Friday, March 17, 2000

Defense Industry Initiative

In this paper, I will tell how ethics field of study changed since 1980. Then by the fourth paragraph, I will explain how an ethics program can come under attack via fraud or misconduct and why it would ruin a company’s reputation. The purpose is to explain why having an excellent ethics program in place prevents blemishes.
In the 1980s, the eighteen defense contractors made the Defense Industry Initiative (DII) with six principles. First, the DII supports a code of conduct to implement guidelines and widespread distribution. Secondly, the companies in the alliance are expected to provide training of their employees. Thirdly, defense contractors must create an open atmosphere so the employees are encouraged to report violators. Fourth, companies need to audit and continue the development of effective internal reporting and discloser plans (termination procedure). Fifth, the member companies preserve the integrity of the defense industry so it may compete against foreign defense industries for military manufacturing contracts. Sixth, accountability is #1 philosophy for individual accountability for a functioning ethical program. [Business Ethics, pg 13, 2008]
In the 1990s, the US Government improved the DII a bit with the Federal Sentencing Guidelines for Organizations. Under this law, businesses can incur penalties if it doesn’t have a functioning and active compliant ethical compliance program. It uses the carrot and stick approach which translates to immediate suspension or termination to fit the crime or the counts will penalize these companies. [Business Ethics, pg 14, 2008]
In the 2000s, new amendments were added to the Federal Sentencing Guidelines for Organizations. The amendments stated that businesses must be well informed, about its ethics program with respect to implementation and effectiveness. This is usually the Board of Director’s responsibility. Secondly, the Sarbanes-Oxley Act made securities fraud a criminal offense and required companies to have a financial version of a code-of-ethics. [Business Ethics, pg 14-15, 2008]
2. What do you think is the biggest challenge to business ethics in the 21st century?
After reading Chapter 1 in Business Ethics and reviewing some articles on ethics, I believe the biggest ethical challenge to business in the 21st century is mixing capitalism with ethical issues. At the present time, especially where our economy is now, promoting and maintaining an excellent code of conduct should be a top priority in every business agenda to remain in good standing. There has been so much fraudulent business activity in the previous past years, not to forget 2008, one wonders if these individuals involved believed they were cloaked from the law. A good recent example of this was done by a man named Bernard Madoff, who took it upon himself to create a ponzi scheme worth $40-50 billion. Per Fox News, 'such a scheme can involve taking investments from clients, spending the money on yourself and repay the clients out of other clients' accounts.’ Enron would be another example where fraudulent activity has collapsed its greatness to bankruptcy. In both cases, greed weighed more than ethical issues. In these two previous scenarios, the micromanagement in ethical issues were selfishly not met. To prevent this from happening, businesses must oversee their ethical program to prevent blemishes. [Business Ethics, pg-21, 318, 2008]
Good ethics with employees would help maintain productivity. Twenty percent of employees view their business ethics program doesn’t work, and that misconduct without guidance and leadership is the #1 reason. It is well known that ethical relationships between upper management, managers and their subordinates contribute to better problem solving and were six times more likely to keep employees than businesses which didn’t. Even 92% investors in the stock market sid they would chose ethics over high-returns when choosing stock. [Business Ethics, pg-20, 2008]
All ethics in customer satisfaction means is the company must develop, alter, and adapt products to customers otherwise they will leave them. For example, 40% of Americans have a negative view of Wal-Mart, because of the reported low benefits to employees, environment issues, ethical issues with top management, and jobs outsourcing to China. [Business Ethics, pg 21, 2008] [Friedman, R, 2008] [Leonard, P, 2009] [Neumeister, L, 2009]
In terms of profit, there are many companies who experienced significant declines, because of their ethical issues. Companies with blemishes have lower sales or assets than ones who avoided court conviction. All a company can do is terminate whoever is guilty, release a comment, and hope to recover reputation lost over time, but the damage has been done. Companies who promote excellent ethical standards provide satisfaction to their customers, to the community, to the investor and to their employees. [Business Ethics, pg 21, 2008]
Ethics have been involved as a necessity since the 1980s. As diverse, global marketing expands, the challenges to every business will be to balance profit with ethical issues and its complexities. Fraud will expose its ugly head, but any businesses which has an ethical culture will always win in the long run financially, and be credible



References
Friedman, R. (2008, December 13). Charity Caught Up in Wall Street Ponzi Scandal
Retrieved January 09, 2009, from Fox News Channel website:
http://www.foxnews.com/story/0,2933,466665,00.html
Leonard, P. (2009, January 08). Madoff Ponzi scheme wipes out QCA grant
Retrieved December 09, 2009, from Zwire website:
http://www.zwire.com/site/news.cfm?newsid=20237287&BRD=2731&PAG=461&dept_id=574903&rfi=6
Neumeister, L. (2009, January 08). Prosecutors say Madoff was ready to send out $173M.
Retrieved November 16, 2008, from Microsoft website:
http://news.yahoo.com/s/ap/20090108/ap_on_bi_ge/madoff_scandal
Ferrel, O. C., Fraedrich, J., & Ferrell, L. (2008). The 1980s Consolidation. In Business
Ethics - Ethical Decision Making and Cases (p. 13). Boston, New York: Houghton Mifflin
Company.
Ferrel, O. C., Fraedrich, J., & Ferrell, L. (2008). The 1990s Institutionalization of Business
Ethics. In Business Ethics Ethical - Decision Making and Cases (p. 14). Boston, New
York: Houghton Mifflin Company.
Ferrel, O. C., Fraedrich, J., & Ferrell, L. (2008). The Twenty-First Century: A New Focus on
Business Ethics. In Business Ethics- Ethical Decision Making and Cases (pp. 14-15).
Boston, New York: Houghton Mifflin Company.
Ferrel, O. C., Fraedrich, J., & Ferrell, L. (2008). Ethics Contributes to Employee
Commitment. In Business Ethics - Ethical Decision Making and Cases (pp. 18-19).
Boston, New York: Houghton Mifflin Company.
Ferrel, O. C., Fraedrich, J., & Ferrell, L. (2008). Ethics Contributes to Investor Loyalty. In
Business Ethics - Ethical Decision Making and Cases (pp. 19-20).
Boston, New York: Houghton Mifflin Company.
Ferrel, O. C., Fraedrich, J., & Ferrell, L. (2008). Ethics Contributes to Customer
Satisfaction. In Business Ethics - Ethical Decision Making and Cases (pp. 20-21).
Boston, New York: Houghton Mifflin Company.
Ferrel, O. C., Fraedrich, J., & Ferrell, L. (2008). Ethics Contributes to Profits.
In Business Ethics Ethical Decision Making and Cases (pp. 21-22).
Boston, New York: Houghton Mifflin Company.

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