Final Paper Abstract – Assignment Example
Running Head: Analysis of an Ethical Dilemma Analysis of an Ethical Dilemma Analysis of an Ethical Dilemma Contents 3 Introduction 3
Deontological Approach: WorldCom’s Unethical Business 5
1. Facts 5
2. Ethical Issues 5
3. Affected Parties 6
4. Consequences 6
5. Obligations 7
6. Considering Character And Integrity 7
7. Potential Alternatives 8
Analysis of an Ethical Dilemma
Ethical decisions in organizations are an important part of businesses as ethics can lead to long term success. This paper will highlight ethical dilemmas faced by certain organizations that can make it difficult to make ethical and legal decisions; accompanied by the eight steps leading to ethical decision making. Bussiness needs strong decision making with perfect corrective actions. Paper will discuss one case study and shed light on different approaches of decisions. Later sections will focus on ethical issues faced by WorldCom business. The paper will give a complete idea about ethical dilemma. It is important to realize that ethics in an organization deal with an implementation of principles, morals and rules in an ethical context of an organization. Thereby ethical behavior in businesses is critical.
Businesses are important source of making money by the provision of goods and services to the customers. But making money should be legal and mostly based on ethical obligations and concerns. These ethical considerations not only deal with kinds of business dealings between customers and the manufacturers, but also the dealings that take place between suppliers, stakeholders, shareholders and business managers. An important fact that needs to be kept in mind is that ethics is the final face of victory in any business deal as ethical decision making is one of the main responsibilities of any business organization (Asgary, and Mitschow, 2002, p. 45).
With an increase in globalization, there is an increase in competition among businesses and organizations with an increase in risks of business failure and losses. Thereby there are various kinds of crisis situations being faced by the organizations that lead these organizational executives in making certain decisions that may be ethical or unethical based on situations.
These days due to an increased awareness in the community; organizations are being ranked in accordance to their ethical behaviors that includes customer dealings. Top notch organizations are those that have achieved success by making use of ethics in the toughest of times thereby making ‘ethical’ money. Chinese organizations are often considered the best leading organizations on the globe and one of the main reasons that lead these organizations is ethics. There are certain points in businesses that make it difficult for decision to be made as these critical situations can bring business managers at cross roads thereby it becomes hard to decide about the right decision that needs to be made in order to solve the issue (Ferrell, Fraedrich, and Ferrell, 2006, p. 78).
Obligations is an important part of ethics in an organization highlighting the fact that there are certain factors that make an organization have obligations towards parties that include stakeholders and shareholders.
It is important to realize that ethics in an organization deal with an implementation of principles, morals and rules in an ethical context of an organization. Thereby ethical behavior in businesses is critical. When businesses are exposed for legal infractions, concerns are raised in the public about ethical standings and dealings of members of this organization. Businesses are of various kinds and ethical immorality can be seen in organizations in a variety of ways.
Numerous organizations have faced legal charges for unethical dealings and business activities with their shareholders and customers. Some of these examples include WorldCom, Enrom, ImClone, and Health South. Being unethical, these organizations faced much more than just legal charges, public humiliation, and huge financial losses, loss of customers and shareholders and bankruptcy (OGara, 2004, p. 67).
Deontological Approach: WorldCom’s Unethical Business
Late 1990s was the era when WorldCom telecommunications boomed and grew making huge amounts of revenues and profits with an increasing number of international and national customers in US and other countries. Acquisitions were on speed when on an annual basis record profits of more than 20% were being produced. Many telecommunication companies were acquired during such a prosperous journey. WorldCom was highlighted as one of the most successful and prosperous Nasdaq stock. Thereby with such growth in a short period of time, Bernard Ebbers, CEO of WorldCom played in billions. When at its peak, record revenue generation was as high as 40% on an annual scale. This high time was also accompanied by selling some telecom sectors to various units in United States and various financial centers on a global scale. The year of 2000 has been marked with a plum that was observed by Nasdaq that further caused an increase in growth of WorldCom.
Technological boom in 1990s and 2000s was defined by a conclusion that meant an economic recession. This recession had been the main reason of slow growth of WorldCom welcoming another blow of regulators in US and Europe planning to block WorldCom’s acquisition of FON in a deal summing up to $152 billion (Brooks, and Dunn, 2009, p. 67). Thereby recession meant a huge financial slowing down for WorldCom in coming days.
