Monday
September 22, 2014

Homework Help: business ethics

Posted by shannon on Tuesday, November 16, 2010 at 2:35pm.

CONFLICT OF INTEREST
Big Company is a large manufacturer of health-care products that is under fire from
the government to lower costs. Big Company has an excellent reputation and is widely
acknowledged as one of the best managed companies in the country. In spite of its reputation,
however, Wall Street has reacted negatively to government efforts to reform
the health-care industry as a whole, and Big Companyís stock price has lost 30 percent
of its value in the last year. To counter the effect of possible government intervention,
Big Company has just purchased Little Company, a discount health-care
supplier. Wall Street has greeted the acquisition with enthusiasm, and Big Companyís
stock price has rebounded by more than 10 percent since news of the acquisition was
made public.
While this acquisition could provide Big Company with a foothold in a growing
part of the health-care industry, a real problem lies in the mission of Little Company.
Little has made its reputation by providing objective health-care advice to its
customers. Now that itís owned by Big Company, customers have expressed doubts
about how objective Little can be in recommending health-care products if itís
owned by a health-care giant. Will Little Company be pressured to recommend the
products offered by Big Company, its parent? Or will Little Companyís advice
remain objective?
As the senior executive charged with bringing Little Company into the corporate
fold, how do you proceed? What are your obligations to Big Company, Little Company,
and the customers of both? What do you owe to shareholders and the financial
community? Are there other stakeholders, and what do you owe to them? What provisions
would you include in an ethics code for Little Company?

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