The first company, the Washington National Building and Loan Investment Association was founded in 1889 to help people rebuild after the Great Seattle Fire. Today, Washington Mutual Inc. is a regional financial services company and provides a diversified line of products. It has also become one of the nations leading residential mortgage lenders. Washington Mutual operates more than 2,000 offices and as March 31, 2000 the compan6y had assets worth $188.61 billion. The services and subsidiaries the bank provides are consumer and commercial banking services, securities brokerage, mutual fund management, property/casualty and life insurance sales, and underwriting for insurance annuities.

Washington Mutual has just been introduced to the California market about three years ago by purchasing American Savings, Great Western, and Home savings, in that order. Once Washington Mutual bought out those banks they acquired all their customers under the Washington Mutual name. Because three banks came under one name, all employees were invited to stay with Washington Mutual to help serve the huge cliental for the bank. Some of the problems they ran into with the expansion was Washington State and California have different business philosophies and California life is a faster pace which was very hard for Washington Mutual to adjust to. Also, the huge volume of customers called for greater customer service, but each branch did not have enough employees to serve all the cliental. Washington Mutual had to convert all the American Saving, Great Western, and Home Savings accounts to be compliant with their present accounts, which took longer than anticipated. Also, all employees that came over from the three banks needed to learn a new computer system and again the management did not allow enough time for training, which resulted in slow business initially.

WAMU Management

Currently Washington Mutual s Executive Committee consists of nine different positions. These positions are:

Chairman, President and Chief Executive Officer

Senior Executive Vice President and General Counsel

President, Mortgage Banking and Financial Services Group

Senior Executive Vice President, Corporate Services

Vice Chair and Chief Financial Officer

President, Consumer Banking Group

Vice Chair, Corporate Development, Consumer Finance and Commercial Banking

Vice Chair, Corporate Technology

These positions were recently modified in June of 1999, when Washington Mutual decided to modify their management assignments. Since the company is growing rapidly and becoming larger, they felt that the responsibilities of the executive committee should be expanded. These executives are in charge of overseeing the strategic direction of the company.

Kerry Killinger is currently serving as the Chairman, President and Chief Executive Officer. His office is based in the Washington Mutual in Seattle, Washington.

Killinger has been the president of Washington Mutual since January 1st, 1991. However, Killinger had been working for the company since 1982 when it had purchased Murphey Favre, Inc , which is the oldest securities brokerage firm in the entire Northwest. They had also acquired an affiliate of Murphey Favre, Inc. , Composite Research and Management Co. Before he had begun working for the company, he attended the University of Iowa and graduated with honors. After graduation, he went on the earn not only a bachelor s degree in business administration, but also a master s degree.

After climbing up the executive ladder for eight years, he was finally named the President of Washington Mutual. While not only serving as president of the company, Killinger is also on the board of America s Community Bankers, the Washington Financial League, the Greater Seattle Chamber of Commerce, the Washington Roundtable, the California Business Roundtable, the Seattle Foundation, the Partnership for Learning and the Alliance for Education.

Fay Chapman is serving as Senior Executive Vice President and General Counsel. She joined Washington Mutual in August 1997 as the Executive Vice President and General Council. It was during this time that Washington Mutual had completed their merger with Great Western Financial Co., where Chapman was the company s chief outside council. It was not only until June 1999 that she was promoted to her current position. Before working for Washington Mutual, Chapman worked for Foster Pepper & Shefelman PLLC for eighteen years after she graduated with a bachelor s degree from UCLA. Chapman is also currently a member of numerous professional organizations, including the American Bar Association and the Washington State Bar Association.

Craig S. Davis holds the title of President, Washington Mutual Home Loans and Insurance Services Group. He is responsible for overseeing production, servicing, operations, marketing, risk management, finance, and human resources for the area of Home Loans and Insurance Services. With his leadership, Washington Mutual has become one of the nation s leading residential mortgage lenders. Before he worked for the company, he started his career at American Savings Bank, as the president of ASB Financial Services. Under his guidance, ASB became California s No. 2 position in residential mortgage lending.

