Business Ethics: Enron and WorldCom - Case Study Example

Ethics Name Institution Introduction In the current business environment, the level of competitiveness is significantly stiff. Businesses that lack appropriate strategies for survival easily find themselves out of the market as a result of competition. With this kind of fear in mind, organizations are being forced to invent unacceptable means of establishing competitive advantages over other players in the industry. Many organizations are taking part in unethical activities since they seem lucrative in attracting huge profit margins at the expense of some of the stakeholders to the organization. Such stakeholders could be the government, the customers, the suppliers, the owners, etc. While to some organizations this seem to showcase an organization as prospering well, it is mainly short term and it may cause long term consequences to the organization. Many organizations have collapsed at the revelation of taking part in unethical activities. Any organization that gives room for unethical trading is actually opening up a door for its collapse. Companies like Enron and WorldCom are quite familiar to many especially when issues to do with ethics are concerned. These multinational companies are amongst many companies that collapsed upon revelations of taking part in unethical activities. Discussion In decision making, it is always important to act based on an informed perspective. Kemal ought to understand a number of issues before taking the decision on the kind of path he wants to use in getting this approval. In the current world, consumers of various products are sensitized daily through media and related sources. Since in the current times there are so many service and product providers, most consumerstend to be indifferent on the products they want to purchase. This is brought about due to competition in the market (Werhane& Cording, 2002). As a result, the choice by consumers on the kind of services they prefer is affected by very small issues. Therefore, through media, consumers get information regarding so many companies and their products. The media is responsible for reporting notable activities in such companies and consumers are left to make a choice. Due to this, any negative tag on a company bears serious consequences on its business (Hartman, 2004). Customers are so sensitive to this information and this can be the only reason they decide never to use that service again. Kemal must understand that in spite of the situation on the ground, the overall character of modern-day consumers leans towards supporting companies that are straight-forward in their dealings (DeGeorge, 2009). Adhering to ethical standards in an organization may seem to be less-rewarding, but the reality is that it bears long-term fulfillment. Quite often, ethical standards are considered to be long term asset to an organization. The risk of taking part in such unethical activities may turn up to be so much to bear in the situation an act of that kind takes place. In essence, when a company makes loss in its financial performance, its reputation is less-affected. This is not the case when a company takes part in fraudulent deals in order to hasten its profitability. The name of the company can be easily tainted because of such deals and this can very complicated to reverse (Hartman 2004). Kemal ought to understand that the company’s reputation and image means a lot than anything else especially in the long term. According to Oram (2010), guarding a company’s reputation and image may be expensive, but it is worthy the expenditure. In addition to the reputation of the company, Kemal stands personally liable in case such fraudulent deals backfire. This can be so much on him considering the responsibilities under him in connection to his family. It is not sensible for an employee to risk the welfare of the people he/she is supporting at the expense of the organization. In case this deal is fraudulently undertaken, Kemal’s career will be completely ruined if it comes into the lime-light. This shows that such a move represents a risk that is rather avoided than managed in any other way. Kemal still has a bright career and should not allow to be carried away by a single deal that can eventually land him into trouble. In the same way, Kemal ought to understand that stakeholders’ interests ought to be safeguarded at all cost (Hartman, 2004). Every stakeholder has a stake in the organization and therefore their interests ought to be safeguarded. The decision by investors to invest in an organization is based on the trust and confidence that their funds are being invested feasibly and therefore they have expectation of better returns. Any decision undertaken by the organization that risks the returns of investors must be avoided (Ferrell, Fraedrich & Ferrel, 2010). Apart from investors, government also represents a very important stakeholder in the organization. The government is entitled to tax and other related levies. In the same way, the undertakings must not be in a way that will lead to tax evasion on the part of the organization. The investor and the government represent many other stakeholders whose interest the company must be concerned about before taking any given decision. Therefore, it is important for Kemal to be concerned about the long term interests of the company as well as his as opposed to immediate gratification. The company stands to gain more in the future by upholding to strict ethical standards (DeGeorge, 2009). Studies show that companies with strict ethical standards find it at ease dealing with both internal and external stakeholders. The fact that such organizations value fairness, honesty and integrity gives them confidence in dealing with all kinds of stakeholders in every day engagement. With this kind of environment, it is very easy for the company to attract more investors to invest in their business (Shaw& Barry, 2012). The confidence of investors in these organizations is based on the strong believe that the decisions made by the company are determined by the deeply-embedded values. To such companies, ethics goes beyond setting policies and principles that prohibit such acts. This is because in most organizations, there are good policies prohibiting unethical activities yet internal stakeholders take part in unethical activities. At the end of it, maintaining high standards of ethics leads to investor confidence, customer satisfaction and loyalty, high performance and subsequently high profits. Fairness It is a bit complicated to explain the fairness aspect