ahmad ali report

Business Ethics - A Philosophical and Behavioral Approach

Christian A. Conrad

Pages 1 to 6

1.1 Basic terms

Business ethics is the study of the relation between economy and ethics. Economy is the

system that generates benefits to the society so the question is there any association between

economy which is alleged to be evil and ethics which is meant to be good. Is there a mediator

between the two terms or the society aspire to get advantages behind any operation? Despite

the tradition definition that good is what generates advantages and evil that create bad effects,

Kant says that people consider their own behaviour as a global law. Economy is a complex

and abstract term that refers to entities made by humans for their own sake or for generating

benefits to the community. While, ethics can be defined as the eyes that ensure the economy

isn’t affecting the community badly due to any illegal behaviours. The mind itself can’t decide

what is ethical or unethical so there must be an objective criterion that can be used to measure

the judgements of any behaviour because our own points of view or judgements about

morality varies according to the time, social context, situation, culture and even common laws.

Sometimes the social context or the ethical agreement decides whether the behaviour is ethical

or unethical according to the empirical studies, whereas sociology considers ambiguous,

missing or excessive degrees of norms can lead to conflicts or in other words unethical

behaviours. For example, every generation or social group have their own norms that isn’t

matching the others. In contrast, conventions are acceptable terms within the common groups

like a local dialect of a region, within the country.

Ethics mean the science of morals which aims to regulate the globe according to good

behaviours. It is a practical science that aims to create a coherence between the common nature

of human being and the surrounding actions or behaviours in terms of their effects on all living

beings. Ethics is a descriptive and a method of tutoring that aims to make practical

applications. Material ethics is an objective term that can evaluate the behaviour to be moral

or not which is different from formal ethics that presents means to produce moral behaviours.

Creating just laws to be followed in order to achieve equality is an example of formal ethics.

Ethos is a partial individual choice of mortality as a basis for behaviour.

When it comes virtues, they are a reflection of the inner attitudes which related to the person’s

own nature. They are also divided into two types the first one is heavenly virtues such as

humility, moderation, goodwill and patience while the second one is called secondary virtues

such as faithfulness punctuality and efficiency which are considered an application of moral

behaviours. The ethical action is based on duties, goods and values as values are considered

the highest guiding criteria of human actions that can be applied collectively or individually.

For instance, the French revolution was based on three main values which are liberty, equality

and fraternity and so as companies’ ethics which are based on some values like trustworthy.

Group Discussion: Value Clarification

An easy exercise you can do by writing the most important values according to you on a sheet

a paper, then you will have a discussion of them with your lecturer followed by a personal

assessment about the possibility of the application of these values on the business world.

Socratic conversation technique would be applied in this issue by asking a group about the

most essential values when dealing with you according to your point of view. It is an open

questioning technique to force people to think and reach conclusions resulted from the

philosophic dialogue upon the question. The agreement on one answer would be the principle

to be followed by the group. Goods are defined as methods to target values or achieve

objectives like peace, security or prosperity that can generate successfulness eventually. On

the other hand, duties are considered a result from norms that can be rules of private actions

or interest which has a social legislation.

1.2 What is business ethics

It is the science that is interested in ethos and morals within the economy in order to have a

better understanding to both the work and the human being. It also targets monitoring and

analysing the human behaviour within the economy so as to promote methods than can

maximized the productivity using the recommendations made by companies. The micro level

objective is the individual behaviours, whereas the macro level objective is the performance

of the economical corporation as a whole which are both affected by the ethics of the staff in

the company. These ethics prevent any kind of unethical behaviour like falsifying the

properties of a specific products. The importance of ethics in business lies in three main points

which are firstly, avoiding any kind of damage to third beneficiaries, secondly, to prevent any

damage for the company’s benefits and finally maximizing the productivity of the corporation

and the society as well. In fact, these Ethics are affecting not only the behavior of executives

and employees among themselves but also their behaviours against third parties, other

stakeholders. These results may result in a conflict between the employee’s interests against

the employer’s interests. This would take us to another term which is so-called moral hazards

that develop conflicts of benefits as negative action incentive meaning that the individual

would create his own interest against the interest of the corporation regardless of any negative

behaviour that would be required to achieve so. These negative behaviours are likely the

reason behind development depression or productivity loses which would result in loans. A

key example of that case is the global financial crisis in 2008 when intermediaries were paid

for subprime credits by credit volume that resulted in loans and sub-loans.

1.3 objectives of business ethics

The idea of achieving the interest of the company or the corporation above the employees’

interest are becoming somehow old-fashioned. Aristol regarded natural acquisition is the

ultimate objective that can be achieved even upon the weakness of humans.

Pages 7-13

Objectives of Business Ethics

With reference to an ancient philosopher; Aristotle, there is a clear difference between natural

acquirement and development. Development, in this case, is based on the business aspect where a

person has to work and make money to be rich. Aristotle claims that the search for money forces

a person out of their comfort zone to work hard in order to have a good life in the future.

Furthermore, he ranks good morals over the economy arguing that a person can get happiness

through exercising their ethical behavior (Conrad, 2018, p. 7). On the other hand, as they say, hard

work pays, it is therefore the foundation of a successful business person. And so, with reference to

Justice, there ought to be a balanced aspect of it which is able to compensate for dishonest and

disturbing outcomes.

Aristotle says the economy is basically a basis in providing a good happy life arguing that initially,

both the economy and good morals were interlinked. In this case, the economy essentially has to

make life easy, by making it possible to acquire resources that are important in life, which is the

economy’s goal. Aristotle further argues that the hustle in gaining wealth is not the potential

economy’s goal (Conrad, 2018, p. 7). In day-to-day business ethics, moral and immoral values are

not clearly illustrated. The purchasing power of customers compels decisions. For instance, if one

has the will the spend money, the ability of the item intended to be spent on is assumed.

From the above statement, it means that a customer’s choices are personal and are never given a

disinterested evaluation. From this case for instance, goods and services can be harmful and

immoral but still the legislator can permit them; the objective assessment of goods and services

has therefore been ignored, and rather the personal high need for them now counts. In the world

today, business sectors have ignored moral values and have majored in their efforts on making

profits (Conrad, 2018, p. 8). In order to secure the society from probable destruction, the possible

effects; be it good or bad, should be assessed and if necessary, the harmful and immoral ones are

eliminated.

Traditionally, ethics put more concentration on social advantages than the individual. An

individual personal interest should never be put as a goal to that of a whole company meaning that

no one’s interest should be advantaged at the expense of others and this is a very important aspect

in business. On this occasion, a person’s attitude must be of goodwill to others in any sector of the

economy. In many cases, the fall of business has been of interest to an individual and the rest suffer

this discourse. More so, it is a human obligation to make the world a better place for others. For

instance, in the Production Company, goods are produced not to satisfy an individual but the whole

market space.

Generally, and most importantly, business ethics has a mandatory obligation in making sure that

the economic independence benefits every person, considering that this is one important duty of

business ethics. In addition, production gain that leads to good morals in society is another key

mandate of business ethics (Conrad, 2018, p. 9). Therefore, business ethics should make sure that

the welfare of people is respected because they determine the nature of the economy.

Ethical Valuation Approaches

In this case, classical and modern aspects of ethical evaluation are put into discussion.

Classical Ethics

A case study example of a man identified as A, who is working in a bank being approached by

person B who does not know him emerges. Person B asks A to give him a job in the bank. How

should A behave from a moral perspective? The case raises questions of how morally one should

behave and in which manner.

Ethics of conviction

From the above example, the concern of the intention of a person to request for a job in a place is

raised. The right way would be to refer the approaching employee to the human resource to help

him in matters of employment. According to Kant, another philosopher, the attitude of a person is

important in making a decision. Kant further explains that the mind has the ability to decide on

whether an action is good or immoral (Conrad, 2018, p. 11). For example, if one takes care of or

looks in on someone who is old, he is performing a duty that is not moral. Perhaps, he will be

considered to be in the inheritance of wealth but not the behavior of the old person.

In society today, the ethics of conviction is the core of decision making. The goodwill of a decision

counts and the law differentiates between contemplation and carelessness. The Ethics of conviction

hence is directly proportional to conscience. This explains why a person with a clear conscience

would think that they have made every decision right and never ignoring it (Conrad, 2018, p. 12).

On the other hand, conscience can be of a bad intention, for instance, a terrorist would be a moral

individual but his intentions of harming others are not good. For that reason, the conscience can

be of bad intentions even though a person might be morally okay.

The people who are convinced that they know better the good morals tend to think that they can

judge how good others are. In addition, they will accuse other people of doing things wrong yet

that was from their personal view, meaning that they are being driven by their conscience. People

need to put into consideration that conscience can also lead one to believe in an immoral manner.

Hence a criminal activity can only be determined as long as it was performed with a moral intention

or conscience. Therefore, if all people had the same objective and intentions in performing a moral

action, then the ethics of conviction will be of a good course. Kant refuted this principle and created

a duty ethic for human actions. Furthermore, he generated rules to help in discussions about human

existence. The principle of the ability to practice what is right should, therefore, be included in

human decision making (Conrad, 2018, p. 13).

Pages 14-19

Ethics exist in every human being, and every place in this world has ethics that follow, especially

at work. As is known in the nature of work, it is a group of employees present in a place to perform

a specific job. As it is the duty of every employee to be highly ethical with himself and with his

colleagues and clients, that they are present. For there are some bad behaviors that may be the

reason for destroying the relationship between employees and perhaps foiling some actions as well

as failure to gain a customer's trust. Example: If there is an employee who wants to market some

products, he must go to the customer with all his respect and ask permission for some minutes and

explain the products to him spontaneously that praises the customer for his purchase or at least

plant a good idea in his mind that this company and its employees possess a wonderful method

and ethics Good. Good morals and a beautiful style are among the things that are required of every

human being. Every human being loves to treat him in a good manner from a close or strange

stranger. Why does he not start from himself treating those around him with high morals and a

good style to begin with those around him in the same behavior and become morals of the soul

and Business ethics are very high for everyone. Because if no one starts with this thing and

everyone becomes passive and negative, the result will be zero morals, zero successful actions,

zero respect. Business will be personal interests only. On the other hand, there is credibility that

requires every action. Credibility is half of the success of the work. Everything must be clear and

frank in all aspects of the client and even the person applying for his job so that the image is fully

and clearly adopted in front of him without any fraud. This is one of their rights. When

interviewing employment, you must clarify all points and conditions written in the contract and

discuss them and not increase or decrease the conditions without the knowledge of the new

employee so that he does not violate one of his rights. For morals are not just words that circulate

among people. Words are present and written in many books, whether they are sacred books or

general books. Ethics is his duty and obligation on every individual. Example: Every religion and

denomination has ethical duties that an individual must adhere to. Every work or work

environment has moral obligations that must be adhered to, and every place and country has moral

obligations that must be adhered to. This means that ethics exist everywhere and that they are

formed in every environment and a duty to abide by them. In short, ethics is law and justice, and

so on, there is chaos. There is a duty in everything and for everyone. Like a person has duties and

is developing his mind and increasing his information, not to kill himself and insult himself and

distort himself, he must preserve his body, know the conscience. All of this is the duties of the

individual over himself, but with others it is necessary for you to be as follows. Not to insult them,

preserve their dignity, or deceive them. Offer them goodness, gratitude, mercy, and honesty if

necessary. And not to sow towards them hatred, envy and revenge. And not to enjoy their mother.

And respect their opinion and listen to them. And consider their feelings .Honesty is one of the

qualities that we should all possess. We do not confuse it for any reason, as honesty will facilitate

many things for us. It is true that perhaps we should leave this trait sometimes and lie to ourselves

or for the sake of ourselves. Honesty has consequences, and falsehood, whether positive or

negative, then we must accept it. More clearly, a person's sincerity towards himself is a right and

a duty. If he violates this thing, he darkens himself, and violates his right. Case study: colleagues

There is employee A working part-time in two companies. Company A, in one of the articles, does

not allow its employees to employ another company. The other company allows that employee

because he stole ideas from company A and earned B company, and caused a loss to company A.

When employee B discovered that information, he went to the manager and informed him, which

caused the dismissal of employee A from company A. Because this behavior causes tremendous

losses on the company's profits, which also affects the income of employees.

Employee B had 100% correct behavior. It is true that his behavior was harmful to his coworker,

but he followed his conscience and told the truth to save his company with which we had a contract.

If he had not told the truth, the company would have lost a lot of profit because of the employee

A who was the reason for this. This means that employee B has done the right job toward himself,

his credibility towards a currency, and the direction of the rest of his co-workers .Some employees

think that work officials have a certain way of writing their opinions towards their employees, how

to promote them, raise their salaries, and so on. Also, they follow the policy that those who have

higher morals will manifest themselves with higher points than the employee whose morals are

lower. And that the quality of paperwork does not matter much and for some it is not important at

all . Also, there is an injustice that some of the employees are promoted to change their names to

officials, and they are not completely competent. In practical and ethical terms. Until there were

interests between them and old knowledge. This causes many problems among employees, and in

general it distorts the form of the company. Therefore, it is repeated that credibility is very

important from the largest employees to the youngest employees. For honesty, and if it has many

consequences, it must be followed.

Pages 20-25

Ethics of Responsibility or Ultimate End

Max Weber criticizes the ethic of conviction because of the limited rationality of the actors and

the unforeseeable and possibly immoral consequences. If the results of an action flowing out of

pure conviction are evil, it's not the agent but the planet that's liable for it, the stupidity of the

opposite men, or the desire of the God who created it so. The ethicist of responsibility, on the

opposite hand, reckons with just those average defects of men. Like Mill, Weber criticizes Kantian

duty ethics for the inevitable dilemma and conflict situations resulting from conflicting duties.

He gives two samples of duty ethics that cause immoral consequences. Thus, the Kantian duty of

truthfulness would make the preservation of state secrets impossible, albeit this is able to cause

great damage to the country. Weber sees a danger that folks, especially government decision-

makers, are going to be liable for their decisions by pertaining to appropriate duties. He demands

that folks need to bear responsibility for the foreseeable consequences of their decision, and also

act morally.

This principle is that the concept of our case law "knowingly accepted" or "gross negligence" is

interpreted by our courts as a mistake. within the current social norms, however, orders don't set

an individual free from responsibility for his actions as an individual. Of course, an ethical

condemnation of murderers would be difficult if that they had been killed themselves as they had

disobeyed an order to kill. generally, the ethics of responsibility is extremely demanding and thus

not always an applicable measure.

It is not always possible to obviously assess the results of the actions. this is often where we

encounter ethical limits. Ethics of responsibility is one of the foremost important ethical evaluation

criteria. The overfishing of the seas was legal, but the results for third parties are catastrophic and

thus not legitimate.

Without impact ethics society couldn't adequately address the challenges of the latest technological

developments. In some metropolitan areas, for instance, a replacement conflict arises from a

globally growing economy in transport. Many residential areas in cities such as London or

Frankfurt are subject to considerable noise and exhaust emissions. Ethical dilemmas also can result

from applying the ethics of responsibility.

The Utilitarianism of Bentham

An extreme approach within the sort of a quantitative impact assessment is provided by so-called

utilitarianism, one among whose founders is Bentham. it's a pure ethics of responsibility during

which the conviction doesn't matter, but the best happiness of the best number, or the principle of

the best happiness of all men. it's therefore about the determination of internet happiness resulting

from actions and their maximization. Joy and suffering are offset against one another individually

also as in between all the people suffering from the action.

The action with the best net happiness is the most moral. The answer of utilitarianism to the

solution of the trolley dilemma would be to save the five people at the expense of one person.

Utilitarianism in economics has become spoken of as maximizing profits. 'Utility' has a special

meaning than the word 'happiness.' In the case of charity, one gives to others and feels joy. The

autonomy of the community or society is not considered here, but only the sum of the individual

benefits. Autonomous utility is mainly the result of division of labor. At the end of the day, the

quantity of joy and suffering cannot be calculated in an absolute and quantitative way.

Ad absurdum, it might be possible to justify the torture of citizenry with utilitarianism albeit a

sadist feels more joy than his victims.

There would be a positive net-happiness. Utilitarianism within the narrower sense isn't an ethical

approach because the welfare of others isn't the main target. The approach is moral inasmuch

because the greatest general happiness, because the happiness of all men, is striven for. Rule

utilitarianism provides an alternate approach to the act utilitarianism.

Rule utilitarianism doesn't encourage the individual action that gives the best happiness, but rather

the overall rule that maximizes happiness. The difference lies within the overall happiness of the

society, which is that the outcome if general rules are followed. If we use rule utilitarianism in our

example, the torture of citizenry couldn't be justified, albeit a sadist feels more joy than his victims.

As a general rule torture wouldn't maximize utility to society, since the utility becomes negative if

everybody tortures others.

The sacrifice of slaves within the Circus Maximus of Rome could not be justified, as not only do

thousands of spectators feel happy, but an infinite number of victims feeling the pain that reduces

happiness. Another advantage of rule utilitarianism is that there's not a special calculation for each

decision or action needed, like act utilitarianism. Either the actor can use his imagination to deduce

the results of applying the rule or he can use a given set of rules that maximize social utility.

However, there is also an account of the pleasure and pain of different people in our Western

democracies.

Millian Utilitarianism

He supplements utilitarianism by differentiating the joys and sorrows of the upper and thus the

lower and adopts the goal of classical philosophy to bring people to a T and dignity. The pursuit

of individual and social happiness is Mill's most important goal of life. He creates a replacement

Millian utilitarianism by restricting the results of ethics to the cases where there aren't any

appropriate duties or rules of action produce contradictory results. For him, all actions that tend to

increase happiness are moral. From this, he develops Kant 's rules, so that Brandt speaks of the

rule of utilitarianism or the Smart of limited utilitarianism. Mill’s utilitarianism is therefore added

to Kantian duties as a consequence of ethics, if these don't provide a transparent statement of

action. to undertake to zilch would be the use of a happiness-related worst alternative of action.

Page 26-31

Habermas believe that the principle of unanimity is the best method of social voting. One

advantage of this method is that people have to agree on one thing because a person cannot get a

higher rank without lowering his competitor’s numbers. That is why this method is known to be

the one with maximum agreement. However, this method takes longer to be applied than others;

because everyone must be convinced to either agree or find a suitable acceptance. Another

disadvantage of this method is that some people do not make a decision by implying the veto.

