AIG’s corporate culture played a big role in its downfall. They seemed to be more concerned about their own personal gains in the short run than what the effects were going to be in the long run. The company did very poorly and accumulated billions of dollars in the red, and still many top executives were getting paid in cash bonuses after the bailout. These bonuses amounted to almost 2-3 times their salaries they earned before the bailout. AIG’s focus was on the reward system this placed little responsibility on executives who made poor decisions. This resulted in many believing AIG had neither concern nor acknowledgement to changing their ways. Also, shortly after the bailout AIG spent over $300,000 on a conference held in phoenix at a lavish resort. This did not sit very well with stakeholders. AIG executives and upper management time and time again were showing little change in business practices even after the bailout.
AIG’s corporate culture also played a role in its downfall by allowing higher-risk transactions to continue time after time. Even though the risk was...
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Stacy was recently interviewed and reported she is currently stressed with school and work. As a full time college student, she has two part-time jobs and finds it difficult to balance going to school and working. She often feels overwhelmed and feels like she needs a break from everything. She reported that she does not get enough sleep and stays up most night finishing school assignments. On average, she gets about five and a half hours of sleep at night. Stacy is also stressed about receiving a number of parking tickets due to the difficulty of finding parking when commuting to school. She does not report any emotional, psychological, or physical problems. She has developed within normal expectations for a female. She reported she does not have a lot of time to spend with friends but during the summer she will get more time. She does not have a significant other and enjoys being single. She reported no history with any substance or alcohol use. When asked how she described herself she reported she was independent, outgoing, and
Acting arrogant and going against the status quo can come back to bite you big time. Bear refused to participate in the bailout of Long Term Capital Management when the rest of Wall Street participated. This along with their arrogant attitude labeled them as outsiders which helped them thrive up to the time when they needed help. That help was nowhere to be found and they were not invited to the big decisions because they had neglected politics a game that Goldman Sachs and others had perfected.
...o turn their securities back into AIG and demand billions of dollars. AIG was faced with a problem and they had to start asking subsidiary insurance companies to liquidate their pension and insurance holdings so they could cover their losses. If this happened those customers would have received a fraction of the money due to them and would ensure a global crisis. Of all the people complaining about AIG, Goldman-Sachs was doing it the most frequently and the loudest. An audit of AIG showed that they had no liquidity to pay off the bulk of what they owed so the Federal government issued a bail out of $80 billion which later elevated to $200 billion. Goldman-Sachs received the largest percentage of that $200 billion and would have torched the entire country in order to get that money that felt they deserved; and the housing-market bubble was just at the beginning of it.
The case study, `Will GM 's Strategic Plan Lead to Success,` is about how the company General Motors Co. Plans to overcome financial deficits, ensure growth within the company, and remain competitive in the automotive industry. To help with overcoming financial deficits, GM was apart of the bailout, which assisted GM in relieving themselves of almost $40 billion dollars of debt. This restructuring gave GM an advantage over other automakers. Most other automotive businesses, that did not participate in the bailout, still have billions of dollars of debt they must repay in addition to competing with its adversaries.(Kinicki & Williams, 2013). GM made many cutbacks to ensure growth within the company. The reduced the amount models that are in production. They have recognized that some changes need to be implemented with global production in order to remain ahead.
In conclusion, we have realized the significance of including just the netted plan assets and the PBO and not including the full amount of the plan assets and the PBO on the balance sheet. This type of accounting flexibility by the FASB helps companies and ultimately hurts investors who are unaware of the consequences. Usually, the estimated PBO and plan assets are very large in relation to the debt and equity capitalization of the company. The financial situation is therefore skewed and is not represented correctly on the company’s balance sheet which then in turn distorts financial ratios. Investors who are unaware of these accounting rules will end up making erroneous conclusions. Also, this accounting flexibility allows managers to manipulate financial statements whether intentionally or unintentionally by influencing their actuarial assumptions.
General Motors is a long established corporation, which has had a profound affect on the American people and the American economy. The corporation has prided themselves on producing automobiles at the lowest cost, while remaining a style leader of the industry. Bankruptcy with a government buy out in 2009 caused reorganization, a battle to transform, reinventing a new GM corporate culture. In 2014, Generals Motors topped the list as one of the nine most damaged brands. What caused General Motors to get such a tarnished reputation, was it a scandal-laden culture and mismanagement, putting profit over safety with massive cover-ups, or a combination of both?
