Professional Documents
Culture Documents
Lecture - 6 Dayton Hudson Corporation Conscience and Control
Lecture - 6 Dayton Hudson Corporation Conscience and Control
• Virtue theory
Management’s point of view: As per Friedman’s view, the main responsibility of a business is to make profit. Thus
management’s decision was right because of -
Outsider’s view: DHC’s lack of responsibility towards Detroit despite growing and operating there for almost 100 years.
• “The whole purpose was to do things better”, says DHC’s vice president.
Outsider’s view:
• DHC could arrange for shorter shifts ensuring more jobs for more people.
Third Issue: Hostile Takeover Attempt of the Dart
Corporation
Unethical in light of :
• Hobbes’s 8th natural law that says –
For Dart Corp., the attempt was for profit maximization. Such attempt benefits Dart by
• Reducing competitors.
Moreover, As Haft (President of Dart) said they planned to operate the targeted companies rather than selling off.
Outsider’s view:
• DGC intended to weaken target companies by selling off their major assets.
Alternative actions by management: Alternative actions in this case could be applicable for
DHC management in the following way –
Portray its Chairman and Presidents to the public media rather company or customers!
Fourth Issue: Dart’s Profit Making
Letting the target companies facing difficult times by initiating hostile Takeover ( i.e., unfriendly
merger);
i.e. Safeway had to sale their British and Australian Holdings, closed 251 stores in USA
PS : Acquisition
[ In a stock acquisition, a buyer acquires a target company's stock. When one company acquires another, the stock
price of the acquiring company tends to dip temporarily, while the stock price of the target company tends to spike. Over
the long haul, an acquisition tends to boost the acquiring company's share price.]
[ In other words, when the company is bought, it usually has an increase in its share price. An investor can sell shares on the stock
exchange for the current market price at any time.]
JUNK BONDS
[Junk bonds are bonds that carry a higher risk of default than most bonds issued by corporations and governments. A bond is a debt or
promise to pay investors interest payments along with the return of invested principal in exchange for buying the bond. Junk bonds
represent bonds issued by companies that are financially struggling and have a high risk of defaulting or not paying their interest
payments or repaying the principal to investors. Because of the higher risk, investors are compensated with higher interest rates, which
is why junk bonds are also called high-yield bonds.
Currently notable businesses with credit ratings that give them "junk" status include: Ford (NYSE:F): Ford has been rated
as investment-grade in the past, but the company lost its investment-grade ratings in 2020 due to the coronavirus
pandemic and global economic collapse.
Fifth Issue: Secret Stock Purchase
Unethical in the light of :
Outsider’s view:
Outsider’s view:
• Dart took advantage of playing as an investment company in spite of violating investment company rules.
Whether they should’ve consolidated their four units into one or not
Whether they should’ve asked for assistance from the state or not.
General Approach Developed from This Case
Takeover Standard:
A performance standard should be set for every companies which will provide a
definite and detailed guideline following which it can be determined whether a company can be
approached for takeover or not.
Government’s role:
The Government should play an active role in these cases ensuring equality for all.
Any Question?
THANK YOU