Besides, the strategic reconciliation process is another disadvantage of this method. This happens

when people exchange votes and use the famous motto “give me your vote and I’ll give you mine”.

There is also “package deals” in which a group of people agree to vote for one thing so that they

don’t distract the votes.

The community seems to follow the individual ethics not the collective ethics. One advantage of

the collective ethics is that hearing the opinion of every single person in the community is

considered a participation and will in some way affect the final decision. In addition, giving the

opportunity to everyone to participate is a way of applying democracy. Democracy means allowing

people to tell their thoughts, which will form the morality and terms of the society or community.

Now a days, television and the internet seems to take peoples’ attention away from the newspapers.

So that, we see that opinion- forming is taking place at the internet and the television, unlike before

when politics is discussed in the newspapers mostly.

Habermas thinks that the effect of social media and the television is huge on people’s decisions.

And the discussions on public opinion are few. So, the locals need to form associations and parties

to discuss their thoughts and increase the effect on public opinion.

Neither the individual nor discourse ethics could be successful without looking at peoples’ needs.

Mead’s approach says that the outcome of the decision should be fair and even to all participants.

A similar approach was made by Rawls suggests to transfer into primal state. Which means living

with no social difference in order to let people vote without any effects and then get the justice that

people aim for.

So, who can assess ethically better, a group or an individual? It seems that the group is better at

this. However, group ethics can never replace individual ethics; because everyone must be

responsible for his decisions and thoughts. One disadvantage of group ethics is that people might

break the roles and hide between the groups in order to escape from the penalty and sometimes the

individuals in the group affect each other and form some unethical and immoral actions.

So, individual ethics is very important and no other type of ethics can be successful without the

individual ethics. Because everyone follows their needs and interests. And everyone has to have

the right to vote and participate. So, individual needs must be taken in consideration, and not only

the needs of overall group. Because if some people do not vote they might give the chance to

stronger groups and some people might not vote which will affect them badly as well.

If we talk about voting and taking a decision in a company, not in political terms. Collective

decisions are mostly made in companies. So that individuals do not take the risk by themselves

and no one gets punished for the consequences. Yet, the risk of taking a wrong decision increases

sometimes because people take their judgments very quickly and without thinking of the

consequences.

Group decisions are logical because everyone get involve in them. Sometimes the team agree to

let their supervisor vote instead of them because they trust his decision. However, if the supervisor

chooses without them knowing or agreeing they might turn against him.

Last, there is no voting method that gives every individual what he aims for. The power of certain

group or individuals and their charisma affects the results. Some people have the power to affect

the public thoughts more than others.

People should take in consideration the sequences of their opinion and choice in addition to having

enough information about what they are voting for before they do. Because there are some

companies that take advantage of competitions and promote immoral thoughts to affect people

decisions. And there are some politicians that takes advantage of this situation as well. There is

something called “new political economy” which is when the politician grants some major benefits

for the locals like power income and prestige in order to get as many votes as possible.

In addition, corrupting lobbying affects the political decision in a bad way because the politician’s

benefits on the expense of third parties, which should be taken in account in every decision made.

Politician’s decisions might be affected by lobbying. Which happens by trying to persuade them

that the expenses are useful for the industry instead. Also, the political campaigns and asking for

donations are another does not benefit us that much. Politicians must know that if they want to do

speeches and parties, they should not take extra; because they are considered a part of their own

job. And by doing the opposite we are accepting lobbying.

An individual can be morally controlled by following the rules and guidelines. It is easier to control

individual moral behaviors than the group behavior. Anyhow, by looking at the discourse ethics,

we notice that it focuses on the ethical process. Which means that the solution is found across

many opinions and features. So, the situation does not fit the individual that much. Discourse ethics

does not work until the individual beings his own ethical point of view and spot out the arguments

and consequences. In addition, the individual has to be open to others’ thoughts and opinions if he

aims to achieve a good ranking of the argument.

On the other hand, other ethics like the discourse and institutional ethics cannot be done without

the individual ethics…

Pages 26-31…

Pages 32-37

It is not possible to have a system that can fully control the people. There are a number of countries

do not leave any space for individual freedom. This will lead to breaking the dignity of the people

and their freedom to make their individual decisions. People are born with certain abnormal

behavior, and this will lead to things getting complicated with moral economics and science. The

system cannot control all the behavior of the people without given specific goods. For example,

people cannot estimate all people's actions; however, people cannot forget that it is the person's

ethics are the main concern.

All the decisions are taken from political people instead of individuals who run the companies.

Therefore, it will control who can be punished and avoiding any mistake of providing decision-

makers in the future.

Modern Ethics

Moral economics: Morality Must Be Worthwhile

Ethical economic can manage to fix all people's ethical and moral issues. Even though people can

gain these ethics, they have to design such an achievement that allows people to follow this ethical

procedure by themselves.

Karl Homann, the co-founder of a moral economy, developed a theory that the person should put

himself on the right track to follow the ethical and morality system by using the right framework.

Furthermore, within short of the ethical agreement it will need more morality at this stage. People

don’t need to establish a new framework of morality even with our system. If we found a gap in

this framework we can treat by case-by-case in the court.

The representative issues an advantage that the ethical code can be established within a small gap

is provided by people's morality; therefore, it can be judge by the court instead.

Actors are following this procedure for the long term if this achievement has a benefit or at least

has no disadvantage.

Homann refuses that people have full control of their morality and it will affect the market. For

example, a child is not responsible for his/her behavior.

The government is responsible for applying health motivation for the people. Meanwhile, there is

business ethics, which are required by the companies to apply.

As Homann design a way to issue certain self-interest to become suitable for everyone at the social

community, and this idea is taken from Adam Smith referring to economics.

On the other hand, Homann believes thought that for the long term and discover that it can't be

able to obtain the actual behavior of the people by social control applied by the government or

certain companies.These days the community has grown and every one deflects his/her behavior

on each other and has deferent cultures this will lead to being complicated.

Ulrich disagrees with classical ethics to economics is come "from above". Therefore, there is a

clash in interest between ethics and economic threats. Therefore, he suggests combining economic

interest with ethics to have better benefits for everyone.

It appears that negative circumstances toward sociality it to focus on the highest human goals.

Also, according to these ideas it may cause fighting for the job and forgetting the human needs.

For example, it will rely on what the people provide to certain companies ever though against

his/her morality. This will have negative consequences on human behavior in the future.

Aristotle stated that people's greed might be the main concern in the near future if they accomplish

their interests again people interest. Sustainability! this what people need for long term economic

benefits.

Economic ethics drive people or companies to accept the wrong achievement, which might be

fixed in case of what they need. This will disregard a personal code of ethics and drive the whole

community to wrong directions. Therefore, people have to disagree with their believes and self-

morality and follow the need for their life. Furthermore, the government will need the only

economical ethics requires to do their job and keep the benefit for the companies only. In the end,

the government will have access to people's privacy in the future.

Ulrich refuses that any application that causes damage to humans and gives benefits to certain

companies or individual people. It may lead to bad consequences in the future disregard the

human's efficiency toward his/her work and social life. Also, he mentioned that the reason why

the working processes cannot be beneficial for people's ethics. Ulrich stated that it will work if the

companies increasing consumption to create job opportunities for more people.

Disregarding institutional regulations will lead to gain less effort by people towards work by

achieving economic principles. On these days, no one cares about his/her personal ethics toward

work or his community, the idea is to gain their dream goals at the end only. For example, if the

companies consider that they will have a surveillance camera to watch but their eyes on their

employees that will lead to denying employee's confidence.

Conclusion

Moral economics is supposed to be a benefit for people's morality towards society. But meanwhile,

we have to accept the reverse action of that. The more that people provide to themselves the more

they will get to socialize. In the long term they will gain more public and communal benefits.

2.2.2 Specific Ethical Assessment Principles

2.2.2.1 Human Rights

Economic action is beneficial for all the people unless they harm the dignity of their behavior.

Acting seriously and put effort into the community helps increasing opportunity for everyone.

On 10 December 1948 Human Rights declare some point to follow:

- Establishing Human Rights helps the people to gain their rights by individual freedom, choosing

where to live and choosing what religion, exposes what their thinking

- Issues a fair value and equalization for everyone.

- Ensure that everyone has good living conditions.

Karl Marx states that providing people their human right it will to destroy the community by

destroying the laws. He thinks that if we focus on the social right instead of people right it will

build a great community. Therefore, in socialist counties, they refuse human right and they demand

people to accept the social right instead of selfishness.

Pages 38-43

In the 21st century, ethical concerns have become a significant issue in most businesses due to the

high level of competition and regulation by the market players. Many businesses are required to

operate their firms while taking into consideration the welfare of the clients and other firms within

the economy. In the book by Conard, Business Ethics: A Philosophical and Behavioral Approach,

the author makes efforts to ensure that firms comprehend the ethical concerns that they need to

consider in the market to ensure economic growth. The book tasks into consideration multiple

issues that influence businesses after carrying out in-depth research. The book embraces multiple

approaches that include sociological, psychological, behavioral, and philosophical approaches to

fill the gaps that exist in business ethics.

The book is organized in eight chapters and begins with a foundation on ethics through defining it

to enable the readers to comprehend what ethical concerns are and why businesses should consider

them in the modern business environment. Each chapter is very detailed and has an introduction

and a conclusion. In the book, Conard explains to the readers that ethics entails doing good or evil.

Hence, the author demands that businesses should consider the outcomes of their actions. The

outcome is defined by the effect on the economy, society, and other competitors. For instance,

Conard expresses the ethical issues on the economy and shareholders through actions by firms

such as Enron that was faced by a significant scandal through its financial reports. Thus, the book

requires a firm to operate morally. The moral values are defined by the cultural and business

environment under which a firm operates. However, in the 21st century, through globalization,

most firms in the globe operate under a similar market environment with the business standards

and regulations being almost homogeneous.

While most businesses operate while considering the ethical issues that can affect their operations,

Conard explains the ethical value approaches based on philosophical approaches. Hence, he does

so by identify the ethics background as defined by major philosophers such as Immanuel Kant.

Through the book, the scholar ensures the readers understand the reasons why a good will is

essential in businesses practices. Hence, human duty is critical in ensuring that public good is

realized through business operations. In so doing, firms need to abide by the moral principles

within society. The morality is aligned to religious conviction demanding firms to act responsibly

and take responsibility for their actions. Conard requires businesses to act with precautions since

the outcome of their actions determines the chances of their successes. This is because the outcome

the global audience is likely to learn about the outcome of some actions made by some businesses.

Some firms have made some products that fail to meet the market requirements, which has resulted

in negative publicity resulting in loss of market share to their competitors. For instance, Toyota’s

products that were faulty in their breaking systems resulted in a loss of the market share and the

firm was forced to recall some of its automobiles.

Conard requires people to act responsibly while making decisions that will affect other people.

Business managers and employees are required to make proper decisions that will not affect the

stakeholders in any way. Mistakes such as making wrong decisions or making false financial

decisions affect the operations of the business and the economy in many ways. Bad business

decisions have been reported in many cases, and firms have suffered hugely when the news about

unethical business practices come to the public domain. There are many incidences where

economic recession has been reported and are attributed to unethical business actions. The recent

2008 global economic meltdown was attributed to bursting of the housing bubble that was a result

of unethical businesses practices.

In some cases, the business mistakes occur accidentally or due to negligence by the decision-

makers. Some decision-makers lack moral values and end up making technical mistakes that

sometimes affect the entire economy. Cases of market failure frequently occur as a result of

unethical practices. There are many causes of market failure that can be avoided through ethical

practices. Some causes of marker failure that can be avoided include corruption and external

effects, among others. Therefore, Conard requires businesses' morality and acting in a socially

responsible way.

With many businesses aiming at maximizing profitability, some managers may have a corrupted

moral fibre that results in making decisions based on personal interests at the expense of other

business stakeholders. The shareholders need to ensure that a firm hires a competent management

team that provides a firm abides by the existing ethical standards within the economy and global

front. Businesses should need to ensure that all the tools of ethics for management are fully

embraced. Failure to abide by the ethical considerations results in the firm been taken accountable

by the moral police. A firm that actins unethically is likely to face the arm of the law. There are

cases where whistleblowers may report a firm in cases where they fail to act ethically. Thus,

Conard demands ethical leadership in a firm to guarantee its growth and economic development

in its region of operations.

In conclusion, Conard requires firms to ensure that abide by the existing business ethics. The

business ethics are established within an industry, economy, and globe. Inability by business to

comply with the existing business ethics is likely to influence the business adversely. Through

that, the business is expected to report negative publicity and loss of market share. The business

leaders or the management need to ensure the business operations take critical consideration of the

existing morals, which determines the future of the business. Business ethics are critical factors in

the 21s century, whereby the world has become a global village. Across the globe, failure to abide

by the business ethics has resulted in the closure of many businesses and the global economy has

sometimes been affected.

Pages 47-52

A homo economics is the figurative human being characterized by the infinite ability to make

rational decisions and will attempt to maximize their utility for both financial and non-financial

gains. Homo economicus is like a machine but working with a mind looking for what they will

gain. Homo economicus in every situation would choose things that will benefit them at max

making their choices numerically unsurprising and even they will clear out the benefit to others

out of the condition and they would commit a moral act to achieve their objective of maximizing

their own advantage with lying, deceiving and other moral acts. According to Hayek the homo

economicus expression goes back to John Mill and Utilitarianism. The individuals are sociological

as considered by Mill. In the event that we take societal mores for human behavior into thought

the resulting decisions change, these mores are societal standards that manage to the individuals

of a society and how they should act in order to benefit the society and not hurt it. Societal

standards and values can be chosen deliberately by the people inculcated socially. Societal

sanctions within the case of standard infractions can make certain choice decision appear to be

more utility maximizing indeed on the off chance that they bring less people more advantage than

others. The word gain is to be caught on as net person advantage, in other words productive gain

reduced by losses social sanctions. On the flip side, sanctions avoid choice alternatives that would

maximize the individual’s gain at the cost of society. The require that numerous individuals feel

to do great for other individuals only indirectly provides a gain, by fulfilling an existing subjective

need. Everything that an individual needs and gets may be depicted as a gain. The main founders

of Utilitarianism are Jeremy Bentham, James Mill and his son John Stuart Mill, they considered

that happiness could happen from things such as tactile delight, a great notoriety, riches, power or

charitableness, but also negatively connoted traits such as malevolence. Pain might result from

privation, a bad reputation, enemies, but potentially also from charitableness, piety or malevolence.

As contradicted to the homo economicus the data processor, social psychology research considers

individuals to be decision-making issue simplifiers. To these conclusion individuals use patterns

made from their impressions and experiences. The impact of pattern showed by Social psychology

using few tests determined ways to solve behavior problems. It has been appeared that individuals

don't have the capacities of a homo economicus. Societal impacts shape human behavior

Concurring to social psychology, additionally vital to know how individuals adapt to cognitive

dissonance in which can be made by non-ethical environment. homo economicus torn into issue

because economic science forgets that they are managing with a paradigm and treat it as reality.

The miss understanding of the economic bible “Wealth of Nations” by Adam Smith, from

managers lead to shortage of ethics and morals. The main idea of Adam Smith is that Economic

progress depends upon a trinity of individual prerogatives: pursuit of self-interest, division of

labor, and freedom of trade. Adam smith described how people with self-interest will act toward

the public good through the “invisible hand” of the market, Also Hume added that even bad

individuals with common good for example the baker by seeking after his claim intrigued he

habitually advances that of the society more effectually than when he truly intends to promote it.

Adam smith explained that every person by looking out for themselves and without knowing they

helps to create the best outcome for all by selling products that people want to buy, a hypothetical

butcher and baker in this economy hope to make money. If they are effective in meeting the needs

of their customers, they will enjoy financial rewards, and while they are engaging in enterprise for

the purpose of earning money, they are also providing products that people want. Smith argued

that this kind of system creates wealth for the baker and butcher. Individuals have an exceedingly

created conscience that functions as an inner ethical judge according to smith. Also, people can

empathize with the needs of their associate human, and must hence weigh them in their soul against

their claim self-interest. Smith defined compassion and sympathy with other people like Hume

does in which sympathy reverses the operation of the understanding, which converts impressions

of sensation into ideas. The principle of rational thinking is the ability to think out of the box, to

think critically, to produce good quality of thought in certain situations to arrive at a rational

decision and this capacity of a human heart is for the most part credited to God or to human

rationally. Rational thinking is about questioning your beliefs, checking the facts and acting

accordingly in other words it is aligning your actions with reality and your goals. Invisible hand

theory by smith are not enough to save the common good from the damage done by individuals.

The invisible hand refers to the self-regulating nature of the marketplace in determining how

resources are allocated based on individuals acting in their own self-interest. Adam smith believed

that more wealth to common people would benefit a nation's economy and society as a whole, and

for most goods and services, there is no need for government regulation and price controls. The

‘invisible hand’ of market forces will ensure the optimal price and output. Smith is saying that

individuals consider their selfish aims – businessman to make profit consumers to purchase cheap

goods. However, by seeking to make profit, firms end up helping to create a more efficient

economy that leads to equilibrium the market for goods, for example in a free market scenario

where there are no regulations or restrictions imposed by the government, if someone charges less,

the customer will buy from him. Therefore, you have to lower your price or offer something better

than your competitor Whenever enough people demand something, it will be supplied by the

market and everyone will be happy. The seller ends up getting the price and the buyer will get

better goods at the desired price.

Summary: Ethics

Optimizing individual utility at the cost of others is the major trigger of the tit-for-tat game which

clearly illustrates the conflict underlying individual rationality and group rationality. Several

experiments (in this context known as games) have been done to investigate the ethical attributes

of people. Individual utility measures the gains one person receives whereas collective utility

emphasizes on benefiting every person who is part of the team. In other words, individual

rationality is being selfish leading to the creation of the tit-for-tat approach whenever public goods

are in question. This approach follows that fair play with minimal or no injury to other people. It

holds that if one is not cooperative, then you should behave the same way. It is a technique that

instills cooperation in a group or partnership setting since everyone gets what they want in the

long-run.

