...had a dramatic impact on the company because of bad decisions, lack of business controls, and a corporate culture that was inefficient and ineffective. The main objective of this case memo is to identify and appropriately assess the risks that the RA insurance company was facing. Further, this case memo introduces internal control solutions to manage those risks. Finally, this case memo provides examples of other companies that have faced problems similar to RA’s “churning” of policies. Identifying and assessing risks There are several strategic, sales & marketing, corporate culture, and corporate governance risks that are causing problems at RA. Firstly, the risk that the maximum amount of possible life insurance is reached is certainly a risk that RA is unable to manage. Although the overall number of life insurance policies was declining, RA continued to put its focus on this product. This might have put additional pressure on the sales force, forcing salesmen perhaps to commit fraud. Although this risk is difficult to control, the management should at least consider the impact of market trends on the company. The impact of having a cap in the amount of possible life insurances is considered to be high and its likelihood of occurrence is medium. In addition to the risk mentioned above the risk of salesmen committing fraud is the main issue for causing problems at RA. It is important to...
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...Effect of Unethical Behavior Article Analysis Terra Postelle ACC/291 January 08, 2013 Bennie Clark Effect of Unethical Behavior Article Analysis The effects of the Sarbanes-Oxley Act of 2002 on financial statements are general guidelines as to how the information is gathered, calculated and presented to clients while enforcing their accuracy and legitimacy. Companies such as Enron, Tyco, Global Crossing, and WorldCom are just a few examples of corrupt business cultures, practices, and greed that made the need for new laws to arise in order to prevent future business taking the same direction. These companies and companies like them manipulated, lied, embezzled, and sometimes flat out stole from their clients plummeted into financial hardship and in some cases the economy as well. There will always be companies such as, The Brooke Corporation, who will purposefully manipulate financial data or find new loop holes through the SOX guidelines and laws to make a bigger profit. Corporations and businesses such as these do not look at the ethics behind their decisions, but their business’s financial well-being and their own pockets. In the article, Eight Years After The Fact Is SOX Working? A Look At Brooke Corporation, Brooke Corporation would sell insurance and related services through franchises. When an “Agent” would purchase a franchise Brooke Corporation would allow the use of their business model, registered trade name, access to the products of insurance company suppliers...
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...Can And Should The Endangered Public Company Survive? Public companies are going to always available in one form or another. The greatest advantage of becoming a publicly traded company is it provides the company with needed cash flow that will increase operations without having to take out loans or sell bonds, essentially meaning they don’t have to pay the money back. It also allows a company to provide stock options to employees, incentivizing them to work hard for the company. Hard working employees equates to a more profitable company, a more profitable company equates to a better stock price. Also, increased prestige and visibility comes with becoming a public traded company. Public traded companies aren’t only good for the company itself, but also they are good for the general public. The general public can benefit from investing in these public traded companies. And investing with multiple public traded companies allows the general public to diversify their investment portfolios protecting their investments. Just to show how lucrative public trading is, eight of the ten richest people in the United States can attribute their wealth to starting of trading public companies (Forbes, 2014). The only two are not attributed to a public traded company are David and Charles Koch. The Chief Executive Officer and Executive Vice President of Koch Industries, America's second largest private company (Forbes, 2014). CargillCargill, Koch Industries, and Bechtel, three of the largest...
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...Stroman XMGT/216 September 25, 2011 Elizabeth Berg Ethical Issues and Management Paper There are times when a manager or supervisor doesn’t know how to deal with an ethical issue in the workplace. Some managers feel they need to break company’s rules if they want good performance or results. Some of them feel like they have to be friends with their employees versus their supervisor in order to get them to work on time or for them to perform their work duties. This is a struggle for a lot of supervisor doing what is right when they know it is wrong. When supervisor or managers ignored certain things it not only affects them it affects all the people that work for that company. If you work in a sales environment company and only one agent is performing interims of getting sales. That great for that individual, but that one person can carry the whole company. So as managers they need to encourage their other employee to do better. Give them steps on what they can do to improve their performance. Threes no I in team when you for a company. Now there are a lot of managers and supervisors that do what is right no matter what. They don't let other outside sources affect their morals and judgment when handing ethical situations. Gathering facts and during an investigation on how to solve the problem don't make you bias it makes you fair. Fairness is very important in a business. Who doesn't want to be treated fairly? You can do for one you can't do for all, because that's when...
