Nike was founded by Bill Bowerman and Phil Knight. They started to create the company back in the 1960's in their shop Blue Ribbon Sports. They were taking shoes that Tiger Shoes sent them and improving them to make them better for runners. Throughout the 70s Jeff Johnson, the first employee of Blue Ribbon Sports, marketed "The Swoosh". This was Nike's original name because of the logo. Nike then became a publicly traded company in the year 1980. Nike has been an ever expanding athletic company. Nike owns Nike, Converse, Hurley, Jordan, and also Nike Golf. Within all these different companies Nike makes all things athletic including shoes, apparel, equipment, and also accessories. Nike has had some trouble always being an ethical company. There were reports about 10 years ago of abuse in the factories overseas where their products were being made. The started the "Better World" campaign where they would go into these factories and make them so they met Nike standards.
Indonesian workers from a Nike sweatshop
Nike purchased the Converse company in the year 2007. In the year 2011 workers from the Pou Chen Group factory in Sukabumi, Indonesia came out and spoke of abuse happening within the factory. This abuse included both physical and mental abuse. The reported physical abuse included them being slapped, kicked, having shows thrown at them, and also scratched until some people bled. The mental abuse was a combination of things as well. It included the management screaming at the workers calling them names such as monkey, dog, and pig. They were also mentally abused to the point where they did not want to speak up against the bad things that were happening to them. One woman reported that she was fired after she spoke up against the management. These people were making $0.50 an hour, which was just enough to live off of with bunk type housing and food. They could not afford to lose these jobs so instead of standing up against the abuse they were keeping their mouths shut. The stakeholders involved in this case include the factory workers and their families, factory management, and also Nike.
Converse All-Star sneakers, run by Nike
Individualism can be defined as the right to do what you want to do but not being able to decide for others. When focusing on businesses this means they are to maximize profits and shareholders wealth. The only thing the business cannot do is break the law. When looking at Nike in this case, they are clearly trying to maximize profits. They send their productions overseas because of the cheaper labor work force. Nike is also not breaking any laws, if anyone is breaking any labor laws it would be the factory itself, not Nike. In the normative theory of individualism, Nike is an ethical company.
Utilitarianism looks at the overall happiness of the stakeholders. As recently stated the stakeholders include the factory workers and families, the factory management, and also Nike. The factory workers and their families are clearly unhappy. They are being abused and they cannot stand up and do anything about it. The factory management is doing what makes them happy. If this situation caused any unhappiness they could stop what they are doing right away and there wouldn't be a case to look at and investigate. Nike is unhappy by this situation. They have already tried so hard to improve factory work overseas and now all that work is being questioned because there is clearly still abuse happening in these factories. The majority of the stakeholders are unhappy which means that Nike is unethical when looking at the utilitarianism theory.
The third theory is the Kantianism theory which has four parts. The definition includes acting rationally and be consistent in your behavior, helping others act rationally, respect others decisions, and to act in good will. Nike is not acting rationally or being consistent. If Nike was being consistent in its behavior Nike would have made these factories work at Nike standards just like the other overseas factories. Also if Nike wanted to help others act rationally it would be talking to the management at these factories to help them learn how to treat the employees. If Nike was working in good will, these employees would not be being treated as poorly as they are. Nike is very unethical according to the Kantianism theory of business ethics.
The final theory that Nike will be analyzed under is the Virtue theory. The virtue theory includes four virtues; courage, honesty, temperance, and justice. When it comes to courage and honesty, Nike knows these employees are being treated so poorly and they are doing nothing about it. They say that their hands are tied due to the contracts Converse was in with these factories prior to Nike purchasing Converse. Temperance refers to having reasonable expectations, clearly Nike has no expectations for how these employees in Indonesia should be treated. Justice includes the idea of fair practices, if Nike wanted justice in their factory in Indonesia they would have fair practices for these employees, instead they are abused daily at work. According to the virtue theory, Nike is yet again an unethical corporation.
DesJardins, Joseph. (2009). An Introduction to Business Ethics (Ed: 4). New York, NY: The McGraw-Hill Companies, Inc.
NIKE, Inc. - The official corporate website for Nike and its affiliate brands.." NIKE, Inc. - The official corporate website for Nike and its affiliate brands.. N.p., n.d. Web. 21 Apr. 2013. <http://nikeinc.com>.
Nike workers kicked, slapped and verbally abused at factories making Converse line in Indonesia | Mail Online." Home | Mail Online. N.p., 13 July 2011. Web. 21 Apr. 2013. <http://www.dailymail.co.uk/news/article-2014325/Nike-workers-kicked-slapped-verbally-abused-factories-making-Converse-line-Indonesia.html>.
