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Ethics Case #1

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Christopher Kobus

on 21 April 2010

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Transcript of Ethics Case #1

Fleming Ethics Bowl Case 1: Aircraft Maintenance Inc. chris.rick.sam.deb eff ackson J F I L O P Universal Test B U S N E S S E T H I C S CFO: Air Maintenance, Inc 3 years Double the value $6,000,000 BONUS! ROA 2% Costs $450 mill Sales $300 mill Aircraft Finishing Airport Operations Avionics Aircraft Maintenance and Storage Physical harm to others? 25% Detrimental to company image? 20% Environmental harm done? 15% Legal ramifications? 20% Duty to shareholders NOT carried out? 20% Would you be proud to tell your mother? -10% Cut Finishing Expenses Hardest to staff, services redundant Only 10% of revenue would be lost ROA by .5% Operating profit $210m Steubenville plant - main employer in town Devastate the economy Jeff's hometown where his family lives $15M tax refund Consolidate our plant operations. Continue operating a redundant facility. or Priorities... Fiduciary duty to the shareholders Employees Company perception "What thou avoidest suffering thyself seek not to impose on others." -Epictetus Close the Steubenville Plant Deontology Utilitarianism Steubenville Employees Air Maintenance Shareholders Other employees Management Customers EVERYONE but Steubenville Physical harm to others? Detrimental to company image? Environmental harm? Duty to shareholders NOT carried out? Legal ramifications? 2 6 0 0 1 Physical harm to others? 0 Detrimental to company image? 2 Environmental harm? 0 Legal ramifications? 0 Duty to shareholders NOT carried out? 2 Could we publically defend this decision? obligation duty rule motives Steubenville Satisfy a Crown Prince Would we want everyone to do the same thing? Total: 1.9 Airbus 330 Operating profit $245M "Get son" into Harvard Real value added! No Harvard, no deal Physical harm to others? 0 Detrimental to company image? 6 Environmental harm done? 0 Legal ramifications? 7 Duty to shareholders NOT carried out? 6 Total: 3.8 RoA 0.75% Operating profit $335M In total... Thank you! Sell and Lease Storage Facility Denver airport Connections to parent co. Debt is generally longer term Creditor issue upon the sale Potential Special Sales Incentives Crown Prince Move part of Y4 sales into Y3 15% discount Operating profit $125M Reduce Y4 Revenues Benefit the customer Short term thinking Somewhat short-term Push Y4 revenues into Y3 using discount incentives 0.72 Sales Incentives 40% goals
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