any decisions already made by your real-life counterparts.

Before working on this dilemma, go to the USA Today Web site ( and read the article “California Tries to Slam Lid on Big-Boxed Wal-Mart.”

The Global View (AACSB)

A senior official of the United Nations’ World Health Organization (WHO) claims that the marketing campaigns of international tobacco companies are targeting half a billion young people in the Asia Pacific region by linking cigarette smoking to glamorous, attractive lifestyles. WHO accuses tobacco companies of “falsely associating use of their products with desirable qualities such as glamour, energy and sex appeal, as well as exciting outdoor activities and adventure.”Agence France Presse, “WHO: Half a Billion Young Asians at Risk from Tobacco Addiction,” May 31, 2008, (accessed June 30, 2008). WHO officials have expressed concern that young females are a major focus of these campaigns.

The organization called on policymakers to support a total ban on tobacco advertising, saying that “the bombardment of messages through billboards, newspapers, magazines, radio and television ads, as well as sports and fashion sponsorships and other ploys, are meant to deceive young people into trying their first stick.”Associated Press, “WHO Criticizes Tobacco Industry Focus on Asian Young People,” May 30, 2008, (accessed June 30, 2008). WHO stresses the need for a total ban on advertising, because partial bans let tobacco companies switch from one marketing scheme to another.

WHO officials believe that extensive tobacco advertising gives young people the false impression that smoking is normal and diminishes their ability to comprehend that it can kill. Representatives of the organization assert that the tobacco industry is taking advantage of young people’s vulnerability to advertising.

Provide your opinion on the following:

  • United States laws prohibit advertising by tobacco companies. Should developing countries in which cigarette smoking is promoted by the international tobacco companies follow suit—should they also ban tobacco advertising?
  • Are U.S. companies that engage in these advertising practices acting unethically? Why, or why not?
  • Should international policymakers support a total ban on tobacco advertising? Why, or why not?
  • If tobacco advertising was banned globally, what would be the response of the international tobacco companies?