of decisions undertaken in most scenarios. For instance, difficult decisions made in organizations may not be considered fair to some stakeholders even if the end results are expected to improve tremendously. If fairness is considered to be lack or being without biasness, then this makes it easy to rate the fairness of Kemal’s decision to avoid giving out gifts in order to gain the purported approval. Fairness must also be considered in relation to an individual receiving equivalent to what he deserves. Having considered these two aspects to fairness, it is easier to conclude that Kemal is being fair to himself, his family and other airlines. By avoiding fraudulent means of getting this approval, Kamal is being fair to himself in the sense that he is getting only what he deserves. He will be forced to earn income that is equivalent to his genuine inputs in the company. In the same way, his reputation will be strengthened as an employee with high levels of integrity and honesty. With such reputation, he can advance his career even in different organizations. On the other hand, when it comes to his family, it may be a bit tricky. The fact that they are forced to be maintained on the nominal income of Kemal and not enjoy the lucrative benefits anticipated may be perceived to be unfair. Nevertheless, that is not the case since Kemal will be providing his family with what he has genuinely earned. Therefore, that is considered to be fairness on the side of the family. Lastly, the decision proposed above is indeed fair to other airline operators. The operators now have a chance to compete equally in getting the landing rights in the newly emerging market (Tyler, Dienhart & Thomas, 2008). The winner of the rights at the end of it will therefore be selected based on competency in terms of skills, qualifications, man-power, financial resources, etc. In the situation where there was a specific clause in the country’s constitution, I still believe much of what has been recommended above will have to be upheld. This is because in most cases, it’s a bit challenging handling the issue of ethics. It becomes tough legislating on issues relating to ethics. This is because ethics has to do with morality. It is about the morality aspect in making choices of right and wrong in each situation that demands decision making. The guidelines that define morality do not change whether the various acts are prohibited or not. The fact that giving of gifts in this context is meant to influence the decision to approve the landing rights means that the act is wrong. Therefore, its acceptance or denial does not change anything in relation to the moral law, which is the law that governs choices in relation to the right and wrongs. Therefore, in my own opinion, the decision made prior to this does not change since it is founded on the moral law which may not actually be constituted appropriately. Kemal ought to stick to his integrity and honesty when making a decision related to approval of the landing rights. Such consideration should also be made in relation to the understanding that the manner in which the media brings out issues to do with ethics may sometimes be a bit biased towards blue-chip companies or generally well-established organizations. Based on this, Kemal must learn to keep off any kind of decision that may ruin the reputation of the organization in any given way. In the setting where more lavish entertainment gifts were preferred, I am not sure if it changes the whole matter at hand. In this case, entertainment gifts will be preferred to holiday offers. From my understanding, this thing is not about the size or the value of the gift being given. The underlying factor when it comes to ethics is the morality of the act. Behind every gift being offered, there is an underlying motive of why it is being given. As long as the gift is meant to influence the decision to be made in relation to issuing approval landing rights for this airline, the act is considered unethical. The consequence of such an act is that some players will be sidelined in the awarding of the landing rights. The biasness being exposed in this way shows how bad unethical conducts are in any given economy. Therefore, my verdict over the decision by Kemal remains. This is because the whole matter is not about the nature of the gift being issued, but rather the reason behind offering such a gift. At the end of it, when the media exposes such activities the reputation of this organization will be completely ruined. In relation to this, it is important to maintain integrity and honesty in all dealings. Conclusion It is quite clear that the business environment is becoming more sensitive with issues surrounding ethical standards by which organizations and business entities are being managed. In the recent, organizations have emerged which are recognizing and rewarding organizations considered to be maintaining and upholding high standards of ethics. This alone denotes the seriousness that the industry is taking the issue of ethics. For organizations which are serious about continuing their operations into unforeseeable future, there is no room to ignore ethics in its operations. It is evident that high ethical standards are a long term asset that requires organizations to be committed while at the same time being patient being confident that with time it bears fruits. It will be important for Kemal to ignore other drivers that may push him to enter an arrangement that may land the company into trouble in the future. The consequences may be too hard to be addressed in case anything goes wrong in the process. Adherence to ethical standards in any given organization must never be compromised regardless of the value of the deal in exchange since the long term consequences may be unbearable. References DeGeorge, R.(2009). Business Ethics, 7th Ed.New York: Pearson. Ferrell, O.C., Fraedrich, J. & Ferrel, C.(2010).Business Ethics: Ethical Decision Making & Case. Mason: Cengage Learning. Hartman, L.(2004).Perspectives in Business Ethics.New York: McGraw-Hill. Oram, D. (2010).Designing for Sustainability: Negotiating Ethical Implications. IEEE Technological and Society Magazine, Fall, p31-36. Shaw, W. & Barry, V. (2012). Moral Issues in Business, 12th Ed., Wadsworth Publishing, New York, pp. 121-133. Tyler, T., Dienhart, J., & Thomas, T. (2008). The ethical commitment to compliance: Building value-based cultures. California Management Review, 50(2), 31-51. Werhane, P.H. & Cording, M.(2002). Ethical Issues in Business: a philosophical approach. 7th.edn. New York: Prentice Hall. Read More

