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Module Three Assignment

Emmanuel Mulenga

Graduate School of Business, University of Zambia

ESB 5011: Business Ethics in a Global Environment

Dr. Marcus Ellison

10th April, 2022

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INTRDUCTION

By analyzing the scandal at Olympus Corporation, this paper seeks to find out if the fine of

USD17.3 million is enough. Secondly, the paper will explain why Olympus Corporation ran

an internal ethics hotline as opposed to having it managed by external parties, which are

independent and objective. Of course, the reason for this was to conceal and disorient people

from whistleblowing unethical activities. The paper will also explain the concept of due

diligence and how it differs between Japan and America. Finally, the paper will point out the

various stakeholders that were affected by this case (scandal), excluding shareholders.

WILL THE $17.3 MILLION FINE BE ENOUGH

Going by the nature of the case, the fine of $17.3 million will be enough because the

company is not actually coming from a background of trying to conceal losses. The amount is

enough considering the fact that there is a likelihood of more possible losses that will be

incurred by the company due to the scandal. It can also be pointed out that one of the factors

looked at when evaluating the amount of the fine to be imposed is the ability of the defendant

to pay the fine. Looking at Olympus Corporation’s net sales, Denis et al. (2014) reported that

according to its accounts for the year ended March 31, 2011, Olympus Corporation had

consolidated net sales of $10.6 billion in the year, and total shareholders' equity stood at $3.3

billion. Based on the amounts the company was involved in, the $17.3 million fine is just

okay. It can also be argued that fines are aimed at preventing would-be offenders from

involving themselves in criminal activities.

WHY OLYMPUS RUN AN INTERNAL ETHICS HOTLINE

In my opinion, Olympus Corporation should have run an internal ethics hotline or

whistleblowing because they knew there were some fraudulent activities being perpetrated by

management. The ideal situation is to enable an external party to manage the whistleblowing

system. When an ethics hotline is managed externally, those reporting unethical practices will
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have a sense of security, and this will empower them to report such cases without fear. This

can also enable the management team to act swiftly and curb vices that are being reported on.

The fact that the ethical hotline was managed internally just shows how systematic and

deliberate the unethical conduct was in the organization. It can be pointed out that

organisations have a duty to instil a culture of ethical conduct among their members. The

problem becomes more serious if the leaders are the ones involved in such vices. It can

therefore be argued that the ethics hotline was run internally to conceal or suppress any

means of bringing unethical conduct to the limelight.

THE CONCEPT OF DUE DILIGENCE AND HOW IT DIFFERS IN AMERICAN

CULTURE.

According to Arslan (2009), due diligence is the investigative process of collecting and

analysing adequate, relevant data before making a decision, with the aim of understanding

advantages, disadvantages, and risks associated with a decision.

The differences between American and Japanese culture pertain to the leadership orientation

between the two cultures. A The American culture is more inclined to the democratic type of

leadership in which all stakeholders including employees have a say in the running of the

business. On the other hand, the Japanese culture is more inclined to the autocratic type of

leadership in which the employees do not have a say in the running of the business. It can be

acknowledged that most companies, including Japanese companies, have moved towards a

democratic type of leadership due to the effects of globalization.

STAKEHOLDERS AFFECTED BY THE CASE, OTHER THAN THE

SHAREHOLDERS

The first group of stakeholders that were affected by this case were the employees of the

company. This is because the company was forced to downsize following the revelations of

the case. Thus, the first stakeholders to take a hit in the case were the employees. Secondly,
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suppliers to Olympus Corporation also lost business due to the financial penalties that the

firm was subjected to. This meant downsizing their operations and thereby affecting the

suppliers that were dependent on Olympus for business. Other stakeholders that were affected

by the case were the communities in which the company operated. The difficulties that the

company was faced with meant that it had to reduce its corporate social responsibility

activities and concentrate on day-to-day management. The various government agencies were

also harmed as a result of the time and money lost as a result of the case. had to be assigned

to the case and money spent investigating the case instead of that time being devoted to other

causes, such as solving community crime. Customers were also affected by the case as some

operations had to downsize, thereby resulting in delayed deliveries to customers.

CONCLUSION

In conclusion, it can be pointed out that unethical conduct always has serious repercussions

on the people involved. It also has wide-ranging negative effects on innocent people. Hence

the need to ensure that all members of the organization strive to ensure that they act in a

manner that enhances ethics and integrity.

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REFERENCES

Arslan, H.B. (2009). Toward a new generation due diligence: shift in the cornerstones of

tradition, Ekonomik ve Sosyal Arasturmalar Dergisi, Guz, Retrieved from

https://dergipark.org.tr/tr/download/article-file/69063

Dennis Elam, D., Madrigal, M., & Maura Jackson, T (2014). Olympus imaging fraud

scandal: A case study. American Journal Of Business Education, 7, (4), 1-8.

https://files.eric.ed.gov/fulltext/EJ1053608.pdf

Harvey, M., Lusch, R. (1995). Expanding the nature and scope of due diligence, Journal of

Business Venturing, 1(10), pp. 5-21. https://citeseerx.ist.psu.edu/viewdoc/download?

doi=10.1.1.468.2046&rep=rep1&type =pdf