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Gonchar Investment Bank Case Solution
Given the scenario, the following alternatives exist for Grant and Gonchar investments.
The first alternative for Grant would be to reject or disagree with the policy altogether. This would eradicate the potential for a conflict of interest amongst the stakeholders and Grant having to go against his moral and ethical values. The policy would permit investment by the company into Ukrainian stocks, where this is a high probability of personal interests given preference over interests of clients.
The second alternative would be for Grant to agree to the establishment of a new asset management company and thereby let go of his values and morals. There would be a possibility of the clients losing out, but the decision would be based on the organization’s best interest. Furthermore, Grant can agree to the policy; however, refrain from providing any further suggestions. The government of Ukraine would be indifferent to this decision, and the management of the company would view it positively.
Following questions are answered in this case study solution:
What are the alternatives for the case characters?
Evaluate each alternative according to teleologicalism, utilitarianism, egoism and deontologicalism?
Evaluate how each significant group (company, society, special interest groups) might perceive each alternative
Determine if there are any constraints that make any of the alternatives unfeasible
Choose an alternative and justify your decision
Determine how this decision might be perceived by the organization and society and why?
Case Study Questions Answers
Lastly, Grant has the option to convince the company to demarcate the investments of clients and that of the company to minimize any risk of cannibalization that may occur for e.g. stocks where clients are invested can’t be invested into by the company or employee. This would be a win-win situation for all stakeholders, albeit would have to be handled with care.
2. Evaluate each alternative according to teleologicalism, utilitarianism, egoism and deontologicalism?
Teleologicalism is a doctrine that states the right act is the one that produces the best overall outcome in any given situation. It is important to ensure that all stakeholder interests are given equal weight. According to the doctrine the third alternative, if executed professionally would be beneficial for all stakeholders. The first alternative would work but not in the company’s favor whereas the second alternative would sideline clients’ interests.
Utilitarianism highlights that the best moral action would be the one that maximizes utility for an organization or individual. Regarding organizational utility the second alternative would work best but would not be morally correct. The first alternative to rejecting it would be a morally correct decision but would not maximize utility for the company. The third alternative, if executed properly, can have the potential to maximize utility for both the organization and the clients within the boundaries of morality.
Egoism states that one’s self is, or should be, the motivation and the goal to achieve what an individual wants. Personal interests and stakes are given priority according to this principle. Egoism is individualistic, and therefore, has a different definition for each. Given that Grant values his morals and ethics highly; his ego would be based on the same. Keeping this in mind, the first alternative would work best, the second alternative would not hold true with Egoism, and the third alternative would yet again work based on if it is handled with care.
The doctrine of deontologicalism states that an individual’s decisions are based on preventing self-harm. Personal interests yet again form an important component in this case. Given that Grant has a chance to increase his income considerably the second alternative would make sense. However, harm, in this case, can also be perceived as harm to one’s moral and ethical values in which case the first and third alternatives would be preferred.
3. Evaluate how each significant group (company, society, special interest groups) might perceive each alternative
The first alternative is that Grant disagrees with the establishment of the new asset management company and the policy that enables Gonchar to invest in equity altogether. This decision would be ideal for Grant as he would be able to safeguard his moral and ethical values to which he gives high importance. Moreover, the company would not be okay with this since potential revenues might be cut off. Clients would take this decision positively, and it would further reinstate their trust in the company and Grant himself. The government of Ukraine would be indifferent as the alternative does not have a direct impact on it.
The second alternative would be for Grant to agree to the establishment of the new asset management company and thereby compromising on his moral and ethical values. This would not have a positive effect on Grant. Moreover, the clients would not be welcoming of this decision as it increases the risk of the principle-agent problem. It would also jeopardize relationships amongst client account managers and clients; relationships that have been built over time. The company would view this alternative positively since it would increase revenue in the future.
The third alternative is important and very crucial. As discussed, if the company can come up with a mechanism whereby equity can be demarcated between the clients and the company it would be a win-win situation for all the stakeholders involved. Controls and measures need to be in place to ensure that client interests are protected and in the meanwhile the company can also benefit from investing directly in the Ukrainian market. If this alternative is chosen, it has the potential to ensure that all stakeholders are content.
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