Question

Select a company that has been in the news for ethical violations (for example, Enron).

Assess the following in 525 to 700 words:

• Identify the alleged ethical violations
• Determine why the violations were unethical (taking into account legal and regulatory requirements for the particular industry)
• Explain how you would address the ethical violation in order to bring the company back into compliance

Answer 1

Enron’s Ethical Violations

First, Enron encouraged its employees to buy and invest in the stock despite knowing that the stocks were lowly valued. Secondly, the company’s management bribed analysts to put the company favorable and positive ratings(Parker, 2005). Additionally, the company manipulated its earnings. The company's accountants and executives made adjustments to the accounts and cooked the figures, thus providing a false financial state of the organization. The other unethical practice involved hiding losses within the business units.

Why the Violations Were Unethical

Enron executives enticed employees to invest in the stocks with the knowledge that the stocks would not lose value. It was an act of deception and taking advantage of the employees’ trust in the management of the company. The executives knew so well that the company was not doing well and went on to encourage the investment in the shares and thus hurting investors. The act of bribing analysts was also unethical and was meant to put the company in a position it did not deserve. The ratings given by the analysts were to attract people to invest in Enron with high hopes of earning more. The code of conduct was not followed, and thus the dealings were unethical.

Manipulating the company’s earnings was contravened the industry regulations since it was a falsification of revenue that did not exist. It thus meant that the company did not disclose the required information to the public and stakeholders. Such unethical acts were not tolerable in the energy industry due to the price fluctuations of different products as well as the stocks of other companies attached to Enron. Accuracy and quality are highly regarded in the industry. By hiding the losses in various business units was so unethical. The profits were recorded prior to being earned so as to put the company in a favorable position against competitors and deceive the public and investors that the company was doing well. Despite the legality of the mark to market practice, the company did not report the losses made. Thus, the accounting practices were contrary to the industry regulations.

Addressing the issue of ethical violation in order to bring the Enron company back into compliance

The Enron case was brought about by the executive’s weakness, the executives of the company destroyed the fortunes that have built for years. The primary cause is that it lacked the idea of ethics in business. The Enron culture resulted to bankruptcy and fraud, and it only focused on financial goals. Therefore, I would suggest the company to build a strong or healthy corporate culture. Company culture will impact the decisions of both the executives and employees when they come across ethical dilemmas. Also, Enron should give job securities to its employees to make them not to cheat when working.

The Enron had its code of ethics written but ethical violations still existed(Silverstein, 2013). Therefore, Enron should have a well-written code of ethics and communicate it to all its staffs. The ethical code should be followed on daily business and make common sense in ethical standards in every employee's mind. Additionally, Enron needs to first learn models and theories on business ethics since they are the ethical basis in all situations. The models and theories give out right ways on how to balance all related parties interest and they help a company to make the right decision when faced with ethical dilemmas. The Enron executives should have enough knowledge on business ethics so that when encountered with a dilemma they can make the right choice on what to do.