Salazar, Heather. Business Ethics, Economics, and Individualism. 21 April 2013. <kodiak.wne.edu/d2l/lms/content/viewer/main_frame.d2l?tId=102984&ou=18408>
Salazar, Heather. Business Ethics and Virtue. 21 April 2013. <https://kodiak.wne.edu/d2l/lms/content/viewer/main_frame.d2l?tId=102984&ou=18408>
Salazar, Heather. Kantian Business Ethics, Utilitarian and Business Ethics. 21 April 2013. <kodiak.wne.edu/d2l/lms/content/viewer/main_frame.d2l?tId=102984&ou=18408>
People for the Ethical Treatment of Animals (PETA)
ControversyUrban Decay was founded 17 years ago by co-founder Sandy Lerner of now famed Cisco Systems. Sandy’s drive for the cosmetic industry was produced within herself because she wasn't satisfied with the alternative makeup looks that were available on the market. With the help of a colleague, David Soward, he introduced a creative businesswoman named Wende Zomnir. The three of them formed an agreement to take the Cosmetic industry by storm. It was in January 1996 when they released their brand Urban Decay with a new line of makeup different from the rest of the market. The company quickly outgrew itself and expanded not only in popular stores such as Sephora but expansion occurred in very different global regions such as the Middle East and the UK. The success of Urban Decay can not only be attributed to its founders, but because of its loyal customers, it built from having an intrinsic policy of ending animal testing and not conducting animal testing on its own products. Instead of performing tests on animals, Urban Decay uses alternative methods to test without harming animals. These alternative methods are what helped them gain fame and success which has earned them certifications from both PETA and The Leaping Bunny Program that stringently monitor to see which companies are cruelty-free. Other than their animal-friendly oriented way of conducting business, Urban Decay is well known for their bold and vibrant trendsetting makeup. The infinitely expanding global presence and ability to overtake prestige packaging awards from major brands like Revlon and Avon displays their success. Animal testing has been used for many years to ensure safety in products intended to be used for humans; it is commonly used in markets ranging from cosmetics to medicine. Urban Decay, a cosmetics company that is heavily invested in ending animal testing worldwide and in its own products was faced with their own dilemma of maintaining a cruelty-free product image. The dilemma for Urban Decay was whether or not to expand into China’s lucrative beauty market where they could grow very quickly like other cosmetic giants have before. If they were to expand into China, Urban Decay would tarnish their customer’s trust in the company’s ethical policy way of doing business which is to not have their products tested on animals. The interests of the consumers wanted Urban Decay’s beauty products to be a cruelty-free and guilt-free usable product that would allow them to express an image without any worry. The consumers’ expectations of the product would be user-friendly and animal cruelty-free product. Such as the people who love animals, especially animal activists would benefit greatly due to the quality made product that competes with top name brands and still being animal-friendly. In addition, it was in their best interest that the company would be truthful and to mention any important changes in the cosmetic company. Yet switching over to the Chinese markets requires the number one thing that Urban Decay is against which was testing cosmetics on animals. However, with just one thought or idea about, this potential expansion into the Chinese market for the growth of the company made many consumers upset. The consumers believed that with the popularity of Urban Decay increasing in the United States that Urban Decay would be content with the way things were going for that cosmetics company to become one of the cosmetics giants around. The use of animals in any manner but to love and care for them are signs of animal abuse or neglect. Testing products on any animal are harmful to animals and could potentially kill the innocent animal in the process. In such cases, this is where the Leaping Bunny Program (CCIC) and PETA certify whether certain companies like Urban Decay can be certified “Vegan” in the protection of animal rights. The main interest of the company’s management is to reach and maintain a huge profit payout for the company. Even though it seemed that the goal was to expand the huge market that China will provide is sufficient enough to receive millions in return. The management for Urban Decay is a very important factor in the decision-making process because whether the customers liked a decision or not the management has the ultimate control to decide to go into the foreign markets.
Individualism The normative theory of individualism is to pursue the interests of the company, such as profits and customer loyalty, but to do so with the constraints of the law and the treatment of human rights. Urban Decay was pursuing profits; they wanted as many people as they could to purchase cosmetics from their company. However, Urban Decay managers were distracted by the sight of potential millions in China and did not properly represent their company as to what it stands for. For instance, Urban Decay expressed their interest for the Chinese market and for those of you unfamiliar with China’s policies the sticking point is this; the Chinese government reserves the right to conduct animal testing with cosmetic products before the products are approved for use by Chinese citizens.. This policy alone defies the beliefs of Urban Decays’ cosmetics line animal testing policy. Yet even though there could be a big turnout in profits if their products were sold overseas in China, Urban Decay customer loyalty would dramatically decrease. This is due to the fact that if the company violates their policy to only gain profits and neglects customer opinions that have supported them, the customers would threaten to stop buying from them as seen in many active social media sites . Although Urban Decay is a for-profit company, it was not breaking any laws and therefore was acting ethically under the individualism theory .
Wende Zomnir, co-founder of Urban Decay Cosmetics
The outcome ethical theory is utilitarianism, which states that businesses should try to maximize happiness for all stakeholders. The company as a whole should maximize happiness in order to gain more clients which could lead to profit gains that will definitely increase the happiness of the management because management is for profit. When the company is generally increasing in profits due to the gain of happy clients it will expand the company. Happiness within a company isn't easy to maintain due to the constant changes in society and the constant changes that go on in a company. As to which Urban Decay wishes to operate and to sell in China does not make clients happy due to the guidelines of selling in that country. The cosmetic line makes phenomenal products with the best quality and also being an animal-free tested product shows the magnitude of the company’s beliefs yet they were still willing to sell to China. In order to maximize happiness, the company’s management decided to hold off before making any decision with China and to fully acknowledge what the customers were saying. In doing so created a connection between management and the clients to fully express what their thoughts and feelings were . The overall effect would be that under the utilitarianism theory Urban Decay tried to maximize the stakeholder’s happiness. Just the idea of Urban Decay moving into China's market greatly affected the opinion and overall feelings established clients had about the company.
Kantianism Kantianism is defined as a duties theory which states to do what is right because it is the right and appropriate thing to do and also to respect people and humanity. The most important factor to this theory is the actions and motivation towards the decisions being made in the company and whether or not it was in an ethical manner. There are two formulas for Kantianism which is first defined as the "action" to use humanity and the other is the demands for people to respect the dignity of humanity. In the animal testing case, Urban Decay respected human rationale. The company publicly announced that they had the interest in joining the Chinese market . Although the whole idea of joining China’s market contradicted what the company stood for management still continued to become more involved with China even though it isn't animal cruelty-free. They still had motives to continue even if customers didn't fight the company's decision to violate their animal-free testing policy. The company’s actions were reverted after a customer's displayed their anger about Urban Decay's thought of expansion that would ultimately go against their morals.
