Donald Chivens' Commentary on "The Information Due to the Customer"
Christine realized that a material change without permission from the customer XYZ is not proper.
Legally and ethically, honesty is required in a case such as this. Handled honestly, both ABC and the
customer XYZ could benefit from a lower cost. Given no cost (or performance) incentive, XYZ would have
no reason to agree to a slightly inferior material. Christine certainly reacted ethically by pursuing this
subject with Vernon. Aside from the ethical issue here, it is also possible that there are important factors
that Christine and Vernon are not aware of, and this "closet" decision could be a large financial risk.
When Vernon disagrees with her objections by saying, "This is business, not engineering," he is implying
unethical behavior (dishonesty) is justified as a part of "good" business. This dishonesty is clearly not an
ethical business decision, but it is also not an ethical engineering decision. In fact, what is the distinction
between business and engineering on an ethical matter? In addition to this, it is blatantly bad business
based upon potential financial risk. Ethically, Christine should press further, but depending upon her
position in the company relative to Vernon, this could be difficult, and she might be risking her job to do
When Christine refused to perjure herself by signing the report, she acted ethically, but if she allows the
report to be released with the other engineer's signature, she is still allowing (and therefore condoning)
a dishonest action. At this point she faces a difficult array of decisions. The lower the managerial level at
which she could influence corrective action, the "safer" might be her position within the company. Since
this dishonest decision was made by Vernon, who appears to be in a marketing position, an engineering
manager might be able and willing to intervene. She might even be rewarded for her actions. If the
managers above her all support Vernon's decision, then perhaps she should be seeking employment
Looking back over this scenario, Christine would have been wise to more aggressively pursue an honest
approach at the outset. Customer XYZ would then have been dealt with honestly regardless of the
"negotiations" within ABC to achieve that. By the time the less expensive parts have been produced, it is
too late for XYZ to play a part in the decision, and belated honesty will be very costly (in goodwill and
perhaps dollars) to ABC.
W. Gale Cutler's Commentary on "The Information Due to the Customer"
XYZ orders 5000 custom made parts from ABC. A price is agreed on based in part on the cost of
materials to be used in the part. ABC discovers a less expensive alloy that can be substituted "only
slightly compromising the integrity of the part." The customer won't be able to detect the substitution
unless they do "a fair amount of testing." The part is still of "good quality" but "might not last quite as
long." There is a simple, one word description of this way of doing business: Fraud!!