Whether Food Mart Stores Should Close - Essay Example

? Whether or not Food Mart Stores should close Number Whether or not Food Mart Stores should close A corporation is recognized as a distinct entity under the law. This means the operations of such an organization are delineated from individual(s) who established them. A corporation can be treated as a natural person in terms of rights and existence. The main features of a corporation are perpetual existence, limited liability and smooth transferability of assets and or interests. Any party that is willing to establish a corporation in the US is required by law to deposit a Certificate of Incorporation or Articles of Incorporation with the Secretary of State under whose jurisdiction the corporation will be established. The certificate must bear the signature of a sole incorporator, whose main objective is to establish the corporation. The Articles generally specify the name of the business, the chosen capital stock structure, the objective of the corporation, and the formal location of the headquarters and agent(s) of the corporation. After all that, the sole incorporator should formalize the appointment of the initial company directors by signing a consent document. Corporations such as Food Mart Stores are normally established to advance the business interests of the shareholders and cushion them against any liability. As such Smith owes a duty to the company’s stakeholders: the investors, directors, employees, and Stone Hill customers. Nonetheless, he is confronted with a delicate situation that could see the company make more profits by opening a bigger store farther away for the neighborhood at the expense of the locals. Different ethical theories manifest in this case study with regard to the impending decision on whether or not to close the store. Firstly, utilitarian ethical principle focuses on implementing ethical decisions that would maximize the good or value within the society while ensuring that the end result harms as few individuals as possible (Shaw, 2010). In this case, two issues prop up in the analysis of the best utilitarian action that Smith should take: on the one hand, the geriatrics who cannot carry heavy loads over long distances on foot make up about 10 percent of the population. Moreover, the average income of the lower-end segment in the neighborhood population depending on the Food Mart Store is $15,000, a figure that is lower than that of the city residents. On the other hand, Food Mart Stores and Smith face a gloom future if no action is taken to expand the store for stocking of a wide range of goods. With a gross income of a paltry 2%, the corporation’s operations could grind to a halt if it heeded the cry of the local population advocating for the retaining of the status quo, or worse still, engage in a costly renovation exercise whose returns on investment would be too little to imagine. Moreover, the future of Smith at the helm of the company hangs on the balance as the level of profits generated by the corporation continues to decline. Having done adequate research on the positive prospects of opening a larger store stocked with a variety of goods, it is ethical of Smith to press for the closure of the two smaller stores in order to pave way for the establishment of a bigger one that would guarantee all the stakeholders better outcomes. In essence, the new store will provide low prices on goods for patrons; and ensure higher profitability and continued existence to the benefit of all the stakeholders. A utilitarian-driven action by Smith would definitely cause suffering to the old residents of Stone Hill, however their suffering would be insignificant because they are a paltry10 percent of the population. The poorer residents have reasonable incomes (of $15,000) which would enable them to adjust if a new store was established a few miles away from the neighborhood. Secondly, a rights ethical principle comes to fore in this dilemma. It is premised upon the notion that all stakeholders in a company have rights which should be respected across board. This implies that all stakeholders should be accorded due respect and dignity in the handling of business operations including restructuring. Whereas the closure of the Food Stores in Stone Hill area will practically deny the locals the right to access foodstuff more easily because other outlets had closed shop under stiff competition from the company, Food Mart Stores was not solely responsible for the monopoly. The corporation did not impose their missions, commodities, or systems on the local consumers. Similarly, the corporation’s activities have no bearing on investors who might want to open doors in the area. As things stand now, it is evident that the shareholders will feel the pinch of shrinking profits which have decreased to a low of 2%. The company’s entire leadership owes a significant obligation to the shareholders, a role which is the manifested in the consolidation of profits or the running of a viable corporation. Failure to observe the shareholder value, the customers and prospects as well as the interests of Smith whose continued engagement with the company is in jeopardy results in the contravention of the third ethical principle – justice or fairness. As Shaw (2010) indicates, fairness is an ethical theory that requires the treatment of all parties equally. In this case, customer’s age, income earnings, class and proximity to the store do not count. After all, the current location of the Food Store is far away from some customers and prospects. Besides, at any given time, not all stores can be closer to all the members of a society. In light of fairness, it would be fair for all stakeholders to continue enjoying the existence of the company. Lastly, common good is as ethical principle that supports the closure of Food Mart Stores in Stone Hill neighborhood. This theory attempts to foster the common values that all the stakeholders are set to enjoy should the corporation carry out the planned restructuring of its operations. The shareholders would be guaranteed a steady income from the company occasioned by a diverse stock. Customers would enjoy a wider variety of goods and services in a larger store at low prices. Mr. Smith’s performance would be felt and; the employees would also stand to gain from the expansion program by gaining better workplace conditions. These are clear indications that the standard, rational decision which embraces the common good rests in the closure and transfer of the Food Mart Stores from its current location to a bigger premise rather than on meeting the interests of the few senior citizens and poorer members living in the neighborhood (Shaw, 2010). According to Immanuel Kant, a standard of rationality dictates the moral requirements in society. Like in most corporate organizations whose continued existence are threatened by dwindling sales, restructuring is not only moral but standard. In this case, Kantian philosophy supports the closure of the smaller stores in favour of a larger one because the current ones have proved unviable. Besides, any form of renovation has been proven to be of little if any positive impact on profits. Despite the need to close the two stores, the action will leave the locals with no other option. This might result in the store losing some of its loyal customers. Moreover, new investors or those that had been in the market but had been forced out under stiff competition might establish new stores or make a comeback in to the area respectively. On the contrary, if the store were to remain open, the society would develop more trust in the corporation and earn it more customer loyalty. A continued existence of the store hangs on the balance by virtue of the low profits. In light of this, it would close at some point leaving the customers with no option. In my view, there cannot be a compromise because the corporate mission of making profit contradicts the interests of the residents of Stone Hill neighbourhood who want easily accessible foodstuff at low prices. Perhaps, the only compromise would be the locals agreeing to sell a piece of land to the store owners to facilitate the construction of a larger store in the area. Reference Shaw, W.H. (2010). Business Ethics: A Textbook With Cases: A Textbook with Cases. New York: Cengage Learning. 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