Urban Decay Cosmetics logo
The final normative theory is the virtue theory which seeks to develop the character traits and habits that will allow people to live a happy and meaningful life. Urban Decay clients were very brave to try a new cosmetic company when Urban Decay first came out because its name brand wasn't well known at first. Also throughout the years, the company grew many loyal customers and these loyal customers continued to bring more new customers. When management made an announcement to pursue the Chinese market there were many objections. Yet, the managers were wise and they recognized what their mistakes were and handled the situation in a mature fashion when their claims were publicized. After the event, the management team reshaped their attitudes and have come to respect and care for the people that their actions and decisions directly affected. In order to allow people to live a happy and meaningful life without the doubt of having products that were tested on animals.
Not long after Urban Decay made the decision not to expand to China they were acquired at the end of 2012 by beauty products giant L'Oreal which has had their products tested on animals. Even though Urban Decay promised never to test animals or use raw materials that have been tested on animals – they are now acquired by L'Oreal which cannot stop their animal testing due to regulations in Europe and China. Customers that are conscious about animals now have to come to the thought provoking idea that supporting the Urban Decay brand is basically profiting L'Oreal whose standards do not fit well with animal rights activists. So by not waiting to see if China would ever change their ways with no animal testing Urban Decay instead sold themselves out which could have tarnished their reputation due to the fact that the acquired company isn't against animal testing.
Works Cited  Clair, Stella. "Foreign Exchange: How Consumers Are Challenging China's Animal Testing Policies." Beautylish. N.p., 2 Sept. 2012. Web. 20 Apr. 2013.
 Hills, Suzanna. "L'Occitane and Yves Rocher: The Big-name Beauty Brands among Those Ditching Cruelty-free Animal Testing Policies to Sell Their Products to China ." Mail Online. Dmg Media, 31 July 2012. Web. 20 Apr. 2013.
 Krupnick, Ellie. "Urban Decay: Animal Testing In China Is Unfortunate Reality." The Huffington Post. TheHuffingtonPost.com, 22 June 2012. Web. 20 Apr. 2013.
 Metro. "Cosmetics Giants Look to China Sales despite Animal Testing controversy." Metro Cosmetics Giants Look to China Sales despite Animal Testingcontroversy Comments. N.p., n.d. Web. 20 Apr. 2013.
 Temptalia. "Temptalia Beauty Blog: Makeup Reviews, Beauty Tips." Temptalia Beauty Blog Makeup Reviews Beauty Tips Urban Decay Press Statement Animal Testing and China Comments. N.p., 6 June 2012. Web. 20 Apr. 2013.
 Urban Decay. "To All Our UDers:... | Facebook." To All Our UDers:... | Facebook. Urban Decay, 6 June 2012. Web. 20 Apr. 2013.
 Yeomans, Michelle. "Urban Decay Comes under Fire as It Moves into Chinese Market." CosmeticsDesign-Asia.com. N.p., 21 June 2012. Web. 20 Apr. 2013.
Under Armour is an American sports clothing and
accessories company and was founded in 1996 by CEO Kevin Plank. Under Armour's
global headquarters is located in Baltimore, Maryland and its European offices
are located in Amsterdam's Olympic Stadium. Additional offices are located in Denver,
Colorado, Toronto, Canada, Hong Kong, China, and Guangzhou, China.The company is a supplier of a wide range of
sportswear and casual apparel mainly focusing on hi-tech sportswear for professional
athletes. The company is the originator of performance apparel which is gear
engineered to keep athletes cool, dry and light throughout the course of a
game, practice, or workout.Under Armour
entered the footwear industry in 2006 (Under Armour).“Under Armour's mission is to make all
athletes better through passion, design, and the relentless pursuit of
innovation. Every Under Armour product is doing something for you; it's making
you better (Under Armour).”The "we will" slogan is important as well to
Under Armour.“"Nothing is really
God-given. You have to embrace the things you feel are important and work hard
-- will it to happen. What I do know is that we have not yet built our defining
product at Under Armour. We are not living in the past. Our larger competitors
are 20 times our size. There is running room all over,” says Plank (Knowledge).”
Armour is attempting to expand further into the footwear industry by doing the same
thing Nike and Adidas did 20 years ago and continue to do today.The company is trying to sign conditional
shoe deals with young, impressionable basketball recruits. The hope is that,
after college, the recruits blossom into the next Michael Jordan, the company
sells a ton of shoes, the player gets rich, and everybody's happy.It would be a win-win for Under Armour and
the player.The problem with Under
Armour's approach is that their relationships with colleges are, unlike Nike or
Adidas, very limited.The company only
sponsors one college school, that being the University of Maryland. And as the Washington
University of Maryland has found itself going off course ethically by enticing
recruits to come play for the Varsity basketball program by offering the
players an Under Armour shoe contract upon graduation (Dime Magazine).The
first such recruit propositioned was Lance Stephenson, who was the subject of
the Washington Post’s story. People
are concerned Under Armour CEO Kevin Plank is discussing footwear contracts
with up and coming Maryland players because he has the ability to guarantee
millions of dollars. It's pretty
questionable and shady of Under Armour and Kevin Plank.This is a violation of NCAA policy because it
is unfair to other colleges and universities that do not have access to these
added benefits and incentives (Rivals).
In business ethics,
Michael Friedman’s Theory of Individualism states that a company’s first goal
is to maximize their total profits specifically for the owner and the stakeholders
within the constraints of the law and human rights (Salazar).For the case of Under Armour, this theory would
say that they are acting unethical because there is a violation of the NCAA
when recruiting players with these types of perks.However, Individualism would allow Under
Armour to entice players to perform at a higher level by offering them a shoe
contract once they decide to attend the University of Maryland.This would potentially increase the player’s
game in a legal way.Also, after
graduation or when they enter the NBA draft, Under Armour’s profits would
increase because of the player’s better abilities. Again, this case does not
follow the guidelines of Individualism because of the specific reason that
Under Armour and the University of Maryland acted illegally through the rules
of the NCAA (Rivals).
theorysays that happiness is the only thing of real,
basic value.The main goal is to
maximize happiness and minimize pain for all stakeholders because it increases
the overall well-being of society (Salazar).In the case, Under Armour, the University of
Maryland, and the player are the main three stakeholders.All three of their happiness will be
maximized if and when their plan succeeds.Under Armour’s profits will increase like stated above in Individualism,
and increased profits equal increased happiness.Maryland will be pleased because they will
have a competitive edge over other colleges and universities in the recruiting
process.This will lead to them
potentially getting better recruits (The Washington).As for the player, they will be thrilled to
have a tentative shoe deal before even entering their collegiate years.Also, it is a motivating factor that would
increase performance of the player, which ultimately increases the happiness of
the player, Under Armour, and the University of Maryland.Using the Theory of Utilitarianism, this case
is ethical (Rivals).
