Explain the scenario in regards to business ethics
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Iroquois Brands, LTD., a Delaware corporation, had 78$ million in assets, $141 million in sales, and $6 million in profits. As part of its business, Iroquois imported pate de foie gras (goose pate) from France and sold it in the U.S. Iroquois derived $79,000 in revenue from sales of such pate. The French force-fed the geese from which the pate was made. Peter C Lovenheim, who owned 200 shares of Iroquois common stock, proposed to include a shareholder proposal in Iroquois annual proxy materials to be sent to shareholders. His proposal criticized the company because the force-feeding caused "undue stress, pain and suffering" to the geese and requested the shareholders vote to have Iroquois discontinue importing and selling pate produced by this method.
Iroquois refused to allow the information to be included in its proxy materials. Iroquois asserted thats its refusal was based on the fact that Lovenheims proposal was "not economically significant" and had only "ethical and social" significance. The company reasoned that because a corporation is an economic entity, only an economic test applied to its activities, and Iroquois was therefore not subject to an ethical or a social responsibility test. Lovenheim v. Iroquois Brands, Ltd, 618 F.Supp 544, Web 1985 U.S. Dist. Lexis 21259 (United States District Court for the District of Columbia)
1. Is Iroquois correct? Should only an economic test be applied in judging the activities of a corporation?
2. Should a corporation also be subject to a social responsibility test other than profit making when conducting business? Explain.
3. Should shareholders be allowed to challenge the decisions of corporate directors?
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1. Is Iroquois correct? Should only an economic test be applied in judging the activities of a corporation?
In my opinion, Iroquois was incorrect. Economic test should not be the only test to apply in judging the activities of a corporation. A corporation is owned by their shareholders who share in profits and losses generated through the firm's operations. Therefore, corporation must incorporate social responsibility. Building a reputation as a responsible business places apart its position in the society and market. A company's reputation is enhanced on being social responsible and builds its brand appeal. Customers choose to conduct business with highest ethical standard corporate citizens. Therefore, the companies make great deal in positioning themselves attracted to ...
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