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| Morgan Company manufactures engine lubricants. During the manufacturing process, some by-products are produced which have no resale value. The by-products are considered hazardous to the environment and should be disposed of in a very specific manner, following hazardous material protocol. Morgan pays an outside company to come onsite and haul away the hazardous materials. Morgan’s sales have been much lower than expected this quarter and there is a lot of pressure to lower costs. John Lark has worked in the company’s Controller’s Office for ten years and is very familiar with the plant floor processes. While walking the plant floor one day, he sees that one of the workers is putting the by-product in the large trash receptacle instead of placing it in the hazardous material bin. When he inquires about why that is being done, the worker explains he is following a management directive, and that disposing of the by-product in the trash would save the company the money that would have to be paid to the hazardous materials company. Questions A. Is the management of Morgan Company acting in an ethical manner? What are some of the potential risks that Morgan Company will expose itself to by making decisions like this in order to cut costs? B. What changes should be made to create a stronger ethical environment? What are some of the potential benefits that Morgan Company could realize by creating a more ethical corporate culture? |