Reference no: EM13774784 , Length: 1200 words

Legal and Ethical Challenges in a Multinational Organization

Walexron is a publicly traded, US multinational corporation headquartered in Little Rock, Arkansas, operating in all 50 states, Europe, Asia, South America, and Africa. In 2009, Walexron was created by the consolidation of a large discount retailer, express carrier, and energy company with the intent to become one of the most powerful and efficient companies in the world.

1. Ima Klutz was painting one of the hangar facilities operated by Walexron for its package delivery services. Ima was electrocuted when she came in contact with a high voltage electrical wire. OSHA requires employers to prevent employees from working near any part of an electric power circuit unless protected against electric shock through one of various insulation techniques.
2. The package delivery division of Walexron produces a significant amount of hazardous materials such as used oil, brake fluid, batteries, paint, and others. The costs involved in properly disposing of the company's hazardous materials in the United States continue to increase. Dee Zaster, Welexron's environmental specialist, is considering options for reducing costs, such as shipping some of the materials for disposal in Vietnam, Thailand, Colombia, and Brazil.
3. The energy division of Walexron developed a new oil that will be sold to wholesalers.  The vice president of marketing asked you to review the four pricing proposals submitted by the marketing teams.   
   • Walexron should set a minimum price that the wholesalers can charge.
   • Walexron should set a maximum price that the wholesalers can charge.
   • The wholesalers can charge any price they want within a certain range; if they charge a higher price, they must give the customer a rebate or coupon for the differential.
   • The wholesalers can charge any price they want, but if they advertise a price that is less than Walexron's specified minimum advertised price, the wholesalers are not entitled to receive the marketing funds that Walexron provides to wholesalers that do not advertise prices that are less than the specified minimum. 
4. Walexron entered into an agreement with Chuangxiang Toys in China to manufacture remote control helicopters, which would carry the name RC Ranger Helicopter W450. Walexron requires its overseas suppliers to conduct quality control testing on most of its imported products before selling them in the stores. In a recent study, there was a small indication that the helicopters had the potential to catch fire if the batteries overheat. Walexron's executives approved the design anyway, and the helicopters were delivered to Walexron's stores in the United States, Canada, and South America. Initial market response to the Ranger Helicopters was positive, and many competitors eyed the unique feature of the camera located in the helicopter. 
   
   A Walexron employee, Lou Scannon, leaked the findings of the safety study to the public and a consumer watchdog group. In a press conference called by Scannon, Lou explained the safety testing process for the Ranger Helicopter and results in detail. Based on the information provided by Scannon, a consumer group known as Public Interest for Toy Safety  "PITS" sued Walexron and Chuangxiang Toys, claiming negligence.
5. Walexron's Senior Vice President of Finance, Penny Lis, and one of her colleagues, Sue Denaly, were on a WebEx and learned that Walexron's new Ranger Helicopters were going to be recalled within the next 48 hours. While the speaker was talking, Sue typed a comment in the chat box, "This won't be good for stock prices." After the WebEx ended, Penny and Sue immediately contacted their brokers and sold a large portion of their interests in Walexron stocks. 
6. Silver Wings Aircraft (SWA) periodically purchased used planes and parts from Walexron's package delivery division. In 2012, SWA purchased a used tug for $18,000. Because of the good relationship between Walexron and SWA, Walexron financed the tug. Last month, SWA sold the tug to a smaller hangar facility for $3,500 two days before filing bankruptcy. SWA still owes Walexron $15,000 for the tug.
7. Walexron offered to sell 5000 Ranger Helicopters W450 to a retailer in Canada known as Toy Surplus. Walexron sent the offer by e-mail. Toy Surplus accepted the offer, stating, "We accept your offer for 5000 Ranger Helicopters, but require an additional 250 Ranger Helicopter V100 for the same price."
8. Walexron ships the new oil to various countries, including several countries in South America. For a shipment to Brazil, an employee of Walexron offered a customs official 1,000 US dollars in exchange for levying duties on only half of the shipment, which would save Walexron over $65,000 a year in duties, taxes, and administrative fees.  
9. Walexron's stores in Indonesia employ children as young as ten and most work at least six days a week and more than 60 hours per week. Recently, a television news program in the United States reported that Walexron's employees in Indonesia were paid less than the applicable minimum wage, were required to work excessive overtime, did not receive any benefits, and were exposed to toxic chemicals in violation of applicable health and safety laws.
10. In 2008, 50-year-old Ophelia Paine was involved in a collision with a semi-trailer, which left her with permanent brain damage and in a wheelchair. The accident was not related to Paine's work with Walexron. Her husband and two children were awarded a $900,000 accident settlement from the trucking company. After legal costs and other expenses, the remaining $615,000 was put in a special trust to care for Mrs. Paine. However, five years later the providers of Mrs. Paine's health plan at Walexron sued the Paines for the $375,000 the company spent on her medical care. Walexron claimed that they were entitled to the money because in the fine print of Mrs. Paine's employment contract it said that money won in damages after an accident belonged to Walexron.

In light of these facts, please respond to the following questions using course material and credible outside research to support your findings. Please submit findings in a 10- to 14-page paper using APA formatting.

• Describe the civil and/or criminal penalties that might arise from Ima's death.  

• What are the legal issues related to Dee's decision options for reducing costs, such as shipping some of the materials for disposal in Vietnam, Thailand, Colombia, and Brazil.

• What are the legal pros and cons of each marketing proposal? What additional information do you need to adequately respond to the vice president?  

• Based on the elements required for a claim of negligence, will PITS be successful in its suit against Walexron? Chuangxiang Toys? Why or why not?

• What steps should Walexron take to protect the design of the Ranger Helicopter from competitors?

• Did Penny or Sue commit any securities violations? Please explain the reasons for your conclusion. What factors might the court consider in conducting such an analysis?  

• Discuss the legal and ethical issues associated with SWA's action in selling the tug before filing bankruptcy. What recourse does Walexron have in recovering the monies still owed on the equipment?

• Under the CISG, has Walexron entered a contract with Toy Supply? Why or why not?

• What are the legal and ethical ramifications of the employee's offer to the customs official? Would it make a difference if the officer requested a $1000 gift to his son's soccer team in order to expedite the shipments?

• What legal and ethical issues are presented by the working conditions of Walexron's Indonesian stores?

• What are the legal and ethical ramifications of Walexron's lawsuit against the Paine family?

• As the new Director of Compliance, you have reviewed each of the issues presented and the Vice President of Legal requested that you identify any ethical concerns and provide recommendations on how to avoid both legal and ethical issues in the future. Be specific and detailed, and be sure to base recommendations on relevant legal and ethical principles.