Business Ethics

 1.  Consider the material quoted below regarding Skechers Shape-Ups and other toning shoes:
 
Super Bowl commercials in 2010, the FTC says, but there was no substantiation to claims its toning sneakers would make buyers’ bottom half their better half.
 
Reebok settled similar FTC charges for $25 million last fall. Vladeck says Skechers settlement was larger, in part, because of its larger share of the toning-sneaker market. Under the settlement, Skechers will be barred from making unsubstantiated claims about the health and fitness benefits of Shape-ups and related footwear. The commission alleged Skechers also made deceptive claims about its Resistance Runner, Toners and Tone-ups shoes.
 
The FTC also said research underlying the claims was suspect. Steven Gautreau, a chiropractor, recommended Shape-ups based on a clinical study he claimed was “independent” and tested the shoes’ benefits compared with regular fitness shoes, the FTC says. The study did not produce the results claimed in the ad, the FTC says. Skechers also didn’t disclose that Gautreau is married to a Skechers marketing executive and that Skechers paid him to do the study, FTC says. 
 
 At the Skechers store near Union Square in San Francisco, customers said they thought the settlement was a little far-fetched and that most people understand when advertising exaggerates the effects of a product. It’s not the shoes, it’s the person that has to run, has to exercise, said Jacqueline Paris, 56, who was visiting from Quebec. You can think for yourself. It’s (the advertising) just to get attention. 
 
Given what youve just read about this case and the topic in general, was the Skechers campaign deceptive, misleading, or manipulative? Or, were the claims merely puffery and therefore acceptable? (33 points)
A.    Knowledge of definitions and principles of truth-telling    _____/10
B.    Use of facts and assumptions made to support position    _____/11
C.    Moral reasoning, logic and overall quality of analysis    _____/12

2. Sally Smith, the president and chief executive officer of X Company is involved in planning the takeover of Company Y.  She has a neighbor who is facing financial difficulties.  She suggests to the neighbor that he buy as much Company Y stock as he can afford because its value will go up soon.  She does not tell him why it will go up.  The neighbor takes the advice and buys the stock.
    Is the neighbor guilty of unethical insider trading?  Why or why not?  (33 points)
A.    Knowledge of insider trading law, principles, & issues        _____/10
B.    Use of case facts and assumptions made to support position    _____/11
C.    Judgment, Logic & quality of analysis    ______/12

 3.  Answer oneof the following questions (aor b):     
a.)Nike is a household name when it comes to sports apparel and equipment. It has worked hard to burnish its image, especially by garnering endorsements from big names in the sports world, such as Michael Jordan. But in 1996 its silver image began to tarnish. It knew it was in trouble when an article on child labor in Pakistan appeared in Life magazine with a picture of a 12-year-old boy sewing a Nike soccer ball in a factory, and activists started showing up in front of Nike outlets holding posters with the boys picture on it. Although child labor is illegal in Pakistan, the law is not enforced and child labor is widespread. The factory in question was not run by Nike, but by a subcontractor or supplier. Nonetheless, Nike was held responsible by many, especially in the United States and Canada. One immediate result was a Boycott Nike movement, which continued to monitor and report on Nikes actions. 
Nor was the report from Pakistan an isolated incident for Nike. In fact, since 1996 Nike has been charged by critics with engaging in a variety of unethical employment practices in countries that exercise little or no control over the conditions of labor or whose governments are corrupt and can be bought off.
Additionally, it has been documented that Nike paid its 80,000 Indonesian factory workers 10 cents an hour. The same group that reported this calculated that Nike could double their wages at a cost of less than $20,000,000, the amount that the company paid Michael Jordan for promoting its products. This group also claimed that the cost of making one pair of Nike running shoes costs on average, about $5.00 though the shoes retail for well over $100. While these figures alone do not present the whole picture, they suggest exploitation of overseas labor.

b.)    You are the senior vice president of a machinery-manufacturing firm that builds and sells equipment for complete chemical processes on a worldwide basis. The design of this equipment is highly technical, and almost all of your younger employees have an engineering background.  Perhaps 15 percent of those engineers are women, who started joining the company about five years ago.
 
It is accepted that the career path for younger employees seeking promotion must include an overseas sales assignment in developing countries, and you plan to appoint a woman to the next available opportunity. The vice president of the South American sales division calls youevidently anticipating your intentionand asks you not to do so.  He says that the firm’s clients in South American countries will not accept women in a technical capacity.  “The older men will be polite to her, and treat her like a daughter.  The younger ones will engage in some harmless flirting, which I assume she can handle with ease, and some not so harmless which she will have to learn to live with. But, neither the older nor the younger customers will accept technical recommendations from a woman, so she’ll be useless in a sales capacity.  If she wants to work in design at our central office and have no contact with clients, that’s fine, but otherwise I think you should send her to Europe.”  However, company sales in Europe were minimal, due to a lackluster economy and strong competition from technically advanced German, French and Italian firms. Consequently, open positions become available infrequently in Europe, and anyone seeking a sales position there will wait longer for placement. Besides, the company’s real sales growth today is coming from the economically robust South American region.
 
        Should you do as your South American vice president asks, and promote a man into this next available position rather than a woman?  How can women be assured of employment equity in countries that assign women only a limited role in business?  (33 points)