Business Finance
CUNY Brooklyn College Ethical Audit Saudi Aramco Company Business Ethics Project

CUNY Brooklyn College

Question Description

I’m trying to study for my Business course and I need some help to understand this question.

Hi

i need project for business ethics subject (report+powerpoint presentation ) and it should about SAUDI Co i choose Aramco co

Comprehensive project guidelines are attached, Chapter slides are also attached; these slides are for your reference and might help you.

So you can use some vocabulary from the course slides

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Chapter 1 The Importance of Business Ethics ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Learning Objectives  Explore conceptualizations of business ethics from an organizational perspective  Examine the historical foundations and evolution of business ethics  Provide evidence that ethical value systems support business performance  Gain insight into the extent of ethical misconduct in the workplace and the pressures for unethical behavior ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 2 Intro  The ability to anticipate and deal with business ethics issues has become a priority in the 21st century.  Demand for improved business ethics, greater corporate responsibility, and laws.  Highly visible business ethics issues influence the public’s attitude toward business.  Making good ethical decisions are just as important to business success as mastering management, accounting, marketing or financial management. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 3 Intro  Ethical behavior requires understanding and identifying issues, areas of risk, and approaches to making choices in an organizational environment.  The field of business ethics deal with question about whether specific conduct and business practices are acceptable.  A salesperson omitting facts about a product’s poor safety  An accountant reporting inaccuracies in an audit report  A manufacturer intentionally concealing a safety concern to avoid a massive recall  By its very nature, the field of business ethics is controversial.  Values and judgments play a critical role in the making of ethical decisions.  All organizations have to deal with misconduct, even the most prestigious companies and organizations. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 4 About this Chapter  Overview of business ethics.  Definition of business ethics and discusses why it has become an important topic in business education.  Evolution of business ethics in North America  Benefits of ethical decision making in business.  Framework for examining business ethics in this text. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 5 Business Ethics  Business ethics comprises organizational principles, values, and norms that originate from individuals, organizational statements, or from the legal system that guide individual and group behaviour in business  Morals: a person’s personal philosophies about what’s right or wrong  Principles: Specific boundaries that should not be violated and become the basis for rules  Values: Existing beliefs and ideals that are socially enforced. Often based on organizational best practices (teamwork, trust, integrity)  Ethics - Behavior or decisions made within a group’s values by a group of people representing the business organization. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 6 Business Ethics  Businesses should hire employees with sound moral principle. However, some special aspects need to be considered when applying ethics to business:  1. Businesses must earn a profit to survive, but these profits should not come from misconduct.  2. To be successful, businesses must address the needs and desires of stakeholders.  To address these unique aspects of the business world, society has developed rules, both legal and implicit, to guide businesses in their efforts to earn profits in ways that help individuals or society and contribute to social and economic well-being. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 7 Why Study Business Ethics? A Crisis in Business Ethics  1. Ethical misconduct is a major business concern, and organizations are under greater scrutiny than ever by  The case of JP Morgan Chase  The conflict between U.S. regulators and Swiss banks  see figure 1.1  2. There is no doubt negative publicity associated with major misconduct lowered the public’s trust in certain business sectors.  3. Decreased trust leads to a reduction in customer satisfaction and customer loyalty, which in turn can negatively impact the firm or industry. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 8 ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Specific Issues  Misuse of company resources, abusive behavior, harassment, accounting fraud, conflicts of interest, defective products, bribery, and employee theft are all problems cited as evidence of declining ethical standards in business and in other areas like government or sports.  Product knockoffs: products that imitate physical appearance of other products although not copying the brand name or logo (AliBaba in China)  Accounting fraud: intentionally manipulating financial statements (Enron)  Bribery: giving or receiving something of value in exchange of an influence (NOLA Mayor, College Admission Scandal)  Abusive behaviour: aggressive, controlling, destructive acts (Domestic abuse by NFL stars and Pop stars)  Harassment: aggressive pressure or intimidation: (Physical, Psychological, Cyberbullying, HWE vs Quid pro Quo (USA Gymnastic National Team scandal, #MeToo Movement) ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 11 Specific Issues  Misconduct can occur in any organization (private companies, the public sector, military, sports, Showbiz, etc)  Regardless of an individual’s beliefs about a particular action, if society judges it to be unethical or wrong, new legislation usually follows.  