The Ethics Case Study

Part A (13 marks)

Part A assesses SE5.1 Social, Ethical and Global Understanding: Demonstrate and apply knowledge of ethical and legal principles and practices in analysing and responding to business issues


Ted is the owner of a restaurant in Southbank that has been trading for two years. When the restaurant first opened in 2013, business was slow, probably due to the fact that it was newly opened and also faced stiff competition from other restaurants and cafes in Southbank. Towards the end of 2013, the restaurant was barely breaking even. Revenue was so low, Ted had to sack two wait staff because he could not afford to pay them.


Things picked up in 2014, however. Business has improved and Ted now has five employees:

  • Chris, the Head Chef
  • Mike, the Sous Chef
  • Viki, Toni and Zee – the wait staff

As business started improving in 2014, there would be times when the restaurant became so busy the staff rostered on did not have time to clean the dirty dishes as they came back to the kitchen. This would result in piles of dirty dishes in the kitchen and food stuff lying around for short periods of time (up to 2 hours in some exceptional circumstances). During these busy times, Ted would call his wife, Helen, to ask her to come to the restaurant to help out. Because Ted and Helen have two young children aged five and six, it was not always possible for Helen to get to the restaurant quickly.

Ted could the see the problem these busy times were causing so, towards the end of 2014, he thought about hiring two more employees to help out in the kitchen. But as that would wipe out the profits he was finally making, he decided to put off hiring any more staff for the time being.

One day in January 2015, a food inspector from the Queensland Health Department visited Ted’s restaurant. Under the Food Safety Act (Qld) 2010, food inspectors are given the authority to inspect the premises of establishments serving food for the purposes of ensuring that the premises and food served meet the standards set by the Food Safety Act. If the food inspector finds that the establishment fails to meet these standards (for example, if food is not stored at the proper temperature or the areas where food is prepared are unclean) then the food inspector has the authority to issue a negative report that is filed with the Queensland Health Department. The establishment is then closed down pending further investigation and is only allowed to be re-opened when the food inspector is satisfied that the issue had been rectified. If however, the food inspector finds that the premises comply with the standards in the Food Safety Act, then no negative report is issued and the establishment can continue trading.

When the food inspector inspected Ted’s restaurant, he found dirty dishes with leftover food lying in the kitchen sink and all over the kitchen benches. The food inspector also found rat droppings on the floor in the kitchen. He pointed this out to Ted and informed Ted that “It could all be forgotten” if Ted paid him $500 in cash. It Ted pays the $500, the inspector will not issue a negative report and Ted’s restaurant can continue trading. If Ted does not pay the $500, the inspector will issue a negative report and Ted will be forced to close down his restaurant until the issue is remedied. This could take weeks or even months.

Ted has $500 in the cash register. Ted knows that $500 is a small sum in comparison to the loss of earnings if he had to close down his restaurant (he estimates the losses at around $3,000 for every week the restaurant is closed).

Ted is uncertain how long it will take the remedy the issues the inspector has identified and he has virtually no savings. If the restaurant were to close for longer than a week (which is highly likely), Ted would not be able to continue paying his staff. It is very likely that all of his staff would resign and find other jobs if they cannot be paid. This is particularly so for the three wait staff who are all university students and rely on the income earned to pay their bills. It also likely the Sous Chef, Mike, will leave. Mike has a young family to support (his wife recently gave birth to a son and his wife is a stay-at-home mother). All of the employees could easily find work in another café or restaurant.
The Head Chef, Chris, is a friend of Ted’s and does not have a young family to support. As such, Chris may decide to stay on without being paid – it would depend on the length of time the restaurant would be closed.

Ted is also worried that closing down the restaurant would affect its reputation. Given the nature of the problem, he is also worried that customers may shun the restaurant even when it is re-opened.

Ted has not received any complaints from customers since the opening of his restaurant as to the food served at the restaurant. He also knows that it would not be too difficult to hire additional staff to help with the cleaning of the dishes in the kitchen and overall cleanliness of the restaurant. In fact, Helen’s cousin, Amy, has just finished a hospitality course at TAFE and has expressed an interest in being a chef. Ted could easily employ Amy as an apprentice.

Answer the following question:

  • Ted would like advice as to whether he should pay the food inspector the $500 to avoid a negative report from the food inspector.
  • When advising Ted, analyse his dilemma with the ethical theories of utilitarianism, Kant’s ethics and virtue ethics outlined in the course. To be clear, Ted wants an analysis from each theory. Therefore you must apply all three theories to Ted’s dilemma and for each theory, draw a conclusion as to whether it would be ethical for Ted to make the payment.
  • Ted also wants an overall recommendation – so you will need to decide which analysis you prefer and justify this conclusion.

You may assume the following when answering this question:

  • Each food inspector is given a designated region in which to inspect the food establishments in that region. This means that in Ted’s case, only that particular food inspector would be responsible for assessing his restaurant. No other food inspector would be involved in the assessment of Ted’s restaurant.
  • After a food inspection, the food inspector would note the date of the inspection and would note whether a negative report had been issued. If no negative report had been issued, the restaurant would be able to trade and usually it would be six months or longer before there is another inspection from the Health Department.