William W. Erich is the Executive Vice President of Corporate Relations. His responsibilities include overseeing Washington Mutual s corporate communications, government and investor relations, and leadership training areas. Erich first joined the company in 1990 as a public relations consultant, but left to work shortly for Alaska Airlines before coming back to the company in 1993 as a coordinator in the company s Mergers and Acquisitions department. Graduating from Washington State University in 1998 with a degree in communications, he is now a member on the board of directors for the Seattle Alliance for Education and the Seattle Sports and Events Councils. Erich is also a member of the Public Relations Society of America along with the Washington Savings League.

As Senior Executive Vice President of Corporate Services, Steven P. Freimuth handles the company s corporate property services, strategic sourcing, human resources, corporate services, credit risk management and community development areas. Freimuth joined Washington Mutual in 1988, when they merged with Columbia Federal Savings Bank where he had formally worked for. After graduating from the University of Puget Sound with a bachelor s degree in economics and business finance, he served as the president and director for Washington State Mortgage Leaders Association.

William A. Longbrake is the Vice Chair and Chief Financial Officer at Washington Mutual, whose duties are to oversee the company s financial accounting, tax management, corporate planning, investor relations, treasury, auditing, finance information systems and risk management areas. He first joined the company in 1982, but left in 1995 only to return again in 1996. After graduating from the College of Wooster, he later got degrees from both the University of Wisconsin and the University of Maryland. Longbrake has taught courses in business administration and finance at the University of Maryland and Seattle University. He now is on the board of trustees at the College of Wooster.

As the President of the Consumer Banking Group, Deanna Watson Oppenheimer is responsible for the consumer banking P & L. This includes the consumer banking branch network, consumer lending, customer service, operations, finance, consumer bank marketing and brand management, corporate research and development and also the group s Internet and emerging market strategies. Oppenheimer manages the company s network of over 1,000 branches and retail call centers. Under her leadership, she has not only been able to bring together the branch systems of H.F. Ahmanson, Great Western Bank, American Savings and Washington Mutual, but have also had them produce record levels of profitability and growth. Oppenheimer has been a key figure in developing the company s corporate position in the Northwest and even beyond. With her help, Washington Mutual has gained immense recognition.

Craig E. Tall is the Vice Chair of Corporate Development and Specialty Finance. His job is to oversee corporate development, this includes acquisitions and their specialty finance operations. Before Tall joined the company, he was the president of a national employee benefits consulting company called Compensation Programs Inc. Tall received his bachelor s degree in economics from the Wharton School of Finance at the University of Pennsylvania. He was also the founder and past president for the Seattle Academy of Arts board of trustees.

Lastly, there is Liane Wilson who is the Vice Chair of Corporate Technology. Wilson is in charge of directing the information technology, architecture services, and alternative delivery technology. Wilson has directed all the integration activities relating to the company s mergers and acquisitions twenty-three times since 1987. Wilson is on the board and executive committee for the holding company at the Star automated switch company and is also on the board at the University of Washington s business program.

In 1999, Washington Mutual modified their management roles. The company changed certain management roles because they were beginning a new phase in Washington Mutual s history following the successful merger of its third major acquisition. Washington Mutual wanted to focus on maximizing efficiency and precisely executing their business strategies within their recently combined organization with American Savings, Great Western, and Ahmanson. This plan also included consolidating many if its remaining centrally managed functions under one area. This area would be Corporate Services and it would free up more of the executive management s time so they would be able to pursue new initiatives, such as the expansion of Washington Mutual in the e-business. Washington Mutual is working on a better and more interesting way for their customers to bank online.


Information systems today are very diverse and complex. The current systems Washington Mutual are using span across all architectures main frames to open systems from lap tops to ATMs. Not only do Washington Mutual s systems have to support the daily business, they also have to support their customers, management, employees, and stockholders.