The theory of Kantianism states that companies should do what is right
because it is the right thing to do.Motivation and conscious effort for the company to do what is right are
the most important parts. Profits and bottom lines are not the ultimate goal in
Kantianism.Therefore, companies can’t
think solely about themselves and try to take advantage of stakeholders (Salazar).Under
Kantianism, the case regarding Under Armour making enticing Maryland University
Men’s Basketball recruits with shoe deals is unethical.These two parties are not doing the overall
right thing by luring athletes in with added incentives.Student should be choosing their college
based on primarily academics/education, location, and environment.Student-athletes add in the specific athletic
program and overall athletic department to that decision.Maryland Men’s basketball recruits should be
evaluating the University’s program compared to other places they are
interested. It is not right that Under
Armour is trying to distract recruits with shoe deals (Rivals).
The Virtue theory, the last and finally theory, says that companies
should strive to give stakeholders meaningful and fulfilling lives through positive
character traits and habits.A virtue is
“a moral excellence;
goodness; righteousness (Salazar).”Some virtues are loyalty, courage,
considerate, and kindheartedness.Companies that demonstrate exploitation, dishonesty, or deceitfulness do
not possess virtues.In the case of
Under Armour, the theory of virtue would rule them to be unethical.They are deceiving all University of Maryland
Men’s Basketball recruits (The Washington).Under Armour is not prepared to hand out shoe contracts to every player
that enters the NBA draft upon or before graduation.That is not their intention, but that is what
they are portraying to the athletes.Under Armour is not concerned about their stakeholders.Their primary focus is to improve their
financial bottom line and overall profits for the long term.Also, they are violating NCAA rules by
offering deals to recruits, some of who could potentially be under 18 years old
which would violate federal law as well.Breaking rules and laws does not demonstrate righteousness or
goodness.Under Armour is being
dishonest and acting unethically (Rivals).
There are many different ways that Under
Armour could have prevented this problem.First, Under Armour, and any other company for that matter doing
business with the NCAA, needs to know their rules.Not only do they need to worry about
following the law and acting legally, but they are under the restraints of the
NCAA guidelines.Another solution would
be to wait until the players have signed their letters of intent, a document outlining the agreement between the player and
school before the agreement is finalized.Most athletes across the country know that Under Armour is associated
with the University of Maryland.Therefore, they should concentrate on giving the stand out players, who
already attend Maryland, shoe deals.Then, when these players enter the NBA draft, they will already be
signed with Under Armour.People will
know and associate them with both Under Armour and the University of
Maryland.This is a win-win for both
parties.Finally, Under Armour will be
able to let history speak for itself.It
would not be unethical to discuss past players successes with recruits looking
at Maryland.The program would be able
to share the continuous development of the players at their school and then to
the NBA.Under Armour would be a part of
their road to the NBA and fame that comes with the title.Solving Under Armour’s ethical issue is
simple; they need to wait out the few days, week, or months until the recruit
has officially signed with the University of Maryland.
I think there are a few things that Under Armour needs to do to rectify the
situation.First, they should release a
publicized statement of apologizing.It
is important that they take full responsibility for their actions and
acknowledge that they were in the wrong.This will help in gaining back credit in their public relations
department.Stakeholders could take a
stance on the positive side and be happy that they realized what they were
doing was not right.They need to earn
back respect from as many stakeholders as possible, and this could be seen as
noble and showing integrity.Under
Armour should also address the recruits and explain how they were in the
wrong.They should have never tried to
taint their decision on what school to attend.Going along with that, Under Armour needs to pull out of any unethical
deals they are currently in with Maryland recruits.This could be costly depending on what
contracts were signed, but long-term, I believe it will be worth it.Finally, they should put out a statement to
all Under Armour employees saying how they recognize that this was not the
right thing to do, they are deeply sorry for potentially tainting their
reputations, and they want to assure it never happens again.
needs an action plan going forward in order to make certain a problem like this
never happens again.It should start
with identifying where the problem began if possible.The people responsible, depending on
seniority and importance, should be terminated or suspended.Under Armour needs to reevaluate their “Code
of Conduct” and decide on a more efficient way of enforcing it.Their human resource department will play a
huge role in their attempt at cleaning things up within the company.All employees at Under Armour need to receive
an updated copy of the rules and regulations.Their mission and vision should be included as well.Also, it would be effective to include
signage in the offices and factories of these things.Employees need to know that ethics is valued,
violations will not be tolerated, and they will be terminated for any infractions.
(5 Jan. 2011). Under Armour's Kevin
Plank: Creating 'the Biggest, Baddest Brand on the Planet'. Knowledge @ Wharton, Retrieved from
Staring out with one small bank HSBC grew into one of the world's most successful and largest banks. The bank was first opened in Hong Kong in March of 1865 with the help of a man named Thomas Sutherland. The bank now consists of four global businesses that include, retail banking and wealth management, commercial banking, Global banking and markets, and Global Private banking. These four global businesses serve 89 million people throughout 85 different countries and 6 different regions. HSBC's headquarters are located in London.
