FIRM COMMITMENT?

In the early 1980s, airlines introduced frequent-flier awards to develop passenger loyalty to a single airline. Free tickets and possibly other awards were made available to passengers when they accumulated a certain number of miles or flights on a particular air carrier. These programs were potentially good for the passenger and the airline as long as the awards were not too generous and the airlines could minimize revenue displacement from a paying passenger. Originally, there were no restrictions. Anyone with the necessary miles could take any flight that had an available seat. In the late 1980s, most airlines changed their no-restriction programs to programs with restrictions and blackout days. The airlines also added partners in frequent-flier programs, such as car rental companies and hotels. These partners handed out frequent-flier miles compensating the airlines in some manner for the miles distributed. Airlines also added triple-mileage deals. A consequence of these expanding frequent-flier programs was a surge in the number of passengers flying free and a surge in unused miles. To get a handle on the cost and the unused miles, airlines increased the frequent-flier miles needed for a flight and placed time limits on the award miles. The increased frequent-flier miles needed for a flight and the time limits prompted lawsuits. Many of these lawsuits were filed in state courts. One of the suits filed in the District Court in Chicago in 1989 made its way to the U.S. Supreme Court. In 1995, the Supreme Court ruled that federal airline deregulation law would not bar the breach-of-contract claim in the state court. In June of 1995, a District Court in Dallas ruled in favor of the airline in a case involving an increase in miles needed to earn a trip. Airlines interpret this decision as upholding their right to make changes to their frequent-flier programs.

Required

a. In your opinion, are the outstanding (unused) miles a liability to the airline? (Substantiate your answer.)

b. Comment on the potential problems involved in estimating the dollar amount of any potential liability.

c. 1. What is a contingent liability?

2. In your opinion, are unused miles a contingent liability to the air carrier?

3. Recommend the recognition (if any) for unused miles.

 

 

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Legal and Ethics Report

In this assignment you will write a short report on the legal and/or ethical issues related to running a modern web application. The assignment requires that you carry out your own research on this topic and summarise it in your report.

Background

Imagine: I am involved in a small startup company developing a Citizen Science web application – our idea is to be able to customise our app for any project and sell our services to Universities and Research Institutions; this will make us extremely rich!

The technical team is almost finished with the main features that will launch as version 1 of the application. I have been asked to review the ethical and legal issues that might impact on the company’s launch and management of this application. The rest of the team is a bit vague on what is required, but they’ve heard that some startup companies have got into legal trouble because they didn’t understand what they were required to do by law or where their legal responsibilities lie. They are also very keen to be seen as an ethical company and so want to understand what best ethical practice is in this context.

This is a big topic and there’s no way I can do this all myself within the time-frame. Luckily I have a team of interns (you) who are keen to show off their research skills and attack part of the problem for me. Your job is to take some aspect of the legal or ethical landscape and write an executive summary on the possible impact on our operation.

The functionality that will be part of our system is as follows:

• We provide a platform for researchers to customise a Citizen Science data collection application for their needs, the app will allow the public to make donations to the project as well as collecting data.
• The application allows users to login and create a user profile where they can set their preferences.
• Users can use the application to make observations for the project, these can include things like the location of the user (from GPS) and photographs (from the device camera).
• Users have the option to store the credit card information in their user profile to facilitate regular or irregular donations.
• The application keeps track of the projects a user has taken part in and uses this information to recommend new projects that might be of interest.
• Users can post comments about a project and can provide reviews of the project that might be used in promoting them to others. This information is then used by a secret algorithm that computes the reputation of the projects and the organisations that run them.
• When users register we require that they give us their email address, full name (no pseudonyms), age, gender and the city and country they live in.

Our source of revenue for this application comes from a fee for service to the research body running the project and a percentage of the donationsthat users make to research.

Your Task

Listed below are four legal and four ethical issues relating to running the web application. There might be some overlap between these two as the ethical questions might have legal implications and vice versa. Your task is to take one issue from each list, research them and write a summary report on your findings.

Your report should be evidence based – I don’t just want your opinion on these issues, I want to know what the real legal position is. In the case of the ethical issues, your opinion will come across in your report but you should still reference what other companies are doing in your report.

Note that you won’t find answers to these questions in the notes for this course. This assignment requires you to do your own research and find relevant resources and interpret them for your report. This is a learning exercise as much as an assessment task.

Please keep in mind that we are launching in Australia and you need to consider Australian law in your report.

Legal Issues

1. Requirements for data privacy given that we will be keeping personal and financial data on users.
2. Any issues relating to our liability if there is a defamation case arising from a review or comment posted on our system. That is, what happens when someone defames a project organiser or another user – what are our responsibilities and how can we best protect ourselves against litigation.
3. There are other things we could do with the user information we have since we have large numbers of user profiles and a record of their activities that might give clues to their interests etc. This would be valuable information to any marketing organisation. What can we do and what should we do?
4. What contracts may be needed with researchers who we want to charge for services.

Ethical Issues

1. How should we deal with complaints about comments or reviews posted on our system, even those that are not illegal? Complaints might come from employers or organisations that are mentioned in them. Complaints might request that certain comments be removed or modified. Who is responsible here – is it the maintainer of the web application or the author of the comment?
2. What policies should we have for running experiments that might be ethically dubious?
3. Since we collect GPS data from users we can see where they are when they are providing data. Our developers wrote some code to plot this on a map in real time with little icons for each person along with their name. This was only ever used internally. Is there a problem with this?
4. Our largest competitor is actually an open source project that makes it possible for researchers to do quite a bit of what our application does for free. We have one or our developers watch the development of this project very closely so that we can make sure we match what they do. Is there a problem with this?

Final Submission

Your report should be 800-1500 words all-together – that is, short and to the point. Your report should be evidence based and you must include citations of all of the resources you use in putting your report together. Further, your report should provide summaries of resources that you have found that are relevant to the question under discussion; so, for example, if you find an article describing a case of litigation against a company running a web application, include a summary of that article in your report as well as providing your interpretation of the implications for our startup.

You must stick to the limit of 1500 words. Long reports will be penalised. The aim is to write an executive summary, not an essay.

Report Structure

A suggested structure for each part of your report is as follows:

• Introduction, a brief expansion on the question that you’ve addressed.
• Resources, a summary of the resources that you’ve found that are relevant.
• Discussion, a discussion of the question with reference to the resources – this is the main part of your analysis or argument as to what we have to or should do.
• Summary, a brief recap of your main points.

You can write the four sections separately but it would be an advantage if you could draw them together in an overall conclusion/recommendation.

Referencing Style

You should include clear references to any sources that you use in your report but the style you use for referencing is not important – just choose something and make it clear.

 

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In the organismic model of organizations, work is reduced to elementary tasks with a focus on efficiency, conformity, and compliance. True False Question 2 (2 points) The traditional way of viewing an organization is by surveying the horizontal dimension keeping an eye on an organization chart. True False Question 3 (2 points) Agency theory suggests that information may be concealed to adyance self-interests. True False Question 4 (2 points) A firm that is characterized by flexibility and short cycle times is considered to be agile. True False Question 5 (2 points) A successful organization is one which integrates quality principles with its mundane daily work activities True False

 

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Attached is managerial accounting homework – text book managerial accounting Garrison Noreen Brewer. 

 

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