FNSINC514 - Case Study Questions (Daisy Valley) v1.0

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FNSINC514 – Apply ethical frameworks and principles to make and act upon decisions (Release 1) Case Study #1 (Daisy Valley) – Case Study Questions Case Study #1 Questions (Daisy Valley) Scenario Instructions Page 1 of 10 © Real Estate Academy Australia Version 1.0 – July 2022 RTO 32426

FNSINC514 – Apply ethical frameworks and principles to make and act upon decisions (Release 1) Case Study #1 (Daisy Valley) – Case Study Questions What you need to do: Answer the questions below by writing in the space provided. You are required to answer all questions correctly. If correct, you will see ‘Satisfactory’ or if incorrect you will see ‘Not Satisfactory’ in your grades section of your learner portal next to the assessment name. The assessor will provide feedback and a Record of Results in the assessment task once graded. You will be required to resubmit your work for any ‘Not Satisfactory’ assessment tasks. What you will need: Use the learner material provided in your online student portal as well as research materials such as books, internet, magazines, workplace documentation etc. to assist you in gaining the knowledge required to answer the questions. Remember that the assessment task is self-paced and open book. You can use whichever resources you have to answer the questions. What you need to submit: Your answers to these questions. How to Submit your Assessment: Upload your completed document into your learner portal following the instructions provided within the assessment task. You can drag and drop the file into the window or use the add file icon in the top left of the submission window and select the file your wish to upload by using the browse/choose file option. Click on “ finish attempt ” to submit it for grading. Page 2 of 10 © Real Estate Academy Australia Version 1.0 – July 2022 RTO 32426

FNSINC514 – Apply ethical frameworks and principles to make and act upon decisions (Release 1) Case Study #1 (Daisy Valley) – Case Study Questions Scenario 1 – Daisy Valley Daisy Valley is a famous Australian Thoroughbred breeding farm. Many grand champions all over the world were born thanks to their stud services. They have decided to add some new blood to their stock and carefully selected a broodmare with a great temperament, top pedigree, and amazing racing traits. However, the owners of the promising stallion chosen do not allow artificial insemination and require the broodmare to be brought to the stallion for ‘in-hand’ breeding, under restricted conditions using a highly supervised and controlled process. They are in Kentucky, America, and it has been agreed that the broodmare will fly a month before her estimated cycle and that all monitoring will be performed by the stallion farm’s team of experts until a successful mating is achieved. All aspects of the project have been thoroughly considered and an amazing presentation was performed by the Daisy Valley owners themselves, to secure the funding needed for this exceptional project to succeed. They have a strong financial position, with no issue to service the loan repayments, not to mention the waiting list of registered buyers and breeders who have been waiting for new blood to arrive in Australia. The security offered against the credit facility is acceptable to the lender and the business plan realised by the accountant shows that Daisy Valley’s Net Profit could double in the next five years as a result of the breeding plan. The owners are to pay for the broodmare transportation, which costs a total of $77,000 in Business Class, with all the premium options selected. They require a credit facility to cover the Skylight Racing Costs (quote provided below). Daisy Valley managers mentioned that they will be open to add the lender as one of their main sponsors, if the funding is accepted, which would be a great way to increase the lender’s public visibility at prestigious events. Based on the supporting documentation and the information you hold, complete the activities below. These activities will assess your ability to Apply ethical frameworks and principles to make and act upon decisions. Page 3 of 10 © Real Estate Academy Australia Version 1.0 – July 2022 RTO 32426

