Written Ethical Analysis of a Business Issue: Bridgecorp, Inc.
Introduction
Changes brought about by the continuous development of communication and technologies have made many breakthroughs feasible, which have already been felt in many multinational businesses. However, despite the improvement and development of such businesses, the presence of unethical and immoral individuals in an organization, who act in accordance to their own motives and benefits at the expense of the welfare of other people, would contribute to its downfall. In this regard, the main purpose of this essay is the critically discuss and analyze a specific business issue, which can be perceived through an ethical perspective, and having a significant impact on consumers. The article to be referred to is an article entitled, “Bridgecorp collapse rings changes”, written by Gill South in July 22 of 2007.
Analysis of the article would be focused on what the New Zealand financial advisers did, advising investors to invest on the company. Bridgecorp, being a risky financial corporation, borrows short-term loans from investors at a lower price and lends them to borrowers for long-term loans in order to make profit. However, the problem can be encountered if borrowers cannot pay them back, thus, entailing the bankruptcy of the company (South, 2007). In this regard, the moral question to be answered is whether the financial advisers aimed at acting as agents to the investors or to the company itself, or if they have misled the investors in making a bad decision. To be able to analyze the situation, two theories would be made as bases, namely, the Act Utilitarianism Theory and Kantianism Theory, which are deemed most relevant in the analysis of the ethical issue involved.
Ethical Analysis
It has been reported that the moral standard of utilitarianism in general is those actions are right that produce the greatest total amount of human well-being (“Essay”, 2007). One of its underlying theories is Act Utilitarianism, which promotes moral conduct that produces the greatest balance of good over evil, thus, a balance of good and evil is applied to every action (Cassens, 1992). In addition, it focuses on the happiness of individuals over a long period of time, wherein the happiness of each individual is equally important (Rachels and Rachels, 2007). In relevance to the case, it can be observed that the happiness being referred to is the happiness or the welfare of the parties involved in the case, including all the financial advisers, the investors and their families, the financial environment and government of New Zealand at large, and the smaller companies operating the country (South, 2007).
Clearly, it can be perceived that the investors can obtain benefits from the risky business of Bridgecorp, as it offers higher return of interests compared to other financing companies. This means that the investors can get far better profits, thus, making them happy. This was deemed possible through the coaxing and advising of the financial advisers, making investors agree to the idea. However, under the Act Utilitarianism Theory, happiness is only considered long-term, thus, disregarding the short-term happiness, which may have significant impacts to the investors. Based on the situation, it can be distinguished that the happiness being experienced by the investors refers only to short-term happiness, given by the amount of dividends they receive at a given time. Such happiness would be replaced by grief and frustration if investors would suffer from significant financial loss in times of bankruptcy. At this time, Bridgecorp has already lost 0 million (McManus, 2007) since its collapse. Frustration and despair would come in most especially if a specific investor invested his or her entire livelihood into Bridgecorp, in the opinion of doubling or tripling the amount of profit to be obtained. Large and significant loss would then be felt, not only affecting the business and livelihood, but the lives of each of the members of the family as well. In addition, given the downfall of the company due to its financial investors, other New Zealand investors would then be scared to trust financial advisers, thus, downgrading the reputation and dignity of many financial advisers in the country. In this regard, it can be observed that the problems caused by the downfall or collapse of Bridgecorp are not only confined on the walls of the company, but affect the entire financial business of the whole country and the integrity of all financial advisers as well. Given this, it can be emphasized that the actions and decisions of the financial advisers to persuade investors to invest in Bridgecorp seem to violate the theory of Act Utilitarianism. This is because it can be assumed that those financial advisers knew about the risks of investing in the company, but continued to persuade the investors to invest in the company due to the amount of commission they would receive (South, 2007). This, in any sense, is not morally acceptable, as the financial advisers thought only of themselves and their own benefits regardless of the adverse effects of their actions on the part of the investors. This violates Act Utilitarianism, as their actions and decisions did not consider their equal happiness, or in this sense, the balance between good and evil. What actually prevailed here were the evil decisions of the financial advisers, which produced major problems in the society. In this sense, from the perspective of the Act Utilitarianism Theory, the actions of the financial advisers were immoral and unacceptable.
Another theory considered was Kantianism. It has been reported that Kant’s central move is to construct the principles of ethics according to rational procedures (Singer, 1993). He argues that a person is free when he or she is bound by his or her own will and not by the will of another person (Johnson, 2004). Given this theory, it can be perceived that given this rationality of human beings, financial investors then have the right and moral decision to use this will. This will, in turn, prompted them to decide upon persuading investors to invest in Bridgecorp, despite its risky financial business. This will also drove the financial advisers to use their convincing power over the investors in order for them to obtain good profits from their commissions. However, every financial investor can use this will both in good and in evil, in terms of making actions and decisions. This will can be used either by informing the investors to not continue investing in Bridgecorp due to the major financial risk involve, hence, making financial advisers lose large sums of money because of this honesty. On the other hand, financial investors can also use this will in evil deeds, such as what most did, by persuading investors to invest in the company in order for financial advisers to obtain profit and monetary gains. In line with Kantianism, this will is free for everyone to use.
