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    Business Law - Philosphy

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    Scenario -

    Congratulations! You have just been hired by Diversified Worldwide Industries (DWI), Inc., as the Vice President of Risk Management. DWI is headquartered in West Palm Beach, Florida, and has over 150 offices in 30 countries. DWI is incorporated in the State of Delaware; its ships are flagged by Liberia and the Bahamas.
    The Corporation's principal activities are grouped into the following areas:

    ENVIRONMENT: Water and water treatment, waste management;
    OIL & ENERGY: Exploration, production, transport, refining, wholesale marketing, alternative fuels research;
    COMMUNICATIONS: Telecommunications, Internet, audiovisual activities, publishing and multimedia;
    LEISURE & RECREATION: Hotels, casinos, cruise ships;
    REAL ESTATE: Builds homes and manages properties in active adult, age-restricted communities;
    FINANCIAL: Brokerage for capital market investments in Russia, Eastern Europe, China, and emerging markets;
    MANUFACTURING: Produces, distributes, markets, exports and imports spirits and wines.
    Your duties as the VP for Risk Management will require that you develop knowledge and expertise in all areas of business law, consult with corporate and outside counsel on legal matters, and advise the board as to available options to reduce or minimize the risk and liability of DWI in its ongoing activities.

    Task needing assistance -

    The Hon. Justice Potter Stewart once wrote: "There is a big difference between what we have the right to do and what is right." Give four examples of possible DWI business situations which would illustrate this principle and explain.

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    Solution Preview

    MANUFACTURING: Produces, distributes, markets, exports and imports spirits and wines.
    DWI has the right to advertise targeting the youth, however, keeping in mind what Hon. Justice Potter Stewart has said your company will not target the youth in your advertisements.
    Consider this legal skirmish. DWI might decide to export spirits to Sweden. A Swedish court of appeals has found a quarter-century-old ban on alcohol ads to be illegal. The law had prohibited the advertising of alcohol on television, radio, billboards and in non-trade publications. The court upheld a lower court decision that also found the ban illegal. That court ruled that the ban was too far-reaching on the one hand and ineffective on the other. The European Court of Justice earlier ruled that the advertising ban, which applied to all alcohol beverages except the very lowest proof beer, was unfair.
    According to Jim Mosher, "communities are awash with alcohol, and there is a set of norms and policies that put people at risk and make problems among youth inevitable." For example, alcohol advertising contributes to an environment that makes alcohol attractive to children. The alcohol industry designs advertising (such as the Budweiser Frogs) which appeals to youth. The industry's answer to criticisms of this practice is often that there is no evidence indicating that drinking behavior in young people and adults is influenced by alcohol advertising. Jim and his colleagues have developed several responses to the industry argument. In addition, if advertising does not increase consumption, then why does the alcohol industry spend $2 billion a year on advertising and expend so many resources to protect its ability to advertise? These arguments support the development of environmentally-based strategies to reduce underage drinking, such as regulation of alcohol advertising.

    Hon. Justice Potter Stewart's stand is supported by these ethical considerations.
    Philosophers and others disagree about the purpose of a business in society. For example, some suggest that the principal purpose of a business is to maximize returns to its owners, or in the case of a publicly-traded concern, its shareholders. Thus, under this view, only those activities that increase profitability and shareholder value should be encouraged. Some believe that the only companies that are likely to survive in a competitive marketplace are those that place profit maximization above everything else. However, some point out that self interest would still require a business to obey the law and adhere to basic moral rules, because the consequences of failing to do so could be very costly in fines, loss of licensure, or company reputation. The economist Milton Friedman is a leading proponent of this view.
    Other theorists contend that a business has moral duties that extend well beyond serving the interests of its owners or stockholderes, and that these duties consist of more than simply obeying the law. They believe a business has moral responsibilities to so-called stakeholders, people who have an interest in the conduct of the business, which might include employees, customers, vendors, the local community, or even society as a whole. ...

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