1. Explain how the businesspersons approach to ethical decision-making in business reflects one of the ethical theories we have covered (utilitarianism, Rawls Theory of Justice, Nozicks Rights Theory, Objectivism, The Ethics of Care, Integrative Social Contracts Theory, or Virtue Ethics) based on the content of the selected businesspersons essay and based on specific examples from their statements and actions in business over the course of their career.Operating and sustaining a business that will grow into an empire is not an easy task, and many have tried and failed. Leaders responsible for handling the management and the board of directors of an organization must recognize the links between ethics, long-term profits, and clear policies that promote performance. Developing ethical decisions is a daunting task for a leader, and it involves conflict between the needs of the individual against the organization. Leaders faced with such a kind of a dilemma opt to use a strategy based on norms and values. Every year, Forbes makes a list of 100 top business minds that have revolutionized the world. One of the leaders on the list is Warren Buffett. Buffett is one of the wealthiest billionaires in the world, famous for his investment in various businesses and philanthropic activities. Buffett has shown an interest in investing since he was a young man (Forbes, 2017). His father was a local stockbroker, and his job influenced Buffett to develop an interest in numbers and investment strategies. Buffett has invested in various businesses and now owns Berkshire Hathaway, which buys companies that have good performance and adhere to various ethical standards. This essay is a reflection of Buffetts ethical decision making using the utilitarian theory in different businesses.
According to Eggleston (2012), utilitarianism is an ethical theory that focuses on how the rightness and wrongness of acts affect the maximization of overall wellbeing. Utilitarianism is defined by five characteristics, consequentialism, maximization, individualism, aggregation, and welfarism. Of the five components of utilitarianism, Buffett has utilized welfarism, maximization, individualism, and aggregation. For instance, maximization views that it is desirable for a state of affairs to be as great as possible. Buffetts journey is an indication of a possibility that Buffett utilized maximization to grow his empire. In 1956, Buffett at the age of 25 started a limited investment partnership with 100 dollars. The partnership consisted of seven limited partners who invested 105,000 dollars each. Buffetts desire to maximize his business allowed him to compound money for thirteen years at an annual rate of 29.5 percent (Hagstrom, 2005). He managed to outperform Dow Jones, and his business reputation grew at a significant rate. The investors were convinced and asked him to manage their money. Buffett began buying controlling interests shares in various private and public organizations. He later bought shares in Berkshire Hathaway, which was an ailing textile industry at the time. Now, Berkshire is a multinational conglomerate holding company that has earned Buffett a significant amount of revenue. Buffetts desire to maximize earnings to create an empire that will produce more income in years to come can be viewed as a utilitarian approach to business ethical decision-making.
Individualism states that the sources of value in the world are individuals. Buffett seems to utilize individualism in making his business decisions. For instance, while starting his limited partnership company, he relied on other investors to invest their money in his company. Buffett, now as the CEO of Berkshire Hathaway, uses individualism to assess and buy companies that have a good employee culture and performance. Buffett values the importance of the employees in an organization, and that is why he evaluates the culture of a business, especially how it relates with its employees and the management style of the CEO then he decides whether to buy the controlling shares of that company or not. A classics example of Buffetts individualistic approach is evident when he restored the organizational reputation of Salomon Brothers after a devastating integrity failure. Buffett took over as the CEO of Salomon Brothers and designed a new corporate culture that resurrected the organization (Taback & Ramanan, 2014). Buffett reached out to the entire workforce of the company and addressed various internal issues. From the example, Buffett first viewed the importance of the employees of Salomon Brothers and put effort towards eliminating their problems; therefore, such is an individualistic approach of ethical business decision-making.
Since utilitarianism is a theory that focuses on the rightness and wrongness of acts, it is possible that Buffett is morally concerned about the wellbeing of people and organizations. Apart from his desire to make profits from Salomon Brothers, his scope of moral concern also led him to purchase a 100 percent controlling rights of the organization. His ethical concern is evident when he went public by writing a compliance note regarding the welfare of employees of Salomon Brothers that they are now rejuvenated and ready to abide by the laws of the land (Talman & Ramanan, 2014).
