March 24, 2004

Business Ethics -- A Price War?

I often check the Financial Post's Editorial page and, previously, I have recommended Kedrosky, Lemieux, Corcoran, Solomon and others. Tony Keller's article is one of the reasons to check business pages -- given the current cry over business ethics.

Ethical Contortions -- If business ethics is bad for business, is it ethical? Tony Keller, Mar. 1, 04 National Post

Last month, I bought shares in the Bank of Ontario. It seemed like a promising investment: a healthy business in a growing economy, paying a reasonable dividend, with a track record of solid returns. And then a funny thing happened. The CEO suddenly announced that the company would be giving all future profits to cancer research, AIDS prevention in Africa and a restitution fund for Canada's native peoples. No more dividends, no more investments in equipment, no more employee training; just millions of dollars to benevolent organizations working to make the world a better place. I'm suing.

This story is made up. But it's not implausible. The cry that corporate money is being used for purposes that do not benefit shareholders is a common complaint, and a common source of lawsuits. It's what the minority shareholders of Hollinger International are alleging that Conrad Black did, except that the purpose the money was allegedly put to wasn't so high-minded as cancer research, and they aren't accusing him of misusing all of the money, just several hundred million dollars worth of it. (These allegations have not been proven in court.) According to the law, the duties of a public corporation's senior executives are clear: Make money for shareholders, or at least make good-faith efforts to do so. That's what corporations are for.

But is that what a corporation should be for? No, say many of those teaching in the new field of "business ethics," part of the curriculum at business schools here and abroad. For this month's annual MBA issue, I asked National Post editorials editor Jonathan Kay to dive into the growing debate: Do corporations have ethical duties? If so, what are they? If a corporation seeks only to make money for shareholders, is it fulfilling its true purpose, or behaving immorally? And what should MBA students, the next generation of business leaders, be taught about all of this? Jon's article, "Ethical Dilemmas," begins on page 78.


[. . . .] But if the corporation has to obey the law, and its purpose is to achieve success in the marketplace, then your average citizen still has two very powerful tools for changing corporate behavior. Start with the law: [. . . .]

Or go to the marketplace. Corporations fear the wrath of the consumer. For example, many companies now refuse to buy from overseas suppliers that don't follow labour or environmental standards. In industries from coffee shops to diamonds to oil and gas, corporations are responding to consumer pressure. These pressures aren't always rational and they aren't always right, but they can make a company change, and this change is happening without asking corporations to blow up a legal framework that has worked for two centuries. A corporation exists to make money -- but it can only do that by giving its customers what they want. That's the only way it can satisfy both society and its investors. Sounds like a happy medium.


As for "going to the marketplace", today, I received this, and it makes sense for peaceful protestors to flex their democratic choice muscle -- especially since gas prices have risen and people are complaining. See if the marketplace responds; alternatively, you may choose to drive less and walk. You will feel better, too. NJC


For Activists, A Suggestion

Having some control over gas prices ...

I hear we are going to hit close to $1.00 a litre by the summer. Want gasoline prices to come down? We need to take some intelligent, united action. Phillip Hollsworth, offered this good idea: This makes MUCH MORE SENSE than the "don't buy gas on a certain day" campaign that was going around last April or May! The oil companies just laughed at that because they knew we wouldn't continue to "hurt" ourselves by refusing to buy gas. It was more of an inconvenience to us than it was a problem for them. BUT, whoever thought of this idea, has come up with a plan that can really work.

Please read it and join with us!

By now you're probably thinking gasoline priced at about 69.9 cents a litre is super cheap. Me too! It is currently 76.9 for regular unleaded in my town.. Now that the oil companies and the OPEC nations have conditioned us to think that the cost of a Litre of gas is CHEAP at 69.9, we need to take aggressive action to teach them that BUYERS control the marketplace ... not sellers.. With the price of gasoline going up more each day, we consumers need to take action. The only way we are going to see the price of gas come down is if we hit someone in the pocketbook by not purchasing THEIR gas! And we can do that WITHOUT hurting ourselves. How? Since we all rely on our cars, we can't just stop buying gas. But we CAN have an impact on gas prices if we all act together to force a price war.

Here's the idea:

For the rest of this year, DON'T purchase ANY gasoline from the two biggest companies (which now are IRVING & ESSO ). If they are not selling any gas, they will be inclined to reduce their prices. If they reduce their prices, the other companies will have to follow suit. But to have an impact we need to reach literally millions of Shell and Petro Canada gas buyers.

It's really simple to do!! Now, don't wimp out on me at this point ... keep reading and I'll explain how simple it is to reach millions of people!

I am sending this note to about thirty people. If each of you sends it to at least ten more
(30 x 10 = 300) ... and those 300 send it to at least ten more (300 x 10 = 3,000) and so on, by the time the message reaches the sixth generation of people, we will have reached over THREE MILLION consumers! If those three million get excited and pass this on to ten friends each, then 30 million people will have been contacted! If it goes one level further you guessed it ... THREE HUNDRED MILLION PEOPLE!!!

Again, all you have to do is send this to 10 people. That's all.

How long would all that take? If each of us sends this email out to ten more people within one day of receipt, all 300 MILLION people could conceivably be contacted within the next 8 days!!!

I'll bet you didn't think you and I had that much potential, did you?

Acting together we can make a difference. If this makes sense to you, please pass this message on.

PLEASE HOLD OUT UNTIL THEY LOWER THEIR PRICES AND KEEP THEM DOWN.

THIS CAN REALLY WORK.

YOU KNOW THEY LOVE HOLIDAYS AND SUMMER TRAVELERS.


I don't get involved in this kind of emailing, normally -- but it has crossed my mind that maybe I am wrong -- that this would be a way to unite the power of the pen, the web, and an idea. Maybe it would be more useful than forwarding jokes to friends? Nah! I enjoy them, still.

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