Whether correct or not, that judgment directly affects a company’s ability to achieve its business goals ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 12 ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. Before 1960: Ethics in Business (theology)  Ethical issues related to business were often discussed within the domain of theology or philosophy.  Religious leaders raised questions about fair wages, labor practices, and the morality of capitalism.  The first book on business ethics was published in 1937 and covered 4 sections:  Fair service, fair treatment of competitors, fair price, moral progress in the business world.  Also demonstrated the necessity of the ethical treatment of different stakeholders. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 15 The 1960s: The rise of Social Issues in Business  The American society witnessed the development of anti-business trend b/c many critics attacked the vested interests that controlled the economic and political aspects of society.  Decay of inner cities and growth of ecological problems such as pollution .  1962’s Consumer Bill of Rights: outlines 4 basic consumer rights (safety, information, choice, and to be heard).  Activities that could destabilize the economy or discriminate against any class of citizens began to viewed as politically unethical and unlawful. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 16 The 1970s: Business Ethics as an Emerging Field  Business ethics began to develop as a field of study.  Universities began to teach about corporate social responsibility (an organization’s obligation to maximize its positive impact on stakeholders and minimize its negative impact).  Conferences were held to discuss the social responsibilities and ethical issues of business.  By the end of this era, major ethical issues have emerged (bribery, deceptive advertising, price collusion, product safety)  Business ethics became a common expression and academic researchers began to identify ethical issues and describe how business people might choose to act in particular situations. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 17 The 1980s: Consolidation  Business academics, practitioners, and centers for business ethics provided publications, courses, conferences and seminars.  The Defense Industry Initiative on Business Ethics and Conduct (DII) was developed to guide corporate support for ethical conduct.  This era witnessed the rise of self-regulation as being in the public’s interest rather than regulation by government.  Many tariffs and trade barriers were lifted, and businesses merged and divested within an increasingly global atmosphere. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 18 The 1990s: Institutionalization of Business Ethics  Administration continues supporting self-regulation and free trade.  However, many reforms were abolished (Arthur Levitt, SEC 1993)  Federal Sentencing Guidelines for Organizations (FSGO) set the tone for organizational ethical compliance programs in the 1990s.  The guidelines focus on firms taking action to prevent and detect business misconduct in cooperation with government regulation. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 19 The 21st Century of Business Ethics  New evidence emerged in the early 2000s that not all business executives and managers have fully embraced the public’s desire for high ethical standards.  Highly publicized corporate misconduct and global accounting fraud at Enron, WorldCom, Tyco, Royal Ahold, Parmalat, etc)  Increase public and political demand to improve ethical standards in business   2008 financial crisis caused by systemic use of high-risk financial instruments such as CDS, risky debt, subprime lending, Asset-backed securities and corruption in major corporations.   Response: SOX (2002) that institutionalized the need to discover and address ethical and legal risk) Response: Dodd Frank Wall Street Reform and Consumer Protection Act (2010): designed to make the financial services sector more ethical and responsible. Further ethical issues revolve around the acquisition and sales of information  Facebook breach of trust (2019): sharing subscribers’ info with third parties plus accusations regarding role in election meddling and spread of disinformation. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 20 ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. The Big 4 ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 24 Developing an Organizational and Global Ethical Culture  Ethical culture: Acceptable behavior as defined by the company and industry that captures the values and norms of the company  Encourages the use of principles for ethical reasoning  Companies are creating ethics programs for their employees and appointing ethics officers to oversee them  Globally, businesses are working together to establish global standards of acceptable behavior  Many companies demonstrate their commitment to acceptable conduct by adopting globally recognized principles, such as the United Nations’ Global Compact.  ISO 19600—a global compliance management standard  The UN Global Compact—a set of ten principles concerning human rights, labor, the environment, and anti-corruption ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 25 The Role of Organizational Ethics in Performance  Ethisphere brings together leading global companies to define and promote best practices for ethics and compliance; and helps to advance business performance through data-driven assessments, benchmarking, and guidance.  NiSource, a distributor of natural gas, electricity, and water in the Midwest and Northeast United States, has earned a place in Ethisphere’s “World’s Most Ethical Companies” for three consecutive years. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. 26 ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use. ©2017Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or se ...
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Running head: Ethical Audit: Saudi Aramco co

