This case study explores the ethical dilemma faced by Markham, a CFA working for an investment consulting firm. The study analyzes the consequences of different actions and applies theories of business ethics to interpret the situation.
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Running head: CASE STUDY: BUSINESS ETHICS CASE STUDY: BUSINESS ETHICS Name of the student Name of the University Author Note
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1CASE STUDY: BUSINESS ETHICS Ethical Dilemma in the context of business ethics can be defined as a situation where the business or the person involved in the business has to make a choice between two or more than two alternatives given to it/him (Hoffman, Frederick & Schwartz, 2014). Quite often, ethical dilemmas in the world of business occurs when one has to choose either a morally correct decision that might harm the business or morally wrong decision that might be helpful for the business (Trevino & Nelson, 2016). Often individuals with high esteemed morals and integrity face such problemswhere he/she cannotdecide which position he/she should take. The respective paper is a case study based broadly upon business ethics where the case has the overtone of ethical dilemma. The paper intends to study the case, comprehend the ethical dilemma happening in the case, analyze the dilemmas with proper theories and concepts of business ethics and interpret them accordingly. In the case study mentioned in the curriculum, there is a candid and a clear depiction of ethical dilemma in the context of business ethics. The case revolves around a CFA named Markham of en enterprise of Investment Consulting Associates, which works as an investment advisor to the pension funds.The enterprise where Markham had worked is mainly an investment consultancy, or rather, a financial advisor, which mainly works for advising about financial turns and activities to the pension fund holders or companies. The enterprise has several schemes, programs and policies specially designed for the pension fund dealers which help them to carry on their business in the ever evolving global world of investment. According to the case study, Markham has been described as a person who has always remained concerned about how the pension liabilities of the public sector has been and is valued globally. As he had a postgraduate degree of finance, he was apparently, aware of the whereabouts of the financial position of the guarantees, provisions and pension funds of the
2CASE STUDY: BUSINESS ETHICS private as well as public sector. Pension liability can be termed as the difference between the total amount that has to be paid to the retiree by the company and the actual fund of money the respective company has in its hand to make the payments to them. Apparently, it has been considered in the case that if he utilized his financial knowledge and principles to calculate and evaluate the liabilities, it would have been almost twice as much large as reported by the funds. The employees, officials and professionals who worked with Markham were neither interested nor ready to tell about the valuation of liabilities of the pension funds to the board of trustees of the enterprise only to keep them happy and relaxed. Such action is highly condemned as it can be deemed under issues of business ethics and business ethical dilemmas. The respective ethical dilemma can be categorized under the banner of “consequentialism theory” of business ethics. The “consequentialism theory” of business ethics and ethical dilemma is a concept that interprets and judges weather an action or a move is correct or incorrect based on the consequences of the action thereupon (Floyd et al., 2013). For instance, in this case, the employees and professionals who worked with Markham felt that if they disclosed the valuation of pension liabilities to the board of trustees, the consequences would be that they would not be happy with the fact, might get offended or demoralized. To ignore the situation, they chose to remain silent by not disclosing the fact. Such consequentialism approach of dealing with the situation might prove effective in short run or immediate actions. However, in long run, it can prove fallacious or catastrophic as the falsification of facts and occurring that are employed to pacify certain departments or aspects of the organization might prove harmful for the organization in the long run. Markham’s dilemma which included dilemma of loyalty towards his firm and the strong belief of the board of trustees who had chosen his firm for providing investment related advice in lieu of misleading financial facts can be associated with “virtue ethics” of business ethical
3CASE STUDY: BUSINESS ETHICS dilemma. Virtue ethics can be broadly defined as the highlight on development of morals and characterofacorporateindividual(McPherson,2013).However,Markhamfacesvirtue dilemmas as according to him, falsification and covering of facts would only exhibit his moral misconduct and dishonesty and prove him less in the organization and also within himself. Markham’s self-actualization would be at stake (Crossan, Mazutis & Seijts, 2013). The core area of dilemma throughout the case study is deduced as to whether Markham wouldclearlystatetheissueabouttheinvestmentconcernsprovidedhekeepsallthe professional, employment standards and code of conduct according to the CFA organization intact. The first alternative Markham could initiate is he must not declare about the liabilities to the board of trustees about the firm. The positive consequences can be gaining trust from the board of trustees, political support for his plans and his firm is assumed not to be fired or terminated. The initiative cannot be totally termed as fallacious up to certain extent, as it can be a cure to the immediate problems, however, in long run, such initiatives would not have any place as it can be equally harmful for the organization. The negative consequences that are associated with the alternative is that initiating such moves would be a breach of ethics of the organization. Moreover, Markham can be tagged and categorized as fraudulent and disloyal towards the professional and business ethical standards of the CFA institute. By hiding the real facts and providing with misleading facts, he would not only harm the firm but also his clients. His firm would not be able to make proper and sound investment. The second alternative that can be taken by Markham is that he should declare about the position of liabilities to the board of trustees. By declaring the truth about the position of
