Business Ethics Case Study: Unauthorized Workers and Vioxx

This case study analyzes two distinct ethical dilemmas in the business world. The first case examines the ethical implications of Chipotle Mexican Grill's employment of unauthorized immigrant workers, exploring issues of workplace diversity, legal compliance, and the impact on domestic workers and government revenue. The second case focuses on Merck's development and marketing of Vioxx, a drug with dangerous side effects, delving into corporate social responsibility, the role of the FDA, ethical advertising, and the importance of transparency with consumers. The analysis highlights the conflicts between profit maximization and ethical conduct, emphasizing the long-term consequences of prioritizing financial gains over the well-being of employees, consumers, and the broader society. It underscores the need for businesses to adhere to ethical standards, legal regulations, and transparent communication to maintain trust and protect stakeholders.

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Business Ethics

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Case Study 1 - Unauthorized Immigrant Workers at Chipotle Mexican Grill
Restaurants
 Unauthorized immigrants are those who have born in any foreign country but
residing in another country. It has been reported that a lot of immigrants are living
in the country without proper documents (Passel and Cohn, 2016). In the case
study it has been found out almost 450 employees from the Chioptle restaurant
has been thrown out because they were not illegal immigrant of the United States.
Workplace diversity means diversification in the cultural background of the
employees working in a same organization. Managing the diversity of employees
in the workplace efficiently helps in creating a positive environment in the
organization (Patrick, Kumar, 2012). Workplace Diversity includes women
working in the organization and legal immigrants. Though Unauthorized
immigrant is a form of workplace diversity because they belong from a different
country and comes from different cultural background but they are treated
differently from the other types of diversity.
Unauthorized immigrant is treated differently from other forms of diversity for
various reasons. The first reason is being an unauthorized immigrant is considered to be
illegal according to the rules and regulations of the country in which the person is living.
People who are unauthorized immigrants tends to keep contact with people who are
responsible of doing unethical deeds in the border in order to transfer people from one
country to another which is again a legal problem. The second reason is an unauthorized
immigrant always get a job by not disclosing the correct identity to the employers.
 Various employers sometimes hire employees by knowing the fact that the
employee is unauthorized immigrant. This is done by the organization with an

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intention. Unauthorized immigrant often gets a less amount of salary than the
domestic employees. This reduces the expenses of the company and thus the
company can earn more amount of profit. Increased Revenue generation is thus
beneficial for the internal stakeholders of the company which includes
management executives and shareholders. Since, the expenses done against
employees reduces, organizations tend to offer various discounts on the services
and the products. This further increases the level of satisfaction of the customers
and also increase the database of the customers. Thus, in two ways the
stakeholders of the organization are benefitted by hiring unauthorized immigrant.
Hiring unauthorized immigrant also hurts a group a people. Chances of domestic
workers and other legal immigrants who have the right to work in the host country
decreases along with the employment of the unauthorized immigrant. The chances of
promotions of domestic employees reduces. This also effects the hike in salary of the
legally allowed workers. As soon as the domestic employees get hurt the government
of the host country also gets effected because the interest of the employees in
spending money decreases and thus less amount of tax is being submitted.
So, it can be said organizations who are benefitted by hiring unauthorized immigrant
can also get affected with this decision because this act is against law. This can be
declared as a punishable offence and the reputation as well as the business practices
can get effected in the long run.
Case Study 2 - Merck, the FDA, and the Vioxx Recall
 Corporate Social Responsibility is defined in various ways. Few beliefs that
setting a business model in order to maintain and promote a standard corporate
behavior. On the other hand, CSR is also defined as an activity which is done by

