Social Responsibilities of Businesses
The Board of Directors acted justly in selling Family Dollar to Dollar Tree rather than to Dollar General. As most businesses, Family Dollar had a social responsibility of making profits for its investors. However, businesses are not only obligated to investors but also to other stakeholders such as employees, customers and the society at large. Therefore, a critical evaluation of each stakeholder’s value was necessary to make the final decision.
The effects of the two options had to be analysed by the Board. If Family Dollar was sold to Dollar General, investors would earn a quick profit. While if the company was sold to Dollar Tree, employment for the company’s approximately 1400 employees in various outlets was assured. Dollar Tree had promised to operate Family Dollar as a separate entity thus the jobs in Matthews were safe (Portillo, 2). On the other hand, speculations had it that Dollar General would merge the two companies since they shared the same model of businesses to minimize operation costs. This would lead to massive loss of jobs. Hence only the investors would benefit at the expense of the employees.
Moreover, per John Joseph the board had to consider factors such as company culture and antitrust issues alongside investors’ value to determine which company met their social-responsibility goals (Tortilla, 5). Family Dollar would still earn profit if the company was sold to either of the two bidders. However, the profit earned from Dollar General would be higher than profit earned from Dollar tree by 5.4%. But considering the obligations Family Dollar had to its employees and the investors, a neutral decision that captured the interests of both stakeholders was vital. Only Dollar Tree provided that option. Despite the investment-returns earned being lower for the investors, the company’s obligations to both parties would be achieved. Hence, the decision to sell the company to Dollar Tree was fair to both employees and investors.
Portillo, Elly. Carl Icahn: Family Dollar board too loyal to CEO. Charlotte Observer.2014
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