Page 149 - Introduction to Business

CHAPTER 3 Business Governance, Ethics, and Social Responsibility 123

What are the pros and cons of a company incorpo- governance, should they adopt meat safety proce-
rating in Delaware? dures greater than what’s required by federal law?
5. You have recently taken a job at an executive With the average American consuming approxi-
search firm that has been hired by a large com- mately 30 pounds of ground beef per year, your
pany to help it find two new independent outside thoughts on the matter are not trivial!
directors. What kinds of individuals do you suggest 2. The Home Depot Corporation recently sent a
for these positions? Any specific names to suggest? memo to its 1300 stores nationwide instructing
6. Who is a principal and who is an agent in the cor- them not to do business with the U.S. government
porate governance context? (i.e., don’t accept federal government purchase
7. What is the basic business governance conflict of orders, federal government credit cards, etc.). The
interest that results from the separation of owner- reason why the home improvement retailer doesn’t
ship and control in today’s large corporations? want to do business with the federal government is
8. What would be some good examples of empire that it doesn’t want to be deemed a federal contrac-
building on the part of corporate executives? tor. Federal contractors are under a wide array of
9. You have been hired by a large corporation as a U.S. Department of Labor reporting and affirmative
consultant to better align the financial interests of action requirements. Analyze Home Depot’s action
its corporate officers with those of its shareholders. from the point of view of a societal responsibility
What specifically do you suggest? model of business governance. Do you agree with
10. What are some recent laws or regulations that deal Home Depot’s action? Why or why not?
with corporate governance and conflict of interest
issues?
11. A CEO of a publicly traded company buys 1000 Web Assignments
shares of the company’s stock on January 1, 2005, 1. The U.S. Securities and Exchange Commission (SEC)
at $40 per share and sells this stock on September is the primary federal governmental agency regulat-
1, 2005, at $50 per share for a $10,000 profit. ing corporate governance matters. Go to the SEC’s
Assuming no trading on inside information, has webpage, www.sec.gov, and prepare a one-page
the executive done anything illegal? If so, what summary regarding what the SEC primarily does.
remedy is appropriate? Also, find the section on the site that shows speeches
12. What is the stakeholder model of business gover- and public statements and read at least one speech
nance? Do you think this model represents a better or public statement by a SEC official to get a better
one than the shareholder model of business gover- idea about some of the agency’s current activities.
nance? Why or why not? 2. The California Public Employees Retirement Sys-
13. Do you think the tithing approach taken by the tem (CalPERS) is the largest pension fund in the
Atlantic Stewardship Bank of New Jersey is a good United States, with over $140 billion in assets.
one? Should other companies emulate this approach? CalPERS has in recent years been very active, as a
14. What is unethical behavior? What are some exam- major investor, in the corporate governance area.
ples of unethical business behavior? Go to the CalPERS website at www.calpers.ca.gov
15. What is the Foreign Corrupt Practices Act? Give and locate the page that lists press releases. Find
two examples of companies violating this act.
three press releases during the past three years
dealing with the pension fund’s investments or
Interpreting Business News corporate governance activities. Then write a one-
to two-page synopsis of the issues addressed in
1. There has been considerable recent controversy these three press releases.
regarding the safety of hamburgers and other meat 3. General Electric (GE) has been at the vanguard of
sold in the United States. Fairly recently, for exam- corporate governance and business ethics reforms.
ple, the presence of E. coli bacteria in ground beef Go to the GE website, www.ge.com, and find the
packed by ConAgra Foods Corporation resulted in company’s statement about its commitment to gov-
one death, 38 serious illnesses, and the second- ernance. Skim the provisions of this section to get
largest meat recall in U.S. history. Ground beef is an idea regarding the company’s activities in this
harder to keep safe than roasts or other types of regard, and then find the company’s code of con-
meat because any contamination is mixed right duct. Locate the section dealing with GE’s integrity
into the meat rather than staying on the surface policy for employees. Pick any two GE employee
where it can be killed by cooking or other meth- integrity policies—fair employment practices, pri-
ods. Obviously, ConAgra and other meat-packing vacy, conflicts of interest—and write a one- to two-
companies are required to follow all U.S. Depart- page paper analyzing the quality of these policies
ment of Agriculture (USDA) safety requirements. and how they might possibly be improved or why it
However, pursuant to the stakeholder model of looks as though they can’t be improved.

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