Business Ethics Project

Presentation on :

Business Ethics & Corporate Governance

Faiz Sayed (08) Rajshree Gaikwad (09)

Vikas Kharat (26) Alihayder Pardawala (37)

Talhah Patel (40) Pritesh Save (44)

Shaikh Abdul K. (46)

Presented by :U.K. Group (PIRATES IN THE MAKING)

Presented to :

Prof. Quresh Moochhala

PROFITS

ETHICS

Business Ethics can be defined as written and unwritten codes of

principles and values that govern decisions and actions within a

company. In the business world, the organization's culture sets

standards for determining the difference between good and bad

decision making and behavior.

BUSINESS ETHICS

1. Pirates of the Silicon Valley

2. Enron : The Smartest guys in the Room

3. The Corporation

Disclaimer : Images used are for illustration purposes only

MOVIES TO BE DISCUSSED

Partially based on the book "Fire in the Valley: The Making of the

Personal Computer" written by Paul Feiberger and Michael

Swaine, the movie speaks about;

the tale of Apple's rise

Steve Jobs' business relationship with Bill Gates

the schism between Jobs and Steve Wozniak

Apple's fall as Gates out pirates the pirates, and leads Microsoft

to dominate the computer industry.

PIRATES OF THE SILICON VALLEY

1. Jobs and Woz's first entrepreneurial scheme selling of “Blue

Boxes”.

2. Jobs obsession with his growth, which led him to ill treat his

employees.

3. Bill Gates signing a deal with IBM to provide operating system

on license, when he actually didn’t have one.

4. Paul Allen buying the operating system from ‘Seattle Computer

Company’ for a meager 50,000 dollars, concealing the fact that

they will earn millions via royalty.

UNETHICAL ISSUES

5. “Good artists copy, great artists steal” implemented by Steve

Jobs to get the mouse and graphic interface for Apple from

Xerox.

6. Steve Jobs inculcated "It is better to be a pirate, than be in the

navy" culture in his employees.

7. Microsoft walked out with Apple's Macintosh system just as

Apple had walked out with Xerox's system.

8. Steve Jobs created internal conflicts like Mac vs Apple II.

UNETHICAL ISSUES (continued)

PERSONAL REVIEW

• The movie highlights the unethical methods that have been

used companies within the Computer & I.T. industries.

• “Microsoft” & “Apple” both have been unethical by not using

the permissions of the creators before actually modifying and

using their products.

• It may have shown “Microsoft” and “Apple” as being

unethical, but their unethical ways have brought inventions in

to this world which would have been neglected by then giants

HP, Xerox & IBM due to their short-sightedness.

ENRON: THE SMARTEST GUYS IN THE ROOM

Based on the best-selling book of the same name by Fortune reporters Bethany

McLean and Peter Elkind, the movie focuses on

• one of the biggest business scandals in American history.

• examines the rise and fall of an infamous corporate juggernaut in Enron

• suicide of Enron executive Cliff Baxter

• the lengths to which the company went in order to appear incredibly

profitable

• They had Income reported / Cash Flow Up / Assets Value Inflated /

Liabilities off the book, all these issues led to the bankruptcy of Enron.

Kenneth Lee Lay Jeffrey SkillingAndrew Stuart Fastow

1. The company’s act of not revealing the internal information to

employees and public caused huge losses.

2. The hiding of documents related to some transactions and debts.

3. Aggressive and Inappropriate accounting

method

• Mark to market value

• Special purpose entity

• Failure of external auditing (SAS 82)

• False information and misleading

disclosure – Manipulated financial reports.

4. Profit driven management culture

UNETHICAL ISSUES

1. Company could have restructured its departments. The quality

improvement strategies should have introduced in terms of financial

transparency. This would have decreased the errors in misacts of the

company operation.

2. They should have bifurcated there financial statements properly in order to

avoid stretched model of accounting.

3. They showed all the financial statements inflated which was unethical and

should have disclosed all their financial aspects properly.

4. They should have ethically used the mark-to-market value in order to avoid

inflating the financial statements.

5. Andrew Fastow misused the SPE’s concept, rather he should have set up

those entities and executed funds appropriately in order to avoid

bankruptcy.

6. Selection of external auditor is also very important, unlike Arthur Anderson

who gave equal co-operation to Enron in their unethical practices for some

mere monetary consolidation.

