Case Scenario:
Scenario 1: Company X, a multinational manufacturing company based in the US, produces and sells boxed cereals. X grows some of the grain used in its cereals, and buys the other ingredients for its products from suppliers in the US and overseas. X has an existing Corporate Social Responsibility (CSR) program called Breakfast First through which it donates cereal products to homeless shelters, and to the Red Cross for distribution to areas where needed; . X is considering spending even more money to create one or two new CSR programs.
Assume the role of Milton Friedman addressing top management and the Board of Directors for Company X. Friedman's role is to recommend against the new CSR programs for X; he must explain and justify his theory that the "business of business is business..." and the primary focus of a business is maximizing profits is also ethical.
You might want to write your response in the form of a memorandum to management and the Board of Directors from Friedman OR simply write your response in an essay/speech type format.
Scenario 2: You have been the Chief Financial Officer (CFO) for Pharm, Inc., a large pharmaceutical company, for 15 years. The Company's year-end is March 31 and you are finishing the year-end accounts.
You have recently been advised by the Chief Operating Officer (COO) that Pharm holds a significant amount of a particular stock that has been very slow moving and has been devalued within the past year. Typically, the stock in question would normally have been written off as a loss some months previously.
The shareholders are trying to sell Pharm and the Chief Executive Officer (CEO), who is also the majority shareholder, has told you that it is not necessary to write off the devalued stock in the year-end accounts. You know that the CEO wants the financial statements to carry an inflated stock valuation because he has found a prospective buyer for Pharm. The CEO has mentioned to you that if the proposed deal is successful, all employees will keep their jobs and you will receive a substantial pay increase.
- What are specific ethical issues and implications to consider in making this decision?