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Foreign Direct Investment, and Regional Economic Integration

Dr. Susie Wang is president of a subsidiary of the world?s largest concrete machine manufacturer (REESE, Inc.). Her job is to organize and operate a newly formed global business consulting company (Concrete Network Services, i.e., CNS) comprising of 13 separate divisions related to the concrete industry. REESE Inc. CEO, Curtis Davis, has assigned CNS the task of capturing the hidden opportunities and potential global sales for REESE. Although CNS is legally a subsidiary of REESE, it has been clear from the beginning that CNS is to appear to the public as a separate, nonattached entity with a different name and location. Presidents of the other five REESE companies: Chris Warner, of the Mixing Truck Company, Ray Kronk, of the Pipe and Tool Company, Eric Downs, of the Aggregate Company, Harry Potkins, of the Molding Company, and Sam Jones, of the Paving Company support the CEO?s desire to have CNS not appear in any way linked or connected legally with REESE. These company presidents along with the CEO of REESE make up REESE?s Executive Team.
REESE Inc. has invited 20 Chinese dignitaries and the owner of the largest construction company in Beijing to tour the REESE plants in the United States where the machines are constructed. These dignitaries arrive at REESE for their tour and evening social event for which they appear most excited. The Executive Team of REESE, CEO, and Dr. Wang are present at the event along with the Dean of the University of Michigan architectural school. The Dean hands out gifts, which include University of Michigan shirts and various other tokens to the Chinese guests.
The CEO of REESE kicks off the event with introductions by all and an exchange of handshakes and gifts. Next, Monica Ponce, Dean University of Michigan Architectural School, presents her plan to partner with REESE and the government of China for a satellite University of Michigan architectural unit to be established in Beijing.
The Chinese are elated and suggest this will cement the deal between the Chinese and REESE Inc., knowing that there will be an architectural satellite with a recognized architectural school (University of Michigan) now operating in Beijing. REESE executives verbally appear enthusiastic encouraging the participation. The University of Michigan representatives return to Ann Arbor confident that REESE will drive this new partnership.
Several months later Dr. Wang receives a phone call from Monica Ponce accusing her, “You used us!” as Dr. Wang knew full well that REESE backed out of the deal immediately following the signing of the 2,000 machine order.
Questions:

Q1: Do you think REESE Inc., adhered to a set of Business Ethics? If so, what were they? If not, what would you recommend as a set of business ethics for them?

Q2: Discuss the ethical issues involved in this case. Discuss how you might develop a plan for addressing the ethical issues involved in this case.

Q3: How do you think the president of CNS should have addressed this directive from the CEO of REESE, Inc.?

Q4: Was this an Ethical Dilemma? And, if so, why?

Q5: What does this case tell you about organizational culture and leadership?

Q6: Of the Philosophical Approaches to Ethics described in Chapter 4, which approach do you think most conveys the Philosophical Approach to Ethics used by REESE, Inc.?