Experiments carried out by Albert Chammah and Anatol Rapoport illustrated cooperation is

enhanced such games are repeatedly played. For instance, even if there are two opponents,

punishments and other sanctions can be implemented for any breach of the agreement to motivate

cooperation among those in the relationship. According to Rapoport, the principle underlying this

strategy is "in weakness is strength" which he recommends in his studies on conflict, races, and

arms. Such a strategy is normally applicable for small groups since the more the people involved

the lesser the connection between individual uncooperative behavior and the impact it has on

others.

The topic of the benefits of cooperation when it comes to public goods can be illustrated with a

public goods game. This game entails group players let`s say 5 who have to pay $10 which is put

in a pot. So long as everyone pays, their money doubles within the pot, thus representing the value

added by public goods. If any player misses paying, there is no public good and the total amount

in the pot is divided among the five. This game can assume different criteria, such as using chewing

gum. For instance, you can give 3 people two chewing gums each and ask them to place all of

them on a cap or pot underneath a table promising to give them an extra piece. This is the benefit

although if the total number of pieces is not 6 then they will have to share equally among

themselves whatever is in the cap or pot. Such a scenario requires trust among the players and it

decreases initially since the players do not know each other's behavior. The best outcome would

be receiving an extra 1.3 pieces with putting any piece hence not risking anything whereas the

worst outcome would be giving out his/her two pieces while the rest do not and receives only 0.3

pieces after sharing.

Research shows that approximately 40–60% of the players of the public goods game are

cooperative in the early rounds. The trend changes after noticing they are only depriving

themselves for nothing since the cooperative good is not created hence they choose to be

uncooperative. This is because there are free riders that benefit at the expense of other players,

therefore, there is a need to punish them to instill cooperation in order to create a public good.

Emotions are the key drivers to punish the uncooperative players through altruistic sanctioning

according to Fischbacher and Fehr who contended that more than sixty percent of unbiased third

parties will intercede to ensure cooperation and fairness even if it disadvantages them whenever

there was lack of cooperation and fairness. These experiments showcase the need for justice,

honesty, social norms, and the role played by reputation.

Fairness as a Source of Motivation

The “ultimatum game” by Alan Sanfeys at Princeton University helped to illustrate how rational

behavior of individuals when they have ultimate power at their disposal. This study involved two

people where the first person (also referred to as the proposer) is given $10 to share with the other

however he is the one to decide the amount to give. The second person (responder) can also decide

to accept or reject the amount the proposer offers, especially when he deems the portion to be too

small. This game can also use ten pieces of chewing gum to be shared between 2 students. Rational

behavior dictates that the responder should agree to take any portion offered however people

behave differently. Many will reject the offer so that they both get nothing since the positive urge

to have more money was surpassed by the negative feeling of unfair treatment. In real life this

shows that people demand fairness and do not want to be looked down upon. There exists another

version of the “ultimatum game” known as the “dictator game”. In this game the first subject can

decide to keep all the 10 pieces to himself and the decision of the second person does not influence

the final distribution thus he has to accept whatever is offered. 10 dollars is normally used in this

experiment and research shows that the second party receives approximately 30% of the amount

to be shared.

This experiment shows human behavior and the need for selfless justices as a principle of human

co-habitation, inclusive of the need for fairness when making economic decisions. In an

organizational setting, an individual will only be cooperative if the impact of his work is significant

to the overall organization. Righteous people will behave ethically without exploiting others.

Human Intelligence

Human intelligence can be measured by one`s ability to make decisive decisions in life, how best

one can cope with the challenges within their surroundings, and what contributed to their success.

Currently, intelligence is defined by the correctness and rate at which solutions for undisclosed

tasks are found. In this case there are three forms of intelligence; linguistic, mathematical, and

spatial intelligence. Mathematical intelligence is popular while spatial intelligence enables one to

comprehend and process things in three dimensions. Linguistic intelligence is simply being good

in languages; verbal expression and imagination in writing.

Pages 65-73

What is taught to economics students is that every businessman, every family, and every company

that wants to be successful must strive to maximize benefits and profits brutally.

Companies’ management must be transparent and fair among their workers to keep them motivated

and active and it have to take into account a sense of fairness among workers.

The ability of the economy to measure benefits and build decision-making models for the purpose

of maximizing benefit leads to inaccurate results that are far from human reality, the systematic

errors:

1- Restricting economics to psychology, neglecting sociology, and lack of understanding of

how the social environment influences the motivation and frustration of people.

2- Take an influence on the company and society when making decisions.

3- Benefit is self-awareness, and decision models based on material benefit only without

taking human feelings like envy, emotions, Ambition into account provide a false and

inaccurate picture.

Ch.4

Enron Company

In order to improve their share prices, many American companies have tampered with their

accounts and numbers, one of these companies is Enron Company. Enron was the largest energy

company in America and one of the largest 7 companies, and one of the best 5 companies in

America, according to the press.

Jeff Skilling a consult working in Mc Kinsey, after that Enron hired him in 1990, the founder of

Enron, Kenneth Lay, liked him, He was his consult until he took the position of CEO in 2001.

Jeff Skilling developed strict policies and strategies to increase employee productivity and bring

out the best in them, establish a special policy to motivate employees "that traders are paid

according to the number of successful contracts, he also Established a Ranking policy in which the

bottom 20% employees are dismissed, He wanted to make sure that all the employees were giving

their best.

These strict policies pushed Employees are afraid to report their loss, what happen because of these

policies is the employees They were doing everything to make him happy, Significant inflation

occurred in the contracts, hide the mistakes from the supervisors, all that lead to spread the fair,

cheating and Conflicts among the employees, His tough policies produced opposite results from

what Jeff Skilling wanted.

In the end, it was discovered that the company claimed $ 1 billion in non-existent profits & that

Arthur Anderson, the renowned auditor manipulated the balance sheets, this and caused a shock

in the finance sector and it was the starting of one of the biggest company’s crises in USA.

The starting of the end:

Manipulation of records was discovered by both Jim Chanos and Doug Millet, short-sellers, after

they were checking the company’s numbers and records in order to speculate on the company's

shares because they were profitable shares, they noticed that operating margin decreased from 5%

to less than 2% in one year, which contributed to increasing profit without Clarification from the

company.

Jeff Skilling & Lay Kenneth was selling their shares in the company & they was motivating the

employees to buy the company's shares as a safe investment, Jeff was selling his stocks less than

the actual prices, selling the stock $126 for $80, that seemed amazing.

Rumors appeared about the financial position of the company and about manipulation of numbers,

and the company could not deny these rumors, which led to the company's stock to fall down from

$ 126 to $ 40, Jeff Skilling left the company and Lay Kenneth became the chief executive officer

again.

Lay Kenneth deny that Accusations of any accounting or manipulation in company numbers, at

middle of October 2001 the company lost more than $617 Million, and 1.6 Billion of the company

assets have been crossed out, Lay Kenneth has been determined that the company is doing fine,

after all that company declared bankruptcy.

The issue was alerted by Jim Chanos to the people that are included the balance sheets were

shoveled into the company rather than having it combined by Enron’s employees and booked paper

profit, it the ratings were to fall into the investment grade, only a few people knew about the

fallback clause for Enron credit, the maximum market value which is $65 billion in value has been

destroyed. As Enron failed with the contracting company, it caused Enron to have the stocks sold

for $300 Million in stock options.

To reduce the loss of trust in the American Market, the 500 Largest stock companies Made a

statement in February 2002:

“The United States has the best corporate governance, financial reporting, and securities market

systems in the world. These systems work because of the adoption of the best practices by public

companies with a framework of laws and regulations. The collapse of the Enron Corporation is a

profound and troubling exception to the overall record of success.”

The Consequences

Enron Chief executive officers Lay Kenneth and Jeff Skilling got jail sentences for many years

for money laundering, Tax fraud and balance sheet corrupting. US government tightened sanctions

and legislation on fraud and counterfeiting cases with Sarbane-Oxyley law, Citigroup and J P

Morgan paid $9 billion compensation to the victims of Enron and WorldCom to avoid collusion

cases in balance sheets, two investment managers are imprisoned for signing a contract and

colluding with the company.

Arthur Anderson, the renowned auditor, charged for improper accounting, obstructing justice and

they lost their license, Arthur Anderson employees had ruined a lot of Enron record that can be

used as proofs, after all this Arthur Anderson was bankrupted and left over 100 lawsuits behind.

All the opportunity to fix the economic system after the Enron & WorldCom scandals was ignored,

the angry public pushed the politicians to discuss the economic system, but it was useless, Enron

rigged the underlying energy prices by making energy shortage, a lot of politicians funded their

elections campaign from the company money, Enron stuff hired in high government places, And

the issue still in USA.

Pages 74-79

The credit derivative market is a market based on the transfer of the liability a lender holds from

non-payment of the loan he is giving to others that are willing to take this risk. For a transfer of

liability like this, there are many factors that are taken into account and many complicated

economical models are studied. Debts that are usually transferred in this market include payments

like mortgages mostly. The risk factors associated by those transactions of debit transfer are

complex and might be hard for a company to assess if it is worth buying this debt with its risks

and sometimes data is not available to the public to study the situation so the task of assessing

those situations was left to rating agencies in the United States of America. During the subprime

crisis, banks sold too many loans which put those rating agencies into question.

For many years, the value of real estate in the United states has been on the rise. This has lead to

a high predicted increase of value in the real estate value which encourages the lender to give large

loans while having the real estate as collateral in the case of nonpayment. Both Freddie Mac and

Fannie Mae are companies created by the United States congress that do not originate mortgages

but instead purchase and guarantee pre-existing mortgages from lenders and real estate owners.

During the Clinton administration in the mid-1909s, lending criteria was relaxed to encourage

owner ship of real estate. Later in the early 2000s, congress man Ron Paul warned that those

relaxed policies of lending will cause an issue as people will start to borrow money to purchase

real estate for which they will later not be able to afford payment for. This relaxation of lending

policies has increased the market size of sub prime mortgages from 5% in 1994 to about 20% in

2006 for a total of 600 billion USD. This act of loans and subprime mortgages was further

encouraged in 2006 after the interest rate was decreased by the federal reserve to as low as 1%.

During that period, many types of mortgage payments came to the rise such as adjustable rate

mortgages and “Teaser loans” for which the payment starts at an interest rate that is very low but

then increases dramatically.

All this has led to an increase in the value of real estate in the united states between 1997 and 2006

of 126%. This was not to be a problem as long as borrowers where able to repay their mortgage

payments as scheduled upon taking the loan and sticking to the payment structures decided on.

During this period, banks encouraged bankers to be more fluid with giving out loans and only

during 2006, bankers received 23.9 Billion USD in bonuses only as they receive bonuses per loan

they give. Banks where relying on the fact that regardless who they give the loan to, in the end

those loans will be sold to other investors so from the bank’s point of view, those loans where risk

free.

In 2006, many people where failing to pay their mortgages and banks where taking back the real

estate they where holding as collateral. This led to a fall in the prices of real estate and the burst of

the bubble of inflation. During this time, investors came to realise the mistakes of banks by giving

loans to people that where unable to repay the loan amounts and the market for collateralized debt

obligation started to collapse. This has led to a fall in the liquidity of many banks and a cut in the

line of income. At this point, all the trust put in rating agencies was lost as all the loan purchasing

process was done after their blessing and without a rating system from those agencies, the CDO

market was crippled. Many banks where also under the risk of bankruptcy as they have invested

way too much of their capital into loans and mortgages. At first, this crisis sounds limited to banks

inside the United States but, many European banks followed the methods used by banks in the

United States as well as other international standards that where heavily reliant on the United

states’ banking systems. After this crisis, the US banking system kept working on the same

mortgage methods but the market for CDO has collapsed and loans had a much more complex

assessment method and loans where only given to people that could show sufficient proof of

income and could guarantee payment. At this point, the problem seems to be over, but it is yet to

spike. Banks kept losing value on their CDO as no investors where willing to purchase them and

loans where already given. This has led to even more decrease in the value of real estate and

liquidity in banks. In September 2009, the entire financial system in the united states came close

to collapse which lead to the interference of the government to deicide to nationalise many banks

and closing down many smaller real estate lenders. This crisis has also led to the bankruptcy of the

4th largest bank in the united states Lehman Brothers. After this period, a new method of derivative

securities came to the rise which was the Credit default swap in which the bank will sell the

derivative contract to the investor while promising a certain amount of money to be paid in case

of failure of payment. As the CDO market has collapsed, CDS was a method for banks to boost

their liquidity as now loans where given to more trusted borrowers which showed proof of ability

of payment.

After the collapse of Lehman Brothers, the capital market collapsed, banks no longer trusted each

other and corporate bonds where no longer wanted by investors which lead to a massive decrease

in their market value and the consequences to the real world was soon to be seen. The credit crunch

has arrived when banks stop giving out loans due to shortage in liquidity.

Pages 80-86…

Pages 87-93

Controls per se have little to do with the possibility of a director losing his job because the director

isn't really intent on manipulating the company. The developers of this model often believe that in

theory, administrators are bad guys. Managers should be able to get benefits (salary and other bene

ts) if they are less regulated. Moreover, the outcomes can be impacted not only by the availability

of generalizations, but also by the construction of a model, but for non-statistics, including such

reporters, this is not evident. In 1974, in the revered "Journal of Political Economy," Martin

Feldstein revealed that the increase in social welfare in the US after 1937 had replaced the desire

to save private citizens income.

Dean Leimer and Selig Lesnoy have demonstrated that Feldstein miscalculated. Researchers also

claimed the key explanation for a decrease in levels of crime in the United States during the early

1990s was the legalization of abortion in 1973. Researchers argued that neglected children are

born under environments that made them more likely to become offenders. With the growing

prevalence of mathematical modeling, market theory does seem to have yielded in to the same

challenge as economic science. Statistics are true evidence. That being said, since individuals make

up the economy, this is not economic fact. Mainstream economics could not be a scientific

principle that is perfect, probabilistic, but a social science. The immeasurable essence will not alter

even unreasonable actions in pattern. There is indeed a good explanation why economists

sometimes debate in general over the preferred technique which enables some participants to

interact particularly though they have no economic background. The development made in

academia by economic science and technically applied advancement has been quite marginal

relative to natural sciences. Objectively determining the importance of contributions to work inside

a social science is quite challenging.

Let us note that the myriad external conditions that are continually evolving and the immeasurable

human element just permit the detection of trends in economic growth. This is impossible to

explain that this overconfidence in such equations persisted too long, contributing to the subprime

crisis, because the LTCM crisis had already demonstrated the risks and vulnerabilities in such

financial estimates. A hedge fund called Long Term Capital Management (LTCM) decided to use

it for trading, so they employed as an advisor Robert Merton. LTCM then lost almost 90 per cent

of the $4 billion spent by the creditors in 1998, which appeared to cause a chain reaction on the

foreign finance markets. This is impossible to explain that this overconfidence in such equations

persisted too long, contributing to the subprime crisis, because the LTCM crisis had already

demonstrated the risks and vulnerabilities in such financial estimates. A hedge fund called Long

Term Capital Management (LTCM) decided to use it for trading, so they employed as an advisor

Robert Merton. LTCM then lost almost 90 per cent of the $4 billion spent by the creditors in 1998,

which appeared to cause a chain reaction on the foreign finance markets. The problem here is not

only LTCM 's equity, but also LTCM number of explanations positions as a negotiating group,

from which certain players in the finance sector had covered themselves.

The rule which was calculated on the basis of past fluctuations in the option price principle or

probability values such as "economic premium" was that potential interactions between demand

and supply could not essentially be adequately represented. Use the same apparently right risk

models often led the market participants to a common investing action. When the equations were

incorrect both borrowers come to the same misguided risk calculation, which worsened the

subprime crisis. The risk models then raised the structural risk, and did not reduce it. In general,

abstract, discrete models of thought are perfect. We encourage the dynamic economy to be

separated into different relations and thus allow for observations about economic activities.

Regrettably even so, the models are becoming so complicated because they're no longer valuable

for educational reasons. The effort expected to understand them is greater than the acquired

knowledge.

It is questionable when macroeconomics, and thus economic math’s statistics tried to apply to the

economic system, are learned as exclusive recognition of the only accurate economics. Rather than

order theory and order politics the state and economics cannot be understood. It seems odd that

certain firms that appeared to be the most financially secure for years will wind up in a state of

failure. It refers to Enron and other businesses, and also to Citigroup and the investment companies

who are embroiled with the sub - prime mortgage debacle. But that still remains true in the short

term. Those companies had economic problems down the line. A few have exploited the lack of

oversight and confidence in the market's self-correcting ability to take advantage of the

circumstance. This really was the development of societal suffering. Mortgage lenders needed to

be mindful of that, because they were specifically interested in operating most at risk of default

for the subprime investors, who can be viewed as the height of financial irresponsibility.

It's no surprise, considering the market scandals, that public respect for management has fallen to

the low point that the management's guild will take to heart. Researches already had developed, in

the 1980s, a rather selfish mentality among US business majors. The conduct is subjective and

opportunistic. Moral understanding is being severely limited. Success and continuity are the first

primary concern, without conditions. This implies, for starters, that they find which solution to be

among the most effective while they have a query to address. This generation of simplified

opportunists doesn't really please staff, as they do not provide the required creative control and

their superintendents cannot trust them.

