BUSINESS ETHICS

Business Ethics

Business Ethics

Introduction

We will be reviewing the case of Martha Stewart and the insider trading scandal which she faced. Our focus of the report will be on business ethics and how it is becoming more and more important for organizations. Business ethics have taken much needed attention in wake of serious ethical scandals like Enron, 2001 (Bratton, 2002) and many others. These businesses were working within the legal framework but breached the ethical boundaries and made personal gains at the cost of general public. The insider trading scandal is also a similar practice in which the individuals make use of non-public information for their personal gains. Law exists now for the punitive action on these trading but still there is ways in which insiders can make similar gains by utilizing the option of “open market repurchases” which is allowed by law (Simkovic, 2009). In our report we will be looking at the case of Martha Stewart and her punishment on insider trader charges. More importantly we will be looking at the role of her image in the scandal. We will review the success of the brand name of Martha Stewart; evaluate the strength of association of the brand with the personality of Martha Stewart, and will estimate the success possibility of the brand without Martha Stewart. We will be also reviewing the impact of Martha Stewart conviction on the business environment.

Discussion

Overview

Martha Stewart was charged for insider trading for selling four thousand shares of ImClone a biopharmaceutical company and the next day the shares of that company fell below normal level. The authorities took notice as similar selling was done by the executives of the company ImClone. Although Martha was not tried in court for fraud of securities, she was found guilty for obstruction of justice and lying to investigators. She was sent to prison for five months, same period in house arrest and was put on probation for two years.

The ethical issue arose when despite being a public figure she opted not to comment in public regarding this issue and she continues to hold her innocence on this issue till date. This scandal reduced her net worth by one worth and reduced the share price of her Martha Stewart Living Omnimedia by more than seventy percent. Although her public image was tainted, she kept much of her brand loyalist by accepting the prison term.

Purpose of report

We will be searching for the following answers:

What role has Martha Stewart's image played in the insider trading scandal?

Will Martha Stewart Living Omnimedia survive if Martha Stewart were to leave the company? In order to survive, what changes will need to be made at the company?

How has Martha Stewart's conviction impacted the business environment today?

Martha Stewart's Image and the Scandal

Martha Stewart was termed as the homemaking queen before the scandal. She was the ideal solution provider for the house wives, with home decorating recommendations within budget, perfectly crafted pastries, and perfection standards and became a symbol of success (CNN, 2002, ...