Who are the stakeholders in this situation?

The R&D division of Pele Corp. has just developed a chemical for sterilizing the vicious Brazilian “killer bees” which are invading Mexico and the southern United States. The president of Pele is anxious to get the chemical on the market because Pele profits needs a boost- and his job is in jeopardy because of decreasing sales and profits. Pele has an opportunity to sell this chemical in Central American countries, where the laws are much more relaxed than in the United States.

The director of Pele’s R&D division strongly recommends further research in the laboratory to test the side effects of this chemical on other insects, birds, animals, plants and even humans. He cautious the president, “We could be sued from all sides if the chemicals has tragic side effects that we didn’t even test for in the lab. “The president answers, “We can’t an additional year for your lab test. We can avoid losses from such lawsuits by establishing a separate wholly owned corporation to shield Pele Corp. from such lawsuits. We can’t lose any more than our investment in the new corporation, and we’ll invest just the patent covering this chemical. We’ll reap the benefits if the chemical works and is safe, and avoid the losses from lawsuits if it is a disaster. “The following week, Pele creates a new wholly owned corporation called Cabo Inc., sells the chemical patent to it for $10 and watches the spraying begin.

QUESTIONS

• Who are the stakeholders in this situation?
• Are the president’s motives and actions ethical?

Can Pele shield itself against losses of Cabo Inc