Pages 94-102

At least, if the banks allowed to balance the portfolios of the debt they have insured, it would lead

to a significant reduction in write-offs. Of course, the banks can submit a request to the Federal

Reserve to refinance the bank and it was possible to implement the financing process at the

beginning of the crisis. The bank and the US administration must have been interested in the

borrowers and not face the problem of mortgage, but unfortunately this problem has occurred

which led to the borrowers losing their homes and most of them became homeless. After this

problem occurred, which led to withdrawing long-term loans from the supervision of banks and

making them short-term loans in order to avoid the same problem occurring, each bank must

realize that this is a violation of the gold rule and will lead to severe consequences. In the United

States of America there is a lot of mortgage and this will lead to an explosion in the field of real

estate and derivatives. The greatest risk for derivatives is leverage. If long-term contracts are used

for speculation, for example, the leverage will artificially multiply. This will influence the prices

by derivatives. The derivatives will distort the basic functions of the market, leading to a different

price evolution. The work of the economy should be without derivatives, that is, with the presence

of derivatives, but it must be controlled properly through the basic mandatory treatment. The use

of leverage of derivatives should be greatly reduced and credit derivatives such as stocks should

be dealt with, so they should be funded with property rights. The coming financial crisis may be

significant, and governments may not be able to save it or avoid the problems caused by it. Also,

reforms in banking regulation go wrong, as they increase the requirements of shares instead of

reducing them to cover systemic risks. There are accounts for people who have great confidence,

and for this reason the mortgage occurred, which led to the emergence of a crisis, indeed the risks

and weakness of these financial accounts. In the year 2005 there were warnings against the use of

models for financial accounts and the best example is the formulas for option prices and he is

responsible for the crisis of LTCM and the formulas were developed to obtain prices to obtain the

rights to buy and sell, and the account holder wanted to speculate what led to the company losing

huge amounts of money and the president of the bank The Central Bank in cooperation with other

actors in the market in cooperation in order to avoid banks from the occurrence of the capital

market crisis. Companies must sell and demand with other companies, and also invest, which leads

to a worsening of the mortgage. Science is able to help solve economic problems. For example,

mathematics and statistics are the basis in economic sciences, but in our time the required effort is

greater than the knowledge gained so there is difficulty in teaching these subjects. Therefore, if

the basis is weak, this will lead to the absence of a real economy in the country. Financial

derivatives are the main cause of mortgage. The reason for this crisis is the presence of a distorted

economy, which is the result of lack of understanding or lack of knowledge in the basic subjects

found in economic sciences. There is no doubt that statistics and mathematics have developed

economic science. There must be a real and practical application which exacerbates the mortgage

problem. Long before the mortgage crisis, there was an attack of criticism against managers and

officials, and these are immoral behavior in the eyes of society. We must not forget that there are

managers who achieve their own interests or manipulate the public budgets of wealth with share

options or bonus payments at the expense of shareholders. There are also employees who deceive

their colleagues at work and this is a moral misbehavior and this problem exists all over the world.

Also, there are international companies that contain ethical errors. The solution to this problem is

the presence of a code of conduct, which is that the employee is able to report anonymously about

the existence of immoral behavior in order not to be harmed, which leads to the aggravation of this

problem. For example, City Group Bank has lost huge sums of money because of the unethical

behavior such as usury and the presence of employees who wanted to achieve their own interests

and not pay interest to clients and also the presence of large corruption in this bank. Companies

and banks that have a state of stability in terms of money will end up in a state of collapse, but it

is the case of the short term, but if it is in the long term then surely you will face financial problems

in the future. The best example is the City Group Bank, which contained immoral behavior. And

the victims of this problem are the people who were persuaded to buy homes, which led to the

occurrence of the mortgage problem, due to the lack of regulation in the first place. This leads to

bankruptcy and can become homeless and life on the streets. The lender had to educate people

and give them some advice, but these lenders only thought about their own interests, and they were

given rewards for their success in issuing loans. But they had no idea how borrowers repaid the

money or what were the consequences of the bank not being paid back. This is evidence of

unethical behavior in these operations. The borrowers had no idea what would happen to them in

case the loan was not paid, or about the consequences that would happen to them, which is the

mortgage. And surely the blame will be on those involved in this process who have deceived and

harmed people.

Pages 103 to 109

The market economy has always been related to the behavior of individuals throughout the years.

Many economists had different ideas about the freedom of individuals and how this freedom

cooperates with the market of economy and how it influences it whether positively or negatively.

Since this debate has been going on for years until the present time, it was important to be put

under the microscope and student efficiently. According to such, and to discuss the topic with more

references with reasonability, it has been stated before that: “The Freedom of individuals ceases

where the other begins”. A statement that limits the freedom of an individual according to the

responsibilities they carry. According to modern economics, everybody has the right to cease their

chances on becoming a millionaire, the question is how? Some people relate social molarity to

economics stating that it is stupid to be honest to achieve benefits maximization. However, the

social morals do not state so and form human behavior according to rewards and punishments.

Economics however insist that the society offers less duty ethics combined with social control to

define a behavior to be good or evil and believe that an individual should have the right to define

their own boundaries to get the maximum possible benefits which introduced the idea of “A Free

Market with no social rules”. U.S. politicians said “Rules are for Fools”, however, Continental

Europe believed that there should be regulations for the financial market stating the concept of

“Ordoliberalism” which aims for the individual freedom to achieve competition. It elaborates the

significance of such activity by providing evidence that the market will never always develop in a

smooth way with constraints and complications if left only to the interests and favors of individuals

as the term “Competition” glows and reflects on prices agreements, merges, vertical restraints, and

others. Adam Smith, an economist, stated that the actions of people are determined by their own

interests which was the main concept of his economic system. He differentiated between an

economic system and economy in general explaining that the concept of the “Invisible Hand” and

the competition in the market are interconnected and define optimal economic activity, which

means that individuals could be resolute about their own preferences, however it will add up for

the common good. However, he stated clearly that following the invisible hand was not enough

and requires a more organized system to avoid any damage. In the 1980s, Russia has followed a

quantitative model by Sachs which made Russia fall economically because the shock therapy

ruined the existing economy losing almost a third of its previous value, and conducting

privatization from a regime that was not democratic. This led to redistribution of resources by the

criminal activities that drove Russia into drastic poverty. Russia faced a hard time due to such as

the level employment was very high and very few people had jobs, and those who had were unpaid.

Education and medical fields were not into process and millions of people were dying because of

hunger, poverty, and illnesses that spread all over the region. The criminal activities increased

drastically which is a normal reaction to the economic situation back at the days. The life

expectancy of individuals has fell to reach 57.6 years old for men, and many serious illnesses

conquered the country like tuberculosis and cholera, alcoholism took over as well as other

addictions which has put the population into a huge threat. Almost two million children were

homeless and another two million did not have the chance to be educated. This has rearranged the

population to become 60% poor and 15% were doing criminal activities to survive. The country

has faced lack of democracy to the point where the middle class did not exist which reflected on

individuals’ behavior and proved the validity of Adam Smith’s concept. New methods to achieve

a successful market economic system were taken which were called “Neoliberalism” were

reformed as to come back with new aspects of a market economy which has failed drastically and

caused negative associations which did not help solve the crisis as the time. Therefore, this formed

a new government that did not stand for justice and caring about the common well-being; however,

they caused more poverty and hunger into the society. The mistake that was repeated was that the

government did not draw enough attention to the social and cultural situation back at the time, and

only took care of their own. Thus, it was very important to consider applying democratic concepts

into the society and practice market economy accordingly to reflect on human capital which came

back from the functions of market economy, it thus reflects on the human behavior which adapts

with the conditions of the market economy and social capital including the practice of common

behavior with the supply and demand and their influence on the market. It might be seen as

predictable, but it is not it is rather a way of achieving competition and attracting customers into

the market to operate. Democracy represents political freedom which leads to active selfless

individuals. Thus, people follow them but do not behave similarly accordingly. Since Russia was

lacking such, it fell. The new government was applying Communism where people received their

basic provisions but the government was making a great wealth which lead to a socialist revolution.

Therefore, it is important to learn from the past national economic experiences so as not to fall into

the same problems again. It is also very important to detect whether the shock therapy that Russia

has faced was a transformational theory or not knowing that the shock therapy a short-term plan

that changes the organizations and/or the institutions to form the planned market economy.

According to the example of Russia, it has been viewed that been viewed that gradualism is a

stable option which inspired China to follow and it is leading to great economic growth and

ownership.

Pages 110 to 116

Summary

This summary is going to go through and provide an understanding and simplification of the

market economy, market welfare and major factors discussed that play a very strong role in how

the market in a country economy operates and what kind of cases or situations can cause the market

to relay a negative long-term effect on the people of a country, and what type of movement creates

an equilibrium state in the market, relating to capitalism, socialism, communism and other systems.

As well as discuss economic systems that were under use and testing in the early 2000s,

particularly between 2001 - 2005. Furthermore, an understanding of the Economic Functions will

be elaborated in order.

In this academic article, Geoffrey Sachs is mentioned over his consultancy in a project to

‘transform’ Russia’s economy, in which he later had to move away from the project after the

American line of Research did not heed his advice during critical crossroads, it is noted that

consultants have the option of moving away from a project when it specifically does not take their

advises and consultation with care and attention during important points and crossroads in a

project, where the chosen decision will take it to a direction with completely new situations that

decide how well did the project move further into achieving its objectives or fall behind them, it

is important as understood that moving in the right direction is more important than going the

wrong direction while doing it ‘right’.

Geoffrey is an economic phenomenon and genius that has advised over 75 countries using an

economic model that was tested and tried as a universal application for any country and its

economics due to its precise and unique nature that deal with the ‘health’ and ‘corruption’ of a

market, using elements such as monopolies, ethical degrees and honesty in the market movements

and dealing, all of which are aimed at understanding the ‘Pareto-Efficient’ state of a market, which

is meant to reflect the degree of ‘fraud’ in the market by showing whether deals and trades are

done honestly and parties are gaining mutual benefits, or some are being deceived and gaining

little to no mutual benefit in a trade, exchange or deal. These are specific elements in relation to

the Pareto-Efficiency chart ratio that play a significant role and revealing whether a market or sub-

market system is being operated in a healthy and non-corrupting manner or not. During his visit to

Russia in the late 20s, Geoffrey expressed that he was very surprised at the corruption running at

the economic foundation of Russia’s economy. Pointing that its massive increase in economic

power and abilities were mostly due to the prices of different raw materials it produces rising in

the global market, which has increased its overall economic growth by 5.5% from 1999 to 2005,

but this is exactly the issue whereby the economy experienced a strong rise mainly because of the

prices of materials it produces/extracts having risen, and very little or almost nothing to do with

the country investing adequately or well enough into its education system and infrastructures,

furthermore it was found that the billions made from this economic growth during that time period

was not used to upgrade its infrastructural foundations and education system, most of the

population did not experience the relayed benefits of this development. Revealing that a market

system without specific rules and regulations on every single member involved, including the

governmental bodies can not function properly, and will cause a disturbance in its health and main

objective of providing the end goal of bettering the society.

The market has certain practical and philosophical fundamentals in order to function in its perfect

picture as agreed upon by most market analysts, economists and philosophical experts. In a perfect

market within a welfare-based economy, the first fundamental basis understood is that humans

have unlimited needs while resources are limited. This then implies that the resources are to be

used in the most efficient manner to bring out the maximum results/output for the main goal of

sustaining and developing a country or society - the peoples of nations. One of the major elements

to sustain a picture-perfect market system that is based on welfare, is the ‘Morality’ aspect.

Whereby Pareto-Efficiency is achieved under two indicators and phenomenon’s, the first is when

the market reaches a state where within the free market and exchanging of goods and services, no

one is able to increase their utility - Business, expansion, sales, production, etc. - anymore except

by decreasing the utility of another party or parties, which would happen naturally in this kind of

market state, however in monopolies this is deliberately used by financially strong and reputable

companies to completely crush and overwhelm quite literally any entity in the same industry that

is smaller than them, which can happen in technical ways by completely taking over the sales

potentials and audience in the market, or by buying out small businesses and taking ownership of

them, and more often than not, by using dark/underground tactics through the use of exploitation,

violence, legal set-ups and so forth. However, in the case of a welfare market, the way in which

the utility of others is reduced is mostly by their own hands, and the way to stay on top is to keep

upgrading, enhancing and developing the products and services that a business or company creates

for its market. As a final note, the functional elements of a competitive market economy run in

order as follows; Productive Efficiency, Sanctioning Function, Freedom function, Control

Function, Adaptation Function and Innovation Function. These are functions that involve the

fundamental practices and areas of a healthy free market in which every member is responsible for

their own utilization of resources, finances, exchanges and production, whereby the goal of

benefiting all members of the nation is much more approachable and sustainable, in a dignified

practice of regulation and monitoring.

Pages 110 to 115

The market and morality have rules that must be followed, and one of the most important of these

rules is that there must be a radical and significant development with an impact so that effective

advice is provided to benefit in the development of economic projects and work on the prosperity

of this project and its renaissance. There should be centers dedicated to consulting according to

mathematics. And econometrics to facilitate and pave the way to reach the amendments required

for global application This will positively affect the economy and will increase the state’s income

due to the ability of its effective administration to study projects from the economic side and other

aspects related to the economy. This will give it confidence between countries and will make its

income doubling, because most countries want to participate with them to establish joint economic

agreements. Both countries benefit from economic foreigners.

Russia has succeeded in developing its economic level after a massive failure that cost it a lot

because it did not conduct the required and sufficient studies to complete the launch of economic

projects due to a lack of awareness. The project, which is based on the fundamentals and rules with

solid foundations, is often successful because of the study of the economy and long-term planning

and the addition of expected possibilities If there is a failure and follow the plans previously

monitored to solve these errors and correct them before they become mistakes that have no

solutions and this will lead to a catastrophic failure in this economic project that can destroy the

economy of an entire country then the state must undertake the required studies to avoid what can

happen in the advanced years by setting Effective non-temporary alternative plans.

How the market economy works? The economic market is not only fully responsible for the state,

for there is a large and effective role for the individual, so that the responsibility that paves the

way for its financial and economic stability for a longer period, the individual must also apply the

systems and regulations and adhere to the specific behaviors required to avoid failure and in order

to obtain A systemic market that is more effective, the individual must provide goods that suit the

ethics and behavior of society, even if working in the unethical market is profitable, the individual

must not work in this because it is a temporary and illegal entry, there are other solutions to meet

the desirable needs of consumers, which is to provide goods based on ethics and these A successful

and superior alternative plan and its income continues and dose not disturb .

The perfect market in welfare is the market that produces large quantities in meeting the needs of

the market and not all commodities are required and each commodity differs from the other as

much as it needs the consumer and the extent of its importance to them the productive partners

must work to balance the production amount by establishing a study to know the desired goods

with the consumer and Working to increase its production from others and that They are used and

distributed well on the purchasing centres so that the consumer clearly has a choice in front of him

to be able to buy and benefit from them and benefit the companies producing the financial return

and the companies should not stop producing these goods because of their knowledge that they are

goods suitable for the consumer they must also continue to develop in the production of new goods

that benefit Society and develop it Companies can benefit from their production of goods, they

added benefits to the buyer and also the issuing party, but at a reasonable price that is not

exaggerated and not exploiting the needs of the consumer due to knowing the extent of his need

for that commodity and fraud and defrauding it because that does not comply with the ethics

regulations in the market so that both of them can benefit from that when Raising the price of the

commodity, the consumer will avoid buying it or will buy it in limited quantities, and this will also

harm the production partners . Companies must not take advantage of the consumer's needs when

raising the price of the commodity. Because there are also companies that produce the same

commodity and sell it at a much lower price than other companies, and this will necessitate

competitions between them, and these problems will result in losses for the occupied companies.

Therefore, balance in listing the price of the product is one of the basics of success in selling it.

For this to apply according to the terms and principles of the Ethics Regulations.

To be able to increase production in companies, companies must provide adequate, necessary and

appropriate support to all of their workforce and motivate them to continue productivity and

develop their capabilities by giving them the necessary courses and adequate education and

teaching them the correct behaviours that are the main factor for the companies ’development if

the employee has limited thinking that will make him a neglected person In his work and to

accomplish the tasks required of him and to delay and delay the productivity of the work, the

employee must be of high creation and bear all responsibility and sincerity in his work in order to

be able to produce everything that is valid, as the neglected employee who is failing in performing

his work and duties that will cost companies a lot of losses, it is necessary to educate The workforce

has the required behaviours and ethics in order to be creative in work and develop commodity

productivity, so a crew must be provided to guide and educate the workers and raise their spirits

in giving them bonuses . To be able to creatively complete their work and seek to rid the business

before the required time, thus the companies will be developed and effective in society and help

spread the benefit to the employee, the customer and the customer also will trust more in the quality

of the goods sold to him because he knows the extent of the interest of this company in its

employees and enhance the love of work to produce what Need the highest quality

Pages 117 to 122

Joseph Schumpeter sees that opposition is a manner of innovation and subsequent imitation

(imitation function). The successful innovation on the part of the pioneering enterprise proves

a competitive benefit over different companies on the market who have maintained

their old manufacturing structures. Above-average income is won from this advantage, which

in turn makes different organizations prefer to copy the invention, or even forces them to do so if

they do no longer prefer to be pushed off the market. This is how the

new, resource saving methods of manufacturing come about, and as a result brings

about considerable technological progress and manufacturing growth.

The kingdom needs to defend competition in order to make certain that agencies cannot elude

the competition functions. Are these features relevant at the global level, though?

The competition forces businesses to continuously try to acquire competitive gain via new produ

cts or manufacturing processes, or at the very least to catch up with the

competitors’ competitive advantages. On the one hand, this reduces the use of assets and, on

the other hand, adapts to adjustments in the relative fees of production factors.

This precept should be the equal internationally, even though there are country- specific absolute

and comparative cost advantages (Ricardo’s Theory of Comparative Cost Advantage). According

to Ricardo even a unilateral liberalization of overseas exchange would give the importing usa an

advantage. Scarce production elements in character international locations would stability out

internationally, which would in turn lead to higher total productivity. The greatest phase of

world exchange takes region inter-ectorally, which capacity within a department and between the

western industrial nations that have similar value and demand constructions such as capital and

labor provisions.

The vast pallet of merchandise to end result from this manner is also a gain in welfare. Gains

are also possible digressively, in different phrases with

a decreased quantity of manufacturing within the framework of international specialization. With

the extended demand corresponding to the world

market, production amounts expand and accordingly unit costs decrease. In precept then,

globalization as countrywide markets developing nearer together into one national market leads

to a universal higher level of welfare. How the benefits are allotted is another question? This

is typically because with modifications in global manufacturing the jobs are shifted

and motive temporary structural unemployment. Unfortunately, the advantages and functions of

the market and opposition are not public goods, which is in reality the essential source of the

rejection and hate directed at the market, and at the worldwide market in unique.

