Q1 Why do good people make bad decisions? Discuss.

Good People Make Bad Decisions In the corporate world around us there are number of people involved within it with a different role and a part to play. Ethics play a vital role in it. the right choices and choosing what is best for one!s self. s life is all about making number of people who run

these organi"ations are always bound to get ethical problem arising within the companies and when as a matter of fact more and more ethical problem arise and situations turn worst. Its is important to make proper decisions and to reconsider things in order to make them better .but sometimes things go bad as good people get prone to make bad decisions In these situation where people are bound to make bad decisions one must have a clear understanding of ethics while making conclusion . #owever according $teve $ablu %&''() people fairly with a broad mind and a good sense of understanding often make bad decisions. *his is due to the matter of a fact that people often fail to analy"e situations and think in a inappropriate way. +ne must always have a clear understanding of a problem before a proper decision could be made. In an effort to understand why good people make bad decisions recent focus has been on the people who lack the knowledge of ethical behavior are often tend to make bad decisions. It is often seen also that good people working in organi"ational or institutions .are also bound to the greatest pressures from others and tend to commit a bad choices or engage in unethical conduct. ,any corporations have implemented codes of conduct that define unacceptable behavior and serve as a guideline for the practice of ethical conduct. *hat is a step in the right direction- but it is not enough for an organi"ation merely to have a written code of ethics still towards the end it the people who work in the organi"ations make bad conclusion ,any business organi"ations are also taking a more proactive position in the area of promoting the practice of ethical behavior. .ocus has turned to developing strong values-

communicating those values- and letting employees to govern themselves.% ,ichael /. Daigneault100() 1eople make decisions based upon their own opinion for their certain reasons and good people in spite of being well learned and knowledgeable often make bad decision. well. $ometimes an organi"ation also gets also involved within it. sa matter of the fact these effects will not only influence that one person- but also others as ccording 2laire 3elisle %&''4) trustworthiness- respect- responsibility- fairness- caring- citi"enship as these si5 1illars of 2haracter are ethical values to guide the choices. *he standards of conduct that arise out of those values constitute the ground rules of ethics- and therefore of ethical decision6making. When decision are considered it is very important for good people who are always to stand up for the sake of the company or an organi"ation to take things in an appropriate way. #ow ever it has been often seen as good people get prone to bad decision as they tend to use inappropriate or faulty reason for making decisions. .or e5ample in &'''the 2E+ of $mith 7 Wesson- a leading manufacturer of handguns decided to start including locks on all $mith 7 Wesson guns. ccording to $eglin %&''&) this was a very ethical decision because it serves the common good. Enlightened self6interest can be argued because an individual who was killed by the accidental discharge of a $mith 7 Wesson handgun will obviously not be a customer any longer. $eglin %&''&) reports the results of including locks *he 2ompany!s customers and retailers were furious. as sales dropped dramatically. 3y $eptember &''' $hult" 8the 2E+9 had left the company and by +ctober $mith 7 Wesson had laid off 1&: of its ;&: $pringfield employees. *he 2E+ might have known his decision would prove unpopular but he said that he had made it because when he asked himself- <Would I put locks on the guns if it might save one child?= the answer was yes. s stated above- the 2E+!s actions can be considered very ethical. >nfortunately- enlightened self6interest was not proven to be true. >nethical actions of others can be blamed as the problem as customers did not seem interested in purchasing a <safe=- gun. While dealing with certain issues which may cause arguments

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to arise its is important for good people to be more particular and focus on the issues before taking bad decision.%$egin &''&). ccording to ,ichael /. Daigneault %100() s the practice of law is important most

concern are taken in account as far as they are not against the rules or the laws. *here are many additional laws and regulations that can apply to all employees of the organi"ation!s standards of conduct and what the procedures are when confronted with a dilemma. *his is especially true when the problem falls into an area in which the distinction between ethical and unethical conduct is unclear. 3esides these rule or regulations disagreement is often seem within the people in such situations. as people need to have a clear understanding of the ethical behavior towards this matter of the practice. .air6minded people sometimes have significant differences of opinion regarding what constitutes ethical behavior and how ethical decisions should be made . ccording 3urton- 3rian and /oldsby ,ichael %&'':). >nder the golden rule approach- this approach has two steps. .irst we determine whether a particular action should apply to all people under all circumstances. ?e5t- we determine whether one would be willing to have someone else to apply the rule to us. In our comple5 global business climate- ethical decision making is rarely easy for good results #owever- as a business owner- one needs to have several models available for analy"ing our ethical issues. $ometimes one approach will be more appropriate than another. If one take time to consider the various possibilities- one is more likely to make a decision to believe is ethically correct the most important things is take in consideration is to follow fair approach .