The MIS systems are main framed based, and utilize IBM CMOS (type of technology used to build computers) technologies and the operating system is a MVS (main frame computer, operating system). This mainframe system consists of multiple CPU s in a shared DASD (direct access storage device) environment. Under MVS Washington Mutual, can run DB2 (an IBM application that runs on main frames). These systems allow Washington Mutual to track each customer s transaction from each entry point whether it be an ATM or a teller. The system provides Washington Mutual management with real time accuracy and allows them to post current balances within a 24-hour period. Also on this system, it is possible to track all of the loans and over night float as well as support the entire ATM networks. As you can see, the mainframe system is quite complex.

As mention earlier it is made up of IBM mainframes, IBM DASD, STK silos (a company name brand of tape drives), multiple laser printers, network controllers, and it also supports a portion of our telecommunications. Telecommunications can help IS by providing timely and accurate information to not only Washington mutual employees, but also to their customers, and investors. Telecommunication is primarily the mode of operations for all of Washington Mutual s tellers. The tellers use computers with a software program which allows the tellers to take people s transactions and give them credit for their deposits or withdrawals immediately. This program can also find customer s accounts by using their social security number which will also give the profile of the customer. This profile tells everything the customer has currently with the bank or anything that has closed at Washington Mutual. In the profile, there is also information about any loan that this customer may have taken out with Washington Mutual and the payment dates. All employees use the computers to track pay role because all time cards are done electronically. Also the telecommunication network not only supports the branches internal uses, but it also allows for over seas wire transfers. New advances in telecommunication technology has allowed customers to perform electronic banking from their PC anywhere. This brings attention to the need for high security controls. Each customer is provided with an account number or logon with an eight-digit password of his or her choice. Armed with this information, a customer can access only their information and no other account. This is accomplished through sophisticated firewall technology as well as the latest security algorithms. To further ensure the systems remain hacker free, Washington Mutual hopes to introduce another layer of entry security that they have dubbed mantrap security. Their hope is if the security were broken, Washington Mutual would then be able to track the offender easily. This system is based on the manual security systems of trying to get into a computer room where it requires you to pass through two entry barriers. First, you need to get past the first barrier: the logon and password, and then the second barrier is another unique logon and password. The beauty of this type of architecture is once you passed the first barrier; Washington Mutual has captured all of your information during the time it takes that person to log in the second time. This new system will provide customers with the security that their information will remain confidential even though Washington Mutual is expanding with technology.

E-mail is another advantage to today s technology and telecommunications network. Washington Mutual employees communicate via the web using Microsoft Outlook, which is an email package. This system runs on a Sun E4500. With this program, the company no longer has to wait for an executive to dictate a letter to his/her secretary, wait for it to be typed, reviewed and edited, and then wait to be retyped, then stuffed in an envelope and delivered to the mailroom. Once it hits the mailroom it must be weighed, stamped, and sorted by destination. Then this letter is handed over to the US mail which would take typically three days to be delivered. Now with email, a letter can be thought of, composed, and sent within an hour or less depending on the length of the email. This increases productivity of the company by not having a secretary, mailroom, mail carriers, stamps, or even the US post office. Think of the old process. Each time the document changed hands the cost of producing that document increased which meant that the marginal cost would be greater than the marginal benefit. Today with email being instanteous, none of those costs are incurred. The email comes from the originator to the receiving party instaneouly, regardless on where that person lives or works. E-mail is Internet based system which allows access into all parts of the company because the whole system is backed on their telecommunication network. This system can be accessed anywhere in the country because of dial in through a phone line. This provides the employees to communicate with anyone in the company while they are in or out of the office. More importantly the company can communicate with their employees instanteously. This technology alone has improved the communications and productivity of the company, and has reduced the operating costs significantly.

In addition to Washington Mutual, their computer also supports a portion of the human resource systems. Currently the company is converting from a mainframe-based system to open systems and then hopefully the HR system will be operational by July 2001. This system will be based on a Sun 6500 system utilizing Peoplesoft software. This will allow each employee to have on line access to his or her individual accounts and personal records. This system is a hybrid HR system as it will allow and cover for health, medical or dentinal insurance and 401K accounts. It will also provide a means for each employee to search for his or her own information requirements in real time using the intranet.