In 2012 HSBC was accused of money laundering through mexican drug cartel and other with possible links to terrorist groups. Money laundering is the process of covering up the proceeds of a crime so it cannot be linked to the wrongdoing. It was found that HSBC has been transferring $7 billion in banknotes from its Mexican to its U.S subsidiaries. Much of this $7 billion was drug related. Their failures also went as far as dealing with bank Al Rajhi in Saudi Arabia that was linked to the financing of terrorist groups. The bank failed to monitor $58 trillion of money moving across boarders and through their branches. HSBC now faces 1.9 billion dollars in fines and penalties that they have agreed to pay to avoid more serious consequences. The bank will be on probation for the next 5 years and need to make sure that they do not allow anything like this to happen again. If they fail to follow these conditions then the case can be reopened and criminal indictment can be charged. Under all of the theories which include, individualism, utilitarian, kantianism, and virtue, HSBC is not acting ethically.
The individualism theory states that the most important thing is to maximize profit and maximize the well being of the company. However, they need to do so within the limitation of the law and peoples rights. originally HSBC intended to maximize their profits by allowing people to launder money through their bank branches and to make this go unnoticed. However they got caught breaking the law and ended up doing the opposite of maximizing their profits and the company's wellbeing. They ended agreeing to pay 1.9 billion dollars in fines, which was the largest fine to ever be imposed on a bank. Not only will they be losing lot of money but they will also be losing the respect and trust of many people including investors and customers. This is definitely not maximizing the wellbeing of the company. Even though they were attempting to maximize their profits they were doing so by breaking the law which makes what HSBC did unethical by this standard.
The Utilitarian theory believes that companies should try and maximize the happiness of the majority of the people and their stakeholders. They believe that happiness is the most important thing. The stakeholders in the case with HSBC would be the employees, customers and investors of the bank. This theory tells us that we should be able to tell the ethical significance of any action by looking at the consequences. In this case if you look at the consequences you can tell that it is both unethical and the majority of the people are definitely not happy. They had to pay large fines, be on probation, and lost peoples trust. I think its safe to say no one would be happy with an outcome like this. The employees end up unhappy because many of them lost jobs and or bonuses, even people who have been with the company for as much as 20 years got fired or were forced to resign. Customers and investors were not happy because they trusted in the bank and the bank broke the law and was dishonest with many people. Once a company has that attached to them its hard to gain back trust and also get the respect of their new customers and investors. For all of these reasons the greater number does not end up happy and this scandal is not ethical by this perspective either.
The next theory is the Kantianism theory. When talking about this theory there are four basic principles that are involved. These principles are that companies should act rationally, allow and help people to make rational decisions, respect people, and be motivated by good will. HSBC did none of these things. They acted very selfishly and did not make rational choices. It is clearly not rational to allow dangerous people such as drug dealers launder money through their bank. They were not thinking about all of the parties involved or what the consequences could potentially be when they chose to look the other way on this issue. Another part of the Kantianism theory is the three formulas that it consists of. These formulas include, The formula of universal law, the formula of humanity and the formula of autonomy. The formula of universal law states that companies should act only on the maximum whereby you can at the same time will that it becomes universal law. This law prohibits people from making exceptions of themselves. However, that is exactly what HSBC did. They knew money laundering was illegal but made an exception for themselves that is was okay to do so. Therefore this is another theory that HSBC would seem unethical according too.
The final theory is the virtue theory, This theory is all about values, virtues and character traits that a company should be run according too that will make their business run properly. There are four major virtues that go along with this theory. This virtues include courage, justice, temperance, and honesty. HSBC showed that they did not have or use any of these virtues in a positive way in this case. They did the opposite. I guess in a way you could say they had courage because they let these things go on and they broke the law. However, they did not have good courage or courage to stick up for the right thing to do. This theory, like the previous ones would not agree with HSBC and would not accept them or think they were ethical. In my opinion I do not agree with what HSBC did or think that it was ethical by any means. They broke the law and allowed dangerous people to launder money. However I do think that it was respectable for them to apologize and take responsibility for their wring doings. They are taking to right steps to move forward in their business and make sure this doesn't happen again. They formed new management teams and spent extra money on improving their anti-money laundering systems. This goes to show that people and businesses can make mistakes but can also bounce back from them is they do the right things from then on out. This proves how far HSBC has come and how much they will continue to grow.
The action plan for HSBC is actually pretty simple. They allowed money laundering to go on through their bank. They will need to first apologize to the public and pay their fines as well as fire and hire new management teams that will run the company better and more ethical. HSBC's mission statement should be"Our mission is to be one of the biggest and most successful banks in the
world, while continuing to grow and develop as well as doing so in a respectful
and honest manner”. They should also have a set of core values that they run their company by. I think that these core values should be honesty, integrity, ingenuity and hard work. I believe if they follow both these core values and the mission statement then they will be very successful and be able to monitor future issues. If they do all these things and make the appropriate fires/hires and follow their main values then they will be able to ensure ethical productivity.
Rob. "HSBC Let Drug Gangs Launder Millions: First Barclays, Now Britain's
Biggest Bank Is Shamed - and Faces a £640million Fine." Mail Online.
N.p., 17 July 2012. Web. 14 Apr. 2013.
Mark. "HSBC To Pay $1.9 Billion To Resolve Allegations The Bank Ignored
Possible Money Laundering: Report." The Huffington Post.
TheHuffingtonPost.com, 10 Dec. 2012. Web. 17 Apr. 2013
Blasted for 'stunning Failures over Oversight'" BBC News. BBC, 12
Nov. 2012. Web. 14 Apr. 2013.
