EMBA 266 BUSINESS ETHICS AND CORPORATE GOVERNANCE FINAL EXAM ROBERT PAUL ELLENTUCK GWID 21376396 kbortolin@sandsanderson.

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1. a. The best ethical argument for paying the funds is a consequentialist argument. IF the consequences could be accurately weighed, the benefit and the cost of making the bonus payment, and it was determined that the greatest benefit to the firm was through paying the bonuses. The best result would be one the provided the greatest net benefit. Correct moral conduct would be determined solely by the cost-benefit analysis of the impact of paying the bonuses. The action would be morally right if the consequences of paying the bonus were more favorable than unfavorable. Ideally, the consequences to the entire world would need to be calculated, but that is not possible, so the benefit to the firm would need to be calculated. b. I am assuming that the rights based argument is the best one in this situation. The best ethical argument for not paying the bonuses would be a rights based argument. This would not be a legal right, but a moral right (not enforceable in court). The argument would be that it is not paying the bonuses is the right thing to do. This decision would not necessarily maximize the aggregate benefit to the firm, as a consequentialist approach would. Such a decision could in fact, not maximize the returns to the firm. Rights such as this do not have a clear source (god, society, etc.). Management would need to say that we have the right not to pay bonuses at this time, using TARP funds, while the American people are being laid off, etc. Rights takes into account what consequentialism does not.

2. Rights lack the basis that consequentialism has, and in fact frequently reject consequentialism when the outcome does not maximize the aggregate benefit. This lack of the
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analytical backing of consequentialism or the emphasis on the character of the moral agent that virtue ethics does, shows the weakness of Rights. Legal rights are simply the work of politicians who expand rights daily, playing to interest groups, ignoring society as a whole. These legal rights are expanded while not necessarily maximizing the aggregate benefit. Legal rights grow without a concern for any hard basis in the numbers, like consequentialism has. Moral rights have no basis at all today, they were originally from god, then the church, and now people pull them out of thin air. Like legal rights, they reject consequentialism, and the outcome does not necessarily increase the aggregate benefit. All rights may have an outcome that does not maximize the aggregate benefit. They benefit the few at the cost of society. Firms have to hire and promote the less qualified, costing society and the general welfare. 3. Assuming that it is more expensive to invest in the new technology. From a Virtue Ethics perspective, the new technology would be the best choice for the firm. The company wants to be seen as the kind of company whose products do not harm their customers. The character of the firm is the driving factor, and we want our employees to know that we do not sell products that hurt our clients. The importance of the workplace for our employees, knowing that our customers are not receiving a potentially hazardous product is paramount. Carrying out this policy regardless of the cost will emphasize our strong character as a company to our employees. We do not want to be the kind of company that sells a potentially defective product, when we could eliminate defects, in order to save a few dollars. We dont want our employees to have to work at such a company. We feel that the character of the company, and the strong impact that will make to our employees is most important factor. From a rights perspective the insurance is also the best choice. Our customers deserve to be treated in a manner that insures their health and welfare. We want to do what is the right thing, and consequentialism arguments dont matter to the company. While there is obviously no specific right regarding knife sharpeners, our clients have the right to a safe product. The fact that they could successfully sue us if injured by our product, and recover damages, does not mitigate the pain and suffering, as well as serious injury, they could experience if injured by a defective product. No one would say being maimed is ok, since I got a check. (Maybe some people would say that).
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4. The Four Square Protocol, part four, would prohibit me from making a decision in this case due to former relationship with CEO. Assuming that were not the case I would. Part 1: Part 2: I would examine myself for any financial self interest, and make that known in the recommendations. o Will action increase my bonus? I would analyze the decision that I am recommending, placing myself into the other parties position. o How would I feel if I were Newton? The CEO? o This will help separate me from any personal gain I might receive. I would examine my own morals, before making a recommendation. Have the organizations ongoing conversations been positive or negative about past problems? o This will guide the recommendation to insure that it is consistent and fair. Interview all parties to the contract, gathering as many details about the contract aas possible. The quality of the facts is crucial to making a recommendation. Is their an ethics officer to whom disclosure could have been easily made by Newton. Has Newton entered into contracts before with any related party. Get specific details of all previous contracts that have not resulted in discipline. o Find out as much as possible about how the managers handled these issues. Get specific details about the contract the resulted in discipline. o Find out as much as possible about how the managers handled this issue. Determine how similar this case is with previous cases. o Find out as much as possible about similarity and difference. Examine each ccase for race, gender, age, education level, and seniority issues. What is my relationship with Newton? Do I have friendship, lack of friendship, supervisory position over, or any other factor that could bias my judgement. What is my current relationship with CEO? Find out as much as possible about the CEOs trip to Tahiti. Has the CEO gone to Tahiti with Newton before?

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I would point out the purpose of the rules, and how the ethics guidelines were intended to be carried out based on facts gained in regard to previous violations. I would make clear my conflict, and how any decision would impact on me. o Disclosing former personal relationship and any friendship, etc. I would make clear how I would feel if I were on the receiving end of any punishment, so that the board would understand that every decision has a downside (a person impacted). I would examine my moral instincts, as a check on my recommendations to insure there was not a conflict that raised a red flag to me. I would recommend that the board not punish Newton based upon not-punishing previous conflict issues, drawing a clear distinction between the cash gift and this situation where the contract went to the most qualified party (as determined) for a fair price (as determined. I would recommend that the CEO be disciplined for accepting a gift from someone she was investigating, and who she should have not investigated by her self. I would recommend that the previous case involving the large gift, was widely accepted as appropriate, and that the non punishment of other violations was well known and was well accepted.

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