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:

Person

An individual human being.

Thinks

The process of considering or reasoning about something; the cognitive activity associated with using the mind to form ideas and make decisions.

Feels

Informal term for feelings or emotions, especially those that are intense or difficult to articulate.

Behaves

To behave means to act or conduct oneself in a specific manner, often in response to one's environment or as dictated by societal norms and expectations.