Example research essay topic: Magna Versus Royal Laser - 1,309 words

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Society has become very cynical regarding business ethics. With liberalization and globalization becoming increasingly more important in the 21 st century, it has become more difficult to evaluate and validate the goals of a business while fulfilling the demands that ethics put on government, business and consumers. Clearly, the purpose of a business can take two opposing views. From a business standpoint, an organization's primary goal is to offer quality to its customers, efficiency from its employees and competitiveness amongst businesses.

However, from an ethical standpoint, a business should act "religiously" towards all stakeholders of a company by taking account of the extent of human suffering that their actions might cause in society. Multinational corporations are increasingly being faced with lawsuits, which tend to accentuate the importance that policy planners in government and industry should allocate to ethical issues. For instance, Microsoft has faced numerous lawsuits for monopolizing the market in an unethical manner. These ordeals have cost the company millions of dollars in the past five years or so. Not only do these lawsuits ruin the image of the company but, from an economic perspective, these lawsuits hurt the company's profits, directly and indirectly. In essence, conflict of interest exists between all members involved when dealing with business ethics.

This paper will attempt to examine the ethical issues of non-competing clause, the fiduciary obligation of a manager and senior officer, theft of trademark secrets, and employer-employee obligations to one another. These topics will be discussed through the case of Magna International versus Royal Laser Tech Corporation. Magna International Inc. versus Royal Laser Tech Corporation involves four parties-Mister Fred Jaekel, Royal's current Chief Executive Officer, Mister Nick Orlando, who had been formerly employed at Cosma International Inc. , a Magna Unit, as the Executive Vice-President of Finance, the Magna International Corporation and its competitor Royal Laser Tech Corporation, a metal molding company. There are two lawsuits at hand that need to be discussed.

First of all, Fred Jaekel, as of August 2001, filed a lawsuit against his ex-employer Magna International Inc. because of his wrongful dismissal for $ 70 million dollars. Mister Jaekel claims that Magna owes him bonuses, shares and other payments. In response to the accusation, as of October 15, 2001, Magna launched a $ 50 million lawsuit against Mister Fred Jaekel's employer.

Also, Magna International states that in its defense that Mister Jaekel left the company for his own personal reasons and hence, was never asked to leave. Under this presumption, Mister Fred Jaekel, by accepting employment at a competitor's company, broke a two-year non-compete clause. Jaekel was directly responsible for developing applications of hydro forming for the production of parts for the automotive industry. Thus, he is regarded as one of the best operating managers in the industry. Consequently, Magna International Inc. , in addition to the sum of $ 50 million, is demanding for $ 5 million in punitive damages. However, Royal Laser Tech Corporation's position on this matter is that the company is not a direct competitor of Magna International Corporation.

The Toronto company uses laser machines to do custom metal work for manufacturers in the transportation sector including such products as bus and rail-car parts. Royal Laser Tech Corporation's clients include General Motors and John Deere. Major clients of Magna International Corporation are OEM's, original equipment manufacturers and virtually every vehicle manufacturer around the world. Both companies' main focus is the automotive industry.

Moreover, both Royal Laser Tech and Magna International Inc. use hydro forming technology, which uses high-pressure water to mold metal. Thus, both compete with each other on metal forming processes including stamping, roll forming, hydro forming and assembly operations. On the other hand, although Magna International's business model is similar to Royal Laser Tech's, the companies differ on one important aspect: revenues. Cosma International Inc. , a Magna unit, generates sales of $ 4 billion annually in comparison to $ 45, 000, 000 for Royal Laser Tech. Consequently, Royal Laser Tech does not consider itself a competitor of Magna International Inc.

seeing that they do not benefit from the same economies of scale. Hence, Magna International Inc. has a better capability of serving the market and should not be compared to Royal Laser Tech. Magna's main argument in this case is the breach ement of the non-competition clause signed by its former employees Mr. Jaekel and Mr. Orlando.

According to the Auto Part Giant, Jaekel - now Royal Laser's chief executive - signed an agreement that prevents him from competing against Magna for a two-year period. Similarly, Orlando - now Royal Laser's chief financial officer - signed a one-year non-competition clause. Magna argues that the employment of its former officers with Royal Laser is contrary to the Code Civil of Quebec Article 2089 that states: "The parties may stipulate in writing and in the express terms that, even after the termination of the contract, the employee may neither compete with his employer nor participate in any capacity whatsoever in an enterprise which would then compete with him. Such a stipulation shall be limited, however, as to time, place and type of employment, to whatever is necessary for the protection of the legitimate interests of the employer. " Secondly, Magna claims that one month prior to the launch of the court suit, both men, Mr.

Jaekel and Mr. Orlando, "agreed to assist Royal Laser to solicit Magna's employees and customers, " Magna said in its statement of claim, filed with the Ontario Superior Court of Justice. They also state that Royal Laser has already tried to solicit business from a major Magna customer - Daimler Chrysler - using knowledge of Magna's pricing. Magna's suit claims another man, Richard Cocq - until June 30 th, a business director at Autotek Industrial de Mexico, another Magna subsidiary - met with Daimler Chrysler of Mexico shortly after Aug. 14. Magna said Cocq - "encouraged" by Jaekel and Orlando - indicated he could offer a lower price to the Daimler Chrysler unit for parts being supplied by Autotek for the automaker's PT Cruiser production. "In doing so Cocq sought to take advantage of the knowledge of pricing by Autotek that he had secured in the course of his employment with it, " Magna said in its claim. This valuable information, customer contacts and pricing policies are trade secrets that belong to Magna, therefore their misuse by former employees to profit their new employer is unethical and contrary to article 2088 of the civil code of Quebec that states: "The employee is bound not only to carry on his work with prudence and diligence, but also to act faithfully and honestly and not to use any confidential information he may obtain in carrying on or in the course of his work. " Finally, among other allegations of corporate espionage, Magna claims Orlando took a bag of documents from Magna-owned Cosma International Inc, and had them copied for Jaekel and Wildeboer less than three weeks before his hiring at Royal Laser.

Another critical ethical and legal issue that Magna should address is the fiduciary duties of Mister Jaekel and Mister Orlando as former officers such as loyalty, good faith and avoidance of conflict of duty and self interest. These fiduciary obligations are known to persist even after the employment has been terminated and are forever after. The articles of the Civil Code of Quebec that deal with these issues at hand are: Article 321 " A director is considered to be the mandatory of the legal person. He shall, in the performance of these duties, conform to the obligations imposed on him by law, the constituting act or by-laws and he shall act within the limits of the powers conferred on him. " Article 322 " A director shall act with prudence and diligence.

He shall also act with honesty and loyalty in the best i...

Research essay sample on Magna Versus Royal Laser