The Reputed Intercontinental Citibank - Assignment Example

? Ethics Question1: Was the accusation bribe or corruption involved? Citibank is a reputed intercontinental bank and serves as the banking support ofthe customers all across the globe. It was established in the year 1812 with its head office situated in New York City. It operates under the parent organization named Citigroup, which is third leading investment organization in banking sector in United States. It is one of the preeminent organization serving about 200 million customers across the world with a strong corporate image and identity in the market. It showed a net income of US $1.6 billion in the first quarter of 2009. In due course of time, the financial condition began deteriorating due to corrupted financial dealings captivating within the banking systems of California in the year 2011. The bank was accused due to its filling of fraudulent documents related to mortgages. As a result, numerous customers of California filed varied types of allegations against Citibank which hampered its brand equity and revenue by a significant extent. Moreover, it also hindered the loyalty and dependency of its target customers resulting in the amplification of organizational risks (Bloomberg L.P, 2012). In addition, the reason for which the lenders accused Citibank was due to change of ownerships of the mortgaged houses. It was mainly identified by a bankrupt home owner of New York named Linda Tirelli in order to regain her collaterals. Besides, it was entirely denied by Citigroup so that the image of the organization can be maintained (Bloomberg L. P, 2012). Thus, it can be affirmed from the above mentioned facts, that it was a situation of corruption, which declined its individuality from the minds of house owners in California. Question 2: Was the company liable, socially responsible and accountable? Yes, Citibank, as one of the largest players in the international banking and financial sector of United States was accused of providing unethical services to its customers. This is because, Citibank was charged due to its presentation of wrong information regarding the housing mortgages to the citizens of California. Moreover, it also passed various inaccurate facts to the housing departments of United States as well, which resulted in loss of huge funds provided by the government (Scribd, n.d.). The management of Citibank was entirely responsible and accountable for the protest against the violation of the rules of Federal Housing Administration (FHA) insurance programme of United States by offering wrong information to customers. In addition, the higher officials of Citibank were also accused for lending low interest rates in case of housing loans in order to enhance its range of customers as well as total revenue among other apparent players in the market. This resulted in lowering of trust and confidence over the mortgage schemes of FHA insurance offered by Citibank (Scribd, n.d.). Question 3: Is capitalism a just system for allocating resources? Capitalism is referred as the philosophy of financial system that mainly favors personal ownership by an individual or an organization offering services in order to earn revenue or profits. In capitalist economy, an individual or a corporation mainly aims to enhance his/her personal welfare as compared to publics (Scribd, n.d.). Moreover, capitalist economy also desires to prevent his/her individual interest in the market or within the communities. In addition, according to Hofstede (n.d.), individualism is a type of cultural dimension, in which individuals are more conscious about their personal relatives and families rather than societies. The citizens of these types of economies are focused on their individual achievement and victory. In addition, self-interest rather than empathy is the prime objective of a capitalist economy (Hofstede, n.d.). Thus, economy of United States also shows highest degree of individualism, which mainly concentrates on the benefits of individuals. Moreover, the citizens of United States were not at all interested to work in collective way, which reveals the inaccuracy of the system (Hofstede, n.d.). Therefore, it can be predicted that capitalist economy is not a just structure for allocating varied forms of assets to the community members as it only desires for individual success only. Question 4: What role should the government play in regulating the marketplace? In a capitalistic economy, the ownership of assets and products are mainly possessed by individual citizens and as a result decentralized decision-making procedure is followed in these types of economies. In a capitalistic economy, government plays a very minuscule role in order to maintain its administration. This means that in the capitalistic economies, governments attempt to maintain a minuscule role in its administration, which indicates that interference of government is quite lower as compared to a socialistic society (Scribd, n.d.). Although the market is the most suitable instrument for enhancing economic growth and human welfare, still it can be maintained in an efficient way only with the help of government. For this reason, government intervention is extremely essential for the advancement of a flourishing economy. The most important role, which should be played by the government in regulating a market place or an economy, is to maintain uniform competition in every aspect (Joskow & Rose, 1989). It should also attempt to implement laws to restore consumer assurance and interest over the financial institutions resulting in diminution of corporate scandals. Moreover, government should also impose varied regulations over the import activities, foreign exchange rates and price discriminations in order to protect social welfare and security. Other than this, government should also attempt to maintain social regulations as well in order to offer protection from the prejudices in employment practices resulting in a healthy and safety workplace (Younkins, 2000). Question 5: What has been some of the legal ramifications to companies caught in bad behavior? Fraud is a pessimistic impact over the citizens, businesses and communities. In order to settle down any unlawful conduct, certain legal ramifications are imposed on the companies suspected for these types of events (Skills Plus International, Inc, 2005). With this concern, the court may issue varied types of legal consequences such as warning letters, untitled letters, consent