The Recalcitrant Director at Byte Products, Inc.

CORPORATE LEGALITY
VERSUS CORPORATE RESPONSIBILITY |

The Recalcitrant Director at Byte Products, Inc. CORPORATE LEGALITY

VERSUS CORPORATE RESPONSIBILITY |

The Recalcitrant Director at Byte Products, Inc.

Table of Contents:

Questions | Page |
1- If you were one of the board members, how would you have initially
voted for the proposal? What would your vote be after the recess in the
meeting? Why? | 2 |
2- Should the Byte executives tell the town administrators and potential
employees that this is a temporary plant, to run for three years? | 2 |
3- What impact does a plant closing have on a small town like
Plainville? What impact does the closing have on the employees? | 3 |
4- Can you suggest any compromise for the present impasse? | 3 |
5- If you were Elliott, would you call for a vote on your proposal or
postpone the vote until next meeting? | 4 |

1- If you were one of the board members, how would you have initially
voted for the proposal? What would your vote be after the recess in the
meeting? Why?
If I was one of the board members, I would have requested feasibility
study and financial analysis for the proposal , although that the
proposal will solve the problem of the surge in demand and although
that by accepting this proposal there is no need for any licensing,
foreign or domestic and the quality control remains firmly in the
company’s hands, the proposal also has a lot of disadvantages such as
that this plant will never be efficient and its low profitability , high labor
costs, warehousing expenses, and inadequate transportation links to
Byte’s major markets and suppliers. So we have to calculate the
benefits and the cost in numbers to evaluate the proposal.
And for my vote after the recess in meeting, I would refuse the
proposal, this due to the new considerations that Williams had
mentioned about the responsibility towards the employees such as the
need of more schools, instructors, utilities, housing and restaurants, all
of these obligations will be afforded by Byte Inc.

2- Should the Byte executives tell the town administrators and potential
employees that this is a temporary plant, to run for three years?

Sure The Byte executives should tell the town administrators and
potential employees that this is a temporary plant, to run for three
years because of the bad impact of the plant closing on the potential
employees, ethically the employees should be informed that the plant
is temporary that gives them the chance to arrange and to plan for
their life after the closing.

3- What impact does a plant closing have on a small town like

Plainville? What impact does the closing have on the employees?

The impact of the plant closing on a small town like Plainville, the
employees will lose their jobs, the tax base of the community will have
been destroyed, properly values will decrease precipitously, and
practically the whole town will be unemployed.

4- Can you suggest any compromise for the present impasse?

Elliott’s team might discuss many options before bringing it to the
board:
1- Byte may go for domestic licensing for its products and process
technology. Although domestic licensing would result in higher
production costs and lower margins; Byte could absorb the higher costs
and do not pass it on to the customer. Offering a higher price (to
overcome the higher cost) will definitely affect Byte’s market share.
This option will benefit Byte in various aspects:
a. Solve the problem of surge demand.
b. Keep Byte’s market share.
c. Keep out the market from being attractive to competitors.
d. Help Byte reserve its position as a market leader.
e. Byte will still has control over it quality, patents and technology.
All these benefits will have a cost; lower profit margins for the next
three years.
2- If Byte go for the new plant option, Elliott must weigh the problems
associated with that option against the benefits of increased capacity
caused by the new plant. Byte should inform all related parties by its
intention (to close after three years) and offer assistance to workers in
the form of housing or credit aids. Byte should guarantee jobs in the
new plant to any worker currently in the temporary plant and willing to
relocate.
Under this option, Byte should understand that the facility would never
boost the bottom line. Sacrifices must be made by Byte if they go with
the New England plant.
3- Another alternative would be to try to locate a manufacturing plant
nearby one of the existing Byte facilities. So that when the temporary
plant would close, job opportunities will be automatically available in
the permanent facilities.
5- If you were Elliott, would you call for a vote on your proposal or
postpone the vote until next meeting?
I would postpone the vote until the next meeting to allow further
discussion with my team backed with an updated persuasive financial
study. I should explain to the board that we should not be pessimistic
about bringing life to a small town. Byte’s factory may bring life
continuously to PlainVille even after the new plant will be available
after three years. New investing opportunities may be awaiting the
small town as they have Byte’s factory with them.