Please read this, “What Would You Do?” scenario and visit the discussion area of

Question

Please read this, “What Would You Do?” scenario and visit the discussion area of your course to answer questions. Ethical Decision Making and Ethical Leadership Karen Belamee faces a decision that could affect her own future, as well as those of thousands of employees in one community. Since graduating from college, she has worked on commission as an investment banker with the A.B. Phillips Company. Karen was barely scraping by until she convinced Dae Chen, president of Narco Corporation, to give A.B. Phillips some business. Chen has a reputation for acquiring companies and splitting them up for a profit. However, he is also a shrewd corporate raider who takes over companies and is able to turn them around. Thanks to Chen’s business, Karen’s yearly commissions have risen to six-digit figures. About six months ago, Karen’s father commented that the management team of his employer, Recreation Products, Inc., was running the company into the ground. Recreation Products manufactures sporting equipment and employs nearly 40 percent of the work force of the community in which it is located. Karen’s father has worked for the company for more than 20 years. "If only someone could buy out Recreation Products and put in a good management team," he mused. After her conversation with her father, Karen investigated Recreation Products and found that demand for its products was high, but productivity was down because of the present management. She also found that the stock was grossly undervalued. Karen decided to tell Dae Chen about Recreation Products. He quickly met with the company’s union representatives and they worked out a plan to save the company and preserve thousands of jobs. Chen gave the union a verbal guarantee that the company would not be broken up. This pleased the union, and also Karen, who had assured the union reps of Chen’s sincere wish to save Recreation Products. In return, the union verbally agreed to concessions that would keep the company financially solvent. Several weeks later, Karen overheard a conversation that disturbed her greatly. She discovered that Chen plans to break up Recreation Products after all, in spite of his pledge to her and the company’s employees. This means that thousands of employees would be laid off, just to increase the raider’s short-term gains. This change in tactics would, in effect, destroy Karen’s credibility with her coworkers, clients, and family. Recently, Karen met Dirk Banacek, president of Banacek Incorporated, who seems interested in purchasing Recreation Products to turn it around. Karen must now decide between two alternatives. She can do nothing and let thousands of workers get laid off, or she can inform the union and cut a deal with Banacek to purchase Recreation Products’ stock. If she chooses to give this information to the unions, however, Karen could be charged with a breach of confidentiality, which is similar to insider trading. Please read the "What Would You Do" feature in this chapter before answering these questions. What are the ethical and legal issues in this case? What organizational and personal pressures have contributed to Karen’s dilemma? What should Karen do, given the situation and her options?

Explanation / Answer

The ethical issue in the case is that whether Karen shall think of the employment of many workers of recreation products and loose her image before family, co-worker, and other people or to let her in problem of being charged for breach of confidentiality.

The legal issue is that Karen can be charged of breach of confidentiality if she decides to inform union about chen plan and to deal with Dirk banashek of banashek company.

Karen’s dilemma exists because she does not want loss of the jobs to many workers of Recreation Company and that she would lose reputation before her clients, family and co-workers. While if she decides to save the recreation company and get them good deal with Banashek Company she will have to deal with legal problem that would make her make legally liable.

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