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various business organizations for the betterment of the society. CSR increases the
trust among the consumers and other external stakeholders of the company
(Bénabou and Tirole, 2010). In this case study if the rules of CSR are taken in to
consideration it can be said that Merck has clearly not met the issues of social
responsibility while testing and developing Vioxx. Vioxx which was being
produced surely helped those patients who really need the medicine but Merck
was not concerned about the deadly side effects of the medicine.
When Vioxx was being developed by the scientists the harmful and fatal side effects
were already been identified by the scientists. It has been reported by the scientists that the
medicine can affect the heart of the patients very dangerously. There are various other
instances from the case study which reveals that Merck was not socially responsible. The first
one is though the top level authorities and management of the organisation knew about the
deadly side effect of the medicine but still they remain silent and disclosed nothing to the
consumers. Another socially irresponsible deed by Merck is FDA said the company to print a
warning message in the packet of the medicine. This order was being not followed by Merck
and the company was continuously delaying in printing the warning message in the packet.
So, from the incident it can be said that companies whose main operation is
manufacturing medicines should be more responsible than any other organisations. Their
products are directly consumed by the consumers and the medicines are made for the purpose
of reducing the health issues of the patients. In this case it can be said that Merck could have
been more responsible. The company should have been more transparent about the true fact
of the medicine Vioxx. This could have alerted the consumers and they could have stopped
using the medicine. In this case since the side effect of the medicine was being discovered in
the research stage, Merck was not willing to disclose anything because it already invested a
significant amount of money and the company only though about the financial crisis.

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 There is a very close relationship between the CSR activities of the firm and the
level of customer satisfaction. It is being said that the positive effect of all the
CSR activities falls on the customer. It increases the level of customer satisfaction
(Saeidi, Sofian, Saeidi, Saeidi & Saaeidi 2015).
 So, it can be said that to increase the satisfaction level of the customers they
should be provided with products which is safe for the purpose of consuming. In
this case it can be seen that Merck was not socially responsible and was not
bothered with the well-being of the customers. It is important to deliver products
to customers after examining all the safety issues. In the case study it has been
seen that Merck knew about the side effects of the products but still launched
Vioxx in the market without providing any warning to all the customers. Though
FDA said Merck to print a warning message in the packet of the products but
Merck did not follow the order and kept on selling highly fatal products in the
market. This effected the consumer in a larger way.
In the previous part it has been mentioned that CSR activities is interlinked with
transparency. In this case it has been found that the company was not transparent with the
external shareholders. They kept all the information regarding the fatality of the product
undisclosed. The external shareholders of the company were not aware of the fact that the
high priced product which is being offered by Merck is highly fatal for those who are
consuming it. This is how it can be said that Merck was not responsible towards its customers
as well as towards the other shareholders of the company. Merck should have been more
ethically responsible towards its customers. Though Merck had made a significant amount of
profit by selling this drug but in long term the interest of the company gets effected. Such act
is considered to be a punishable offence. Government can ask a huge penalty from the

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company which effects the reputation of the company and also reduces the revenue
generation of the country to a significant level.
 The function of advertising is to provide correct information about the products
which are being launched in the market. The information aims at consumer
protection. It helps the customer to gain correct knowledge about the products so
that retailers cannot mislead them (Sheehan, 2013). According to this case study it
is important for the company to organize the process of advertising in such a way
that it can give correct information about the medicine which has been launched
for the treatment of arthritis but it can be seen that Merck did not disclose all the
truth about the medicine. Merck focussed on advertising the products directly to
the customers instead of telling them the side effects of the product. Thus, with
this incident it can be said that Merck was very irresponsible when it comes to
advertising of the product in the market.
Merck focussed direct advertising. This means that all the information regarding the
product was communicated by the company directly to the consumers. Sometimes doctors are
aware of the composition of the medicines that they are prescribing to the patients. There are
many consumers who are not aware of the composition of the products. This opportunity was
taken by Merck and they started selling Vioxx without informing them about the truth of the
product. In the case study it has been found that many doctors suggested to prove a clinical
test on the drug that has been produced by Merck, but the company did not clinically prove
the effect of the drug in front of the doctor. So, it can be said that Merck chose the path of
unethical marketing of the product which effected a huge number of customers. Merck also
influenced various doctors in order to prescribe the medicine to their patients. Thus, the case
study also addresses another major issue which says that big pharmaceutical companies are
hugely influencing doctors for prescribing their medicines. This is effecting the safety of the

