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BUE201 EXERCISES
Name : Nguyen Duy Tien
Student Code : FB00384
Class : FB00384
Contents
Exercise 1 – Bernard Madoff’s Ponzi scheme...............................................................................................2
Exercise 3 - Piggybacking ..............................................................................................................................6
Exercise 4 – FSB WAY....................................................................................................................................7
Exercise 5 – KOTO .......................................................................................................................................10
Exercise 6 – Toyota, the CEO, the Assistant, and Inaction.........................................................................11
Exercise 7 – Bloggers...................................................................................................................................12
Exercise 8 – Cheerios and cholesterol ........................................................................................................15
Exercise 10 - Norsk Hydro – Norway...........................................................................................................16
Exercise 11 – AIG.........................................................................................................................................18
Exercise 12 – Enron.....................................................................................................................................20

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Exercise 1 – Bernard Madoff’s Ponzi scheme
1. Case summary
Bernard Madoff is an American businessman, a former stockbroker, investment
advisor, and financier, and also the former non-executive chairman of the NASDAQ
stock market. He earneda lot of money by Ponzi scheme through his wealth
management company that is considered to be the largest financial fraud in U.S.
history came to an end late in 2008.Mandoff used Ponzi scheme as a fraud to attract
investors by promising of very high returns for investors compared with legitimate
profit. A lot of investors, who expect higher than normal return, joined the scheme.
However Madoff didn’t invest these amounts of money for investing, the profit of
investors came from the initial money of other investors later. Therefore, Ponzi
scheme can collapse whenever the flow of money into the scheme declines, it means
the number of investor takes part in this scheme decreases.
When this case was disclosured, it really made people stunned because of its’
negative impacts on both economic side and social side. It was not only costed
clients more then 10$ billion, but also caused the recession in the period
2008-2009. It also caused the bad consequences for many stakeholders including
Madoff’s relatives, employees who worked for him, their families, investors, and
many non-profit organizations, etc.
One more thing that needs to mention in this case is the role of government
regulators, specifically in this case is SEC (Stock Exchange Commission). They
didn’t investigate or fail to follow when received complaints and tips of investors
about Madoff’s investments. After everything was clarified, Madoff was
sentenced to 150 years in prison. He also apologized for what he caused.

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2. Ethical issues
From the ethical perspective, Mandoff had many actions go against the moral
values in business.
Firstly, he had knowledge and many-year-experience in financial sector,
therefore, hecertainly knew his business was wrong and would cause the negative
effects for other people. But he still implemented it. He only cared about individual
benefits and ignored the others, even harmed society. Secondly, he based on his own
reputation to gain beliefs and deferences of people. Then, he used them for the
not good purposes. It means that, he took advantages them to trick people
invested money in his scheme by promising them for high returns through legal
investments. But he didn’d do as they said. He took money from them but didn’t
invest money to create legitimate returns. He only continued to cheat others and took
money to pay for earlier investors.
Thirdly, if we research more carefully, we will easily see that, Mandoff couldn’t do
this plan by himself in such a long time (1960-2008). Therefore, it raised another
ethical issues in this case that related to some people who knew Mandoff’s
actions were wrong but because of some reasons such as high salary or other
benefits, they hided and lended a hand to Mandoff’s plan.
Finally, in this case the responsibility of Government reguators is a remarkable
issue. Because as the information was mentioned in this case, the SEC did
not do the right task in checking carefully the Madoff’s business although
there were many complains of investors. Their lack of responsibility and
sensitivity with information leaded to the bad consequences of victims.
3. Case analysis

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From all of the ethical issues that we mentioned above, this part will use some
theories to analyze this case study. First of all, related to the Stakeholder Theory.
This theory emphasizes that how the ethical norms and values in business
management will affect to benefits of stakeholders. It means that, each decision of
a firm, in particularly is manager will definitely affect to a number of people
who have relative benefits as well as community. In this case, when applying this
theory, we can point out many relative parti es seperated into 2 main groups, and
they are directly or indirectly bared the negative effects:
- Internal stakeholders: are people who are already in that particular line of
business or the organization. These are people who already serve the
organisation, for example, staff, board members or volunteers. In this case
aims to employees who worked for Mandoff, when thousands of employees lost
their jobs, their retirement funds, and their health care benefits; the investors who
give him so much money including many individuals as well as non-profit
organizations who lost their money when invest in Mandoff’s company; his relatives
especially are his wife and sons.
- External stakeholders: are stakeholders outside the organisation, but those who
have an impact on the organisation, such as the community or the organization's
clients. In this case arecommunity was also hurt by the loss of a major employer
and community benefactor; Families of employees, investors were also hurt,
financial situation went to recession, and Many of the individuals directly involved
will themselves suffer criminal and civil punishment, including prison sentences
for some.Secondly, we will focus on Personal responsibility vs Social
responsibility: Whenever manager makes decision or business strategy, it isn’t only
related to individual’s benefits as well as personal responsibility, but its’
consequences also impact on community and many relative stakeholders as