PERSONAL REVIEW

Among the 40 interview subjects are CEOs and top-level

executives from a range of industries: oil, pharmaceutical,

computer, tire, manufacturing, public relations, branding,

advertising and undercover marketing; in addition, a Nobel-prize

winning economist, the first management guru, a corporate spy,

and a range of academics, critics, historians and thinkers are also

interviewed.

THE CORPORATION

LIST OF PEOPLE INTERVIEWED FOR THE DOCUMENTARY

1.Jane Akre, investigative reporter, fired by TV station WTVT

2.Ray Anderson, CEO, Interface Inc., world's largest commercial carpet

manufacturer

3.Joe Badaracco, Prof. of Business Ethics, Harvard Business School

4.Maude Barlow, chairperson, Council of Canadians

5.Marc Barry Competitive intelligence professional

6.Elaine Bernard, director, Harvard Business School Labor Program

7.Edwin Black, author, IBM and the Holocaust

8.Carlton Brown, commodities broker

9.Noam Chomsky, professor, M.I.T.

10.Chris Barrett & Luke Mccabe, "Corporately-sponsored" students

11.Peter Drucker, professor of management and author

12.Dr. Samuel Epstein, Emeritus Professor of Occupational and Environmental

Medicine, U. of Illinois

13.Andrea Finger, spokesperson, Disney-built town of Celebration

14. Milton Friedman, Nobel Prize-winning economist

15. Sam Gibara, chairman and former CEO, Goodyear Tire

16. Richard Grossman, co-founder, Program on Corporations, Law and

Democracy

17. Dr. Robert Hare, Ph.D., psychologist and FBI psychopath consultant

18. Lucy Hughes, vice president, Initiative Media

19. Ira Jackson, director, Center for Business & Government, Kennedy School,

Harvard

20. Charles Kernaghan, director, National Labor Committee

21. Robert Keyes, president and CEO, Canadian Council for International

Business

22. Mark Kingwell, philosopher, cultural critic, author

23. Naomi Klein, author, No Logo

24. Tom Kline, vice president, Pfizer Inc., world's largest pharmaceutical

corporation

25. Chris Komisarjevsky, CEO, Burson Marsteller Worldwide

26. Dr. Susan Linn, Prof. of Psychiatry, Baker Children's Center, Harvard

27. Robert Monks, corporate governance adviser and shareholder activist

28. Sir Mark Moody-Stuart, former chairman, Royal Dutch Shell

29. Michael Moore, author, filmmaker

30. Oscar Olivera, leader, Coalition in Defense of Water and Life

31. Jonathan Ressler, CEO, Big Fat Inc., undercover marketing specialist

32. Jeremy Rifkin, president, Foundation on Economic Trends

33. Dr. Vandana Shiva, physicist, ecologist, feminist and seed activist

34. Clay Timon, CEO, Landor and Associates, global branding specialists

35. Michael Walker, executive director, Fraser Institute

36. Robert Weissman, editor, Multinational Monitor

37. Steve Wilson, investigative reporter, fired by TV station WTVT

38. Irving Wladawsky-Berger, vice president, Technology and Strategy, IBM

Servers

39. Mary Zepernick, coordinator, Program on Corporations, Law and

Democracy

40. Howard Zinn, historian and author, A People's History of the United States

COMPANIES FINED FOR THEIR UNETHICAL BEHAVIOR

SOME CASE HISTORIES

1. Manipulating Children

1998, Western International Media, Century City & Lieberman

Research Worldwide conducted a study on nagging.

2. Crime at a subway

Pfizer taking care of the community

3. Unsettling Accounts

Fox Television trying to suppress the story covered by Jane Akre

& Steve Wilson on Monsanto’s Posilac

The movie gives the description of some of the unethical behavior of the

reputed corporations around the world.

The movie also towards its climax shows how the common people when come

together can overcome a corporations rule. This can be seen from the

following examples;

1. Bechtel Corporation (Bolivia)

2. Union Oil Company (California)

3. Unocal (Burma)

4. Limited number of chain restaurants in Arcata

5. Revoking the patent on Neem (W.R.Grace & U.S. Govt.) and Basmati Rice

(Ricetek)

Companies do CSR only to be identified and seen as responsible member of

the society & not for their affiliation to public good.

PERSONAL REVIEW

LESSONS TO LEARN FROM THESE CASES

Ethics cannot be fragmented… or fragmentation goes against

ethics

Company governance must integrate the active participation of

all stakeholders who affect the organization's activities or who

are affected by these activities and in all four domains :

1. profitability

2. equity

3. dignity

4. viability

Closing thought…

“Every fraud could have been prevented

if honest people had asked the right

questions at the right time”