Marketing: Business Finance 2

Read the focus on ethics below. The last paragraph describes how Chipotle sources their meat. What other companies have similar "ethical" behaviors in their mission statements or operating principles? What about firms that seem to have ethical behaviors but seem to be in the news due to low pay or poor working conditions in their overseas factories. This is an open discussion on ethic goals set by firms. FOCUS ON ETHICS: Nonfinancial Considerations in Project Selection Corporate ethics codes are often faulted for being “window dressing” – that is, for having little or no effect on actual behavior. Financial ethics expert John Dobson says day-to-day behavior in the workplace “acculturates” employees- teaches them that the behavior they see is rational and acceptable in that environment. The good news is that professional ethics codes, such as those developed for chartered financial analysts, corporate treasury planners, actually provide sound guidelines for behavior. These codes, notes Dobson, are based on economically rational concepts such as integrity and trustworthiness, which guide the decision maker in attempting to increase shareholder wealth. Financial executives insist that there should be no separation between an individual's personal ethics and his or her business ethics. “It's a jungle out there” and “business is business” should not be excuses for engaging in unethical behavior. How do ethics codes apply to project selection and capital budgeting? For most companies ethical considerations are primarily concerned with the reduction of potential risks associated with a project. For example, Gateway Computers clearly outlines in its corporate code of ethics the increased regulatory and procurement laws with which an employee must be familiar in order to sell the government. The company points out that knowingly submitting a false claim or statement to a governmental agency could subject gateway and its employees to significant monetary civil damages, penalties, and even criminal sanctions. Another way to incorporate nonfinancial considerations into capital project evaluation is to take into account the likely effect of decisions on nonshareholder parties or stakeholders, employees, customers, the local community, and suppliers. Chipotle Mexican grills “Food with Integrity” mission is one example. Chipotle's philosophy is that the company “can always do better in terms of the food we buy. And when we say better, we mean better in every sense of the word-better tasting, coming from better sources, better for the environment, better for the animals, and better for the farmers who raise the animals and grow the produce”. In support of their mission, Chipotle sources meat from animals that are raised humanely, fed a vegetarian diet, and never given antibiotics or hormones. The company favors locally grown produce, organically grown beans, and dairy products make from milk from cows raised in pastures and free of growth hormones. Chipotle's efforts have been rewarded, as sales increased by nearly 50 percent from 2007 to 2009. Investors have also profited, as shares that sold for $44 at the company's 2006 initial public offering were priced at over $150 in mid-2010. 1. References must be used. The course textbook and Wikipedia will not count as a references. Be aware of bias references. REQUIRED REFERENCES: PRINCIPLES OF MANAGERIAL FINANCE, 6th edition by Lawrence J. Gitman and Chad J. Zutter . Separate the references used in answering each question. 2. It is imperative that the question is answered.