Solve the question by Four Component Model of ethical decision-making or the IRAC-type analysis
LAW 2221
2018
Problem 3 Writing Assignment
Assume that 4 classmates who graduated from the SCOB decided to start a small business that produces
small components for automobile valve assemblies for Hyundai Sonatas. The company was set up as an
Alabama corporation under the name of “SCOB Products.”
Because Hyundai has a large assembly plant outside of Montgomery, Alabama, all four of the classmates
decided to locate the company in Montgomery. The company has hired local managers who can run the
business. These managers are also graduates of Troy’s Sorrell College of Business. They are originally
from Israel.
The four classmates make up the company’s board of directors. Jane is the Chairwoman; Paul is the
Secretary; Julie is the Treasurer; Jacob is simply a voting member. Stock was issued and each of the four
took a 25% interest in the company. Jane is also the CEO; Paul is the CFO; Julie is the CCEO. Jacob is not
one of the officers. He was recognized by the other members as having incredible marketing and sales
talents and, therefore, he was given the position of Director of Marketing and Sales which is a
management position.
The Board recently met to discuss a proposal by Jane to donate 10% of the profits, after taxes, from the
company to a building project in what is referred to as Palestine.
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The project is sponsored by Hamas
and it is designed to provide living space for orphans. Jane and the other two Board members are very
much in favor of this project because Jane was an orphan herself in Jordan at a very young age. She is,
therefore, intimately familiar with the plight of orphaned children in that part of the world.
Jacob is Jewish and he disagrees. Because of the conflict between Israel and Hamas, he is adamantly
opposed to anything that Hamas wants to do no matter how socially worthwhile the project might be.
He openly express his disagreement and strong opposition to the proposal.
The debate at the most recent Board and Shareholders’ meeting was quite heated. The other three
Board members, however, voted to make the contribution. At the same time, they reassessed Jacob’s
“cooperation.” They voted to remove him from his managerial position and to put him in the position of
head of the sales force. They intend to bring in another person who they know very well and to make
her Director of Marketing and Sales.
This will result in a reduction of Jacob’s pay and much lower prestige among the employees.
You are a consultant for businesses on corporate governance matters. Jacob comes to you for advice.
What are the corporate governance issues that you see in this fact pattern?
Analyze
them. This is not a
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An area in the Middle East recognized as a state by some members of the U.N.
fact pattern that will require you to use the Rest Four Component Model of ethical decision-making or
the IRAC-type analysis. Those will come in later assignments.
