Situationg between a Health Care Entrepreneur Gloria Londono and Investor Victor Serna - Case Study Example

Running Header: Case Study 2 Business Ethics Student’s Name: Name of Institution: Instructor’s Name: Course Code: Date of Submission: Table of Contents Executive summary………………………………………………………………………… 3 Introduction………………………………………………………………………………… 4 Case study 2 Business ethics……………………………………………………………….. 5 Application of ethical perspectives in the case study Libertarianism……………………………………………………………………… 8 Utilitarianism………………………………………………………………............. 9 Deontology………………………………………………………………………… 10 Virtue ethics……………………………………………………………………….. 10 Conclusion………………………………………………………………………………..... 12 References………………………………………………………………………………….. 13 Executive Summary The issue of ethics has always been a crucial part of any business organization. The philosophies of any business are reflected through the business ethics. Any business organization aims to realize its fundamental purpose by embracing professional business ethics that are in line with current business trends. Many businesses strive to maintain their reputation by ensuring that they strictly adhere to recommended business ethics. Those businesses that are only motivated by making profits while neglecting business ethics have had their reputations ruined. Making money is not a bad motivator for businesses, but the manner in which these businesses conduct themselves during their operations and interactions with the customers and other stakeholders is supposed to be in line with the recognized business ethics. Any business organization that aims to be successful must respect the business ethics within the sector that it operates. Many business organizations have neglected business ethics on many occasions and many have suffered as a result of not fulfilling their ethical responsibilities and obligations. Managers and business leaders have been in constant efforts to ensure that their organizations adhere to business ethics and values for their overall good. This essay brings to light the case of an investor, Victor Serna, who seems to have vested interests in an investment that he is willing to sponsor. It talks about Gloria, a woman who is torn between accepting Victor’s offer or rejecting it because of the vested interests that Victor Serna has in this investment. Introduction Business ethics is the behavior that a business is expected to adhere to during its daily operations, dealings and interactions with the world (Jones and Parker 2005, 45). Business ethics have also been described as a form of professional or applied ethics that are concerned with the examination of ethical or moral problems and ethical principles that are likely to arise within a given business environment. In business, most managers and other stakeholders know what is right to do and what is not right to do. The business organizations that go against recommended business ethics have been found to know the right thing to do. Normally, unethical behavior is usually as a result of having vested interest in a particular business aspect. For example, a manager or managers may decide to pay themselves multibillion allowances and try to justify these actions yet they are fully aware that it is wrong to do so (Andersen 2006, 19). They simply do this because they want to benefit and enrich themselves. This is unethical because the managers are illegally benefitting themselves at the expense of others or the business. In many instances, many managers and organizations are faced with situations where they have to decide whether to remain ethical or not. There are many temptations presented to managers on a day to day basis which may drive them to going against business ethics for their own vested interests. Adhering to business ethics requires total dedication and commitment since it is no easy affair. Managers usually have to decide whether they should be ethical or not. They are presented with situations in which they can benefit themselves when they are unethical and in the process benefit others with vested interests. It is these moral features that are usually addressed in business ethics. They include the decision of whether to do right or wrong in a particular business environment or situation. In this paper, one such situation involving a health care entrepreneur and an investor with vested interests will be discussed in great detail. Case Study 2 Business Ethics In the case of an angel investor with an agenda, we are presented with Gloria Londono, a health care entrepreneur. Gloria has been presented with € 3 million by an investor named Victor Serna. This money has been offered to Gloria Londono by Victor so that she could have the opportunity to open up ten new health care centres. Even though Gloria was not looking for funding for such a project, she loved the offer and it was very enticing because the ten new proposed health care centres would be under her direct control and ownership. This was very appealing because the previous health care centres that she was involved in were franchises. The others that she had also planned to invest in would also be franchises. That is why she found the idea of opening up ten new health care centres that would be under her direct ownership and control very enticing. At first, Gloria is really excited at the thought of managing, controlling and owning her own health care centres. This excitement is however short-lived because of conditions that the investor, Victor Serna, has given. In this particular case, Victor Serna is a potential investor who has decided to offer his money to be used in establishing ten new health