BUSINESS ETHICS CASES

GROUP NUMBER 11

Viraj Bhatt 06Sushant Cowlagi 12

Nilesh Singh 52 Sameer Vichare 59

Tejashree Sawant 61

ETHICS – An Overview

Ethics may be defined as the set of moral principles that distinguish what is right from what is wrong.

Ethics has a twofold objective: it evaluates human practices by calling upon moral standards.

It may give prescriptive advice on how to act morally in a given situation.

BUSINESS ETHICS

Ethical issues may vary from one organization to another according to the factors influencing their Ethical Behavior: conflicts of interest, quality control issues, discrimination in hiring and promotion, misuse of proprietary information, abuse of company expense accounts, misuse of company assets, drug and alcohol abuse, environmental pollution, environmental destruction etc.

Case 1

Ethical Issues of Walmart

Skimping on employee paychecks

Health Insurance

Labour Union Opposition

Unfair treatment of Employees

Illegal Hiring Practices

Some more stories…WALMART’S WHISTLE BLOWER ACT IN CHINA HIGHLIGHTS GLOBAL

ISSUE:

Wal-Mart is vague about its testing methods.It is unknown which products Wal-Mart tests and the types of tests conducted. In addition, Wal-Mart conducts nearly all of its product safety testing at Consumer TestingLaboratories (CTL), a private company which relies on Wal-Mart for the majority of itsbusiness. Neither CTL nor Wal-Mart is required to disclose test results to the public, andconsumers are forced to take Wal-Mart’s word that the company’s products are safe.

Wal-Mart relies on consumer complaints after the fact.As part of a voluntary reporting system with the Consumer Products Safety Commission(CPSC), Wal-Mart is only required to investigate complaints about its products; it isNOT required to take any preventative measures to ensure its products are safe

Wal-Mart lobbies against increased port container inspections.In 2007, when a bill came before Congress to increase port security funding, Wal-Martdenounced it. Despite its potential to save lives and prevent widespread illness, Wal-Mart railed against the law, saying it would slow down the import process and raise costs.

Some more stories…

Wal-Mart opposes strengthening the CPSC.

Through the Retail Industry Leaders Association and the Toy Industry Association, Wal-Mart opposes provisions in legislation that would strengthen the enforcement abilityof the CPSC. The retailer is adamant about avoiding responsibility for selling recalled orunsafe products.

Wal-Mart openly opposes Country of Origin Labeling (COOL) for food products.

Country of Origin Labeling would mandate that all food be labeled with its country oforigin, helping consumers tell where their food is from. Wal-Mart has come out againstthe law several times, saying it would be too difficult to accomplish.

Wal-Mart indirectly lobbies AGAINST food inspections.

Through the Food Marketing Institute, Wal-Mart has lobbied against legislation thatwould increase inspections of imported food and increase transparency of shipmentshandled by food manufacturers and processors

Case 2

Toyota brief Formerly known as “Toyoda Automatic Loom Works”, were involved in manufacturer of automatic looms (a device use to weave cloth) used by the silk & cotton industry.

Sakichi Toyoda invested in R & D of an automobile in 1930.

In1930's the textile industry suffered and Toyoda’s orders were slowed. Owing to the biz loss of Toyoda, Mr. Sakichi handed over the company to his eldest son Kiichiro Toyoda.

To make clear distinction between his family (private life) and his company (public life), Saikichi changed the name “Toyoda” to “Toyota”

Toyota Motor Company Ltd. was established in Koromo Town, Japan in 1937 by Mr. Kiichiro Toyoda.

Toyota brief ( contd )

In 1972, Toyota began manufacturing operations in United States

By 1986 started full-scale vehicle production.

Toyota publically listed at New York  Stock Exchange (NYSE) currently market capital valued @ $233.73 billion ( as on 26th Feb’15 ).

Over and above manufacturing, Toyota also has a global network of design and 'Research & Development' facilities, embracing three major car markets of Japan, North America & Europe.

Toyota Company is still in the textile business and still makes automatic looms, which are now computerized and electric sewing machines which are available worldwide.

Timelines of Recall

Sept 26, 2007 In US, 55000 Camry and Lexus recalled-unsecured floor mats.

