Ethical Theories Essay On Bank Of America UK.

1.assess the significance of a range of ethical theories, and how these might be applied to the business context;
2.critically evaluate a range of ethical issues that may occur both within and external to business organisations; and
3.demonstrate a range of capabilities, including research, analysis and self-reflection.

The report is prepared to discuss the various aspects of ethical concerns related to the different types of situations within the organization Bank of America in UK. The company happens to be inclined properly with the values and ethics of the organization and so it has maintained a good culture and ensured successful business functioning as well. To demonstrate the ethical concerns, the topic will illustrate the environmental, social and governance leadership that will be responsible for managing the growth of the organization as well as deliver long-term value to the shareholders or investors (bankofamerica.com 2018).

Bank of America has maintained various ethical theories and concepts to become corporate socially responsible and at the same time, maintains a good culture to enable successful business functioning and deriving positive business outcomes too. The organization is one of the industry leaders within the banking industry that has a huge market share and manages low carbon and sustainable business practices to fulfill the ethical standards and responsibilities. The minimum wage for the employees on an hourly basis is also good, i.e., $15 per hour, which makes it one of the best companies to work in all over United Kingdom (Schaper et al. 2014). The company is believed to maintain ethical standards because of the activities undertaken to become socially responsible and contributing to the society largely too. The company invested a whopping of $2B to create partnerships that an address the issues regarding the economic mobility, workforce, education and development of community along with the fulfillment of the basic needs and requirements of the service users. Due to this, Bank of America has gained reputation and created a positive mindset among the service users, furthermore positioned itself properly within the banking industry in United Kingdom. The company through the development communities has achieved good reputation where more than 200,000 hours have been dedicated for the training and development of youth (Wild, Wild and Han 2014). The collective ethical theory is associated with the making of management decisions and maintains ethical relationships within the bank whereas the individual ethical theory maintained the rules of morality and focused on the personal interests at first for creating a healthy business atmosphere where people could work in.

The most important stakeholders of the organization are Vice Chairman, investors or shareholders, Head of Investor relations, Head of Wealth management, customers, managers and the employees of the organization. When ethical issues arise, there could be conflicts and misunderstandings between the workers, which could result in degraded organizational performance as well as lesser revenue generation (Czinkota, Kaufmann and Basile 2014). There were various environmental, social and governance issues within the banking sector, which created difficulties in maintaining a proper culture at Bank of America. This also resulted in lack of transparency and clarity, which furthermore created environmental and social risks as well as hindered the management of a proper risk framework within the organization. It was analyzed that the investors made lesser investments, which created difficulties in financing the low carbon and sustainable business that were required to address the changes in climatic conditions and the demands o the natural resources (Benson-Rea, Brodie and Sima 2013). To overcome this kind of problem, the shareholders provided a whopping $58 billion for managing clean energy as well as maintain energy efficient techniques, conservation of water and ensure successful sustainable transportation. This has also fulfilled the needs of many other people because the investments made have created job opportunities for many people and even managed environmental finance efforts with ease and effectiveness. The employees are provided with information about the sustainable business practices along with the environmental, social and governance issues that shall be managed to ensure successful business functioning within the banking industry of United Kingdom. The customers were provided with the good quality banking and financial services and their queries have been answered as well through effective customers’ services to achieve the ethical standards and maintain consistency in business all throughout (Haufler 2013).

PESTLE analysis

Political – The corruption among the political parties have created unstable political conditions whereas the policies for foreign investments have created impact on the bank too.  The wags legislation, mandatory employee benefits and pricing regulations are managed properly to favor the trading partners and the business itself to improve the potential for the workforce and maintain stability while managing the political matters.

Economic – The inflation rate, rate of interest, foreign exchange rate and economic cycle can impact the economic condition of the organization. The rate of unemployment and fluctuations in currency value could also impact the business.