Stakeholders in Johnson and Johnson were greatly affected in a positive way. Trust was broken and many expected a company failure, but the company was able to turn opinions as well as the crisis around. From adversity, Johnson and Johnson was able to keep the trust of their stakeholders by taking every possible measure to protect and ensure the people involved that the company is reliable, always has the stakeholders’ interest first, and something like this will never happen
...se of pride, participated in deviant acts to reward themselves and the company. All of this behavior occurred under a veil of fantasy imagery, so employees neutralized feelings about unethical behavior allowing them to accept and reproduce it. Facilitated by organizational conditions such as the rank-and yank' system and the wider political economy, this unique configuration of ritualized practices contributed to the company's implosion.
This analysis may not be useful to investors as it focuses on corporate culture and wo...
In modern day business, there can be so many pressures that can cause managers to commit fraud, even though it often starts as just a little bit at first, but will spiral out of control with time. In the case of WorldCom, there were several pressures that led executives and managers to “cook the books.” Much of WorldCom’s initial growth and success was due to acquisitions. Over time, WorldCom discovered that there were no more opportunities for growth through acquisitions when the U.S. Department of Justice disallowed the acquisition of Sprint.
Enron’s ride is quite a phenomenon: from a regional gas pipeline trader to the largest energy trader in the world, and then back down the hill into bankruptcy and disgrace. As a matter of fact, it took Enron 16 years to go from about $10 billion of assets to $65 billion of assets, and 24 days to go bankruptcy. Enron is also one of the most celebrated business ethics cases in the century. There are so many things that went wrong within the organization, from all personal (prescriptive and psychological approaches), managerial (group norms, reward system, etc.), and organizational (world-class culture) perspectives. This paper will focus on the business ethics issues at Enron that were raised from the documentation Enron: The Smartest Guys in the Room, from cognitive moral development to group norms, etc.
Horton (2009, p. 221) argued that this type of government intervention in the free market economy has been a historical mistake that stifled competition and both economic and legal luminaries concurred that this approach is a hindrance to economic growth. It is widely known that the 2008 crisis stemmed from unethical behavior in the subprime mortgage market. The question that FMC leaders faced at that juncture was whether to accept the TARP funds or not. In the following sections, I demonstrate why this was an ethical dilemma, and provides an incisive analysis of how FMC used this defining moment to transform the company into one of the leading ethical company worldwide.
Basis Risk As discussed, Metallgesellschaft AG made use of the ‘stack and roll’ hedge strategy. This strategy brought about basis risk, the risk of no direct relationship between movements in the futures market and movements in the longer maturity contract. What Went Wrong? In 1993, oil prices began to plunge because of a bearish market signal.
Although ING-Group and particularly its German subsidiary ING-DiBa AG (“DiBa”), the retail (and direct) bank of ING-Group, have been pioneers in terms of effective usage of digital marketing, the knowledge and the efforts of its sister company “ING Bank”, the German commercial bank (my employer), are still in its infancy. With ING Bank’s initial focus on multinational corporates, they didn’t see the need to put a lot of efforts on marketing activities in the commercial banking area, least of all to put particular emphasis on digital media. After the financial crises this worked well for a while as commercial banks could sell their services mainly through providing enough balance sheet commitment, i.e. providing corporate loans to clients. Nowadays, where liquidity is much easier to get on the capital markets and where particularly German banks have tons of liquidity, this criteria becomes less important as lending becomes more a commodity type product. Thus, competition increases, margins are shrinking continuously and it becomes much
The major groups that were directly affected are investors, employees, and suppliers. Here we should make the distinction between different types of investors. There are two major types of investors: insiders and outside investors. Insiders are the investors who know the information that is not known publicly and may benefit them in some way. Outside investors are the investors who only know publicly known information. In our case, outside investors was the group that lost the most. On the other hand, insiders, notably Mickey Monus and David Shapiro, were the one that gains millions on IPO. The group who suffered was employees of Phar-Mor. After the scandal was revealed, most of the stores were closed to cover up losses. As a result, thousands of employees got fired. Another party that was damaged by the scandal was Coopers&Lybrant, the firm that did the audit for Phar-Mor, lost its reputation as a firm who does an audit with integrity. The secondary effect of the scandal was the overall mistrust among investors. They thought that if a giant retailer can forge its accounting books, why smaller companies wouldn’t do the same. As a result, investors became reluctant in investing into businesses that caused harm to the economy as a whole. The last but not least group that was affected by the scandal is Phar-Mor’s suppliers. Mickey Monus was fiercely fighting with them to make the chipset deals to cover up his losses, sometimes using inappropriate pressure and causing suppliers making unprofitable deals. In additions, Monus forced them to pay fees and sponsor his basketball League using buyer power of his company. In addition, a lot of bills for supplies were unpaid for months by Phar-Mor. Some suppliers said that they hated doing business with Phar-Mor, but had no choice since it had an access to vast amount of customers.