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Applying Ethics: The Case of the Sole Remaining Supplier

Applying Ethics: The Case of the Sole Remaining SupplierSanta Clara University houses the Markula Center for Applied Ethics. The Center focuses on providing ethics resources to groups, organizations, institutions, and society that heighten ethical awareness and improve ethical decision making by offering ethical theory and practical methods that can be applied to real world situations. The Center is committed to exploring the ethical dimensions of issues in the areas of business, health care, education, technology, and public policy.The Markula Center website is an outgrowth of the Center’s mission. The website ( contains a great deal of information regarding the practice of ethics, including real life cases and a chance for visitors to contribute solutions to the cases. This case essay assignment uses one of the Ethics Connection’s cases and related visitor comments as its focus.The assignment first requires that you read two brief articles available at the Ethics Connection web site. One article, “Thinking Ethically,” ( reviews five values-based approaches to evaluating moral issues. The second, “A Framework for Ethical Decision Making”( , describes a model of ethical decision making.After reading the two articles, read and consider “The Case of the Sole Remaining Supplier”( . Think about the following issues as you do, then develop the major portion of your essay around the following points.What are the relevant facts in the case? Briefly recap them (no more then a hundred words or so).The legal and business issues this situation involves (such as honoring contracts, avoiding lawsuits, and “maximizing shareholder value”) are clear and easily identified; they need not be further discussed in your essay. Instead focus on the moral issue(s),defining it (them) as clearly as you can.The article “A Framework for Ethical Decision Making” provides a step-by-step process for analyzing situations and making ethical decisions. Using that framework and one (and ONLY ONE) of the five ethical perspectives discussed in the “Thinking Ethically” article, develop and justify the course of action you would have taken in the situation the case describes. Be sure to support your choice of perspective with facts or reasonable assumptions drawn from the case.The remaining portion of your essay should deal with the comments to the case that are attached to the end of these assignment directions. Read and consider each comment, then address the following in your paper.In the first of the “comments” to the case, Thomas Shanks, who authored “The Case of the Sole Remaining Supplier,” describes what really happened. Identify and briefly discuss the values-based approach or approaches that best explain the course of action the transistor company actually pursued.After reading and thinking about the remaining four comments, select the one that, in your judgment, represents the best example of sound ethical reasoning and briefly explain why you find it to be so, again relying on one of the values-based approaches described in the “Thinking Ethically” article.The purpose of this assignment is to apply, to a real life situation, theoretical perspectives on business ethics and ethical decision making.Based on materials originally developed by Nancy Bryant for Prentice-Hall (revised 1-13-20)Comments — Case of the Sole Remaining SupplierPosted at: 17:16:14 on February 6, 1997 by Thomas Shanks, S.J.Comments: In the real-life circumstances on which this case was based, the board decided to continue supplying the transistors but made sure the specs for the heart pacemakers were strengthened, which meant the pacemaker manufacturer made less profit. That was, however, the price it had to pay for access to the product it needed for the company’s continued existence. Marketing people note that the transistor manufacturer could then market itself as “the ethical company,” which, in fact, it was.Posted at: 15:31:7 on November 6, 1996 by Brian C. BuckleyComments: Sound business judgment dictates against putting oneself in the position of producing a product where the risk of a law suit outweighs financial reward.A company with a pure short-term perspective would flee from such a situation. However, by looking at the actions of the supplier as impacting its corporate personality it may be concluded that the long-term benefit outweighs immediate financial risk.The development of a positive corporate personality can certainly lead to long-term financial benefits. For example, establishing a reputation for the company as an organization which contributes to the well-being of the community can lead to improved media and governmental relations. Thereby by providing a goodwill value likely to lead to increased profits.Moreover, a positive corporate personality can lead to increased morale among management and employees which results in increased retention and better work performance.By acknowledging that a positive corporate personality leads to increased financial success, the decision-makers can make decision in favor of what is best for the entire community sometimes even at the cost of immediate profits.Posted at: 17:27:12 on November 3, 1996 by Barbara GrecoComments: If the transistor company chooses to remain a supplier, it needs to convince investors that it can protect their investment. The company needs to examine ways to reduce the cost of its liabilities. It should probably reexamine the pacemaker and transistor designs. Adjustments should be made accordingly. Test procedures and training should be reexamined and strengthened. It might be a good idea to halt further production and installations during this evaluation phase.Legal contracts should be reevaluated. It may be possible to become indemnified against certain lawsuits. Certainly the patients should be willing to share the responsibility and accept statistically reasonable risks for the chance at a better and prolonged life. Doctors should be trained to inform patients properly of these risks.By continuing to supply the transistors, the transistor company has a chance of fixing the problems with the pacemaker and improving the quality of life for patients. The pacemaker company can stay in business. And, if improvements are made and the right legal contracts drawn, the investors can be protected and the transistor company can maintain profitability. Being the sole remaining provider could become an advantage if the company can be the only successful one in a niche market.This solution seems to address the common good of all affected parties. It attempts to protect the rights of the pacemaker manufacturer, the patients, the hospitals, and the physicians. And with the potential to better lives, it seems like the right and virtuous thing to do.The goal of saving or bettering lives should have a slightly higher priority than saving investor dollars. Yet the one does not necessarily preclude the other.Posted at: 17:20:50 on November 3, 1996 by Rafael Verbera Jr.Comments: The utilitarian approach to ethics focuses on the consequences of actions or policies on the well-being of all persons directly or indirectly affected. The action taken should produce the greatest balance of benefits over harms. Using this approach, I would decide to continue selling the transistors to the pacemaker company. This would yield the best consequences for the pacemaker company (it would not go out of business) and for those in need of pacemakers (they would still be able to have the pacemakers implanted). There is still risk to our company, but the well-being of the pacemaker company and of the pacemaker-needing society overrides these risks. Continuing to sell the transistors to the pacemaker company provides the best balance of benefits over harms.Posted at: 17:2:56 on November 3, 1996 by Palmyra PawlikComments: The rights approach to ethical questions includes “the right to what is agreed: We have a right to what has been promised by those with whom we have freely entered into a contract or agreement.” Also, we have “a right to be told the truth and to be informed about matters that significantly affect our choices” (“Thinking Ethically,” Winter 1996).It is clear the transistor company was well-aware of the risks when it entered into a contract with the pacemaker company. The business has not changed, only the number of suppliers.The transistor company is not pulling out due to new information but rather to a growing fear that, as the sole supplier, it will take the entire financial impact of a lawsuit. The initial decision was made with all of the facts known, and a contract was signed. Pulling out of this contract would be a clear violation of the rights of the pacemaker company, its employees, and its customers.This is not to say there are no options. The transistor manufacturer can continue to sell to the pacemaker company while, at the same time, adding additional tests that would limit its liability. This would benefit all the interested parties.-The transistor company would not lose profits from sales to the pacemaker company.-The pacemaker company would stay in business and its employees would remain employed.-Current and future pacemaker customers would have a continuing source of new and replacement parts, giving them improved quality of life and the most fundamental of all rights — life itself.-Society would benefit by not losing the lives of people who could potentially improve the world as we know it.