Social – The culture, demographics and skills of the people are important social factors that are considered and the company has managed shared values and beliefs to create an impact on the marketers and even understood the preferences of the customers in the market. This helped in designing marketing messages for the Money Center Bank industry customers too.

Technological – The technological advancements have given the company a competitive edge and even influenced the value chain structure in the financial sector, furthermore allowed to enhance the offering of new products and services in the market.

Legal – The employment law, data protection act and health and safety laws are imposed within the company to maintain the safety and health of the workers and even provided good opportunities of employment to people. The data protection ct helped in ensuring that the data and information of customers are kept safe and secure.

Environmental – Bank of America has adopted sustainable practices to maintain an ecological balance in nature and maintained the air and water pollution regulations. The recycling of wastes and attitudes towards greener products furthermore enhanced the sustainability measures’ efficiency at Bank of America.

The ethical issues mainly emerge when there are conflicts regarding the rights and responsibilities, questions arising due to the limits and obligations related to the safety and health of the individuals working within the company, responsibilities for the various stakeholders and conflicts of interest at Bank of America. The issues were mainly related to the allegations put on the organization and the wrongdoings of the company until the company reaches a settlement to overcome the uncertainties and prevent distraction of further litigation (Potgieter and Coetzee 2013).

Few of the ethical issues include Mortgage Securities fraud activities, Auction Rate Securities scandal, Bond fraud, unfair overdraft scheme, etc. The Bon fraud involved Bank of America settling with WorldCom investors or shareholders who bought the bonds from the company. The shareholders stated that the company should have been aware of the huge numbers of frauds happened at WorldCom, which was not done. Bank of America reached a settlement finally by closing the arguments and they were not satisfied with the rate of return on investments too. During the mortgage securities fraud activities, the investors or shareholders lost a lot of money on the mortgage backed securities that were purchased prior to the housing collapse (Van Der Aalst, La Rosa and Santoro 2016). After the concerned time, the settlement was much more than the actual profit achieved by the company. The ethical issues also arose due to the lack of maintaining environmental, social and governance standards, which not only hindered the investments in the team, but also created difficulties in creating an environment where all the team members could thrive for excellence and work in coordination as an unit. It is critical to foster sustainable growth and development and even create scopes and opportunities for the employees to perform efficiently (Hond et al. 2014). This could not only support the employees’ financial, physical and emotional wellbeing but would also provide better wards and incentives to them for keeping them motivated and encouraged to perform better.

Ethical issues emerged

It was found that Bank of America misled the investors or shareholders about the mortgage backed investments made by the Merrill Lynch unit. Few of the employees were also involved with the rigging of bids when the marketing financial contracts were linked with the municipal bonds. The Home loans offered by the bank assessed and reviewed millions of dollar in an illegal way, which lead to the violation of certain agreements too (Feldman, Bahamonde and Velasquez Bellido 2014). The accounting cover up was another issue along with the disclosure of private information of the clients to the marketers and the third parties without the permission of the clients. The credit cards provided by the company involved an arbitration service that was termed to be biased because it benefited the bank more rather than its customers. The employees were even forced to work overtime who were called as client manager, though they did not perform their true managerial or leadership roles properly. Therefore, these are the ethical issues that created obligations on the money safety matters and even created problems for the investors due to lack of rate of return on investments (Taghian, D’Souza and Polonsky 2015).

Deployment of a good amount of financial capital could be beneficial for creating opportunities and develop a positive environmental impact. Other approaches to resolve the issues and maintain ethical standards included financing of low carbon and sustainable businesses so that the changes in climatic and weather conditions could be resolved and the demands on natural resources should be met with ease and efficiency. The undertaking of greener approaches for maintaining sustainability and bringing out environmental benefits could also be effective course of actions undertaken to overcome the problems (Kronlid and Öhman 2013). This also included the incorporating of solar energy into the business operations and designing energy efficient buildings, furthermore uses renewable sources of energy for energy conservation. Bank of America could also expand the Catalytic Finance Initiative for handling the challenges of financing clean energy and furthermore advance in innovative financing structures. The sustainable approaches undertaken by the company would also deliver value-based products to the customers, reduce the costs of operations and at the same time ensure successful sustainable forestry and management of renewable energy projects that have been undertaken (Edwards and Kirkham 2014).

