1 Case Instructions Overall Instructions .docx

1
Case Instructions
Overall Instructions
1. When using material from the chapter, outline, and/or
lectures, remember that you do not
have to cite any material quoted from these sources in this
course.
2. Each case is an INDIVIDUAL ASSIGNMENT, not a group
assignment. I expect your
answers to be your own thoughts and written in your own
words! (See the discussion in
your Syllabus regarding ECU’s Academic Integrity Policy.)
3. Save your file as a Word 2003 document (“.doc”), Word 2007
document (“.docx”), Word
2010 document (“.docx”), Word 2013 (“.docx”) or in “rtf”
format. DO NOT USE
MICROSOFT WORKS OR SAVE YOUR FILE IN ANY OTHER
FORMAT. I WILL

NOT BE ABLE TO ACCESS YOUR FILE AND THEREFORE
WOULD HAVE TO
GIVE YOU A GRADE OF “0.”
4. Save the file as “CaseX” and then your last name, first name
initial, and middle initial. For
example, my last name is obviously “Jones,” my first name
initial is “C,” and my middle
initial is “C.” Therefore, I would save my Case 1 file as
“Case1ScottMD”; my Case 2 file as
“Case2ScottMD”; and my Case 3 file as “Case3ScottMD.” If
you do not have a middle
name, enter your first name initial twice. If you have more than
one middle name, use the
initial of your first middle name only. DO NOT LEAVE
SPACES IN YOUR FILE
NAME because it prevents me from properly archiving your
file.
5. Type your answers according to the “Formatting Instructions”
above. (Instructor’s Note:
Failure to following the format when completing this
assignment can cost you a significant
number of points). Then, save your file according to
instructions 3 – 4 above,
PROOFREAD YOUR PAPER (grammatical errors in your paper

can cost you significant
points), then submit it BEFORE the deadline as shown on your
Blackboard Calendar.
6. Submit your file by clicking on the “Exercise/Case
Assignments” Tab in the left-hand frame
in Blackboard. Then click on the assignment titled “Case X”
and scroll down until you see
the words “Attach File” and the buttons to the right titled
“Browse My Computer” and
“Browse Course.” Click the “Browse My Computer” button and
attach your file (DO NOT
type your answer to this exercise in the “Submission” text box).
When you see that your file
has been properly attached, click the “Submit” button. (To
access each case assignment
you must have scored at least a 90% on Chapter 10's Practice
Quiz.)
2
Formatting Instructions

Step 1: Ethical Issue(s) (10 points)
1. Use one paragraph to tell me what your ethical issue is and
why? If you have more than one
ethical issue, write and explain each issue in a separate
paragraph?
2. In the first sentence of your paragraph, simply tell me what
the ethical problem/issue was in
this case without explaining why?
3. In the next sentences of your paragraph, describe the ethical
issue using information from
your book, outlines, and/or lectures? Also state the chapter from
your book that supports
your answer? (Note: Ethical issues in the cases you do in this
class will come from
Chapters 5 – 10.)
4. In the next sentences of your paragraph, use facts from the
case to support your answer?
5. In the final sentence of your paragraph, use a concluding
sentence to wrap everything up?
6. CAUTION: Do not make any decisions at this time. You are
simply identifying and
explaining the ethical issue(s) facing you as the decision-maker
at this point. In addition, do

not discuss ethical issues facing others in the case—again, I am
only concerned with
whether you can identify the issues facing you as the decision-
maker.
Step 2: Stakeholder Analysis (10 points)
1. Starting with the decision-maker (you), identify and list in
sentence form ALL your
stakes in the decision to be made. Stakes are what you hope to
gain, fear losing, or want
given the situation and the decision or decisions you must
eventually make. THEY ARE
NOT DECISIONS.
2. Identify the other key stakeholders as specifically as possible
and then identify and list in
sentence form NO MORE THAN TWO important stakes facing
each key stakeholder. Key
stakeholders are individuals or groups that are essential to
solving the ethical issue(s)
identified in Step 1 above. (Instructor’s Hint: They are usually,
but not always, mentioned in
the case so use that as a starting point.)
3. Explain each stake for each stakeholder in a separate
sentence and make sure you use