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mentioned above. Therefore, personal and social responsibility is always a
sensitive matter in business ethic.
In this case, this issue was also clarified. When Mandoff made the decision to
implement the Ponzi scheme to gain the money from investors to enrich for
himself but ignore others’ benefits, it pointed out that he seemed to stand on his
own point of view – it meaned personal responsibility. He perhap only answered
the questions “What should I do? How should I act?”but he forgot the question
“How should we live?” refers to how we live together in a community. Mandoff
passed the benefits of many people and community to focus on his own benefit in
short term.
Moreover, as we mentioned above about some parties who took part in this
deal with Mandoff also need to consider between personal and social
responsibility. They certainly got some extra benefits, money, or even high
salary for their silence before the fault of Mandoff. They are the same as
Mandoff when hided his cheating. They traded off between their own benefits
and the others one.
Thirdly, we will talk about Ethical norms vs Economic values. In doing
business, the trading off between ethics and economic profits is popular. Beside
many firms, which have kept their ethical norms, there are many firms
concerning so much to the short term profits and ignoring the ethics. Mandoff
in this case is a specific example. Becau se of the huge amount of money he scamed
and used money of other investors unjustly. His other partners in crime are also stood
before the choices. On the other hand, they will gain a lot of money if they keep
silence and lend Mandoof a hand. But on the other hand, they will gain nothing,

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however keep the ethical norms. At the end, these people choosed the first way by
selling out their moral norms to take economic values.
Finally, Legal responsibility vs Ethic responsibility will be mentioned here.
The law provides an important guide to ethical decision making. But ethical norms
and legal norms are not idential, or in other words they are not always agreed.
However, a commonly accepted view, a business fulfills its social responsibility
simply by obeying the law. In this case, Mandoff is remarkbly law violation when
he applied Ponzi scheme to scam many people. Of courses, as we analyzed in detail
above, he also violated ethical norms. Therefore, he was sentenced 150 years in
prison.
The other partners in crime of him also violated in both two norms when they
recognized the faults in Mandoff’s actions but they still covered it and helped him
to reach his goals.
In conclusion, business ethic is a process in giving responsible decision
making. Whenever giving any decision, people must consider carefully among
many norms and responsibility that related to that decision. Because each decision
will not only affect the people who make decision, but also others, even society. In
this case, it pointed out a fact that Ethic Failures = Business Failures. It is an
expensive cost for unethical behaviors.
Exercise 3 - Piggybacking
 Background of concerned firms in the case
With the development of the Internet, many people pay a monthly fee to use wi-fi
service. However, almost of them are not set up password or have low security

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because of some reasons. On the other hand, their neighbors who want to use internet
but don’t want to charge money will tap into their wireless Internet connection and
become Piggybacking. It leads to slow down connection and sometimes apartment
dwellers are hacked by them.
 Ethical issues
According to Kant, piggybacking is seriously intrusion dignity of human being. In
case of virtue ethics, the wifi owner and piggybacking have affected to each other,
as well.
 Analysis
About Kant theory, piggy-back don’t respect wifi owner agreement, they also act for
their own ends and don’t care about wifi owner.
Because the owner don’t set password, piggy-back will feel free to access network.
Then they think that they needn’t to charge money anymore. Someday, when they
can’t access network free, they will try to “steal” network from the other.
 Solution/ proposed module of decision.
Someday, if enough neighbors piggy-back on their neighbors’ wireless access, they
will very angry about that, pay money for many users and using slow internet. It’s
like a insult.
Exercise 4 – FSB WAY
Case summary
The case study comprises of the following parts:

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1. Vision of educational target
 Student – FSBers: good beginners in business, quick adaptability and
success, be a leader in future
 FSB – Elite school: top of business school in Vietnam
2. FSB Way
FSB consists of 5 values:
 4M Methodology: Multi-media and Multi-mode
 Passionate learning and teaching
 Innovation and Practicability
 ICT-based environment
 Be leading
Multi-media and Multi-mode (4M) is better than Hollywood teaching (7 activities).
4M has in-class activities and extracurricular activities.
3. 4M – In class
 Enhanced Hollywood
 5 mental experiences for students: happy, sad, regret, angry, revengeful
 6 main strategies: more games, debating, creative room, ICT
application, educational tactics and oral examination.
4. 4M – Extracurricular activities
Extracurricular activities have 7 main strategies: imitate room, clubs, online
business, business beginner class, online golden board, OJT, guest speaker program.