However, it must not be forgotten that the Principle of Ends is also involved in the Kantian Theory. According to the Principle of Ends, one must be able to act in treating people as ends in themselves, and not as means to an end (“Overview of Normative Ethical Principles for Selected Theories”, 2002). Following this, it can be recognized that the financial advisers deemed and used the investors as good means to a very good end. As mentioned, they have used their convincing and persuasive powers to encourage investors to invest in Bridgecorp, thus, not telling them of the major financial risks involved. Aside from advising investors properly by giving them options and other alternative financing companies, financial advisers informed them to pursue investing in Bridgecorp, so they can get their commissions and profits. This clearly violates the Principle of Ends, despite the fact that anybody is given the freedom to use his or her will. Furthermore, this evidently shows that the financial advisers used their will freely, using the investors as means to their end, which is unacceptable and morally wrong. Instead of using their capabilities in good terms, they allowed themselves to become overpowered by greed. This must not be so because following Kantianism, the investors must regarded as ends themselves and not as means to the ends of the financial advisers.
Conclusion
Based on Act Utilitarianism, what the financial advisers did was morally unacceptable, as they thought of their own benefits or profits firsthand over the welfare of the investors, by advising them to invest in Bridgecorp despite the major financial risks involved. Similarly, based on Kantianism Theory, what the financial advisers did was also deemed morally unacceptable, as they used their own free wills to cheat over the investors, and used them as a good means or tools for their ends or objectives of obtaining good profits and monetary gains. In this regard, both theories emphasize that the actions and decisions of the financial investors of Bridgecorp were morally and ethically wrong, making them liable for the collapse of the company. However, despite the common point being driven at by the two theories, it can be perceived that Kantianism seemed to become more significant over Act Utilitarianism, as it clearly specifies that humans must not be used as means or tools to get what one wants. This theory emphasizes that it is morally unacceptable to use other people to allow an individual to get what he or she wants, as it violates human dignity. Although happiness of people can be obtained through good deeds, the means or the process of obtaining that happiness should still be considered. In this regard, it can be assumed that happiness can be achieved in many ways, even evil ways, such as what the financial advisers did. As such, regarding each individual as ends themselves is the best form of happiness one can provide to another, entailing respect for human dignity at all costs.
Written Ethical Analysis of a Business Issue: Bridgecorp, Inc.
Introduction
Changes brought about by the continuous development of communication and technologies have made many breakthroughs feasible, which have already been felt in many multinational businesses. However, despite the improvement and development of such businesses, the presence of unethical and immoral individuals in an organization, who act in accordance to their own motives and benefits at the expense of the welfare of other people, would contribute to its downfall. In this regard, the main purpose of this essay is the critically discuss and analyze a specific business issue, which can be perceived through an ethical perspective, and having a significant impact on consumers. The article to be referred to is an article entitled, “Bridgecorp collapse rings changes”, written by Gill South in July 22 of 2007.
Analysis of the article would be focused on what the New Zealand financial advisers did, advising investors to invest on the company. Bridgecorp, being a risky financial corporation, borrows short-term loans from investors at a lower price and lends them to borrowers for long-term loans in order to make profit. However, the problem can be encountered if borrowers cannot pay them back, thus, entailing the bankruptcy of the company (South, 2007). In this regard, the moral question to be answered is whether the financial advisers aimed at acting as agents to the investors or to the company itself, or if they have misled the investors in making a bad decision. To be able to analyze the situation, two theories would be made as bases, namely, the Act Utilitarianism Theory and Kantianism Theory, which are deemed most relevant in the analysis of the ethical issue involved.
Ethical Analysis
It has been reported that the moral standard of utilitarianism in general is those actions are right that produce the greatest total amount of human well-being (“Essay”, 2007). One of its underlying theories is Act Utilitarianism, which promotes moral conduct that produces the greatest balance of good over evil, thus, a balance of good and evil is applied to every action (Cassens, 1992). In addition, it focuses on the happiness of individuals over a long period of time, wherein the happiness of each individual is equally important (Rachels and Rachels, 2007). In relevance to the case, it can be observed that the happiness being referred to is the happiness or the welfare of the parties involved in the case, including all the financial advisers, the investors and their families, the financial environment and government of New Zealand at large, and the smaller companies operating the country (South, 2007).