The pluralistic ethical analysis is adopted to determine the approaches that are right or wrong. It might be incompatible with the personal and moral norms, rules and regulations. It enables international engagement, which favors working with the other societies as well as considers various aspects related the societal and environmental contexts. It also includes treatment of value in children, environment, waste management as well as management of ethical business practices to maintain the trust and loyalty of the customers. The ethical pluralism also includes management of information and keeping it secured and safe so that others cannot access it. The customers’ data and information are kept secured so that no other can access it (Müller et al. 2014). The Pluralistic ethical analysis has driven economic and social progress as well as extended capitals to individuals through making of investments in women’s economic empowerment, community developmental activities and ensuring economic viability too. The theories concerned with the ethical approaches made sure that the religious views and opinions of the employee within the workplace are respected and the consuming habits and spending behaviors are managed properly too.

The theory proposed by Friedman in the field of economics was related to the consumption habits and behaviors along with the saving decisions made by the people. The behaviors are often influenced by permanent changes in the income structure rather than the changes in income that are considered as ephemeral. The theory influenced the permanent income hypothesis and even proved that the short term tax increase results in decreasing the savings and maintains a static or balance level of consumption all throughout. The free market theory enabled the people to pay for things purchased or generate income regardless of what the other people think. The stakeholder theory enabled Bank of America to increase profit level for the owners by becoming socially responsible and making lives of people within the community easier.

The Kantian ethics theory considered two different types of actions including any unethical practices that are prevented. It could be done unethically though might be the subject of happiness for that person, still it would be advisable not to perform such kind of action, rather respect the human beings to achieve the goals and objectives.

The Judeo-Christian theory considered the religious views in terms of the Judaism and Christianity; it could either refer to the Christianity's derivation from Judaism or could be the management of shared values between the two religions. Acording to the theory, ethics should be maintained within the organization and the religious views of people working there should be respected along with supporting the traditional family values too. It would not only prevent discrimination within the workplace of Bank of Smerica, but could also maintain proper business ethics and values, further maintain honesty and fairness in terms of the business operations and processes.

After the financial crisis in 2008, Bank of America made decisions regarding the management of sustainability, understood the cultural and ethical norms to balance the reciprocity and partnership working for the organization. The company also made useful decisions about obtaining potential suppliers who could deliver the best quality supplies and additional resources for producing the products and services to fulfill the needs of the customers. To make the workers more skilled, training and educational facilities were provided for strengthening their expertise and knowledge and furthermore ensure better business outcomes (bankofamerica.com 2018). Decisions were also made regarding the supplier diversity and to make it successful, the impact investing program was introduced as well. It not only helped in meeting the needs of clients, but also favored the process by providing information to the shareholders regarding the investing process, platforms, guidance and resources. The development of workforce was managed by participating in leadership summits and important decisions were made to develop better career opportunities for the employees of Bank of America (Schaper et al. 2014).

Conclusion

The report was developed to focus on the business ethical theories along with the various ethical concerns related to the business functioning. The ethical issues were related to the lack of investments and rate of return on investments, not being able to manage the mortgage backed securities and even not following the sustainable measures. The stakeholder analysis helped in understanding the roles of various stakeholders who were associated with the maintenance of ethical standards and overcoming of environmental, social and governance issues too. Greener approaches and introducing the Catalytic Finance Initiative were major approaches undertaken to overcome the ethical issues while the Pluralistic ethical analysis was also adopted to make people influenced to make investments and furthermore expand business.

References

bankofamerica.com. (2018). Bank of America - Banking, Credit Cards, Home Loans and Auto Loans. [online] Bank of America. Available at: https://www.bankofamerica.com/ [Accessed 23 Mar. 2018].

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