Business Ethics: Ethical Decision-Making in the Enron Case Study

This essay examines business ethics, focusing on the Enron financial scandal as a case study. It explores the significance of ethical decision-making and analyzes three key ethical frameworks: Virtue Ethics, Consequentialist Theory, and the Identify Consider Act Reflect framework. The essay highlights how the lack of ethical considerations contributed to Enron's downfall, including confusing financial statements, misrepresentation of earnings, and the misuse of special purpose entities. Furthermore, the essay discusses the importance of ethical frameworks in improving employee morale, enhancing public credibility, building a strong employer brand, and increasing profitability. The conclusion emphasizes the critical need for ethical considerations in all organizations to ensure long-term success and sustainability in the market.

ETHICS ESSAY

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Business ethics are the moral principle which used to drive the business entity the way
they behave. Acting in a ethical way shows the difference between the right and the wrong and
choosing the right path. This report is based on the case study of Enron's Complex financial
where the organization has seen a good amount of downfall due to the unethical activity in the
organization. This essay highlights the different frame work which can be applied in the ethical
decision making. Also the importance which used to be provided by the ethical framework to the
organization with the help of looking at the example of the Enron's Complex financial
MAIN BODY
Business ethics is the study in which business used to make different business policies
and the practices in the organization by looking at the different controversial subject that is
corporate governance, insider trading bribery, discrimination, corporate social responsibility, and
fiduciary responsibilities (Bowie, 2017). In simple words the business ethics is the basic level of
the trust which used to exist between the consumer and various forms of market participants with
business.
There are many framework which has to be looked by every organization before making
decision in the organization as Ethical behaviour of the company used to help the company in
many ways. At the same time not following the ethical consideration also used to create the
variety of the issue. This better can be understand with the help of the case study of Enron's
Complex financial in which company was doing great in the initial stage of their incorporation .

This is better with the data that the profit of the company has increased by 750%, But after that it
was found that the organization not used to use the ethical framework in the organization. The
biggest evidence for supporting the statement is the different activity such as financial statement
were confusing, also misrepresent earning and modify (Enron's Corporation, 2018).
Some of the ethical framework which may had used by Enron's Complex financial are
Virtue Ethics, it is the framework which used to prompt that the decision in the organization
should be made by looking at the person character and moral virtue (Crane and et.al., 2019).
Generally, in this framework the leader in the organization will be perceiving on the basis of the
choices they make. In simple words it explain that the leader in the organization has to take the
honesty, trustworthiness and discipline into consideration at the same time also has to used the
business skill to make the decision that is critical thinking, communication skill and financial
competence. This will help the company in building good relationship with the stakeholder,
employee customer and the community (Ferrell and Fraedrich, 2015). This framework was not
applied in the Enron's complex financial as the biggest reason of their downfall was confusing
statement to the shareholder and analysts.
Another framework of ethical decision making is the consequentialist theory, in this
framework ethical course work are made by looking at the end result Generally, organization
used to look at the end result before making the decision in the organization. Leader in the
organization after choosing the desired outcome used to reveal the action toward the end. The
end goal of this type of the framework is to produce a the plan which can be accepted by the all
or produce the most effective result. The reason of choosing this sort of the framework is that
this theory used to provide the transparency at all the level of the reflective goal. This framework
used to work well at the time of influencing the decision making of more larger number of the
people in the organization. There are many consequence which are also linked with this
framework such as it get difficult for the organization to see the unforeseen circumstances of the
future a in present and develop the different action plan (Werhane, 2019). This eventually
creates the situation which used to bring more harm than the goods for the organization. In the
case of the Enron's complex financial the framework was missing as the action or the decision
which were taken in the organization were to overcome or overlook the current risk as compare
to that of the end result (Rhodes, 2016). For example: Enron's complex financial has pass on the