Nov 2, 2009 In US, 3.8 Million Toyota and Lexus vehicles recalled- floor mats. 

Nov 25, 2009 In US, 4 Million vehicles recalled-reconfigure gas pedals. 

Jan 21, 2010 In US, 2.3 Million vehicles recalled-gas pedal sticking. Jan 27, 2010 In US, 1.1 Million more vehicles added to recall list -

sticking accelerator pedal.  Jan 30, 2010 In Europe, China: 1.8 Million cars with a sticking

accelerator problem. Aug 28, 2010 In US & Canada: approximately 1.13 million Corolla

and Corolla Matrix vehicles for Engine Control Modules (ECM) that may have been improperly manufactured.

Feb 22, 2011 Toyota recalls an additional 2.17 million vehicles for gas pedals that become trapped on floor hardware.

Toyota Recall Case

Toyota recalled some of it automobiles due to unintended acceleration leading to the death of innocent people. Toyota ultimately recalled millions of its cars for floor mat issues, brake problems and "sticky" gas pedals

Sticky gas pedals/stuck gas pedal

More than 16.5 million Toyota cars and trucks have been recalled from 2007 till 2011 .

Reason : 1) Problems that were attributed to faulty accelerators, floor mats getting

stuck in gas pedals and brake problems in Prius hybrids

2) Drivers complained about cars getting out of control at 65mph while overtaking, and negotiating roundabouts so fast that it felt like their car was on two wheels.

3) Around 10,000 Toyota owners have so far contacted a hotline to air concerns.

Cars affected : RAV4, Corolla, Matrix, Avalon, Camry, Tundra, Sequoia, Lexus, Pontiac, Highlander

Toyota Recall Case

Toyota did not act until the number of cases and the media outcry became loud enough to get through their in-defiance skulls

The problem was taken seriously when one duty police officer and his family ,in August 2009, traveling in their Toyota Lexus, unexpectedly accelerated, crashed into another vehicle, tumbled over an embankment and burst into flames lead to the death of the man.

Toyota Company commissioned the National Highway Traffic Safety Administration (NHTSA) to investigate on the problem.

After investigation, the NHTSA charged Toyota with a $16.4 million fine for failing to notify the government of the infamous unintended acceleration issue within the allotted time.

Since then, Toyota has been more forthcoming with information about what it claims the company knew and when.

Toyota Recall Case

As immediate remedy if such problem occurs in any Toyota Vehicle, Toyota said that drivers should firmly apply their brakes, drive the car to a safe location, shut off engine & contact the nearest Toyota dealer. Drivers who experience the problem should not pump their brakes, Toyota said..

Solutions from Toyota to fix the problems

Toyota's engineers have developed and rigorously tested a solution that is both effective and simple. A precision-cut steel reinforcement bar will be installed into the accelerator pedal assembly, thereby eliminating the excess friction that has caused pedals to stick in rare instances

Toyota Recall Case

Toyota Recall Case – Lessons learnt

Aggressive growth can create unmanageable risk.

Get the facts quickly and manage your risks aggressively

Your supply chain is only as strong as your weakest link. 

Accept Responsibility. 

Take the Long View.

Founded by Harland Sanders in the 1930’sMainly for hungry TravelersChicken delicacies – USPSanders' fame grew >>> given the title Kentucky \ Colonel by the state Governor in 1935 for his contribution to the state's cuisine.

As of 2014,It is the world's 2nd largestrestaurant chain with 18,875 outlets in 118 countries.

KFC – A brief

KFC’s entry in India in 1995 in BangaloreProtests by farmers led by the Karnataka Rajya Ryota Sangha (KRRS)Addition of higher levels of the flavour enhancer monosodium glutamate (MSG)The PETA issue

Ethical Issues of KFC in INDIA

Understanding the issues of Cultural / Social / Economic behaviors / patterns in INDIA..Sense of empathy while doing businessUnderstand the importance of ETHICS in doing businessFor the Vegetarian crowd???

Ethical Issues/lessons from KFC in INDIA

CONCLUSION

Fairness & honesty – the heart of business ethics

How a company uses its resourcesNo harm to customersAccurate representationsInternal / External facets of businessThe Primary reason – SERVE / NOT PROFIT

• AS YOU SOW , SO SHALL YOU REAP