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FNSINC514 – Apply ethical frameworks and principles to make and act upon decisions (Release 1) Case Study #1 (Daisy Valley) – Case Study Questions Question 1 Analyse the context of the situation highlighted in this case study. a) Explain why this scenario has a chance of causing an ethical issue for the lenders considered. Lenders may face ethical issues in this scenario because it involves animal testing and experimentation on animals. There are some organizations that oppose animal testing because it causes suffering to the animals b) What purpose, values, and ethics a lender is likely to demonstrate if it refuses to be part of Daisy Valley’s project? Choosing not to participate in Daisy Valley's project represents a lender's goals, values, and ethics as follows:  They may not want to support and get involved in animal experiments.  They may also demonstrate their ethics by avoiding animal experiments and promoting animal welfare. Some clients choose a bank that shares similar values to their own to enhance their ethical side even more.  They Want to Protect their reputation, by avoiding any relationship with companies that violate ethical standards, to avoid legal repercussions and any negative publicity that might result from a connection to an unethical breeder. c) If a lender declines to consider a credit application regarding Daisy Valley’s project, what impact would this decision have on clients and potential new clients if it was publicised? (Positive, negative, neutral…). Please detail your answer. Daisy Valley's business may suffer if its credit application is rejected and publicised. In such a situation, Daisy Valley's reputation would likely be damaged, as potential new clients would believe they are unable to obtain funding for their project. Potential new clients may also be discouraged from applying for financing with Daisy Page 4 of 10 © Real Estate Academy Australia Version 1.0 – July 2022 RTO 32426

FNSINC514 – Apply ethical frameworks and principles to make and act upon decisions (Release 1) Case Study #1 (Daisy Valley) – Case Study Questions Valley, since they may be concerned that their application will also be declined. Consequently, Daisy Valley could experience a decrease in potential customers and revenue, reducing its chances of success in the future. The lender's decision could also negatively impact Daisy Valley's existing customers . If their project is not able to acquire the necessary financing, it could lead to delays in the completion of their project, which could result in disgruntled clients and possibly financial losses. Question 2 In the table below you are to define the consequentialist decision-making ethical framework, determine what would be the preferred decision from the lender under this specific framework and provide an explanation to your answer. Consequentialist Framework Most likely decision from the lender Why? A consequentialist framework looks at the future effects of potential actions, considering the people who will be directly or indirectly affected, as well as respect for animals' dignity. Rejection of the application. In line with its principles and beliefs, the bank is committed to promoting moral behaviour. By rejecting the loan application, the bank would convey a strong message to the market about its beliefs. The bank opposes animal experiments and the mistreatment of animals. It is important to respect and honour animals as living beings. Page 5 of 10 © Real Estate Academy Australia Version 1.0 – July 2022 RTO 32426

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FNSINC514 – Apply ethical frameworks and principles to make and act upon decisions (Release 1) Case Study #1 (Daisy Valley) – Case Study Questions Question 3 Identify two stakeholders of this case study and analyse the impact that the lender’s decision, from question 2 above, would have on them. There are two stakeholders in this case study:  the lender and  the borrower. The Lender would be adversely impacted by their rejection of the loan application. Thus, they could lose potential profits since they would not be able to generate any revenue from the loan. It is also detrimental to the loan applicant if the lender rejects the loan application. Their purchase would not be possible without the loan, which would be a significant setback for them. It could also negatively impact their credit score, making it more difficult for them to obtain a loan from another lender in the future. The lender's decision to reject the loan application would negatively affect both parties. Question 4 If the lender agrees to become a ‘main sponsor’ of Daisy Valley as offered by the management, identify the potential risks, and the public concerns, that could arise from this agreement. Accepting to become the main sponsor of Daisy Valley would benefit the lender; however, there are some potential risks and public concerns to consider before agreeing to this agreement. Below are some potential risks and concerns that may arise: 1. Potential controversies - Lender should consider the possibility of controversies arising from the case. Sponsoring someone, a brand, or an event will immediately associate you with it. 2. No guaranteed returns - The lender's investment may not have a guaranteed return because, as stated in the case, there is still a plan proposal for the project. Like any marketing strategy, there is no guarantee of a return on investment. As a result, you should take steps to Page 7 of 10 © Real Estate Academy Australia Version 1.0 – July 2022 RTO 32426

