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Business Efficiency and Ethics presents both the theory of business efficiency and ethics, and a wealth of case studies based on practical experience. This unique perspective offers a framework for identifying this behaviour and reestablishing appropriate business behavior standards.

Inhaltsverzeichnis

Frontmatter

1. Ethical Values, Efficiency, and Effectiveness

To the ancient Greek philosophers areté (virtue) meant excellence, bound with the fulfillment of purpose or function. The way of reaching one’s full potential is efficiency, and efficiency depends on the job one does and its deliverables. You cannot be efficient unless you take the trouble to learn the job and then be willing and able to deliver an honest day’s work prior to asking for compensation of your efforts.
Dimitris N. Chorafas

2. Senior Managers Are in the Frontline of Efficiency and Ethics

After the fall of Enron, practically everyone is agreed that board members, chief executives, chief financial officers, and other senior managers must be held accountable for the financial information their company releases, including the reported profits and losses. The Sarbanes-Oxley Act, which came on the heels of Enron, WorldCom, and other debacles, specifies that there should be significant penalties on those who falsify financial reports, in addition to the punishment by the markets.
Dimitris N. Chorafas

3. Social Ethics and Rising Corruption

Nearly all governments are involved in providing health services, pensions, disability compensation, and unemployment insurance to the citizens of their country. Western nations are heavily committed along these lines, characterizing a social net that is generally considered as live evidence of social ethics. They explicitly define minimum coverage and finance the associated programs with both revenue streams from taxation and by increasing the public debt.1
Dimitris N. Chorafas

4. Ethics and Efficiency in Public Administration

Cicero (106–43 BC), the Roman senator and orator, had said that society is made by eleven professions: The poor who works, the rich who exploits him, the soldier who defends both of them, the taxpayer who finances the previous three, the tramp who rests for the four, the drunkard who drinks for the five, the banker who swindles for the six, the lawyer who deceives the seven, the medical doctor who kills the eight, the undertaker who buries the nine, and the politician who rides on the back of all ten professions.
Dimitris N. Chorafas

5. Be Ready for the “Unthinkable”

Part of the basic philosophy of sound management is that moment by moment every “good thing,” every acquired asset, every business relationship stands on the razor’s edge of change. Often, though by no means always, the aftereffects of that change are unpredictable, while their timing and direction are not evident in advance. This is particularly true when one or more political decisions trigger that change. Still prognostication is vital; hence the need for forecasts.
Dimitris N. Chorafas

6. Ethics and Efficiency in the Financial Industry

Ivar Kreuger started his career as a builder. At a time when no other entrepreneur would undertake to construct a house or factory in the cold climate of northern Sweden in winter, Kreuger made his mark by putting in place a wooden structure bigger than the projected construct so that men and materials would be in a protected environment. Then, having made a name as an engineer, he turned his attention and his imagination to finance.
Dimitris N. Chorafas

7. Libor Scandal, Derivatives, Gold Deceits, and the ETFs

Libor stands for the London Interbank Offered Rate, which has been, for years, a generally accepted interest rate benchmark. Unveiled in 2012, the scandal associated with it caused turmoil in the financial industry and it was censured by the Bank of England, the New York Federal Reserve, and other central banks. What started as a misdemeanor with Barclays developed into a wide conspiracy with commercial and investment banks forced into costly settlements.
Dimitris N. Chorafas

8. The Strategy of Financial Gambling

With listed assets of $41 billion, MF Global is a large American broker-dealer headed, since 2000, by Jon S. Corzine, a former chairman of Goldman Sachs as well as ex-senator and ex-governor of New Jersey. Announced on October 31, 2011, the bankruptcy of MF Global has been the biggest failure of a financial company in America since 2008.
Dimitris N. Chorafas

9. Barings: The Crashing of a Venerable Bank

The most depressing thing about the crushing of Barings is that while the bank’s derivatives exposure had reached for the stars its top management believed that it had finally discovered a risk-free way of making profits. The bank assumed more and more exposure to options and other derivative financial instruments, while the evaluation of assumed risk was fuzzy or nonexistent. Toxic waste was interpreted as a sound investment and a secure good fortune—till all hell broke loose.
Dimitris N. Chorafas

10. Parmalat: The Hedge Fund with Dairy Products on the Side

Theoretically, Parmalat was a fast-rising dairy products company accepted as being one of the stars of the so-called Italian economic miracle. Practically, more than anything else, its business was speculation and financial gambling, that ended up as a major scandal while those responsible escaped prosecution as usual.
Dimitris N. Chorafas

11. Ethics and Efficiency in Manufacturing and Services

In the 1980s Eastman Kodak, then one of the two global leaders in the photography industry, made a study on corporate survival, taking two kinds of companies as samples: One included companies that had prospered for decades in a competitive business environment and the other included firms that had lost their market and disappeared. A quarter century later, in the early 2010s, Kodak itself fell on its sword while Fujifilm, its archrival, prospered.
Dimitris N. Chorafas

12. Ethics, Opportunities, and Risks with Information Technology

Albert Einstein once said he feared the day that technology will surpass our human interaction; when this happens the world will have a generation of idiots. While that day has not yet arrived, what confronts us at present is a swarm of software challenges and their aftermath. The more sophisticated a software, the greater the opportunities it opens up but also the risks associated with its implementation—from crashes to security.
Dimitris N. Chorafas

Backmatter

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