The Corporation

Corporation….
1. SEPARATE LEGAL ENTITY : An Entity separate from its members;
referred to as an artificial person*
2. LIMITED LIABILITY : Either limited by shares or limited by
guarantee.
3. PERPETUAL SUCCESSION : A Company outlasts its members. Since
Law has created it, only Law can end it…
4. COMMON SEAL : It is the official signature of the company. The
purpose of the seal is to furnish evidence regarding authenticity of
a document.
5. TRANSFERABILITY OF SHARES -Transfer of the ownership of shares
either in the form of a transfer or by transmission
6. SEPARATE PROPERTY - Since it is a legal person distinct from its
members, it is capable of owning, enjoying & disposing property in
its own name.
7. CAPACITY TO SUE - A company can sue and can be sued
8. MANAGEMENT - Management of a company is vested in the hands
of directors who are elected by shareholders
What is a Corporation?
 A Legal Person

An individual without
moral conscience,
designed by law to be
concerned about only their
shareholders.
 Externality
• The effect of a transaction
between two parties on a
third party
• Obligation to grow large and
even more and more
profitable
• At some point, the
corporation says let
somebody else deal with
that.
Psychopath?

In a clever manner, the film then

charts the corporate person's
behaviour
Is the Corporation a Psychopath?
• Callous unconcern for the feelings of others
• Incapacity to maintain enduring relationships
• Reckless disregard for the safety of others
• Deceitfulness - repeated lying and conning others for profit
• Incapacity to experience guilt
• Failure to conform to social norms with respect to lawful
behaviour
Dealing with a psychopath
• Locked away to protect society from them.
• Should not they be treated like their human sociopathic counterparts, perhaps
with long prison sentences, confiscation of property or even capital punishment
• Capital punishment would prevent a lot of sociopathic behaviours from
multinational corporations.
The Great Imbalance
Stakeholders’
Shareholders’ Benefit
Benefit
 Attitude
Problem
“Even in devastation
is opportunity.”
 Perception
Management
• Guiding the motives,
emotions, and conclusions
of another party by means
of using different
approaches to alter that
party’s perception of past
events and the projections
of future events.
• Truth or the illusion of
truth?
Perception Management
Privatization- A Bizarre Solution
• Other central concept – privatization
• From privatization of rain water to the song "Happy Birthday”, an
enlisting of outrageous examples of corporations fiddling with the
line.
Democracy Ltd.
Hitler and IBM
• Strategic alliance between Nazi
Germany and Americas most
powerful corporation
• Concentration Camps
• 1933 – World war II
• Corporations to dominate
Government
• Corporations gone global
 • Patent wars – Neem, Turmeric & Basmati
Fissures • Corporations as Pirates in the third world.
• Farmers locked into chemical treadmill –
Monsanto
• Law that makes it illegal to save seed is
flawed
• Finding Alternatives
Purpose of Business
• ‘Purpose of a business is to create and keep a customer ‘
• Peter Drucker

• ‘Purpose of a public company is to create as much wealth as

possible of its stockholders’
• Milton Friedman
Where does Ethics Come in?
• When an individual brings his moral standards into
the workplace…..
Where does Ethics come in?
• ‘If you are not in business to do good things, you shouldn’t be in business at all.’
• Sir Richard Branson
• ‘Business is an amoral institution and traditional notions of ethics don’t belong in the
corporate setting.’
• Anonymous
• ‘Using profits that belong to stockholders for charitable purposes or other ‘socially
responsible’ activities is unethical.’
• Milton Friedman
• ‘Business ethics is the application of a moral code of conduct to the strategic &
operational management of a business.’
• Applied Corporate Governance, a consulting firm.
• Founded by three brothers Robert Johnson, James Johnson and Edward
Johnson.
• Company introduced first commercial first aid box, baby powder, no more
tear shampoo and modern form of medicine packaging along with many
medicines.
• October 1982 , Tylenol leading painkiller sold by Johnson and Johnson was
tampered with cyanide and 7 people died in US. The Gold
• The suspect bought Extra-Strength Tylenol capsules over the counter,
injected cyanide into the red half of the capsules, resealed the bottles,
and sneaked them back onto the shelves of drug and grocery stores.
Standard
• Johnson & Johnson recalled all of its product and over the following week,
every Tylenol product was removed from every store around the world
and destroyed. That’s all 31 million capsules valued at $100 million.
• In 1982 Tylenol had 37% of market share & sales of all Tylenol products
had been projected at more than $400 million.
• After this incident market share reduced to 7 %.
• CHALLENGE FOR COMPANY:
• To find the best way to deal with this problem without destroying the
company’s image and its most profitable product.
• They had to provide a better product protection before re-establishment
of the product. The Gold
Standard
• COMPANY’S MOVE:
• Reintroduced the product with a triple seal tamper resistant packaging.
• Offered a $ 2.50 off coupon on the purchase of their products.
• Chairman James Burke appeared on commercials, did more than 50
interviews and was the chief trust-builder. Toll free numbers were
available for consumers & medical professionals.
• 25% off on the purchase of product to recover the loss in stock crisis.
• 2250 sales people made presentations for the medical community to
restore trust on the product.
• Cost and the benefit:
• Company won praise on its quick and appropriate action. It was
dubbed the Gold Standard in dealing with a crisis.
• Within five months, company had recovered 70% of market share for
the drug. The Gold
• There was evidence that consumers rewarded the company by
switching from other painkillers to Tylenol. Standard
• Causes of success:
• Acted quickly , removed any source of danger and did not wait for the
other evidences.
• Showed that measures had been taken which would prevent such
types of problems in the future.
• Showed themselves as prepared to bear the short term costs in for the
sake of consumer safety.
 Johnson & Johnson has been ordered to pay $4.7bn
(£3.6bn) in damages to 22 women who alleged that its
talc products caused them to develop ovarian cancer. A
jury in the US state of Missouri initially awarded $550m

But…..
in compensation and added $4.1bn in punitive damages.

Johnson & Johnson told to pay $2.1 billion over cancer-causing

talc powder

Johnson & Johnson Feared Baby Powder’s

Possible Asbestos Link for Years
Johnson & Johnson says its product is safe. But asbestos, a carcinogen that can exist
That will be all for now.
Thank you!