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5. Conclusion
FSB Way: 5 values
4M: Hollywood in class and Extracurricular activities
Ethical issues
Both FSB’s culture and style of leadership from FSB’s CEO apparently have
influence on ethical issues of the whole FSB and FSBers.
1. Values-based cultures:
 Students oriented
 Lecturer oriented
 Flexibility
2. Ethical leader:
 People oriented
 Traits of ethical leader
3. FSB goals:
 Best choice for students
 Attracting excellent students
 Attracting funds and investment to for strong development, business
consultant.
FSB’s culture is recognized as values-based culture. It is said that FSB is a good
place where people can find out and develop themselves. Indeed, FSB creates

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various opportunities for people working, studying and entertaining following the
way they like.In FSB, studying normally doesn’t make student feel stress, both FSB
teachers and students negotiate together to find out the best and most suitable way
to teach and study; for example, both teachers and students see every subject as a
game, teachers let game be carried out and controlled by all students in the class;
which makes students become the main subject, they create the way to acquire
knowledge and use it in concrete situations by themselves, and it helps them to
remember easier. When studying, students can discuss with not only teachers but
also other friends. Students can present their thinking, evaluations without any
prevention. Teachers here always respect students’ ideas, and invite them to support
and ask questions all the time.
Exercise 5 – KOTO
 Background of concerned firms in the case
KOTO stands for “Know One, Teach One”: Learning should be passed on;
knowledge is there to be shared. This is the essential idea of KOTO’s founder,
Jimmy Pham, a Vietnamese-Australian who more than 10 years ago opened a
training center in hospitality in Hanoi, giving disadvantaged youth the possibility to
learn and strive in their lives. As a social enterprise, KOTO has trained over 400
students. Foundation arm in that focuses on raising funds to support its cause through
charitable activities and initiatives.
 Ethical issues
The main issue is using the disadvantaged youth or street children for purpose in
which not only for helping them, but also like marketing plan in order to attract
customers.

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 Analysis
In this case, the company follows corporate social responsibility. In particularly,
following philanthropy. This model is different from other entrepreneurs and NGO
by "love of humanity" in the sense of caring for, nourishing, developing, and
enhancing "what it is to be human" on both the benefactors' (by identifying and
exercising their values in giving and volunteering) and beneficiaries' (by benefitting)
parts.
 Solution/ proposed module of decision.
The company should grasp thoroughly this issue, don’t make people think badly
about idea of stating up the business.
Exercise 6 – Toyota, the CEO, the Assistant, and Inaction
I. Background of concerned firms in the case
Toyota Motor Corporation, abbreviated TMC, is a Japanese multinational automaker
headquartered in Toyota, Aichi, Japan. In 2010, Toyota employed 325,905 people
worldwide and was the third-largest automobile manufacturer in 2011 by production
behind General Motors and Volkswagen Group. Toyota is the eleventh-largest

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company in the world by revenue. In July 2012, the company reported it had
manufactured its 200-millionth vehicle.
II. Ethical issues
Sayaka Kobayashi’s boss had been making romantic and sexual
advances to her for 3 months, the lawsuits asked for $40 million in
compensatory damages for her career and $190 million in punitive
damages.
III. Analysis
She sent a letter to the senior vice president of Toyota North America
to notify that her boss’ harassment. Kobayashi filed a lawsuit in New
York with full details that had the tabloids clucking over the lurid
details.
IV. Solution/ proposed module of decision.
Need to consider about U.S harassment laws for international
executives.
Exercise 7 – Bloggers
1. Introduction the case
Frenkel - founder of a popular blog “Troll Tracker”, who was claiming to be a patent
lawyer with address in Afghanistan. Cisco is the company with brand which was
consulted to public to the market by Frekel. One day, Cisco was sued by other
companies who were licensed copyright with Cisco brand. As one anonymous
investor, Frenkel said that people who had sued him and Cisco had repaired the Cisco

