Bottled Water Companies, Environmental Villians

The following post pertains to the article in this link listed below:

http://business-ethics.com/2011/02/26/1739-is-bottled-water-a-waste/

Bottled water has become an ingrained part of U.S. culture. Over 50 billions bottles of water are consumed every year which roughly equates to about 1.5 million barrels of oil to make the bottle for the water to be stored in. That's enough oil to fuel 100,000 cars for approximately one year. These are just a few bothersome statistics presented in the article which exploits one inefficiency of market economics and is, in my opinion, ethically unsound. Bottled water companies need to enforce or adopt a new view on corporate social responsibility. The goal of CSR is to embrace responsibility for the company's actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders, and anyone else in the public sphere.

Water that is cleaner and much cheaper is available through a filtered tap in nearly every single home in America. Oil , electricity, packaging, and transportation resources can all be saved if U.S. citizens would cut back on their consumption of bottled water. Ethically, the bottled water companies know that they are selling their product for a premium, but don't care about the negative environmental influences or the inefficient structure of their entire market. The price of bottled water can be up to 1900 times higher than water from the tap. It would seem the cost of convenience is negligible in this situation considering that bottled water is still relatively cheap to purchase, but the principle of the matter is that logically bottled water makes little sense from an ethical/environmental view. Do you think that the opportunity costs are small enough to overlook the long run environmental costs of bottles that haven't been recycled and oil that could be put to a more efficient use?

Posted By: Grant Luther

Google vs. Microsoft

http://www.businessweek.com/managing/content/feb2011/ca2011024_853469.htm


In the above article, it talks about how Google believes that Microsoft is copying their search results. You can read about how technically through the toolbar application and gibberish searches Google claims that Microsoft is stealing their results.


As stated within the article, Google is strange to be the one criticizing other companies for copy writing or stealing. They acquired YouTube which has an enormous amount of copyright infringement clips. 


Microsoft used "user behavior" in finding out the searches. "Microsoft received user permission for these observations. And information about users' click patterns is users'information—not Google's." states the article.


Google's click patterns were sent to Microsoft—just as Microsoft's privacy policy and other disclosures said they would be." So when the Google employee's installed the toolbar, then they agreed to the terms, whether they read them or not. My question to you is do you believe that Google is in the wrong or right here? Do you think that Bing will ever come close to competing with Google? Please comment below/


-Matt Blachowicz

Understanding Intentions

The following post is in regards to the article in the link below:
http://www.businessweek.com/managing/content/dec2010/ca20101214_945792.htm

This article talks about the power of giving and the social perception that people associate with philanthropic generosity. In specific, Mark Zuckerberg recently signed into the Buffet-Gates Giving Pledge which means he will donate half of his wealth over time. This is undoubtedly a selfless and kind gesture right? Maybe, but probably not. Not to belittle the extreme generosity of those who donate purely for the benefit of others, but usually there are ulterior motives behind the generosity.
For example, when a person or business has their reputation tarnished by some negative publicity and then that person/business turns around and donates money  to some charity or participates in other philanthropic activities are they really being so generous or are they just covering for their faults? Is the gift or donation as well received if it is only in response to some fault previously incurred? This is an ethical issue that some people/businesses struggle with.
For a corporation, I believe the responsible/ethical action to be taken should be to donate indefinitely  from the time of inception if that corporation ever expects to make donations or participate in other generous behavior as a result of negative publicity or corporate scandal. If the corporation doesn't think they need to be socially active in order to be successful and strive to achieve the underlying goal of a business which is to generate profit and increase the wealth of shareholders, then they shouldn't be viewed negatively or expected to be generous. It is hard to clearly articulate my thoughts on this issue in words, but hopefully you follow my meaning.
Do you think that all organizations and people should strive to be philanthropic and generous if circumstances allow it and should they act in such a manner as a result of wrongdoing?


Posted By: Grant Luther

Bad Business Ethics or Acceptable Promotional Perks?

