What are the potential ethical issues faced by Acme Corporation?

What should Acme do if there is a desire to make ethics a part of its core organizational values?

Identify the ethical issues of which Frank needs to be aware.

Discuss the advantages and disadvantages of each decision that Frank could make.

The case

Frank Garcia was just starting out as a salesperson with Acme Corporation. Acme’s corporate culture was top-down, or hierarchical. Because of the competitive nature of the medical supplies industry, few mistakes were tolerated. Otis Hillman was a buyer for Thermocare, a national hospital chain. Frank’s first meeting with Otis was a success, resulting in a $500,000 contract. This sale represented a significant increase for Acme and an additional $1,000 bonus for Frank.

Some months later, Frank called on Thermocare, seeking to increase the contract by $500,000. “Otis, I think you’ll need the additional inventory. It looks as if you didn’t have enough at the end of last quarter,” said Frank. “You may be right. Business has picked up. Maybe it’s because of your product, but then again, maybe not. It’s still not clear to me whether Acme is the best for us. Speaking of which, I heard that you have season tickets to the Cubs!” replied Otis. Frank thought for a moment and said, “Otis, I know that part of your increases is due to our quality products. How about we discuss this over a ball game?” “Well, OK,” Otis agreed. By the seventh-inning stretch, Frank had convinced Otis that the additional inventory was needed and offered to give Thermocare a pair of season tickets. When Frank’s boss, Amber, heard of the sale, she was very pleased. “Frank, this is great.We’ve been trying to get Thermocare’s business for a long time. You seem to have connected with their buyer.” As a result of the Thermocare account, Frank received another large bonus check and a letter of achievement from the vice president of marketing. Two quarters later, Frank had become one of the top producers in the division. At the beginning of the quarter, Frank had run the numbers on Thermocare’s account and found that business was booming. The numbers showed that Otis’s business could probably handle an additional $750,000 worth of goods without hurting return on assets. As Frank went over the figures with Otis, Otis’s response was, “You know, Frank, I’ve really enjoyed the season tickets, but this is a big increase.” As the conversation meandered, Frank soon found out that Otis and his wife had never been to Cancun, Mexico. Frank had never been in a situation like this before, so he excused himself to another room and called Amber about what he was thinking of doing. “Are you kidding!” responded Amber. “Why are you even calling me on this? I’ll find the money somewhere to pay for it.” “Is this OK with Acme?” asked Frank. “You let me worry about that,” Amber told him. When Frank suggested that Otis and his wife be his guests in Cancun, the conversation seemed to go smoothly. In Cancun, Otis decided to purchase the additional goods, for which Frank received another bonus increase and another positive letter from headquarters. Some time later, Amber announced to her division that they would be taking all of their best clients to Las Vegas for a thank-you party. One of those invited was Thermocare. When they arrived, Amber gave each person $500 and said, “I want you to know that Acme is very grateful for the business that you have provided us. As a result of your understanding the qualitative differences of our products, we have doubled our production facilities. This trip and everything that goes with it for the next few days is our small way of saying thank you. Every one of you has your salesperson here. If there is anything that you need, please let him or her know, and we’ll try to accommodate you. Have a good time!” That night Otis saw Frank at dinner and suggested to him that he was interested in attending an “adult entertainment” club. When Frank cameto Amber about this, she said, “Is he asking you to go with him?” “No, Amber, not me!” “Well, then, if he’s not asking you to go, I don’t understand why you’re talking to me. Didn’t I say we’d take care of their needs?” “But what will Acme say if this gets out?” asked Frank. “Don’t worry; it won’t,” said Amber.

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