Even though the Internet has simplified and increased Washington Mutual efforts, it also comes with a dark side. The company is vulnerable to outside, unauthorized attacks by anyone who owns a PC and modem. With today s technology the bank is constantly trying to protect the company and the customers information from unauthorized personal. Because Washington Mutual has come to depend on today s technology so greatly, there can be times when this system is unreliable. For example: In a natural disasters such as earthquakes or floods if their computer system or network is down for any great period of time it would have a significant effect on the business. If they were to experience a major disaster, the bank would not be able to communicate to their customer base in a timely matter. The customers then could start to withdraw their accounts and move them to a Washington Mutual s competition. Therefore, it is extremely important for any company to have disaster recovery strategies firmly in place. For Washington Mutual, a DR (disaster recovery) strategy not only includes routine backups of all data, but also storing it in a secure location with the capabilities of becoming operational within minutes. Here in California we are prone to earthquakes. Therefore, the main data center for Washington Mutual is totally backed up in Phoenix in a parallel system which can carry the entire operations of the bank from the sight. All of their data is backed up on a daily basis. The back ups are in two forms: on disk and on tape. If for any reason the back up disk fails, Washington Mutual then could fall back to tape. The reason the company started with a disk is to speed up the recovery because tape takes substainly longer to reload the systems. Another disadvantage for Washington Mutual is if their computers are down, then it is virtually impossible for any business to get down because the company has become so dependent on today s technologies. However with this technology it allows, Washington Mutual to compete equally with other banks.

Today banking has become far more competitive and less regulated. Thus allowing Washington Mutual to compete with traditional banks like Bank of America or Wells Fargo as well as brokerage houses such as Merrill Lynch. This portion of their business could be viewed as their marketing department who is responsible for generating new products as quickly as possible. Some of the new products are the recently announced no charge ATM, free checking, business checking accounts, home mortgage loans, equity line, and car loans. The marketing department is an open system based and needs to communicate internally to the employees as well as their customers. Again, security is extremely important with this system to ensure their customer s trust, so the company can continue to grow.

Washington Mutual is consistly collecting information and then supplying their databases with this newfound information. The term recently merged as data warehousing and data mining is used to describe the collecting and storing of all sorts of the information collected. Some of the information collected is customer preferences, what Washington Mutual s competitors are up to, and new advances in technology. This allows Washington Mutual to keep up to speed with other banks. In order to do that, Washington Mutual needs to make sense of that information and then use it to their competitive advantage. Information is power, and by collecting information companies need to know how to truly mine it. Even though databases have been around for years, they usually in the form of a sequential file. This means you start at the beginning and just continuously add to the end of it. There was some structure to how the format was captured, but it was difficult to retrieve it. With a relational database, it allows Washington Mutual to pull information quicker then ever before. Today, relational databases are based on indexed fields and sophisticates algorithms searches which can return a response in milliseconds. This simple fact allows Washington Mutual to work with greater number of customers per teller then we ever have been in the past.

Computers have allowed Washington Mutual to advance immensely in productivity because timely feedback is now available for management. It wasn t too long ago when information had to flow from the field back to head quarters so upper management could analyze and make business decisions. Today Washington Mutual systems collect the information continuously in the form of relational databases that allow upper management to review information instaneously and in a format of their choosing. It is also allows them to play what if with this information. For example. What if the interest rate all of a sudden drops by one full percentage point? What would the impact be on our business? This is just another benefit of how today s technology has affected a local company.

Another form of benefit the IT is it has provided standardization. Previously, a teller in LA would manually enter an amount and a customer s passbook. A teller in San Francisco would be responsible for doing the exact same thing. However, that system was vulnerable to human error. With today s IT the human error is greatly reduced improving Washington Mutual s bottom line. Today standardization is truly the key. The teller in San Francisco does exactly the same thing as a teller in LA. To make a deposit of $100 into a savings account the teller must enter the amount and then hit the deposit key. This immediately updates the customers account balance company wide. All information is entered, filed, stored, and updated the exactly the same way regardless of the tellers abilities or location.