By Jessica Silliman

Gail Ellen had taken her first job offer out of Santa Clara University. As a communication major, she hoped to go into broadcast media and eventually become an on-air personality. But she knew she had to work her way up. So she took a job with a local Bay Area radio station in the publicity department. Gail immediately fell in love with the station's young, hip vibe.

Soon after beginning at the radio station, Gail began to feel uncomfortable about some of the practices within the promotions department. When station officials requested products from local companies to be given away on-air, they would overestimate the amount necessary. The employees would then take the extra products.

This happened several times with tanning packages. A local tanning salon would often donate coupons for free one-month trials. The station didn't have a set ratio for coupon dollar amount per minute of advertising, so the promotions department would negotiate individually with each customer. It was also impossible for the individual companies to keep track of the on-air advertising time, so they never knew if their negotiated airtime was actually in effect. These negotiations resulted in a completely arbitrary system that always erred on the side of the station. Instead of giving all the tanning packages away on the air, the disc jockeys would often keep a few for personal use, or distribute them to other station employees.

Because everyone at the station enjoyed receiving the perks, nobody complained. "I enjoyed the industry," said Gail. "I'm just glad I wasn't on the other side of the street." Gail realized that the supporting companies donating give-aways had no idea of the radio station's practices. This frustrated her, but she, too, didn't feel it was worth speaking up about. "I was getting a horrible salary, so I figured I could enjoy the perks," she said. "Plus, they were on such a small scale, that it didn't seem significant."

"This was just how the business operated, so I didn't say anything," said Gail. "It was just part of the culture."

This article struck me as pretty shady business practices.  In the article she says that the perks “were on such a small scale, that it didn't seem significant."  I’m sure that to her it did not seem significant since she was the one receiving the so-called “perk.”  Imagine, however, that you are one of the companies providing the promotion in exchange for advertising on the radio.  You give the radio station deals that your normal customers would not receive as prizes to radio games.  Your objective with the deals is that once someone wins the prize not only will they use the deal but become a repeat customer.  If your deals are instead being used by radio station employees and they are just using the deal, then your advertising dollars are basically being wasted.  You might as well just give the station’s employees money.  While this may not seem significant to the station employee, it is very significant to a small company who only advertise on the radio.  In the article, Gail herself even says, “I'm just glad I wasn't on the other side of the street."  Even she realizes that it is the wrong thing to do but she would not speak up because everyone else was doing the same thing.

Posted by: David Ashbeck

Blowing the Whistle -- What Influences Employees to Report Unethical or Illegal Behavior?

“It’s Time to Cap Whistleblower Payments, Former Prosecutor Says”

The Wall Street Journal: February 3, 2011

By: Katherine Hobson

Blowing the whistle on drug-company shenanigans has never been more lucrative.

Just ask the former GlaxoSmithKline employee who in October was awarded a record $96 million for her role in exposing manufacturing problems at the pharma company. Other whistleblowers have collected tens of millions of dollars, and there have even been “serial” whistleblowers who have collected awards for blowing the whistle on more than one former employer. The Los Angeles Times recently reported on a small pharmacy that has made a specialty out of filing suit against drug companies that overcharge Medicare and Medicaid and collecting whistleblower payouts.

Michael Loucks, a former big-time health-care fraud prosecutor with the Massachusetts U.S. Attorney’s Office and now a partner at Skadden, Arps, Slate, Meagher & Flom, says it’s time to think about capping those awards.

When the False Claims Act was bolstered in 1986 to give whistleblowers up to a quarter of any monetary recoveries, “no one anticipated there would be recoveries in the hundreds of millions of dollars,” he tells the Health Blog. In a paper recently published in Health Care Fraud Report, Loucks calculates that from 14 settlements in two years, whistleblowers have taken home $650 million. (Before paying their attorneys, that is.)

In his article Loucks suggests a cap of $2 million, saying that an analysis of the data shows that “the potential for earning as ‘little’ as $400,000 has encouraged blowing the whistle.” (Should you think he changed his views when he switched to the defense side, he says he gave a speech advocating caps when he was still with the U.S. Attorney’s Office and has supported the change since about 2003.)

