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Corporate Ethics - K Mart

K-Mart sends one of it's employees to Wal-Mart to apply for a management position with the intent of researching their satellite-based, "Just-In-Time" merchandise inventory / delivery system. It's not a classified system and is built using off-the-shelf technology that's available to everyone. Is K-Mart ethical? Is it breaking the law? What is the employee's responsibility?

Second scenario: Company A unethically gathers competitive intelligence on another company, but never uses it. Company B ethically gathers competitive intelligence, but ruins the competitors reputation with the data collected. Is one scenario better or worse than the other? Why or why not?

Solution Preview

This is mostly an opinion-based question (except for the law part) but I'll give you my take on it.

First Scenario:

Sending an employee to another company to gather information is not illegal unless the information is a trade secret or in breach of a confidentiality agreement. For example, the recipe for Pepsi is a trade secret and very few people know what the whole recipe is. If someone went over to Pepsi and spent years in the plant learning more and more about the process of producing the Pepsi drink and then divulged what they knew, that would not be legal. However, here we have a well-known operations management system. Even though it is not classified, the way that K-Mart implements it may be a trade secret. If K-Mart had the employee sign a confidentiality agreement beforehand, then what Wal-Mart is doing may be illegal and a breach to the confidentiality agreement.

If the employee would not be divulging any trade secrets or breaching the confidentiality agreement, this ...

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