With all the benefits IT technology has provided us Washington Mutual still have a ways to go. The systems still are vulnerable to outages. These outages are more costly today then ever before. The systems have to be operational 7X24X365. The demand for information continues to out strip Washington Mutual s technologies. Thus driving the company deeper and deeper into a technology Catch 22. As Washington Mutual strives for more information, the bank needs more and more technology in less and less time making Washington Mutual more dependent on computers.

Changes In Technology

Technology has definitely changed the way Washington Mutual does business. Before technology began to progress, Washington Mutual had to do all of its work by hand. But today, Washington Mutual does everything by computer. Technology has made banking easier, and Washington Mutual has been able to be more efficient. Not only has technology improved the services Washington Mutual can provide, but it has also changed the organization and environment of Washington Mutual.

Before computers and technology were established in society, banks were forced to do everything by hand. This made banking difficult, and it was hard to be effective. Banks could only make loans and issue notes for money deposited since they had to do everything by hand. However, currently Washington Mutual offers many services, including checking accounts, PC banking, a VISA check cards, automatic teller machines, direct deposits, pay by phone, and also many other services. All of these improvements have arisen because of the use of technology.

One of the new and considerable advances Washington Mutual uses is PC (online) banking. There are many features to Washington Mutual s PC banking system: accounts, transfers, paying bills, and more services. With the account feature, screens are provided that give an account summary, a detail of accounts, and transaction details. The transfer feature allows a person to schedule a transfer or learn details about transfers. The PC banking system also allows customers to use quick pay, schedule a payment, or look at their payment history. Other services offered by the PC banking system permits customers to reorder checks, look at their check history, and read messages. Without technological advances, Washington Mutual would not be able to provide this convenient service to its customers.

There are both advantages and disadvantages to Washington Mutual s PC banking system. An advantage to this PC banking system is customers can use their computers and a telephone modem to dial in from home or any site where they have access to a computer. Other advantages are that Washington Mutual s services are available seven days a week, 24 hours a day; transactions are executed and confirmed quickly; and the range of transactions is fairly broad. Although PC banking has helped Washington Mutual improve their services, there are some disadvantages. Data entry is necessary before numbers can be handled successfully and switching software or banks can mean re-entry of data. Even with the disadvantages, it is obvious that PC banking has helped Washington Mutual become more productive, and the advantages far outweigh the disadvantages.

As well as improving the services Washington Mutual provides, technology has also changed the organization and environment. There are four different kinds of structural organizational change that Washington Mutual could have taken because of information technology. The first one is automation. This is where the computers are used to speed up the performance of existing tasks. The second kind is rationalization of procedures. This structural organizational change is the streamlining of standard operating procedures so that the operating procedures become more efficient since obvious bottlenecks are revealed. The third kind is business process reengineering, which is the redesign of the flow of business processes with the intention of reducing the costs of business. The final kind of change is paradigm shift. This shift is the extreme restructuring of the nature of the business and the organization. Washington Mutual took on the automation form of organizational change. The intent of Washington Mutual was to not radically change their business, but just use technology and information systems to enhance their current duties and help make their business more efficient. By using computers, Washington Mutual can calculate paychecks and payroll registers which gives their bank tellers instant access to customer deposit records, and allows them to provide the wide variety of services that they now offer.

With the new technology used by Washington Mutual, some concerns arise about changes in the organization. These concerns are the difficulties Washington Mutual may have with managing change, and trying to fit the technology into the organization. The natural inactivity of organizations slows the development of information technology and information systems significantly, which makes it difficult to manage the change. This is especially difficult of large system-building efforts, where massive changes to jobs, business processes, and other parts of the organization are effected in order to get the company to continue working towards its common goal. Although this is a concern when implementing technology to organization, Washington Mutual did not have major problems with this concern. The goal of Washington Mutual has remained the same throughout the years; they are still a savings and loans bank, and act in small town communities in order to receive the best relationship with their customers. Technology has not changed the goal and organizational culture of Washington Mutual. Therefore, the concern of running into difficulties arises with the implementation of technology into organization, Washington Mutual feels it has not really encountered this concern, and believes technology has improved the way they do business.

