Legal and Ethical Issues Surrounding Solyndra - California-Based Solar Panel Manufacturer - Case Study Example

Solyndra is a solar panel manufacturer that focused on producing cylindrical panels whose base being in California. This was a great opportunity in having clean energy and the manufacturing company got support from the government as well (Bloom, 2013). The government did this as a way of showing that they cared and were willing to support production of clean energy in the US with a view it was environmentally clean. Solyndra would therefore acquire a loan guarantee from the government upon the reason that they contributed largely in the production of clean energy (KAO, 2013). The use of cylindrical solar panels was more preferable than the flat ones as the cylindrical types were capable of receiving light from any direction. Solyndra in their production exhibited modern technology that encouraged many people to opt for the emergent know as for their solar panels. The company argued that those who used Solyndra solar panels stood a chance of receiving more electricity (Bloom, 2013). They were quite easy to erect on a building, as they require special stands meant for their erection. The company also alleged that their solar panels provided optimum results by being in a position to cover a larger part of the roof. Through the years, Solyndra faced competition from Chinese companies and they filed lawsuits against them for price fixing but their efforts did not succeed. Later on in September 2011, Solyndra filed for bankruptcy and halted all its operations as they were instead of profits ended up making losses and productions costs were still high irrespective of the approach they utilized that was at their disposal (Olson & Biong, 2015). Closure of Solyndra greatly affected the scope of the nation in achieving constant production of clean energy. This paper gives clear insight into the failure of the company and factors leading to bankruptcy and reasons influencing the managers to make that move.

Specific Laws that Apply in This Situation

After Solyndra filed for bankruptcy, it became important to establish whether by any chance the company would have been involved in any illegal dealing or broken any of the federal laws within the country. Therefore, the House of Representatives took upon themselves the responsibility of conducting the necessary investigations to validate any raised claims about the solar panel company. Following the investigations, it was ascertained that Solyndra had gone against the energy Act 2005, hence was liable for those actions (Olson & Biong, 2015). In getting the federal loan that the government had offered to give, it emerged that they did follow the stated procedure leading to receiving of those funds. However, the issue on the guarantee proved to involve both the department of energy and the company. Both had a major role to play in order to achieve the requirements to enable Solyndra to be eligible to receive that loan (Toomey, 2014). This issue extended to political terms among some of its shareholders, which were a probable reason as to why they received the loan guarantee in the first place and the reason as to why it was also approved so quickly. The approval did not quite follow all the procedures that ought to be followed in this specific situation (DesJardins & McCall, 2014). Though it might not be very clear, the factors that influenced the quick response and action not all may end proven to be within the law. This move reflects negatively on the political leadership for allowing such an act that taints the reputation of the government and hence it affects the image of innocent who were not involved in the acts (Olson & Biong, 2015). There was conflict of interest and the political leaders as well as the management of Solyndra stood a chance of putting a stop to it as it compromised the future of the solar panel as those deeds manifested themselves following the bankruptcy.

The terms by which a company would receive loan guarantee were changed and that has a clear connection to the fact that department of energy had knowledge that Solyndra were not in a stable condition such as to enable them to make the loan payments as required (Bloom, 2013). Initially, the company had made a deal with the government on how to make payments for the loan and Solyndra was headed to violating the deal. According to DesJardins and McCall (2014), the terms stated by the department of energy in case Solynrda filed for bankruptcy flaunted a great deal of personal interest in the deal which goes against the energy act of 2005. This case depicts lack of accountability by both the department of energy and Solyndra as well. The main driving force leading to the approval of the loan guarantee can be attributed to politics. In so doing, the two parties are deeply involved in violating the law in spite of them being aware of what was required of them. The managers at Solyndra failed to demonstrate their strong leadership capabilities and ethics since by heading such a robust company, they ought to exhibit equivalent qualities. They should have dealt with the competition effectively by devising a good strategy to improve their competitive advantage (DesJardins & McCall, 2014).

The managers at Solyndra ceased to hold up to the regulations and rules of the company but instead went ahead to make their own decisions that stood a chance to ruin the company and its operations. They evaded tax as a scheme to keep a huge sum of the loan as operating losses by filing for bankruptcy (Olson & Biong, 2015). They also failed to protect the interests of their workers by laying them off when filing for bankruptcy. They did not notify the workers sixty days before they did so as is required under the act on workers adjustments and retraining notification, which made the workers to sue company in order to be compensated (Olson & Biong, 2015).

