Question

Q1(a). Discuss briefly why ethical decision-making is essential in an organization.

Q1(b). Identify three (3) companies internationally, regionally or locally that were cited for ethical violations in their business operations.

Q1(c). How could these ethical violations impact strategic leaders such as managers, CEO’s and other stakeholders?

Answer 1

Answer(a): Ethics- These are the rules that tell what is right and what is wrong. These refer to morals and principles to do a particular task.

Ethical decision-making- Taking business decisions by considering the rules, laws and principles, is called ethical decision-making. It refers to evaluate the business decisions before implementing. Ethical decision making says that company should not violate any rule or law while taking the business decisions. All the actions should be performed with responsibility and these should be legal in the eyes of law.

Advantage of ethical decision-making- Ethical decision-making increases the brand value of company in the market and gives competitive advantage that leads to increase in profit and revenue.

Answer (b): Three companies that were cited for ethical violation-

1. Enron Corporation- In 2000, Enron's CFO and other key executives hide the billion of debt by bad accounting practices.
2. Arthur Andersen is the Audit firm in USA that was indulged into Enron scam, it made falsified accounting entries.
3. Satyam computer of India is also a big name, it transferred the profits of Satyam computers to the loss making company. Company's CEO did the fraud.

Answer(c): Ethical Violation is a bad practice, it not only hurts company's image but the manager, CEO and the stakeholders are badly affected by this. If company is indulged into malpractices and that scam comes into picture, managers and CEO get penalty and suspension. Due to this, company's share price comes down and shareholders lose their wealth.