Q&. Describe the moral point of view of evaluation and @ustification of business decisions. Identify the primary features of and discuss the criticisms of the moral point of view. Moral point of view of evaluation and justification of business decisions ccording to one influential conception of morality- being moral is a matter of acting from or in accordance with a moral point of view- a point of view which is arrived at by abstracting from a more natural- pre6ethical- personal point of view- and recogni"ing that each personAs personal point of view has eBual standing. *he idea that which is not for morality- rational persons would act from their respectively personal points of view ishowever- simplistic and misleading. 3ecause of our non6moral reasons one cannot all be adeBuately captured as falling within any single- unified and coherent point of view as morality cannot be adeBuately understood as a matter of abstracting from such points of view and taking them all eBually into account. fter considering several ways of modifying the initial conception of morality in a way that accommodates the variety of non moral reasons that do not have their source in a personal point of view- therefore the suggestion that free ourselves more thoroughly from the grip of the metaphor that takes morality as a whole to be a matter of acting in accordance with the @udgments of a single unified and coherent point of view. %Wolfs &'';). ccording to %Clein- Dinda $ 1001) the issue of effectively integrating ethics into business decision making is a ma@or area of discuss confronting in todayAs corporate leaders. 1ersistent media reports of unethical behavior by corporations- business e5ecutives- and governmental officials highlight the need for effective solutions to the ethics dilemma. *he ethics dilemma derives from the perceived conflict between the traditional corporate ob@ective of profit ma5imi"ation and the overall desire for increased social welfare. lthough ethically responsible business practices are generally desiredopinions about what these practices are and how they should be encouraged are diverse. *he comple5ity of the current business environment complicates the development and implementation of resolutions to ethical issues facing industry.

Ethical standards also include those that en@oin virtues of honesty- compassion- loyalty and ethical standards also include standards relating to rights- such as the right to life- the right to freedom from in@ury- and the right to privacy. $uch standards are adeBuate standards of ethics because they are supported by consistent and well founded reasons. %,anuel FelasBue"- 2laire ndre- *homas $hanks- $.G.- and ,ichael G. ,eyer 1000). *he development of procedures for ethical decision making and reasonable standards for making are a part of every culture. *he description of values and moral beliefs and more of an particular individual or institute or society is a part of the way one describes them. *herefore the task of @ustifying moral beliefs and the process of applying ethical standards to everyday decision making is a process that sometimes challenges those beliefs. In business ethical @ustification is most difficult as economical goals often appear to override these considerations. Integrating ethical decision into managerial decision making without setting out economic consideration it is not considered risk free. #owever ignoring ethical consideration one must look in certain fact while considering economic affairs firstly most economic decisions are choices were decision makers could have done otherwise secondly every such decision effects people and alternative action would affect them and lastly every decision is embedded in a belief uses that pre supposes some basic values. ccording to %1etri Feteran &''E) it is suggest that evaluation is a highly respectedappreciated and venerated field. It is based on three central claims. .irst- evaluation standards and ethical principles are useful only to the e5tent that one recogni"es what they can and cannot do. $econdly- they can never be applied in algorithmic fashion- but must always be interpreted in the evaluation. nd thirdly they are- at least to some e5tentshaped by cultural norms and understandings. Ethics is about the assessment and evaluation of values because all of life is value6laden. ccording to %2hristina #off $ommers 1004) emphatically pointed out that values are the ideas and beliefs that influence a direct our choices and actions. Whether they are right or

wrong- good or bad- values- both consciously and unconsciously- mobili"e and guide how one make business decisions and the kinds of decisions we make. When evaluation is considered in business decision making it mainly focuses on the idea that has been done after a particular decision has been made. Its is also vital important to keep the note of certain things or factors in order to achieve a prescribed goal. ccording to .ish- $. %&''4) ,oral criticism focuses on whether or not everything that should have been taken into account in a decision actually was taken into account. business decision can for e5ample be critici"ed on the grounds that it is likely to have certain undesirable effects. $uch criticism may be answered by an argument showing that even though it is indeed likely to lead to such effects- other very desirable effects @ustify it. moral criticism of this argument may challenge the overall estimate claiming that the decision fails to take into account certain considerations that ought to be taken into account and which will show the decision to be wrong. $uch criticism may challenge preferential ranking or the values taken for granted or some other aspect of the decision. In this respect- moral criticism is independent of moral theory. It simply points out that considerations which were not taken into account should have been on grounds that are generally speaking moral- but without demanding any theoretical account of what constitute moral grounds that are generally speaking moral2riticism of moral theories turns out to be similar and even identical to moral criticism of political or social decision6making. failing moral theory is worse than no theory- for if a theory recommends a course of action- which is then @udged to be un@ustifiable- it has limited the range of options open to the moral agent in an illegitimate way.%.ish- $. &''4)

