question archive ASSESSMENT COVER SHEET LOCATION: ONLINE LEVEL 7 FINAL ASSESSMENT MBA ODL SEPTEMBER 2021 MODULE CODE: MBOE7183 BUSINESS ETHICS AND CORPORATE RESPONSIBILITY ANSWER ALL QUESTIONS INSTRUCTIONS The questions must be completed and submitted electronically via Turnitin using word processing software
ASSESSMENT COVER SHEET LOCATION: ONLINE LEVEL 7 FINAL ASSESSMENT MBA ODL SEPTEMBER 2021 MODULE CODE: MBOE7183 BUSINESS ETHICS AND CORPORATE RESPONSIBILITY ANSWER ALL QUESTIONS INSTRUCTIONS The questions must be completed and submitted electronically via Turnitin using word processing software
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ASSESSMENT COVER SHEET LOCATION: ONLINE LEVEL 7 FINAL ASSESSMENT MBA ODL SEPTEMBER 2021 MODULE CODE: MBOE7183 BUSINESS ETHICS AND CORPORATE RESPONSIBILITY ANSWER ALL QUESTIONS INSTRUCTIONS The questions must be completed and submitted electronically via Turnitin using word processing software. No images allowed on answers. All writing should be academic in style, formal, focused, concise and subject specific. It should use a font of Times New Roman 12 with 1.5 paragraph. The questions will be posted via Google classroom on 18 September 2021 at 9.30 am Submission deadline is on 19 September 2021 before 9.30am Submission must be completed via Turnitin.com All submissions will be checked via the Turnitin report in relation to unfair practice for similarity, potential collusion and contract cheating (that is buying from essay mills etc) You may provide citations in the answers (minimum 1 citation per question). Word Count preferably not more than 500 words on each part. No penalty on word count, as long as the question is answered. Please reference any materials obtained from internet or any other sources Equipment or materials required – None Page 1 of 7 2020/2021 Turn Over ANSWER ALL QUESTIONS Question 1 James who works for Fresh Supplies Bhd, is a newly appointed junior employee of the largest food processing company in the region. Fresh Supplies, a renowned household label specialises in high quality meat processing, The company enjoys the trust and confidence of its customers because of its reputation for high quality products. On his second week at work, James noticed some inferior meat being mixed with the normal product in one of the processing plants. He felt this must be unauthorised so he informed the factory manager, who told James that this was in fact a necessary cost reduction measure because company profits had been declining in recent months. James later found out that all stages of the production process, from purchasing to final quality control, were adapted in order to make the use of the inferior meat possible. The factory manager told James that the inferior meat was safe for humans to eat and its use was not illegal. However, he told James that if knowledge of the use of this meat was made public, it would mean that customers might stop buying the products. Many jobs could be lost, probably including James’s own. The factory manager ordered James not to disclose to anyone about the inferior meat and to conduct his job as normal. James later discovered that the main board of Fresh Supplies was aware of the use of the inferior meat and supported its use in seeking to reduce costs and maintain profits. In covering up the use of the inferior meat, the factory produced a fraudulent quality control report to show that the product was purely based on high quality meat when the company knew that this was not so. When James heard this, he was very angry and considered telling an external source, such as the local newspaper, about what he had seen and about how the company was being dishonest with its customers. Required: Page 2 of 7 2020/2021 Turn Over a) Explain how James might act, in each case, if he were to adopt either conventional or postconventional ethical assumptions according to Kohlberg’s definitions of these terms. Your answer should include an explanation of these two terms. (15 marks) b) Construct an ethical case for James to take this matter directly to an external source such as a newspaper. (10 marks) [Total 25 marks] Question 2 Marine Recovery System (MRS) was recently shortlisted for a high value contract for the development of a coastal defence system for another country. This was contingent on the payment of a facilitation fee to an official in the defence ministry. Despite being an unusual request, it was made very clear that MRS would not be awarded the contract, worth $2 billion over 10 years, unless the relatively modest sum of $1 million was paid immediately. Recently, MRS has been facing very low level of business activities, and is about to announce around 500 staff redundancies. Therefore, news that this contract was about to be awarded came as a great relief to the board of MRS, as the jobs would now be secured. However, only the chief executive officer (CEO) and operations director knew about the facilitation fee, so an emergency meeting of the board was convened with only one item on the agenda. Due to the very sensitive nature of the matter at hand, it was decided not to make a formal record of the discussions at the board meeting. This was more likely to result in a frank exchange of views and encourage all directors to express their opinions openly. The CEO, Ray explained the dilemma to the board, making it very clear that without this contract there would be no way to protect jobs. The finance director, Nelson, said that he was personally very uncomfortable with the idea of paying a facilitation fee, which was in effect a ‘bribe’. As a professional accountant he was bound by a code of ethics which strictly prohibited making such payments, therefore he could