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...Managers’ Ethical Evaluations of Earnings Management and Its Consequences* ERIC N. JOHNSON, University of Wyoming GARY M. FLEISCHMAN, University of Wyoming SEAN VALENTINE, University of North Dakota KENTON B. WALKER, University of Wyoming 1. Introduction and motivation The purpose of this study is to investigate, in an experimental setting, how favorable versus unfavorable organizational consequences influence managerial responses to an employee’s earnings management behavior. We focus on the following question: Do the ends of positive organizational consequences justify the means of earnings management? Earnings management is defined as ‘‘the choice by a manager of accounting policies so as to achieve specific objectives’’ (Scott 2003: 369). Earnings management can be fundamentally classified as either accounting related, involving the manipulation of accounting records through aggressive or fraudulent applications of accounting principles, or operating related, involving choices made by management regarding the timing of investment or operating activities, with the result that reported earnings are influenced by these choices (Lev 2003; Cohen, Dey, and Lys 2008; Roychowdhury 2006; Gunny 2010).1 The effect of earnings management on the value of the firm and the related issues of financial-based incentives for managing earnings has been widely examined in the accounting literature (e.g., Healy 1985; Dechow, Sloan, and Sweeney 1995, 1996; Healy and Wahlen 1999; Fields...
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...(FDA). Under the terms of the plea agreement, GSK will pay a total of $1 billion, including $956,814,400 and forfeiture in the amount of $43,185,600. The criminal plea also includes certain non-monetary compliance commitments and certifications by GSK’s president and board of directors. The plea and sentence is not final until the U.S. District Court accepts it. GSK will also pay $2 billion to resolve its civil liabilities with the federal government under the False Claims Act, as well as the states. This resolves claims relating to Paxil, Wellbutrin and Avandia along with a few others. This resolution marks the culmination of an investigation involving special agents from the Federal Bureau of Investigations (FBI), FDA, and Department of Health and Human Services (HHS). The article continues on by breaking down each unethical business research practice by drug name. Paxil: The government alleges that, from Aril 1989 to August 2003,...
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...always a risk of default at the debtor’s end. Therefore, the bank bears the risk. For the minimization of this risk, the banks secure themselves with the help of securities and collaterals. In term of house loans, the house which is for which loan is advanced is taken as the collateral. A charge of bank is created over that asset by the bank. In case of default in payments by the debtor, the bank acquires that house and recovers the money of loan and interest by selling the house in auction. Any residual value after paying the bank liabilities is returned to the debtor. Therefore, throughout the loan tenure, bank is secure and reduces its risk with the help of collaterals. * After considering Cristina’s likely motives, incentives and behavior, do you believe she had conflicts of interest that were so serious she would knowingly recommend loans that were harmful to her clients’ interests? Explain your answer. Answer: The motives of Cristina were own wealth maximization. She was offered benefits on selling the assigned amount of loans to the Hispanic customers. Otherwise, her own job was at stake. Those workers which did not perform well and were not able to meet their targets were laid off by the bank. Therefore, there was a conflict of interest. She had to sell the loans to customers by exaggerating their importance and value for the customers. Therefore, she showed only bright side of...
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...MetLife: Deceptive Sales Tactics Outline: • MetLIfe duped customers out of $11 million • Mainly took advantage of nurses through disguising a life insurance policy as saving deposits and retirement plans Rick Urso • Discovered something was wrong on Christmas eve of 1993 when heard he may get fired • September before two corporate vice presidents had shown up to conduct the fourth audit of the year but gave him the impression he was following the rules • Started working at john Hancock in 1978 and took him four years to become manager then went to MetLife in 1983, took 3 months to become branch manager • By 1993, the branch had 120 reps, 7 sales managers, 30 admin employees • Won sales office of the year award in 1990 and 1991 • After xmas 1993 was summoned by William Groggans, head of the MetLife’s southwest territory and was fired for improper conduct Route to Stardom • Vehicle for strong sales was the life insurance policy which required high premiums but only part earned interest and compounded on a tax deferred basis and rest went to pay for life insurance policy • MetLife policy paid 55% commission on the first year where as an annuity paid 2% • Nurses were constantly convinced to be in need for economic security because constant exposure to death • Salespeople were called “nursing representatives” • Mailed $1m worth of brochures in 1992, 10x any other company office, made $1m in ‘93 Early Warnings • In 1990, Texas insurance commission warned MetLife...