complete, grammatically correct sentences.
4. SEQUENTIALLY NUMBER YOUR STAKES (see the sample
case and answers).
Step 3: Decision(s) and Analysis
Decision(s) (10 points)
1. Determine what the most ethical decision or decisions are
that resolve all of the ethical
issues you identified in Step 1. List and describe each decision
in a separate paragraph
labeling them sequentially (e.g., Decision #1, Decision #2, etc.)
as shown in the sample case
and answers.
2. VERY IMPORTANT: Make sure you do not make alternate
decisions. Alternate
decisions are “either-or” decisions. For example, if I stated in
the sample case that my
Decision #1 was to lay off one-third of the sewers and my
Decision #2 was to cut all sewers’
pay by one-third, these would be alternate decisions in this
case. There is no way to
implement both decisions at the same time and, therefore, no
way to analyze which decision
is the most ethical.

3. After listing and describing all of your decisions, explain
how they resolve all of the ethical
issues you identified in Step 1 of the case.
3
Nonconsequentialist Analysis of Decisions (10 points)
1. Review all of the 26 SUBCHARACTERISTICS identified on
the Six Pillars of Character
Outline in Chapter 2 (i.e., ones with an “(S)” after them) asking
yourself if any ONE of your
decisions violates that subcharacteristic. If any one of your
decision(s) violates a
subcharacteristic, it is not an ethical decision using a
nonconsequentialist analysis. For
example, if I decided to immediately layoff 1000 sewers in the
sample case, that decision
violates the WARN Act and violates the lawfulness
subcharacteristic. That decision would
not be an ethical decision and I would need to start over.
2. If none of your decision(s) violates one of the 26

subcharacteristics, then choose the
STRONGEST FOUR subcharacteristics that you feel support
your decision(s) as being the
most ethical.
3. In a separate paragraph for each subcharacteristic:
A. First, type the name of the subcharacteristic with a “:” after
it.
B. Second, copy and paste the EXACT definition of the
subcharacteristic used in the Six
Pillars of Character Outline.
C. Third, explain in detail how a specific decision or decisions
uphold the
subcharacteristic identified.
Consequentialist Analysis of Decisions (10 points)
1. BASED ON YOUR DECISIONS ABOVE, categorize every
stake identified in Step 2 as
either a cost, a benefit, or part cost and benefit. DO NOT RE-
NUMBER YOUR STAKES.
2. Categorize any additional costs and benefits generated by
your decisions.
3. Analyze your costs and benefits identified in #1 and #2

above. Do the benefits outweigh the
costs? If so, your decision(s) are ethical using a
consequentialist analysis. If not, your
decision(s) are unethical using a consequentialist analysis and
you need to start over.
4. If you believe the benefits outweigh the costs, argue why you
believe so in no more than one
paragraph.
Case 1
You will use this case for both “Case 1 Part 1” and “Case 1 Part
2” assignments.
With annual sales of over $10.5 billion and annual profits of
over $475 million, Nike is one of the
giants in the sports apparel business, and its trademark
“Swoosh” logo is recognized around the
world. However, for a company its size, Nike directly
employees surprisingly few workers—only
about 22,000. That is because overseas contractors manufacture
all Nike’s products. These
independent contractors employ approximately 600,000 workers
at 910 factories, mostly in
China, Indonesia, Vietnam, and Thailand.
Like many other firms, Nike outsources its manufacturing to
take advantage of cheap overseas

