GROUP 8 CRG 520 OCTOBER 2006

NUR LIYANA BTE ONN NUR SYAFIQA BTE AZMAN NUR SHAHIRA BTE AZIS NURUL SYAFIQAH BINTI MOHD HISHAM NUR NARLISA ATIQAH BTE MOHD LOKMAN 2009818152 2009207214 2009612548 2009852012 2009886842

QUESTION 1(a) Lisa Newton in an article entitled 'The Internal Morality of the Corporation" (1986) argues that a corporation can be seen as much more than a profit machine, it is in fact an ongoing human society. Discuss three (3) implications of Lisa Newton's 'new view' on business ethics. (12 marks)

Answer

Question 1 (b)
Occasionally people object to the view that ethical standards should be applied to the behavior of people in business organizations. Explain two (2) of these objections. (8 marks)

Answer
1. Misunderstanding objective and fiduciary duty
People can misunderstood the organization objective Employees just followed the top management without realizing that they are misguided or the guidance is unclear resulted from directors and other do not understand their duty as fiduciary. The employees did not understand that they were to report the problem for appropriate corrective action to whom or how. Lack of compliance mechanism as directors did not focus for the protection from ethical downsides.

 Failure to identify and manage ethics risks.

This is because of the increasing complexity, volatility, & risk inherent in modern corporate interest & operations, particularly as their scope expand to difference countries and cultures. This will led to the requirement for risk identification, assessment, & management systems. External auditors have resisted being charged with full responsibility for this in the past, because fraud is very difficult to discover & the costs of doing so are much greater than BOD have been willing to authorize and management has been willing to incur.

QUESTION 2(a)
One of the significant threats to good governance and accountability is conflicts of interest. Explain the term 'conflicts of interest' and discuss how it impacts the role of employees, executives, directors and professional accountants. Give an appropriate example of situations involving conflicts of interest for each group mentioned above. (12 marks)

Answer
Conflict of Interest occurs when the independent judgment of the person is or might be swayed, from making decisions in the best interest of others who are relying on that judgment. The conflict of interest will give the effects toward the role of:

(i). Employee Employees are expected to make judgment in the best interest of the company. For an example, an employee who worked in the purchasing department, need to choose the best price from the best seller to buy an equipment that need to be purchased by the company. However, the employee could choose from the seller with a higher price because the seller is his brother in law. Therefore, the conflict of interest would rise in this situation whether the employee choose for the best interest of the company or for himself. Thus, the employee need to give priority and choose for the best interest of the company even there are no best of interest in himself.

(ii) Executive Executives are expected to make judgment in the best interest of the company. For an example, the executive in Company A have a conflict interest whether wants to receive a bribe from company B in order to give the tender to them or not. However, the executive of the company A need to choose the best interest for the company and avoid from any conflict of interest in making effective decision. The executive need to make an independent decision without interfering of neither any other people interest nor himself. Thus, the executive in the company A need to analyzed whether the company B really deserve to get the tender or not.

(iii) Directors A director is legally expected to make judgment in the best interest of the company and its shareholders, and to do so strategically so that no harm and perhaps some benefit will come to other stakeholders and the public interest. The director of the company needs also to consider other stakeholder interest such as employee rather than not only shareholder s interest. For an example, the Human Resource (HR) Director needs to investigate about the charged of sexual harassment made by one of the employee against the other supervisor whom are his relative. Thus the HR director only uses an internal resources that she can control rather than check through external resources such as using CCTV. The HR Director need not have a conflict of interest in order investigating and protect employees of the company rights .

(iv). Professional Accountant A professional accountant is expected to make judgments that are in public interest. A professional accountant should provide a true and fair view of financial statement of the company. The professional should not have any conflict of interest that might rise in bias financial statement. For an example, is a familiarity threat, when a professional accountant, due to a close relationship, becomes too sympathetic to the interests of other. The professional accountant needs to remove or eliminate the threat in order to avoid from any conflict of interest and from producing a bias and undue influence of Financial Statement of the company.

Question 2(b)
A code of conduct for an organization is essential in ensuring its development and success. Codes not only should be drafted effectively but it also must be implemented well. Explain briefly four (4) ways by which this can be done to ensure effective implementation of the codes of conduct. (8 marks)

(i). Distribution of code should be to all employees To ensure the effectiveness of the code of conduct, the company need to distribute the code of conduct to all of the employees that none will be claim they were not told how to behave. It is surprisingly that many company believe their line-workers don t have responsibility for environmental acts, or for actions toward fellow worker, and so on. (ii). Training in support of the code is essential This training should focus on the awareness of issues, interpretation of the code in accord with top management wishes, approaches to ethical analysis to enable decisions beyond the code, and on legitimizing the discussion of ethical issues and whistle-blowing.

(iii). Reinforcement of and compliance with the code The reinforcement of and compliance with the code should be furthered by mechanisms of encouragement, monitoring, and facilitation of the reporting of wrongdoing. These issues should not be left to chance, otherwise the organization miss an opportunity to head off a disaster or to accomplish an ethical performance objective. (iv). The Board of Director (BOD) should actively review and monitor The BOD should actively review and monitor whistleblower concerns on financial and nonfinancial matters, and ethics program activities and feedback. This will ensure the board is aware of problems and can take appropriate action before the company s reputation, activities, or stakeholders are compromised.

QUESTION 3(a)
Buchholz (1998) mentioned three types of justice: i. distributive justice ii. compensatory justice iii. retributive justice Explain any two (2) of the above. (5 marks)

Answer

Question 3 (b)
'Theories of justice have been developed to provide general guidelines in determining what justice requires in a given situation." Buchholz (1998) page 36 Explain in detail the following theories of justice and give an example of how each of these theories can be applied in business organizations. i. Egalitarian Theory ii. Libertarian Theory iii. Marxist Theory (15 marks)

Answer

Question 4(a)
Discuss the following axioms of Islamic Ethical Philosophy and its application to business ethics: i. Benevolence ii. Responsibility (10 marks)

Answer

Question 4 (b)
Knowledge is one of the cornerstones of alGhazzali's ethical system. Morality and good conduct (both essential elements of good character) are not possible without knowledge. Explain how knowledge can give rise to good character. (10 marks)

PART B
CASE STUDY The Garuda Oil Spill

a)Name four (4) parties whom you think were most responsible for the accident and why? (4 marks)

ANSWER

b)Evaluate the ethicalness of the action taken by Captain Rubin based on the characteristics of moral standard by Velasquez. (10 marks)

ANSWER

c) Discuss three (3) possible impacts of this accident to Tycoon Oil Company. (6 marks)5

ANSWER

CASE STUDY The Plastiko Berhad

a) Explain the ethical dilemma faced by Kamaludin. (4 marks)

ANSWER

b) Identify three (3) primary stakeholders and briefly explain the impact of the above situation on them. (6 marks)

ANSWER

c) Suggest five (5) alternatives available for Kamaludin. (10 marks)

ANSWER

THE END THANK YOU