care centres. However, Victor has vested interests in this investment which are very evident through the terms and conditions that he gives to Gloria before releasing his money for such a venture. In return for the € 3 million, Victor demands to be given a 25% stake in the health care centres. He also demands to be given a seat among the Board of Directors and a vote on all the strategic decisions taken by the management. In addition to all these conditions, Victor also wants to be given the freedom to liquidate his position in the company after five years if he so wishes, either through a sale or a public offer. As much as such an offer would mean that Gloria gets to own, control and manage her own line of health care centres, it comes with a lot of complications because of the conditions that have been put by the investor. Victor Serna is a wealthy and potential investor who can be very useful to Gloria to help her own her own health care centres. All that Gloria has to do is to accept Victor’s terms and conditions and they are good to go. This therefore raises the ethical question in the sense that Gloria has to make a compromise between accepting Victor’s offer and standing by her ethical principles. As much as Gloria may want to own and control her own line of health care centres, accepting the offer with Victor’s terms and conditions will be unethical because she is being coerced into accepting an offer just because it will benefit both her and the angel investor. The question at the end of the case study asks whether Gloria should accept the angle investment or not. In my own personal opinion, I think that Gloria should not accept the angel investment. This would be because Gloria is guided by some values and principles that she would be breaking if she accepts Victor’s offer. Currently, Gloria already has the Calidad de Vida business whereby she has franchised ten health care centres. All the franchises were meeting their performance targets and Gloria would gain profits by charging them 5% on their basic entry fees and other royalties that they accrue. Gloria was already doing well but she was now faced with this temptation from Victor Serna. She imagined how much more she would earn if she controlled and owned her own health care centres without franchising as she was currently doing. On the other hand, she also imagined the values that her current establishment stood for. These included honesty, transparency and the search for common good. All these values required that information be made readily available to every stakeholder, speaking clearly but with respect and putting oneself in the clients shoes so as to understand their points of view. Gloria was now confused because she did not know whether to accept Victor’s money or to uphold these ethical standards and do what is required of her. By accepting the offer made by Victor, Gloria knows exactly how much money and control she stands to gain out of the investment. By rejecting the offer, she also knows what she is turning down. In the franchising business that she was part of, things would only work if the Calidad de Vida brand stood for high and exceptional quality and innovative care across all sectors of the economy. If Gloria accepts the offer, her business might not be able to continue doing this because this was an unethical practice which was not part of the core values of the business. She in fact wanted her business to continue standing for quality and innovativeness in as many other centres as possible. Gloria even consulted her Chief Financial Officer (CFO) over the matter so that she can get an informed opinion about the situation that they are in. According to facts revealed by the case study, this situation presents a lot of temptations to Gloria and her team at Calidad de Vida. When joined by her CFO and Deputy Director, they all seem excited and the two try to convince Gloria that Serna’s proposal is a great idea that they should consider. Even though they seem to be fully aware that there are strings attached to the offer and the major implications it may have on them and the future of the health care facilities that they run and the ones being planned to be open, they seem to still want to go ahead and accept Victor’s investment proposal. They also acknowledge that they have had a very easy time recruiting franchises in the past but it seems to me that they have now started developing doubts and uncertainties about what could happen in future. These doubts and uncertainties are possibly as a result of the better offer that has been made to them by Victor Serna. This is one of the many situations that most managers today are faced with as mentioned in the introduction (Boldrin and Levine 2008, 103). Application of ethical principles to the case study Libertarianism In regard to libertarianism, Gloria has the freedom to decide what to do in this case as an individual. Libertarianism has been described as the political philosophy which respects an individual’s liberty and holds it as the basic moral principle that should be used in society (Hamowy, Kuznicki and Steelman 2008, 157). There are diverse beliefs included in libertarianism but they all advocate the importance of minimizing the state and maximizing the liberties and political freedoms of an individual. According to libertarian principles, Gloria should only accept the offer after considering the consequences and determining whether they are favorable or not. In this case, the investment would mean that Gloria benefits greatly from owning and controlling her own health care facilities. This would mean more profits for her and a greater level