- Published: November 21, 2022
- Updated: November 21, 2022
- Level: Bachelors Degree
- Language: English
- Downloads: 9
On Ethics and Law: a) The Financial Crisis perpetrators and the originators, the Lehman brother’s can truly be considered as a best example to explain the role of ethics and law in the management of business entities. It is really a grim reminder of what the consequences can be, when some of the biggest companies in the world and the most powerful ones in Wall Street, can do to the world economy through manipulations of accounts and the company balance sheet. Indeed the stakeholders have been given scant respect and have been fooled perfectly, with the help of the external company auditors. Though the US government has indeed taken tough action against the Lehmann Brothers, through the process of asking for the explanation of the whole manipulation act from the CEO of the company, still nothing much could be achieved since the Lehman Company filed for bankruptcy in 2008. But what will happen to the stakeholder’s interests and the faith that they had deposited on the company? Indeed they got nothing and they are still fighting for justice that they believe, will be delivered from the judiciary and also from the government. The company that had executed so much of power on the proceedings at Wall Street is now in shambles and the society which had nurtured it to such levels, has lost confidence in the management. The company shares have plummeted from the start of the crisis, which has led to the deepening of the worldwide financial crisis.(www. theweekinethics. wordpress. com) b) The Lehman crisis has indeed opened the loopholes of the auditing systems, that are undertaken by the companies the world over and it has shown that a small manipulation in the account statements and the balance sheets, can really falsify the current financial position of any company. Thus by projecting a company that is basically financially weak as one of the strongest company with huge financial returns, through the means of false balance sheets, any investor or shareholder can be easily fooled to believe, about the prospects of the company’s future growth. This would make the shareholders to pool in large amounts of money with the prospect of getting back huge returns. Hence to avoid such a situation from happening in the future, the auditing procedures of the company’s world over should be made more stringent and the government has to intervene in carrying out mystery audits by its own batch of government auditor’s , in order to find the true state of the company’s financial position. Manipulators should be caught red handed and the toughest punishments should be meted out to them. This would make the shareholders interest to be safeguarded and which would very well lead to the occurrence of such crisis a rarity. This would do well for the government and also the good and ethical companies to really prosper and create the most stable of world economies. Thus a very good strategic management could have really prevented the above crisis from happening. In addition to this if the multi fiduciary approach was practiced within the company management, then at least there could have been some people in the top management, who could have got a hint of the happenings within the company and brought it to light before the public. (www. theweekinethics. wordpress. com) 2. On Enterprise Level Management: a) Many top companies of the world are now concentrating on their efforts to build an image with the public. Gone are the olden days when the management of a company or a firm, really used to sweat to make out only profits. Now the whole concept has changed and company’s not only concentrate in making profits but also have very much realized the importance of building a brand image before the public, through their various social activities. As a result most of the big companies have realized the need for giving a huge importance, towards the social obligations of the society. With this concept in mind, there are companies who fund socials projects, for the well being of the people in that country. There are companies presently who are ready to sacrifice and spend millions in funding national and international social projects, that would in one way project and improve the company image. In other words this could be an indirect way of marketing and selling their brand to the public. The best example is the charitable activity, which is undertaken by the big company’s for example the IBM Corporation. This helps in improving the image of the company through donating for a social cause. Hence it is a true fact that any company can get a very good competitive edge and outsmart its competitors, by indulging in meeting the social obligations that makes it noticeable to a large audience and makes it a champion in the minds of millions both at a national level and also internationally. b) Any company in this modern day world can really taste success, when they create awareness about their product and also by creating a powerful brand image in the minds of the public. Indeed this is a major factor that would in turn determine the success of any company, irrespective of the size and the reach of the company. History has been filled with accounts of how small firms have developed themselves to become giant corporations and also how big companies have crumbled due to mismanagement and fooling the public. In the present world most of the companies have been created from the shareholders money. Hence it has become quite mandatory that the obligation of the company, towards the satisfaction and the protection of the interests of the shareholders of the company is of prime importance, which otherwise would result in losing of its shareholders trust. This is what has happened in the case of the Lehmann Brothers, whose share value tumbled once the shareholders came to know of the manipulations of the company’s annual balance sheet. (www. theweekinethics. wordpress. com) References: Gael O’Brien “ Lehman Brothers’ Perfect Storm: Where Ethical Lapses Met Bad Judgment” www. theweekinethics. wordpress. com, March18. 2010. Web. January31. 2011
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