“The goal is not to create a payment so that no one ever has to work again, and it’s not to create a pool of money to pay for lawyers, it’s to encourage [people] to blow the whistle,” Loucks says. The money instead should go back to Medicare and Medicaid. He also says that to be eligible for a payout, whistleblowers should be required to have first gone through their employer’s corporate compliance program.

A special report by the New England Journal of Medicine last year would seem to shore up Loucks’s contention that folks would still blow the whistle even without the prospect of a big payout. The NEJM interviewed 26 pharma-company whistleblowers and none of them said that the possibility of financial reward was the motivating factor. They said instead they were driven by integrity, altruism or public safety concerns, a sense of justice and self-preservation. And despite walking away with between $100,000 and $42 million, “the prevailing sentiment was that the payoff had not been worth the personal cost,” the report found.

Opinion by Jon Worthey:

Whistle blowing has become a mainstay in the ongoing battle against unethical and illegal business practice. The adoption of whistle blower protection laws has given the SEC, BBB, and government another means of uprooting, controlling, and reducing the amount of insider trading incidents, false reporting accounting scandals, and investment banking frauds, to name a few.

However, businesses are often critical of these provisions because they believe such laws undermine the policies and procedures set forth by the companies to control this type of unethical and illegal behavior. Furthermore, employees who blow the whistle on similar behaviors within the company are being granted tremendous sums of reward money for their actions. While the stimulus behind whistle blowing is sometimes questionable, recent articles from the Wall Street Journal present ideas that the enormous sums of money rewarded to whistle blowers is excessive.

As stated above by former healthcare fraud prosecutor Michael Loucks, “the goal is not to create a payment so that no one ever has to work again, and it’s not to create a pool of money to pay for lawyers, it’s to encourage [people] to blow the whistle” (Hobson, WSJ, 2011). These assertions present the point, what exactly influences employees to blow the whistle? To what extent do the employees’ personality, values, and work attitude play in the decision to report their company’s unethical or illegal business practice?

Employees with a proactive personality who are faced with an unethical or illegal business practice are more likely to report their findings because they realize the complexity and importance of being ethical in decision making.

Values play an even greater role in whistle blowers; the possibility of reporting unethical or illegal behavior depends on the level of ethical belief the employee generally displays. If an employee is raised with the belief to choose right over wrong, he or she will act ethically to bring unfair business practices to justice.

Work attitude can also have a stake in whether an employee blows the whistle. The more negatively opposed an employee is to their organization, the greater chance the employee will be subjected to report their company to the SEC. Likewise, positively attuned employees may be reluctant to blow the whistle because of their disposition towards the company. These employees may find difficulty in reporting unethical or illegal behavior due to their relationship with the company or disbelief that their company could be involved in such conduct.

While whistle blowing has an essential role in disrupting illegal business practice, there are certainly concerns regarding the large monetary rewards behind such activity. Workers’ personality and overall disposition toward the company relates to the motive behind blowing the whistle – which is questionable at time. By lowering the amount of reward money granted to whistle blowers, governing agencies will guarantee the reasons being whistle blowing.

- Jon Worthey

Going Green, Intuitively ethical

The following paragraph pertains to the article on this link and related topics: http://smallbusiness.foxbusiness.com/starting-a-business/2011/02/07/small-business-going-green-later/

The green trend towards sustainable business practices and self-sufficiency has been on the rise over the past decade. The benefits greatly outweigh the initial costs although it takes time to get a return on this investment. The article highlights the cost reduction benefits and long term sustainable efficiency. One staggering statistic  explained that  retro-fitting green supplies on an older business could cost a small business up to 75% in premiums. Exponential benefits can be realized as more businesses turn towards green alternatives such as solar panels, efficient insulation, and energy-efficient light bulbs.