special purpose entities to fulfil the special need or to manage the risk associated with the
specific assets in the organization this is against the ethical consideration for any organization.
Another framework which can be applied in the organization is Identify Consider Act
Reflect, It is the four step framework which was designed to address the different ethical issue
which was line up with day to day challenges. The first step of the identify all the scenario in the
organization in such a way that ethical standpoint as a means of finding a means of finding the
best course of action. Generally at this step of the ethical decision making leader used to answer
the set of the question such as which is ethical principle?, parties affected by this decision?. Next
step is the step where the leader has to assess the decision making path which has been chosen by
the leader. So that the leader in the organization can easily brainstorm the different alternative
solution in the organization (Barry, 2016). In third step of the framework entail action are being
taken by the leader by the way of following the action which has been decided on or of. Finally,
at the fourth step of the framework the leader in the organization used to reflect on the overall
outcome of their action.
Not only the following framework need to be consider by the organization but also has to
make sure that the organization used to take the variety of the factor into consideration. The
factors are business should have fair dealing with every one this was not the case in Enron's
complex financial as they were misrepresenting the financial data. Ethics should be fixed for
every one in the organization. Violence of ethics should be detected as soon as possible and
measure should be taken. Business ethics should be based on the broad guidelines.
Following Framework does not only mean that the organization is compiling the business
with different social responsibility in taking the decision in the organization, but there are many
other importance also which are brought to the organization due to the proper following of the
different framework in the organization. Such as it helps the business in improving the human
power in the organization as employee are happy in the organization as the company is
understanding there need and requirement in the organization. Also the ethical framework used
the company in improving the public creditability in the market (Davies, 2016). As people or the
consumer always love to purchase the product of the company is honest in their working ans also
used to help the society to grow in the long run of the business, this is a very good sign toward
the goodwill of the company. On the basis of the same the organization used to take the decision
regarding the offering of the company in the market.

Another important which is brought by the ethical framework is that the company is able
to build a good employer brand in the market which eventually help the company in getting the
good employee with the good skill set in the market (Robertson, 2017). As all the employee in
the market always love to go to the organization which used to care about them and there need in
the market. As a result on the basis of the same the organization used to take the variety of the
decision related to the recruitment and the Human resource management in the organization
(Wallace and Sheldon, 2015). Increases the profitability it is the another benefit which is
brought by the ethical framework in the organization as ethical company used to see the better
goodwill in the market and also having the better human resources in the organization. It
eventually result in increasing the number of the customer for the organization. This eventually
help the company in increasing the profitability for the organization in the long run of the
business.
CONCLUSION
After going through the above report it has been summarized that three type of ethical
framework which can be used by the business in making the ethical decision in the organization.
Framework are Virtue Ethics, consequentialist theory and Identify Consider Act Reflect
Framework. After that the report goes on to summarized that there are many other benefit which
are seen by the organization by applying the frame work in the organization other than
compiling with the social responsibility of the business. In the end the report summarized that the
ethical consideration is one of the need of all the organization in today's market.

REFERENCES
Books and Journal
Barry, N., 2016. Business ethics. Springer.
Bowie, N. E., 2017. Business ethics: A Kantian perspective. Cambridge University Press.
Crane, A and et.al., 2019. Business ethics: Managing corporate citizenship and sustainability in
the age of globalization. Oxford University Press.
Davies, P. W., 2016. Current issues in business ethics. Routledge.
Ferrell, O. C. and Fraedrich, J., 2015. Business ethics: Ethical decision making & cases.
Rhodes, C., 2016. Democratic business ethics: Volkswagen’s emissions scandal and the
disruption of corporate sovereignty. Organization Studies. 37(10). pp.1501-1518.
Robertson, D. C., 2017. Business ethics across cultures. The Blackwell Handbook of Cross‐
Cultural Management, pp.361-392.
Wallace, M. and Sheldon, N., 2015. Business research ethics: Participant observer perspectives.
Journal of Business Ethics. 128(2). pp.267-277.
Werhane, P. H., 2019. The normative/descriptive distinction in methodologies of business ethics.
In Systems Thinking and Moral Imagination (pp. 21-25). Springer, Cham.
ONLINE
Enron's Corporation. 2018. [ONLINE]. Available through
<https://www.investopedia.com/updates/enron-scandal-summary/>