Question

Joanna Newsom owns and operates Joanna's Burgers, a small fast food store, located at the edge of City College campus in Newton, Ohio. After several very profitable years, Joanna's Burgers began to have problems. Most of the problems were related to Joanna's expansion of the eating area in the restaurant without corresponding increases in the food preparation area. Joanna does not have the cash or financial backing to expand further. She has therefore decided to sell her business.

Vivian Girls is interested in purchasing the business. However, she is located in another city and is unfamiliar with Newton. She has asked Joanna why she is selling Joanna's Burgers. Joanna replies that her elderly mother requires extra care, and that her brother needs help in his manufacturing business. Both are true, but neither is her primary reason for selling. Joanna reasons that Vivian should not have asked her anyway, since profitable businesses don't come up for sale.

Required:

1. Identify the stakeholders in this situation.
2. Did Joanna act ethically in not revealing fully her reasons for selling the business? Why or why not?

Answer 1

Q1:

The stakeholders in the situation are Joanna who is selling the business, Vivian who is the prospective buyer, the customers who are the City college students and staffs and the employees of the fast food store

Q2:

Joanna did not act ethically by not revealing the real reason for selling. She could have said the real reason of selling the business which is not having enough capital to expand the kitchen area without which the business will not be profitable. This can create a trust in the buyer and since the information was clear and transparent it will be easy for the buyer to make the business a profitable one after the acquisition.