Ethics Code in Enron and Microsoft - Assignment Example

ENRON One senior Enron executive, Sherron Watkins did apprise the CEO of the accounting irregularities in 2001 and d that this could pose a threat to the company (Williams, 2002). This was ignored and so were the concerns of another employee Baxter. Employees are expected to bring with them certain values. As good communicators, they are expected to create, defend and promote the best image of the employer and implementation of these does not pose serious ethical dilemmas. Most organizations have code of conduct but Enron suspended the Code of Ethics. The board is supposed to be the organization’s ethical conscience. The employees were at a loss how to arouse the consciousness of the Board. 2. The leadership at Enron was concerned with maximizing shareholder value and hence they hid debts and overemphasized profits (Gardner, 2006). They blinded themselves to ethics and limited their capabilities to recognize ethical and moral issues. The leadership did not see any harm in their actions and they believed there were no ethical issues involved. They focused on the ends and since the end that they received was happiness, profits and no harm involved, there was an initial sense of disbelief within the culture when they saw the outsiders’ reactions to their business practices. The leadership failed to realize that their decisions had powerful ethical components involved. The leaders should have educated the managers on the moral values, principles and guidelines. This could have helped avoid the violation of rules. 3. Enron had the corporate culture of risk taking, aggressive growth and entrepreneurial activity (Schuler, 2002). While these are positive values, these were not balanced. They did not pay attention to corporate integrity and customer retention. It concentrated on increasing the share holder value and maximizing price per share of common stock. Its size gave it arrogance and all of its values became its liabilities. They started hiding debts as shareholder value increased and over confidence developed that nobody could touch Enron. All of these led to indulging in more risky ventures betting the stocks would never fall. Its culture was out of control and the culture was such that they did not pay heed to ethical objections. Such a corporate culture has to fall and it is only a matter of time. 4. The auditors allowed the dubious accounts to pass unchecked. The accounts that were presented to the public concealed the damage that had occurred. The auditors’ activities had the active support of the investment banking community (McRae, 2002). The shares of the company were bloated up and at the same time the executives or the leaders involved themselves in raising more funds for the company from the investment banks. The investment banking community also supported the company in the takeover and merger bids. MICROSOFT 1. Microsoft is not guilty of being a monopoly because even after the court ruling demanding them to unbundled their software and sell, they have found other means to maintain their monopoly. In fact they are even more passionate about their intellectual property protection. They maintain that the bundling of the software was the result of innovation and creation. They can create a basic and premium version of the windows and ensure that the premium version has a bigger market. Microsoft maintains that if they have to follow the court orders strictly, there would be no incentive to innovate. 2. Complaints were lodged that Microsoft abused its monopoly power in its handling of operating system sales and web browser sales. The issue central to this case was whether Microsoft was allowed to bundle its flagship browser Internet Explorer (IE) with its Microsoft Windows (Wikipedia). This has been construed as violation of the antitrust laws. The issue evolved because anybody having the windows operating system automatically had their browser IE. This meant that the competitors’ browsers would either have to be downloaded over the internet or purchased at a store. There were other apprehensions over Microsoft’s conduct in forming restrictive licensing agreements with computer manufacturers and over its intent in its course of conduct. 3. I do not agree with the ruling of the court. If a company can innovate and offer superior technology as a bundled offer, this does not mean denying rights to others. Why are other operating systems not able to compete with Microsoft? The public is concerned with best facilities at minimum cost and if they get a bundled offer, who would refuse to have it? They are competitive but in any industry there is competition and competition is supposed to be healthy. Besides, their operating system is powerful and other software like the browser and the media player come free with the operating system. The competitors are free to offer browsers as a gift to the customers as well. The antitrust laws were formulated to serve the interests of the competitors. 4. The situation has changed little even after all these years. The agreement reached between the DOJ and Microsoft required Microsoft to share its application programming interfaces with third-party companies. Three people would have access the Microsoft’s system and it was required to share its source code for five years in order to ensure compliance. This agreement does not prevent Microsoft from tying any other software with windows in future. Thus, despite agreements and rulings, Microsoft continues to distribute and innovate. 5. The major lesson to be derived from this case is that knowledge is free. Anyone has the right to innovate and be competitive. There are other players in the market and they have equal opportunities to innovate and create. Trying to impose conditions would stifle innovation and cripple the society. Growth would be stunted and there would be no incentive to improvise. Competition is healthy and results in benefits to the end consumer in many ways including competitive price. Microsoft has only been adding value to its products and services without charging extra for it. In fact Microsoft serves as an incentive to others to invest in technology and innovate further. References: Gardner, N., (2006), Profit-driven corporations can make management blind to ethics, study says, 30 Sept 2007 McRae, H., (2002), Enron: A year on...The `Perfect Storm and a sea of dirt, 30 Sept 2007 Schuler, A. J., (2002), Does Corporate Culture Matter?: The Case of Enron, 30 Spet 2007 Williams, D., (2002), Blurred standards: when corporate ethics fall by the wayside, so does the publics trust - Brief Article, 30 Sept 2007 Wikipedia, United States v. Microsoft, 30 Sept 2007 Read More