Q4 part 1 Hou know you have the best interest of firm at the heart. What are your obligations as a member of the board regarding the investments? Obligation as member of the board ccording to ,artin Cay % &''4) $candals such as Enron- *yco and World2om have led to increasing focus on structural and internal controls for businesses- with a view to ensuring best practice for obligations making at board level- appropriate remuneration of directors- proper accountability- audit processes along with positive relationships with shareholders and critically institutional shareholders. *he primary obligations as I being the member of the board regarding the investments mainly focus on the management of the business of the corporation. It is the duty of the member of the board to appoint and monitor the performance of management and to provide direction and policy guidance to ensure that the directions of the board are implemented. .or day6to6day operations of the corporation this may be left to management member of the board to retain ultimate responsibility and control. ,embers must be sufficiently knowledgeable concerning the corporation!s business and affairs and sufficiently independent of management to perform their guidance and monitoring functions effectively that are reBuired while dealing with business decisions member of the board must avoid any situation involving a conflict between their personal interests and those of the corporation. 3eing the member it is also important to inform themselves about the corporation!s affairs and the issues facing the corporation- by attending board meetings regularly and participating in decisions concerning the profit!s business. s me being the member of the board I will make sure that the company must keep all the documents as a record for transparent flow of business activities. *he obligation to act in the best interests of the organi"ation 3oards is liable for their decisions. +ne reason organi"ations generally provide directors and officers with liability insurance for actions taken within the scope of their duties.

,ore important each board member is an individual <fiduciary= acting in trust on behalf of the owners of the corporation. 3oard members owe their organi"ation the duties of loyalty- care- good faith and trust. s a board member one must employ the organi"ation!s assets- opportunities- and information for the organi"ations benefit rather themselves or that of their other interests. $econdly- ,embers of the profit corporation owe a duty of care in managing the corporation as care must be taken in proper decision6 making as members of the board must take important steps that control and take to protect the interests of their organi"ation. *hirdly keep a good faith is vital important as member of the board must act in a way that is e5pected to believe to be in the best interest of the enterprise. Dastly to act on trust as this obligation lies at the heart of fiduciary duties.% ,arc Dean ,illot &''E). 3esides these duties the I believe the personal behavior of the board member should lays emphasis as *he standards of personal behavior applicable to 3oard members are vital important .3oard members will acBuire a clear understanding of the role and purpose of the 3oard and the 2ompany- including statutory and regulatory reBuirements. *hey will develop an understanding of the 2ompany!s business and the environment in which it operates- and stay informed of all relevant activities affecting the 3oard members will also strive to attend all 3oard and relevant committee meetings and other scheduled activities. ,embers will treat each other with professionalism- courtesy and respect. *hey will work cooperatively with fellow members towards agreed goals- whilst accepting the obligation to be independent in @udgment and actions. ,embers will not attempt to improperly influence other 3oard members. s all members will strive to achieve consensus with the 3oard- but if the final position reached is a ma@ority decision that will be the decision of the 3oard. *hese personal obligations contribute towards the better development of the company. ccording to Iose- Gacob %&'';) 3oard of the members bring to the corporation a wide range of e5perience- knowledge and @udgment and bring these skills to bear for the corporation. *hese varied skills mean that good governance depends on far more than a Jcheck the bo5J approach to standards or procedures. *he governance structure in the

company is designed to be a working structure for principled actions- effective decision6 making and appropriate monitoring of both compliance and performance. Effective members maintain an attitude of constructive skepticism and careful review. ,embers are allocated to know that their @ob reBuires them to ask probing Buestions of management and to take the action necessary to get accurate and honest answers. ,embers also rely on the advice- reports and opinions of management- counsel and our e5pert advisers. ccording to % llan Dowe &''E) Ethically as I being the board of member I would ethically follow the following rules of ethics for the proper development or process of the company. I will always hold the betterment of the membership of the organi"ation as my priorityincluding during all participation in discussions and voting matters. It will be my responsibility to contribute to the board of directors any suggestions of ways to improve the organi"ation!s policies- standards- practices or ethics. I will not abuse my position as a board member by regular members of the organi"ation. I will declare any conflict of interest- be it real- potential- or apparent- which is not immediately obvious with regard to any matter being discussed in my presence during a meeting. I understand that the following activities are considered by the organi"ation to be conflicts of interest- and that conflicts of interest are not limited to the following situations suggesting to any

organi"ation employee that I am entitled to or e5pect any special treatment beyond