Chick-fil-A is a quick-service chicken
restaurant chain located across 39 states in the U.S.It is the second largest quick-service chain
in the country.It was founded by Truett
Cathy in Atlanta, Georgia in 1967 and is most popular in the southern
states.The business takes pride in
creating some innovations to the quick-service food industry mainly focusing on
their strategic location methods.The
company also tries to be a family restaurant and has renowned Christian beliefs
in its background.This way of business
has worked well for the company up until recently when the President of the
company made some debatable remarks that sparked a controversy.
the President and Chief Operating Officer of Chick-fil-A, Dan Cathy publicized
his views against same-sex marriage and how the company has been donating money
to anti-gay organizations.These remarks
have offended many individuals especially those of the lesbian, gay, bisexual,
transgender (LGBT) community.The comments have
triggered rallies and campaigns against the company.Some of these campaigns have led to the
removal of restaurants located on college campuses and other areas that were
highly influenced by the controversy.The
stakeholders in the case include management and employees of Chick-fil-A, their
customers, and the community as a whole. To
determine whether this action is ethical or not it should be analyzed using the
four normative ethical theories.The first
theory to be evaluated is Individualism which says that an ethical action is
one that increases profit for the company as long as it is legal.Milton Friedman says that it is most
important for the company to maximize the amount of money for their stockholders.In this case Dan Cathy essentially decreased
sales because of the boycotts and rallies that took place against the
company.Also, they lost complete sales
in the areas where the restaurants were removed.Therefore Dan Cathy’s actions were unethical
according to this theory because he lowered sales, in turn lowering profit and
stockholder wealth. The
next ethical theory used in the analysis is Utilitarianism.This is doing the greatest good for the greatest
amount of people.The ethical action is
the one that creates maximum happiness in the company and in its customers,
employees, and all shareholders.The
controversy that took place with Chick-fil-A did not maximize overall
happiness.In fact, the case hurt many
people and offended those who were affected by the subjective statements that
Dan Cathy made.This greatly lowered the
happiness and did not do any good for those people, which makes this action
unethical by the utilitarianism theory. Kantianism is the third ethical theory that will be used to asses the case at hand. According to Kant, it is a business's responsibility to do good for its customers and employees and its stakeholders in general. Kant also says it is a business's duty to "respect people, their autonomy, and any individual needs and differences." When Dan Cathy announced his opposition to same-sex marriage and equal rights he was thinking of only himself and not the valued customers or other employees of the organization. In turn, by donating money to anti-gay foundations Chick-fil-A did not respect people or their differences, they singled them out and looked down upon them. That act and notion is completely unethical by reasoning of this theory. The last ethical theory that will be used in this analysis is the virtue theory. This theory is based off of four main virtues that are essential to have in good business practices. These virtues include courage, honesty, temperance, and justice. Dan Cathy had courage in voicing his opinion, however that is the wrong type of courage in the business world because it hurt many people and had negative effects on the business. He was honest in his statements, but that does not mean that they are right or should have been made for that matter. Temperance was a virtue that was met by the company, yet justice was not. Justice includes having fair practices and that was violated because the company was unfair in its judgement of individual's sexuality. This means that the Chick-fil-A case would also be considered unethical by virtue theory.
For Chick-fil-A to solve this problem the President Dan Cathy should issue a personal apology on behalf of the company. Then the company should stop donating money to anti-gay organizations and cut all ties that they held with them. By doing this the company would start to get back on the right track and hopefully create better ethics because of it. Overall the statements that Dan Cathy
made and the fact that Chick-fil-A was donating to anti-gay organizations was entirely
unethical. These actions were considered unethical by all four of the normative ethical theories. Even without using the theories to analyze the case it is clear to see what happened in this situation was wrong by the amount of people it hurt. In the end the company was not affected that much as far as sales figures are concerned. They were hurt in the short run, but once all of the media died down about the topic the company had made almost a full recovery.
Berring, Jesse. "The Prideful, Arrogant President of
Chick-fil-A." Slate. N.p., 06 Aug. 2012. Web. 03 Apr. 2013.
"Chick-fil-A." Chick-fil-A. N.p., n.d. Web.
03 Apr. 2013. <www.chick-fil-a.com> DesJardins, Joseph. (2009). An
Introduction to Business Ethics (Ed: 4). New York, NY: The McGraw-Hill
Companies, Inc. Morgan, Glennisha. "Chick-Fil-A Removed From Emory
University's Food Court." The Huffington Post.
TheHuffingtonPost.com, 11 Mar. 2013. Web. 05 Apr. 2013. <http://www.huffingtonpost.com/2013/03/11/chick- fil-a-emory-university-_n_2854599.html> Salazar, Heather.“Business Ethics and Virtue.”Feb. 2, 2012. Salazar, Heather. “Kantian Business Ethics.” Feb. 6, 2011. "Thread: Religious Ethics, Business and the Chick-fil-A
Controversy." Human Rights and Business Dilemmas Forum RSS. N.p.,
n.d. Web. 01 Apr. 2013. <http://human-rights-forum.maplecroft.com/showthread.php?5626-Religious-Ethics-Business-and-the-Chick-fil-A-Controversy>
JP Morgan Chase & Co. is one of the largest banks in the world. Often referred to as the shortened JP Morgan, the corporation has leads all American banks in terms of assets, and is the second largest bank worldwide. The size of the company can be attributed to a merger in 2000 between Chase Manhattan Corporation, founded 1799, and JP Morgan & Co., founded 1871. In the wake of the merger, JP Morgan Chase & Co. has raised their total assets to $2.5 trillion, making it the second largest public company in the world (Forbes, 2012). The bank, which is headquartered in Manhattan, offers a wide array of services from credit card services to private banking to asset management. As a result of its size, JP Morgan is recognized as being one of the “Big Four” banks, alongside Bank of America, Wells Fargo, and Citigroup. Furthermore, the bank has been the most successful of the big four in avoiding the major impacts of the recession in the banking industry.
However, in 2012 it became clear that one of the bank’s key traders, Bruno Iksil, had been practicing assertive and risky trading for quite some time. In fact, traders in another branch of JP Morgan made such bets against Iksil, who came to be known in the media as the “London Whale” because of the widespread effects of his trading. By April, reports began to surface about the magnitude of the losses. Initial estimates put the total losses at $2 billion. However, as the breadth of the scandal unfolded, the loss count was nearly quadrupled, reaching over $7 billion (Silver-Greenburg, 2012). Although the company looked to downplay the widespread effect of the poor trades, it quickly became clear that even the highest executives felt influence of Iksil’s negligence. In the end, the billions of dollars lost by Iksil led to the London Whale being forced to resign from his position as a trader at JP Morgan.