labor. But the price of doing so began getting higher for Nike in
the late 1990s, when
antisweatshop activists started campaigning against the
company, charging that the third-world
workers making its products were exploited and abused.
Activists on many college campuses, for
instance, encouraged their peers to boycott Nike shoes and
clothing and tried to pressure their
universities’ athletic departments not to sign deals with Nike
for team sports apparel.
Instead of ducking the issue, as other companies might have,
Nike responded vigorously to the
criticisms. At the University of North Carolina, for example,
Nike ran full-page ads in the student
newspaper, asserting that it was a good corporate citizen and
upheld humane labor standards. It
sent representatives to meet with student activists, and company
CEO Philip Knight took the
unusual step of showing up at an undergraduate seminar on
corporate globalization to defend
his company. Nike issued press releases and sent letters to many
college presidents and athletic
departments, asserting, among other things, that Nike paid “on
average, double the minimum
wage as defined in countries where its products are produced”
and that its workers “are
protected from physical and sexual abuse.”
Enter Marc Kasky, a fifty-nine-year-old San Francisco activist.
He thought Nike’s campaign was
misleading the public about working conditions inside its
factories, so he sued the company for

false advertising under California’s consumer protection law. In
Kasky’s view, the case was
simply a matter of protecting consumers from corporate deceit.
In response, Nike argued that
the statements in question were protected by the First
Amendment because they were made in
news releases, letters to the editor, and op-ed essays and
because they related to the
company’s labor practices—which are a matter of public
concern—and not the products it sold.
Two lower courts agreed with Nike, but then the California
Supreme Court overturned their
verdict, ruling in a 4 – 3 decision that the company’s campaign
was essentially commercial
speech (which generally receives less First Amendment
protection than political or personal
speech) even though Nike was not specifically talking about
shoes. In the court’s view, Nike’s
speech was directed at customers and dealt with its business
operations; the form in which the
information was released was irrelevant. The judges, however,
did not determine whether Nike
really did abuse workers or mislead consumers; it left those
factual questions for a trial court to
decide.
Nike then appealed the case to the U.S. Supreme Court.
California Attorney General Bill Lockyer
filed a brief in support of Kasky, which seventeen other states
joined. The brief contended that

the case was not about free speech but rather about “Nike’s
ability to exploit false facts to
promote commercial ends.” Harvard law professor Laurence
Tribe, however, defended the
company arguing that treating Nike’s letters and press releases
as equivalent to advertising
would undercut the ability of companies to speak out on
political issues. He urged that the
California decision would have a “chilling effect on freedom of
speech.” To this, however, the
chief author of the California brief, deputy attorney general
Roland Reiter, responded: “I believe
the concerns expressed are really overblown. We have a
company talking about itself. It is
difficult to see why holding them to the truth would cause any
kind of calamity.” University of
Southern California law professor Erwin Chemerinsky agreed.
He argued that it did not matter
whether Nike issued the information in the form of a press
release: “If a company makes false
statements about its product or practices with the intent of
increasing profits, that is
commercial speech.”
After having heard the case, however, the U.S. Supreme Court
declined to decide the
substantive legal issues at stake. Instead, it dismissed the case
on a technicality and sent it back
to California for trial. Assuming that you are CEO Philip
Knight, what would you do now? Analyze
and format your analysis according to the Opening Case
instructions.

Sample Case: A Domestic Garment Company
You are on the management team of a rapidly growing,
privately-held apparel company that had
$80 million in sales last year and is projecting $150 million for
next year. The company’s
operations are entirely U.S.-based, an anomaly in an industry
that has moved almost all
manufacturing to foreign countries in search of cheap labor.
Your company has succeeded by
targeting a niche market that will pay more for fashionable
styles, making the speed and flexibility
of operations more important than the price. Your company is
also unique in its employee
policies. Poor working conditions are common at many apparel
factories in the U.S. and abroad,
and the industry is besieged by public criticism of labor
practices. Yet a fundamental tenet of your
company is the belief that apparel manufacturing should be
profitable without exploiting workers.
Management has worked hard since the company’s inception to
treat employees as well as
possible, and it has developed a reputation for these efforts.
This summer your team found the company could not keep pace
with orders. You added a second
shifty and hired 1,000 new sewers to staff it, bringing the total
number of sewers to 3,000. During
the summer months, all employees worked full-time (eight-hour
shifts, five per week) and often
overtime to meet sales needs and replenish dwindling
inventories.
The date is September 1 and it has become clear that the