Apply three general Legal Concepts

At Solyndra there is wrongful or constructive discharge as there is involvement of the employers in laying off their workers (Hasl-Kelchner, 2006). The jobs for those workers were terminated without any clear justification of the wrongful act. The workers did not go against any of the firm’s expectation but were dismissed due to personal interests of top shareholders, which was an unethical move to make. There are also cases of price discrimination between Solyndra and the Chinese Companies and Solyndra claims that their Chinese competitors exhibit unfair competition (Hasl-Kelchner, 2006). These are the exact claims that led to Solyndra filing law suits against the Chinese Companies after finding out that the company was starting to make huge losses yet the production costs were still high (Toomey, 2014). Going against the terms of loan guarantee can also be considered as contrary to the legal concept regarding contracts. Solyndra failed to repay the loan as per the set terms and did not follow the right protocol in getting the loan guarantee in the first place (Stephen, 2011).

Philosophy of Milton Friedman and its influence on executives of the company

Milton who is an economist takes the standpoint that making of decisions within any organization should be in such a way their sole aim is to maximize profits for the entity for its harehodlers rather than leaders within a firm performing social responsibility within their positions. According to KAO (2013), it is probably the reason why the managers at Solyndra took it upon themselves the mandate of filing for bankruptcy in spite of the fact that they had earlier received a loan to finance their operations. After filing for bankruptcy, they had in mind that the loan they would not pay it back as it was meant to act as operating losses for the organization (Stephen, 2011). Thus, this constituted a scheme that was quite beneficial for the major shareholders at the company, as they did not record losses. Another move was for the managers to lay off their workers, which was outrageous as it deviated from the organization’s rules and regulations.

Any leadership in a business organization is under the obligation to make maximum profit for the company but also adhere to the set ethical terms that safeguard the interests of every individual working for the firm. In this case, everyone should work knowing that ethical lines should not be crossed within the course of work (Toomey, 2014). Contrary to this, Solyndra leadership did not follow these terms and they dismissed their workers without valid reason to do so as maintained by the law. All their decisions should have been in line with the law and focused covering every sector of the firm without bias or selfish motives as the Solyndra managers did. Protecting the rights of workers would have worked well as workers would be more enthusiastic by holding on to the thought that the firm was still protecting them despite the downward trend then experienced and the reduced competitive advantage (DesJardins & McCall, 2014). Milton Friedman’s philosophy all goes against any government intervention into a business organization as this would hurt the business more rather than better the situation. When applied to Solyndra’s scenario, government intervention made the situation worse as the company eventually ended up closing ad infinitum. The managers should have tried to resolve the problem first within the industry before heading to the government that is actually ignorant of the operations of the firm. That move would stand a better chance than going to the government because with further and constructive consultations, probably could have salvaged the situation thus ensure continuance (DesJardins & McCall, 2014). They did not also regard the importance of workers with the dignity that it deserves, as workers are very valuable to the firm. Workers or staff normally constitutes an invaluable aspect of any entity that seeks to intensify their proceeds and ill-treating them would not only being unethical but also a disservice to the entire entity’s progress. Since, the company to reach where it had reached was due to the good workmanship of the staff if it were not for the loan that seemed to cripple its operations.

Ethical framework that applies to this situation and how it may have influenced the executives of this company

The ethical framework in this case should encompass some values such as transparency and integrity that are important aspects while dealing with ethics in addition to free market ethics. Though profits are the major concern for managers at Solyndra, it was also vital to consider the ethics that revolve around achieving that goal and hence put it into consideration (Stephen, 2011). Ethics are crucial in business as much as they are in the societal setting and that should be a point for the managers to consider. Instead of the managers upholding these ethical values, they went against and it resulted to collapse of the company eventually. Had the managers stuck to those ethics, the company would have a better chance of surviving the tragedy that faced it (DesJardins & McCall, 2014). The workers would still be willing to help in alleviating the situation and bringing back the competitive advantage of the company. The act of laying off the workers showed that they were unethical and were willing to take any unethical move in order to achieve profits. They did use a framework that worked for the benefit of everyone at the firm but instead made a selfish move. The aspects of moral rules might have compelled them to make moves focused on preventing the failure of the firm (DesJardins & McCall, 2014). Under the ethical framework, the management at Solyndra should have ensured a fair treatment of all people that protects the interests of everyone including the workers. Nonetheless, this was not the case as the leadership at the company chose to dismiss their employees without prior notice. It is evident that the managers prioritized interests of major shareholders by stopping all their operations and filing for bankruptcy, and as such, they bypassed their ethical obligations (DesJardins & McCall, 2014).