Introduction
Credit and financial managers face difficulties in making monetary decisions. Applying business ethics and trying to meet the interests of the business at the same time proves difficult. In most cases, conflictions arise in the struggle to adhere to moral ethics, legal considerations, and the interests of the business. Adhering to ethically correct actions would most probably lead to the demise of a company. In this case, the essay considers Elaine, a senior finance manager of United Banc Corporation (UBC) who holds her ethical standard so high. Elaine is in charge of signing off huge loans that range from $500,000 to $40 million.
The vice president has to be involved in signing off loans exceeding $40 million. Elaine has more often declined to sign off loans because of her moral stand. At first, Elaine was applauded for her moral outrage, but a time has come when her morals have negatively affected UBC’s bottom line. Dennis, Elaine’s husband, also faces a great financial challenge where he rejects a proposal that would earn him millions of dollars because of his highly esteemed ethical and legal considerations. In this view, this paper analyzes Elaine and Dennis’s decisions, their ethical and legal considerations and the implications they have on UBC and their family.
In this context, Elaine makes a number of decisions in disapproving loans. Each decision is associated with advantages and disadvantages as discussed below.
Disapproval of the $10 million loan request by Graphco Inc
- Advantage: Elaine stood to defend her moral stance. This shows that her interest is not on the associated monetary benefits, but she is has reservations regarding the morality of being involved in hazardous and addictive tobacco products.
- Disadvantage: Elaine rejected the loan despite there being nothing wrong with the financial statements. She made UBC lose precious income as Graphco had offered to pay an additional interest rate.
Disapproval of the loan by a Canadian Company
- Advantage: Elaine stood by the U.S policy against Cuba. She adhered to the legal considerations of the Helms-button amendment on what should not be done with Cuba thus avoiding the risk of offering unsecure loans.
- Disadvantage: It was an unfair decision since a Canadian firm was the borrower.
Disapproval of the $50 million loan requested by Electrode international
- Advantage: Elaine was conscious of the abnormally high profits over the past two years. A business with such financial statements brings in suspicion. She disapproves the loan after finding out the monopolistic strategy employed by the company to increase prices and molest customers, thus escaping the agony of offering unsecure loans. Either way, Elaine adhered to the company’s rule, as the amount needed the vice president’s approval.
- Disadvantage: This decision denied UBC a chance to earn profits. Elaine should have directed the matter to the vice president instead of disapproving the loan.
Disapproval of the $40 million loan by a Brazilian company to harvest a rain forest
- Advantage: Elaine stood diligently against destruction of the environment, which prevented the company from conflicting with the ministry of environment.
- Disadvantage: Elaine denied UBC massive profits as the Brazilian company willed to pay 2 points over the existing interest rate. The company went ahead and obtained the loan from a competitor, and the UBC felt the pain of losing massive profits to their competitor.
Ethical and legal considerations
While Elaine focuses so much on adhering to ethical considerations, she faces a number of legal considerations. Denying Graphco the $10 million loan after finding no glaring problems in their financial statements is illegal. Moreover, denying the Canadian firm a loan due to its cigar exports from Cuba is illegal as Elaine had a weak standpoint of disapproving the loan. Elaine has set very high ethical morals with a negative stand on tobacco products (Ferrell, Freadrich, and Ferrel 171). Elaine’s ethical and legal considerations have caused UBC to lose precious income. Elaine’s dilemma is the ABCO case reflects her incompetence. The dilemma Elaine faces is choosing between lowering her moral standards and approving the loan, or disapproving the loan; another gross error that would make UBC lose some considerable amount of cash to its competitors.
Dennis, Elaine’s husband sets his standards high as well. His nicotine and caffeine export business has fallen short, as the drugs are considered problematic. The manufacturing firm decides to employ a business strategy to penetrate into the market and secure a market share by lowering prices at first instance and rising them gradually afterwards. He rejects the deal that would otherwise earn him millions and the firm goes to another company to pursue the same. Dennis’s legal and ethical considerations have affected his financial stability. His commissions are slipping thus crimping his cash flows. Dennis and his wife stand a chance of being financial unstable, losing their house, and having difficulties in servicing their bills.
Conclusion
From this situation, the moral lesson learnt is that at times one may have to go against certain moral and ethical standards. It is noteworthy that the main aim of any business is to generate profits alongside making ethical and legal considerations.
A stringent analysis is necessary for every decision made by a businessperson. Dennis rejects a deal of a rapid market penetration strategy that would earn him millions without forecasting the implication of his rejection afterwards. Each decision by Elaine implies her incompetence in the position of a senior finance manager of a credit company. She keeps her moral standard so high at the expense of the company. Unless Elaine decides to adjust her moral standards, UBC is at the risk of collapse, and it would rather fire Elaine and hire a competent senior financial manager.
Works Cited
Ferrell, Odies, C., John Freadrich, and Linda Ferrell. Business Ethics: Ethical Decision Making and Cases 7th ed. New York: Mifflin Company, 2008.