  • For Kant’s ethics, your analysis should include the appropriate maxim and must apply both Kantian principles of universal acceptability and respect.
  • For Virtue ethics, you must apply one virtue that is relevant to the dilemma. The relevant virtue must be selected from the list of virtues in the table titled ‘Aristotle’s moral virtues’ discussed in lectures. Additional reading on virtue ethics (authors: Fisher, Colin and Lovell, Alan; title: Ethical Theories and How to Use Them) is also available on CMD via Blackboard. On page 105 of this CMD reading you will also find the table ‘Aristotle’s moral virtues’. To access the CMD reading go to Blackboard, tab ‘Tools’ – Course Materials.
  • For virtue ethics, in addition to applying one relevant virtue you must also include in your answer a discussion of at least one corresponding vice in relation to the virtue you have selected.
  • For utilitarianism you must discuss at least four different groups of stakeholders in your answer.
  • Please answer Part A based on the facts given to you. This means you do NOT need to do additional research on the Food Safety Act or the Queensland Health Department or food inspections in Queensland.

Part B (Part B is unrelated to Part A) (5 marks)

Part B assesses PC3.1  Professional Communication: Use information literacy skills, and communicate effectively and professionally in written forms and using media appropriate for diverse purposes and contexts

We have all experienced ethical dilemmas in our lives.

  • Describe an ethical dilemma that you were faced with in your life. Be specific as to why it was a dilemma (i.e. what are the conflicting moral imperatives of the situation)?
  • Explain how you resolved your ethical dilemma, that is, what was the reasoning/process or tools that you used to resolve your ethical dilemma. Why did you decide the way you did?
  • In light of your knowledge of the materials in this course (i.e. the ethical theories of utilitarianism, Kant’s ethics, virtue ethics or Kohlberg’s theory of moral development,) would you change your decision? Why or why not? Explain your reasoning.

Part C (7 marks) (Part C is unrelated to Parts B and Part A)

Part B assesses PC3.1 Professional Communication: Use information literacy skills, and communicate effectively and professionally in written forms and using media appropriate for diverse purposes and contexts


You are the Chief Executive Officer (CEO) of a very successful Australian cosmetics company, Divine Skinz Pty Ltd. You started your business in 1995, selling scented soap and body lotions that you developed in local markets in Brisbane. As your soaps and lotions became more popular, you opened your first retail store in Indooroopilly Shopping Centre. Currently you have five retail stores across Queensland and your annual profit is currently running at $1 million. The shareholders of your company consist of yourself, your family, friends and some company employees.

In 2014 you attended a health and beauty exhibition in Europe. At the convention you discover an ingredient used in two of your best selling products (the ‘Day Rejuvenisor Cream’ and the ‘Night Rejuvenisor Cream)’ was banned in Europe in 2013 because of concerns linking it to increased rates of skin cancer. Upon your return to Australia, you contacted your legal advisor who has checked and assured you that the ingredient is not banned in Australia. Medical and pharmaceutical authorities in Australia are aware of the ban in Europe but have decided not to impose a similar ban in Australia because there is no direct causal link between the ingredient and skin cancer.

Still, you are concerned and hold a meeting with key executives from your accounts department as well as the products and marketing department where you discuss the implications of changing ingredients. Executives from products and marketing advised you that while it is possible to change ingredients, the replacement ingredients will be more expensive. Staff from the accounts department advised you that given the cost implications, you will have to either increase the price of your products or reduce your profit margins on these key products. Staff from your marketing department advised you that there has been little customer or media interest in the use of this ingredient by cosmetics companies in Australia, although this may change in the future. Market research also indicates that all other Australian cosmetics companies currently use the ingredient in their products, but again this could change in the future.

Your management team has come up with three options:

  • Option one would be to do nothing. As your legal adviser pointed out, there is no legal requirement to remove the ingredient from your products. This would mean no change to current profit margins.
  • Option two would be to remove the ingredient and use alternative ingredients. This would reduce profit margins by 25%.
  • Option three would be to remove the ingredient, use alternative ingredients and increase the price of the products with the new ingredient. This would allow you to retain current profit margins.

You are due to meet with your management team where you will have to make a decision. Since establishing your business your focus has been to keep the business financially viable. As such, you have not considered whether the company should have a social responsibility. You now have the opportunity to revise this topic and to set the company’s goal/s for the future.

Prepare a statement that you will distribute to your management team prior to the meeting about the options you face. Your statement should cover three areas:

  • It should describe what your vision is for the company – what you feel should be the company’s goal/s. This vision should directly address the social responsibilities (if any) you believe your company has to meet.
  • It should contain a convincing argument for the vision you have formulated. Since you have to convince your management team of the future direction of the company, this needs to be a strong and convincing argument. Apply at least two factors listed in the article by Keith Davis titled ‘The Case for and against Business Assumption of Social Responsibilities’ that you consider relevant and important to your reasons for adopting this vision. You should also explain why you consider these two factors important and relevant.
  • It should contain a conclusion where you outline your decision on which option you will pick and why OR, if you do not agree with any of the given options, what option would you come up with and why.


