Presentation on : PROFITS

Business Ethics & ETHICS

Corporate Governance

Presented to :
Prof. Quresh Moochhala

Presented by :
U.K. Group (PIRATES IN THE MAKING)
Faiz Sayed (08) Rajshree Gaikwad (09)
Vikas Kharat (26) Alihayder Pardawala (37)
Talhah Patel (40) Pritesh Save (44)
Shaikh Abdul K. (46)
 BUSINESS ETHICS

Business Ethics can be defined as written and unwritten codes of

principles and values that govern decisions and actions within a
company. In the business world, the organization's culture sets
standards for determining the difference between good and bad
decision making and behavior.
 MOVIES TO BE DISCUSSED

1. Pirates of the Silicon Valley

2. Enron : The Smartest guys in the Room
3. The Corporation

Disclaimer : Images used are for illustration purposes only

 PIRATES OF THE SILICON VALLEY

Partially based on the book "Fire in the Valley: The Making of the
Personal Computer" written by Paul Feiberger and Michael
Swaine, the movie speaks about;
 the tale of Apple's rise

 Steve Jobs' business relationship with Bill Gates

 the schism between Jobs and Steve Wozniak

 Apple's fall as Gates out pirates the pirates, and leads Microsoft
to dominate the computer industry.
 UNETHICAL ISSUES

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

Boxes”.

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

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

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

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

Company’ for a meager 50,000 dollars, concealing the fact that
they will earn millions via royalty.
 UNETHICAL ISSUES (continued)
5. “Good artists copy, great artists steal” implemented by Steve
Jobs to get the mouse and graphic interface for Apple from
Xerox.

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

navy" culture in his employees.

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

Apple had walked out with Xerox's system.

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

 PERSONAL REVIEW
• The movie highlights the unethical methods that have been
used companies within the Computer & I.T. industries.

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

the permissions of the creators before actually modifying and
using their products.

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

unethical, but their unethical ways have brought inventions in
to this world which would have been neglected by then giants
HP, Xerox & IBM due to their short-sightedness.
 ENRON: THE SMARTEST GUYS IN THE ROOM
Based on the best-selling book of the same name by Fortune reporters Bethany
McLean and Peter Elkind, the movie focuses on
• one of the biggest business scandals in American history.
• examines the rise and fall of an infamous corporate juggernaut in Enron
• suicide of Enron executive Cliff Baxter
• the lengths to which the company went in order to appear incredibly
profitable
• They had Income reported / Cash Flow Up / Assets Value Inflated /
Liabilities off the book, all these issues led to the bankruptcy of Enron.

Andrew Stuart Fastow Jeffrey Skilling Kenneth Lee Lay

 UNETHICAL ISSUES

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

employees and public caused huge losses.
2. The hiding of documents related to some transactions and debts.

3. Aggressive and Inappropriate accounting

method
• Mark to market value
• Special purpose entity
• Failure of external auditing (SAS 82)
• False information and misleading
disclosure – Manipulated financial reports.
4. Profit driven management culture
 PERSONAL REVIEW
1. Company could have restructured its departments. The quality
improvement strategies should have introduced in terms of financial
transparency. This would have decreased the errors in misacts of the
company operation.
2. They should have bifurcated there financial statements properly in order to
avoid stretched model of accounting.
3. They showed all the financial statements inflated which was unethical and
should have disclosed all their financial aspects properly.
4. They should have ethically used the mark-to-market value in order to avoid
inflating the financial statements.
5. Andrew Fastow misused the SPE’s concept, rather he should have set up
those entities and executed funds appropriately in order to avoid
bankruptcy.
6. Selection of external auditor is also very important, unlike Arthur Anderson
who gave equal co-operation to Enron in their unethical practices for some
mere monetary consolidation.
 THE CORPORATION

Among the 40 interview subjects are CEOs and top-level

executives from a range of industries: oil, pharmaceutical,
computer, tire, manufacturing, public relations, branding,
advertising and undercover marketing; in addition, a Nobel-prize
winning economist, the first management guru, a corporate spy,
and a range of academics, critics, historians and thinkers are also
interviewed.
LIST OF PEOPLE INTERVIEWED FOR THE DOCUMENTARY

