UTC is a diversified International Manufacturing firm and has almost about 200,000 employees working for the company. Its main business units include Pratt & Whitney, a jet engine company which is a leader in its industry. More than the half of UTC’s profits come from the aerospace and defense sectors, commercial and military jet engines, helicopters and related services for maintenance.
UTC had faced difficult circumstances in 1991 due to consolidations and cuts in defense spending which caused national recession, a negative impact on commercial real estate industry. It had increased the competition worldwide. UTC had issued its first formal Code of Ethics and created Business Practices Officers to help in implementations of this code of conducts.
Jack Egan had raised question on the compliance program for the contracting side of businesses of UTC since 1986. His urgent concern was due to the investigations of The Federal Government, the scandals on Wall Street, and general concern with ethics in American Institutions.
The code of ethics was introduced in the company to make the corporate legal and lawful. It was developed for the purpose to facilitate ease of the employees which unexpectedly created more difficulties for them due to less understanding and inefficient applicability.
It is stated in code of Ethics that anything which is meant to be proprietary for the competitors must never be used and accessed by Pratt and Whitney’s employees. Due to the ambiguity in the code of ethics and not defined “proprietaries” resulted massive problems and confusion for the employee as they could not know what information of competitors they have to use or not and to what extent.
This case highlights the main problem which was identified during the time period when Code of Ethics was developed for Pratt and Whitney with respect to information gains about the other leading players in industry. Introduction of the code of ethics in the company was made for the purpose of to form corporate atmosphere more legal and lawful. The code of conduct was formed and developed to provide ease to employee but it created more issue for them with respect to little knowledge and understanding of the “proprietaries of competitors” which must not be used by the employees of Pratt and Whitney.
Analysis of Situation
Jack Egan, Vice president of Environmental and Business Practices a UTC was getting more concern to make policy circular on information gathering about the competitors. After several workshops and meetings, He had called a corporate counsel from Pratt and Whitney Headquarters to review draft policy circular for Code’s provision on competitive information. Paul Benik, associate of general council explained that they are putting efforts to guide people in gathering information about competitors.
Due to the ambiguity in deciding the “proprietary” of competitor, it is proposed not to be used by the employees. Even Don Pattern, Vice President of Pratt and Whitney was not in favor of the circular proposed by Egan, as it seemed to be prevention from getting anything but public documents in order to learn about competitors.
UTC had faced tough situations in 1991 and due to consolidations and cuts in spending of defense and nation recession with a negative impact on commercial real estate industry had increased the competition worldwide.UTC was being more cost efficient by cutting down the staff and other expense to reorganize in developing, manufacturing, and marketing of the products.
UTC started showing concerns about ethics and created a network of (Business Practice Officers) BPO throughout the world in 1990. Fletcher developed two criteria for the code of ethics that it must be understandable and it should be applicable to business worldwide. Egan was given the responsibility for implementing the program further.
Each business Practices Officers at all the locations worldwide were given the responsibility of all changes in corporate policy and responding to queries of employee about the interpretation of the code. 10% to 15% expenditure was allocated on BPO by some of the managers. There were various reactions towards the new program……………………….
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