Blog Post #1:
BUSINESS ETHICS
These Wall Street Journal articles on the telecommunications company Vodafone-Essar shows the difficulty for companies to agree and how making agreements may compromise ethics. Vodafone currently owns 67% of the company Vodafone-Essar while Essar Telecommunications Company owns 11% and Essar Communications Holdings 22%, giving Vodafone the majority. Vodafone-Essar is the third largest mobile phone company, and is growing rapidly.
This article discusses the dilemma Vodafone-Essar is facing because Essar wants to merge with the Indian company, India Securities Ltd.. India has more than 700 million subscribers with continued constant growth; these facts make Essar believe India Securities Ltd. will be a good investment for the company as well as the stockholders. However, Vodafone opposes this merge saying “it is concerned that the value of India Securities after the merger could be misinterpreted as a fair market value of unlisted Vodafone-Essar” (pg1). Essar replies to this statement saying they are fully compliant with all the Indian laws. Vodafone has taken the next step to ensure it will be an ethical decision to merge by asking the Securities and Exchange Board of India to investigate this proposed merger. Vodafone is being ethical by looking out for the public interest but also the interest of the company.
I wonder was it unethical for a joint company to look for a possible merger without Vodafone ensuring the same desire to merge with an Indian mobile company? In my personal opinion, both articles show how Vodafone and Essar have been having a war of words; this aspect makes me question the reliability of the company to not being able to handle their problem in a joint effort. Nevertheless, It is admirable how Vodafone-Essar wants to investigate this possible merger to ensure it will be a wise as well as an ethical decision. -Rachel
2 comments:
You have a good point here and there are many ethical issues that revolve around proper valuation. Additionally this covers the ethical issues of treating the joint company fairly even though Vodafone owns a majority of the company's stock. Good find!
Don't forget that you must also comment on at least one of your colleague's posts as well.
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