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Ethical issues that arise in domestic and global business environments using an understanding of ethical concepts

Identify ethical issues that arise in domestic and global business environments using an understanding of ethical concepts and of legal and business principles.

Case Scenario:

The outbreak of the COVID-19 pandemic required Americans to shelter in place thus causing the U.S. economy to freeze-up, resulting in millions of lost jobs. The U.S. Congress passed legislation to try and limit the economic damage. Included in the legislation was a stimulus package that would give $1,200 to single tax filers making $75,000 or less and $2,400 to married couples making $150,000 or less. The purpose of the payment was to give people emergency funds and to stimulate the economy. Also included was the CARES Act that provided the Paycheck Protection Program (PPP). The PPP was a program administered by the Small Business Administration that was targeted at small businesses. It provided for a government loan that was forgivable if used to pay employees’ salaries and benefits, mortgages, rent, and utilities. According to the SBA website, "[t]he Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll.”

USAA is a member-owned organization that provided insurance and financial services exclusively to current and former members of the military as well as their family members. USAA has an excellent reputation as a well-run organization and for giving its members good service. Many USAA members maintain checking accounts with it. Some of those members who have checking accounts had overdrawn their balances and had a negative balance in their accounts. When the $1,200 or $2,400 stimulus check was deposited, USAA used those amounts to offset the negative balances in some of its members’ accounts. Members were not informed in advance that this would be the case. This resulted in some USAA members not having any access to the stimulus money. The action USAA took in crediting the funds to existing account deficits was perfectly legal.

Shake Shack is a corporation that owns and licenses restaurants selling traditional American fare like hamburgers and milk shakes. It currently operates 124 locations in the U.S. and overseas. As of May 4, 2020, the company had a market capitalization of $2.06 billion. The company is publicly traded on the New York Stock Exchange. In 2019, Shake Shack’s CEO received $2.3 million in compensation. Shake Shack applied for and received a loan of $10 million under PPP. The loan was permissible under a provision in PPP that allows restaurant chains to apply when each location has fewer than 500 employees. Shortly after Shake Shack received the loan, the PPP ran out of funds and many small businesses did not receive loans.

Small Business Administration. (2020) Retrieved from https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program

How to Set Up the Paper

Create a Word or Rich Text Format (RTF) document that is double-spaced, 12-point font. The final product will be between 5-8 pages in length excluding the title page and reference page. Write clearly and concisely.

Create a title page with a title, the course number and section, the instructor's name and your name.

Write an Introduction paragraph. The Introduction paragraph is the first paragraph of the paper and will be used to describe to the reader the intent of the paper explaining the main points covered in the paper. This intent should be understood prior to reading the remainder of the paper so the reader knows exactly what is being covered in the paper.
Consider writing the introduction last to ensure that all of the main points are covered.
Ethical Issue(s)

Identify and discuss the ethical issue(s) related to USAA and Shake Shack.
Stakeholders Implications

Identify the stakeholders involved in the actions of both companies.
Discuss the potential implications of the company's actions on each stakeholder or stakeholder group. Give examples.
Utilitarianism Viewpoint

Explain how a utilitarian would view USAA and Shake Shack’s actions.
Rights and Duties Viewpoint

Explain how the actions of both USAA and Shake Shack would be viewed under the theory of Rights and Duties.
Fairness and Justice Viewpoint

Explain how the actions of both USAA and Shake Shack would be viewed under the theory of Fairness and Justice

Full Answer Section

Ethical Issue(s) USAA USAA's use of stimulus checks to offset negative account balances has been criticized by some as being unethical. Critics argue that USAA should have informed its members in advance that it would be doing this and should have given them the option to opt out. They also argue that USAA took advantage of its members during a time of crisis. USAA has defended its actions, arguing that they were legal and that they were in the best interests of its members. USAA stated that it used the stimulus checks to offset negative account balances in order to help its members avoid additional fees and charges. USAA also stated that it offered its members the option to have the stimulus checks deposited into another account if they so desired. Shake Shack Shake Shack's receipt of a PPP loan has also been criticized by some as being unethical. Critics argue that Shake Shack is a large and successful company that did not need government assistance. They also argue that Shake Shack's receipt of a PPP loan took away money from smaller businesses that needed it more. Shake Shack has defended its decision to apply for a PPP loan, arguing that it did so in order to protect its jobs and its business. Shake Shack stated that it used the PPP loan to pay its employees and to keep its restaurants open during the pandemic. Shake Shack also stated that it returned the PPP loan after it became clear that the money was not needed. Stakeholders and Implications The stakeholders involved in the USAA and Shake Shack cases include:

USAA members: USAA's members are the primary stakeholders in this case. USAA members were directly affected by USAA's decision to offset negative account balances with stimulus checks.
Shake Shack employees: Shake Shack's employees are another important stakeholder group in this case. Shake Shack's decision to apply for a PPP loan helped to protect the jobs of its employees.
Small businesses: Small businesses are also stakeholders in this case. Shake Shack's receipt of a PPP loan took away money from smaller businesses that needed it more.
Taxpayers: U.S. taxpayers are also stakeholders in this case, as they are the ones who funded the PPP program.

The implications of the USAA and Shake Shack cases are significant. These cases raise important questions about the ethics of businesses using government assistance programs, especially during times of crisis. These cases also highlight the importance of businesses being transparent with their customers and employees about their business practices. Conclusion The USAA and Shake Shack cases are examples of ethical issues that can arise in domestic business environments. These cases are complex and there is no easy solution. However, it is important for businesses to be aware of the potential ethical issues that they may face and to have a plan for addressing them. Businesses should also be transparent with their customers and employees about their business practices. This will help to build trust and confidence, and it will help to mitigate the reputational damage that can result from ethical scandals.

Sample Answer

Introduction

Ethical issues can arise in both domestic and global business environments. These issues can be complex and challenging, and there is often no easy solution. However, it is important for businesses to be aware of the potential ethical issues that they may face and to have a plan for addressing them.

This paper will identify and discuss two ethical issues that arose in the United States during the COVID-19 pandemic: USAA's use of stimulus checks to offset negative account balances and Shake Shack's receipt of a PPP loan. The paper will also discuss the stakeholders involved in these cases and the implications of these actions.