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Ethical Dilemmas in Business Decisions

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After years of steady growth in net income, The Performance Drug Company sustained a loss of $1.6 million in 2012. The loss was primarily due to $5 million in expenses related to a product recall. The company designs and produces health supplements and had to recall a product in 2012 because of potential health risks. The company controller, Joe Mammoth, suggests the loss be included in the 2012 income statement as an extraordinary item. "If we report it as an extraordinary item, our income from continuing operations will actually show an increase from the prior year. Investors will appreciate the continued growth in ongoing profitability and will discount the one-time loss." Joe further notes that executive bonuses are tied to income from continuing operations, not net income. The CEO asks Joe to justify this. "I know we have had product recalls before and, of course, they do occur in our industry," Joe replies, "but we have never had a recall of this magnitude, and have upgraded our quality control procedures so this should never happen again." Other than the "this should never happen again" comment...what is the ethical dilemma faced by Joe Mammoth and the CEO. Who are the stakeholders and how are they affected?

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The main ethical dilemma faced by Joe and CEO is the treatment of this loss in the financial statements of the organization. The controller and CEO should ethically follow the accounting ...

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See Also This Related BrainMass Solution

Albert Gable, Business & Professional Ethics: Apply a Decision-Making Framework

Applying a Decision-Making Framework

Assignment: Fully Applying a Decision-Making Framework

? Read the Locker Room Talk Ethics Case

? Analyze the case using stakeholder impact analysis and the philosophical approaches to
ethical decision making.

? Explain what you think Albert should do in 700- to 1,050-words.

Review the questions below to help analyze the case.

? What is the ethical dilemma in the case?

? What events led to the dilemma?

? When describing the dilemma, did you mistakenly propose a solution?

? Have you identified stakeholders?

? What is their stake in the case?

? Have you described every stakeholder in an objective, unbiased way?

? Have you clearly stated the course of action Albert should take?

? What reasons support your decision?

? What philosophical approach did you use to reach your decision?

? What are the weaknesses of your argument? Have you addressed
counterarguments?

? How do you think each stakeholder will be impacted by your decision?

? Are there potential impacts on stakeholders that are difficult to anticipate? Have
you identified them?

? Do you present new evidence or analysis in the conclusion? Would it be more
appropriate in another section of the paper?

? Have you summarized the dilemma, your decision, and the potential impact on stakeholders?

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