Q4 part b Discuss your obligations- if any- your obligations regarding your shares in the ,erchant $ecurities. Obligations in Details towards shares in merchant securities ccording to the case study on behalf of my opinion in companies ethical responsibility comprises those standards- norms and e5pectations which reflect interest in what customers- employees- shareholders and community consider as fair- correct- and as they protect moral rights of the stakeholders %e5ternal environment). 2omponents of the ethical responsibility of the .irm stress that it is important that the .irm operates in consistent manner in observing the social moral and norms of ethics that the new or increasing ethicalLmoral norms adopted by society are noticed and respected and that discrediting the ethical norms is prevented in the effort to achieve the goals of the .irm. >ndoubtedly- ethical norms are somewhat stricter than the legal norms of conduct. *hese were not to be seen in the case of E5trion limited. s I take into account that it is increasingly common to argue that each of these parties has a AstakeA in how the corporation behaves. *hat is that the corporation has an obligation to take account of how its actions affect each group. *his is not to say that all stakeholders have to be treated identically. ?or is it suggested that all stakeholders should have a direct say in the way corporations are governed. ccording to %$imon Dong staff 100K) Despite these limitations- the emergence of stakeholder theory represents a departure from an older view in which company directors were thought to have few obligations beyond those owed to shareholders and the law. Indeed- some directors have held that they have an obligation to do anything lawful that might advance the interests of shareholders irrespective of the conseBuences for other groups. $uch a perspective might be attractive because of its relative simplicity. 3oards of directors adopting this position would certainly have a relatively simple test to apply when considering how best to proceed.

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*here is no such thing as a perfect company.

ll are involved in activities that someone

somewhere may ob@ect to. .or e5ample- one investor may wish to avoid companies that invest in firms that act as a privately owed business while seeking out businesses that have a good track record on the business. nother investor may be more concerned about interest rates. *o find suitable companies to invest in one must first identify own concerns. ,any companies may not meet all of them. 3ecause of this it is worthwhile to priorities the concerns and decides which issues concern the most. ,ore and more people are now taking ethical considerations into account when making decisions about what to do with their money- fuelled by the awareness of issues raised by the media and campaign groups. 3eing a shareholder is not @ust about putting money into a company that one might think that will give a good return for the investment or a company . s a shareholder one must have certain rights and powers. ctive share ownership is all about employing those powers to make a company take notice of issues.% mbler- *im &''') *he director of the E5trion made certain unethical decision in investing in a firm as he did not follow the rigorous corporate policies and work more like than a private company. #owever that should not be in the case of financial institution as these institutions are suppose to take care of the funds of the other organi"ations and they must be more prescribed and must not take the money of the stake for granted. *he director of E5trion is being unethical as he is looking for the minor increase in the : M shares that he owes rather than looking at the overall picture of the company.

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Q4 c In your view- do you see a conflict of interest I this financial arrangement? E5plain. Conflict of interest in the financial arrangements ccording to the case study there is a conflict of interest in the financial arrangements as generally in a conflict of interest situation arises when a 3oard memberAs duty clashes with their duties- obligations or interests elsewhere. In the case study there is a conflict between the concerns and the stake holders. $uch situations as described and can cause real damage to official and public confidence in the 3oard and the reputations of individual *here are other situations that can give rise to potential rather than actual conflicts of interest which can be @ust as serious in undermining confidence in a group . It has been often seen as 3oard members do not live within the prism of their 3oard work but have a range of other personal and professional interests and relationships. It is no surprise then that almost all 3oard members will come across a real- potential or perceived conflict of interest at some point. .rom my point of view. It is important to maintain in a company while dealing with the business decisions that ,embers must always take proper decisions and avoid conflicts. $uch conflicts can me managed by taking in account several approaches. ccording to %Daurence 3. ,c2ullough&'':) It is always said that 1revention is always better than a cure and one should check if a organi"ation has a policy or particular rules about how these situations should be handled. *he policy or rules should stipulate when and how a 3oard member should disclose their personal and financial interests and also they should deal with gifts made to them in the course of their 3oard role.. In order to maintain the highest degree of integrity in business and to maintain the independent @udgment- directors must avoid any activity or personal interest that creates or appears to create a conflict between a directorAs own interests and the interests of others It is to be understood that a director may be a member- officer or owner of a member firm or a customer of a organi"ation without creating a conflict or the

