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GUJARAT TECHNOLOGICAL UNIVERSITY
MBA - SEMESTER–IV • EXAMINATION–SUMMER • 2014
Subject Code:2840003 Date:21-05-2014
Subject Name:Business Ethics andCorporate Governance (BE&CG)
Time: 10.30 am - 13.30 pm Total Marks:70
Instructions:
1. Attempt all questions.
2. Make suitable assumptionswherevernecessary.
3. Figuresto the right indicate full marks.
Q.1 (a) Ethisphere Institute,USA hasrecently publishedarankingof World’smostethical 07 companies.
Out of 144 companiesfrom41 industries,all overthe world,thereare twoIndiancompanies,Tata
PowerandWipro inthislist.Takingthisas a background,Discussthe importance of ethical practicesfor
businesscorporationsof today.Canbeingethical be agoodstrategyfora successful company?Justify
your answerwithrelevantexamples.
(b) Define corporate governance.Discussthe nature,evolutionandmechanismof 07corporate
governance practicesinthe businessworld.
Q.2 (a) 1. BrieflyexplainKohlberg’ssix stagesof Moral Development 03
2. Write a brief note onRecommendationsof the NarayanamurthyCommittee report 04
on Corporate Governance.
(b) Discusswithexamples,the Corporate Governance practicesinUS,Germanyand 07 Japan,
outliningsimilaritiesaswell asdifferencesamongthem
OR
(b) Explainthe salientfeaturesof Corporate Governance practices inIndia 07
Q.3 (a) Explainthe meaningandobjectivesof Corporate Social Reporting.How doesithelp 07
inimprovinggovernance of companies?
(b) 1. Discussthe use of Creative Accounting bycompaniesforfalsifyingdataand 03
cheatingshareholders.
2. List some of the importantrecommendationsof the GangulyCommittee report 04
for improvingCorporate GovernanceinBanks.
OR
Q.3 (a) Define Whistleblowing.UnderwhatconditionsisWhistleblowingjustified?Discuss 07
WhistleblowinganditseffectonTrustinan organisational context.
(b) 1. Brieflylistandexplainthe stepsinEthical DecisionMaking 03
2. What isa twotierboard structure?How doesit affectCorporate Governance in 04
companies?
Q.4 (a) How are IndependentDirectorsinthe Board,differentfromotherDirectors?Discuss 07
the role of IndependentDirectorsinensuringgoodCorporate Governance.
(b) The collapse of the WorldCom, Tycoand Enron inUS ledtoan importantpiece of 07
legislationwhichhasdrasticallychangedlawsrelatedtocorporate governance inUS

2. and all overthe world.Listand explainsome of the importantfeaturesof thisAct.
OR
Q.4 (a) What are the mainrequirementsof the revisedClause 49of the ListingAgreementas 07
givenbySEBI forensuringgoodCorporate Governance
(b) List andexplainthe importantBoardsubcommitteesandtheirrole ineffective 07Corporate
Governance.
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3. Q.5 (a) Readthe followingcase andanswerthe questionsbelow it.
SandozNutritionCorporation is a subsidiary of the Swiss pharmaceutical giant, Sandoz Ltd.
Sandoz,basedin Minneapolis, Minnesota, began manufacturing Optifast 70, a liquid meal-
replacement weight loss program in 1976. The six month program is designed for people
who are at least 30 percent or 50 pounds over their ideal weight. Health problems often
accompanyexcessive weight.Optifastprovides an opportunity to get rid of the weight fast.
The Optifast program is only available through doctors, hospitals, and medical clinics; a
prescriptionisrequiredtopurchase the products.The Optifastprogramtypicallybeginswith
the patient being placed on 420 to 800 calorie diet per day of liquid protein for 12 to 16
weeks.Calorie intake isthenincreasedto1000 or 1200 caloriesperday forthe remainderof
the program. The total cost is between $1400 and $2800.
Optifast sales grew slowly following its introduction as the medical community and
consumers became aware of the program. Sales continued to build slowly until mid
November1988. Then Oprah Winfrey announced on her TV talk show that she had lost 67
pounds using Optifast. She appeared on the program in size 10 jeans to prove her point.
Here was a celebrity endorsing Optifast without being asked for or paid! Within hours
Sandoz received more than 200,000 phone inquires about the Optifast diet program.
The firmdoesnot publishsalesfigures,buttheyforecastedasales increase of from 25 to 30
percent during the six weeks following Oprah’s announcement.
In 1989 Sandoz launched a print advertisement program, mostly in professional
journals. Its promotional brochure and ad claims included: (1) “ The one that’s
clinicallyprovensafe andeffective”and(2) “You can call the Optifastprogramtoday,
and have all youneedto control yourweightforthe restof your life.”
Unfortunatelyfor Oprah, she regained 17 pounds during the first year after she
completedthe Optifastprogram.Studiesatthe Universityof Pennsylvaniasuggested
that people whoundertakequickweightlossprogramssuchasliquiddietsare likelyto
experience weightrebounds.Studiesatthe Universityof Michiganindicatedthatas
manyas 90 percentof dietersregainweightwithinfiveyearsafterlosingit.Liquid
dietshave alsobeenlinkedwithdizziness,headaches,nausea,gallbladderproblems,
and irregularheartbeat.Thus,there appearstobe some differencebetweenclaimsand
use experience.
1. Were any ethical normsor principlesviolatedbySandoz?
2. Are liquiddietproductsethical products?Justifyyouranswer
3. What moral responsibilitymightSandozhave consideredwhendevelopingits
promotionmessagesforthe customers?
OR
Q.5 (a) Discussthe conceptof Utilitarianismasa theoryof Ethics.List andexplainthe types and
limitationsof Utilitarianismwithrelevantexamples
(b) "There isone and onlyone social responsibilityof business---to increase its profits."-Milton
Friedman.Doyouagree withthe above statement?Justifyyouranswerwithrelevanttheory
and examples.
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