The market can no longer solve all human problems. The answer that the market has developed is

that each man or woman pays for the performance they want. The problem creates a demand that

creates its own supply. The market only is aware of the principle “due ut des” as the precept for

trade. This mechanism regularly functions, but now not always. The reach of market forces is

limited. Superordinate and subordinate relationships have constantly exited. In every team of apes

or humans there is a social order. There

are also exclusive mental and bodily skills and specific get admission to to resources, in

particular in humans, which determines power, dependencies and hierarchies. For example,

the useful resource distribution in Latin America and many developing countries cripples

their monetary development. Whoever was in a position to seize something now owns it. Lands

and property have frequently been inherited within the equal household for centuries. Like noble

titles, the youngsters of these families have inherited the fortunes of these households except any

effort of their own. They have the capital for worthwhile investments.

A shortage of property means dissatisfaction, on account that threatened survival capacity having

to enter into structured employment, or the condominium of one’s own time and labor. The

distribution of profits in a market economy is solely oriented closer to overall performance to

a certain extent, due to the fact the preliminary distribution of wealth is in another way inherited.

However, a market economic system with the correct conditions provides for a distribution

of profits based on performance, and as a consequence leads to

an extra balanced fairness distribution with time. Business ethics locations people above the

economy, and assumes that the economy have to serve the people. There are other perspectives on

this, whereby monetary success justifies the means. Economics would then be positioned above

morality. According to Calvinism, economic success is s signal of God’s benediction. Economic

success is accordingly not solely morally legitimized, but those with success have been chosen by

way of God. There can rarely be a larger incentive to attempt to earn more. Hard work and

asceticism are then the crucial traits of a successful Calvinistic enterprising personality.

The human issue as individuals is the central actor in the market economy. In a

market economy the market mechanism coordinates the plans of humans through the

market rate which matches supply and demand. The basic prerequisite for a complete economic

system to improve optimally is that competition dominates the markets. Private property and its

augmentation are the primary incentive for individual financial exercise.

Moral values are expressed. via “fair competition”. This consists of the moral demand that the

fruit of the market, income, have to solely be received by these who contribute,

in different phrases these who outdo their opposition through an alternate of effort on the market

and open competition and no longer thru advantages. Whenever property is now

not earned through effort, the neighborhood will now not take delivery of an unequal distribution.

In excessive instances belongings are immoral, when they are bought thru theft and fraud.

Moral values can be found, for example, in the term “fair performance competition”. This implies

that the ethical demand that solely these who perform well receive the fruits of the market, the

income, that they not downside competitors in the market and that

they prevail in truthful opposition via their very own efforts.

If assets are not earned through performance, there is also a lack of public acceptance for unequal

distribution.

Pages 123-128…

Pages 129-134

We all know that us as humans are imperfect, and that we sometimes make decisions that benefits

us more than the society. Focusing on the decisions that humans make in the market, in most cases

causes economy to decrease because in most cases human’s decisions are unperfect. Therefore, if

the market was perfect then there would be no successful investors. Due to humans making

different decisions that might not have any social benefit then this will lead to market failure.

However, there is something called public goods which comes for the national economy to benefit

the society, and these goods are available, but are offered in limited amounts. It is well known that

markets are willing to fail and this is accepted by many people. Another case of public goods

would be that people cannot be prohibited, would be an internal and external security. Many people

would not want to be part of the cost or the financial field of the failure of these goods. Therefore,

countries have put compulsory taxes on these goods. Taking a look at the private sector which also

has these public goods, and they face the problem of free riding. Sometimes when people try to

purchase an exclusive item and they are not able to, people would not pay the cost, but still use the

item. This kind of act goes against many moral behaviors. When moral and ethical behaviors are

practised in the market it opens better an greater deal. When everyone agrees on the same level of

beliefs its beneficial for many people. The benefit would be that it is going to be an advantage for

everyone, and less competition in the market. Individualism versus collectivism of public goods

appeared to be more significant to social standards. To have a perfect market, people in the market

should have all the data of each decision. Therefore, on person should make the knowledge of

trade, contracts, and the intentions clear to people who are not aware of them. However financial

members have different information and one party of these different information can send the

misinformation to a service that is less educated. This party’s values and less then excepted so this

less to different kinds of situations. That’s why traders have different characteristics or information

on the goods that are being exchanged this causes negative choices. An example of that would be

that on some products in the market that are unethical and can be a disadvantage to the buyer. This

issue can be food in mysterious markets, which buyers or dealers don’t know each other and these

trades will not happen again. That’s why the seller in that case would misdirect the buyer with

data, without fearing that the buyer would know anything or even come back. In most mysterious

markets which can be financial markets people usually do not see each other after the buy happens

because in big cities people don’t usually know each other. Another area where this issue of

covered characteristics is staff management. Due to covered characteristics mangers or bosses

would not be able to qualify the workers properly and a chance of disappointment evaluation can

occur. In the past, company’s administration would have worked at difficult stages and different

types of characters. Moreover, the risk of disappointment due to covered up characteristics since

the administration had to demonstrate itself within the company for a long period of time. Be that

as it may be that these issues with covered up characteristics, covered up data, and covered up

activities exist on different levels. Screening which is the individual that moves forward in his data

level by gathering the data through specialized parties. Signaling which is the educated party that

gives data by offering a guarantee. Quality which is the moral behavior in covered up

characteristics that would avoid the superior- educated from the less-educated. Usually companies

does not know how the employees would act after they start working. These would be hidden

actions. Contracts are meant to be an advantage for both sides, however sometimes one side betrays

the other side. These kind of problems happen in the insurance industries, because after signing

the contract many insured individuals change their behaviors and this causes problems between

the insured individual and the insurer. In some cases, the insured person purposely destroys the

insured item, thinking that we would get a replace. There is also another thing that is called hidden

intentions, and from the word you would know it has to do with people’s intentions. As we all

know that a contract has do to with two sides agreeing on one thing. However, one side may have

hidden intentions like when it comes to the payment. In some cases, when the partners meet

together, one of the partners would try to study the company really well, to build his own company.

Some kind of market failures would be transactions fail. This causes the income of the market to

decrease. Due to the world being small and the cost is becoming higher. However, taking a look

at the services each country is providing is getting faster and more cost effective. In order to

continue the business properly everyone should be able to speak English. In many cases contracts

are at risk to be broken because of the different ways people can behave after the contract signed.

However, moral beliefs can lower the effects of transaction costs. For example, when a country

has strong morals and beliefs, you would be sure that some people of that country are moral as

well. The most important factor of a person or a company is their reputation. Therefore, every

company should take care of its reputation and also each company has its own reputation. After a

couple of crises that are happening many people stopped trusting companies. For example, the

subprime crises that stopped people from trusting banks. This is a reason why the economy after

the crises collapsed.

Pages 135-140

Champanzees had created an app that displays the political behavior of human. This app is made

to put people in groups that are coded with the same genes which they have shared behavior. The

dilemma is a good thing for individual because they can work with their own ideas and doesn’t

have to take his partners permission, which sometimes it will cause trouble with the partners.

Uncooperatively people will have problem to trust the people who is going to sell them the product,

which causes cheating and will make the people lose by not getting a good quality product or

losing money. The best case is never sell or buy a product without a bank transaction which will

be safer for both side the buyer and the seller.

Trust is important, you must trust people which have good moral behavior because if you can’t

trust the buyer it will be bad for you because the buyer can cheat on the seller with a bad quality

product with a huge amount of money. Trust for companies are always essential, because

companies always sells and buys with other companies. If the company with a good reputation you

can easily trust them because many companies have tried their experience and if it was not good

the reputation of the company will be bad. To keep your company well trusted and have a good

reputation the company need to be trustfully. An example of trust is a bank and a customer. When

a customer comes to a bank and puts his money the bank will recommend poor stocks that makes

a lot of money and let other people sell this customer a lot of life insurance which the bank

recommend that he should have five at least weather he wants it or no. This problem will cause

the customer to take all his money and put them in another bank where he can trust them with his

money.

There is a game which is called “Gift exchange game or trust game” which has started with a

chewing gum then with a 10$ bill. This game you can start with 10$ and wait for the responders

maybe he can give you some respond after a while, then they can keep adding so your balance can

go up. This game has only one round there is no second chance, the unknown responders have a

strong interaction of the money that is being transferred. After the confidence the companies

balance was cracked, because no one have trusted their banks so the confidence was lost and no

way to get what the company has lost.

Dilemma plays a big rule in businesses especially with individual, if a person with a co-operative

behavior he will act like he is an individual and not make decision with the partners that he is with

in the business. So the best way to solve this issue is to behave like a non-cooperative which works

best with individual that he can decide everything by his own. Have his own risk and take all the

profit for himself not like the people with cooperative behavior, they have to share their risk and

also share their profits among the partners. Also the last point there will be no cheating if you have

a non-cooperative behavior because you will be individual and take everything for yourself. Also

dilemma and asymmetrical information will cause problem if the individual is not familiar or

making a deal with one sided individual which they will be afraid by selling you product and don’t

get the amount of money that they have requested.

There are companies that have high cost, this causes that country that they are living in has high

currency from the other country. To fix this problem, the companies should have their employees

and the managers and everyone working in that company have a good moral behavior. Because as

we said if a company has a good reputation and a good moral behavior people will buy and trust

its company weather they are very expensive or very cheap because they will see that this company

has a great reputation and can be trustfully.

External effects include third party people. Which means there is a help that coming into the

business without being expressed in the market prices. There is two kind of external effects: 1.

Negative effects. 2. Positive effects. The negative effect can cause a harm to a business which will

cause the business paying taxes and suffer. On the other hand, the positive effects will not harm

any business. In fact, it will help the business by not paying taxes and not having a damaged

product. External effects also causing wrong major because they are reflected in the market price.

And the market takes individuals in advantage because individual will make their own individual

so can easily make profit out of them.

Take this into consideration, the flight causing negative feedback because of the exhaust gases that

is mostly CO2 which is causing pollution to the environment. Also airplane is causing a lot and a

lot of noise for the people of living next to the airport they are not flexible by the sound of the

plane which is so loud that they can’t sleep and be comfortable at their own house. This causing a

high negative external effects that the flight seat is too expensive, well the prices does not cover

the cost this is why too many flights are in the air. However, the negative effect should be fixed or

at least have less damage and harmful to the environment. This can be fixed by ethical solutions,

how? Businesses should think of the environment like they are their family and say “if I love my

family why should I harmful other families” which means that If this products causing harm for

the environment think if your family they will be harmed so whatever you don’t want to be

happened to your family don’t do it for the people have some moral behavior. (words 1008)

Pages 141-146

Siemens is covered by the front slab of the current layout and features a widget decorating feature.

There has been endless unlimited trade, business management teams, and numerous complaints

within the multinational segment and industry world. Evaluation of the submitted statements

submitted by the Siemens director's methods, although the site's work reviews open facilities, the

fact that the site took place in 2001 and 2006, appeared in part. The three billion rand worked in

the form of those debt financing programs. It is an add-on, so the cost index doesn't look like a

cloud yet. In 2007, Siemens transformed the characters through open market introductions to

original markets, pre-recorded imagery, and billions in training.

Internal contamination is the mismanagement of the situation in a personal encounter using the

nature of the personal incentive system and the basis of an open diary understands the abuse of

open office. Shameless habits can damage the frame in this special situation, the super mannequin

is immoral, and the offensive frame is dirty. Individual rejection improves slightly in the

complexity of the entire framework and can therefore be able to damage the framework and

temporarily. thirty-seven, a private customer was paid for by using a terrific and excellent provider

and with extra money was going to hurt the government, the outline of the market gadget in this

way the whole network. The company will be looking to pay more for a comparative sum for basic

adventurous purchases than for the buyer of an unbiased, unbiased first-hand delivery item. There

are creators who view money laundering as a deliberate act, where a two-factor thing prevails,

where money cannot be compared to physical damage. The risk-focused factors are rooted in wage

gains such as the Hasten-Money Inventory. The destructive nature of the private sector often uses

money as an incentive to engage, and thus makes the advancement of the sector a fertile phase.

Cash turns out to be a major problem in the framework, thus unleashing a lot of power to mistreat

many people who are blocked from the powerful process. eighty-one unreliable pollution results

in the dismantling of the weekly draft. It is to a great extent that the two circles participate in

thinking about the danger they may experience. Debit is also misleading as it disables the

profitability of the merchant's financial gadget from the power of dispute. The eighty-two credits

of the majority class put a stockholder in charge of the fines to be recorded by the enemy of the

dirty auction and distance themselves from the honor of open long-term contracts. In addition, this

authorization will have an impact on the financing of organizations, for the real reason now not

everyone is receiving open contracts.

Damage is of far higher quality than the benefit of the compensation. Therefore, the damage to

someone's paid coverage that allows for multidisciplinary treatment is often greater than the benefit

of the pharmaceutical organization. In any case, the rate and pay, as noted above, do harm to others,

which is the cause of the deduction. While it is considered interesting in the text that a trust

relationship is established between the moment and the bride of a commercial contract, this relies

on profits, growth of the resource, linked by payment. The Bremmer will no longer be able to show

the highest paid location, and the bill does not apply. Whether relationships give records or not,

now high-definition clowns are given to find the man or woman or something better, or that the

person or thing is too big, and should be re-calculated by looking at the relationship. In that respect

there is little to think about, but the burden is with the help of the relationship.

The U.S. anti-Embassy Debauch Comply Act in 1977, in addition, accelerated the reintegration of

open government with the emergence of American businesses and citizens worldwide. As various

international locations no longer followed, and Germany pushed for a long-distance payment to

help facilitate shipping, the FCPA initially had a negative impact on the depth of American

organizations. In 2008, the SEC demanded that $ 1654 million from Nokia's hiring be paid to

foreign professionals based entirely on the US Embassy Debauch Comply Act, a $ 350 million

reductions to the SEC and $ 450 million to the US. Ordination. $ 854 M to a German official.

Introducing temporary green opportunities to transgender people and transactional relationships

for capture and capture in 1998.

Nations are filmed using the idea of dirt on the open stage. As an External Openness, the CPI is an

almost universal means of achieving global pollution. Improper performance is performed as a

reward for the average risk, for example, the risk at hand, along these lines as a motivational force

directed at the agency's or network's background activities. The corrupted comport lately is a bad

slogan for the pin owners of friends and driver. The well-being of an organization is being

jeopardized with the help of using misconduct. Good, good manners are unequal in the

organization. Shameless practices severely harm the public for the most part, from the elevator

forms, the types of internal production facilities and the decay of culture. The local emergency has

checked that the framework for restrictive and regulatory policies cannot be implemented. inquiry

existing therefore which refined realities now pertinent for profitability therein an entrepreneur

enterprise and country wide economic system and how they able being utilized. To be an increasing

number of precise, in what manner can the normal inclinations, inspirations and wishes of

representatives be utilized to advantage the employer and exclusive workers? What would possibly

this type of the board or organization method resemble? First, we need to symbolize a corporation

all the greater unequivocally notwithstanding, what its capacities and wonderful highlights are. Let

us suggestions scholarly study. Establishment monetary things characterizes a successful

enterprise as "an alliance of asset vendors restrained through a correlation of authoritative members

of the family that is administered by means of a settlement want and teacher proxy–the financier.

This differentia portrays the synthesis of an organization, on the other hand would not usually

tackle its center.

Pages: 147 to 152

1. Company, Organization Principles

We can define company as an alliance of asset proprietors limited by a nexus of legally binding

relations that is represented by an agreement choice and monitory operator, the businessperson.

Then we consider the capacity of a company is to keep away from exchange costs. This would

make organizations a unit that controls tedious exchanges inside and remotely through long haul

contracts, which would then spare exchange costs. The unequivocal attribute of an organization is

neither long haul contracts nor group creation, however association all by itself. An organization

doesn't need to create in a group to make benefits and a few difficulties must be defeated to make

an additional worth helpfully. Reasonable standards for potential clashes must be found. In

organizations this frequently appears as the drawn-out agreements referenced. In addition to the

fact that they reduce exchange costs by directing execution and pay between the business and

worker of the long haul, which envelops the social incorporation of the on-screen characters in

group creation, yet they likewise control the ability to settle on choices and along these lines every

inside right and obligations including the dispersion of included worth made in the organization

as profit.

2. Cooperative networks principles

Cooperative networks considered as a social construction that creates added value. Cooperative

networks are the primary degree of participation whenever estimated by multifaceted nature.

Associations offer structure to collaboration, placing the agreeable systems in an increasingly

unpredictable request and chain of command, with the goal that progressively intricate procedures

can be organized safely over the long haul. Long haul contracts are fundamental for this. These

are polished types of collaboration or by and large strong communications among numerous

individuals, which make included worth. Each group is a helpful system; dreary work is appointed

inside a group and rehearsed in participation together. Companies are commonly comprised of a

few intuitively collaborating systems that are remembered for the association as a task of

capacities. Cooperative networks exist outside of organizations be that as it may. A soccer group

is another case of an agreeable system that isn't an organization. A soccer group can be made

unexpectedly, which clarifies that drawn out agreements are not basic for helpful systems.

3. Social, Human and Individual Capital Principles

Social capital can be clarified as is the entirety of the requirements for efficiency an individual has,

yet just in a gathering, in this way social as in they must be acknowledged inside a general public.

Social capital is the entirety of the essentials for efficiency an individual has, however just in a

gathering, subsequently social as in they must be acknowledged inside a general public. The

rehearsed agreeable and educational conduct of individuals in helpful systems is social capital,

since it can just give an additional incentive through the communication with others. Another

model for social capital is drilled social conduct, including excellences, ethics and neighborliness.

Human capital can be clarified as the entirety of the requirements and potential for included worth

creation where individuals are included and fused as profitable powers. We can separate here

between social capital and individual capital. Human capital is certainly not a static factor.

Likewise, the establishments and associations change. Socialism and Fascism are philosophies.

Like religions, they give individuals clear virtues and social rules. They give activities a reason.

Human conduct is given a worth that goes well beyond the material worth, and it along these lines

turns into an incentive all by itself. Qualities as human capital can propel social orders just as

specifically organizations and national economies by animating the beneficial powers of its people.

Individual capital can be clarified as the entirety of the requirements the individual has so as to

deliver included worth, making an incentive without the network or outsiders. Training as a

goldsmith is a case of individual capital. Every individual has different capacities as a social being

and person. An effective business association looks to consolidate these helpful characteristics

through an organized task of capacity – through the incorporation of genuine capital, for instance

by uniting hardware and licenses – to make a more noteworthy synergistic entire and in this way

the ideal production of significant worth. Human capital through individual and social capital and

genuine capital make for the firm the most extreme advantage, or most noteworthy conceivable

joined association of benefits.

