Tw & Aol Merger

1. Based on the fact that investors lost millions of dollars and employees found themselves unemployed and holding worthless stock options, do you see any lapse of ethics or corporate social responsibility in the AOL Time Warner situation? Describe it and discuss how it might have been avoided. (Chapter 2)

Time Warner (TW) and America On Line (AOL) did not apply business ethics, moral rules and/or regulations that guide judgment in their decision to merge. Ethical issues occur at all levels of an organization, from a file clerk to a CEO and in many different forms from stealing a pen to the total disregard of a company's shareholders. Business ethics applies to everyone within an organization.

Corporate social responsibility is the implementation by a company of a planned focal point for satisfying the legal, ethical, economic and philanthropic responsibilities expected of the company by its stakeholders beyond the pursuit of profits. TW and AOL did not exhibit corporate social responsibility. Both companies were too aggressive with their promises. Steve Case was more focused on satisfying his personal goal of AOL becoming a blockbuster global communications company rather than its employees and stockholders.

Time Warner should have balanced social responsibility with their financial objectives, even if it meant taking a less-profitable course of action by not merging with AOL.

AOL and Time Warner could have avoided this situation by conducting a social audit to determine whether or not their performance would be socially responsible. They should have considered their stakeholders.

2. Was there a regulatory issue with the proposed merger of AOL Time Warner? What was it? Discuss the potential problem that you see. What agency would be responsible for it? (Chapter 2)

The regulatory issues that the AOL/Time Warner merger faced were it would possess an unfair competitive advantage coupled with the possession of too much power over access to the Internet.

The federal, state and local governments preside over a company's business dealings. The government agency responsible for overseeing the regulatory issues of the AOL/TW merger was the Federal Communications Commission (FCC) and the Securities Exchange Commission (SEC). These entities are responsible for encouraging businesses to behave ethically and in a socially responsible manner.

3. While the ownership form of the merged AOL Time Warner company would remain a corporation, what changes would the owners have anticipated? What challenges presented themselves, and why? Revisit the section in Chapter 5 where Understanding Business Combinations is discussed. Relate the information in this section to the issues presented in the case. Discuss how they might have been foreseen and what could have been done. (Chapter 5).

Owners of AOL Time Warner had the high expectation that