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Avoid the Hustle

Business Law and Ethics

Category: Ethics

Write a ten page double-spaced essay addressing the case below.

Please DO NOT re-write the questions. However, draw upon the important points (terms) of the question in answering your questions. Only use the facts of the case to explain your answer as they relate to the class materials. This assignment requires a written essay with references to the text and to class materials. No additional research is required nor desired.

As you answer the questions, you must refer to your text readings, cases, articles, films, ethics concepts and the rubric topics. I recommend that you BOLD key terms and place internal references in parenthesis. No separate reference page is necessary. Also, number the questions as they appear, i.e. A.1, A.2, etc. A cover page is required that contains your name, the course number and section, the date and the professor’s name. Please staple the pages together.

This is not a group project. Your paper must be your own work.

THE COMPANY

Green Move is a startup company that focuses on environmentally friendly and sustainable transportation products. Its three founders and current shareholders, Robert, Lewis, and Viktor attended the same MBA program in Boston. Robert and Lewis were high school friends from an affluent Boston suburb while Viktor grew up in Russia. The three agreed that their collective mindset could best be described as “competitive with a conscience.” They support the fundamentals of capitalism and agree that the free market operates to the benefit of society. Robert serves as the CEO of Green Move and Viktor serves as the Chief Technology Officer while Lewis has moved on to other opportunities. All three serve on Green Move’s board of directors along with two other corporate officers and two outside investors. The seven directors along with the other corporate officers and several of Robert’s relatives who invested heavily in Green Move own all of the stock. Much of the startup funding, however, was the result of a $15 million government loan at zero percent interest as part of an Investing in Green Technology initiative. Green Move is incorporated in Delaware and maintains a corporate office in Boston.

The last year has been very exciting at Green Move and the perceived value of its shares has increased steadily. In fact, there are rumors that that Green Move will soon go public. This is due largely to the much anticipated launch of the Zero Pedal; a solar powered bicycle that includes a small throttle and brake system. Green Move recently received a patent on the technology enabling the use of a small solar panel that propels the bike at speeds close to 15 m.p.h. The popularity of the Zero Pedal has been limited to the northeastern part of the United States mostly due to “word of mouth” advertising throughout area colleges and universities.

PART A – YOUR EMPLOYMENT AT GREEN MOVE

You graduated six months ago from a Boston MBA program. You earned your degree part time in the evenings so that you could continue your work as an advertising assistant at a prestigious Boston firm. You are thankful that your firm financed a large portion of your degree and that you were able to support your spouse and young child while attending classes.

Green Move was one of several marketing positions for which you interviewed. You were attracted to Green Move because it struck you as “young and energetic” with the potential for tremendous growth. The interview consisted of a single meeting with the three founders who explained that your primary objective would be to expand the sales of the Zero Pedal to the southwestern part of the United States. It was explained that your success at Green Move would be measured exclusively on the expansion of the Zero Pedal into this new market. Your modest salary would be supplemented with stock options in Green Move in proportion to the product expansion.

You learned during the interview that Green Move was replacing a “bad fit” employee whose departure was “mutually agreed upon” after only six months. You gladly accepted the position with a handshake and agreed to complete the necessary tax forms to begin work in two weeks. The only documentation you received was a stock option agreement. You never received any employment training, instruction, or manuals.

Three months have passed since you started at Green Car and you have made several friends including Doug, a product engineer on the development of the Zero Pedal. Much to your surprise, Doug has explained in confidence his concern regarding the operation of the Zero Pedal in warm climates. He claims that the bike accelerates dangerously after the solar panels have been exposed to temperatures exceeding 100 degrees Fahrenheit for four consecutive hours. Apparently, his team had uncovered this defect during the design of the Zero Pedal. He tells you that he planned a report outlining the dangers of the acceleration and that he shared his findings with your predecessor and that he was suspicious of his firing. Doug believes that your predecessor was fired because he questioned management about this defect.

Doug tells you that your predecessor presented the cost per bike to fix the defect to the board but that Robert claimed the report was incomplete without a comparison to the costs of “not fixing” the bike. Robert also claimed that he could not imagine a situation in which the bike would be exposed to those conditions. The two had a heated discussion and two weeks later you responded to the job posting.

Doug further discloses that regulations under the National Highway Traffic Safety Administration (NHSTA) that would otherwise limit the production of the Zero Pedal do not apply because the bike is not “gas powered.” As a result, the production of the Zero Pedal is entirely unregulated.

