BMA735 Management Ethics: Critical Analysis of RFG, IOOF, and Bupa

This assignment presents a comprehensive analysis of three case studies—RFG Group, IOOF, and Bupa—from the perspective of management ethics. The RFG Group case examines franchise disbursement issues and the ethical implications of prioritizing shareholder benefits over franchisee well-being. The IOOF case delves into unethical activities within the Australian non-banking financial sector, focusing on scandals like insider trading and unit pricing manipulation. Finally, the analysis of Bupa (case study not provided in the original text) would likely address ethical challenges within the healthcare industry. For each case, the assignment identifies key ethical issues, applies relevant ethical theories such as deontological, Kantian, and Golden Mean theories, and proposes strategies and recommendations to address the identified ethical problems. The analysis draws upon academic literature to support its arguments and provide a well-rounded perspective on management ethics in diverse business contexts. Desklib offers this and similar solved assignments and past papers to aid students in their studies.

Running Head: MANAGEMENT ETHICS
Management ethics
Student’s Name
University Name
Author’s Note

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Table of Contents
Case Analysis 1: Case Study 1........................................................................................................3
Introduction..................................................................................................................................3
Discussion....................................................................................................................................3
Conclusion...................................................................................................................................5
Case Analysis 2: Case Study 2........................................................................................................6
Introduction..................................................................................................................................6
Discussion....................................................................................................................................7
Conclusion.................................................................................................................................10
Case Analysis 3: Case Study 3......................................................................................................10
Introduction................................................................................................................................10
Discussion..................................................................................................................................11
Conclusion.................................................................................................................................12
Reference List................................................................................................................................14

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Case Analysis 1: Case Study 1
Introduction
The issues regarding the franchise disbursement of the RFG group is evident in the case
study. Hundreds of the franchises of the group have been devastated financially after signing up
with any of the high end value brands of the Retail Food Group. The attitude of RFG group
towards the franchises became evident when Andre Nell reported the Group chairperson that his
Donut King franchise was closed down like the other several outlets of the same brand under the
RFG. In almost cases of close down of the franchise stores of RFG, the organisation had left to
stones unturned for extracting the hook on rent for the shops as well as the business dividend for
the stipulated contract period. The RFG group is the biggest operator of the food franchise chains
around the country. The chief brands comprising the business segment of the RFG group are
Donut King, Brumby’s Pizza Capers, Crust Gourmet Pizza, and Michael’s Patisserie and so on.
The market capital value of the organisation is about $800 million and the number of stores of
the organisation is about 2500.
Discussion
The organisation RFG has been able to gain double digit profit returns on the equity as
well as accountable for the fat dividend payouts to the shareholders. The business model of the
organisation have been profitable for the organisation’s shareholders, whereas the company has
gained the reputation of being the franchise amalgamator since it have been spending over $500
million in the last decade on the 15 acquisitions that have been incorporating including Crust
Gourmet Pizzas, Pizza Capers, coffee chain Gloria Jean's, Café2U, DiBella Coffee and Hudson
Pacific, a food manufacturer and distributor. The organisation’s negative reputation have been

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built as an organisation that is involved in wage fraud where the employees share the liability of
making the end meet and pay the company the necessary dividends to the organisation, in spite
of all the issues that the franchise have been facing in terms of expanding their businesses. The
employees of coverage of the organisation were under the coverage and protection of the veil of
ignorance. The test of fairness will hold that the members of the organisation did not have any
clue to their privileges, advantages, disadvantages or even their personality. They exited as
impartial group working towards the fulfillment of the organizational goals. The sham
employment contracts that have been provided by the company to almost all the franchise
owners of the organisation, along with underpayment of their overseas workers is the procedure
that the organisation have been utilizing in order to compensate for the business loss that is
bearable by the company.
In fact the condition of the business of the organisation has also been deplorable. The
RFG group had purchased the Brumby’s during the time when the store chain had high growth
chances and at that time they owned 321 stores. However, after the acquisition, the number of
stores should have been 600 at least. However, in reality the franchises have either gave away
with their business or they gave grown to the state of maximum prominence. However, the
proportion of the latter kind of franchises is the least. The franchises have grown poor earning a
bare living out of the stores, keeping the business alive only because they did not have the
necessary resources for starting any new venture. On the contrary, there have been no help
coming from the end of the RFG management who continued t display a business model that cuts
out all overheads, pressurizes for the rebates and keeps the shareholders happy by extracting
maximum monetary benefit from the franchises in the form of chargeable fees (Ferguson 2018).