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consumer in many ways. The entire incident is very sad because there are lots of people who
are depended on medicines and doctors in order to keep themselves healthy but such
incidents are breaking the trust of the patients in a broader way. It can be seen that various
pharmaceutical companies are focussing on spending a large amount of money in marketing a
product which can be harmful when consumed instead of focussing on serving the customers
with the safe product. It is important for each pharmaceutical companies to be more
responsible to the society.
 The role of government in each and every country is to look after the safety of the
people living in the country. The interest of each and every people should be
looked after by the Government of the country. Universal care of health is the
ultimate responsible for the government. Local government aims at informing
people about various health care programs like immunization, vaccination and
many more (Mossialos, Wenzl, Osborn, Sarnak, 2016). It has been found out
from the case study that Merck kept delaying in disclosing about the side effect of
the products to its consumers. This intentional delaying was known to the
members of FDA. Thus, it can be said that Merck was successful in influencing
FDA. In 2002 FDA came to know about the side effects of the product Vioxx,
from that time FDA constantly forced Merck to declare the side effects of the
medicine. This initiative of FDA was to safe the health of the stakeholders who
are consuming the product. Instead of listening to the order of FDA, Merck
continuously went in to negotiation for delaying the disclosure.
FDA once also sent a warning letter to Merck to decrease the potential cardiovascular
risk which is associated with its product Vioxx. This order was also not followed by the
company. In the case study it has been mentioned that few researchers who is not from the
company identified the potential risk of the medicine but unethically at that point of time all

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the statistical data regarding the composition of the drug was being removed by Merck. This
showed that Merck was not cooperating with the government agency, FDA. This step was
taken by the company in order to meet the short term objective of the company. Merck
earned a huge amount of money by selling Vioxx in the market. Though the short term
interest of the company was served with the increase in sales of the product but in long term
the company was hugely effected. Once the truth was revealed in front of everyone in the
market Merck started experiencing a huge array of failures.
 In the case study it has been seen that Merck was socially irresponsible towards
the government agency and the stakeholders of the company. It has also been
found that unethical approach was also adopted Merck in order to advertise its
product which has cardiovascular side effects but at the end of all this drama it has
been found that the drug Vioxx which created all this problem was finally recalled
by Merck from the market. There are various reasons this recall of the drug from
the market is considered to be a socially responsible deed.
The recall of this drug saved the life of various internal and external stakeholders
of the company. The internal stakeholders like the investors and management
executives were benefitted because they further do not need to deal with the legal
complexities. The main external stakeholders who is benefitted from the recall of the
drug is consumers. It has been found in the case study that having the drug was
effecting the cardiovascular system of the patients and they became highly prone to
heart attacks. Thus, lives of many patients were saved after the drug has been recalled.
So, this is one of the responsible action which has been taken by Merck.
Merck was previously warned and ordered by FDA to label their products about
the side effects which can take place due to the consumption of Vioxx. So, it can be

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said that Merck had an option of re-packaging the product and launching it in the
market. This could have saved a lot of money and Merck could have stopped itself
from suffering through financial losses. Instead Merck chose to recall the entire
product from the market. Immediately the share price of Merck fallen down and the
reputation of the company was also effected to a huge extent. However, this action by
the management team of Merck is considered as a socially responsible action as they
did not want any further chaos and disaster among the external stakeholder of the
company.
In the previous part of discussion, it has been found companies take forward the
CSR activities by integrating three factors. The factors are interests in economy,
society and environment. When Merck recalled the product from the market the
company knew that they would undergo a lot of financial losses and the company
might face economic crisis. The company chose to pay all the penalties and they were
ready to face all the legal punishment for this misdeed. This decision is considered to
be very tough for any company but still Merck chose to be socially responsible and
thought about the well-being of the consumers who are consuming the drug.

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References
Bénabou, R., & Tirole, J. (2010). Individual and corporate
social responsibility. Economica, 77(305), 1-19.
Mossialos, E., Wenzl, M., Osborn, R., & Sarnak, D. (2016). 2015 international profiles of
health care systems. Canadian Agency for Drugs and Technologies in Health.
Passel, J. S., & Cohn, D. (2016). Size of US unauthorized immigrant workforce stable after
the Great Recession. Washington, DC: Pew Hispanic Center.
Patrick, H. A., & Kumar, V. R. (2012). Managing workplace diversity: Issues and
challenges. Sage Open, 2(2), 2158244012444615.
Saeidi, S. P., Sofian, S., Saeidi, P., Saeidi, S. P., & Saaeidi, S. A. (2015). How does corporate
social responsibility contribute to firm financial performance? The mediating role of
competitive advantage, reputation, and customer satisfaction. Journal of business
research, 68(2), 341-350.
Sheehan, K. B. (2013). Controversies in contemporary advertising. Sage Publications.