not sanction the payment under any circumstances. Page 3 of 7 2020/2021 Turn Over The HR director, Sue, took a far more pragmatic stance. She acknowledged that any form of corruption was utterly deplorable; however, it was a fact of life in many countries. She asserted that if the board of MRS decided not to make the payment and forego the contract, then it could be assured that a competitor would not adopt such a high-minded position. The net effect was that by avoiding a relatively small payment, the firm would be doing a disservice to both its employees and its shareholders, who would undoubtedly suffer a reduction in their shareholder value. She maintained that sometimes it is necessary to take difficult decisions in business that are for the greater good, and so suggested that the payment to the official should be made. Required: a) Compare relativism and absolutism and explain the significance of individual or personal differences in guiding ethical behaviour under each approach in a given scenario such as the situation at MRS. (7 marks) b) Explain the ethical theories of deontology and teleology or consequentialism, and analyse which of the approaches have been adopted by Sue and Nelson. (9 marks) c) The involvement of directors in bribery and corruption can seriously undermine the relationships of trust upon which corporate governance is based. Required: Describe best practice measures which could be employed by MRS to combat bribery and corruption. (9 marks) [Total 25 marks] Question 3 Jessy is the executive director and qualified accountant of a large public listed company. Jessy was recently in charge of awarding large outsourcing contracts for her company, without inviting an open tender. When her family fell into heavy debt, she looked for a way to make some additional income. Her company was seeking to place a contract for a large outsourced service. Out of desperation she accepted a bid from one supplier who said it would pay her $50,000 as a ‘thank you’ once the contract was awarded. Page 4 of 7 2020/2021 Turn Over She justified her behaviour by reminding herself that she obtained her job partly because she was an accountant and that she had worked extremely hard to obtain her accounting qualification. She believed she was entitled to make a ‘higher personal return’ on her investment of time and effort in her accountancy training and through successful qualification as a professional accountant. Her act was in violation The IFAC code of professional ethics. The IFAC code of professional ethics (2009), relevant to accountants, contains the following advice. ‘A professional accountant in business or an immediate or close family member may be offered an inducement. Inducements may take various forms, including gifts, hospitality, preferential treatment, and inappropriate appeals to friendship or loyalty. Offers of inducements may create threats to compliance with the fundamental principles [of professionalism].’ Required: a) Briefly describe the five types of ethical threats in the IFAC code of professional ethics (2009) and discuss how accepting excessive ‘gifts’ or ‘hospitality’ can give rise to some of these threats within this case. (9 marks) b) Criticise Jessy’s beliefs and behaviour, and explain why accepting the $50,000 conflicts with her duty to uphold the public interest. (10 marks) c) There are ethical issues, legal restrictions and other regulations around potential insider trading.’ Required: Explain what ‘insider dealing/trading’ is and why it is an unethical and often illegal practice. (6 marks) [Total 25 marks] Question 4 Raymond is currently serving as a non-executive director on the board of a nationalised concern, The Electricity Board (EB), in a developing country in Asia. EB operates a number of coal-fired power stations and transmits energy through a national grid which it controls. The Page 5 of 7 2020/2021 Turn Over electricity generated is then sold to the general public by private sector electricity distribution companies. Raymond is concerned about the ethical implications of a couple of issues that were discussed at EB's most recent board meeting which was held yesterday. As a non-executive director, he believes he has a particular responsibility to consider ethical issues carefully. (1) A general election campaign has recently begun in this country. The governing party has indicated that it intends to maintain EB as a nationalised industry if it wins the general election, although it will be seeking efficiency improvements. The opposition party has indicated that it intends to privatise all industries that are currently nationalised. Early yesterday morning before the board meeting, EB's Managing Director was suddenly asked by senior civil servants in the Ministry of Energy to provide a major commitment to cost cutting in the next ten days. The Managing Director is aware that the Minister of Energy will be making a major election speech in a fortnight's time. (2) A recent United Nations report ranked EB's home country in the Top 10 of its worst polluters, as measured by CO2 emissions per head of population. This report has been seized upon by environmental groups who have called for a month of action during the general election campaign. They wish to highlight the environmental damage being caused by the government's environmental policies and to highlight the need to switch to alternative technologies such as wind power generation. In the last few days small groups of protestors have broken through perimeter fences at two of EB's power stations and managed to delay deliveries of coal by chaining themselves across railway tracks. There have been some reports in the press of heavy- handed treatment being meted