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The success of a business organization in every business environment is built by corporate governance and obedience to the business ethics which related to sustainability of the business. The main objective of the paper is clear understanding of business ethics in relation to their impact to the business enterprises. Apparently, the research will explain the meaning of key terms in business ethics as well as the meaning of different business ethics theories in business. On the other hand learning the relationship between the legal requirements, cultural factors and the impact of business ethics on sustainable business will also be discussed. Major ethics theories will also form the basis of the paper.
Business ethics is a written and unwritten principle and value that reflects on the decision-making process in a business environment. The business ethics in this context tries to elaborate more on the decision that will differentiate between what is wrong and right, this is based on the total human behaviour in a business environment (Carroll & Buchholtz, 2014). Ethics is a phenomenon that tries to express the relationship between, professionalism, personal contact and corporate governance in the business enterprise (Virakul, 2015). Business ethics takes the assumptions of the professional ethics that scrutinize ethical principles values moral and ethical problems that ascend in every business environment. The ethical issues arise from the case study includes;
The professional duty is to define to be part of the business ethics which comprises the legal practices and duties of the top management, this is to act in a hastily manner obeying the law and avoiding conflicts of interest, this is also by putting the interest of their clients ahead of their own interest (Ferrell & Fraedrich, 2015). According to the case study, the ethical behaviour and the ascent of some manipulation of various policies indicated that managers from different banking institutions such as Barclays bank, Royal Bank of Scotland and Citigroup did not act in accordance with the professional duties.
The self-interest is one of the primary ethical issues which arose from the excerpt. It refers to the ability of an institution to wanting to pursue a particular advantage without considering the interest of other institution in a business environment. Barclays bank and other service regulators including the Financial Services Authority (FSA) and US Commodity Futures Trading were involved in self-interest issues, which lead to the huge amount being paid as the punishment of not considering the vital ethics in business (Ferrell & Fraedrich, 2015). Barclays bank and the management embraced the concern of their self-interest in their operation, this was against the business ethics with regard to business decision making.
Stunted moral development refers to the ability of the business enterprises failing to look beyond their current performances. The business organization and service regulatory organization failed to observe their performance standards against the base of their mission and the core values (McGillivary & Fung, 2013). The passage has indicated that many service regulatory organizations were only interest to be seen as the top performers in the business market. Lack of business organizations in the banking sector leads to unstable business condition which will indicate unsustainability in business activities (G, 2014).
The benchmark interest rate is also described to be the base interest rates, it is defined to be the minimum interest rates that the investors are demand from investing on non-treasury security. While the conflicts of interest refer to the capability of personal as well as the financial consideration may influence the ethical performance of an institution (Salvioni, 2015). The case study reveals that, most of the banking institution were only expressing the interest of their mission and vision, this is to improve and increase profitability making by involving themselves in immoral business processes (Carroll & Buchholtz, 2014). Among the regulators who became part of the receivers of base interest is the New York Federal Reserve which send a later to Bank of England, this is to make credibility of the LIBORs reporting system. Based on the comprehension of the passage, the New York Federal Reserve acted in such a way in order to secure their conflicts of interest.
However, many bank institutions were whistle-blowers of each other, where they did not want to be part of the Global Financial crisis, this confirms the comprehension of conflicts of interest between themselves (Dooley, 2012). Moreover, trader’s ability to influence the benchmark interest and as a result leading to conflicts of interest is well demonstrated by the passage (Lessi, 2013). Joaquin Almunia noted that it is so unique that business organization can decide to machinate, which as a result of it will allow business operators to predominate their financial influence which is part of the conflicts of interest (Salazar, 2013).
Thomas Hayes is highlighted as one of the traders who colluded with other in order to seek favour from Global Financial Crisis, improve the profitability position of his organization as well as to continue receiving personal bonuses and in general trying to spurt on the LIBOR scandal (Lessi, 2013). On the other hand reputation of the banking community was adverse as result of manipulation of LIBOR reporting systems, the manipulation indicated great concern of the traders and banking institution to expressing greed and self interest in their business activities (Aldohni A, 2016).
The code of ethics in profession serves different purposes that seek to improve the business activities and sustainability. According to the research, it is only at the level of a profession that the code of ethics will document the standards and performance on which profession should be held accountable for the conduct of its members and colloquies (McGillivary & Fung, 2013). Traders have the tendency of manipulating the reports and system of financial service regulators in the banking sector. The LIBOR scandal forced many banks to stand their position in their services provision, some even going to an extent of lowering their interest rates in order to escape the scandal which they knew it will track their position in the banking sector as well as their financial performances (Wright & Bennett, 2011). Based on the business ethics in promoting true business sustainability, traders’ behaviour demonstrated failure in embracing the good ethical conducts.
