Business Practices

Business pr operateices came under fire when Americas seventh largest potent Enron tipd due to falsely accounting strategies. This case triggered a series of unwelcome events where whizz after the virtually different, large cheeks in the US collapsed or move for bankruptcy cover with one case even implicated the infamous Martha Stewart for insider trading. The various deceitful activities of some larger companies publicationed in widespread man mistrust of business put ons and values.Companies as big as Adelphia, ENRON, Global Crossing, Kmart, Qwest communications, realismCom and run off atomic number 18 altogether under thorough investigation by one of the few reliable authorities, Securities and Exchange Commission (Royal desire of Scotland). All the aforementioned(prenominal) names were business of international repute that were charged with the un honest act of projecting inflated get to trick stakeholders and earn higher profits and generate greater revenue from expensive stemmas (Royal Bank of Scotland).WorldCom ran for insolvency in July 2002, devising it one of the biggest bankruptcies of all times (Royal Bank of Scotland). Both World Com and ENRON tremendously overstated their profits and hence committed the major crime of misleading stockholders. World Com Inc. , the US No. 2 long distance caller-out fraudulently overstated profits by nearly 7 million dollars in last few course of studys. Analysts, brokers and accountants moved analogous herds to promote their stock (Royal Bank of Scotland). Enron was a nonher major setback to the industry and economy when its un respectable accounting practices resulted in a great financial crunch.The accounts of the company showed that Enrons revenues in 2000 were over $100 billion. Enron was growing rapidly as it was selected by batch magazine as one of those companies whose stocks were most likely to last the perfect first decade of the 21st century. Enron was performing sanitarys pring in all its three business namely energy, wholesale and global go. Enrons bankruptcy consequently in additionk the domain of a function by complete surprise, as this was not only the biggest collapse in the fall in States in recent years, it was in any case the fastest.Before register for bankruptcy in December last year, Enron was the seventh largest company of the United States as it turned its businesses into monopolies by dominating all aras of its various operations. to a greater extentover a company that looked so powerful only a year ago collapsed dramatically when one of its accountants began raising straitss more or less those shady transactions which had managed to conceal the companys negative debt position from its accounting books. alone slowly and bit by bit Enrons worrys began unrolling in front of the public and it became clear that all the profits sh confess by the company were simply an illusion. ENRON as well as World Com some(prenominal) had m anaged to make these blunders with the Arthur Anderson, that was reportedly, one of the top five accountancy business theatres in the cosmea that doctored accounting books of ENRON and later shredded vital documents at several of their mail locations including London (Royal Bank of Scotland). Ethical crisis in business is definitely a hot issue these days.With no gap in sight and in all probability no long term solution available, public has become wakeful of American corporate world. It appears that all(prenominal) other day, a large organization makes headlines for fraudulent actions. What is even more than ironic is that these un honest practices throw mostly involved large accounting firms organizations that argon created with the sole purpose of providing ripe third-part services. The major accountancy organizations that have been found involved in ethical crisis included Arthur Andersen, KPMG, Price Waterhouse Coopers and others (Royal Bank of Scotland).In addition to these in may 2002, Myrill Lynch was fined $100 million for over rating various stocks of voluptuous chip companies and apologized for doing so in N. Y district court (Royal Bank of Scotland). Furthermore, many of the analysts of investment/Merchant Banks hype stock prices and profit forecasts of companies with whom they do business with (Royal Bank of Scotland). Apart from accounting errors, there are other illegal and unethical practices that companies have been consistently resorted to.Unethical activities like cast away polluted chemical wastes into rivers, insider trading on Wall Street, overcharging the government for Medicaid services, and institutions like Stanford University inappropriately using taxpayer money to buy a yacht or to enlarge their Presidents bed in his home as morally wrong (Ronald 505) are the bane of business today. Nonetheless, such unethical practices are undertaken every other day with little or no regard for the well being of people. Sense of soci al right is thence missing from our powerful corporate world today.Two important cases in this regard are as follows Allegheny Bottling is one of the Pepsi-Cola Bottling enfranchisements, which came under severe criticism when it was found blameful of price-fixing. It is a common practice which is nonetheless unethical (Ronald 505). The case went to federal courts where it was decided that since ever senior executive knew of the price fixing practice and did not report it, they were all partners in crime. The court then coherent three years in prison for the entire senior management, some of whom were not directly involved but knew of the plan and chose to remain silent.The firm was withal fined 1 million dollars as fine but the problem with the sentence was that a firm cannot be imprisoned under the inbuilt Law and thus what the federal court fellowshiped was not relevant in practice. (Ronald 505). Another such case that underscores the need for better practices and more e thically sound business code concerned Harris Corporations. This firm had incurred huge losses, amounting to more than $500,000 when they were heavily fined for their fraudulent practices.But instead of pleading not guilty or struggleing, the firm quickly and calmly pleaded no contest to charges that it participated in a kickback scheme involving a defense department contribute to the Philippines (Ronald 506). This was an irresponsible strategy to cover up unethical practices of the firm and the chief executive officer explained it later in these scathe The firm and its employees were not guilty of unlawful conduct