out by the security firm hired by EB to deal with the protests. EB's Managing Director has dismissed these reports, saying the protestors' solutions are impractical, they have no rights of access, and that EB is entitled to take whatever action is required against the protestors to protect its property and maintain electricity supplies. In addition, extracts from the discussion on social responsibility at the last board meeting are as follows: Page 6 of 7 2020/2021 Turn Over Extracts from board meeting minutes The Managing Director commented that a key element of good corporate citizenship was managing the company's relationship with the natural environment. He therefore regarded it as top priority for the company to introduce an effective environmental management system. However, he was unclear of the exact meaning of the term corporate citizenship. The Finance Director was more sceptical of the concept of corporate citizenship, claiming that staff co-operation would be necessary if the company was to act as, and be perceived as, a good corporate citizen. She suspected that this would depend on the factors in their background that determined their ethical approaches: 'We ourselves can't teach our employees to be good citizens'. Required: a) Using Tucker's model for decision-making, assess the factors that EB's board should consider when dealing with the current protests by environmental groups. (15 marks) b) Explain the concept of corporate citizenship and describe the issues that influence an organisation's position on corporate citizenship (10 marks) [Total 25 marks] [Total: 100 marks] ** END OF QUESTION PAPER ** Page 7 of 7 2020/2021 Turn Over
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Question 1a
James' case involves an ethical dilemma because disclosing the use of inferior meet to the public will put his job at the edges and is also unethical to contain the immorality perpetrated by Fresh Supplies Bhd. However, Kohlberg provides direction on how James should act in this case of public deception (Mathes, 2021). According to Kohlberg, moral understanding depends on cognition development. Therefore, according to Kohlberg, James should apply post-conventional morality, which is the third stage of moral development. The post-conventional morality stage is characterized by understanding the universal ethical principle that operates in different situations. In James' case, the stage will involve preserving human life and dignity at all costs.
Kohlberg argues that the self-chosen principle guides individual judgment, whereas individual rights and justice guide moral reasoning. For James to disclose the matter to the public, he should let ethical principles, codes and values define his morality (Mathes, 2021). In particular, James needs to understand the employer's procedures to reduce operational costs and enhance profitability are unjust and need elimination or changes. Besides, the post-conventional morality stage depends on the growing realization that people are separate entities from society and may disobey rules inconsistent with personal principles.
James should allow respect for basic human rights like liberty, dignity, respect, and justice to guide him to become a post-conventional moralist to disclose the use of inferior meet to the public. The pre-conventional morality explains why James should disclose the matter to the local newspaper. According to Kohlberg's pre-conventional stage, a child's morality senses are externality controlled, and children believe and accept moral rules from authority figures (Mathes, 2021). James should allow post-conventional morality to guide him to disobey the principle of pre-conventional morality to disclose the use of inferior meet to the public against management's rules.
Question 1b
Taking the matter (use of inferior meat in the production process) to the public would mean James' job would be put at stake; James should first report the case to the bureau of standards and labor authorities before going public. Besides, labor authorities protect employees against injustice, firing and discharge (Arnold et al., 2019). Therefore, a report to the bureau of standards and labor authority would protect James against unfair employment discharge by the employer. James should let ethics guide his actions but follow the right procedure in disclose the immorality perpetrated by the company board and managers. After reporting to the bureau of standard and labor authority, James can then take the matter to the local newspaper to notify the public about the fraudulent practices by his employer. James should also take necessary measures to prevent the local newspaper from disclosing his identity when reporting the case to the public or customers.
Question 2a
Ethical relativism is a perspective that holds that moral values are entirely relative to different contexts and societies. Thus, the context of an action determines whether it is right or wrong (Jalsenjak, 2019). Relativism theories consider the consequences of moral actions when deciding if they are right or wrong. Such theories are therefore teleological and include situations ethics and classical utilitarianism. In the Marine Recovery System (MRS) case, Sue bases her argument on ethical relativism.
On the other hand, ethical absolutism relates to a moral position that argues for intrinsic moral acts and objective values. In particular, ethical absolutism argues that moral principles are always correct and valid (Jalsenjak, 2019). Besides, humans hold moral principles that are intuitively correct and valid. For instance, people hold golden rules as a correct and valid moral principle that requires us to treat others in a way we would want them to treat us.