4. Immoral behavior effect

Immoral behavior reduces the additional estimation of authoritative structures. Let us accept that

representatives are doubtful and don't help each other any longer. On the off chance that they don't

trade data among themselves or educate themselves wrongly, the additional worth they can reach

through division of work and participation will diminish. Immoral behavior from top chiefs has

the best negative impact on partners and investors. The organization's prosperity is menaced by

immoral behavior.

Pages 153-158

This essay will discuss the business ethics and its effect and what are the consequences of immoral

behavior and how to deal with it in a business ethical attitude, Bad behavior can affect the whole

community and can damage many companies interior relations that is why bad behavior should be

punished by the law and to set up some ground rules the people can work with and to obey the law

or else they will answer to the court and will prosecuted, without these laws and ground rule there

will be chaos and it will be hectic and too easy to control peoples attitude and behavior, however,

to those who follow these rules and morals must be rewarded in any way possible just to keep them

motivated and to encourage to get better with their behavior, attitude & morals, otherwise, if they

don’t activate these procedures as soon as possible there will be no guarantee for fair work in

business work and companies, moral behavior and attitude can really reflect on the work

environment and can statistically either improve the ranking of the business or decrease the

business ranking which can hurt the company’s reputation this is why monitoring the moral ethical

behavior and attitude in work or in our daily lives is really the full package of either or descending,

it’s not to control individuals freedom it’s just to keep our emotions and our reactions in check in

case something went wrong, that’s morals and ethical behavior should work and that’s how it

should have worked a long time ago, but it’s not too late to get up and start making changes so that

you I can improve yourself not just as individual but as a team worker too and also a leader.

Nevertheless, all companies want to reach the peak of gaining profits, but ask yourself this, is it

connected to morality, the base of life and business and the economic structure is connecting,

communicating, interacting and engaging without out crossing the line or cheating, it is hundred

percent fact that to achieve and prosper is to take the risk and take hardest step and the hardest step

ever is the first step, what comes after this comes continuation with the target which will lead to

efficiency and fruitfulness and to gain more profits there should be trust and fairness, as they say

one for all and all for one, that means when something goes down pointing fingers won’t be the

solution, the whole team should take the blame and start working to fix the problem, when an

investment goes badly in the company no one should gain from its lose, this is fairness and equality

in business, no shareholders or stockholders benefits from the company’s losses, that means

everyone is equal and the company is united, in business this good and it is financially and ethically

moral.

No lets discuss what are the weak points about controlling an employee or employees or the team,

researchers have found that even if a manager controls those below him for the good of the of the

company and to increase and maximize profits it might not be the best solution, because you see

controlling means having the authority do what comforts you regards off whether your employees

feeling and comfort, which can lead to a bad ethical behavior which is not good, and the tables

could turn on company and damages its reputation so instead of gaining and increasing the

company’s profit, profits will go down, people will have second thoughts before doing business

with this company, people will not feel safe investing and buying stocks knowing that it carries a

bad reputation, so yes, forcing anyone to do anything is immoral and not ethical for business, yes

setting ground is good for business, but it stops being god for business when you start making the

employees uncomfortable, there are many unethical factors that happen in offices like, coming to

work and not being productive with less active performances, but shows up and starts acting in

front of the boss is move is completely unethically the wrong thing to do.

In conclusion, ethics, behavior, attitude and morals have a huge role in our lives, not just in

business but also in our daily basis of living and connecting and communicating, improving

yourself to fit in a company and to be ethically appreciated takes a lot of time and hard work,

because morals and ethics are not materials, they are behaviors, ethics can build the reputation of

a company just as easily as it can ruin it, this is why maintaining a good reputation with your

colleges at work and with your boss the can really help gain reputation and also profit the company,

the same goes to the whole community, law should to protect the people who have ethics from

those who do not, because they cause harm and danger for everyone in business or in personal life,

and the law should punish them, for they can cause bad reputation for the company plus decrease

the company’s profits, we also learned that forcing employees is not good for business it is not

ethical and it shows bad authority which have proven that it can affect the company’s future and

present goals.

Ethics and moral are a way of living in harmony and peace, it also gives you charisma and

motivation to get better and be productive and helps perform your work properly.

Pages 159-170…

Pages 171-176

Institutional Ethics

A fair performance competition is created when all competitors behave morally. Moral behavior

by economic order is necessary for the wanted outcome. However, companies are often forced to

act immorally as a way of gaining an advantage over others. Immoral behaviors such as libel

promote a lack of transparency that may affect the customer’s trust in a company or its products

and services. Therefore, they may not be willing to buy anything from any company, which is a

situation referred to as the prisoner’s dilemma. The prisoner dilemma, therefore, influences

companies to behave immorally as a survival tactic since they are assuming that their competitors

are also employing unethical practices to get an edge in the market. Therefore, it results in a risk

of unfair, predatory competition, which affects the achievement of the economic welfare potential.

Ethical imprisonment only occurs when morals are not enforced in society, and it ends up being a

dilemma that impacts not only companies but also employees. It does not affect the external

competition of companies but also the internal ones, such as when employees lie as a way of

gaining a career advantage over others. Therefore, it affects cooperation within the internal

structures of a company, which impacts teamwork and productivity.

For a fair competition, the ethical prisoner dilemma follows the Nash equilibrium. It follows that

the worst-case scenario occurs when a company manager A employs moral practice, but the

manager of company B does not. Therefore, the manager for company A is also forced to employ

immoral practices even though B does not have to change their strategy. Therefore, both

companies end up applying unethical behavior; thus, resulting in the worst case for all involved

parties. Therefore, without ethical rules, a company may find itself in the worst-case scenario when

the ethical dilemma arises.

Therefore, companies can try to change the situation by requesting a change of the regulatory

framework from the government even though such endeavors are very successful. One study

revealed that managers, even if they believe rules are meaningful, will likely fail to follow them if

they believe that their rivals are also not doing the same. Therefore, the uncertainty about the

other's conduct is what leads to the prisoner's dilemma. Even if all the companies want to behave

ethically, they cannot since they run the risk of falling into the worse-case situation. Therefore, the

solution to the problem is clarifying the value of moral behaviors to A and B, as mentioned above.

Another solution is rewarding moral behavior with incentives and lastly, binding contracts with

sanctions, and state control for cases of misconduct.

A company is likely to fall into a worse-case situation when rules are absent. Companies are likely

to escape the ethical prisoner dilemma through incentives such as environmental subsidies. It is

possible to counteract unethical behavior to ensure that it does not grow in the workplace by

developing social morality. Social morality can help shape people before joining companies. It can

also create a more ethical environment and culture within companies; thus, ensuring that moral

behavior will take precedence in such institutions. Institutions are places that serve people.

Institutional, social, or order ethics describe the ethics that deal with moral institutions. If it is not

a dictatorship, institutional ethics arise from social regulations that govern the collective. The

community is responsible for creating these social regulations that, when institutions attempt to

circumvent, must be held accountable.

In contrast, institutions also shape the community together with norms and values that determine

the socialization of people. For instance, the legal system is an institution that sets regulations and

rules that determine the consequences that will be assigned to immoral actions. In so doing, they

create incentives for people to adopt more acceptable behaviors. In the workplace context, these

laws protect employees from their employers as well as employers from any liabilities. However,

such a state can only be effective in democracies due to the equitable share of powers. Social,

moral norms and values are important since they demonstrate the type of behavior desired by

society. Therefore, positive behaviors that follow these norms and values are rewarded while

negative acts are sanctioned. If there is equality in the distribution of these provisions to the public,

then people are more likely to follow the set rules and regulations.

The creation of laws follows a legitimacy that ascribes to societal moral norms and values.

Unfortunately, legitimacy does not usually mean that some actions or rules are legal. For instance,

racial segregation that was once rampant in the United States is illegal, but it was a law at one

point in time. Another example is that of child labor in some regions. Even though the act is illegal,

many companies benefit from it. Unfortunately, many of these unethical practices often go

unpunished due to the lengthy court process that people want to avoid or lack of financial resources

for the victim of such actions.

The case of the Salmon Brothers provides a perfect example between legality and legitimacy.

When trading for government bonds, a report was made about four top managers for legally non-

conformist behavior. Upon checking with their legal department regarding if they should file the

public lapse, they were informed that they did not have to do it. However, their silence, later on,

led to an estimated loss of one billion dollars after the incident came to light, causing a massive

breach of trust that led to contract and customer losses as well as the fees used for refinancing and

for legal issues. The laws and regulations that state regulates dealings between stakeholders and

companies include Employee protection rights, Protection of consumers, Investor protection,

Environmental protection legislation, and Animal welfare laws and regulations.

For societal processes to run smoothly, there exists a variety of prerequisites required. A smooth

functioning societal and economic process needs the production of goods for survival and

investment, inner stability, good behavior, low crime rates, social morality, politeness, and a

general harmony among the population. Social education is necessary for transmitting good

manners, behavior conformity, and morality in society. Therefore, social education is needed for

society to thrive and must be a product of the population. However, even though laws assist in the

smooth functioning of a society, they are not sufficient. The absence of morality invalidates their

hold on people. When the punishment for unethical practices is not persuasive enough or when

regulations are incomplete, laws can be ignored or circumvented. Furthermore, since they have to

be universal, laws can be inaccurate, which leaves them open to numerous interpretations. For

example, as compared to other illegal acts, economic crimes are rarely punished. With the

developing economy and technology, more laws are yet to be created for immoral acts. For

instance, the internet provides a breeding ground for immoral acts that may need the creation of

new regulations. However, the bottom line is that laws are no good if the people are not willing to

follow them. Therefore, they have to be made more stringent, or incentives have to be attached to

them to make them more ‘attractive, for the population and society as a whole.

Pages 177 to 182

With the evolution in the various fields, laws also have to be updated in order to comply with the

continuous changes in technology and economy. These legislations have to be global based as the

trade movement is going beyond borders like shipping trade while providing these regulations with

morality customs. In fact, the good nature of man is the main pillar in any community regardless

of any education which may not be useless in case people are bad.

Summary

Economical products are essential for the society, whereas good humans who behave in a respect

manner is also important for the internal security and the stability of the society. So good manners

and morals should be a priority as they can’t be applied only through authorities. In fact, the

absence of these essential values will result in a whole collapse of the society and social harm for

individuals.

Comprehension questions

1- Solutions and causes of ethical prisoner’s fair competition and at the expense of third parties.

2- The reason behind the variability between legality and legitimacy?

3- To what extent is morality essential for the functioning of a legal system?

6.4 International business ethics

Role-play game: globalization

Some mixed roles including a labour child, His parents, Consumers, Foreign producer, Local

producer, National unemployed to be used to apply the ethical evaluation approaches in this

chapter in order to find a solution to such a globalization problem. Discussions about the problem

would generate the ethical violations. The situation is clear that according to the globalisation

terms, any unethical behaviour is accepted as long as it achieves profit like the case of child labour

in china. With the emerging of global competition, there must be a global legal legislation that

govern the ethical management so applying the discussion approach may result in some suggested

solutions including:

1. Transparency and sanctions

2. International quality seal

3. Incentives

4. International Code of Ethics

6.4.1 Non-Governmental Organizations or Civil Society Groups

These organisation working in various field including environment, human rights, ant-corruption,

health, health food and fair trade with third world are endeavouring to establish an international

ethics framework to control the misconduct of groups and individuals. A possible solution is

establishing an independent international arbitration system to monitor the trade. They can be

given some prosecution and judiciary functions before appealing to the world trade organisation

in case of violations.

6.4.2 International Quality Seals

There were some steps to implement a global quality accreditation upon work like the certification

of the flower labour program upon the cut flower production which was a trial to monitor the

ethical working social and environmental criteria upon workers as an elementary step towards a

quality seal.

Fairness seals can be implemented by other non-governmental organisations on some products like

food and goods. For instance, The Clean Clothes Campaign (CCC) endeavours to sustain better

working environment in the clothes industry where workers in cheap labour countries were cheaply

exploited.

6.4.3 Incentives to overcome the international prisoner’s

Raising the ethical awareness of consumers and investors will force the companies to coincide

with this behaviours as ethical managements pays back. Many companies have taken the initiatives

to apply ethical incentives such as 174 investment funds in Germany in 2008 in order to apply an

assessment according to some ethical criteria for investment development. In addition, purchasing

companies are meant in these initiative to ensure the compliance of not employing children in

labour like the case of C&A trading group which asked for proofs about these criteria. Leading

corporations have to employ mediator monitoring groups in order to ensure the execution of the

ethical behaviours amongst their production lines in countries with bad reputation like china and

India.

6.4.4 International Ethical Codes

Multinational companies have not only authority on the local authorities but also their national

governments due to their economic power. For instance, 42 Governments of the participating states

at the meeting of the OECD Council have agreed on executing The OECD Guidelines for

Multinational Enterprises on the 25th of May 2011. These guidelines include some ethical

behaviours including honesty, environmental protection, achieving consumer interests and

compliance to human rights. Moreover, the UN has adopted The Global Compact in 2000 and

endeavoured to create a global framework for a voluntary ethical commitment in business. It had

made ten principles concerning ethical commitment in business and related behaviours which were

signed by more than 9000 companies all over the world. Agreeing on The Global Compact would

force companies to report an unethical behaviour to the UN secretaries and to adhere to the ten

principles. A key example about a related incident case is the American labor activist accusation

against Nike which had to pay 1.5$ to settle its condition. The case was simply about the false

allegations by Nike that the work conditions in the manufacturing countries have improved which

was totally unreal.

In a similar basis, Germany has created German Sustainability Code (GSC) in 2011 that includes

20 criteria concerning ethical behaviour to be reported yearly. More than 40 German companies

have agreed to apply it including big corporations like Allianz and VW. In addition, the European

Union is trying to implement similar codes on largest companies that have 500 staff or more. Any

ethical behaviour criteria have to be reviewed continuously by experts to make any further

amendments too these code. Even the payment of these experts have to be funded through non-

governmental organization to avoid any conflicts. Moreover, some independent experts auditing

companies can be developed so as to carry out the monitoring assurance missions so as to prevent

any allegations made upon the non-governmental organisations. These companies would be

certified according to the SA 8000 standards which defines the ethical guidelines for working

condition in accordance with specific criteria including healthy working conditions, no child labor,

the admission of trade unions, fair working hours and no discrimination. Mutual understanding

globally for the global guidelines is essential for proper application as all consumers, businesses

and countries must understand and adopt these guidelines in order to achieve the ultimate objective

behind business ethics.

Pages 184-188…

Pages 189 to 194

The guiding principles of business ethics can achieve the company's operational efficiency. The

model of business ethics includes the goal defined in the specific period. Environmental protection

and social protection are the primary objectives of the organization. The employee training and

identifying the specific strategies in achieving the goals of the company are the basis of the

business model. The strategy is defined as the fundamental pattern and planned resources

deployment and the environmental interactions that correlate with achieving the organization's

goals.

To achieve a competitive advantage, the companies align all the strategies and allocate the

resources accordingly. Business ethics is a phenomenon that represents the behavior, ethical

conduct, and its effect on the entire environment. The business environment must be operated

based on defines a set of rules that are implemented on the ethical control systems. Before

elaborating on the ethical controls system, this chapter discusses different types of strategies used

to achieve the organization's desired goal. There are two types of plans; corporate business

strategies and functional area strategies that are differentiated by each other. The corporate strategy

includes decision-making policies, allocation of resources, market corporations, organization

structure, and the company's constitution.

The company's strategies are divided into the division level of operations. There are three strategies

to obtain the goal of successful competition: cost leadership, product differentiation, and niches

strategy. Product differentiation can be achieved by offering different aspects of the products not

provided by competitors. On the other hand, the niche strategy focuses on delivering the products

or services in the areas where there is a specific buyer’s group. The successful business strategy is

the one that sells the products that are based on the ethical code and conduct. The environment-

friendly products, that is different from the other products in the market.

The cost leadership will take the company at the next level of the pure market economy. The public

opinion is also critical in determining ethical misconduct. If the company is involved in some

unethical means of producing and selling, the customers are the first to pinpoint the loopholes. The

moral perception and the consumer force the need to provide the products based on the ethical

code and conduct.

The company goals are further divided into functional areas to achieve the strategies defined. The

company plans to implement both the companies and the competitive strategy. The practical

strategies include the research department, production, procurement, and sales. The environment-

friendly products strategies include the creation of environment-friendly and sustainable goods.

Moreover, the use of environmentally friendly resources, recyclable and combustible packaging

of the products and environment addressing advertisement is essential in developing the corporate

ethical goals.

The research studies show that before the occurrence of a financial crisis in the United States,

France, and Germany, a gap of ethical principles exists. The companies are responsible for setting

the ethical principles, but the need of the hour is to implement those principles on the companywide

level. The moral law is necessary to follow by the employees at the lower level and the upper

executive level. There are different examples of the companies that have established frameworks

of the ethical management system. The primary purpose of using the moral management system

is to eradicate corruption, dumping wages, unfair competition means, and undeclared work.

If the executives do not follow the code and conduct, this does not only call on their credibility but

also questions the whole system of law and conduct: the code and conduct and obligatory to follow

with the association of the employees. The code fulfills many functions of the organizations that

include; the supplementation of the general legislation related to the employees, enabling the

employees to commit to the uniform standards of the company and enabling the companies to

respond on the ethical grounds. Also, it involves management in setting the rules of ethics and

addresses special sectors.

Codes of professionals are necessary to implement by the high professionals to achieve a high

degree of liability. Ethical industry codes are defined by the big chemical industries or the

pharmaceutical industries. The law of ethics is associated with the management system of ethics.

The main focus of the law is on the payment strategies and the context of the training events. There

are business associations that comply with ethical standards without any state compulsion.

Different ethical programs are also devised by business associations. One of the most important

applications is the compliance program in which companies like world health organization take

institutional measures to protect the company's employees. It was incepted back in 1991 when

Federal sentencing guidelines entered the force of the United States. The instructions provided a

complete set of rules and financial penalties for the companies when the institutions attempt to

prevent employees from economic crimes. The companies are bound with binding integration

issues or compliance plans. They are based on incentive ethics. In this type of ethical program, the

employees are liable, and the companies are held responsible.