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4CASE STUDY: BUSINESS ETHICS liabilities to the board of directors, he and hid firm would be able to make proper, solvent and sound investment acts, plans and schemes for the interest and preference of their clients. By initiating transparency in the firm, he would be able to rebuild the casualties the firm has incurred so that the firm starts functioning smoothly and the reputation of the firm is revisited and rechecked. By initiating and actualizing such act, Markham would be able to restore integrity of the firm. He would be able to be respectful and show the required dignity towards the employable, professional standards and ethics of the institute. It is important for the members of the firms to abide by the standards and code of conduct laid by the firm to maintain dignity and integrity of the firm in the market. Therefore, by initiating the move, the reputation and prestige of the firm in the global world might be kept intact (Schwartz, 2016). The mentioned alternative can also enhance the interest of the clients in many ways. It can help in increase of pension obligations and net liabilities which can benefit the clients in future for their investment ideas and concepts. The most basic and customary solution that can happen by such alternative is that since there will not be any accounting illusion, therefore, the firm can take proper decisions for their future course of action. However, the negative consequences that can be faced by the firm for the alternative decision is that, the board of trustees might be unhappy and lose trust or belief in the firm that might prove harmful for the firm and it’s reputation. The firm can get terminated even for such declaration. The state legislature can be surprised to see such liabilities and the firm might lose political support in near future. For the benefit of the firm, Markham has to choose a particular business ethics among the basic business ethics usually utilized, for instance, utilitarianism approach, consequentialism approach, right approach, justice approach, common good and virtue approach (Schwartz, 2013). The suitable business ethics approach in this case would be right approach which is based on the
5CASE STUDY: BUSINESS ETHICS concept that among the plethora of views, overviews and conflicting perspectives, the firm has to choose the right decision for the interest and preferences of the clients among the alternatives given to them (Buckley, 2013). Such ethical approach can prove beneficial and righteous for the firm in the long run and that might ensure the well-being, prestige, power, democracy and dignity of the firm in the global competitive market. Discount rate can be decreased or pension fund can be unfunded along with increase in funds in the due course of time can be taken up by the firm in this case to meet the casualties. The respective paper is an introspection, analysis, interpretation and recommendation of business ethics and actions or alternatives that can be taken up by a firm to tackle its casualties with the help of a case study provided. The paper not just introspects but also uses various theories and concepts of ethical dilemma and business ethics to reach the results thereafter.
6CASE STUDY: BUSINESS ETHICS References : Buckley, M. (2013). A constructivist approach to business ethics.Journal of business ethics, 117(4), 695-706. Retrieved from: https://link.springer.com/article/10.1007/s10551-013- 1719-x Crossan, M., Mazutis, D., & Seijts, G. (2013). In search of virtue: The role of virtues, values and character strengths in ethical decision making.Journal of Business Ethics,113(4), 567-581. Retrieved from: https://link.springer.com/article/10.1007/s10551-013-1680-8 Floyd, L. A., Xu, F., Atkins, R., & Caldwell, C. (2013). Ethical outcomes and business ethics: Toward improving business ethics education.Journal of business ethics,117(4), 753-776. Retieved from: https://link.springer.com/journal/10551/117/4/page/1 Hoffman, W. M., Frederick, R. E., & Schwartz, M. S. (Eds.). (2014).Business ethics: Readings and cases in corporate morality. John Wiley & Sons. McPherson, D. (2013). Vocational virtue ethics: Prospects for a virtue ethic approach to business.Journalofbusinessethics,116(2),283-296.Retrievedfrom: https://link.springer.com/journal/10551 Schwartz, M. S. (2013). Developing and sustaining an ethical corporate culture: The core elements.BusinessHorizons,56(1),39-50.Retrievedfrom: https://www.sciencedirect.com/science/article/pii/S0007681312001218 Schwartz, M. S. (2016). Ethical decision-making theory: An integrated approach.Journal of BusinessEthics,139(4),755-776.Retrievedfrom: https://link.springer.com/article/10.1007/s10551-015-2886-8
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7CASE STUDY: BUSINESS ETHICS Trevino, L. K., & Nelson, K. A. (2016).Managing business ethics: Straight talk about how to do it right. John Wiley & Sons.