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appearance of a conflict.

conflict of interest arises when a directorAs loyalties or

interests are divided between best interest and his or her personal interests or those of another. 2onflicts of interest may also arise when a director- or members of his or her family- or an organi"ation with which he or she is affiliated receives an improper personal benefit as a result of his or her position as a director. ny situation that involves or may involve a conflict of interest should be promptly disclosed before it turns to be worst. .rom my point of view towards the end as .inancial conflicts of interest are often comple5. *he scope of financial arrangements considered to involve conflicts of interest from the organi"ationAs perspective should be made clear in its policies. 3oard membersA financial arrangements that constitute conflicts of interest policies should set under which self6reported conflicts of interest will be evaluated. *he need for transparency is crucial. Everyone must be able to have confidence that the evaluation process will be rigorous and fair. 2onflicts of interest threaten professional integrity. In the evaluation process- the burden of proof should be put on the acceptability of a conflict of interest in towards the case. *he distinction between conflicts of interest and the other kind of role conflicts identified above is important- as conflicts of the second type respond to different remedies. Iole conflicts result from the range of legitimate roles and duties that organi"ations have. *he problem is not the fault of the decision makers concerned rather conflicts arise because organi"ations are committed to duties that become contingently incompatible. $tandard approaches such as disclosure or recusal- are not effective in such cases. *here are some measures that may be used in other conflicts- which resemble this sort of role conflict. %$pielman- 3ethany&''K)

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Reference and Bibliograph 1. $teve $ablu %&''().= Why good people make bad decisions-= ?ews event articles issue 1& $eptember &''(- page 1 &. .,ichael /. Daigneault%100()-= Ethics 7 1rofessionalism-! Why /ood 1eople Do 3ad *hings volume 1 -100( $eptember page 1 4. 2laire 3elisle%&''4)-! Ethical Decision6,aking-! Gune 1(- &''4-!page 1 E. $eglin %&''&)-= 3usiness ethicsN What does ethical behavior actually involve= December &1- &''&-!1age : :. ,ichael /. Daigneault%100()-=Ethics 7 1rofessionalism-! Why /ood 1eople Do 3ad *hings volume 1 -100( $eptember page 1 rticle to ethics and decision-=

(. 3urton- 3rian /oldsby- ,ichael%&'':)

Gournal of 3usiness Ethics- Folume

:(- ?umber E- .ebruary &'': - pp. 4;164K4%14) ;. Wolfs %&'';) ,orality and the view from here-= *he Gournal of ethics 1000- vol. 4- no4- pp. &'46&&4 K. Clein- Dinda $ %1001)-! Ethical decision making in a business environment-! Ieview of 3usinessN $unday- December && 1001 page 1 0. % ,anuel FelasBue"- 2laire ndre- *homas $hanks- $.G.- and ,ichael G. ,eyer

1000).-What is Ethics-!Ethics and applications-O $aturday 1& 1000-!page 1

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1'. 1etri Feteran % &''E)-=3eyond evaluation standards-! a case study towards the ethics-! ugust &''E page 1&1 614; 11. 2hristina #off $ommers- J*eaching the Firtues-J 2hicago *ribune ,aga"ine$eptember 1&-1004-page 1( 1&. .ish- $. %&''4). <,oral 2riticism *ruth -=Why 1hilosophy Doesn!t ,atter= 2ritical InBuiry &0 %$pring)N 4K0.page 1 14. ,artin Cay % &''4)-! Cnow your legal obligations-! case study of informatics-! &; ?ov &''4-!page 1 1E. ,arc Dean ,illot % &''E)-! Duties and liabilities of directors -=?ews 2ompany inside out- K $eptember &''E page 0 1:. Iose- Gacob %&'';) 3oard members talks-= Gournal of 3usiness Ethics- Folume ;4- ?umber 4- Guly &''; - pp. 4106441%14) 1(. llan Dowe &''E) Ethical /uidelines for 3oard ,embers for 1rofit +rgani"ations- Pmarch &''E page 1 1;. $imon Dong staff %100K)-= *he ethical dimension of corporate governance-= 1& march &''E page 1 1K. mbler- *im%&''') 3usiness $trategy Ieview- Folume 11- ?umber &- Gune &''' - pp. :06((%K)

10. Daurence 3. ,c2ullough&'':)-= 1racticing preventive ethicsQthe keys to avoiding ethical conflicts-= ,arch6 pril- &'':-page &

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&'. $pielman- 3ethany&''K) ,arch &''K - pp. 1;61K%&)

merican Gournal of ethics- Folume K- ?umber 4-

1(