Customers are so sensitive to this information and this can be the only reason they decide never to use that service again. Kemal must understand that in spite of the situation on the ground, the overall character of modern-day consumers leans towards supporting companies that are straight-forward in their dealings (DeGeorge, 2009). Adhering to ethical standards in an organization may seem to be less-rewarding, but the reality is that it bears long-term fulfillment. Quite often, ethical standards are considered to be long term asset to an organization.

The risk of taking part in such unethical activities may turn up to be so much to bear in the situation an act of that kind takes place. In essence, when a company makes loss in its financial performance, its reputation is less-affected. This is not the case when a company takes part in fraudulent deals in order to hasten its profitability. The name of the company can be easily tainted because of such deals and this can very complicated to reverse (Hartman 2004). Kemal ought to understand that the company’s reputation and image means a lot than anything else especially in the long term.

According to Oram (2010), guarding a company’s reputation and image may be expensive, but it is worthy the expenditure. In addition to the reputation of the company, Kemal stands personally liable in case such fraudulent deals backfire. This can be so much on him considering the responsibilities under him in connection to his family. It is not sensible for an employee to risk the welfare of the people he/she is supporting at the expense of the organization. In case this deal is fraudulently undertaken, Kemal’s career will be completely ruined if it comes into the lime-light.

This shows that such a move represents a risk that is rather avoided than managed in any other way. Kemal still has a bright career and should not allow to be carried away by a single deal that can eventually land him into trouble. In the same way, Kemal ought to understand that stakeholders’ interests ought to be safeguarded at all cost (Hartman, 2004). Every stakeholder has a stake in the organization and therefore their interests ought to be safeguarded. The decision by investors to invest in an organization is based on the trust and confidence that their funds are being invested feasibly and therefore they have expectation of better returns.

Any decision undertaken by the organization that risks the returns of investors must be avoided (Ferrell, Fraedrich & Ferrel, 2010). Apart from investors, government also represents a very important stakeholder in the organization. The government is entitled to tax and other related levies. In the same way, the undertakings must not be in a way that will lead to tax evasion on the part of the organization. The investor and the government represent many other stakeholders whose interest the company must be concerned about before taking any given decision.

Therefore, it is important for Kemal to be concerned about the long term interests of the company as well as his as opposed to immediate gratification. The company stands to gain more in the future by upholding to strict ethical standards (DeGeorge, 2009). Studies show that companies with strict ethical standards find it at ease dealing with both internal and external stakeholders. The fact that such organizations value fairness, honesty and integrity gives them confidence in dealing with all kinds of stakeholders in every day engagement.

With this kind of environment, it is very easy for the company to attract more investors to invest in their business (Shaw& Barry, 2012). The confidence of investors in these organizations is based on the strong believe that the decisions made by the company are determined by the deeply-embedded values. To such companies, ethics goes beyond setting policies and principles that prohibit such acts. This is because in most organizations, there are good policies prohibiting unethical activities yet internal stakeholders take part in unethical activities.

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