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licensed to earlier and if someone can shot and kill 2people who was said in above,
as a good lawyer, he will defend into manslaughter or something like that to mitigate
the guilty.
Till through a subpoena to Google, they found that Frenkel had his blog hosted by a
server in Korea and put down his address as one in Afghanistan.
The lawyers have sued both Frenkel and Cisco for defamation. Cisco has taken full
responsibility for the issue but note that Troll Tracker played an important role in
highlighting issue.
2. Define the ethical issue
- Violations from the management and provide server in update
information which facilitated Frenkel become an anonymous business who
can said everything he want as public in his blog.
- Many companies maintain or depend on the using blog to manage
whether they know clearly about risk when using blog to manage through
Cisco event or sth like that. Sometime, because of hatred they post some
information to public in blog to damage company images.
- Load the false or private information on blogs which affect
company fame.
- Mismanagement of company information
3. Ethical philosophy analyze:

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- Utilitarianism: Frenkel’s behavior had violations utilitarianism
because he just decides based on his benefit not based on overall
consequences.
- Deontological: violation not only utilitarianism but also
deontological ethics because he act not on the basis of moral principles
(copy right, fake information about patent lawyer….)
- Privacy protection : disrespect for privacy ( load private
information on blog contents)
- Challenges posed by Technology usage: because of lack of
understanding about information management, many companies and
lawyers are defamed by false information that spreads on the net.
4. Recommendation for effectively ethical monitoring:
- Internet-use monitoring: develop a policy : When posting a
comment or piece of information or opinions that affects the company,
users should note they work for that company.
- Monitor information at workplace: all information would be
managed but announced to employees in advance and all employees would
have access to this source of information.

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Exercise 8 – Cheerios and cholesterol
1. Introduction the case
The Food and Drug Administration (FDA) warned General Mills about the content
of its ads for Cheerios. Cheerios is a cereal. General Mills claims that Cheerios was
“clinically proven to help lower cholesterol.” The ads claim that it could reduce bad
cholesterol by 4 percent in six weeks.However, the FDA pointed some analysis of
the studies is not true. One commentator commented wryly that those in the ads
appear to have conquered heart disease.
Other companies have been facing the same increasing scrutiny on their health
benefit ads claims as FTC claim that Frosted Mini- Wheats improve children’s
attentiveness by 20 percent.
2. Define the ethical issue
- General milk made hype ads about their product- Cheerios.
- This ads bring good moods for viewer however it made customer
have trend buy their product base on emotion not rational
- This ads can make a bad precedent for follower.
3. Ethical philosophy analyzes:
- Ultitarianism: in this issue, General Mills is ethic, because they
bring benefit for both social and their own company.
- Deontology: not satisfy because it infringe law and job ethic.

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- Human right: not ethic because their ads make customer confuse
and satisfy about emotions and make trend to buy Cheerios.
- Virtual ethics: if this ads effective, it makes the others want to copy
this concept, it’s not good for customer.
4. Recommendation for effectively ethical monitoring:
- Give exactly what they research on the ads, it makes customer trust them and bring
both benefit and solve ethics problem.
-Give a public apologize, make sure their message obviously, Cheerios is not treat
anyone, and it just not meet what ads said.
Exercise 10 - Norsk Hydro – Norway
I. Case summary
Norsk Hydro operates globally in environmentally sensitive and technically
complex fields such as plant nutrients, offshore oil and gas, aluminum, magnesium,
and petrochemicals
 the 'repairs phase‘: cleaning up local pollution and amending 'sins of the past‘
The ‘repairs’ phase did not result from a business strategy, nor were its projects
closely
linked to business activities. Norsk Hydro had long been a ‘closed’ company
regarding environmental issues
 the 'preventive phase‘: developing and installing 'cleaner technology’

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The second phase made environmental work a key part of operations, integrated
throughout the organization. Clear lines of responsibility were established, goals set,
reporting improved, results analyzed and organizational expertise developed
 the 'business development phase‘: analyzing and minimizing the environmental
impact of products throughout their entire life cycle.Environmental care: an
important strategic business issue through Life Cycle Analysis: enabled
application of the most advanced knowledge. The company also sought to
establish closer links between customers, business needs, and R&D activities.
 the 'globalization phase': addressing the challenges of globalization of economies
and markets, as well as global environmental issues
II. Ethical issues
1. Three pillars of sustainability: economic, environmental and ethical
sustainability
2. Environmental protection is in Norsk Hydro’s operations
3. Create efficient management of natural resources, reduce waste and emission
while taking great care to insure a kind operation toward humans and
environment
4. Applying of theories
Utilitarianism
 Norsk Hydro's environmental work evolved in 4 phases to rectify
environmental ills:
• Phase 1, the 'repairs phase' : clean up local pollution and amending 'sins of the
past‘