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The article makes a detailed analysis of the business issues facing the RFG organisation, by
highlighting descriptive details of the causes and outcomes. The initial issues that have been
faced by Banks have been introduced in order to exhibit the state of the franchises of the
organisation. After that, the article turns about to show the bigger picture of the organisation. The
real issues that the organisation has been facing and the related reason for which the franchises of
RFG have been facing adverse conditions have been clearly depicted in the article. Based on an
in depth market analysis, the article highlights that the issues facing the franchised stores of RFG
are associated with the well documented challenges that the shopping centers belonging to the
various brands of the company have been depicted in detail. However, contenting to the issues
that have been facing the organisation, it can be reflected based on the analysis made in the case
study that the excessive pressure on the franchised business owners for crippling fees,
overarching labor costs as well as high end rents and the food imposts has made the
organisational reputation of this brand deplorable with the franchise owners. On top of that,
analyzing the case study it can be highlighted that the organisation has been crippled by the
allegations like reduced support from the headquarters of RFG. The negligible of the
organisation towards their franchises and the culture of extraction of maximum monetary
benefits from the franchise owners can be attributed as the cost cutting strategy that have been
implemented by the organisation (Ferguson and Danckert 2017).
However, the credibility of the article can be attributed to the fact that analysis has been
conducted in the article from an unbiased perspective. There has been no perpetual effort from
the end of the authors to establish the malice of the organisation by force. That is why the issues
that have been carved from the end of the franchise owners have also been reflected here.

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Documents show some stores are manipulating their sales to try to avoid the royalties charged by
RFG on every transaction.
Conclusion
Lastly, in the report it have been analyzed that other franchises like Wayne Hong or Devi
Trimuryani have also been experiencing misery. As a conclusion, it can be stated that none of the
affected franchise business is a norm for the organisation. Perhaps the ultimate attitude of the
organisation towards the franchises is summed up in the last business case concerning the survey
of affected franchises of RFG by the Franchise Redress. As identified by the franchise owners:
“RFG acquired a brand, decimated the franchisee support staff, renegotiated supplier deals and
collected "kickbacks" to the detriment of the franchisee's profit line, and milked every possible
cent out of the franchisees, before finally allowing the brand to die.”
In analysis of the case study, it can be highlighted that the business model that have been
followed by the organisation is justified from the perspective of the Deontological theory. This
theory highlights that whether any business entity has been achieving negative outcomes from
their business or not, they should ensure that the shareholders get the maximum benefit. Hence,
from the perspective of the deontological theory, the approaches of the company are ethical.
However, in contrast, the Kantian theory states that the when the organisational leaders are
undertaking any business decision, they should be questioning themselves whether all of
business leaders can be acting in this way, when their turn comes. In this context, it can be
argued that in no way it is justified that all business leaders should be neglecting the franchises
and supporting the shareholders. In this way no firm can be sustainable in the long run. Lastly
the theory of golden Mean can also be suggested here. This theory states that ethical businesses
generally tends to maintain a middle path so that alongside maintaining high profits, they also