Utilitarianism involves aggregation, which is the formation of some things into a cluster (Eggleston, 2012). Buffett has utilized aggregation method to grow his business revenue. Berkshire Hathaway focuses on controlling interest shares of top performing companies such as GEICO, which is the seventh largest vehicle insurer in the United States (Cunningham, 1998). The purchase of top performing organizations, when put together, increases the revenue of Berkshire Hathaway exponentially. One can view aggregation as a proper strategy for boosting a companys growth in revenue. Buffetts strategy of purchasing these different businesses is an illustration of ethical decision-making that leads to positive results in terms of profits that assist the investor and also the community via donations. Welfarism is another characteristic of utilitarian theory that focuses on the well-being and happiness of an individual or individuals. It views that the goodness and badness of consequences depend entirely on facts about wellbeing (Eggleston, 2012). Buffett is a man who cares for the welfare of the people. Buffett now uses part of his wealth to fund charities. Buffett has accumulated over 50 billion dollars of wealth in forty years. He now wants to donate a significant percentage of his wealth to foundations that function to eradicate various social problems such as poverty and diseases such as HIV. Buffett gives a part of his money to the Bill and Melinda Gates Foundation and other three charities run by his children (Daft & Samson, 2015). Such an act of donating almost ninety percent of his wealth portrays a man who cares about the welfare and wellbeing of other people. The ethical business decisions that he has made over the past years have also prompted him to divert to charity work.
Explain whether and why you find the businesspersons approach to ethical decision making in business admirable or not.
Buffett is one of the wealthiest investors in the world. He has managed to amass all his wealth by buying shares of various companies and obtaining a hundred percent control of the businesses. Buffetts approach to ethical decision-making in businesses is impressive because Buffett knows how to select the best companies to buy. He is keen in observing the organizational culture of the business and looks for a trustworthy management that will ensure an increase in revenue for years. What makes his business approach admirable is his humble beginnings when he was a young stockbroker trying to sell company shares. At a young age, he managed to set up a limited partnership company and convinced several investors to invest in the business. The investors enjoyed the profits they obtained from Buffetts company. Buffett was not greedy and ensured he took a small percentage of the benefits, and the rest would go to the investors. The investors trusted Buffett would invest their money wisely because they believed him since he was not acquisitive and offered financial transparency in the business. Greed and the lack of transparency are behaviors common with leaders in charge of large companies. Buffetts young age ideas have grown with him and built him an empire that is so competitive than other successful businesses. Buffetts double-barrel approach of investing in companies that have profound economic characteristics and outstanding managers is an approach that should be emulated by aspiring investors. Buffetts business strategy proves that he is a man of the people who care about their wellbeing. He does not invest in a company to obtain profits, but he is also interested in the human resource aspect of the organization. Buffett appreciates the labor of the employees and their dedication to their work. Buffetts buying of Salomon Brothers is a perfect indication of his commitment towards the people by creating a worthy organization based on ethical principles. Berkshires acquisition of Geico, which is one of the largest auto insurance companies in the United States, proved to the American citizens that Buffett is a man who cares for the well-being of the nation. Before purchasing Geico, the auto insurer used to charge an exorbitant amount of money to its customers annually. After Berkshire acquired the company, Buffett reduced the price and increased the market share of the company. In that example, Buffett saved money for the Americans, and at the same time increased the value of the company (Forbes, n.d.). Therefore, the acquisition was a win-win situation for both the people and the investor. Such a philosophy is admirable and rare to find because most investors focus only on the profit side and forget about the importance of the community. Additionally, Buffetts business philosophy is also an aspect to be admired by a majority of people. After amassing a significant amount of money from his hard-earned businesses, Buffett decided to give back to the community by donating almost 90 percent of his wealth to charity. He funds three charities owned by his children and the Melinda Gates Foundation. To give back to the society, especially a considerable amount of wealth is an admirable trait not common amongst people. Buffett communicates the message that it is kind to give back to the society and help the needy to transform their lives and live a life free of poverty.
Cunningham, L. A. (1998). The essays of Warren Buffett: Lessons for corporate America. Cunningham Group.
Daft, R. L., & Samson, D. (2015). Fundamentals of management: Asia Pacific edition pdf. South Melbourne, VA: Cengage Learning Australia.
Eggleston, E. (2012). Utilitarianism. Encyclopedia of Applied Ethics, Second Edition, 4, 452-458. DOI: 10.1016/B978-0-12-373932-2.00220-9.
Forbes. (2017). Greatest living business minds on investing: Warren Buffett. Retrieved November 08, 2017, from https://www.forbes.com/100-greatest-business-minds/person/warren-buffett
Hagstrom, R.G. (2005). The Warren Buffett way (2nd ed.). Hoboke, NJ: John Wiley & Sons, Inc.
Taback, H., & Ramanan, R. (2014). Environmental ethics and sustainability: A casebook for environmental professionals. Boca Raton, FL: Taylor & Francis Group.
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