Professional duty is one of the issues arising in business ethics, it impresses the traders' ability working in an unethical profession in order to secure their standing position, to escape the Global Financial Crisis, as well as to increase their profitability making (Lessi, 2013). According to the understanding in relation to the business ethics and sustainability in business, top bank management fail to evaluate even the reports from the internal auditors, in 2009 Rabobank was one of the bank that suffers great losses from unethical profession behaviors. As a Bank Chief Executive Officer, one should act in accordance to the ethical provision which expresses the sustainability in business actions (Aldohni A, 2016).
Understanding the business ethical theories is a key learning outcome that expresses the comprehension of aspects relating to business ethics and their impacts in promoting business sustainability.
It is commonly and widely applied ethical theory in the business environment. It is defined to be the decision that concerns the good performance of the enterprise, it implies the ethical decision which is considered to be good if they only produce the greatest benefits to a numerous individual (Salvioni, 2015). LIBOR scandal demonstrated that most banking institution in the banking sector was applying the utilitarianism in their business activities. Barclay’s chairman, Marcus Agius reported the influence of utilitarianism in banking, his organization was greatly affected, the Chief Executive Officer of the company basically involve themselves in unethical business decisions which led the company to be named as part and parcel of LIBOR scandal (Carroll & Buchholtz, 2014).
Deontology is defined to be the business ethical theory that impresses the obligations and duties of individuals. It implies the duties and responsibilities that are generated after setting particular set principles (Tourvalai, 2012). Based on the research, deontology is a business ethical theory that was used to by traders, banks, and financial interest regulators to escape the LIBOR scandal. According to the analysis and the comprehension of the passage, bank were used as the base setters who have the obligation of using the principles that were introduced by their regulators (Salzmann, 2010). The penalty of $2.3 billion which was set as principle by the EU antitrust regulators was imposed to a number of banks, they include Deutsche Bank, Royal Bank of Scotland and Citigroup, therefore, demonstrated the deontology as the business ethical theory which was used in the banking community in the LIBOR scandal (Webb, 2013).
Virtue ethics a vital element of the business ethics that is used by the business organization in order to gain favour from the other superior bodies in their business environment (Ferrell & Fraedrich, 2015). It is identified as those ethics that emphasizes the moral character as well as the virtue, this is in contrast to the methodology that accentuates deontology and the consequences of specific actions. Virtue ethics theory is comprehended to be used by the LIBOR in order to save the deviation of the banking sector. Base on the information provided, some banking institutions wave their concern in rebuilding their reputation by seeking refuge from the courts, this was to emphasize the moral character of regulators who forced them to adhere to set principles, rules, and policies (Weber, 2016). Barclays chairman, Marcus Agius unveil to the relevant authorities that the Libor scandal and related behaviors were within the banking community, the chairman acted accordance to the virtue ethics.
Accountability is a primary aspect of ethics in the business sector, it implies the commitment that employees and organization have upon their operation in a particular business environment. While promoting sustainable business accountability should start from the management and its progression will follow (Aldohni A, 2016).
The case study exposes that virtue ethics in business was greatly artificial, the firmness on the report provided indicates that most of the banks were operating based what they will achieve at the end of the day. Profitability and increase in bonus were what many banks were looking, and thus they fail to be accountable about the core values of their business organizations. The action of the traders was originating from the institutions which were driven by self-interest and greed over the financial influence (Carroll & Buchholtz, 2014).
The success of the banking institution and the international regulatory bodies depends on the trust between each other as well as the trust of the customers. Among the factors to be considered by the money lending institution is the revolution of the management system, this implies the installing the policies and principles that will monitor the operation of the bank management (Ferrell & Fraedrich, 2015). Bank should consider obeying the lawsuit and court orders in relation to the consumers’ cases. However, the financial institution should also take into account the principles, policies, and regulation provided by the international monitoring policies (Salvioni, 2015).
In conclusion, business ethics are described to be the main factors which enhances sustainability in a business enterprise. Business ethical theories acts as the basis which the business organization should use while developing sustainable business environment and related activities. The analysis indicates that, LIBOR scandal a rise as a result of many banking institution failing to adhere to the ethics which govern their business activities. Sustainability challenges in business sectors affected all the stakeholder in the banking sector.
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