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keep in mind that they do not cause extreme harm to any of the stakeholder groups. In this
context, it can be recommended that RFG group should have incentivized the franchises to some
extent when they were facing challenges in their business. They could have done so by providing
marketing support or rebranding so that the brand equity of the franchised stores were
maintained.
Case Analysis 2: Case Study 2
Introduction
This article makes A Remarkable review of the tradition of unethical activities of the
non-banking financial corporations in Australia with the example of some of the biggest scandals
conducted by the IOOF. Initially, deriving ideas from empirical review, the article highlights the
nature of claims of breach of ethics brought against the financial services organisation. The listed
claims include insider trading, front running as well as misinterpretation of performance number.
In this context, the significance of the article lies in the fact that it depicted the inside in the
vertically integrated nature of business organisations, and especially the financial service
companies. Highlighting the source of identification of individual scandals, this article
establishes the authenticity of the occurrence and also reverberates the consequence of the
scandal on the consumers are the section who has been on the receiving end.
Discussion
The unit pricing scandal conducted by the cash management trust of the company was
revealed by the document developed by the risk and compliance committee of 2014. Describing
an incident of 2009, the article reflects the incident of disbursement of excess cash in the

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management account of customers. The biggest achievement of this article is that after
destruction of the individual scandals, the criminology employed in the Act have been defined
and the impact of the same on the wider industry And Atmosphere of the financial services
industry is also implied.
Driving from external industry specific sources like the email exchange between two compliance
officers of the risk and compliance committee , this article establishes the fraud in the cash
management trust of the organisation. This highlights that the authors have entered into intensive
research work, so that they can also establish sources from third party agencies in order to
authenticate the occurrence of crime by IOOF (Sharpe 2018).
The above discussed factor also applies towards the email request sent to the organisation by the
Australian Prudential regulation authority for supplying all data regarding investment breaches
as well as error in unit pricing in context to several IOOF funds including Questor and IIML.
The article does not only leave this incident by highlighting the involvement of the Australian
Prudential regulatory authority in order to authenticate that rhyme or describe its significance
and impact. Rather, it investigates individually, the unit pricing scam in which the company was
involved in order to describe the unit pressing error of a Platinum Asset Management in late
2012 as well as the Questor cash management fund issue in the same here which accounts to
distribution to some internal unit holders to the tune of at least $6 million US dollars.
Describing the growth graph of the organisation, this article successfully attempts to analyze how
this organisation has accumulated their fund as well as expanded the scope of their Financial
Service. The company, as highlighted by the article begin the journey as a friendly Society for
financial investment has now developed into a listed organisation with $150 billion of invested

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funds which about active 1200 financial planners. The article highlights that the technology cards
of the acquisitions and the low-cost research department are major factors that have been playing
a crucial role behind the expansion of the organisation. The industrial growth of the organisation
was accomplished by various acquisitions including Shadforth, Lonsdale, breaches Financial
Services and handsome stake in the Order Minnett. The article highlights that is this trend of
merger and acquisition which made IOOF the second largest non-banking financial corporation
in the entire country.
Immediately contrasted to the growth graph of the organisation, the article reflects the challenges
that has been facing the organisation also. This shows that a neutral and in-depth review of the
organisation and its operations have been conducted in this article. The first challenge of the
IOOF has been the incorporation of more than necessary technological platforms as well as
dealer groups both of which are aligned as well as owned by the organisation itself and not to
specify the difference in cultures. The challenges also incorporate activities like unfair means of
cost reduction in order to develop the profit margin as well as bonus. The Theory of the Golden
Rule of ethics can also be applied here. In this context it can be regarded that the financial
conflict that have been evident in this organisation is not desirable to have happened with the
organisation itself in case the scenario had been reversed. This outcome establishes that there has
been a case of ethical breach in this organisation. The application of the utilitarian theory of
ethics is also relevant. In no way, it can be claimed that the business activities of IOOF were
founded in best interests of the clients, which is the biggest group of stakeholders. It can be
recommended that in case if the organisation could have ensured safe financial returns of at least
40% of the customers, the lb business could have been sustained. If the Kantian theory is applied
in this case, it can be recommended that it is not advisable for the higher management to provoke

