Reference no: EM133201536 , Length: word count:600

To complete this assignment you must watch the following movie and read textbook chapters:

Dan-In the movie Too Big Too Fail there is a scene where Dick Fuld calls Neel telling him to find a buyer. Neel tells dick that he needs to do what is best for the firm and accept a low stock price to keep the firm alive. Dick responds angerly and yells that he is not giving this company away (Too Big, 13:55). This relates to the textbook on the topic of conflicts of interests between manager, shareholders and stockholders (Chapter 34, sec 34-1a). Dick is both a manager and shareholder, and his interests are a high share price, keeping his job and having his legacy kept alive. However, this caused him to pass up several deals that could have saved the company. Stakeholders want the company to stay alive in their communities and would have wanted Fuld to sell, even if it was at a low price because it would save the company and jobs. Fuld let his interests of keeping his income and legacy alive overshadow the interests of the firm and its stakeholders.

According to the article we learn that the banks saved the day but went back to their normal practices even feeling self-righteous about it (p.6, para 4). The banks never lend out the money from the government and use it to get bigger. This relates to the textbook on the topic of moral licensing. Moral Licensing means that when people do an ethical act they are more likely to do an unethical act afterward (Chapter 2, sec 2-3e). An ethical act makes them believe it's okay to then commit an unethical act after. Although it may not have been ethical, the banks taking the money was not unethical and saved wall street. In their heads this gave them the right to commit an unethical act by not lending the money and instead using it to get bigger.

Jenna-In the movie, Too Big to Fail, there are many connections to the textbook and the movie review article. At the very beginning of the movie, the senior executives of Lehman sit down and have an emergency meeting. They discuss how they have to admit the company made mistakes and make a management change to show the market that they know what they are doing (Too Big to Fail, 9:31). And this relates directly to the duties of a manager as stated in chapter 34 of the textbook. The value of shareholders and their opinions and desires is something that must be thoughtfully considered and is not a delicate matter. In order to succeed in the management realm of stakeholders, the company has to show that their business will continue to survive and thrive, increasing stock price and supplying customers (Chapter 34, section 34-1a). An ethical issue arises soon after as the federal government encourages a deal with Meryl Lynch and a buyer which "snakes" the deal with Lehman and Barclay (Too Big to Fail, 36:22). I believe that this connects to the Utilitarian Ethics presented in Chapter 2. Utilitarianism focuses on the greatest food for the greatest number (Chapter 2, section 2-2a). The head of the federal reserve seems to be invested in saving the investment banks through private deals outside of a government bailout. At the moment that he confronts the CEO of Meryl Lynch about their impending deal, I do believe that he thought he saw an opportunity to save Lehman and Meryl, thus hoping to stop the impeding market crash. In the article, an honest depiction of the movie, Too Big to Fail, the bank CEO conference is discussed (pg. 3, para 2). There emerges somewhat of a fear of following orders from the federal government when they thus far have decided not to bail out any of the sliding banks. This connects directly to chapter 2 and how often times, there are ethical dilemmas due to the fear of retaliation and need to follow direct orders from superiors or regulators (Chapter 2, section 2-3i).