Furthermore, there is an integrity program that is associated with the internal implementation of

the ethical code and they are not based on the external law. Although there are no absolute control

plans for the employees in the company and the regulations have disadvantages in all the situations.

The companies identified values and insights based on ethics; honesty, adherence, fairness,

promises, respect for others, and compassion are considered the key features to determine

employee’s ethical behavior. The integrity programs go far beyond the compliance programs.

These programs promote self-responsibility in the employees and the decentralization approach in

organizations. They also include ethical guidelines, objectives and control of the compliance,

association of rewards and sanctions. The ethical management programs in short provide plans to

the employees to integrate good behavior and follow the ethical code. Business ethics endorse the

healthy environment, high job involvement and provide opportunities for growth to the companies.

Corporate ethics is consistent implementation of company's ethical goals in the company policy

but not purely a PR action.

Pages 196 to 201

Ethics is an understanding of what is right and what is wrong. The pages that are being paraphrased

will be talking about Levi’s as a company and its code of ethics.

Levi’s code of ethics is “We believe that business can drive profits through principles, and that our

values as a company and as individuals give us a competitive advantage.” (Conrad, 2018) Levi’s

talks about 4 main principles. They are originality, empathy, integrity and courage.

What is originality? It’s means that the company is very original with its products. The company

has started in 1873 and has been innovative with its products to deliver excellency and good quality

products. Integrity is basically doing the correct thing. As in doing right by their employees,

company, brand and society. It takes courage to be extraordinary. courage is the readiness to come

clean and to challenge chain of command, acknowledged practice and standard way of thinking.

It implies remaining by our feelings and following up on our convictions. Empathy means feeling

other people, being in their position. Empathy starts with considering our general surroundings.

We tune in and react to the requirements of our clients, workers and different partners.

Levi’s divides its responsibilities and to act correctly and states it’s priorities as following:

The employees must have respect one another and their clients and superiors. Must have human

dignity and they should be having a secure job. Customers should be receiving high quality

products, innovation and reliability. The company also must respect the society. Environment

protection, compliance with laws is mandatory.

To guarantee that the organization's corporate standards are bolstered by the representatives and

are not seen as disabled by the organization's administration, it is suggested that workers and

perhaps at the same time the most significant partners be engaged with the elaboration of rules.

This shows a moral talk that empowers the representatives to comprehend the outcomes of their

activities and, at long last, a weighing of merchandise. The organization the board rules should

then be conveyed and promoted in the organization and remotely. This additionally reinforces the

corporate personality and improves the notoriety of the company. General Electric and Siemens,

for instance, both promote with their breeze vitality effectiveness finance. Be that as it may, there

is likewise an extraordinary peril. The dreams and standards sound moral and pass on the feeling

that the organization is exclusively something to be thankful for. The doubt is consistently there

that a few organizations present the moral rules just for picture and PR, yet that they assume no

job in regular working of the company. However, on the off chance that a case freely repudiates

the rules and isn't an exemption, this undeniable logical inconsistency appears to be double-dealing

and debilitates the believability of the organization. The core values can be checked by the general

population and mentioned by the partners. For instance, the undeniable inconsistency between the

core value of legit client guides and the offer of dangerous authentications and subsidiaries as of

late has prompted lost the validity of numerous banks.

Strategies. An organization's operational destinations can be met utilizing general core values.

Along these lines, they slender down their model by including a quantifiable objective and a period

reference (years or months) notwithstanding a goal (for example benefit or turnover) and a material

extension (all out organization or division). Organization targets are separated to the division level

and characterized operationally, for which methodologies are resolved. On account of business

procedure, the opposition systems regularly owing to Porter13 are recorded here. For an

organization, there are three distinct alternatives to be fruitful in rivalry: (1) Cost administration,

(2) Product separation, to isolate from the contenders, and (3) A specialty procedure where the

organization concentrates its item on a purchaser gathering. Other serious systems are quality

administration and fixation, along these lines the constraint or takeover of contenders. Ultimately,

public opinion is generally liable for endorsing moral unfortunate behaviour. Consequently,

specific significance is joined to the media. General conclusion likewise decides the conduct of

buyers in the choice of items and in this way in a roundabout way the accomplishment of the

organization. A moral impression of the purchaser powers organizations to receive morally

situated creation. To this end, a buyer bunch has been created, called Lohas (Lifestyle of health

and sustainability), which concentrates its utilization on the standards of wellbeing and natural and

social manageability.

Code of conduct. even before the financial crisis, a supposed "ethical boom" emerged in the US.

According to an examination, as ahead of schedule as 1989 over 90% of reacting US organizations

previously had morals standards. A similar report was completed by French, British and German

organizations. Just 41% had a morals code (Germany 51%, the UK 30% and France 41%), with

the greater part of the code presented after 1984. Toward the start of the thousand years, 90% of

enormous US enterprises presented a "Set of accepted rules" or "Code of Ethics". Representatives

should concentrate on qualities, for example, trust, decency, genuineness, trustworthiness, and the

benefit of the overall population. The foundation is the knowledge that the picture of the

organization affects advertise achievement. Moral affectability and trust in trustworthiness are

factors for progress. Companies can also set moral principles for themselves. The issue of

requirement is equivalent to in cartels. For instance, the German Flower and Import Trade

Association has set up an implicit rule for the ecologically and socially mindful creation of

blossoms and is endeavouring to accomplish consistence. Forty organizations of the Bavarian

development industry submitted themselves, inside the structure of a morals the board framework,

to forestall unreasonable rivalry practices, for example, undeclared work, dumping wages and

defilement. On the off chance that administrators don't follow the implicit rules, this subverts their

validity, yet additionally raises doubt about the Code of Conduct. The logical inconsistency

between the direct of the administrators and the code can at last lead to disappointment among

representatives and different par

Pages 202-216…

Pages 216-221

Ombudsperson

The origin of the word Ombudsman is from Sweden. The role of Ombudsman is acting as a contact

person, middle man, or conciliator for the local people and is required to toughen its mandate

against the highest offices in a country. Regarding business, which can also be compared to state

functions, Ombudsman inspects mismanagement of executive roles. In the incidence of trust, he

can mediate and settle discourse in any organization. An attorney, in this case, referred to as an

ombudsman is very important for maintaining fairness in case of fraud or other incidences in an

organization. With the direct contact of an Ombudsman, who is a personal reference contact, the

false information incidences are eliminated (Conrad, 2018, p. 216). The role of an Ombudsman

offers trust and hence protects the identity of the complainant.

In addition, Ombudsman’s office provides a platform for junior staff to follow up on their

complaints proceedings thereby avoiding the hierarchy. When the mediator does not favor

anybody regardless of their level of qualification, then the junior staff will have faith in them. The

neutrality and objective aspect of tackling organizational issues are all that is required to put trust

in the complainant's mind. Above all, business institution management is also mandatory unless

the recommendation execution is termed insignificant (Conrad, 2018, p. 217). Ethical matters

which include customer complaints can be channeled through hotlines created for easy

communication for the issue to be solved. This is a perfect example of a middleman who is easily

accessible.

Ethics Officers

The role of Ethics officers is to undertake functions of the complainant and the Ombudsman

although their tasks field comprises solving ethical issues and the possible recommendations. For

instance, in the United States, an Ethics officer is entirely responsible for enacting moral principles

that will govern a company. The Ethics Officer can have a supportive department full of other

officers who can be deployed when the need arises. For example, in Germany, Siemens has come

up with a Compliance Helpdesk that gives information regarding unethical activities and also a

standby hotline that can be called at all times and in turn, offers radical pieces of advice or moral

values in the business (Conrad, 2018, p. 217). The company's success records have greatly been

influenced by this implementation.

Ethics Commission

The Ethics Commission is made up of several people selected in a manner in which all shareholders

can be represented. The stakeholders can also include customers who play an important role in the

business cycle (Conrad, 2018, p. 218). In a company, the commission is always used as a medium

for dialogue concerning different ethical issues. The typical functions of the Ethics Commission

include;

1. Preparations and setting up of the business image and declaring punishments for non-

compliance.

2. Offering moral advice to company management.

3. To form solutions for ethical problems.

4. Help in solving both internal and external moral complaints

5. Enact measures that promote an ethical value in an institution.

On resolving complaints, the commission is disadvantaged because it is not a permanent

department in any business company or institution. The different committee members can pose a

challenge during voting. From a general point of view, the ethics commission ought to be assigned

the ability to update itself on matters business making it mandatory to interview staff on a face-to-

face basis. Collectively, the Ethics Commission has two major functions. The roles include the

provision of advice on the way forward and the creation of an opinion platform for every employee

to give their recommendations. On the other hand, the Ethics Committee can aid in supervising

the management of a company in various ways, and in that way, this activity moderates the

principle agent complications. The administrative board that offers supervision in this case,

therefore, represents the top management on the hierarchy of an organization (Conrad, 2018, p.

219). Hence the top management would always provide business duties and govern the entire

process.

Whistleblowing

Essentially, the company staff would always avoid clashes with the company which might be

termed as immoral as the outcome, and in the long run, the organization will be affected. In any

business organization, there should be room for addressing the misconduct of any employee. The

company supervisors on the other hand will offer assistance where possible, especially on

unethical behavior, but if the supervisor is also involved in committing an offense, therefore the

problem will not be addressed. Whistleblowing can also be directed to the customers and other

external stakeholders since an immoral attitude in business affect the whole activity. On the other

hand, whistleblowing helps in disclosing the unethical activities of a business to the public. For

example, in one of a United States tobacco company, the vice president declared to the public that

his administration was covertly adding additives to the tobacco product. The action depicted by

the vice president of this tobacco company revealed the unethical business practice hence

whistleblowing (Conrad, 2018, p. 220). Therefore, whistleblowing is very important in any

organization.

Whistleblowers can be anybody associated with a company and this is the main reason they are

always referred to as informers or traitors. Whistleblowing affects everybody in the business. The

effects will render both the culprits and the innocent people jobless if sales fall. Hence, the

whistleblower must always weigh the effects of his actions to avoid making everyone suffer from

the action. The act of whistleblowing must only be an option if all the internal organisms are unable

to solve any issue in the company. In Germany, staffs are ought to be loyal to the company and

unless it is impossible to solve any criminal activity internally, then it is permitted to go to the

public. Generally, an act of whistleblowing shows that complaints and company management are

not working well (Conrad, 2018, p. 221). In the event of a lack of whistleblowers, then the

management will depict a silence mode, ignoring the unethical act which will eventually affect the

company.

Pages 222 to 227

Ethical behavior leads to an increase in productivity in the organization. Thus, it is critical to

explore ethics in HRM since the management as well as selection of personnel has a direct

influence on the corporate culture, thus making it the most critical instrument for the company’s

ethical behavior. On page 222, the author defines leadership in an organization as “a goal-oriented

design, steering and development of the company.” It includes corporate governance of the

organizational management and structure, particularly personnel management. the Case study of

Enron is used to explain the requirements for achieving optimal corporate management.

The weaknesses of corporate governance often play a detrimental role in an organization. The

mistakes the managers made contributed to the business crises that are described in the case

studies. Apart from agricultural corporations, organizations came into existence within the

industrialization framework. The productive amalgamation of machine and human due to

advancement in production methods made labor distribution in larger groups to appear lucrative.

Notably, the industrial revolution led to permanent transformation of human cohabitation

requirements. The world was not the same again and every new technological progress step

transformed the economy’s general framework, and the society at large. With technological

progress, capital became increasingly important. Regarding how companies were first created,

economic Schumpeter contended that there should first be an entrepreneur who dares to make the

initial step in actualizing his idea or innovation. Ideas have the potential of bringing astronomical

profits in the value creation process. Pioneer entrepreneurs have the risk of failure, including the

capital that they invest in trying to ensure that their ideas are realized.

Summarily, an entrepreneur is a special and positive thing. Apart from being a genius, he is also a

shaker and mover, as well as an individual who is willing to dare in rolling out an idea. He aids

the national economy through implementation of innovation and creation of value by productively

combining machines and humans. He yearns to see his idea become actualized and risks his

existence to have it

fulfilled and implemented. In addition, an entrepreneur wants his efforts to be rewarded. Self-

realization enables him or her to become rich and he does not pursue his idea solely for profit

motivation. What this means is that an entrepreneur sacrifices himself to create employment

opportunities and welfare for all individuals. In this regard, the society should honor and admire

him. However, this image is not in tandem with today’s reality where the society mainly has the

image of a greedy manager rather than the self-sacrificing entrepreneur. Notwithstanding, it is

worth noting that a manager and an entrepreneur are wholly different jobs. One of the major

differences is that the new breed of managers is that where they have become employees of

investors or an agent of the principals, thus creating new problems. The manager’s roles include

motivations and other interests. Such legalities can complicate ethical or moral behavior, thus

impeding efficient management.

The section on the Principal Agent problem suggests that numerous theories exist on managers.

According to the old Stuart Theory, managers are honorable wealth builders. The Neoclassical

theory holds the assumption benefit maximization, but fails to differentiate between the owner of

a company and manager. Since entrepreneurs as owner and founder no longer are the CEOs of

enterprises, but rather entrust third parties with company management and separate various roles,

there is separation of the interests behind every role. This is because the entrepreneur becomes

reliant on the CEO’s reliability and performance. It poses benefits and drawbacks. In case the agent

(employed third person), has better qualifications for the task compared to the principal, task

delegation benefits both parties. However, the drawback is that the principal has to depend on the

agent. Also, headhunters play a peripheral role in overcoming asymmetric information because

they prioritize higher salaries. Thus, a manager can take advantage of asymmetric information to

his benefit through changing jobs frequently. In case he is successful in presenting himself better

than he actually is, he can improve on all changes. Also, if his unsuitability increases after

establishing his position, he can depart. The manager’s weaknesses are often tolerated by the new

employer.

Hidden information refers to the informational deficit of the principal when controlling the agent’s

actions. He lacks knowledge on the actions undertaken by the agent. Thus, hidden action refers to

the lack of capacity by the principal to conduct an evaluation of the effectiveness of actions

undertaken by the agent. Whereas the principal may be aware of the action’s results, he lacks

knowledge on the framework through which the action occurred or environmental conditions

during the period when the action happened. The manager may find it easy to link his failure to

external factors like demand reductions, recession, preliminary shortage of products, and bad

weather.

The principal’s control costs directly relate to the anticipated returns from share of the capital since

implementation and information costs rise with the company’s size. In case the agency costs are

less compared to the residual costs, there may be no interference from the principal. The main

problem is that control can only occur through the supervisory board because the capital providers

or small investors abroad are absent at the meeting of shareholders as a result of travel expenses

and time. Thus, it becomes impossible to achieve control through the supervisory board.

Conversely, the minority shareholders tend to have a disproportionately high-power level during

the meetings of shareholders because of the small number of people who can vote. This

background provides a rationale for investors in Enron as well as investment banks in the subprime

crisis framework being unable to assert control of the managers. The managers’ control by owners

becomes more difficult due to close linkage of politics and board members, and supervisory board

linkage, particularly in Switzerland and Germany. The disproportionate salary development can

also be linked to the company management lacking control. It results in concerns on why

immorally-minded board of directors omit self-enrichment in case they do not fear anything.

Pages 228-245…

Pages 246 to 251

According to the business ethics we have case study in ethical corporate culture about VW Diesel

Scandal. Firstly, in November 20, 2006, the specialists of VW Boss Designer Rudolf Krebs found

that they could not in fact meet the tough outflow rules of the US showcase. The experts found an

answer. They controlled the outcomes in the fumes gas tests by introducing programming that

manages the fumes gases just in the test cycle. As per members of a gathering, Rudolf Krebs stated:

"We'll do it, yet we should not get captured”. On September 18, 2015, the US Ecological Insurance

Organization (EPA) distributed that VW deliberately skirted emanations guidelines for the greater

part a million diesel vehicles. However, with low fumes outflows, the organization won a few

natural honors and began the "perfect diesel" promoting effort.

Second thing to talk about is consequences about it. Is the fumes gas control prompted pay claims

against VW, conceivable assessment installments, repayment of creation cash, just as the dubious

fate of present and future diesel models? Example about that is VW and Audi, Seat and Skoda

needed to get back too many vehicles and furthermore reconstruct the motors of new vehicles. To

wrap things up there is enormous picture harm. Overall, 11 million vehicles must be retrofitted.

VW does not, in any case, ensure any noteworthy harm after the change and keeps the specialized

subtleties of the product update mystery, with the goal that an autonomous master can never check

for blunder. The President Winterkorn acknowledged fractional duty and ventured down in

September 2015. When Winterkorn was recounted the control, he was the most elevated procuring

administrator in Germany. According to the open examiner's office in the German town of

Braunschweig opened an examination against Winterkorn for misrepresentation doubt in January

2017. The examinations depended on witness tributes and assessments of seized documents which

demonstrated that Winterkorn. The author goes on to say that Winterkorn and co-proprietor and

administrative board Ferdinand Piëch had define themselves the objective of overwhelming

Toyota in 2018 as the world's biggest car gathering.

According to the author he gives as several solutions to this case:

1- Conviction morals: VW purposely controlled the fumes gas esteems, which is the reason a

genuine disposition can not be assumed. Winterkorn did not take care of business. The

clients were purposely misled by the promoting of "clean diesel."

2- Kant's guidelines of moral thinking: a) Unmitigated goal. b) Exposure rule. c) Common

sense Objective.

3- Obligation morals (deontological morals): No, the ecological necessities were clear.

4- Suggestions (teleological morals): Ecological necessities effectively protected nature and

individuals. There were clients who were happy to follow through on a greater expense.

5- Moral financial aspects: There was evidently no sufficient government control that would

identify and rebuff the control of fumes gas esteems, so every vehicle maker had to swindle.

The author discusses the company culture in this paragraph in how you might carry on as a worker

and the impact of the accompanying models in five point:

1- In the organization, there is rivalry among the representatives as in "up or out," while the

organization the board requests reasonable group play among the workers.

2- Receptiveness, genuineness and reasonableness are required, yet just the individuals who

do not commit errors are advanced. Errors can mean excusal.

3- Genuineness and humility of the exhibition of the group are requested, yet the individual

is advanced who is boasting about a third individual's presentation and concealing his own

slip-ups.