top managers pleaded no contest because the costs associated with litigation would have been greater than the fines, and litigation would have diverted management attention from firm operations (Ronald 507).Both the aforementioned cases reflect the loopholes and the weakening moral and ethical values in the corporate world. Nonetheless, the former case pertaining to the unethical practices of the Pepsi-cola franchise reveals that there are various firms that though realizing, knowingly commit crimes and accommodate to illegal and unethical practices. However, in the latter case, the management as well as the executives performed an unethical act, which they were ignorant of due to vague laws.Consequently, the above preaching reveals that one of the major motivations behind performing illegal acts is the reward that is offered by the executives or the employers themselves to induce unethical behavior for personal gains in terms of huge profits by illegal means. It has been observed that executives who offer bribes to other parties involved in business dealings are rewarded for transgressing code of morality and many a times righteous individuals are scared to let the cat out of the bag, fearing the dire consequences that might place their jobs in danger.Therefore, some other apparent reason of unethical behavior in the workplaces that promot es illegal practices is the event that employees at all levels are either directly or indirectly rewarded for unethical acts or harshly abandoned by the materialistic world for going against the norm of practicing evils. Another reason as explained by Jansen and Von Glinow by dint of their exhaustive study is that encouraging counternorms in an organization is also a form of promoting unethical standards in a company in order to save the firms name or to avoid charges.These experts believe that within organizations, it is a great deal considered not only acceptable but desirable, to be much more secretive and deceitful. The practice of stonewalling, willingly hiding relevant information is quite an common. One reason for this is that organizations may sure as shooting as shooting punish those who are too open and honest (Ronald 505). There are innumerable examples and real-life situations wherein employees were offered special incentives and bonuses as well as other monetary benefits for deliberately not disclosing the actual picture thereby hiding the true story.B. F. Goodrich is one of the employers utilizing such ill-gotten strategies to gain acceptance and to enhance the international reputation. He offered great monetary gains to all his employees who provided him with and generated pseudo figures, with the help of which, he managed to receive a documentation for high quality aircraft brakes (Ronald 509). In addition to the above, Metropolitan Edison also bribed their employees and compelled them to keep all the necessary and relevant details pertaining to the Three mil Island endoplasmic mishap from the governmental agencies and other investigation firms (Ronald 511).Thus the cases mentioned above perspicuously prove the experts view that organizations advocate counternorms of secrecy and deceitfulness. Because these practices are commonly rewarded and certain suggests that organizations may be operating within a world that dictates its own s et of accepted rules. This reasoning suggests a second answer to the question of why organizations knowingly act unethically namely, because managerial values inhabit that undermine integrity (Ronald 512).We all know by now that ethical problems exist in firms and when it is not in the form of major unethical practices like accounting fraud, monopolistic strategies or price-fixing issues, they can exist in the form of small white lies. While they may not be intended to harm anyone, but they certainly mislead the public thus creating a huge gap between actual reality and project reality. And what is really disturbing is the fact that while some unethical just are condemned by law, there are others for which no legal respite is available.False publicize is one such issue. False advertising is certainly an ethical issue, which cannot be controlled through legal action. This is because while there are certain trade laws, which prohibit misrepresentation, advertising firms and their c lients can always excite First Amendment in order to retain their right of freedom of speech. But it is the ethical duty of the companies to present their commodities in the positive light without only altering the reality. There are different ways in which advertising can deceive the viewers and potential customers.The one important method often used by most advertisers is the misrepresentation method where products are made to appear better than they really are. While we cannot do anything about in tranquilizeing a sense of ethical responsibility in these people, it is still important for the customers and viewers to ignore useless and senseless advertisement. The Editor of The World & I (1996) writes, The Supreme Court has held that advertising, at least much of it, is protect by the First Amendments freedom of speech provisions. Thus, advertising is an important and protect form of speech, similar to journalism or statements of political opinion.So, rather than protest adv ertising outright, we need to learn how to discern the acceptable and useful from the insufferable and worthless. Besides, everyone actually does accept and use advertisingnamely that which promotes products or services or causes that one favors. For this reason, while we may not always be able to control unethical problems concerning the business world, we essential realize that it is the responsibility of companies to ensure that ethical violations are avoided at all costs. Firm mustiness introduce the codes of ethics and make them suitable according to the nature of the job.These rules and regulations must envelope relations with government organizations, relations with customers and suppliers and employee conflicts of interest, honesty, etc. (Creating an ethical organization). It is also recommended that the organizations provide general principles and detailed guidelines, including policies related to violations and must make sure not to overload people with unnecessary inf ormation for that might result in the loss of interest and extreme agitation of the entire notion. Moreover, executives as well as managers are advised to enforce the code with proper(a) training and effective communication.