  • In describing your vision for the company, the textbook and course materials database (CMD) reading titled ‘Business Ethics’ will be helpful as they provide you with an understanding of what is corporate social responsibility and the debate surrounding corporate social responsibility.
  • The article by Keith Davis is available on Blackboard under the tab ‘Learning Resources’ – week 2 folder



The practice of a business makes the business become a social member. Therefore, every business has a duty to ensure the rights, and values of the society are upheld. The need to observe normative ethics by far overrides the need to maximize business needs. It is therefore imperative that the business operate within the confines of the public laws in Southbank, Queensland.

Utilitarian theory

According to the utilitarian theory, actions of every business must only benefit the majority. Therefore, the operations of the restaurant must only be tailored towards the social benefit of most people (Swaen, 2005, Pp.206). The need to serve the majority boils down to the study of the business stakeholders. Ted’s restaurant has different stakeholders, including himself, as the proprietor, the employees, the customers and the government that implements the health and safety rules. Ted and his family are the least in group of people whose interest should be cared for by the business.

The health officials have a duty to perform and ensure that the restaurants are healthy places to get food. Though they enforce the rules, the Queensland Health Department inspector has lowered the social morals. Ted should not consider this person offering quick fixes to the problem. He should instead understand that the only long lasting solution to the problem is to follow socially acceptable Behaviour (Fallon, 2007, Pp.45).

Ted should mind about his workers, and uphold their needs to continue earning income from the restaurant, if in line with majority. The question I would ask Ted is, “What if the problem persists, would he continue giving $500 every six months?” This may turn out to be more expensive than hiring other personnel on contract to help in cleaning the restaurant and doing the dishes during the peaks (Butterfield, 2002, Pp.238). Ted should avoid paying bribe as a way to exonerate his business from the predicament.

Kantian Ethics

Kant puts it so well in his Humanity as an end in itself principle. According to this principle, Ted should do what is considered commonly done by the majority for the benefit of the society (Rosen, 2006, Pp.184). Despite the fact that his actions have not been identified by his customers should not be a reason to continue doing wrong. According to the maxim of universality, Kant proposes that everybody should only act according to the universal laws. These are the laws that govern everyone in the society. In this case, I would tell Ted that he is not an exception.

Virtue ethics

Temperance is a strong virtue that Ted should inculcate. This is the ability to stand firm, against the strong desire to indulge in corruption to save the business fortunes in the short term. The moment Ted gives in to the egocentric needs to mind his own fortunes at the expense of the majority, he would indulge into more problems. After all, the inspector may only offer to accept the money as a bait to find more reasons to nail Ted and his business. It is time for Ted to take responsibility to correct every wrong in the business.

General recommendation

Corruption is unethical Behaviour that Ted should shun. In addition, giving out bribe is not going to clean the kitchen and the dishes at the restaurant. The best thing Ted should do is to talk to the person to lessen the time of the closure. His employees may find alternative jobs if they so wish, but there are many others willing to join him in a healthier restaurant. This will also improve his customers’ confidence in the business, and not necessarily reduce his reputation.


During my undergraduate studies, I had the sponsor who agreed to pay for my studies for strictly four years. During my final semester, I was on the last days of the sponsorship, and was not ready to extend for a single one month. It was during this time when I encountered my ethical dilemma.  I was going to present my proposal during my undergraduate studies. I was late for the presentation and so was in a serious rush. In the due process, I was carelessly driving on the road not minding about the other road users.

Unexpectedly, I came across the traffic police who flagged me down. I knew that I was on the wrong, and thought on how I would miss my proposal defense before the panel, a factor that would extend my graduation for over another one year. He suggested that I was carelessly driving and so should be arrested, taken to court and charged.

However, he had an option that if I paid him $100, he would allow me to go on with my journey. I did my mental calculations and compared the $ 100 with the whole semester’s fees. I paid and I was let free. Conversely, after learning of the utilitarian theory, I feel that my ego should not be put first before the others.


Statement of objectives

Hi all.

It has been the vision of Divine Skinz Pty Ltd to offer healthy and sustainable cosmetics in Australia. We hold our customers dear to our hearts and we also understand the need to address the arising, prospective and past customer needs so as to maintain our market leadership, and profit margins.

However, it has come to our unfortunate understanding that some of the products that we have been using in making our cosmetics have health related problems. Our research team, lawyers and marketing teams have advised that the products are not banned in the country at the moment, but I feel that we should not take chances. We understand that such conditions may change drastically.

One of the factors that we have considered in our business is the operations sustainability and business relevance. In whatever we do at Divine Skinz Pty Ltd, we strategize to remain relevance to our customers at all times. Moreover, our actions should be sustainable in the long run. At no point should we therefore be seen as mindless to our product consumers. This is in line with our core mandate to give customers healthy products. So far, we have three possible options to take. The following scenarios will help you in preparing your points of discussion during the meeting.

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