Ethical Audit: Aramco co
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Ethical Audit: Saudi Aramco co

INTRODUCTION
This section discusses the background of the Saudi Aramco Company, the major players, and the
changes in the organization. It also explains recent fundamental changes in the industry for the
last five years.
Background of the company
Saudi Aramco is located in Dhahran in Saudi Arabia and deals with natural petroleum and gas. It
is considered to be one of the largest companies concerning the revenues collected. Among the
oil production companies, Saudi Aramco is the biggest, and globally, it is termed to the most
profitable. It was started in the year 1933, and it's an international company serving many
markets across the globe. The president and CEO is Amin H. Al-Nasser, and Yasri AlRumayyan is the executive director. As of 2018, the company had total revenue of $355.9
billion, which had been increasing from past years. By June 2018, the company had $111.1
billion net income, which was an increase from $75.9 billion by 2017 (Aramco Accounts, 2018).
By 2019, the operating income was $674.8 billion, and the company has total assets of 1.5
trillion as of the end of the year 2019. Saudi Arabia's government owns the company, and as of
today, it has approximately 76,000 employees (Key facts and figures, 2017). The master gas
system is the biggest hydrocarbon network and is operated by Saudi Armco. It has over one
hundred fields for gas and oil with Saudi Arabia.
In 1938, some of the United States Companies joined Saudi Aramco after they discovered that
there was a lot of oil in Dhahran. The company has an adequate infrastructure that enhances high
levels of production, and the employees are well knowledgeable and experienced with what they

Ethical Audit: Saudi Aramco co

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do. It produces an estimate of 10.2 million barrels per day. Some of its subsidiaries are located in
the United States, United Kingdom, China, Egypt, India, Japan, Singapore, and the Netherlands.
In 2012, Aramco faced a cyber-attack after the systems were hacked, but fortunately, the
attacked computers were not part of the oil production. Around 30,000 work stations were
affected, and a group called cutting sword of justice claimed to have caused all that mess. This
brought some delays as the company had to concentrate on bringing back its systems to normal.
Besides, Houthi rebels attacked the company with the use of drones, and this affected the supply
and production of oil since around 5% of the world supply was cut.
Major players and changes in the organization
Other players in the industry include British Petroleum, which was founded in 1909, a public
entity majoring in oil and petrochemical production. It is located in London and has around
73,000 employees, with estimated revenue of $282.6 billion in 2019. Exxon Mobil is also a
critical player that focuses on the production of natural gas and crude oil. It is the earliest
founded company in 1870, located in Irving, United States. The employees stand at around
74,900, with a revenue of $264.9 billion by 2019. Marathon is another player in the industry
founded in 2009 and is the youngest among the key competitors in the market and the ones that
have been discussed here. It is situated in Findlay in the United States. The employees are about
60,350 and have revenue of $123.9 billion by 2019. Total also stand among the key players and
is located in Paris, founded in 1924 and has more employees of over 102,168 with total revenue
of $172.3 billion. ADNOC was founded in 1971 and the most significant rival for Aramco’s
despite having a small share in the market and revenue of $62 billion. Shell is more competitive
and was initiated in 1907 as a group of energy companies. It is based in Den Haag and has

Ethical Audit: Saudi Aramco co

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82,000 employees with a revenue estimate of $352.1 billion (Craft, 2020). Other players include;
chevron, ConocoPhilips, Lukoil, and Valero. These are key players in the oil and natural industry
that Saudi Aramco operates.
Critical recent changes in the industry for the last five years
The industry had an oversupply for several years back, and the prices of oil have now rebounded.
Through capital discipline, realignments of portfolio and efficiency in production have seen the
industry regaining its trend. According to alert given by Aramco, Total, and Eni, there are high
chances of a supply crunch in the industry since 2016, and this might extend for a decade. This is
because the demand for oil is growing day by day; therefore, companies producing oil must
boost their production. More importantly, is that the companies should be able to come up with
mitigating strategies of curbing the risks that might come along with the supply crisis. The
sector, therefore, seems to be more volatile than before, with a lot of internal and external forces
affecting the production.
Volume of oil discoveries was less made in 2017 in comparison to the too early 1950s when the
same had occurred. Condensate, crude, and natural gas liquids worth 3.5 billion barrels were
recorded, having been discovered only in 2017, and this generally low to meet the demand. The
critical challenge to this is that making discoveries to date is a problem because most of the areas
have already been explored (PwC, 2019-2020).
Another significant change in the industry is supply disruption. As the old fields get depleted of
the products, the supply chain is messed up before new fields are discovered. Other than fields
lacking oil, in some nations, geopolitics has affected the production, for instance, in Libya and

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Ethical Audit: Saudi Aramco co

Venezuela. Change in demographics has also left oil production at a problem because of a lack
of technical skills. To ensure that these changes don't affect the industry ultimately, key players
need to have capital discipline, manage their portfolio with less break-even price, maintain their
assets, change the business modeling, have more talents for technological advancement and
keenly look at how the business is evolving from time to time. Few companies that will manage
to adapt these strategies and realize that the oil and natural gas industry is so volatile now will
thrive in the market. The fact remains that the supply has been neglected as demand rises (PwC,
2019-2020).
The company has been made tremendous changes in the market in terms of profits and has said
to be the most valuable among the listed companies. This has created more investors to buy
shares with the hope of getting good returns. On the first day of...

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