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

2.Ray Anderson, CEO, Interface Inc., world's largest commercial carpet
manufacturer
3.Joe Badaracco, Prof. of Business Ethics, Harvard Business School
4.Maude Barlow, chairperson, Council of Canadians
5.Marc Barry Competitive intelligence professional
6.Elaine Bernard, director, Harvard Business School Labor Program
7.Edwin Black, author, IBM and the Holocaust
8.Carlton Brown, commodities broker
9.Noam Chomsky, professor, M.I.T.
10.Chris Barrett & Luke Mccabe, "Corporately-sponsored" students
11.Peter Drucker, professor of management and author
12.Dr. Samuel Epstein, Emeritus Professor of Occupational and Environmental
Medicine, U. of Illinois
13.Andrea Finger, spokesperson, Disney-built town of Celebration
14. Milton Friedman, Nobel Prize-winning economist
15. Sam Gibara, chairman and former CEO, Goodyear Tire
16. Richard Grossman, co-founder, Program on Corporations, Law and
Democracy
17. Dr. Robert Hare, Ph.D., psychologist and FBI psychopath consultant
18. Lucy Hughes, vice president, Initiative Media
19. Ira Jackson, director, Center for Business & Government, Kennedy School,
Harvard
20. Charles Kernaghan, director, National Labor Committee
21. Robert Keyes, president and CEO, Canadian Council for International
Business
22. Mark Kingwell, philosopher, cultural critic, author
23. Naomi Klein, author, No Logo
24. Tom Kline, vice president, Pfizer Inc., world's largest pharmaceutical
corporation
25. Chris Komisarjevsky, CEO, Burson Marsteller Worldwide
26. Dr. Susan Linn, Prof. of Psychiatry, Baker Children's Center, Harvard
27. Robert Monks, corporate governance adviser and shareholder activist
28. Sir Mark Moody-Stuart, former chairman, Royal Dutch Shell
29. Michael Moore, author, filmmaker
30. Oscar Olivera, leader, Coalition in Defense of Water and Life
31. Jonathan Ressler, CEO, Big Fat Inc., undercover marketing specialist
32. Jeremy Rifkin, president, Foundation on Economic Trends
33. Dr. Vandana Shiva, physicist, ecologist, feminist and seed activist
34. Clay Timon, CEO, Landor and Associates, global branding specialists
35. Michael Walker, executive director, Fraser Institute
36. Robert Weissman, editor, Multinational Monitor
37. Steve Wilson, investigative reporter, fired by TV station WTVT
38. Irving Wladawsky-Berger, vice president, Technology and Strategy, IBM
Servers
39. Mary Zepernick, coordinator, Program on Corporations, Law and
Democracy
40. Howard Zinn, historian and author, A People's History of the United States
COMPANIES FINED FOR THEIR UNETHICAL BEHAVIOR
 SOME CASE HISTORIES

1. Manipulating Children
1998, Western International Media, Century City & Lieberman
Research Worldwide conducted a study on nagging.

2. Crime at a subway
Pfizer taking care of the community

3. Unsettling Accounts
Fox Television trying to suppress the story covered by Jane Akre
& Steve Wilson on Monsanto’s Posilac
 PERSONAL REVIEW
 The movie gives the description of some of the unethical behavior of the
reputed corporations around the world.

 The movie also towards its climax shows how the common people when come
together can overcome a corporations rule. This can be seen from the
following examples;
1. Bechtel Corporation (Bolivia)
2. Union Oil Company (California)
3. Unocal (Burma)
4. Limited number of chain restaurants in Arcata
5. Revoking the patent on Neem (W.R.Grace & U.S. Govt.) and Basmati Rice
(Ricetek)

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

the society & not for their affiliation to public good.
 LESSONS TO LEARN FROM THESE CASES

 Ethics cannot be fragmented… or fragmentation goes against

ethics

 Company governance must integrate the active participation of

all stakeholders who affect the organization's activities or who
are affected by these activities and in all four domains :

1. profitability

2. equity

3. dignity

4. viability
Closing thought…

“Every fraud
could have been prevented
if honest people
had asked the right
questions
at the right time”