CRITICAL THINKING CASE 4 By: Hazel Medina FSCJ – Fall 2017 BUL 3130 Professor Bob Allen Roger Vs Shareholders Roger, under duty of good faith and loyalty, had convinced the company’s board to design, build, and market sport utility vehicles. After the company hired a committee and a marketing consultant to do some research, they have learned that the market might be able to support the project. The board had voted and was in favor of the plan. Unfortunately, shortly after the vehicle was introduced, due to a major oil supply disruption the price of crude oils increased almost three-folds. Because of this unforeseen event, the company lost considerable amount of money for that the new vehicles only had a few purchasers. The shareholders filed suit against Roger as they claim that he had violated his duty to the corporation by convincing the board to build and market large SUV’s. …show more content…
Duty of good faith is generally defined as honesty in person’s conduct during the agreement (Kelly, 2016). Duty of loyalty is when the appointed director must act in good faith and with consciousness, fairness, morality, and honesty that the law requires fiduciaries (The duty of loyalty, n.d.). As one of the few remaining companies that has yet to introduce a sport utility vehicle, Roger decided to convince the board to form a new division. As it was stated on the key fact, the final decision was not on his own but was brought up for judgement. The vote was 9 to 6 in favor to move forward with the plan. The corporate directors have a fiduciary duty of trust and confidence to its appointed leaders. Roger, as the director, was liable for his decisions, but is not liable because of unknown circumstances. The major oil supply disruption was out of his control. Directors are chosen to lead success of an
Ralph Nader, Mark Green and Joel Seligman, in an excerpt from Taming the Giant Corporation (1976, found in Honest Work by Ciulla, Martin and Solomon), take the current role of the company board of directors and suggest changes that should be made to make the board to be efficient. They claim the current makeup of the board does not necessarily do justice to the company because “in nearly every large American business…there exists a management autocracy” (Nader, Green and Seligman, 1976, p.570). The main resolution they present is to make the board more democratic with the betterment of the company as its first priority. Currently the board no longer oversees operations, or elects top company executives and they are no longer involved in the business operations to the extent they should be. Nadar, Green and Seligman argue that that all of these things need to be changed. For a corporation so large to be successful there must be separation of powers just as there is in any current government system ( p.571). They claim this is the only and best way to success (Nader, Green and Seligman, 1976, p.570-571).
du Pont who owned stock became the President of General Motors and developed his “Organization Study” a document that showed how a highly diversified corporation could give division manager adequate freedom and reward to excel, while top management still would have strategic and financial control. The company’s philosophy and strategy from 1910 to late 1920 was a car for every purse and purpose and as demands for automobiles increased, General Motors set the pace for innovation, production, and design for others to follow. Despite high profits, General Motors suffered from a divided management and the war interfered with the company’s ability to solve the problem. During wartime, General Motors showed its commitment and social responsibility by supplying “12 billion dollars worth of materials, such as trucks, tanks, and airplanes, to support the Allied war effort” (General Motors, 2015). The citizens of America had a profound respect for GM’s positive efforts. On the other hand, in 1949 after the purchase of National City Lines of Los Angeles, GM was accused of buying streetcar companies since the 1920’s and replacing them with bus systems (Associate Press, 2008). Consequently, in this Los Angeles case General Motors was convicted of conspiracy, their first major cover up. After the war, GM executives persuaded DuPont’s directors to invest 25 million dollars in GM. DuPont could use their products of plastics, paints, and artificial leather with GM automakers designs and jointly dominated the market. In addition, DuPont developed anti-knock gasoline additive and their Engineering Department helped General Motors build production plants and employee housing. According to Holstein, “General Motors controlled 50.7% of the U.S. automotive market in 1962” (p. 5). DuPont and General Motors had a successful business partnership, but unfortunately, the stock interest DuPont held in General Motors violated the Clayton Antitrust Act according to the
The corporation’s business is carried out by its management, under the direction of the Board of Directors. The Board, and each committee of the Board, has complete access to management. Also, the Board and committee member’s has access to independent advisors as each considers necessary or appropriate. Mallor, Barnes, Bowers, & Langvardt (2010) state that the Board of Directors also, issues shares, Adopts articles of merger or sha...
Student’s Name Professor’s Name Subject DD Month YYYY Engineering Ethics - TV Antenna Collapse Case Summary A 6-ton antenna was being hoisted on top of an 1800 ft. tower, while the last part of the antenna was being hoisted. As a result, the bolts gave in and the antenna crumbled down.
Being determined is a trait you may want to take on. In the story Thank you M’am by Langston Hughes, the main character Roger is determined character because he is determined to be grateful He is determined to earn respect. He is determined to get more money.
