Assignment:
Ethical Issues
Watch the movie "Margin Call". In no more than three double spaced typed written pages, analyze the business and ethical issues involved in the business practices engaged in by the firm in the movie as well as the individual characters. Be sure to include a concise discussion of the ethical dilemmas involved, the school of thought employed by the various characters, consequences of the ethical decision made by the leaders of the firm, alternative action the firm (and individual characters) might have considered and the possible consequences of taking a different course of action. Also include your opinion as to what your recommendation would have been if faced with the same circumstances, the reasons to support your recommendation and the likely consequences of your recommendation.
Categories of Ethical Dilemmas.
1. Taking things that don't belong to you
Use postage meter to mail personal letters
Exaggerate personal expenses
Download music without paying
2. Saying things you know are not true
Telling a customer that there is a complete money back guarantee when there may be a restocking charge
Promising a rebate and not honoring it (Dell settlement in 2009 of claims by 46 States of deceptive practices-financing promotions, rebate offers, tech support and repair policies)
Telling a prospective buyer of a house that the neighborhood is quiet (if it is not) so as not to lose the sale.
Blaming others for your errors
3. Giving or allowing false impressions
4. Buying influence or engaging in conflict of interest
5. Hiding or divulging information
Not disclosing side effects discovered during testing of a new drug.
6. Taking unfair advantage
Considering a credit card payment late if not received by 10:00 a.m.
7. Committing personal decadence
The office sponsored party resulting in intoxication which causes injury to others.
8. Perpetrating interpersonal abuse
9. Permitting organizational abuse
10. Violating rules
11. Condoning unethical actions
Failure to report a wrong
12. Balancing ethical dilemmas - No right or wrong answer
Downsizing-balancing effect on employees with right of shareholders to receive a return on equity
Four schools of thought on ethical behavior for business based on 2 questions:
i. Whose interest does a corporation serve?
ii. What is the best way to serve that interest?
Policy question:
Best way to serve
Moral question: interest is if the
Whose interest should corporation is corporation serve? responsive to:
Inherence Shareholders only Shareholders only
Enlightened Self-Interest Shareholders only Larger society
Invisible Hand Larger society Shareholders only
Social responsibility Larger society Larger society
Schools of Thought Specifically
i. The Inherence School (Milton Friedman Perspective)
A. Serve shareholders
B. Serve shareholders best by only looking out for shareholders - avoid any social or political issues unless they benefit the shareholders
ii. The Enlightened Self Interest School
A. Manager is responsible first to shareholders but serves them best by being responsible to larger society
B. Business value is enhanced if it is responsive to society's needs
iii. The Invisible Hand School
A. Manager believes larger society should be served but manager does that best by serving shareholders first
B. Do not become involved in political or social responsibility issues - allow others to handle issues and they will comply
iv. The Social Responsibility School
A. Manager should serve larger society
B. Become involved in all types of political and social issues
C. Encourage managers to be involved