Week 4 notes
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This 2 page Class Notes was uploaded by Sophie Levy on Tuesday September 27, 2016. The Class Notes belongs to LGST 3010 at Tulane University taught by Sanda Groome in Fall 2016. Since its upload, it has received 8 views. For similar materials see Legal/Ethical/Regul Busn in Business at Tulane University.
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What is Karma?
Karma is the currency of StudySoup.
Date Created: 09/27/16
Ch. 5 Tuesday, September 20, 2016 9:37 AM The law may say one thing, but morals and ethics vary from person to person - First question in a business decision: is it legal? - THEN you may consider other ethical/moral situations - Ex: the Exxon scandal: big oil spill off of the coast of Alaska; pilot of vessel was drunk ○ Congress/agencies decided to pass federal regulations about oil vessels ○ Expensive measure to make vessels doub-lhauled ○ Makes us feel better about company! - Ex2: Tylenol scare: there didn't used to be so many safety coverings ○ Someone put cyanide in Tylenol– several people died ○ Tylenol pulled ALL of their products off the shelf ○ They went above and beyond to fix the problem and protect their customers - Ex3: Cars that exploded sometimes Business made a cost-‐benefit analysis and decided NOT to recall ○ ○ Instead, they were willing to pay the death claims when people died Primary stakeholders: would be your investors, your shareholders, customers, employees - Everything you do in a business should benefit your shareholders 5.1 case (p 130): GMC plant was given tax breaks for employing so many local residents - GMC announced it was consolidating and closing one factor (losing 4,000 jobs) - The lower court in Michigan ruled in favor of the citizens, finding that GMC's promised were binding, and allowing GMC to close the plant would result in unfairness - Appeals court said that the people's argument was unfounded and unbi–it was not a true, legally -‐binding contract - You can argue that they were morally/ethically bound Necessary: - You need to have specific rules - let your employees know what those rules are - You need to have leadership/upper management that follows the rules Necessary: - You need to have specific rules - let your employees know what those rules are - You need to have leadership/upper management that follows the rules Enron: an energy driven trading business - In their accounting practices, they essentially predicted their revenues - Earnings were tied to stock prices (lied about revenues) - Their shareholders were also their employees - Things were not going well, so upper management started selling off stock - When Enron plummeted, their shareholders/employees lost everything - Conspiracy theory: ○ Kenneth Lay, CEO and Chairmen, faked his death ○ 9/11 helped prevent records from becoming public knowledge because the papers were in one of the twin towers - Lay's death renders the government's decision null - Lay's life insurance policy cannot be touched by the government seizures