Category: Business Ethics

In 2006, CNET news published exclusive details of HP’s long-term strategy, information leaked directly from the boardroom. Patricia Dunn, HP chairwoman at the time, hired spies to uncover the source of the leak. The problem was that these spies used pretexting, an illegal and unethical way of obtaining personal information about another individual.

The reason for the information leakage was mainly employee deviance, as they were voluntary actions that violated established norms within HP. It was found that Jay Keyworth, a long-service board member, was the source of the leak. He was forced to resign, which caused another board member, Tom Perkins, to become a whistleblower and reveal all of the boardroom’s internal problems.

Dunn’s decision of finding the responsible person was certainly part of her job as a chairwoman. However, the way she did so was unethical. Her utilitarianistic reasoning showed that she thought that the end justified the means. This unethical decision caused a further organizational crisis, which resulted in several people losing their jobs. HP could not handle the post-crisis media coverage and showed a poor organizational culture.

Overall, HP’s crisis is a clear example of how lack of ethics, misunderstanding of organizational norms, employee deviance and a poor organizational culture can lead to a major crisis.

Further reading: HP’s pretexting scandal FAQ

Nike is the world’s leading supplier of athletic shows with about 36% of market share and $19.2 billions in revenue (2009). They are in charge of designing, marketing and selling, but not manufacturing their shoes.

The factories that are in charge of this are called sweatshops, given that employees often work long hours in poor conditions for a very low wage. About 800,000 people work on these, which are mainly located in China, Indonesia and Vietnam because of cheap labour.

In all of these countries, the minimum wage is not enough to survive. In China, workers make $1.75 a day; in Indonesia, $2.46 a day; and in Vietnam, $1.60 a day, even when three simple meals cost $2.10 a day. Workers usually need to work more than 100 overtime hours per month so that they can only survive.

Where are Nike’s values and ethics? They are always under great criticism because they are perfectly capable of increasing the wages of all their factory workers, but they refuse to do it. Other companies like Coca-Cola or Goodyear did not hesitate to do so when realizing minimum wages were not enough. Nike should follow their ethical example.

The first seems to change organizational ethical values. Just watch the following video to get an idea what of what Phil Knight, Nike’s Chairman, has to say about sweatshops (15:41 to 16:56):

Behind the Swoosh from Jim Keady on Vimeo.

Some facts about Nike sweatshops:
Nike Sweatshop Facts
More Nike Sweatshop Facts

Further reading:Detailed analysis of Nike’s sweatshops

Apple created the “Get A Mac” television advertising campaign, which run from 2006 to 2009, to directly highlight the aspects in which they were better than Windows. All of the ads followed a simple template, in which a two men (each one representing each company) talked about a certain feature. This campaign surely brought a lot of attention and even won an Effie Award in 2007 for its originality and effectiveness.

However, to what extent was Apple competing fairly. Most analysts state that most of the differences pointed out were not as huge as shown. Anyways, Apple’s strategy is understandable given that they are the second brand behind Windows. And one of the most effective ways of advertising in that position is pointing out the leader’s weaknesses. However, it can be said that it was not ethical to attack their main competitors in such a hard way.

Windows responded with the “I’m a PC” campaign, in which they did not attack Apple but rather defined their own strengths. This was the way to go, certainly, because if they had decided to attack Apple then consumers would have thought that Windows felt threatened by their competitors.

Further reading:
Differentiating between a Mac and a PC
“I’m a PC” campaign

* Funny fact: the “I’m a PC” commercials were done with Apple hardware and software.

The worldwide financial crisis of 2008 resulted in the collapse of many companies in the USA, some of which were helped financially by the government to prevent bankruptcy and probably massive unemployment. Due to the financial help, these companies could achieve extraordinary profits, which were distributed as bonuses for their senior executives. At the same time, lower-end workers did not receive bonuses and some were left unemployed. To what extent did these senior executives deserve those bonuses? Weren’t they responsible for the company going bankrupt or was the market system as a whole accountable for that?

On February 2009, President Obama attempted a solution by imposing a limit of $500,000 on these bonuses. Another possible solution in the long-term would be to encourage the development of more powerful companies and therefore have a more competitive market. There are skilled professionals out there that can do this but the barriers of entry are very high. In the short-term, the solution would be to increase the taxes on profits, which is reasonable given that the government itself helped these companies gain profits in the first place.

Further reading: Alternative Solutions