Before evaluating the case through the lenses of the normative ethical theories, it is crucial to understand the stakeholders in the JP Morgan crisis. The stakeholders in this particular case include executives at the bank (including Iksil, the top trader), other employees, competitors to JP Morgan, and those who have accounts, funds, stocks, etc. associated with the bank.
The executives of JP Morgan had one major interest in their positions—to maximize profits for the bank. Major profits in both 2007 and 2008 allowed the bank to establish itself as one of the most powerful in the world. The executives looked to continue this profit-streak, and keep finding large profits each quarter. This is the leading reason why some traders, particularly Iksil, pushed themselves to make dangerous and ill-advised moves. Simply put, the executives’ focus was on making money. Employees not in the high-end “money making” positions (e.g. bank tellers, tax preparers, etc.) had a main interest in working in an environment that offered job security. These employees had a focus on working in a position that offered rewarding duties while providing the comfort of knowing that they could have a steady job. However, as the scandal unfolded, employees were unsure whether or not they would have a job in the aftermath. In fact, in the months following the crisis, JP Morgan found itself laying off 19,000 employees to offset losses caused by the London Whale (Carey, 2013). Perhaps the most important players in this scenario are those who have invested money in any way at JP Morgan. The main interest of these stakeholders is to find a safe way to protect and grow their savings. Those customers at the bank saw the once trusted bank lose $7 billion dollars in a shockingly quick manor. This left many customers wondering how this would affect interest rates, investments, and more. Unfortunately, they found that this simply was not true in the case of Iksil. This idea rings true in the four normative theories; Individualism, Utilitarianism, Kantianism, and the Virtue theory.
From the individualist standpoint of business ethics, JP Morgan Chase & Co. would have been performing ethically had the trading tactics been successful. This normative theory does not focus on the general population and its happiness, nor does it have its roots in good will. Instead, the individualist theory views decision-making as being strictly based on maximizing benefits (profits) for the company and its stakeholders. Had Iksil’s trades succeeded, these risky moves would have benefited all stakeholders, keeping the bank from violating the individualist view of ethics. However, since the trades failed atrociously, the company can easily be viewed as violating individualist beliefs. Not only did the company not maximize their profits, they lost billions of dollars in the process. Furthermore, these losses did not only affect the company, but also its stakeholders as well. Investors, employees, those with bank accounts, etc. at the bank all felt the ripple effect of the poor trading.
In looking at the utilitarian theory of ethics, the main focus of all actions should come in maximizing utility. In the field of business ethics, utility is most easily described as aiming to reach extreme happiness, while lowering the level of suffering. That is to say, total happiness for the company and the public as a whole should be the main factor in decision-making. In this view of business, Iksil’s actions on behalf of JP Morgan were extremely unethical. As a direct result of the risky trading, huge amounts of money were lost, thus leaving those within the company quite unhappy. Furthermore, because of the widespread effects, the scandal left people worldwide discontented. If the trading did indeed work out to the benefit of the bank, then the utilitarian view of ethics would have been satisfied. However, the company did not only fail to increase happiness, they effectively damaged the level of happiness that already existed. To compound the issues caused by Iksil, the executives also acted
in ways contrary to Utilitarianism. In their efforts to minimize the
suffering caused by the poor trades and subsequent money loss,
executives such as Dimon and CIO Ina Drew “sought to hide the extent of
the losses from regulators and the public” (Puzzanghera, 2013). Once the
news broke to the public, there was an obvious feeling of distrust for
said executives. In all, the company accomplished exactly what it had
sought to avoid; there was an extreme lack of utility, with the
suffering multiplied by careless cover-ups from Dimon and Drew.
Kantianism is another theory that was clearly not considered by JP
Morgan during the trading scandal. In his thoughts on ethics, Kant
follows four main principles including: acting consistently as well as
rationally in decision-making, assisting others in making rational
choices, respecting all others’ needs and the differences each person
possesses, and (perhaps the most basic, yet most important) acting out
of good will. The last principle, acting in good will, essentially
speaks to the idiom of “the ends do not justify the means”. In other
words, acting out of good will does not mean doing something because it
is convenient or easier, but instead doing it because it is the right
thing to do. This ideology is represented in Kant’s Formula of Humanity,
which suggests that one should treat all others and themselves as an
end, or something that has value in itself. If one has done this, they
have practice the idea of humanity (Salazar, 2013).
relation to JP Morgan, Iksil’s risky trading violated all four of Kant’s
basic principles. The London Whale was most definitely acting
irrationally when looking to maximize profits off of deals that had a
high likelihood of failure. In turn, his actions (that were unknown to
the vast majority of stakeholders) left others in a position where they
were unable to make rational decisions themselves. In other words, JP
Morgan’s actions did not encourage rational decision-making in others,
but instead prohibited it. Additionally, the company obviously did not
respect the needs of others, instead choosing to focus on the needs and
desires of a few top traders, especially Iksil. Finally, there was
absolutely no evidence of Iksil and JP Morgan acting out of good will,
as the decisions to take part in risky trades were far from doing what
was right. Even if the trades had gone well, the ends would not have
justified the means whatsoever. This relates back to the Formula of
Humanity, which Iksil’s deceit and greed clearly violates. His risky
trading attempted to use the ends to justify the means, and even had he succeeded, would not have been acting humanely. Overall, a Kantian ethicist can clearly recognize that JP Morgan did not follow any of the principles laid out in Kantianism.