Now you might be asking yourself, what does going green have to do with business ethics? Actually, it has much more to do with ethics then you think. It is not ethically sound, in my opinion, to function inefficiently when a more sustainable means is available to businesses. Now their are some extenuating circumstances mostly consisting of large start-up or switching costs, but currently there are federal tax break incentives as well as state and local initiatives to help businesses make a smooth transition to more efficiently run their businesses. If a more environmentally-friendly and financially beneficial state can be reached by a business it is ethically imperative to take the initiative to make that change. Benefits include the appreciation of customers and the potential to increase the quality of life for employees.

This article argues that all small businesses will eventually make the transition to green technology because of its financial benefits. The article lacks to highlight the social impact and ethical responsibility that all businesses face. Ultimately, the decision rests on the shoulders of the business owner, but as more and more businesses make the transition, pressure from environmentally concerned consumers and other businesses will inevitably force everyone into a more sustainable existence.

Posted by Grant Luther 

The Effect of Facebook Within Companies

Recently I heard about a person complaining about their job and workplace environment on Facebook.  This individual’s supervisors were friends of theirs on the social network.  Needless to say the supervisors saw the employee’s comments.  Within a few days, the company decided to state in the company handbook that employees are not allowed to post negative comments about the company on Facebook.  If an employee is caught posting negative thoughts or comments, they will be reprimanded.  To me this sounds like a violation of freedom of speech.  People should be able to write what they want on Facebook or any other social network.  An employer does not have the right to censor their employee’s comments or thoughts.  Just because someone works for you does not give you the liberty to tell them what they can say or think about your company.  However, employees should have the common sense to know that their supervisor can see everything that they post online, especially if they are added as a friend.  While the company cannot tell them what they are allowed to say, they certainly have the right to reprimand the employee for comments detrimental to the company and the employee should realize that.  Please feel free to offer your opinion on what you feel is appropriate for the company or the employee to do.

Posted by: David Ashbeck

Egypt's Bad for Business

http://www.foxbusiness.com/markets/2011/02/03/telecoms-hedge-bets-amid-internet-blackouts/




Opinion by Matt Blachowicz

In the previous posted article (see top) it talks about telecoms complying with Egypt's government amid the blackouts. If you haven't been up to date on Egypt's violence that has erupted here is a quick break down.

Egypt has shut down 90% of its internet and mobile traffic. This has caused many riots and protests by Egypt's people. Their leader shut down services "an effort to squash rising protests calling for the ouster of the autocrat dictator and hinder social media-based coordination efforts."

Many people are surprised that companies worked with Egypt's government in shutting down services. They claim Egypt was within their rights as a government to shut down services and was complying with the Telecom agreement. But when does a company stand up for its customers?

Even though they were “required” by law to shut down services, what would happen if they refused to? The government might make them shut down regardless but doesn’t that result in the same outcome? I understand there are laws and everyone must abide them. However, when does that line end? Companies have the option of leaving a country and doing business elsewhere. I assumed companies have a contract with their customers.

There has been a history of companies, who do work with governments going against people, having poor business after the disputes are settled. It would be smart for a company to go with the customers’ opinion. As the saying goes, the customer is always right. 

Customers are what drive companies to make money and provide services. They need our money to keep alive and pay bills. When is a company going to stand up for their customers and tell a government that our customers are more important to us than a contractual agreement?  Guess that day is still on the horizon.

-Matt Blachowicz

The Effects of Insider Trading on Business

"A Fund Manager Ensnared"
The Wall Street Journal: January 31, 2011
Section C1-C3
By: Jenny Strasburg, Michael Rothfeld, and Susan Pulliam

A former Citigroup Inc. hedge-fund manager has been drawn into the government's insider-trading investigation as a co-conspirator in the case, and his firm has been raided by Federal Bureau of Investigation agents, according to people familiar with the matter.

