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Business Ethics- Ethical Principles and Decision-Making

Business Ethics- Ethical Principles and Decision-Making

Introduction

The subject of ethics may, in many ways, seem like a light matter compared to other more pressing organizational issues such as chasing company goals and human resource management. However, that is not the case, as putting ethics at the backburner can spell potential trouble for the organization. Ethics carry similar weight, just like the processes of formulating a company’s vision, mission, and principles. Incorporating ethics in decision-making does not mean doing the right thing per se but rather complying with legal requirements and policies that keep the organization out of trouble. Some ethical principles applied in organizations include utilitarianism, common good, fairness, rights, and virtue ethics.

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Bernard L. Madoff Investment Securities LLC Case

Bernard L Madoff, a capitalizing mastermind, pulled one of the largest-ever Ponzi schemes in the world. Madoff managed to elope with over 60 billion in capital investment by exploiting ethical principles. Madoff Investment Securities LLC managed to display moral character and virtuous ethics outwardly, but in a real sense provided moral minimum to largely unsuspecting investors.

Universalism is one of the ethical principles violated in Madoff’s Ponzi scheme. The principle of universalism requires a company to consider the welfare and risks to all parties when making a decision. The core of the approach is to take people, their needs, and values seriously, even as it chases profits. JPMorgan Chase violated the principle of universalism by letting people deposit significant amounts of money despite becoming suspicious of the activities of Madoff Investment Securities LLC. JPMorgan Chase made a total profit of $483 million from activities relating to the Ponzi scheme (Weiss, 2014). In its defense, the bank stated that it had no disclosure rights on its suspicion and consequent withdrawal of its deposits from the scheme. However, that is not true since the bank clearly wanted to profit for as long as possible.

Madoff Investment Securities LL also exploited the principle of utilitarianism. The principle of utilitarianism avers that an act is morally right if it brings good results for the largest number of people. In other words, if the net benefits over costs of an action are greater than those of other choices, then the action is justified. During the scheme’s early days, Madoff would comfortably pay dividends and redemption claims by early investors. By doing this, he looked like a well-meaning investor with no intentions to defraud anyone. Sadly, however, Madoff was taking money from new investors and used it to pay off old investors in what looked like an ambitious investment scheme (Muñi, 2015). Despite the high returns Madoff filed with the SEC, the authority was never suspicious since he fulfilled the short-term expectations of paying off investors.

Ford’s Pinto Fires: the Retrospective View of Ford’s Field Recall Coordinator

Following stiff competition from Japanese imports and Volkswagen, Ford Company started the production of subcompact Pinto. As the production started, the president set two restrictions for the production team- the car should not weigh over 2000 pounds nor cost more than $2000. The cars were to comply with safety standards even with these restrictions. A total of 2 million units of the Pinto car model were produced. However, the Pinto subcompact car models were involved in a series of fires after minor collisions, culminating in the prosecution of Ford Company in 1977. Although the company was vindicated, over 1.5 million units were recalled by 1978, and Ford later discontinued their production in 1980 (Weiss, 2014). The ethical question is whether the restrictions set by the president potentially led to the production of substandard cars prone to fires (Baura, 2006).

Ford relied on the utilitarian approach in defending its cost restrictions by conducting a cost-benefit analysis. In doing this, Ford failed to consider the fact that the social costs of potential accidents and explosions ought to weigh the cost of delaying the release date to make improvements on the cars (Shaw & Barry, 2015). Ford Company should have analyzed cost concerns from the perspective of consumers and not the company itself.

Besides, Ford’s perspective when calculating the costs was arbitrary as it is not possible to quantify costs such as pain. Since the cars eventually led to the deaths of people, Ford’s argument was ultimately immoral. The company’s perspective of utilitarianism does not hold water since they treated utilitarianism as a practical approach, ignoring the potential loss of lives from accidents.

Conclusion

Madoff’s Investment Securities LLC Ponzi scheme and Ford’s ill-fated pinto subcompact car models show how organizations violate and/or exploit ethical standards for profit. Madoff’s view of utilitarianism was so skewed that he did not consider the eventual demise of his Ponzi scheme. He saw no problem as long as he paid dividends and redemption claims to current investors from the huge new capital investments. He did not consider the fate of ‘investors’ who would lose their money once the scheme fell. On his part, the Ford Company president viewed cost reduction from the company’s perspective, ignoring the potential social costs of accidents.

References

Baura, G. D. (2006). Engineering ethics: An industrial perspective. Boston: Elsevier Academic    Press

Muñi, F. (2015). An Ethical Analysis of the Bernard Madoff Investment Scandal: Causes and             Deterrence.https://www.researchgate.net/publication/332513540_Strategic_Data_Driven_            Approach_to_Improve_Conversion_Rates_and_Sales_Performance_of_E- Commerce_Websites

Shaw, W. H., & Barry, V. (2015). Moral issues in business. Cengage Learning.

Weiss, J. W. (2014). Business ethics: A stakeholder and issues management approach. Berrett-    Koehler Publishers.

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Question 


Ethical reasoning helps differentiate between right-thinking decision-making and actions
that are wrong, hurtful, and harmful. In this writing assignment, you will consider your
own decision-making processes and evaluate the application of those principles to other
scenarios.

Business Ethics- Ethical Principles and Decision-Making

Business Ethics- Ethical Principles and Decision-Making

Instructions:
Choose one of the following three assignment options for your essay:
1. Select a corporate leader in the news who acted legally but immorally and one
who acted illegally but morally. Explain the differences in the actions and
behaviors in each of the two examples. What lessons can be learned from the
examples? Cite Weiss in your response and incorporate at least one other
reference you locate in the Post University library or online source into your
essay. Provide a clear introduction, an organized set of paragraphs, and a
conclusion.
2. Read Case Study 1, “Bernard L. Madoff Investment Securities LLC: Wall Street
Trading Firm,” and Case Study 3, “Ford’s Pinto Fires: The Retrospective View of
Ford’s Field Recall Coordinator.” Compare and contrast the ethical decision-making principles applied or violated by Bernie Madoff and Dennis Gioia. Use the
table on pages 56-57 to guide your thinking. Prepare your essay incorporating
points from Weiss in your response in addition to one other reference source you
locate in the Post University library or online source. Provide a clear introduction,
organized body paragraphs, and a conclusion.
3. Read Case Study 4, “Jerome Kerviel: Rogue Trader or Misguided Employee:
What Really Happened at the Societe Generale?” Write an essay in which you
first provide a 200-250 word summary of the case study using your own words.
Then respond to questions 2, 3, and 5 on page 105. Cite Weiss in your response
and incorporate one other reference you locate in the Post University library or
BUS340 – Business Ethics
Ethical Principles and Decision-Making
online source into your essay. Your submission should be written as an essay
with an introduction, body paragraphs, and a conclusion. Do not include the
questions in your response.

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