Published on Mar 8, A presentation of case study on business ethics of two different companies and the corporate social responsibilities shown by them in India.
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Business ethics case study. Upcoming SlideShare. Like this presentation? Why not share! Embed Size px. In the cases listed, the reasons given for departure gave a false impression because the conduct of the departing officers after the departure belied the reason. The family reason does eliminate questions about what was really happening at the company and may preserve the value of the stock.
Gini & Marcoux, Case Studies in Business Ethics, 6th Edition | Pearson
However, have the students think through the consequences for the company, if only from the perspective that the company is not really facing up to the issues it faces. The reasons save face for the executive and the company. Is it misleading? Why are you using a different reason? Why are you using a partial explanation? The legal issue here is whether the statement is intentionally false.
If the executive agrees to the statement, it would be difficult to establish fraud because there was, at the time, at least some truth to the statement.
Business Ethics Case Study
However, in the classic ethical sense, shareholders and markets are misled about the true reasons as well as the true condition of the management structure and success at the company. However, SEC rules do not specify instructions on content of press releases. The key portion of the 9. The statements perhaps violated the spirit of the securities law disclosure requirements. Those who occupy high political office or high business positions or are famous athletes or actors or singers are watched for their examples.
This reality may not be popular, but it is a reality nonetheless. Personal lives are inextricably intertwined. They want to believe that information can be managed, but too many people are watching; too many photographers are out and about; and their personal conduct matters to those who have lionized them. The belief is that the reasons given save face for those involved as well as their companies or sponsors. However, as noted in all of these situations, the truth does eventually percolate and then the lionized figure is faced with two problems: the conduct and the dissipation of trust that results from having not been forthcoming.
Both are facing some issues that is embarrassing for them or could affect their future earnings. Both are also powerful and been used to a great deal of adulation. They assume they can continue with whatever. Do your numbers — figure out costs of doing something and not doing something — including longer term impacts. Be sure to consider the impact on those not specifically mentioned in the case. Recall the categories and apply the categories to be sure you have spotted the issues. Apply all the questions to see what you might have missed in analyzing. Check for those warm language labels and rationalizations that may find you overlooking an issue as you find comfort in avoiding real analysis.
Be sure to consider other cases you have or will study and whether those historical precedents might be of help in analyzing your present situation and dilemma. Bring in other areas of business to be sure you are looking at the ethical issue fully. For example, consider any strategic advantages in your decision.
Be sure to apply economic principles to proposed actions. Think through the organizational behavior implications of your decision. In other words, integrate what you know about business as you analyze from an ethical perspective. Watch the framing of the issue.
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Make sure that you are zeroing in on the issue itself and not what you see as consequences for public disclosure of the issue. In this case, most were convicted or entered guilty pleas, so they did cross that line into obtaining non-public information from company insiders. Leaks are still inside information and his quote indicates that he could not see the distinction. In addition, he tried to cultivate insiders and could not see that such a strategy was a dangerous one in terms of crossing legal lines.
If he had considered the long-term consequences of his behavior — 26 indictments and the end of his company are high prices to pay for crossing some ethical lines. What is most interesting is that no one disagrees that they all crossed legal and ethical lines. In other words, there were no close calls here yet he remained, through his sentencing reports, somewhat stunned that he was charged. The employee went to get legal advice and asked a very simple question — Was what he was doing legal?
The Lululemon story indicates how intimidated employees were that they would participate in such an activity and be willing to subject themselves to such humiliation. The CFO had strength to resist group think and did not fall victim to the bystander effect — he was willing to end the meeting because the conduct was so unprofessional and bizarre and humiliating for those involved.
Legal Issues Sophisticated investor: Goldman used the area of sophisticated investor — the definition to escape full disclosure to its client.
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If they were not analysts in name then the rules did not apply to them. Auction rate securities: Interestingly, on the auction rate securities issue, it took state law to result in a settlement of these issues. The SEC struggled with applying laws and regs to this practice of bidding up the price and then not buying.
Business Ethics, 8e Jennings IPO allocation and structure of the market: The IPO structure was also eventually settled, but for relatively small fines with new rules on IPO allocations and agreements between clients on second-wave arrangements to buy more. IPO profitability changes prior to IPO: The change in the profitability standard to one quarter was an interesting legal issue because the information on these dot-coms was always disclosed — the financials were there for investors to see. However, Goldman did not disclose its gradual drift from three years of profit to one year to one quarter.
Investors assumed the vetting that had existed in the past. Partnership to corporation structure: The change at Goldman from partnership structure, where the principals put everything they owned on the line, to corporation, by which they were shielded from liability, was one that allowed for greater risk with little downside for the principals. The new legal structure with limited liability resulted in the riskier strategies that the firm took.
See the legal issues listed above under "Legal Issues" and discuss how Goldman fell into the gray. Also discuss how folks were misled. Most of the issues involved nondisclosure of facts that an investor would have deemed important in making their investment decisions.
Short Business Ethics Cases for Use in Class
The front-page-of-the-newspaper test is a good one here because the headlines were not flattering to Goldman. The questions of the senators reflect the struggle with people trying to understand how what Goldman did could comply with the law but still seem so deceptive. The law is but one part of ethical analysis. Those affected by Goldman strategies and gray areas: investors, the market, the U.
Reading: Case Studies: Introduction to Business Ethics
Students can create flow charts to show the ripple effect of these behaviors. Was it just bluffing for Goldman to not disclose its positions or was it a card up the sleeve? Not everyone knew the rules of the Wall Street game — the large investment bankers clearly did from their involvement in IPOs to auction securities to their structuring of the CDOs. However, these investments made their way to the retail level where the knowledge base was just not there. Goldman and others believed them to be sophisticated investors by definition and it was not necessary to disclose.
However, that definition is now changed and more disclosure will be required because they clearly did not understand the double positions. Business Ethics, 8e Jennings 6. The translation of these two sentences is that the culture that existed at Goldman before will remain, with all the drive to success and that Goldman does not feel that its client base will be affected.
In other words, Goldman emerges with a fine but little contrition and a plan to go forward with the status quo. The lessons learned do not seem to be there. Fabrice was using a complex form of rationalization — he believed that what he was doing improved the world because high finance allowed everyone in the U.
Business Ethics: Case Studies
This mantra was something that was repeated throughout the Goldman culture — Mr. This assurance allows them to continue with the gray area activities because the cause has been defined as noble. However, it is not factoring in the new regulations, the changes in the market so that it can no longer occupy those legally gray areas and will be required to compete on a different basis other than loopholes.
This is a good example for discussing self-interest vs. This question on immorality is loaded — the European girlfriend feels that because the underlying activity is immoral then those who support that activity are accomplices. There is a simple element of the Nash test here.