FNSINC514 – Apply ethical frameworks and principles to make and act upon decisions (Release 1) Case Study #1 (Daisy Valley) – Case Study Questions ensure that you receive what you consider appropriate exposure for your contribution. 3. Building a coalition of support. The lender risks their credibility and may cause public concern since the task is risky and requires a lot of responsibility. It is also a major concern that there is a risk of a lack of coalition support in terms of building the relationships of the people behind the company. Question 5 What communication strategies could the lender use to acknowledge and mitigate the risks and concerns mentioned in question 4 above? The lender should use below communication strategies: 1. Lenders should introduce a transparent communication plan that outlines the sponsorship agreement's goals, objectives, and outcomes. Ensure that everyone knows the details of this agreement by sharing it with the public. 2. Identify the communication method that works best for stakeholders. Choose the most appropriate communication channel according to the person or community - e-mail, online platforms, social media, phone, or in-person group meetings. Providing people with multiple ways to communicate and provide their input should be a priority. The lender should explain the benefits of the sponsorship agreement to the community and how it will improve the lives of Daisy Valley residents. Be sure to keep a record of all stakeholder communications over time. Meetings, phone calls, emails, and commitments are included. You can easily prevent misunderstandings and delays by showing the history of all communications with your stakeholders. 3. The lender should explain the benefits of the sponsorship agreement to the community and how it will improve the lives of Daisy Valley residents. 4. Address public concerns: The lender should address Page 8 of 10 © Real Estate Academy Australia Version 1.0 – July 2022 RTO 32426

FNSINC514 – Apply ethical frameworks and principles to make and act upon decisions (Release 1) Case Study #1 (Daisy Valley) – Case Study Questions any public concerns that have been raised and provide clear answers to any questions. 5. Any conflicts of interest should be addressed by the lender so that no undue advantage is taken. 6. The lender should provide regular updates on the sponsorship agreement's progress. Keeping the public informed about the agreement will ensure its success. 7. Communicate with stakeholders: The lender should communicate with stakeholders in order to hear concerns and objections. As a result, public trust in the agreement will be maintained. 8. It is important for the lender to monitor the outcomes of the agreement to ensure that any risks or concerns are addressed and managed. 9. In order to ensure that the sponsorship agreement is achieving its intended goals, the lender should establish an independent review process. Page 9 of 10 © Real Estate Academy Australia Version 1.0 – July 2022 RTO 32426

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FNSINC514 – Apply ethical frameworks and principles to make and act upon decisions (Release 1) Case Study #1 (Daisy Valley) – Case Study Questions Question 6 One of the lender’s employees stated that: ‘it would be wonderful to sponsor such a great racing farm and be part of their success. My parents used to bring the whole family to Race Day and they were fantastic family events. I recall having a blast every time we went to such events, they were amazing days for us all, even the Governor General was seen at Race Day…’. Analyse the psychological tendencies of this employee. a) What are the two main factors of influence that influence the employee’s behaviour? Justify your answer. The two main factors of influence that influence the employee's behaviour are: 1. Firstly, a direct personal experience has a major impact on attitude. Employees who attended those events had positive experiences. Observation is another direct factor of influence that can be seen in children replicating their parents' attitudes. His parents used to take the whole family to Race Day. 2. Additionally, Social norms also have a major influence on attitudes, go to race day is considered acceptable, even the Governor General was seen at Race Day b) What cognitive bias is altering the employee judgement and potentially affecting his objectivity? Justify your answer.  Halo bias: tendency to allow positive impression of a person/product/brand to influence opinions, the Governor General was seen at Race Day.  Anchoring: the judgement is based on the 'first impression', information that was available early on. It occurs when we rely too heavily on either pre-existing information or the first piece of information or experience (the anchor) when decide. His had this experience in the past. Page 10 of 10 © Real Estate Academy Australia Version 1.0 – July 2022 RTO 32426

FNSINC514 - Case Study Questions (Daisy Valley) v1.0

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