BUSI 301 Application Activity 1 Business Ethics Analysis Assignment Liberty University
Hey Ralph, ... I just had to refund Sally's Sundries $8,350 and spent almost an hour on the phone apologizing
profusely so we wouldn't lose their business. whoa! what was the problem?
They were furious about paying emergency fuel surplus fees for the past decade.
We sent that memo in 2008 to all our Customers explaining that we would have to temporarily increase our
delivery fee by 50%. We had to increase the fees just to stay in business.
Oh right! Name, you weren't working here back then so you probably never saw the memo. Here, take a look.
So you fixed the problem! That's a huge refund but at least you kept their business.
I’m afraid it's a bigger problem than just Sally's Sundries… I looked into it and we're still charging a lot of our
biggest customers the “temporary increase” rate.
Until now, none of our customers have asked about the increased delivery fee.
But 35% of our revenue comes from these customers. We can't afford to lose their business
Yikes. This is a tricky situation. Obviously we have to protect the business but it seems kind of wrong to keep
overcharging?
Name, any ideas for where we can start?
Response 1 of 2: Let's start by looking at the service contracts and make sure we're not in breach. Let's start by
looking at the service contracts and make sure we're not in
breach.
Good point. Let's start with our legal obligations.
We don' t have go to through the whole contract. Here's the section we're talking about:
So we’re covered. Right, Name?
The service contract gives the company the ability to change the rates, without notice. At a minimum, we've
fulfilled our legal obligation under the contract. That's the starting point for determining whether a course of
action is ethical.Ok, that's a relief at least. And we did give notice even if we weren't obligated
to.
In the memo, we said that we would look at the rates again in a year to see whether we could reduce them. Did
that happen?
The market conditions were even worse in 2009 so we couldn't reduce the rates. Then it kind of became the
new normal.
Name, is breaching the contract the only thing we have to worry about?
Response 1 of 2: We have to comply with all legal obligations and our ethical responsibilities. Just fulfilling our
part of the contract isn't enough.We have to comply with all legal obligations and our ethical responsibilities.
Just fulfilling our part of the contract isn't enough.
Right. We still have broader responsibilities as a business.
That sounds complicated.
How the decision might affect our stakeholders and profitability; whether the decision is consistent with our
company's values; and how the public would react if they found out about our
decision.
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It is! With ethical questions in business, you can weigh different factors and consider:
Haha easy there, Aristotle! I know you were a philosophy major but we're talking about business ethics. We
need a way to apply ethical theories to real-life situations.
OK, help me break this down… Name, what did you mean by “stakeholders”?
Stakeholders are all the people affected by our decision. That group includes our owners, investors, employees,
customers, suppliers, the wider community, and even future
generations.
So where does our bottom line ft into this? We can't afford to lose these customers. But we also can't afford to
refund thousands of dollars just to retain their business.
Making an ethical business decision doesn't mean that you forget all about profitability. By continuing to stay in
business and turning a profit, you advance the interests of multiple stakeholders — your owners, investors,
employees, customers, and suppliers all
benefit.
As long as we didn’t break the law, I think that the company's financial well-being should be our top priority.
We need to protect our business.
Response 1 of 2: Sounds like you're in favor of the "maximizing profits" approach to business ethics — within
the law, of course! That's one of the ethical models businesses can follow.Sounds like you're in favor of the
"maximizing profits" approach to business ethics — within the law, of course! That's one of the ethical models
businesses can follow.
We're a business for profit. We have to for prioritize profitability the sake of our company's long-term financial
health. l think we should maintain the status quo and keep the increased rates quiet.
“Greed is good”, right?
That is one way of looking at this dilemma. Some philosophers and economists say that businesses should
solely focus on maximizing profits because:
Response: The “Invisible hand” That's
what I’m saying!
l don't agree with Gayle's approach. Just feels wrong to me. Plus, these things have a way of getting out. What if
Sally's Sundries tells our other customers? Or the press?? Then we'll be in even worse shape!
Considering the consequences of public disclosure is one way to figure out whether a decision is ethical. That
test is sometimes called:
The "television test" or the "broadcast news test"
Exactly! We need to think about what happens to our credibility (and our profits) if this news gets out. I think
we’d lose customers.
We need to proactive and get out ahead of this problem. We should send a memo to all and of our customers
apologize for overcharging them. How would we feel if we were overcharged thousands of dollars?
This study source was downloaded by 100000900559687 from CourseHero.com on 01-26-2026 10:50:10 GMT -06:00Then what... return their
money from past 10 years? How can we survive that financial hit?? Besides, under the
terms of our service contract, we didn't do anything wrong!
Benevolence and following the "Golden Rule" — treating our customers the way we would want to be treated
and promoting the common
good.
It sounds like Ralph is in favor of:
We should look at current market conditions and reduce the delivery fees if possible. If we can't reduce the
rates, we can still tell any customers who ask that we made a good faith effort. If we can cut costs, then we
send a "good news!" memo that we're reducing the rates but not issuing refunds. That way, we protect our
company's profitability and act benevolently.
Well said! I just think telling them is the right thing to do.
What a mess…
Name, what do you think our best option would be? No wrong answers here!
