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Business Law and the Regulation of Business 11th Edition by Richard Mann, Barry Roberts
Edition 11ISBN: 978-1133587576Business Law and the Regulation of Business 11th Edition by Richard Mann, Barry Roberts
Edition 11ISBN: 978-1133587576 Exercise 1
Omega, Inc., a publicly held corporation, has assets of $100 million and annual earnings in the range of $13 to $15 million. Omega owns three aluminum plants, which are profitable, and one plastics plant, which is losing $4 million a year. Because of its very high operating costs, the plastics plant shows no sign of ever becoming profitable, and there is no evidence that the plant and the underlying real estate will increase in value. Omega decides to sell the plastics plant. The only bidder for the plant is Gold, who intends to use the plant for a new purpose: to introduce automation, and to replace all existing employees. Would it be ethical for Omega to turn down Gold's bid and keep the plastics plant operating indefinitely, for the purpose of preserving the employees' jobs? Explain.
Explanation
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Case summary:
O Company has assets worth $100 million. It earns around $15 million every year. It has four plants, one plastics plant and three aluminum plants. The aluminum plants are profitable whereas the plastics plant generates a loss of $4 million every year. The owner of the company decides to sell the plastics plant. Unfortunately, there is only one bidder for the plastics company.
G is the bidder of the plastics company. It has a plan of completely replacing all the employees, as it wants to introduce automation.
Determine if it is ethical for O Company to preserve the employees by not selling the plant:
This situation comes under the moral of equality. According to the owner of O Company, his employees in the aluminum plant and the plastics plant must be the same. He must not exhibit partiality on any worker. The employees must be equally treated.
The owner must try to make changes in the plastics plant that may reduce his annual loss. Ethically, he can change the methods and techniques used in the company. The reason for failure must be found out and steps must be taken to rectify it. Still, if the net loss cannot be met out, then the company must take broader steps like changing the total plant but retaining the employees.
Only if the manager preserves the employees in the plastics plant, the employees working in aluminum plant would act loyally to the owner. If not, there is a chance of drop in production in all the three aluminum plants. Hence, to be away from such circumstances, it is better to protect the employees.
O Company has assets worth $100 million. It earns around $15 million every year. It has four plants, one plastics plant and three aluminum plants. The aluminum plants are profitable whereas the plastics plant generates a loss of $4 million every year. The owner of the company decides to sell the plastics plant. Unfortunately, there is only one bidder for the plastics company.
G is the bidder of the plastics company. It has a plan of completely replacing all the employees, as it wants to introduce automation.
Determine if it is ethical for O Company to preserve the employees by not selling the plant:
This situation comes under the moral of equality. According to the owner of O Company, his employees in the aluminum plant and the plastics plant must be the same. He must not exhibit partiality on any worker. The employees must be equally treated.
The owner must try to make changes in the plastics plant that may reduce his annual loss. Ethically, he can change the methods and techniques used in the company. The reason for failure must be found out and steps must be taken to rectify it. Still, if the net loss cannot be met out, then the company must take broader steps like changing the total plant but retaining the employees.
Only if the manager preserves the employees in the plastics plant, the employees working in aluminum plant would act loyally to the owner. If not, there is a chance of drop in production in all the three aluminum plants. Hence, to be away from such circumstances, it is better to protect the employees.
Business Law and the Regulation of Business 11th Edition by Richard Mann, Barry Roberts
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