Answer Happy

Identify the ethical dilemma?
what are the undesirable consequences?
Propose an ethical situation that considers the welfare of all stakeholders?
ETHICS IN ACTION F abrizio Rivetti is an entrepreneur who has recently started a wine importing business. While he currently has an exclusive relationship with only one premier winery in Tuscany, he is hoping to expand his importing business to include other wineries as well as artisan Italian food products, such as cheeses and specialty meats. With plans to expand, Fabrizio is in need of extra funds. As a first step, he approaches a friend and fellow entrepreneur who has considerable experience dealing with angel investors, Chas Mulligan. Chas has successfully obtained funds from angel investors for his social networking start-up company, so Fabrizio is hopeful that Chas can provide some sound ad- vice. Chas explains to Fabrizio that most angel investors bear considerable risk and consequently favor ventures that are in high-growth areas, such as software, healthcare, and biotech. He also mentions that many angel investors, like venture capi- talists, want to exercise some control over the start-up com- panies in which they invest, either by securing a seat on the company's board of directors or having veto power. Fabrizio is now a bit unsure about seeking angel in- vestments, so Chas puts him in contact with a consultant, Paula Foxx, who can help him make the right decision. Paula is well connected with a network of angel investors, understands the types of start-ups they prefer to invest in, and, most importantly, knows how to prepare the perfect a tv W he W ve
angui inves t so Fabrizio is hopeful that Chas can provide some sound ad- vice. Chas explains to Fabrizio that most angel investors bear considerable risk and consequently favor ventures that are in high-growth areas, such as software, healthcare, and biotech. He also mentions that many angel investors, like venture capi- talists, want to exercise some control over the start-up com- panies in which they invest, either by securing a seat on the company's board of directors or having veto power. Fabrizio is now a bit unsure about seeking angel in- vestments, so Chas puts him in contact with a consultant, Paula Foxx, who can help him make the right decision. Paula is well connected with a network of angel investors, understands the types of start-ups they prefer to invest in, and, most importantly, knows how to prepare the perfect pitch. At their first meeting, Paula is quick to inform Fabrizio of her consultancy fee schedule. Next, she assures Fab- rizio that she is acquainted with a number of angels whom she believes might be interested in his wine importing busi- ness. Fabrizio expresses to Paula his reservations about sharing too much control of his start-up with investors, and is particularly wary of granting investors veto power. WHAT HAVE WE LEARNED? She anc two WOL her who vetc func anot • Id . W • Pr of
ss and Probability He is reluctant to hire Paula on the spot, so Paula suggests they meet again after she has had the opportu- nity to pull together data on some of her most successful clients. Paula's objective is to direct clients to angels who tend to make large initial investments. In this way, her cli- ents reach their goals more quickly and she can spend less time with each client. She decides to compile some data only for angel investors who have made significant initial investments in her clients' start-ups (in excess of $250,000). She came up with the following contingency table for this group of investors. Yes No Total Veto Power? Yes .05 .45 .50 No .45 .05 .50 Total 50 50 1.00 She was happy to find that 50% did not get veto power and 50% did not sit on the board. By multiplying these two probabilities, she arrived at a figure she thought would help persuade Fabrizio to pursue angels and hire her to do so. She planned to tell him that 25% of angels who make large investments are not interested in either " t veto power or a seat on the board in the start-ups they fund. She called her administrative assistant to arrange
V -ss and Probability table for this group of investors. E 5 7 Board Seat? J Yes No Total Veto Power? Yes She was happy to find that 50% did not get veto power and 50% did not sit on the board. By multiplying these two probabilities, she arrived at a figure she thought would help persuade Fabrizio to pursue angels and hire her to do so. She planned to tell him that 25% of angels who make large investments are not interested in either veto power or a seat on the board in the start-ups they fund. She called her administrative assistant to arrange another meeting with Fabrizio as soon as possible. Identify the ethical dilemma in this scenario. • What are the undesirable consequences? t d • Propose an ethical solution that considers the welfare of all stakeholders .05 .45 .50 No .45 .05 .50 Total 50 .50 1.00