Set to debut in 1970, the Pinto was Ford’s first attempt in the subcompact car market. The Pinto was a simple, fuel efficient vehicle and performed well against its foreign competitors. Not soon after the Pinto’s release, complaints concerning the car’s rear-end catching fire began to trickle into Ford. After an evaluation of the Pinto, Ford was unable to find a consistent pattern pertaining to the complaints and the topic was dismissed. What brought the Pinto into the public realm was the highly publicized Grimshaw v. Ford civil trial; a woman had died and her passenger severely burned, after the Ford Pinto they were in was rear-ended and caught fire. Ford was forced to pay punitive damages and was scorned in the public spotlight. The trial was followed by the popular and controversial Mother Jones article “Pinto Madness”, written by Mark Dowie. Although the article was a brilliantly written blockbuster, it construed the facts involved in the Pinto case, which led to a public misconception of Ford, the Pinto and corporate ethics in general. In 1978, in an effort to put to rest what had become a publicity nightmare, The Ford Motor Company announced a recall on all early model Ford Pintos. The events leading up to and after the recall, remain to this day, a popular topic in business ethics debate.
Jentz, Gaylord A., Miller, Roger L., “Business Law Today,” South-Western Cengage Learning, 8th edition, Masan, Ohio, 2008, pg.705-824.
Thomson, Judith J. "The Trolley Problem." The Yale Law Journal 94.6 (1985): 1395-415. JSTOR. Web. 20 Jan. 2009.
Probable loss of company’s trust: When a leader impacts the business negatively, he or she is not trusted by the organisation to be a good professional for crucial deals and thus he is not taken seriously because of the problems related with the stringent ethical choices he makes.
The first section of this essay will focus on the analysis of directors’ remuneration in the light of current principles set by the UK corporate Governance Code. Section 2 will evaluate the justification of economic or fairness standards set by the UK regulation...
The first prima facie duty is fidelity, and one of the subsets it lists is one should not lie in any aspect of their lives. This binding duty is something that Randall should consider when deciding if he should say anything. The ethical obligations that Randall has to the buyers of said car, his team and company are all different. His ethical obligation to himself is to live a truthful life which can lead to a good character. Furthermore, the ethical obligation Randall has to the consumers is also do not lie. Ross considers it a duty of fidelity to not lie and lying to unsuspecting individuals could result in them trusting you and possibly buying the product (Bivins, 26). One of the ethical obligations toward the stakeholders based on Ross’s prima facie duties is the duty of justice. Ross states that if someone receives a gift that brings him or her happiness, it is up to them to provide or prevent the distribution, regardless of their position or power (Bivins, 26). This is applicable to Randall, as he has an ethical obligation to speak up or ignore his gut feeling. Randall accepted the position, which means he has an ethical obligation to his company unless he quits. The ethical obligation of the automobile company would be a duty of beneficence. The duty of beneficence is applicable to the company because they are introducing a new car
Corporate governance is the system by which companies are directed and controlled. De Kluyver’s book focuses on corporate governance in large, pubic held companies. His main point of concern is the distinction of the various roles and responsibilities that CEO’s, investors, managers and other stakeholders in the running of corporate companies. The author also focuses on the rules and regulations that govern the operation of corporate companies with regards to the rights and responsibility of each of the participants in the corporations. De kluyver also stipulates the procedures that corporations ought to emulate in decision making and he goes ahead highlight the significance of the participants in the corporations to encourage consultations before arriving at the various corporate decisions. This book also highlights the importance of the existence of a good relationship between participants in corporations.
Corporate governance is the set of guidelines that determines the control and organization of a particular company. The company’s board of directors is in charge of approving and reviewing changes to this set of formally established guidelines. Companies have to keep in mind the interests of multiple stakeholders, parties who have an interest in the company. Some of these stakeholders include customers, shareholders, management, and suppliers. Corporate governance’s focus is concentrated on the rights and obligations of three stakeholder groups in particular: the board of directors, management, and shareholders. Corporate governance determines how power is split between these three stakeholders. A company’s board of directors is the main stakeholder that influences the corporate governance of a company (Corporate Governance).
Both Beasley (1996) and Uzun et al (2004) demonstrated that larger proportion of independent non-executive directors on the board for US listed companies could reduce the likelihood of corporate fraud. These findings indicate that independent directors are more likely to represent shareholders’ interests. Thus, higher proportion of independent non-executive directors on the board could increase board’s effectiveness as a monitoring mechanism over management.
.... It is the directors’ responsibility to identify potential risks that the company is likely to face or risks already faced by the company. This is basically to prevent such risk to arise again that may negatively affect the company’s operation. By identifying the risks, it allows the company to prepare step by step solutions to prevent or overcome such risk beforehand. It also allows company to take control of risks before risks affect the company seriously.