4- Individual exertion is required, however compensates are equivalent paying little heed to

results.

5- The interest for individual execution and helpful analysis is requested, however the person

who has lunch with the director and concurs with everything is advanced.

The author goes on to say that because of the gathering work, the class members indicated an

incredible uneasiness and a dismissal of the above models. A conflict of the individual culture of

the worker and the organization culture essentially prompts the end or possibly to the inner end of

the representative. Trust is immediately lost and building new trust requires some serious energy

if it is conceivable by any means. The standards a general public makes decide it drawn out

progress. Decides that are actualized decide human conduct inside the general public through

remunerations or disciplines, which are signals that make those compensated into good examples

and those rebuffed into obstacles. Moral conduct must merit the exertion. Poor models sabotage

ethical quality, which applies both inside an organization and a national economy. Corporate

standards must be lived out. If representatives and officials carry on uniquely in contrast to the

corporate picture, it turns into a misuse of desk work. These are for the most part standards,

qualities and practices that characterize the conduct of individuals in the organization as a

gathering (definition). However, in the mid 1980s, Hofstede portrayed the association between the

general culture of a nation and the conduct of the individuals in the organization by meeting IBM

workers in 71 nations with a survey on their conduct for 10 years. He indicated that the conduct of

administrators is emphatically affected by their way of life. According to Hofstede he created four

social measurements for depicting societies: an individualistic versus a collectivist culture, power-

separation, vulnerability shirking, and manliness/womanliness.

In finally, the author is claim that the corporate societies speak to the built-up direction designs for

conduct in the organization. These direction designs are profoundly tied down on an oblivious

level. They diminish multifaceted nature and give the workers social security. An innovative

capacity is credited to the corporate culture. Example of shared opinion prizes that the gathering

has figured out how to manage their issues of outer adjustment and interior mix, which has

substantiated itself and is along these lines authoritative. Therefore, the popular cultural model of

Schein give as the refined surface is dictated by the practices and procedure results. They are the

first to be perceived in the organization, yet they should be deciphered.

Pages 252-256…

Pages 257-262

Measurement of Company Culture

The company’s culture would need to be captured in order to match it with the corporate

guidelines. The culture must be altered if there is a clear discrepancy. Political science has an

approach named Political Culture, which is here understood as the “distribution of political

knowledge, value convictions, attitudes and behavior within the population at a specific point in

time.” This approach came from asking “why democracy was sustainable in countries and not in

others despite the required system institutions and order, particularly where a democratic system

had been newly installed?”. To political scientists, it is not sufficient to introduce a democratic

order in the country. There are different ways to measure political culture which are opinion

surveys with direct and indirect questions, meaning hidden and control questions, known as

opinion research. Applying political culture approach to the economically relevant attitudes is

called “economic culture approach.” The functioning attitudes of society can be called the “social

culture approach.” Reliability, honesty, helpfulness, a willingness to make sacrifices, as well as

the readiness to observe societal rules by subordinating and restricting oneself, are all considered

socially relevant attitudes and moral values that benefits the community. These characteristics

create added value and trust. Because they reduce the costs of economic transactions or even enable

them to take place, these values are economically relevant. Distrust parties, means a simple

exchange of goods would not take place although it is possible working around this problem with

contracts and a legal system. We are interested in the attitudes that can be influenced or changed.

Six basic characteristics are relevant to a society, national economy or business for example, 1.

Reliability 2. Loyalty 3. Team competence 4. Willingness to perform, 5. Integrity and 6.

Acceptance of the system.

Leadership Ethics

Reliability is important for both the company and the national economy and all transactions

between companies and other market participants as well. An individual is reliable if they keep

their promises and agreements. Potential questions would be (to be answered with yes or no): –

The saying "honesty is the best policy" just offers consolation for dumb people who aren’t able to

get what they want. (Answer expected from those who are reliable: no) – My good reputation is

important to me. (Answer expected from those who are reliable: yes) – For me promises are

declarations of intent. You can’t keep every promise.

Loyalty is considered a constant feeling of gratitude. The loyalty of an employee is very important

for companies. In turn, the employee depends on the company for not dropping him whenever it

might be advantageous. Possible questions would be (to be answered with yes or no): – I am

thankful to have my job. (Answer expected from those who are loyal: yes) – My employer needs

me and I need my employer.

Society depends on productive teamwork. For teamwork capability, people are able of teamwork

when they are willing to include themselves in a group in order to reach higher goals. Positive

feelings such as sympathy for others as the basis for helpfulness is considered a part of teamwork

capability. Possible questions would be (to answer with yes or no): – In a community everyone

helps everyone else out. (Answer expected from those who are team capable: yes) – Together we

are strong. (Answer expected from those who are team capable: yes) – The individual must

sacrifice sometimes for the good of the whole.

Leadership Ethics

Both ambition and purpose creates the willingness to perform well. Overtime, and in the degree of

perfection a project may requires in its details or difficulties during implementation, and stress

increases. The fun gets serious. Possible questions would be (to be answered with yes or no): – I

want to make a positive difference. Dolce Vita is not enough. I want to do something with my life.

(Answer expected from those who are willing to make an effort: yes) – Where there is a will, there

is way. God helps those who help themselves.

A person has integrity if they always try to take the right, legal path. Possible questions would be

(to be answered with yes or no): – To reach sales goals your boss demands that you describe false

product features to your customers. (Answer expected from those who have integrity: no) – To

reach sales goals your boss demands that you manipulate the sales figures for your department.

(Answer expected from those who have integrity: no) – Your boss wants to get rid of your

colleague and demands that you make a false accusation against them.

System Acceptance Democracy and market economy clash if there is not enough cultural

acceptance for the way a market economy works. Education about the market economy starts in

schools. Therefore, every state must be active in creating this education if they opt or aspire to

make the system work. The reason why politics tend to disregard market economy rules and takes

on losses in welfare is due to the lack of acceptance and understanding for market economy

correlations. If there is not enough cultural acceptance for the way a market economy functions,

then that would result in System Acceptance Democracy and market economy conflicts. Possible

questions would be: Knowledge questions: What do you associate with market economy? What

do you connect with Socialism? What are the advantages and disadvantages of a market economy?

Attitude questions (to be answered with yes or no): Is it time for a just Socialism? (Answer

expected for system acceptance: no) Is it fair for everyone to receive what they need in life?

(Answer expected for system acceptance: no) Does earned wealth exist? Do you think the rich are

entitled to their wealth? (Answer expected for system acceptance: yes) Is your performance in the

company rewarded? Is your effort worth it? (Answer expected for system acceptance: yes) We

have seen that the figures from controlling do not provide a comprehensive picture of companies.

Economic laws and human characteristics must both be respected, although an economy as the

sum of economically relevant institutions and organizations created by people is there to serve the

people.

Pages 263-268

Business and leadership ethics are a fundamental aspect of any organization. Organization needs

good ethics and leadership skill to reduce contemporary issues and define its structure and culture.

This paper serves to summarize cultural management, ethical corporate identity, ethical leadership,

and the relationship between management and its employees, as presented in Christian A. Conard's

Business Ethics – A Philosophical and Behavioral Approach;

Culture management.

Organizational culture can be defined by anonymities that exist in a different organization. It’s

highly dynamic, ambiguous, unquantifiable, and with characteristics that cannot be explained

through cause-effects relationships. Culture cannot be genetically oriented, and thus adoption is

purely dependent on unconscious learning through groups. As such, only indirect group methods

such as socialization can be viewed as gradual agent of culture change. Culture is made up of

various constituents, the orientation of pattern of action, and values which they influence to bring

on cultural evolution. Successful culture evolution calls for people to have to be aware of their

norms and value, look back on them and effect intentional changes. Therefore, culture changes

growth and development are solely dependent on the ability of individuals to willingly accept

reforms or assimilate new norms.

Culture is created through the collective and cooperative actions of employees. It's an institute of

action where individuals bring various cultural proponents from outside and collectively accept

them as a convenient way of doing things within the organization. Group culture tend to influence

the deviant behaviors into the organization, and as such, culturally disoriented individual

assimilates the culture through adaptations. In organizations, people learn cultures by internalizing

the corporate role they occupy within groups by way of thinking and feelings of company norms.

It's stipulated that influencing corporate culture must target groups rather than individuals with

essential stimuli being the executive or group leaders since they have the capacity or powers to

influence or sanction organization behaviors. Behavior characteristics in a hierarchy will thus

depend on executive efforts in educating their peers on the benefits of certain cultures being pushed

through.

On the contrary, enforcing organization culture should be done with great modalities to avoid

negative impacts on organizations such as deterring the freedom. The use of authoritarian methods

of influence and brainwashing instill fear among employees, and thus culture becomes loosely

attached to individuals since it's not to their consent. Corporate culture should promote more

humane ways that promote freedom. Tyrannical hierarchies that build culture through command,

and absolute obedience is unethical as such, influencing organizational culture is relies on

individual willingness, not external forced influences. Individuals should be convinced of the

adverse effects of their present culture on themselves and organizations. Hence, as they naturally

change to adopt appropriate cultures since it makes them feel safe. Equally, it reduces

contemporary issues in an organization.

Language, artifacts, and actions are essential symbols for changes in corporate culture since they

are the critical avenue of communication by employees. Language form avenues through which

meaning and values are transmitted-gestures, the form of expression, names, words, titles, and

functional names are all dependent on language. It's also pivotal in gaining attention. Artifacts

represent instruments, buildings, and equipment with which employees work. Principally, artifacts

shape the relationship between the company and its employees by establishing control and

information systems, work schedules, and resource distribution. On the other hand, the action

represents the power of factual contempt which tend to shape the behavior of individual any given

culture.

Ethical corporate identity.

Ethical identity is a derivative of ethical corporate culture oriented to the identification of the

organization employees with the organization and its goals. It serves to scale up the self-

determination and passion of individuals to perform better through the creation of an enabling

environment. Externally, the corporate identity is vital in creating an organization image as well

as bolstering self-confidence of the organization to the general public. These cultures are highly

influenced by organization management and its structure through actions.

It's essential that in every organization, individual should influence the culture other than executive

adjustment since anonymities in any group creates immoral behaviors. An influential ethical

culture influences the cooperation of employees and therefore stir value addition of organization

by influencing synergies among various functions, especially in the division of labor. This because

people can interact freely with each other in pursuit of common goals due to boosted morality.

Excellent technical progress shapes the economy and forms a framework for social coexistence,

which consequently shapes the ethical corporate identity.

Ethical leadership and the relationship between management and employees.

Management power is vested on the executives is principally based on helping organizations to

achieve their objectives. Its thus upon them to use their management skill to influence their

subordinates in achieving organizational goals. There will always be a transition gap between

executive managerial power and personal management skills owing to various discrepancies, such

as social expectation and socio-economic efficacy. Thus, for ethical leadership to prevail,

managerial ethics have to be designed in a such a way that it motivates employees to maximize

their contribution in achieving organization goal. The most fundamental aspects of ethics include

ethical protection; shaped through the relationship between leadership and employees, and

economic efficacy shaped by ethical organization behaviors.

The success of an organization is dependent on the relationship between various departments in

realms of management. Employees have the right to issue directive while employees are bound to

comply with issued directives. In one way or the other employer and employees are interconnected

in various aspects and own different degree of commands within specific areas. For instance, an

employer relies on the efficiency of employees, while employers depend on employees for income.

Thus, employees are bounded to observe integrity and show loyalty in their areas of action, while

employers should show concern and appreciation of employee's commitments. It's very unethical

for employers to show inconsistency or disrespect to their employees since it creates a dilemma

among them which compromises passion and morality. Equally, employees are obliged to work

and protect company assets while employers are bound to protect their employees passionately.

Pages 269-274

There are times when the employees have a difficult time and get tested in their morals by pushing

them to harm someone or otherwise harm their selves by refusing the orders. Couple of things

could be said like another person could do it or I have to take care of my family. Some will say

any body will do the same, and this the unethical most applicable. There are multiple things that

leadership should take into consideration. Employees are not just a mean of earnings, every

employee is a human been with his own dignity, which should be respected. Harassment or violate

the privacy should be out of the book. Freedom and health protection should be guaranteed. The

following meritorial duties are from Kant which are, communication should be equals without

command, provide honest information, criticize by compliment and blame, and give support and

sympathy. The leadership should encourage work environment by reasonable tasks, freedom for

workers, and provide development for employees. Strict policy towards employees and

exploitation could lead to unorganized work environment and violations. supervisors should be

fair and take responsibility of their actions because, it effects directly on employees. Profits is not

an excuse to behave unethically. Unethical behave could be represent by companies with the

excuse of interest of shareholder to raise profits without feeling guilty. There is a mutual obligation

between executive and employees unofficially. The punishment on any crime should be equal

between the employee and the executive. The leadership is concepts are complicated, it depends

on personalities of executives and situations. There are many concepts of employees involve in

management and it will be summarized in three types authoritarian leadership, democratic, and

laissez faire. Authoritarian type is when the manager issuing all commands, employees are not

involved in decisions, they only execute it. Any mistakes punished usually in this style and grateful

is rare. This style lead to fast implement to work but reduce qualified employees and it needs good

expert manager. Working environment will be less motivated to employees because lack of

involve, and high percentage of mistakes.

Cooperative leadership style gives employees more freedom and involve in making decisions.

They are supported from management to give opinions. It makes less mistakes because share of

knowledge. Punishment re not usual praise is high. It takes time to make decision.

Laissez fair style is a total freedom to employee. Management does not involve in decisions. It

usually used in creativity sectors.

A study from Lewin, Lippit, and White on three styles showed that autocratic style high

performance but poor employees feeling, democratic got less performance but better employees

feeling.

Katz and Kahn suppose that the employee-oriented management style with high gratification lead

to high performance. Robert and Jane distinguish five leaderships style based on many

characteristics according to tasks orientation and personal orientation. The result was weak in the

two dimensions. Harsey and Blanchard added maturity of employee and get four leaderships, the

result was the lower education and maturity of employee, more tasks orientation.

There are many leadership theories and back in 1950s, the decisive theory was the great man

theory, leadership based on character. With many researches and analyzation more approached

showed like behave approach and situation approach.

Transactional leadership is when the performance of the employee associated with reward.

Pages 275-280…

Pages 281-286

It is a fact that all companies must be successful, but achieving this goal is not only the company’s

goal itself. It is well known that employees moral and ethical commitment is required in this field.

It is the employee’s obligation not to destroy each other but to support each other for the own good

of the company and themselves to achieve the company’s success and aim to perfection to be

successful as it should be. It is also the company’s obligation to support its employees not to

sacrifice them by any conditions or any circumstances. There are plenty of examples where

companies where lost just because of the management who worked against their employees rather

than supporting them and pushing them to right way by giving them enough opportunities to do

what should have been done. For sure there are many certain behaviors that any company and its

management should avoid to stay away from these struggles. For example, listening to the junior

staff who can give any positive ideas which can enhance the company’s progress. It appears that

once the company respect its employees and give them enough attention that they need, the

company will conquer the employee’s loyalty to support the company in any condition and

circumstance. It is important to build a trust between the employees and their management to feel

secured in their jobs. While it is the company’s responsibility to support its employees, part of that

responsibility relies on the management’s shoulders which requires some certain characteristics.

For sure there are many positive characteristics in the leadership for an ideal management which

can lead any company to a worthy huge success. And there are many ways for this leadership

which are all effective in its own way. However, the ultimate way is to behave ethically and

morally with any employee rather than pushing them to the limits to do any task even if they are

not convinced with it. Some managements find it smart enough not to care much for their

employees and it turns out that it is enough to crush a whole company to the ground, and there are

many examples. According to a survey has been done in Switzerland, a majority of employees lost

their jobs just because of a disagreement with their superiors. It is very obvious that ethical

leadership builds a trust and honesty between any employees and their superiors. Furthermore, it

is not only the ethical leadership itself, but also the ethical behaviors from any superiors to their

employees is very important and effective. It is important to mention that ethical behavior and

leadership is related to many positive results such as honesty and fairness, wither it is between

superiors and employees or between the employees themselves. The theory of social learning

emphasis that even in promotions, while getting promoted, people might get attracted to some

powerful acts and behaviors which might affect the working progress, wither it is on the employee

or the superior. It is worth to mention that unethical acts will certainly harm the progress of the

company and affects it in a negative way, which harms both interests of the company itself and

employees. At the end, the employees should not only concede themselves, but also the company

they are working in to achieve its goal by working together as a team not individually. Working in

a team will certainly fulfil the company’s goal and interests in achieving its aim, while working

individually in a selfish way will surly harms the company which in fact will harm the employees.

We should keep in mind that as a superior and employee relationship, working together as a team

and not being bossy on the employee is way effective to keep the employees always rely on their

superiors and trust them, which will always build a trustful relation between all employees. Not

only that, motivating the employees is a well effective method which many companies realize its

affection which reflects on the well needed results, which all companies need. As a motivation,

rewarding employees not only the superiors for their success in a company is highly appreciated

or might be required in some cases to assure the ultimate satisfaction, so the employees will always

keep motivating the company and make sure it will always be in a perfect shape in all points.

Raising salaries and sharing of success and profit are good examples that all employees will keep

doing their best. Not only the financial profit what all employees want, sometime a thankful word,

recognition and appreciation is way effective than financial rewards. In fact, the reward system

must be apparent enough for all employees as a part of honesty and justice. There are many forms

of justice in any company such as justice of requirements which is related to the job description.

The justice of performance for example wither an employee is effective in his position or not.

Justice of the market also is where there is a need for a certain qualification in the market or not.

Being fair enough by determining the importance of a qualification and its effectiveness is where

the justice of qualification relays. The justice of success for example, while some companies

struggles for a revenue, it is not recommended to neglect the employees after collecting a high

revenue. A justice of distribution also is where the company itself is transparent with its rewarding

system or not, so the employees know if they are doing good or not. Humanity is also considered

in these matters, and that where justice of needs come through, because it is not fair to equalize a

woman who is not responsible to a family with an irresponsible one. And last but not least is the

social justice, which means that all personnel have the same salaries which would not be affected

by any event, meaning that their jobs or salaries would not be effected or compromised in order to

give the company a better chance to achieve an undone aim or goal.