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false claims of business outputs. In case, if higher managers of all similar organisations practiced
the same norm, then it would have been detrimental for the industry.
Attempts towards verification have been undertaken as abstract endeavors by individual whistle-
blowers in the organisation. In most of the cases, the whistle-blower had to end of leaving the
organisation. This article provides the example of the equity analyst who communicated an issue
with the HR department of the organisation. Eventually he was sent off and later sacked.
Critical review in the article reveals that the cheating and misinterpretation cases that have been
revealed in the compliance reporting have not been revealed to the ASIC. Rather, the
investigations are done internally and the investigation reports have been kept classified. The
utility of the article is evident in the fact that it highlights facts from the insider articles of the
company which states that suspicious trading including activities like insider trading have been
identified by the organisation in its compliance reporting. However, the article highlights that the
report does not delineate any significant action taken against the staff member involved in the
crime other than asking him to repay the outstanding profits to a Charity of the choice of the
company.
The scandals in this company have been utilized in order to highlight the problem with the entire
process of vertical integration in the investment management and financial planning industry. the
law requires financial planning companies to keep for the best interests of the clients. in this
context, the exchange of emails between one of the subsidiary organisation of the company,
reveals that more than 50% of the clients' managed fund portfolios have been constantly
underperforming. This shows that the research department has been compromised, in order to

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save cost. In spite of that, the underperforming funds where available on the approved product
list of the company (Williams and Williams 2015).
Detailed research into the scandals of the company has been conducted in this article. The
involvement of the royal Commission has also been specified in the article regarding the
payment of compensation to the superannuation members of the company from their own
retirement savings. Analyzing the course of events in context to this scandal, it can be
commented that the article successfully highlights that the organisation was involved in breach
of the superannuation industry supervision act followed by the statement that the company also
failed to meet the prudential standards.
Conclusion
In conclusion it can be stated that the article also highlights the consequences facing the
organisation because of their scandals, in order to ensure that the customers of the non Banking
Finance industry keeps their faith on fair judgment and state of operations in the industry. In this
context the attempt of the Australian Prudential regulatory authority to disqualify the
chairperson, chief financial officer as well as the company secretary and general counsel can be
discussed. The action of the court to derail the attempt of the ANZ to sell their financial planning
business to this organisation can also be specified in this regard. The philosophical note on which
the article ends is also commendable. There should have been an internal advisory committee
that should have informed the lower operation team about the harmful impact of the false
appropriation of the unit pricing and similar activities.
Case Analysis 3: Case Study 3
Introduction

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This article highlights the unethical incidents in context to the aged care system of Australia.
Serious risk to the residence of the aged care homes have been identified in context to the
facilities which provide aged care. There has been 292 percent increase in the number of
facilities who refused compliance with standards. The selection of the case of the Bupa's aged
care home for discussion in this article is relevant from the point of view that after the
Revelations of the scandals of this facility, the Prime Minister announced the implementation of
Royal Commission into this industry.
Discussion
Highlighting the condition of the residents of this old age care home, this article highlights that
the Bupa's Seaforth facility opened in 2016 but it was suspended for entrance of new members
for 6 months because of the poor performance. Issues like payment and short staffing were
revealed. In order to substantiate these issues, this article makes in-depth analysis to highlight the
quotations of the internal members of the organisation. The facility of the company in the
Northern beach failed to comply with at least 30 of the 44 primary care standards in aged care
homes including the likes of adequacy in staffing, medication, pain management as well as
clinical care facility for the residents (McAllister 2018).
After the intervention of the Royal Commission, the issue of Snap audit regarding the
harassment of one of the residents by staff member was released. After this incident, other
similar incidents also came up in the open including the likes of providing medication of one
residence to another and the substantially poor quality of food. These claims were raised by the
family member of the residence only.