BUSINESS LAW AND ETHICS DILEMMA

Dilemma 1: Pimp my Hide

It is January 2020 and, after many years of planning and saving, you have finally been employed as the manager of a business – a Barbershop/Tattoo parlour called Pimp my Hide. The business makes a flying start – the business employs six staff and takes out a loan for $100,000 based on the financial performance of the first few weeks.

Unfortunately for you, a virulent Coronavirus has landed in the state. The government has issued a set of directives around hygiene, ventilation and social distancing. You have developed a Corona-safe plan in line with these requirements and adhere to them.

About a week later, there are seven known community transmissions on the other side of the city and there is a concerted media campaign asking businesses to voluntarily close to stop the spread. You notice that a number of other businesses, particularly Tattoo parlours have decided to close.

This is a disaster for you personally, the shareholders and your staff. There is enough funding to last 3 weeks if you close now, but there is no advice on how long you might have to stay closed. Your six staff do not qualify for government support as you only recently employed them.

Do you remain open, as is your legal right or do you close? Justify your answer based on ethical frameworks used in this course.

 

Dilemma 2: The Superseded Tablet Case

You work as a sales assistant for a family run business – a mobile phone “kiosk shop” in a local Shopping Centre. The business sells cases and protective covers for mobile phones and tablet computers.

Earlier that morning, the owner explained that the recent pandemic had decimated sales and the business was failing. They are going to have to close the business if sales do not increase. Due to declining revenue, the owner is concerned that she will not be able to pay her child’s school fees for the new year. You will, of course, lose your job.

An elderly customer enters the store to purchase a 100 cases for tablet computers. They tell you excitedly that they are on the board of a charity and they are going to take delivery of the newly released Pear tablet computers for their clients.

The sample of the case the customer is interested in buying is nearing the end of production as a newer version of the Tablet was launched last week. As a result, these cases will become harder and harder to sell – and 100 cases will clear most of the inventory and make a substantial difference to this quarter’s sales. In fact, the owner will for sure be able to pay their child’s school fees.

You know that the charging and headphone connection positioning has changed on the new Pear model, so that the case for the Tablet will not fit as it should. You do not have cases for the newly released model.

From an ethical perspective, should you inform the customer that the case they want to purchase won’t fit well (knowing you will lose the sale) or should you let them buy the cases? Justify your answer based on ethical frameworks used in this course.

Dilemma 3: CabStonk!

You work in policy development at the Associated Australasian Securities Exchange (the AASX).

A crisis has arisen at the AASX. It seems that a number of Hedge Funds had taken out significant “short” positions in a listed taxi business OrangeCabs (OCC). The Hedge Funds (correctly) believed that ride sharing was undermining the business and the share price of OCC had been in decline for the past 9 months.

The managers at one particularly Hedge Fund, Hound Investments, thought they had sniffed a bargain and took a particularly aggressive stance. Unfortunately for Hound, a large group of day traders have banded together and bought up swathes of the stock, artificially raising its price. The buying has spread to the market, somehow egged on by a local tech entrepreneur’s single, unintelligible tweet of “Cabstonk!”.

If the buying continues, it will bankrupt Hound and have significant knock-on effects for the financial sector and the retirement funds of the general public. On the other hand, the investors buying are doing nothing illegal – the situation has been caused by the aggressive position taken by Hound.

The pressure is on your boss – she is being contacted by several institutional investors who make the point that this is price manipulation that distorts the market.

Your boss would like a position paper – is it ethical to regulate the day traders? Justify your answer based on frameworks from this course.

Dilemma 4: Profiting from Pear

You work for a marketing consultancy, OnPoint where you help clients assess the market potential of products they have in development.

You have recently been assigned to work on the largest account with the agency. It is the well-known technology innovator, Pear, who is developing a new wearable device – the P-glass. The P-glass will be a wearable display (think glasses) that can also sense hand gestures.

You know from being around the staff at Pear that the company’s share price is under pressure due to the failure of its three most recently launched innovations.

It just so happens that you also undertake work for the Australian government on their COVID-19 Vaccination marketing campaign. You are aware that the government has decided it needs to “modernise” the workforce and get them “fit for the 21st century.” As a result, you know they have placed an order for 250,000 sets of P-Glasses for all Commonwealth employees.

Having studied business, you know that Pear’s share price will spike on release of this news.

Your sister has just had a child born with a significant disability. If you tell your sister about this upcoming announcement, she could make a lot of money by investing in Pear shares and options now. Of course, using this information is illegal.

You can assume your sister will make a large profit and that no-one will ever find out. You can also assume investors selling to your sister will be happy with the price she pays at the time of the transaction.

Do you tell your sister about the deal? Justify your answer based on frameworks from this course.

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