company’s inventory is growing too
large. Sales across the industry are usually slow during the
winter months, and you know the
company must slow its production. Each of the 3,000 sewers
assembles an average of 20 dozen
pieces per day. Based on projected orders and the maximum
inventory you can afford to carry,
production cannot exceed 4,000,000 dozen pieces between
October 1 and April 1. Therefore, you
must determine how to reduce your actual production over that
six-month period to only two-
thirds of full capacity. Wages for sewers are not based on the
number of pieces they sew. The
efficiency of production at your company is partly responsible
for the high wages workers earn.
Typical industry practice in the U.S. and abroad is to lay-off
excess labor for the winter season,
with no severance pay or other assistance and no promise of
rehire. Many of your sewers have
lost their jobs elsewhere during the slow season for several
years. However, if your company
made such a move it would contradict the company’s
philosophy regarding the treatment of
employees as valued partners. Laying workers off seems like it
would be a significant defeat in
this respect, with possible repercussions in employee motivation
and public relations. Also, your
team has invested several thousand dollars in training each
employee, and you are concerned that
new sewers may not be skilled enough to meet the steep climb
in orders anticipated in the spring.
If workers are laid off, there is no guarantee that you will be
able to rehire the same people in the
spring. However, the company cannot afford to pay workers to
do nothing for six months, and

many workers will likely return to the company if they fail to
match your wages or working
conditions elsewhere.
1
Assume you are the manager that must address the company’s
excess labor problem during the
upcoming period of slow sales (i.e., you are the decision-
maker). What would you do now? Keep
in mind, there is no union and there are no other specific
policies or agreements that mandate the
basis (e.g., seniority) for prioritizing which sewers might be
affected by your decision. Analyze
and format your analysis according to the case instructions
given in class.
Sample Answer
Step 1: Ethical Issue(s)
One ethical issue in this case is compliance with the Worker
Adjustment and Retraining
Notification Act (WARN). As discussed in Chapter 8, WARN
protects workers, their families,
and communities by requiring employers to provide notification
60 calendar days in advance of
plant closings and mass layoffs. A covered mass layoff occurs
when 50 to 499 employees are
affected during any 30-day period at a single employment site,
if these employees represent at
least 33 percent of the employer’s workforce where the layoff
will occur, and the layoff results in
an employment loss for more than six months. If the layoff
affects 500 or more workers, the 33

percent rule does not apply. It is now September 1 and it has
become clear that the company’s
inventory is growing too large. I presently employ 3000 sewers
and must reduce the capacity by
two-thirds during the months of October – March. If I choose to
reduce the overcapacity by
laying off a proportionate number of sewers, this would result
in approximately 1000 sewers
temporarily losing their job. Since this would qualify as a mass
layoff under WARN, the earliest I
could provide the minimum 60 day’s notice and then layoff
1000 sewers would be November 1.
Therefore, I must consider the requirements of WARN when
making my decisions.
Another ethical issue in this case concerns the ethical process of
dismissing employees through
layoffs. Also in Chapter 8, the authors state that before
dismissing an employee, management
should follow a rational and unbiased decision-making process
and analyze carefully the reasons
leading to that decision. The organization must ask itself
whether its treatment of the employee
follows the appropriate procedures for that type of discharge. In
addition, the company must
guard against preferential treatment. Although I am
contemplating reducing the company’s
overcapacity through layoffs, I must carefully analyze the
situation keeping in mind that one of the
fundamental tenets of my company is the belief that apparel
manufacturing should be profitable
without exploiting workers. Management has worked hard since
the company’s inception to treat
employees as well as possible, and it has developed a good
reputation for these efforts. Therefore,
as an ethical manager I need to carefully analyze the situation

