3 Ethical Frameworks

Question 1. Identify and define three ethical frameworks discussed by Halbert & Ingulli. Provide a detailed and documented example of a corporate executive using each of these frameworks.

1. Free Market Ethics: deals with the consideration of only shareholders and the profit for which they receive. (Halbert & Ingulli, 2008, pg. 10) In other words, the greed of the shareholders is only of concern and not the community in which the company stands.

2. Deontology Ethics: deals with the “respect for life, fairness, telling the truth, keeping promises – no matter the consequences.” (Halbert & Ingulli, 2008, pg. 14) It essentially goes with the belief that duty and rights come before the consequences of the action.

3. Virtue Ethics: deals with who

people can ultimately become based upon good habits of character learned from a lifetime of conditioning. (Halbert & Ingulli, 2008, pg. 16) Virtues to learn would be to become courageous, generous, kind, just, honest, among others.
In regards to Philip Morris, ethics take a back seat to billion dollar tobacco industry. The Department of Justice filed a lawsuit back in 1999 against Philip Morris for fraud and unlawful conduct as well as reimbursement of medical expenses related to tobacco. (“United States v. Philip Morris (D.O.J. Lawsuit),” n.d.) Philip Morris was accused and convicted of misleading the public about the health issues regarding smoking and second-hand smoke, the addictiveness of nicotine, deceptive marketing, targeting youth, and not providing a healthier cigarette. (“United States v. Philip Morris (D.O.J. Lawsuit),” n.d.)
The executives of Philip Morris is completely in favor of the Free Market ethics and Milton Friedman’s philosophies. The previous sentence is in the present tense because, even though the United States has curbed most of this, Philip Morris is finding other global markets to do the same thing they did to the American public that caused the lawsuit in 1999. (AmongSnares, 2012) They want make sure that their profits continue beyond the steady decline in the United States over the past decade. Indonesia, among other countries, are being hard hit with cigarette advertising for Marlboro and Sampoerna Mild which is made by Philip Morris. Indonesia does not have the same restrictions and guidelines that the United States does as they are allowed to sell cigarettes to children. There is even a story of a 2-year old child who smoked like an adult. They promote sex and individualism as well as being a “cowboy” to young and old alike. (AmongSnares, 2012) They simply want their profits regardless of the health risks.
However, Philip Morris is not in favor of deontology ethics. They do not have a respect for life as seen by the billions of people that they kill slowly throughout the world. Philip Morris was forced to tell the truth to the American people about the effects of smoking but they certainly do not tell the truth to the current global market that they are selling their cigarettes to. They do not tell them any risks at all. It is not until people are in the hospital fighting for their lives and finding out that it all had to do with them smoking since they were eight years old because they were not told that smoking was bad for people’s health. (AmongSnares, 2012)
Nor does Philip Morris favor virtue ethics. It seems as though the people who work for Philip Morris were not taught any morals at all…certainly not anything regarding good habits of character. Who could in good conscience say that they are willing to kill the people of the world simply to put money in their own pockets if they had any character at all? Being virtuous also means that you care about others and nothing that Philip Morris portrays in the past or present says that they care about others. They only care about themselves and their greed.
Question 2. Discuss Schaefer's position on shareholders and social responsibility. Do you agree? Why or why not?
Brian Schaefer argues against Milton Friedman’s philosophy that corporations have no moral obligation or duty to share social responsibility. Shareholders tend to benefit from a corporation if its sole purpose is to please the shareholder and make as much money as possible. (Schaefer, 2008) Schaefer argues that the main goal of a corporation is to benefit its stakeholders regardless of the profit the corporation makes. He also argues that corporations tend to deceive and manipulate customers, clients, and investors which would benefit the shareholders but it should be that the corporation “do the right thing” and be truthful to its customers, clients, and investors which the stakeholders would approve of. (Schaefer, 2008) Schaefer argues that several of the ethical frameworks that make up Western society including the Judeo-Christianity philosophy says the complete opposite of Milton Friedman’s philosophy. (Schaefer, 2008)
I agree with Schaefer as I am of the moral inclination of the Judeo-Christian “philosophy.” I believe that if a corporation is to be a “person” in and of itself, it should have a moral responsibility to its members, customers, clients, investors, and shareholders. Being honest and truthful with no deceit is how each person and corporation should act. Unfortunately, most of Western society has transformed its moral ethics into a “Me, Me, Me” society. It has become more about greed than helping others.
Question 3. Discuss three factors that Maffei identified as elements the court will use in determining whether to pierce the corporate veil.
a. The Absence of Corporate Formalities: This is when the corporation must be seen as legally separate from the shareholders / owner. Examples of such separation should be seen in that the corporate books must be kept, there should be regular corporate meetings, election of directors and appointments of officers, corporate records should be kept, and stocks should be issued. (Maffei, 2011, pg. 111) For example, in the case Brown vs. Knowles that I posted about in Week 7, Mr. Brown could not provide corporate records for International Steel, there were no corporate meetings held since 1988, and several other non-formalities were used to allow the court to pierce their corporate veil.
b. Personal Use and Comingling of Corporate Funds: This is in regards to corporate finances and assets and the personal finances and assets of the shareholders / owners should remain separate. (Maffei, 2011, pg. 111) For example, I know for a fact that my previous employer consistently used corporate finances for his own personal use by using the corporate credit card to buy upgrades for his personal car that he had no intention of using for the business itself. I have no idea if anyone will bring this up in court.
c.

Inadequate Capitalization: A corporation should have enough capital to run itself. (Maffei, 2011, pg. 112) The business that the corporation conducts should prove that it can sustain itself no matter what sector the business is in.

Question 4. Identify and discuss two major laws that are enforced by the Department of Labor.

a. The Family and Medical Leave Act (FMLA): this legislation entitles eligible employees of companies with 50 or more employees, to receive unpaid leave based upon adoption/birth/sickness of a child or sickness of the employee or person in their immediate family (i.e. spouse or parent) for up to 12 weeks. (United States Department of Labor, n.d.)

b. The Occupational Safety and Health Act (OSH): Employers are required to provide a safe and healthy work environment free from serious hazards to their employees. Employers must comply with the regulations and standards promoted by the Occupational Safety and Health Administration (OSHA). (United States Department of Labor, n.d.)

Question 5. Define and discuss three disadvantages of sole proprietorship, according to the assigned reading from the Missouri Bar Center.

a. The sole proprietor is personally liable for all debts of the business. Creditors can go after personal belongings to fulfill debts of the business. (Missouri Bar Center,

2008)
b. All income of the business is taxed on the sole proprietor’s personal income tax return. Their personal taxes are not separated or protected from the business as it would be if the business were a partnership or corporation. (Missouri Bar Center, 2008)
c. Obtaining funds for the sole proprietor usually involves borrowing money from a bank instead of being able to obtain funds from investors and partners or issuing stock and bonds. (Missouri Bar Center, 2008)