IN YOUR OWN WORDS, explain and discuss each of these concepts within the context of the above case. Hint: Concepts must be discussed (or explained) by referring to the case, i.e., as they apply to the case.
1. The Legislative process
2. Party vote vs conscience (or free) vote
4. Political donations – legality vs ethics
5. Political corruption – legality vs ethics
6. Conflict of interest
Melton Ltd [a fictitious company] is an Australian public company with a market capitalization of about $120 million. The company was established 50 years ago and is well known for its patronage of the arts – donating $500 000 every year to the performing arts sector.
It is a diversified business with several product divisions. Its core but the least profitable division is its leather goods business which specializes in high-end leather jackets and handbags for both the domestic and export markets under the Snowy River® brand and its associated famous tagline, ‘Always hundred percent Australian’. An insider once revealed that there is an implied expectation that cast members in certain theatre shows that benefitted from Meaton’s donations adorn the latest-designed Snowy River® apparel & accessories during the plays.
The Snowy River® range is sourced from Australian leather (kangaroo and sheepskin) tanneries; designed, cut, sewn & finished in Meaton’s leather-goods factory in Perth.
Direct production costs have gradually increased over the years squeezing the profit margin of the leather goods division. In 2020 it recorded its first loss and had to be supported by Meaton’s other product divisions. According to analysts, the loss was partly responsible for the fall of 7% in Meaton’s share price in2021. No dividends were paid in that period as well. Sales revenue has been stable but increasing the price is not an option given the highly competitive markets.
Disgruntled shareholders put pressure on the Board of Directors to address the negative return on their investment and even to replace the current CEO, James Meaton – who is the founder of the company. The company’s 3-year profit forecast is even direr with a projected loss in the third year amid a tough competitive environment. Clearly, a major restructuring [of operations] is required especially involving cost reduction.
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