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...Running head: ETHICAL ISSUES IN MANAGEMENT PAPER Ethical Issues in Management Paper Carl Meyer University of Phoenix Ethical Issues in Management Paper First let’s explore the current moral and ethical issues involving managers pertaining to disciplinary actions within their organization. Secondly let’s explain how the relationship between social issues and ethical responsible management practices which pertain to discipline. Lastly, provide a workplace example of an ethical dilemma pertaining to discipline. Also what legal aspects did management face during this dilemma and what legalities governed or should have governed the decision. First and foremost discipline is one of the major issues faced by managers regarding ethics, morals, and values. Managers must conduct themselves with the utmost diplomacy when dealing with disciplinary actions toward employees. Respect is a two way street and must be adhered to by both management and employees. Nothing is worst than a manager who says one thing but their actions tell a whole other story. Hypocritical managers lose respect from their employees. Managers who have certain attributes like honesty, integrity, and trust are taken more seriously when it comes to disciplinary actions. When dealing with discipline managers should also adhere to acceptable moral and ethical values of our society. Unfortunately not all managers in leadership positions exhibit the same value system of higher standards. Personally let’s go on the...
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...Ethics Case Study - Student Gets a Better Job Offer Step 1: Recognize: Define the ethical problem from all perspectives. • The student did not tell company B after accepting to work there that he already accepted to work company A. • The student did not notify career services office about any of this. Step 2: Clarify the Facts • The student agreed to work for company A at the beginning, because he did not hear from company B (yet). • The student later was accepted to work for company B; since this was his first choice he accepted that offer as well. • The student went back on his words and declined company A after already accepting it. • Career services office only found out about this after the student had reneged upon the job offer. Step 3: Create Alternatives • The student will not be permitted to work in company A or B. • The student will go work for company A, as he approved that offer first. • The student will work for company B, but will never be allowed to use career services again. • The student will be kicked out of school. Step 4: Evaluate Alternatives (short/long term effects) • Short term: student will not have a job Long term: the student might not be able to find another job that year but will learn an important lesson for life. • Short term: student will work for company A and be disappointed since he is not fulfilling his true ability. Long term: student will realize that what he did was the ethically correct choice. • Short term:...
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...has provided advice that was ethically & strategically to be ignored … + Why is digging a shallow trench a poor choice? We have clearly seen in the course that the legal and ethical behavior of an organization and its employees should support the long-term business strategy. It is imperative that ‘sustainable growth’ is the driving force of any organization… and this should be based on the People-Profit-Planet structure we have reviewed in the course. If we look to the advice of Karl Mann’s boss we could analyze it as following: 1. Profit: the decision/advice will support the short-term goal of profits, but not in a foreseeable and sustainable way; the risk which is embedded in his advice (i.e. possible death of people) is too high for the corporation! If something happens with injuries of workers the reputation of the corporation is damaged as such that the long-term profit is at risk… 2. People: this is clearly not the right advice in order to prevent damages and injuries at the people side. He reckons there have been accidents with dead people before, and still advices to go down that route ..; clearly an unethical decision where he –on purpose- risks the life of his workers. This cannot be the intent of a good sustainable policy; we cannot talk about good “corporate social responsible behavior” here …. It’s crystal clear that this is unacceptable managerial advice, not at all in line with good corporate governance in the DVC Construction organization either. This level of...