2. Ethical Issues
WorldCom was facing a financial disaster at this time in face of zero possibility of further acquisitions in the time of recession. Moreover stocks were floating thereby there were no revenues anticipated. The main need was to attract more investors in WorldCom’s shares or to sell out more telecom units to investors and financial centers in order to recover from recession. Thereby an ethical dilemma that was being faced by WorldCom was either to keep on making lesser revenues waiting on to the times to change for better and increased growth (Frederick, 2002, p. 89).
3. Affected Parties
In face of these falling revenues tougher times were being faced and decisions were to be made by Bernard Ebbers, CEO of WorldCom, in order to design strategies that could help revive from recession in order to generate profits and revenues. Based on deontological approach, mergers and acquisitions blockage realities were hidden from the new investors in business along with Securities & Exchange Commission. Other than this in order to attract more investors, facts were ‘cooked’ representing booming growth in the telecom sector on a global scale when in fact WorldCom was facing falls.
As a conclusion of these business based unethical conspiracies a total of US$ 11 billion fraud was committed with many investors for which five executives of WorldCom along with the CEO were found guilty and legally charged. Finances of the company were fading and as a part of desperate measures undertaken, it was testified by these executives that it was considered necessary to make transfers of the line costs in an illegal manner from operational budget to the capital budget. As a consequence of such unethical dealing with the investors, Ebbers was now standing in a row with other famous people who had committed financial crimes in desperate times as Credit Suisse tech banker Frank Quattrone, Martha Stewart, ImCloneCEO Sam Waksal, and cable TV tycoon John Rigas. What was left for Ebbers was shame and humiliation in front of his family in the courtrooms when all other executives had admitted to crimes they committed making Ebbers face federal prison in coming days (Fraedrich, and Ferrell, 2010, p. 89).
Recession had hit hard and investors were lied to by Ebbers, WorldCom in order to make more revenues and profits as the need arose. These times were a crisis and these required decisions to be made, ethical or unethical. Unethical decisions called for desperate measures that were to be taken as main aim was to secure revenues and profits. If ethical decisions were made by Ebbers in this dilemma, there were no obligations towards investors who were robbed as no cooked up books were to be shown to the investors. But the set of obligations that ultimately landed on the shoulders of Ebbers after being convicted for robbing these investors for their money was to return all the robbed money back to the investors (Swanson, and Fisher, 2008, p. 34).
6. Considering Character And Integrity
Integrity had been lost as soon as the call for desperate measures was accepted by Ebbers as he directed the other executives to do the same thereby involving them in unethical fraud with investors. Characters are defined by having the courage to face the toughest of times by making ethical and legal decisions that promise no harm to shareholders and stakeholders in the future. Thereby Ebbers by making an unethical decision gave up on character that left him with humiliation and isolation in facing all charges.
7. Potential Alternatives
In the times of failing revenues and finances, only one choice was taken into consideration by the executives of WorldCom and that was to transfer money in the bank accounts by robbing the investors. No other choices or alternatives were considered by these executives while making a decision in the time of recession. If considered, there was more than one choice that could be taken into consideration in tougher times. But as an easy way out only unethical decision was considered and acted upon. Financial managers could opt for strategies that in the long run could increase revenues and profits or normal business activities could be resumed and undertaken in a normal manner until the recession was over (Zerbe,Härtel, and Ashkanasy, 2008, p. 89).
8. Courage, patience and strategies are required for business in order to revive from financial crisis as odds of losing investors and customers increase that can lead to greater unanticipated events and odds. Thereby these times require strength and moral courage to make decisions in accordance to business aims and goals. Easy way out was found by the executives of WorldCom in order to opt out of the crisis situation.
From here, it can be seen that unethical decision were taken by the executives at WorldCom choosing an easy way out rather than being patient in crisis situations; taking into account the obligations that they held towards the stakeholders (Carroll, and Buchholtz, 2008, p. 60).
In face of crisis situations, there is an obligation of executives of certain organizations towards shareholders and stakeholders in order to protect these parties from frauds thereby it is important that ethical and appropriate decisions are made. Here it can be seen that unethical decisions were made in terms of crisis situations that lead the investors into facing frauds. In appropriate stands were made by the executives of WorldCom in crisis situation and unethical decisions were made that lead to a US$ 11 billion fraud.
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