of power and control. However, the investment comes with conditions that do not make it very favorable and leave one pondering whether to accept the proposal or not. It would be unethical for Gloria to accept to take money from a man of Victor’s reputation and give up the franchising businesses that she has been involved in. The stability of the new proposed health care facilities that Victor plans to fund is not even known because he says that he should be given a say in the project and should be allowed to do what he wants with his share after the first five years. Gloria should not compromise her moral beliefs and agree to such terms and conditions because it is evident that Victor only cares for himself and has his own interests at heart. If Gloria needs to establish her own health care centres, she can go about it in other ways that will ensure that she has 100% say in her establishments. These include saving or taking a loan to fund such an investment. Victor knows that his idea will be appealing to Gloria and that is why he has terms and conditions that only seem to favor him (Hamowy, Kuznicki and Steelman 2008, 157). Utilitarianism Another ethical theory that can be applied in this case study is utilitarianism. Utilitarianism has been referred to as the ethical theory which proposes that the correct course of action is the one which maximizes the overall good of the greatest number of individuals (Rosen 2003, 56). Utilitarianism holds that the moral worth of any action taken is dependent on the outcomes, consequences or results of that particular action (Harwood 2003, 96). In regard to the utilitarian framework in this particular case study, Gloria should not accept the offer because it will not benefit many individuals than it will cause harm. This simply means that the overall good of the investment is not worth taking up. Currently, Gloria is running health care centres as franchises. These health care centres are not doing badly at all. In fact, they have been reported to be meeting all their objectives. This therefore implies that they have been providing high quality health care services to their customers. Patients who have been visiting these facilities are the core factors of the business. They have been served well over the years and that is why the franchises are achieving their objectives. By Gloria deciding to accept the offer made to her by Victor Serna, it will appear like she only wants to benefit herself. The future and stability of the proposed investment is not really certain because Victor can decide to do whatever he wants with the establishment after the first five years, which may include offering them to the public or selling them off. This will have negative impacts on the customers because they will no longer have a place to receive the high quality health care services that they used to receive at the franchises (Weiss 2009, 101. By accepting the offer, Gloria would not have considered the overall good of the rest of the stakeholders. She would only have taken care of her own interests and personal gains of making profit, owning and controlling health care facilities. The greatest number of people here are all the other stakeholders and if their interests are not factored, then the investment is not worth it because it will not benefit them (Rosen 2003, 176). Deontology Deontology has been described as an ethical theory that judges the morality of one’s actions based on the way it adheres to rules or one particular rule. This approach usually looks at how an individual is bound or obliged to certain rules within the course of their duties (Salzmann 1995, 192). In regard to this case study and the deontological framework, Gloria Londono is not obliged by any rule to either accept or reject the offer made to her by Victor Serna. If there were any rules concerning whether she should accept or reject the offer, then she would be bound to make a decision towards one particular side, depending on the morality of this situation. However, this situation is morally wrong according to the operational rules and four core values of the Calidad de Vida. She therefore has to make a decision basing on the adherence to these rules of the company. Gloria should therefore not accept the offer because it seems that it will be breaking certain rules of the Calidad de Vida. Virtue Ethics This school of thought argues that the character of a particular moral agent is what drives ethical behavior and not rules or social context which only determine rightness or wrongness from the outcomes of the action rather than the character of whoever doing the act. In regard to the angel investor case, Gloria should have made her decision based on this ethical principle which tends to focus on character rather than what she would have decided to do. Her moral character would help her make the best decision of whether to accept the offer or not. Conclusion Ethical theories can be used in any business environment and in the corporate world to deal with any dilemmas that may arise. The people within these businesses who are faced with these dilemmas are the best placed to make wise decisions about which of the four ethical principles they will choose to direct their actions and decisions. In this paper, the case study about the angel investor has been reviewed and the four ethical principles have been applied to the case so as to bring to perspective the way the case should be handled in regard to business ethics. The most suitable ethical principle in this case is the virtue ethics and the reasons have been discussed in the essay. 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