The Controller of One Division of a Large Diversified Firm

question 52

Essay

The controller of one division of a large diversified firm is compensated by salary plus bonus. The bonus is a significant part of total compensation, and is based directly on the profits of the division. Thus, the controller has an incentive to find ways to increase profits, including the delay of discretionary expenses such as research and development, delay of maintenance and repair of manufacturing equipment, and delay of sales promotions.
Required:
Is finding ways to increase profits as described above unethical? Why or why not? Who is to blame, if anyone?

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Definitions:

Stimulus Generalization

A phenomenon in which responses to one stimulus are also produced by similar stimuli.

Modeling

The process of learning by observing and imitating the behavior of others.

Exposure Technique

A therapeutic method used in treating anxiety disorders that involves the gradual exposure of a patient to their feared object, situation, or thought without any danger, to overcome their anxiety.

Feared Object

An item or situation that triggers a phobic or intensely fearful response in an individual.