Samir Barai

The hedge-fund manager—Samir Barai, the 39-year-old founder of New York-based Barai Capital Management—didn't return calls for comment. Prosecutors haven't disclosed any charges of wrongdoing against Mr. Barai in the still-unfolding investigation. FBI agents raided his fund in November, the people familiar with the matter say, but the fund's identity hasn't before been made public.‪The FBI and Manhattan U.S. Attorney's office declined to comment.

The development broadens the known scope of a burgeoning criminal probe because it marks the first time a hedge-fund manager has been publicly revealed as a co-conspirator in the case. The investigation is examining whether hedge funds and other investors traded on inside information received from corporate employees freelancing as consultants for "expert-network" firms.‪

Mr. Barai made his name at Citigroup in a high-profile hedge-fund position and he used that affiliation to help market his own fund, according to people familiar with the firm. His role in the investigation involves conversations and trading that took place after Mr. Barai left Citigroup in 2007, and there is no indication the bank is implicated in the probe.‪ A Citigroup spokeswoman declined to comment.

A criminal complaint filed in the case against an expert-network consultant said FBI agents raided the offices of an unnamed hedge fund, seizing recordings of telephone calls in which the fund's founder and a research analyst discussed inside information with the employee about technology companies including Marvell Technology Group Ltd. and Nvidia Corp.‪

That hedge fund is Barai Capital and the founder is Mr. Barai, who was identified as "CC-1," or an unnamed co-conspirator, in the complaint, according to people familiar with the matter. 

The complaint, filed last month in a New York federal court, alleged that Winifred Jiau, a consultant for expert-network firm Primary Global Research LLC, provided inside information about publicly traded companies to hedge-fund managers.‪ 

The complaint also refers to a cooperating witness in the case, who is an analyst working for Mr. Barai, people familiar with the matter say. 

"There were some individuals who CC-1 communicated directly with in order to receive inside information," including Ms. Jiau, according to the complaint. "CC-1 sometimes recorded CC-1's conversations with Jiau on a digital audio recorder…and/or had CW-1 listen in on the conversations so that CW-1 heard the inside information provided by Jiau." 

Prosecutors said the hedge fund, identified by the people familiar with the matter as Barai, received more than $820,000 in May and June 2008 from trading ahead of Marvell's earnings based on inside information provided by Ms. Jiau.

The people familiar with the matter identified "CW-1," or a cooperating witness, as Jason Pflaum, a 38-year-old technology analyst at Barai Capital. The Jiau complaint says the analyst, who began working at the hedge fund at about March 2008, has entered a guilty plea on charges of conspiracy and securities fraud and has been cooperating in the government's investigation in hopes of a reduced sentence.‪
Mr. Pflaum didn't respond to requests for comment.

Two other Barai Capital employees—Jeffrey Wilkins, chief financial officer, and Michael Colman, a trader—declined to comment when reached at their homes last week. There is no indication that either Mr. Wilkins or Mr. Colman is involved in the case.

Fred Hafetz, a lawyer for Ms. Jiau, said his client "looks forward to her day in court."‪ Primary Global declined to comment. A spokesman for Nvidia declined to comment. Marvell didn't respond to requests for comment.
The government's broadening insider-trading probe has resulted in criminal charges against eight employees or technology-industry consultants who worked for Primary Global Research, including Ms. Jiau, who was charged with conspiracy and securities fraud.

In November, the FBI conducted raids of hedge-fund firms Level Global Investors, Diamondback Capital Management and Loch Capital Management. The three firms have said they aren't targets of the insider-trading investigation. Diamondback and Level Global have said they are cooperating with authorities.‪

Ms. Jiau, 43, learned that at least some of the calls she made with Barai Capital were recorded, a person familiar with the matter says, but believed the reason was that Mr. Barai couldn't hear well.‪Mr. Barai has a severe, lifelong hearing impairment, and uses hearing aids and other technology to communicate, including while on telephone calls, according to people who know him.‪ In an August 2008 profile for the magazine Absolute Return, Mr. Barai discussed having an electronic-hearing device, and using computers and other technology to help.