taking into account the effects of
my decision to solve the excess capacity problem on the key
stakeholders while making sure my
decision solves the problem.
Step 2: Key Stakeholder Analysis
Manager/Decision Maker (Me)
1. I hope to find a way to effectively reduce production capacity
to only two-thirds of full
capacity for the months of October through March.
2
2. I hope to maintain as much speed and flexibility of
operations as possible since this is of vital
importance to our organization.
3. I hope to uphold one of my company’s fundamental beliefs of
being profitable without
exploiting workers.
4. I am concerned that new sewers may not be skilled enough to
meet the steep climb in orders
anticipated in the spring.
5. I fear a poor decision will demotivate my present employees.
6. I fear a poor decision will result in negative public relations
for our company.
7. I want to make a decision that shows my superiors that I am a
capable manager.
Sewers
8. They fear losing their job and having no income from

October through March.
9. If they do not lose their job, they fear having their wages
reduced since production must be
cut and they are paid on a piece rate basis.
Shareholders/Owners
10. They hope to maximize the return on their investment which
usually translates into increased
profits.
Company
11. It hopes to maintain its level of profitability (it cannot
afford to pay workers to do nothing
for six months).
12. It does not want to exploit workers.
Customers
13. They desire quality, fashionable clothing.
Community
14. Local businesses fear losing business due to the loss of
income of laid-off workers or the
reduced income of all workers if there is no layoff.
Step 3: Decision(s) and Analysis
Decision(s):
Decision #1: I would gather the 3000 sewers together in a
meeting and tell them of the need to
reduce capacity to only two-thirds of full capacity for six
months. I would then tell them that each
sewer’s pay will be reduced up to one-third in amount for the
six-month period. I would also tell

the sewers that if any person cannot take such a drastic cut in
pay, those persons will be laid-off
and 60 days thereby qualifying for state unemployment benefits.
I would also tell those sewers
who chose to be laid-off that they would have hiring preference
when sales increased after the
slow winter months. (Note the amount of reduced pay for the
remaining sewers would depend on
how many sewers chose to be laid-off thereby increasing the
work for those who chose to remain,
and the cost savings generated by Decision #2 below.)
3
Decision #2: I would gather managers and administrative
personnel whom I had authority over an
offer them the same deal as the sewers: they could either be
laid-off with the ability to draw state
unemployment benefits or continue working at a reduced pay
level which would depend on how
much cost savings are generated by this decision and Decisions
#1 and #3. Any manager or
administrative personnel who chose to be laid-off would also
have hiring preference when sales
increased after the slow winter months.
Decision #3: I would tell each group of employees at their
respective meetings that I plan on
continuing to work for the company at up to one-third less pay
for the six-month time period.
How These Decisions Resolve the Ethical Issue: The ethical
issues dealt with complying with the
WARN Act and how I should address my company’s excess

labor problem during the upcoming
period of slow sales. By asking employees to work at one-third
less pay, I avoid laying off those
employees and the violating the WARN Act. Those employees
who do choose to be laid-off will
be given 60 days notice before the layoff becomes effective
which also complies with the WARN
Act. Finally, by giving employees the choice of continuing to
work at reduced pay, I am using
layoffs as a last resort. By asking all employees of the
organization, including myself, to work at
reduced pay instead of just the sewers, I am treating all workers
fairly.
Nonconsequentialist Analysis of Decisions
Integrity: Consistency between our stated values and behavior;
demonstrating the courage to do
the right thing regardless of the costs (a.k.a. moral courage). All
of my decisions show that I
acted with integrity, but especially Decision #3. By voluntarily
taking a pay cut along with the
other employees, my behavior is consistent with the stated
values of my company even though
this will cost me a significant amount of money. I am doing the
right thing even though it is going
to cost me up to one-third of my salary.
Autonomy: Exercise authority in a way that provides others
with information they need. Decisions
#1 and #2 show that I have provided others with the information
they need to make an informed
decision. In Decision #1, I explained the need to reduce
production costs to the sewers and gave
them the option of being laid off or working at a reduced rate.
Similarly, in Decision #2, I
explained the same situation and gave the same options to my