decree, seizure, injunctions, criminal prosecution, imprisonment and imposition of various new laws namely Sarbanes-Oxley Act, Fraud Act of 2006 and many others. It is mainly imposed in order to reduce the chances of fraudulent activities being performed within the societies, with the intention to enhance the maintenance of uniformity and justice. This is extremely essential for the government of any economy to maintain its social well-being (Skills Plus International, Inc, 2005). Question 6: To what extent can the company of your choice improve its corporate branding for global perspective? Brand image and equity are quite difficult and expensive to establish, preserve and adapt in a cluttered, competitive and complex global environment. The corporate brand name acts as the identity of a particular firm which may stand behind its offerings delivered in the marketplace. It helps to enhance the brand portfolio and customer dependency as well as their reliability over the organization, resulting in overall enhancement of its sustainability in the long run. For this reason, brand name of any organization plays a significant role in developing its market share and uniqueness (Aaker, 2004). In order to re-establish the market image of Citibank, it might attempt to offer high attention over the values and priorities of its customers and thus satisfy their demands and requirements effectively. Moreover, Citibank might also endeavor to offer varied types of value added benefits to the consumers in order to re-gain their confidence over the organization. The management of the organization might also attempt to introduce various inventive service facilities in order to gratify customer assurances (Aaker, 2004). The management of Citibank might also attempt to resolve the dilemma in front of its shareholders, stakeholders, employees and customers in order to establish its value proposition, which might facilitate to retain its efficiency among other competing firms. In this way, the image and position of Citibank might recover in the eyes of its customers as an ethically reliable organization. However, regaining its previous corporate image and sustainability might pose as a long-lasting challenge for Citibank (Aaker, 2004). Hence, it can be avowed that corporate brand name is the catalyst which facilitates an organization to augment its essence and revenue in the global perspective. Question 7: How can we use the Sarbanes-Oxley Act of 2002 monitor compliance in working with US based international companies? Discuss the effects on US business and reforms for corporate America. The Sarbanes-Oxley Act is a type of legislation established in the year 2002 by the government of United States. This law was generally referred as the public company accounting reform along with financier tribunal and a corporate liability act in order to reduce corporate scandals. Moreover, it is also implemented in order to protect the common public from accounting faults and fraudulent practices. This act is principally administered by Securities and Exchange Commission (SEC), which helps in setting specific rules and regulations for maintaining public welfare. It is a centralized act of United States which helps in offering varied inventive and enhanced standards for the public companies and financial institutions in order to diminish the issue of white collar scandals. In addition to this, the particular Act also takes into account the various types of criminal punitive measures which may be imposed over the accused individuals of the organizations. Thus, it can be affirmed that development of SOX Act helps in maintaining consistency while working with any US based global organization (Bisoux, 2005). Due to the introduction of SOX Act, it became compulsory that the management of US companies should maintain consistent inner financial control, which can certainly prove beneficial to retain its dependency and uniformity within the minds of its target customers. Moreover, SOX Act also implemented that Public Company Accounting Oversight Board (PCAOB) is also the decision maker along with Chief Executive Officer (CEO) of an organization. This helped to evaluate all types of accounting records and documents in order to reduce the accounting frauds often performed by an organization. SOX Act also implemented the law of utilization of independent auditors at the time of audits. Hence, it can be revealed that SOX Act helped in the prevention of varied criminal penalties, American business practices, and scandal which largely helped in maintaining accountability and integrity within the business environment. SOX Act also helped in preserving the efficiency of corporate governance within the organizational procedures of America resulting in the overall enhancement of its customer dependency. Thus, SOX Act can be regarded as a major driver of a new era of transparency and liability emphasizing on the corporate fiscal reporting structure (Bisoux, 2005). References Aaker, D. A. (2004). Leveraging the Corporate Brand. Retrieved from http://www.prophet.com/downloads/articles/AakerCMRPWSsp042.pdf Bisoux, T. (2005). Sarbanes-Oxley Act. Retrieved from http://www.aacsb.edu/publications/archives/julyaug05/p24-29.pdf Bloomberg L. P. (2012). Citigroup Settles Fraud Cases Tied To Texas Mortgage Assigner. Retrieved from http://www.bloomberg.com/news/2011-02-08/citigroup-settles-as-bankrupt-homeowners-fault-use-of-mortgage-assignments.html Hofstede, (n.d.). Making Sense Of Cross Cultural Communication. Retrieved from http://www.clearlycultural.com/geert-hofstede-cultural-dimensions/individualism/ Joskow, P. L. & Rose, N. L. (1989). The Effects of Economic Regulation. Retrieved from http://economics.mit.edu/files/4316 Scribd (n.d.). Fraud of Citibank. Retrieved from http://www.scribd.com/doc/48665689/California-citi-group-assignment-fraud Scribd (n.d.). Accusations Of Fraudulent Mortgage Documents Led Citigroup To Settle With Homeowners. Retrieved from http://www.scribd.com/doc/76946567/Accusations-of-Fraudulent-Mortgage-Documents-Led-Citigroup-to-Settle-With-Homeowners-Pro-Public-A Scribd, No Date. Changing Role of Government. Retrieved from http://www.scribd.com/doc/27821626/Changing-Role-of-Government Skills Plus International, Inc. (2005). Legal Consequences. Retrieved from http://www.skillsplusinc.com/PDF%20File%20Subweb/Kit/02%20Legal%20Conseq.pdf Younkins, E. (2000). Government Regulation: Enemy of Individualism. Retrieved from http://www.quebecoislibre.org/younkins12.htm Read More