Another concern with changes in technology is trying to fit the technology into the organization because it may create problems with jobs. Technology can be a threat to humans because people can be replaced by technology or it may create less job opportunities. However, at Washington Mutual, technology has created more jobs rather than less because it has created an information systems (IS) department. People such as programmers, highly trained technical specialists who write software instructions; systems analysts, those who translate business problems into information requirements; IS managers, leaders of teams of programmers, analysts, and others; and end users, the employees outside of the IS group for whom the applications are developed. These people are now needed to manage the new technology, update the programs, and build new systems for Washington Mutual to use. Problems with availability of jobs is not a problem Washington Mutual has encountered because they feel as the business grows, the technological side of Washington Mutual must grow correspondingly.

With technology creating many new jobs, Washington Mutual was forced to generate training programs for its employees. These programs were implemented so that the employees would understand the new information systems, and so they can constantly be updated with any new software or programs. When an employee of Washington Mutual attends a training program, they go offsite to training facilities. At these training facilities, there are people who are knowledgeable of the systems used by Washington Mutual, and they teach and train the employees on all the new systems. With these training systems, it is easier for the corporation to implement the system into the organization. Washington Mutual also uses a system called Words to Bank By, which is a newsletter that goes out once a week to all the branches, and this allows everyone to be constantly updated with any changes in the information systems.

The final concern with trying to fit technology into the organization is that it may be hard to align with the way the organization currently operates. When first trying to apply technology into the organization, many companies have problems with it working with the current procedures used by the company. However, this was another concern that Washington Mutual avoided. As mentioned earlier, before technology, Washington Mutual did all of its business by hand, and now they do everything using computers. Trying to utilize the computers into the past system of doing everything by hand was never a problem for Washington Mutual because the new systems that were created were very user friendly, and therefore it was extremely easy to input the hand-kept data into the computers. The only problem Washington Mutual currently encounters because of the transition is since everything is stored in computers, if the computer system goes down, then it will be extremely difficult for Washington Mutual to do business. The only hard copies of information they have are signature cards, however these do not have enough information about the customers for Washington Mutual to continue business regularly. Other than this problem, trying to adapt technology into the operating system of Washington Mutual has only improved business, and not harmed it.

Ethics in WAMU

Ethical issues in business can be a very controversial subject. Some people even claim that the term, business ethics is a paradox. For many years now, when people consider business, words such as conniving, stealing, or cheating come to mind. In order to break the mold of ruthlessness commonly referred to in today s business world, certain ethical principles have been accepted from which we, as business people, are supposed to maintain.

The idea of ethical principles can only exist if everyone is willing to abide by these rules . It only takes one person to make everybody worse off. This can be seen in the idea of a prisoner s dilemma where if everybody complies by the rules then everybody is better off. However, if one person breaks the rules then that person is better off, but everyone else is worse off. Also, if everyone breaks the rules then everybody is better off, but not as well off as they would have been if everyone involved had complied. The implication of this idea is that we must all abide by these ethical principles in order for them to be effective.

In everyday life this is normally all agreed upon, however, in the business world some people seem to think there exists a different agenda by which to live by. These people believe that the only reason business endures is because of a profit motive. Opponents of this belief tend to think that profit is not the only goal of businesses but that being a role model for society is also their responsibility. At Washington Mutual the latter is what they believe in. They believe that, In order to have a successful business, you must make sure you have support from your society. In order to accomplish this you (as a company) must take the initiative in making your customers feel welcome and being a role model for all those you meet and work with. In other words if you want profit as an eventual outcome you need to be ethical in order to gain trust from the customers that are going to ensure this profit. This is where the ethical principles come into play.

