Business Ethics: PHI 360 Week 3 Short Answer Questions

This document provides a comprehensive analysis of several ethical dilemmas in business and professional contexts. It begins by examining the Ford Pinto case through a utilitarian lens, concluding that the decision not to install a baffle was ethically wrong. The document then explores the ethical considerations of whistleblowing from utilitarian, deontological, and virtue ethics perspectives, arguing for the importance of reporting unethical behavior. It further addresses workplace policies and the needs of employees with children, analyzing insider trading scenarios and the ethical failings of a CEO. The analysis extends to the views of commentators like Dorfman and Altucher on insider trading, and the Enron case, examining the use of mark-to-market accounting, performance review processes, and the overall ethical environment. The document underscores the importance of ethical leadership and transparency in corporate environments.

Running head: BUSINESS AND PROFESSIONAL ETHICS
Business and professional ethics
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Question 1
From the perspective of a utilitarian, the decision made by Ford of not installing a baffle on
their Pinto was wrong. The analysis indicates that Ford would have used $137 million to
install the baffle while liabilities due to the loss of human lives would amount to $49 million
(Boutilier, 2015). The company decided not to install the baffle on the Pinto in disregard to
their customers so as to earn more profit and increase their market share. A utilitarian would
have place more utility on the safety of their customers which would also improve the
brand’s value. When NHTSA noticed the defects, Ford could have corrected the problem to
minimize bad press rather than justifying that Pinto was just as safe as other cars.
Question 2
In view of the Utilitarian theory test, whistle-blowers should be able to act with the public
interest. By fearing the consequences and keeping quiet, the results would be a continuation
of the harmful behaviour which might eventually harm the public. Therefore, research by
Kesselheim, Studdert and Mello (2010) shows that utilitarians should report to the manager
which would lead to putting a stop to the fraudulent actions.
On the other hand, deontologists may believe that the rule suggesting people should neglect
their duties cannot be morally acceptable thus the actions cannot be morally acceptable.
Lastly, virtual ethics suggest that amid the dangers brought about by whistle-blowing, the
spying on companies is not supported by virtues of justice, fairness and honesty (Conway &
Gawronski, 2013).
Question 3
By asking the question “How Much Should I be Required to Meet the Needs of Your
Children?” Mills meant how workplace policies could be tailored to meet the needs of
employees with children. Mills answers the question by describing how many organizations
have make significant steps in being family friendly so as to offer assistance to working

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parents. In addition, she notes that some companies with family friendly policies tend to
exploit childless employees so as to support workers who are parents.
Question 4
For each of the following situations, analyse whether or not the person’s trading constitutes
illegal insider trading and explain your position:
a) Bill is guilty of illegal insider trading since the man who told him to buy Apple shares
was probably an executive at Apple thus an insider who willingly shares the company
secret. The fact that the shares brought forth profits means that the man had prior
knowledge of the situation.
b) Amirah is not guilty of insider trading since she is not an insider and does not get
directly involved with the leak of the information. While the couple speaks of selling
their controlling position at the company, they did not intend to tell Amirah or any
other person. The leak of information was unintentionally and the couple did not even
realize that Amirah had overheard them speaking of selling their position in Internet
Inc. and retiring to Hawaii. Furthermore, when Amirah searches the internet, she finds
rumours about the purchase of the company.
Question 5
The C.E.O behaves in an unethical and unfair manner especially since he is the top most
manager of the organization. By selling a great part of his stock position at the company, the
CEO is guilty of unfairness since he used prior knowledge of the FDA not approving their
cancer treatment in a way which goes against the virtues of fairness. In addition, the CEO
misuses the powers accorded to him as the top most leader of the organization. The CEO is
therefore guilty of insider trading and unfairness since people could only sell their shares at a
very low price as compared to what the CEO had sold previously.

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Question 6
Dorfman would not find any fault with the CEO due to his hunger for simple ways of making
money, the 12-step computerized program that is a guarantee people they won’t be beggars
after retiring, 10 mutual funds for the 90’s, seven stocks to buy now and the quick hit. He
would quickly support the CEO by arguing that he could not wait to see price of shares fall
when he has the opportunity of selling at a cheap price. Besides, Altucher advocates for the
legalization of insider trading by arguing that the move would ensure that fraud is exposed
earlier, there would be transparency in companies and prices would be effective (Peress,
2010). Therefore, Altucher would support the situation.
Question 7
Lay audited Enron’s Valhalla oil trading firm where he realized that it was using phony
financial records to depict that the company was making profits. The company was later
closed with a $140 million loss (Arbogast, 2013).
Question 8
Mark-to-market accounting evaluates the asset value for organizations at the prevailing price
in the market. The objective is to give a clear picture of how the company is stable financially
and its anticipation for profits in future. The type of accounting is significant as it gives the
level of profitability of inventory to assist in avoiding losses when sold. Enron executives
would have used the method by noting that their assets still have a great value in the market
when their price was actually low.
Question 9
The performance review and corporate culture processes instituted by Jeff Skilling at Enron
resulted to deception, greed and corruption. According to a research on “What Plato knew
about enron” conducted by Henderson, Oakes and Smith (2009) indicates that the
organization failed to create a sustainable environment with its employees which led to the

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company being driven towards a gloomy end. Employees were fired or ignored after trying to
question their leaders’ actions.
Enron’s leadership were so individualistic rather than caring for the demands of the other
employees. Ethics was not being practiced at Enron which depicted a lack of shared vision
between the management and employees going beyond profits.
Question 10
Enron used phony financial reports. In addition, there lacked openness between employee and
employer, and the toxic environment led to corruption in the organization.

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References
Arbogast, S. V. (2013). Resisting corporate corruption: Cases in practical ethics from Enron
through the financial crisis. John Wiley & Sons.
Boutilier, C., Caragiannis, I., Haber, S., Lu, T., Procaccia, A. D., & Sheffet, O. (2015).
Optimal social choice functions: A utilitarian view. Artificial Intelligence, 227, 190-
213.
Conway, P., & Gawronski, B. (2013). Deontological and utilitarian inclinations in moral
decision making: a process dissociation approach. Journal of personality and social
psychology, 104(2), 216.
Henderson, M. C., Oakes, M. G., & Smith, M. (2009). What Plato knew about enron. Journal
of business ethics, 86(4), 463-471.
Kesselheim, A. S., Studdert, D. M., & Mello, M. M. (2010). Whistle-blowers' experiences in
fraud litigation against pharmaceutical companies. New England Journal of Medicine,
362(19), 1832-1839.
Peress, J. (2010). Product market competition, insider trading, and stock market efficiency.
The Journal of Finance, 65(1), 1-43.