Yet another theory that was violated during the trading scandal is the Virtue theory of ethics. The theory essentially operates on the idea that there are numerous
characteristics that permit everything to work correctly. Similar to
Kantianism, the Virtue theory has four major characteristics. Within the
theory, these four characteristics are vital to ethical business
operations. The four are courage, honesty, temperance, and justice.
While it did indeed take courage to make such risky trades, the extreme
downfall came from the company lacking the other three characteristics.
The fact that Iksil was making trades without the knowledge of other
executives and almost all stakeholders completely ignores the idea of
honesty. In fact, Iksil’s own supervisor was unaware of the true
riskiness of his trades. Drew, the former CIO for JP Morgan told the LA
Times that “she was deceived by traders working for her about the size
of the risk they were taking in the bank’s Synthetic Credit Portfolio” (Puzzanghara, 2013). Furthermore, these actions do not exemplify
temperance, in that the London Whale did not show any sort of restraint
or self-control at all. The fact is that Iksil did not pay attention to
any regulations and disregarded the risk limits that are in place for
traders. Finally, although Iksil was technically acting within the law,
his trading practices violated the laws of social justice. By
essentially gambling on long-shot bets using the money of those
utilizing the bank’s services (without their knowledge), Iksil was not
acting in a way that reflected justice for all stakeholders. The only
true justice came when JP Morgan chose to force Iksil to resign from the
position in May of 2012.
From a personal viewpoint, I feel that the London Whale’s actions were
about as far from ethical as possible. My reasoning for this is simple:
Iksil, along with Dimon and Drew were deceitful to the majority of
stakeholders throughout the scandal. Iksil’s misleading information
about the true risk of his trades meant that he was acting carelessly
with other peoples’ money. What makes it truly unethical is the fact
that the people whose money he was risking had no idea that this money
was being used in such a way. Perhaps even more unethical are the actions of the bank’s top executive,
Dimon and Drew. While they were not directly responsible for Iksil’s
trading practices, the unethical attempts to cover up the true impact of
his actions are sickening. I
am not alone in thinking that any person who trusts a bank in handling
their money should be treated honestly. This includes admitting mistakes
on the part of the bank and its employees. Keeping the truth from those
who hold stake in the company is simply inexcusable from an ethical
Overall, JP Morgan’s response to the plan was
relatively successful, and the bank was able to regain the support and
trust of their stakeholders. This can be easily seen by their recent
quarterly profit of $6.53 billion, up from $4.92 billion last quarter
(Kopecki, 2013). However, this solution could have been solved in a much
smoother way had the company changed their approach slightly. First,
the company should have avoided the attempted cover-ups by other
executives, such as the CEO Dimon. These attempts were not successful,
and only added to the negative representation in the public eye.
Additionally, the bank should have disassociated itself with Iksil much
quicker than they did. The top executives at JP Morgan were
investigation the trades for a long time (over a month), yet kept Iksil
on their payroll. Furthermore, rather than firing him immediately when
news broke to the public, the bank chose to simply remove Iksil from his
duties; this meant that he was still being paid by JP Morgan. By the
time he was forced to resign officially, the damage was already done.
The bank was seen as both protecting Iksil, as well as being indecisive
about what should become of the London Whale. Had JP Morgan chosen to
approach the situation while taking into account these two changes, the
situation would have been viewed as a much more fair solution to the
As for preventing a similar scandal in the
future, JP Morgan must put into place three key practices to ensure
nothing of this magnitude happens again. The most important step is to
refine the practices for monitoring the traders employed by the bank. As
Drew said, she was unaware of the true risks of Iksil’s trades.
Therefore, the management of the big-money traders must be dedicated to
observing their subordinates more closely. By instilling the idea of a
low-risk trading philosophy, the traders at JP Morgan will be less
likely to begin trade practices similar to those of Iksil. Secondly, the
bank should be more open about how and why money is being used. The
open approach will not only gain the trust of the stakeholders, but will
also force traders to be more conscious about the decisions that they
make regarding said trades. Thirdly, if a problem arises and trades
similar to Iksil’s occur, JP Morgan must immediately terminate the
employee. Practicing this speedy disassociation will show that the
company values justice and ethical practices, along with overall control
over the situation at hand. If JP Morgan approaches the future with a
plan of action seeded in these three practices, it will undoubtedly be
better suited to avoid a future scandal of this size.
These facts and Analyses are based on a paper by Andrew Roberts, "JP Morgan Trading Scandal: Risky Trades, Greed, and Record Losses " (2013).
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Forbes. (2012, April 15). The world's biggest companies. Forbes magazine, Retrieved from http://www.forbes.com/global2000/list on April 9, 2013.
Kopecki, D. (2013, April 12). JP Morgan 33% profit jump beats estimates on reserve releases. Bloomberg. Retrieved from http://www.bloomberg.com/news/2013-04-12/jpmorgan-profit-increases-33-beats-estimate-on-mortgage-fees.html on April 3, 2013.
Pollack, L. (2012, May 14). [Web log message]. Retrieved from http://ftalphaville.ft.com/ 2012/05/14/998601/two-billion-dollar-hedge on April 7, 2013.
Puzzanghera, J. (2013, March 15). Ina drew, who oversaw JP Morgan's 'London Whale,' saddened by losses. Los Angeles Times. Retrieved from http://articles.latimes.com/2013/mar/15/business/la-fi-mo-jpmorgan-london-whale-senate-hearing-20130315 on April 7, 2013.
Salazar, Heather. Kantian Business Ethics. Retrieved from https://kodiak.wne.edu/ d2l/lms/content/viewer/main_frame.d2l?tId=129594&ou=18408 on April 11, 2013.
Silver-Greenberg, J. (2012, July 13). New fraud inquiry as jpmorgan’s loss mounts. Wallstreet Journal. Retrieved from http://dealbook.nytimes.com/2012/07/13/jpmorgan-says-traders-obscured-losses-in-first-quarter/?ref=morganjpchaseandcompany on April 7, 2013.