Clearly, it can be perceived that the investors can obtain benefits from the risky business of Bridgecorp, as it offers higher return of interests compared to other financing companies. This means that the investors can get far better profits, thus, making them happy. This was deemed possible through the coaxing and advising of the financial advisers, making investors agree to the idea. However, under the Act Utilitarianism Theory, happiness is only considered long-term, thus, disregarding the short-term happiness, which may have significant impacts to the investors. Based on the situation, it can be distinguished that the happiness being experienced by the investors refers only to short-term happiness, given by the amount of dividends they receive at a given time. Such happiness would be replaced by grief and frustration if investors would suffer from significant financial loss in times of bankruptcy. At this time, Bridgecorp has already lost 0 million (McManus, 2007) since its collapse. Frustration and despair would come in most especially if a specific investor invested his or her entire livelihood into Bridgecorp, in the opinion of doubling or tripling the amount of profit to be obtained. Large and significant loss would then be felt, not only affecting the business and livelihood, but the lives of each of the members of the family as well. In addition, given the downfall of the company due to its financial investors, other New Zealand investors would then be scared to trust financial advisers, thus, downgrading the reputation and dignity of many financial advisers in the country. In this regard, it can be observed that the problems caused by the downfall or collapse of Bridgecorp are not only confined on the walls of the company, but affect the entire financial business of the whole country and the integrity of all financial advisers as well. Given this, it can be emphasized that the actions and decisions of the financial advisers to persuade investors to invest in Bridgecorp seem to violate the theory of Act Utilitarianism. This is because it can be assumed that those financial advisers knew about the risks of investing in the company, but continued to persuade the investors to invest in the company due to the amount of commission they would receive (South, 2007). This, in any sense, is not morally acceptable, as the financial advisers thought only of themselves and their own benefits regardless of the adverse effects of their actions on the part of the investors. This violates Act Utilitarianism, as their actions and decisions did not consider their equal happiness, or in this sense, the balance between good and evil. What actually prevailed here were the evil decisions of the financial advisers, which produced major problems in the society. In this sense, from the perspective of the Act Utilitarianism Theory, the actions of the financial advisers were immoral and unacceptable.
Another theory considered was Kantianism. It has been reported that Kant’s central move is to construct the principles of ethics according to rational procedures (Singer, 1993). He argues that a person is free when he or she is bound by his or her own will and not by the will of another person (Johnson, 2004). Given this theory, it can be perceived that given this rationality of human beings, financial investors then have the right and moral decision to use this will. This will, in turn, prompted them to decide upon persuading investors to invest in Bridgecorp, despite its risky financial business. This will also drove the financial advisers to use their convincing power over the investors in order for them to obtain good profits from their commissions. However, every financial investor can use this will both in good and in evil, in terms of making actions and decisions. This will can be used either by informing the investors to not continue investing in Bridgecorp due to the major financial risk involve, hence, making financial advisers lose large sums of money because of this honesty. On the other hand, financial investors can also use this will in evil deeds, such as what most did, by persuading investors to invest in the company in order for financial advisers to obtain profit and monetary gains. In line with Kantianism, this will is free for everyone to use.
However, it must not be forgotten that the Principle of Ends is also involved in the Kantian Theory. According to the Principle of Ends, one must be able to act in treating people as ends in themselves, and not as means to an end (“Overview of Normative Ethical Principles for Selected Theories”, 2002). Following this, it can be recognized that the financial advisers deemed and used the investors as good means to a very good end. As mentioned, they have used their convincing and persuasive powers to encourage investors to invest in Bridgecorp, thus, not telling them of the major financial risks involved. Aside from advising investors properly by giving them options and other alternative financing companies, financial advisers informed them to pursue investing in Bridgecorp, so they can get their commissions and profits. This clearly violates the Principle of Ends, despite the fact that anybody is given the freedom to use his or her will. Furthermore, this evidently shows that the financial advisers used their will freely, using the investors as means to their end, which is unacceptable and morally wrong. Instead of using their capabilities in good terms, they allowed themselves to become overpowered by greed. This must not be so because following Kantianism, the investors must regarded as ends themselves and not as means to the ends of the financial advisers.
Conclusion
Based on Act Utilitarianism, what the financial advisers did was morally unacceptable, as they thought of their own benefits or profits firsthand over the welfare of the investors, by advising them to invest in Bridgecorp despite the major financial risks involved. Similarly, based on Kantianism Theory, what the financial advisers did was also deemed morally unacceptable, as they used their own free wills to cheat over the investors, and used them as a good means or tools for their ends or objectives of obtaining good profits and monetary gains. In this regard, both theories emphasize that the actions and decisions of the financial investors of Bridgecorp were morally and ethically wrong, making them liable for the collapse of the company. However, despite the common point being driven at by the two theories, it can be perceived that Kantianism seemed to become more significant over Act Utilitarianism, as it clearly specifies that humans must not be used as means or tools to get what one wants. This theory emphasizes that it is morally unacceptable to use other people to allow an individual to get what he or she wants, as it violates human dignity. Although happiness of people can be obtained through good deeds, the means or the process of obtaining that happiness should still be considered. In this regard, it can be assumed that happiness can be achieved in many ways, even evil ways, such as what the financial advisers did. As such, regarding each individual as ends themselves is the best form of happiness one can provide to another, entailing respect for human dignity at all costs.
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