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...BarCharts, Inc.® DEFINITION: The study of the nature, purpose, function and justification of rules of right conduct within the context of commerce; broadly conceived to include the transaction of goods and services at the individual, corporate, and international level of exchange. PRIMARY ETHICAL CONSTRUCTS 1.The Question of Generality: Can the rules of right conduct that apply to individuals be generalized to collective entities, such as corporations? 2. The Question of Responsibility: Can a corporation have moral responsibility? If so, how is responsibility to be diffused and distributed throughout the corporate hierarchical structure? 3. The Question of Liability: Provided that corporations can be meaningfully said to be morally responsible, must their liability necessarily be proportional to their responsibility? 4. The Question of Allegiance: Do the commonly accepted personal virtues of loyalty, commitment, and devotion have a place in the employer/ employee dichotomy? Does a corporation have an obligation to provide for a worker based purely upon that worker’s loyalty to the corporation over many years – even if the continued employment of the worker is counter-productive? ETHICAL CONCEPTS IN BUSINESS 1. Conflict of Interest: A state of affairs is said to constitute a conflict of interests – or potential thereof – in a set of circumstances where the individual has the capacity to influence decisions that promote their self-interest but...
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... |$ 800 |$400 |$1,200 |$1,000 |$1,400 |63.64% | |b. |2,400 |1,300 |400 |1,700 |700 |1,100 |45.83% | |c. |900 |500 |400 |900 |0 |400 |44.44% | |d. |1,800 |900 |400 |1,300 |500 |900 |50.00% | 3-17 (10–15 min.) CVP computations. 1a. Sales ($68 per unit × 410,000 units) $27,880,000 Variable costs ($60 per unit × 410,000 units) 24,600,000 Contribution margin $ 3,280,000 1b. Contribution margin (from above) $3,280,000 Fixed costs 1,640,000 Operating income $1,640,000 2a. Sales (from above) $27,880,000 Variable costs ($54 per unit × 410,000 units) 22,140,000 Contribution margin $ 5,740,000 2b. Contribution margin $5,740,000 Fixed costs 5,330,000 Operating income $ 410,000 3. Operating income is expected to decrease by $1,230,000 ($1,640,000 − $410,000) if Ms. Schoenen’s proposal is accepted. The management would consider other factors before making the final...
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...Qn 1 1. The Natural Environment One of the more common ways marketers demonstrate social responsibility is through programs designed to protect and preserve the natural environment. a) Many companies are making contributions to environmental protection organizations, sponsoring and participating in clean-up events, promoting recycling, retooling manufacturing processes to minimize waste and pollution, and generally reevaluating the effects of their products on the natural environment. b) Green marketing refers to the specific development, pricing, promotion, and distribution of products that do not harm the natural environment. c) Although demand for economic, legal, and ethical solutions to environmental problems is widespread, the environmental movement in marketing includes many different groups, whose values and goals often conflict. d) Some environmentalists and marketers believe that companies should work to protect and preserve the natural environment by implementing the following goals: (1) Eliminate the concept of waste (2) Reinvent the concept of a product (3) Make prices reflect products’ true cost (4) Make environmentalism profitable 2. Consumerism a) Consumerism refers to the efforts of independent individuals, groups, and organizations working to protect the rights of consumers. b) A number of interest groups and individuals have taken action against companies they consider irresponsible by lobbying government officials and agencies...
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...Why Corporate Social Responsibility Matters (BU041) INDIVIDUAL ASSIGNMENT #1: (Claire.Jin) * * * * * * * * * Table of Contents Executive summary 2 Introduction 3 Question 1: Efficacy of Monsanto’s Ethical Culture 4 Question 2: Costs and Benefits of Growing GMO seed 5 Question 3: Management of Harm with Plants and Animals 6 Question 4: Visit Monsanto website, what is CSR and Sustainability Strategy of Monsanto, and give suggestions for its strategy for Monsanto Company? 8 Conclusion 9 Bibliography 10 * * Executive summary Monsanto is one of the world’s largest industrial agriculture businesses, especially focusing on genetically modified products. Monsanto has obtained a progress in corporate responsibility, but Monsanto has deficiencies with ethical culture. Monsanto is in a difficult position, because the products are highly specialized and therefore most consumers do not understand them. Although, Environmental and health issues aside, Monsanto’s GM seeds provide an opportunity for farmers to increase profits by allowing them to grow crops on land that would not support traditional seeds. ...
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