You are wondering about what to do about the product safety problem on your return trip from Scottsdale, Arizona where you had met with several sporting goods chains to discuss the roll out of the Zero Pedal. The buyers seemed impressed by the Zero Pedal but you did have a curious encounter at your final stop. There, the buyer causally mentioned that he would personally expect payment of a “special “$5,000 annual fee to place the product on its shelves.

Questions A
A.1 What will you do about the product defect information that you have learned about from Doug? What are the relevant pressures? What questions or problem solving models will you consider in making your decision? How would you apply the model to arrive at a solution to the problem?
A.2 Will you pay or recommend that your company pay the special $5,000 fee to have the Zero Pedal placed on the shelves of the sporting goods store? What are the relevant considerations? Is it legal? Is it ethical? Both?
A3. While this problem is in the “latency stage” should Green Move apply the cost/benefit analysis in analyzing safety concerns about the product? What are the risks?

PART B – SUPPLY CHAIN

Green Move’s recent success is due largely to its strategic relationship with one of its suppliers, the Solar Group. The Solar Group manufactures the solar panels that are critical in the Zero Pedal. The Solar Group is located in Bangladesh where it employs over one hundred people, including many child laborers. Consistent with Robert’s conscionable mindset, Green Move’s contract with the Solar Group specifies that “no children shall be employed by the Solar Group and that all workers shall be treated fairly.”

One evening Robert receives a telephone call from an online blogger who claims that he obtained video footage within the Solar Group factory depicting a dimly lit and poorly ventilated work environment. He also claims that the factory workers are paid less than an adequate wage to live in dignity. He asks Robert to comment and tells him that he will be posting a link in his blog to the video to show the public that Green Move is a phony and that its relationship with Solar is being used to exploit foreign workers.

Ironically, at the same moment, Akash is returning from his long day of work at the Solar Group factory. He is 23 years old and has been working intermittently in various factories since he was thirteen. Most of his childhood friends do not have jobs and those who do earn less than Akash. He has never left Bangladesh. Akash is tired but he is thankful to have found a job at the Solar Group. He understands that the work is dangerous but he hopes to move into a supervisory position within five years where he will realize a modest increase to his hourly wage. As a result, he has avoided the recent debate among his coworkers whether they should unionize and leverage their collective weight to demand better working conditions.

Robert knows that the workers at the Solar Group factory are paid more than the average wage in Bangladesh. However, he also knows that work environment is much worse compared to the conditions in the United States and that these labor practices which are legal in Bangladesh are illegal in the U.S.

Questions B
B.1 What should Robert do about the conditions at the Solar Group? Terminate the agreement? Whose interests are at stake?
B.2 What is the appropriate standard he should apply when considering the working conditions and wages in Bangladesh?
B 3. How might the blog impact Green Move’s brand?

PART C – FOREGIN EXPANSION

Green Move has a small technology team employed in the Boston office and outsources the remainder of its technology needs. Viktor has long advocated the substantial cost savings and better management if Green Move were to hire well educated individuals from Eastern Europe at low wages. Privately, Viktor realizes that he would also like to make a difference in Russia by helping the underemployed and unemployed. The board met and agreed that Green Move should consider this as a long-term strategy and that Viktor should investigate a remote technology base in Russia. Viktor spoke to his friends and believes that he has found the perfect location to lease. The government- owned property is large, well lit and its urban location will attract many workers.

Viktor has traveled to Russia to visit his family and to meet with the property manager. The two discuss the rich history in the area and Viktor is under the impression that the property is available. It is not until the end of the meeting that the manager informs Viktor that there will be a competitive bid for the lease of the property. He instructs Viktor to send him his best offer by the end of the week and hands him two envelopes; one addressed to a government office labeled “property lease bid” and the second addressed to the property manager labeled “facilitation.” He explains that whatever he places in the second envelope will “keep the process moving” and the he would hate to see him miss out. Viktor takes both envelopes.

Question C
C.1 – Should Viktor provide a bid on the property lease? Should he include both envelopes? Why or why not? What are the legal and ethical considerations?
C.2 Should Green Move expand its operations in Russia?

PART D – THE BOARD AND REMEDIAL MEASURES

In addition to the previous facts, assume the following has occurred:

• You have continued to market the Zero Pedal in the Southeast and persuaded the company to pay the special $5,000 fee.
• Robert has done nothing about the working conditions at the Solar Group.
• Viktor has leased the space in Russia and included a $2,000 payment in the “facilitation” envelope.

Question D
D.1 What are the organizational issues that may have led to ethical and legal breaches at Green Move?
D.2 Are there any residual risks (ie; civil or criminal liability) to Green Move as a result of any legal and ethical breaches?
D.3 What short and long term steps should the board of directors take to “fix” Green Move?
D.4 What is the role and responsibility of the government