Mr. Barai launched his hedge fund in 2008 after leaving Citigroup's hedge-fund unit. At Citigroup, he ran a technology, media and telecommunications stock portfolio that produced strong returns for the bank's Tribeca hedge fund, says a person familiar with the matter.

‪Citigroup executives decided in 2007 to close Tribeca, which had produced mediocre investment returns overall and failed to attract money as expected.‪ 

Barai Capital itself never gained much traction with new investors. The firm managed less than $100 million in assets as of last fall, Mr. Barai told other hedge-fund managers and investors in October, when he spoke at an industry roundtable discussion in New York. 

The fund has been profitable, however, Mr. Barai told his roundtable audience in October. Barai Capital achieved a cumulative total return of 13% over 2-1/2 years, he said, according to a transcript of the discussion from online hedge-fund news provider Opalesque.‪

In November, two agents dressed in street clothes flashed their FBI identification and announced their destination as Barai Capital for a video surveillance system at a Manhattan building, where the hedge fund was a tenant, said Augustus Tudzi, a security guard there.‪

"They just showed me the ID and said they were going to Barai Capital," he said. Mr. Tudzi said the agents arrived in the afternoon and that he hadn't seen them leave by the time his shift ended at 5 p.m. ‪Sharon Adamo, the building manager, said she was also aware FBI agents had come to visit Barai Capital around November.‪

Building employees said that shortly after the FBI visit, Barai Capital left the offices, as had been earlier planned. It wasn't clear whether the fund has moved to another location or has shut down.
Voicemail boxes at numbers for Barai weren't accepting messages in recent days. An outgoing message said: "The office is closed for the holiday."‪

Opinion by Jon Worthey:

The Hollywood-hit sequel, Wall Street: Money Never Sleeps, revolves heavily around ethical decision making in the business world -- specifically insider trading. The head of a successful investment banking firm, Bretton James, is involved in an insider trading scheme that forces a competitor, Keller-Zabel, to go out of business. James’ board of directors forces his resignation once allegations surface about his role in sinking the competitor bank’s company. The Security and Exchange Commission (SEC) then intervenes by indicting James for insider trading leading to the demise of Keller-Zabel. 

Though this film is fictionally-based, the ethical dilemmas featured are unfortunately real occurrences in today’s business world. As posted above, The Wall Street Journal published an article on January 31, 2011 in section C1 and continued in section C3 about an insider trading incident similar to the one portrayed in Wall Street: Money Never Sleeps. 

The conspirator, Samir Barai, was a hedge-fund manager at Citigroup where “he used his affiliation to help market his own fund” until 2007 when he left Citigroup to start his own firm – Barai Capital Management (WSJ, C1-C3, 2011). The Federal Bureau of Investigation (FBI) “[seized] recordings of telephone calls in which [Barai] and a research analyst discussed inside information … about technology companies” (WSJ, C1-C3, 2011). 

Insider trading is not only illegal, but it is also unethical. Aside from risking the possibility of being sentenced to time in federal prison, conspirators like Samir Barai lack the moral principles and judgment capabilities to resist the temptation of unethical and illegal business practice. This article can serve as a lesson to all current and future business employees; Barai acted unethically for years in his business decisions and those actions finally caused legal implications. 

With such ethical dilemmas as the Martha Stewart insider trading scandal, Enron and numerous other companies producing false financial statements, and Bernie Madoff’s Ponzi scheme ravaging the business community during the past several years, the United States’ government reacted by implementing the Sarbanes-Oxley Act and other regulations, but these actions are not sufficient. 

Though these types of illegal and unethical practices will never completely vanish, the public needs to understand that such behavior only adds to the recent economic conditions. Greed only allows the few to prosper while harming the finances of the many; greed will continue to confine the American society to the illegal and unethical business decisions as seen in Samir Barai’s situation.   

Professionals need to take individual responsibility to make legal and ethical decisions in their everyday transactions; this sense of pride and awareness in business practice not only establishes fair business opportunities, but also encourages a trustworthy and positive business culture. 

- Jon Worthey