Similarly, the principle of true and fair representation of accounting records guides accountants and finance staff to comply with internal accounting and finance standards (Jalsenjak, 2019). Nelson believes that Marine Recovery System should not pay the facilitation fee to win the contract because it is unethically incorrect. Personal differences are essential when deciding on an ethical dilemma to develop the best solution to the dilemma.
Question 2b
Deontology ethical theory
The deontological ethical theory emphasizes on relationship between the morality of human actions and duty. According to theory, an action is morally correct if it complies with some moral guidelines regardless of its consequences (Arnold et al., 2019). In addition, the philosophy holds that some acts are morally obligatory regardless of the consequences they produce to human and law welfare. Therefore, it is morally correct to abide by duty to others regardless of the consequence of the action while executing the duty. For example, sue adopted a deontological approach in her view for Marine Recovery System to pay a facilitation fee to win the contract because the duty is to ensure the security of its employees.
In contrast, teleological ethics or consequentialism holds that actions should comply with basic moral standards. The theory derives moral duty or obligation from desirable and good as an end product (Arnold et al., 2019). Nelson bases his argument on a teleological ethical approach by declining to facilitate payment of facilitation fee or "bribe" to win the coastal defense system contract.
Question 2c
A company that engages in corrupt deals does no favor to its future as it creates and cultivates a corruption culture among its members. For example, if a company allows manipulation of accounting books for a certain purpose, it becomes likely to perpetrate such practices in the future (Arnold et al., 2019). Therefore, it is necessary to install measures to prevent corruption and bribery in MRS company. One way to combat corruption is to install and maintain strict internal controls to monitor all operations in the firm. Another way is to create and implement anti-corruption laws that prevent all company members from engaging in corrupt deals irrespective of their authority rank.
Question 3a
According to the IFAC code of professional ethics, accountants should not accept excessive gifts that may impair or may appear to impair integrity in the accounting profession (Anders, 2018. Accepting excessive hospitality gifts creates the threats of self-interest, familiarity, self-review, advocacy, and intimidation when complying with fundamental accounting principles (Anders, 2018). In Jessy's case, sharing a financial interest with the supplier creates the threat of self-interests.
The justification that she is an accountant and should get compensation for hard work to obtain accounting credentials creates the problem of self-review. Advocacy threat relates to one in which a professional accountant promotes a client to the point of compromising objectivity (Anders, 2018). Familiarity threat involves a close relationship with a client to the extent of sympathizing with their self-interest. Finally, intimidation threat arises when a professional accountant experiences actual or perceived pressures to act unobjectively. In the case scenario, Jessy gets pressure from family financial challenges to compromise the objectivity principle.
Question 3b
International accounting standards require accountants to possess fundamental qualifications to practice in the profession. Therefore, no one should justify unethical behaviors based on resources spent to acquire accounting qualifications. Hence, accepting a $50,000 gift conflicts with public interest because it brings unfairness in the contracting awarding process.
Question 3c
Insider trading relates to the practice of buying or selling securities of a company while holding material information to influence the sale. Material information can significantly influence buying or selling decisions of securities (Crane et al., 2019). This malpractice (insider trading) is unethical because information regarding securities should be available to the public, and hiding such information compromises accounting information's true and fair representation.
Question 4a
Tucker's decision-making model is a framework that assists business firms in making ethical decisions. The model requires businesses to consider profitability, legal compliance, fairness principle, environmental sustainability, and morality when making decisions (Crane et al., 2019). EB's board should consider whether the company's operations are using the environment sustainably or bringing minimum environmental effects on the environment. The case scenario shows that the company has been polluting the environment with large amounts of CO2 emissions. Therefore, environmental groups have the right to protest against the company. The board should consider collaborating with protestors to obtain an opinion on how to change its operations to make them environmentally sustainable.
Question 4b
Corporate citizenship relates to recognizing a business's social and environmental responsibility towards the community in which it operates. It also includes the financial and economic responsibility to its stakeholders, including shareholders and customers. In simple words, corporate citizenship describes a business's contribution to the local community (Crane et al., 2019). In the EB's case scenario, the company should contribute to the local society by ensuring environmentally friendly operations. A business must be a good corporate citizen. Some of the issues that influence an organization's stance on corporate citizenship include the need to improve public image, increase brand awareness, prevent possible legal sanctions, and enhance public acceptance.
