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Financial Decision Making for Managers

Introduction

Business ethics are standards that are applied to examine certain behaviors in the business processes of corporations. Companies are held accountable if they do no follow ethical guidelines in terms of societal welfare, environmental benefits, and other ethical values. The companies that do not have any sense of responsibility for their societies are considered unethical companies. When it comes to societal welfare, there is a term named corporate social responsibility (CSR), it is often observed that people are more diverted to those organizations that opt for sustainable development considering the society’s benefits. Through ethical decisions, people also appreciate the company’s efforts and become more loyal to it. Some corporations take decisions that have short-term profits but in the end, there are only sufferings that companies have to face. Through unethical things, companies can have a profit in short term but that is not sustainable and results in loss of sales as well as reputation.

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Failure of Lehman brothers as an ethical issue

Lehman brothers’ failure was more of an ethical failure than a financial. The management admitted having made some decisions while they knew that the financial position of the company was falling. The company made decisions to take huge debts without maintaining enough capital to keep keep liquidity of the firm this lead to the famous subprime crisis. This crisis led to what is now the financial crisis. I can argue that monitoring liquidity before increasing the debt of a firm is the right thing to do on moral grounds; complementing this ethical argument is evidence that it is also the necessary business strategy. Ethics should also be taken into account when looking at the business interests because if the companies start to handle such decisions like this then it would be hard to maintain ethics. This case of Lehman brothers has not been given as much publicity as the case of Enron and WorldCom. The cases were due to ethical failures, although in their case there were fraud elements. Lehman brothers’ management did not make decisions directly to benefit individual members but they failed to observe ethical issues in managing the organization.

In the modern era of expanding global trade and business activities, there are a lot of differences observed in the practices of organizations. From monopoly to business ethics there are a thousand issues that need to be handled ethically by the corporations. Therefore business executives of the modern global economic world must be well aware of the possible unethical happenings in their corporations. There are certain ethical standards created through many long controversial findings. These ethical standards should be considered by businesses when making a decision. By closely monitoring and understanding differences, a successful executive can manage the situation easily and constructively. If the unethical processes are addressed properly such delicate matters can result in adverse effects to the business of the organization.

References

  1. Business ethics, sixth edition (n.d.).
  2. Dennis, LaToya(2008); WM Tackles Business Ethics in the Classroom.
  3. Fisse, B. & Braithwaite, J. (1994).Corporations, Crime and Accountability.London: Cambridge University Press.
  4. Solomon, J. (2007).Corporate Governance and Accountability. London: John Wiley &Sons Ltd

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StudyCorgi. (2021, October 24). Financial Decision Making for Managers. Retrieved from https://studycorgi.com/financial-decision-making-for-managers/

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StudyCorgi. (2021, October 24). Financial Decision Making for Managers. https://studycorgi.com/financial-decision-making-for-managers/

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"Financial Decision Making for Managers." StudyCorgi, 24 Oct. 2021, studycorgi.com/financial-decision-making-for-managers/.

1. StudyCorgi. "Financial Decision Making for Managers." October 24, 2021. https://studycorgi.com/financial-decision-making-for-managers/.


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StudyCorgi. "Financial Decision Making for Managers." October 24, 2021. https://studycorgi.com/financial-decision-making-for-managers/.

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StudyCorgi. 2021. "Financial Decision Making for Managers." October 24, 2021. https://studycorgi.com/financial-decision-making-for-managers/.

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StudyCorgi. (2021) 'Financial Decision Making for Managers'. 24 October.

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