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The Social and Ethical Perspective of Entrepreneurship Case: A Friend For Life The Glades Company is a small manufacturer. It has produces and marketed a number of different toys and appliances that have done very well in the marketplace. Late last year, the product designer at the company, Tom Bringer, told the President, Paula Glades, that he had invented a small, cuddly, talking bear that might have a great deal of appeal. The bear is made Of fluffy brown material that stimulate fur, and it had a tape inside that notations 50 messages.
The Glades Company decided to find out exactly how much market appeal the bear would have. Fifty of the bears were produced and placed in the kindergartens and nurseries around town. The results were better than the firm had hoped. One of the nurseries reported: “The bear was so popular that most of the children wanted to take it home for an evening. ” Another said the bear was the most toy in the school. Based on these data, the company decided to manufacture and market 1 ,OHO of the bears. At the same time, a catchy marketing slogan was formulated: “A
Friend For Life. ” The bear was marketed as a product a child could play with for years and years. The first batch of 1,000 bears sold out within a week. The company then scheduled another production run, this time 25,000 bears. Last week, in the middle of the production run, a problem was uncovered. The process of making the bear fur was much more expensive than anticipated. The company is now faced with two options: It can absorb the extra cost and have the simulated fur produced, or it can use a substitute fur that will not sat as long.
Specifically, the original simulated fur will last for up to seven years of normal use; the less expensive simulated fur will last for only eight months. Some of the managers at Glade believe that most children are not interested in playing with the same toy for more than eight months; therefore, us obstructing the less-expensive simulated for the more expensive fur should be no problem. Others believe that the company will damage its reputation if it have opts for the substitute fur. “We are going to have complaints within eight months, and we are going to repent the day we agreed to a cheaper substitute,” the production manager argues.
The sales manager disagrees, contending that ‘the market is ready for this product, and we ought to provide it. ” In the middle of this crisis, the accounting department issued its cost analysis of the venture. If the company goes with the more expensive simulated fur, it will lose $ 2. 75 per bear. If it chooses the less-expensive simulated fur, it will make a profit of $ 4. 98 per bear. The final decision on the matter rests with Paula Glades. People on both sides of the issue have given her their opinion.
One of the last to speak was the vice president of manufacturing, who said “If you opt for the less expensive fur, think of what it is going to do to your marketing campaign of ‘A Friend For Life. ‘ Are you going to change the slogan to ‘ A Friend For Eight Months’? ‘ But the marketing vice president argued a different course of action: “We have a fortune tied up in this bear. If you stop production now or go to the more- expensive substitute, we’ll lose or shirts. We aren’t doing anything illegal by obstructing the fur. The bear looks the same. Who’s to know? Questions for discussion: 1 . Is the recommendation of the vice president marketing legal? Is it ethical? Why or why not? The marketing vice president has recommended that production continue using the substitute fur. While this is not illegal, since there are no laws specifically governing what type of simulated fur is used, it is unethical to delude the public into thinking the product is of high quality when the material is actually of low quality. Especially since the company knows exactly hat it is doing in trading away good faith and trust for the sake of profits. . Would it be ethical if the firm used the less expensive simulated fur but did not change its slogan of “A Friend For Life” and did not tell the buyer about the change in the production process? Why or why not? No, it would not be ethical since the firm had already produced 26,000 bears with the higher quality simulated fur that lasts seven years. The continued production of bears under the same slogan “A Friend for Life” but with lower- quality simulated fur expected to last only eight months is consumer fraud.
Thus, while the legal question may be debated as to the actual fraud, the ethics question is not debatable. This is a prime example of disregard for ethics. 3. If you were advising Paula, What would you recommend? As an adviser to Paula, you should utilize Table 6. 3, which illustrates the various approaches to management ethics. The column dealing with “moral management” explains the different aspects of ethics concerned with motives, goals, orientation to the law, and strategy. The strategy segment especially applies to Paula in that she must assume a leadership role when ethical dilemmas arise.
In dealing with consumers, enlightened self- interest means that by having concern for others (consumers), you are also TA king care of yourself (business) in the future. Thus, Paula will find that either full disclosure to… One of the most important attributes for small business success, IS the distinguishing quality of practicing admirable business ethics.