There are many ethical principles we must abide by in business; some of the main ideas are presented here. First, there is the Golden Rule which we have all been told since we were little kids. It states that you should do unto others as you would have them do unto you. The golden rule, like other ethical principles, is only effective when everyone follows it. This rule is applied in the every day life of the employees of Washington Mutual. The belief is the customers should get what you (as an employee) would want if you were the consumer. For instance, interest rates are always of concern to banking customers when they need loans or are investing. Since we, as employees, would want the greatest benefits from our loan or investment, we would want the prime interest rate the bank has to offer, so we give this interest rate to our customers as well. Another example of this rule (in every day life) is lying: you would never want to be lied to, so you should never lie to anyone even in a business setting when it may seem like lying would be beneficial.

The second ethical principle is Kant s categorical imperative, which claims if an action is not right for everyone then it is not right for anyone. Kant claims there are two rules that make up this categorical imperative. First, the action must be universally accepted, and second, the action must not treat people as means to ends but just as ends in themselves instead. Referring back to the example of interest rates, if one customer gets a prime interest rate, and another customer of equal financial status does not get this interest rate it is hardly fair for the party who is receiving less. This is why Washington Mutual uses an equality policy, which simply states that people of the same financial status receive equal benefits. This principle helps people to see that if something should not be done to one person, it generally should not be done to anyone else either.

The third ethical principle is Descartes rule of change. This rule states that if something cannot be repeatedly done, then it should not be done at all. For example, since people should not steal large amounts of things, they should not steal small amounts of things either. This argument is based on logic and the other principles that claim, if it is not right for me then it is not right for you, in any way, shape, size, or form.

The fourth ethical principle is titled risk aversion. It entails taking the action that produces the least amount of harm or the route that produces the least cost for everyone. Washington Mutual tends to think that this is not the right policy for their company. Instead of looking at matters with the idea of minimizing costs, they would like to look at things with the idea of gaining something. This relates more to the idea of profit maximization. If the cost is reduced and not many people are harmed then not only will this principle lead to better ethical products, but it will also lead to higher profits.

The opposite idea of risk aversion is the utilitarian principle. This principle says that you should take the action that achieves the higher or greater value. Value, in this case, does not refer to profits or revenues. Instead, it refers to the value of morality. Washington Mutual takes this policy into their company because they think that it encourages the well being of the whole community. According to this principle then we see that if a certain ethical issue is valued more than another is and one has to be forgone, then the one that yields the most pleasure, morally, is the one that should be executed. This principle makes sense because utilitarianism states that everything we do should benefit society in the greatest. If something only benefits one person, it is not as sound as something that benefits everyone is.

The last ethical principle taken into account is the idea of no free lunches . This principle says that you must assume that someone already owns all tangible and intangible objects unless there is a specific declaration otherwise. With this in mind, we must assume by using other s resources we must pay for it, and we must be ethical about this and always pay what is owed. If everyone does not abide by this principle and pay what is due the principle will not be able to be sustained.

With these ethical principles at hand, we can evaluate ethics with the five-step process of ethical analysis. First, we must identify and describe clearly all the facts and problems. By doing this, we can identify which ethical principle to use. Second, we must define the conflict or dilemma and identify the higher order values involved. Once we do this we can begin to apply the principles chosen. Third, we must identify the stakeholder. This allows us to ask the question, Who is being affected here? This step would allow Kant s categorical imperative to come into play because if something is not right for everyone then it is probably not right for the stakeholder at hand. Fourth, we must identify the opinions that you can reasonably take. We must decide what information regarding the situation is valuable and who should be involved in making such decisions. Lastly, we must identify potential consequences of our opinions. By making a decision on moral grounds we are setting ourselves up for praise or rejection. We must consider what the possible consequences are of each decision and using the utilitarian principal or the risk aversion principles decide which one is right for our purposes. The people of Washington Mutual claim that this is an excellent way of assessing their problems and finding the best solutions. When an ethical dilemma arises they turn to a plan similar to this and point out the problem in detail and design a solution.

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