In the Case of the Home Depot below, is it inherently unethical to make business decisions that add long-term value to the business and which do not violate law or social convention? Why or why not? Explain your position.
What alternatives to Home Depot's action would you consider more morally appropriate in consideration of the operating situation they faced in which both the community and the business would be better served? Provide details.
Under what conditions could managers, acting entirely in support of the organization's economic benefit, make a morally relevant decision? Provide details.
Home Depot: Good Ethics or Shrewd Business?
When weather forecasters predicted that Hurricane Andrew would strike the Miami area with full force, customers rushed to stock up on plywood and other building materials.7 That weekend the 19 Home Depot stores in southern Florida sold more 4-foot-by-8-foot sheets of exterior plywood than they usually sell in two weeks. On August 24, 1992, the hurricane struck, destroying or damaging more than 75,000 homes, and in the wake of the devastation, individual price gougers were able to sell basics like water and food as well as building materials at wildly inflated prices. But not Home Depot. The chain's stores initially kept prices on plywood at pre-hurricane levels, and when wholesale prices rose on average 28 percent, the company announced that it would sell plywood, roofing materials, and plastic sheeting at cost and take no profit on the sales. It did limit quantities, however, to prevent price gougers from reselling the goods at higher prices. In addition, Home Depot successfully negotiated with its suppliers of plywood, including Georgia-Pacific, the nation's largest plywood producer, to roll back prices to pre-hurricane levels. Georgia-Pacific, like Home Depot, has a large presence in Florida; the company runs 16 mills and distribution centers in the state and owns 500,000 acres of timberland. Although prices increased early in anticipation of Hurricane Andrew, Home Depot was still able, with the cooperation of suppliers, to sell half-inch plywood sheets for $10.15 after the hurricane, compared with a price of $8.65 before, thereby limiting the increase to less than 18 percent. Home Depot executives explained their decision as an act of good ethics by not profiting from human misery. Others contend, however, that the company made a shrewd business decision.