Business law 1 discussion

You are President of a nationaltoy manufacturing company that has numerous production and manufacturing facilities here in the USA and Europe.You are approached by a company from Indonesia that says it can provide all of the componenttoy parts at its plants in Indonesia at one tenth the cost of production of the parts in the USA, and that they then can be thereafter assembledhere in the USA, still saving the company 50% of its overallmanufacturing costs.However, you know that this Indonesia company employs women who earn only $100per month and work 10 hour days 6 daysper week.Your company has always put a Made In theUSA label on its toys.You intend on still doing that.Your company has an excellent reputation formaking "clean toys", no toxic materials, lead paints, or similarcomponents.Since most of your competitors haveengaged in similar decisions you are underpressure tomake this move for higher profits.Whatissuesshould you consider in makingthis decision?Who are the "stakeholders" and how will they be affected if at all?

M4CHAPTER 3 Mini-Lecture BUSINESS ETHICS An understanding of ethics and its application to business decision making has never been more important than it is today. Not a day goes by where we do not read or hear about some type of activity that although legal is morally inappropriate in the business environment. Whether it is payment of millions of dollars in bonuses to employees when the company is near bankruptcy and in need of government bailout assistance(AlG), or the misrepresentation of assets and prots(Enron, WorldCom, and Tyco), it is a constant source of concern in society. The lack of trust in corporate America is at all time high. But who do they serve, who is their master? Corporations are owned by their shareholders(stockholders) and one ethical theory is that they exist soley for the benet of their shareholders only. This "ownership theory" of ethics asserts that the company exists solely for the purpose of maximizing its prots, so as to elevate its stock price and pay aggressive dividends. The executives who manage the company owe no allegience to anyone other than their shareholders and moral and ethical issues are narrowed by their focus on that target. Contrast that with the "stakeholder theory" which propounds that corporations owe a higher duty to society taking into consideration the affect its decisions will have on stakeholders. Stakeholders are persons and groups that affect or are affected by a busines's decisions and policies. These groups include employees, creditors, customers, and suppliers, and sometimes cities and towns. Many scholars argue that the two theories are not exclusive, that is, companies that are good "corporate citizens" are generally more protible as customers prefer to do business with them over their competitors because of their good name or good reputation. How we judge a company's business ethics can include many different components of its existence. How we characterize the following: 1. the quality of its product from a safety and reliability perspective, 2. how we judge a company's willingness to warranty its products and customer service, 3. how a company treats its employees, 4. how it treats the environment, 5. how humane it is, 6. is it charitable and/or involved in the community, and 7. how a company reacts or behaves in the instance of a crisis, are indicators of ethical standards. A crisis can take on many different issues. For example, a pharmaceutical company learns that they are getting numerous reports of serious side effects for one of its premier products that was not known to exist previously. What they do and when they do it is a question of ethics. When does a company recall its product rather than handle the crisis in another manner when they learn of a conrmed defect in one of its products? Outsourcing of production is another area of ethical debate. If Nike for example uses labor in Indonesia for production of its sneakers because it is more cost effective, they may face the decision of a need to close a plant in the United States in order to be protable and competitive. Yet, if all of their competitors have done so, and they don't-their sneakers may be priced out of the market due to signicantly higher labor costs in the United States. What if a United States company hires a foreign company for the production of a component part in its manufacturing process, and then learns that the company they contracted with for this part violates child labor laws, or is discriminatory against women or minorities? These are questions of ethics. On a smaller scale we see people all the time in our workplaces doing things such as: padding their time sheet, leaving early, arriving late, taking supplies, and exaggerating their expense accounts. There are obviously many other examples of this unethical behavior. It is imperative in the first instance that top management set an "ethical tone" and insist on its implementation for its mid-level and even lower level management personnel. Some areas of decision making are not as clear. When does advertising of a product go from a characterization of being "slick", or "extremely effective", to being "deceptive" or "misrepresentative"? What crosses the line? Does a company have an obligation to warn consumers not to use its product for a purpose other than what it was intended, even if a signicant part of its sales are for its riskier use? What if a company could lower its overall product costs by transferring production expense to a foreign company that saves money because its country has lower safety standards than the USA for the production process? It is not illegal in the country that is producing the product even though the USA company knows that the foreign company workers have a high injury rate in the production process? It could be a question of even the air quality in the workplace and a higher incidence ofemphysema or lung cancer? Rest assured that you will encounter these types of dilemmas and others in your lifetime in the business environment. Will you be a "whistle blower" if you see unethical actions by your superiors or coworkers, or will you hide and keep quiet to keep yourjob and put food on your table