Neal Is the Young, Likable, Optimistic, and Generous Son of a Prominent

question 57

Essay

Neal is the young, likable, optimistic, and generous son of a prominent public official. He has a master's degree in business and is the business partner of Ken and Bill in an oil drilling and exploration business. Neal also serves as a director on the board of the Bonanza Savings and Loan Association. While serving on the Bonanza Board, Neal votes to approve major loans to Ken and Bill without disclosing to the other directors that he is a business partner of Ken and Bill. Neal also personally arranges for a $900,000 line of credit from Bonanza for an oil drilling venture in which he is a partner with Ken. The drilling venture is unsuccessful and Ken and Bill both default on their loans to Bonanza, which then causes the S & L to become insolvent. Federal banking officials seize Bonanza and liquidate its assets to pay creditors and depositors. Because Bonanza is federally insured, tax money is also used to pay off depositors whose deposits are insured under federal programs. Bonanza shareholders lose their investment money. Was Neal's conduct as a director of Bonanza ethical? Analyze his conduct in light of the following ethical theories:
a. Intuitionism and the "Television Test."
b. Milton Friedman's ideas on corporate governance.
c. Deontological theories.
d. Rule utilitarianism.
e. Ethical relativism.

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Definitions:

Fixed-price Policy

A fixed-price policy is a pricing strategy where the seller sets a specific price for a product or service that is not subject to change based on fluctuations in the market or inventory levels.

Penetration Pricing

A pricing strategy where the price of a product is initially set low to enter a competitive market and attract customers.

Skimming Pricing

A pricing strategy where a firm sets relatively high prices at the launch of a new product or service to maximize profits from customers willing to pay more.

Fixed-price Policy

A pricing strategy where the price of a product or service is set and not subject to change based on market fluctuations.