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• Phase 2, the 'preventive phase‘: develop and install 'cleaner technology
• Phase 3, the 'business development phase‘: analyze and minimize the
environmental impact of products throughout their entire life cycle
• Phase 4, the 'globalization phase‘: address the challenges of globalization of
economies and markets, and global environmental issues
→ Norsk Hydro maximizes the positive impact on communities and the natural
environment.
Deontology
• Comply strictly with the provisions of the Government and the Kyoto Protocol
about environmental protection
• In Phase 4, the ‘globalization phase’, Norsk Hydro began addressing the
challenges of globalization of economies and markets, as well as global
environmental issues such as climate change and the Kyoto protocol
→ Follow legal of Government and international
Exercise 11 – AIG
1. Summary
American International Group (AIG) is one of the largest and most respected
insurance companies in the word
• AIG is one of the most controversial players in the 2008 – 2009 financial crisis

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• The government rescued AIG to help many other global financial institutions
that depended on AIG
2. Ethical issues
• Capital: AIG did not have enough mortgage collapse when they sold the
CDSs.
• Investigation: Cassano and Sullivan reassured investors and auditors that AIG
researched and they confidence in their evaluation methods.
• Bailout: It was reveled that $ 165 million of the bailout money went to bonuses
of the employees of the Financial Products unit
3. Applying of theories
Conflict of interest
• It exists where her or his personal interests and/or obligations conflict with
those of others.
• Managers focus on short-term financial gain served their personal interest.
They received millions for selling CDSs
• Utilitarianism: The government bailouts give to AIG, it is not only preventing
AIG bankruptcy, and it also prevents the other financial institution collapsed
which may make the crisis in 2008-2009 had been worse. Thus, it brings the
best for larger number of people. However, from public taxpayer perspective,
their money used to help the superior class, which is unfair.
• Kant theory: Greenberg CEO of AIG was manipulated the financial statement
that treat to the customer autonomy to know about the financial information.
In another case, when the financial meltdown occurred, AIG audit know the

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market indicators that AIG swap should be lower. However, the AIG
executives continued reassure the investors that they indentified all the area
of loss, and confidence in their evaluation. That had misled the investors.
• Virtue ethics: AIG culture was focus on a reward that placed little
responsibility on executives that made very poor decisions. It raise opinion
that they don’t need contribute to company development and still get rewards.
• Deontological theory: AIG ignored their obligation to the shareholders and
clients by continuing extending the issued risk what the company could not
pay back and waste money for bonuses. Moreover, they depend too much on
computer model that fail to take into account of real risk
Exercise 12 – Enron
 Background of concerned firms in the case
Enron Corp was an energy company that was incorporated in Oregon in 1985. In
2001, Enron Corp was the world largest energy company. It holds 25% of all trading
contracts in the world. It became the largest energy trader in the world, with $40
billion in revenue in 1998, $60 billion in 1999 and $101 billion in 2000 but its
success was based on magnify profits and accounting fraud.
 Ethical issues
When discussing mark-to-market accounting, Jennings explained what mark-to-
market accounting was and then proposed that the investors had no idea whether the
company adopted the conservative or aggressive assumptions, which was the way
Enron utilized the non-transparent information to beautify its financial statement. In
terms of off-the-books entities, Jennings described it as another trick Enron played.

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Enron used these entries to maximize its income and minimize its liabilities. Enron
even used a related company called LJM Cayman, L.P to transfer the profits to Enron
and suffer liabilities for Enron.
 Analysis
Utilitarianism theory: Enron made its financial statement analysis difficult to read,
minimal public disclosure to stakeholders to hide its wrongdoing just to gain more
investment to maximize the profit of their company while pushed many investors of
them into risk without knowing that, which are considered to be the greater number.
Deontological theory: Enron violates the legal rules when did not disclosure risk of
hedge fund in SEC document and have their independent auditors to have a close
relationship with their company.
Kant theory: The investors and employees of Enron have the right to know the exact
financial information of Enron. Enron hiding its financial situation mistreated their
autonomy.
Virtue Theory: If the wrongdoing of Enron was not explored, criticized, other
company might see that action is ethical and apple Enron’s “innovative” accounting
method, or so called “aggressive” method for their company because it seems to be
harmless, legal and brings about a lot of benefit for their companies.
 Solution/ proposed module of decision.
It increased the independence of the outside auditors who review the accuracy of
corporate financial statements, and increased the oversight role of boards of
directors. Financial statement should be clearly. Using independent directors to
control power of CEO and it also protects protect the benefit of shareholders.

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