managers and administrative
personnel.
Loyalty: A special moral responsibility to promote and protect
the interests of certain people,
organizations, etc. In this situation, I have a moral
responsibility to all of my key stakeholders to
protect their interests the best I can given the situation.
Decisions #1, #2, and #3 financially hurt
the sewers, managers, administrative personnel, and myself, but
this harm is spread evenly over all
of these stakeholders instead of just one stakeholder.
Impartiality: Rules are applied equally among every human
being involved or affected—no matter
who the human being is—or what his or her relationship is with
the person administering the
rules. Again, Decisions #1, #2, and #3 spread evenly the
financial harm to the sewers, managers,
4
administrative personnel, and myself. I could have simply
allowed the sewers to bear the brunt of
the cutbacks, but that would violate my company “rule” not to
exploit workers thereby also
violating the impartiality subcharacteristic.
Consequentialist Analysis of Decisions
Costs:
2. Some speed and flexibility will be lost to the extent that
sewers choose to be laid-off under
Decision #1.

5. All three of my decisions will cause a reduction in employee
pay, no matter what option is
chosen, which will have some demotivating effect.
9. Sewers who choose to stay based on Decision #1 will have
their wages reduced.
14. All three of my decisions will reduce total employee income
thereby harming local
businesses.
Decision #2: Managers and administrative personnel will also
have their income reduced up to
one-third or be laid-off.
Decision #3: I will have my income reduced by up to one-third.
Benefits:
1. All three of my decisions effectively reduce production
capacity to only two-thirds of full
capacity for the months of October through March.
2. Most of the speed and flexibility will be retained because I
feel that most workers will choose
the option of reduced pay over being laid off in Decision #1.
3. All three of my decisions uphold one of my company’s
fundamental beliefs of being profitable
without exploiting workers.
4. In Decisions #1 and #2, I believe most of my present workers
will choose the option of
reduced pay over being laid off therefore requiring the hiring of
few new workers in the
spring.

6. I believe my three innovative decisions where I treated
sewers, management, and myself the
same will garner positive public relations for our company.
7. Although somewhat risky, I feel my three innovative
decisions will more than show my
superiors that I am a capable manager.
8. Since Decision #1 gives sewers the option of keeping their
job or being laid off, they will get
to keep their job if they want it.
10. All three of my decisions maintain current company
profitability thereby allowing
shareholders to continue to maximize the return on their
investment.
11. All three of my decisions allow the company to retain its
level of profitability since
production capacity will be reduced by one-third.
12. None of my decisions exploit the workers.
13. Since I believe most sewers will elect to keep their job
under Decision #1, we will retain most
of our quality sewers thereby allowing us to continue to meet
customer needs for quality,
fashionable clothing.
Decisions #1 and #2: Since laid-off employees will be given re-
hiring preference after the
slowdown, we will be able to rehire mostly former employees
who have already been trained
5

and know the company. This policy should help maintain morale
and productivity both in the
short-term and long-term.
Decision #3: Since I am willing to reduce my pay along with my
coworkers, I believe they will
view me in a more favorable light leading to enhanced team
cohesiveness and higher job
satisfaction.
Analysis:
The benefits clearly outweigh the costs in this situation.
Although our company will lose some
flexibility and motivation of our workforce during the
downturn, this is far less than if the sewers
were simply laid off. In return, our company will be able to
remain profitable without exploiting
workers, maintain most of its flexibility, maintain a highly
skilled and motivated workforce over
the long-term, and meet our customer and community demands
and obligations.
6

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