Introduction of Maldives - Part 01 - Doing Business in the Republic of Maldives

The Maldives is a small island state located in the Indian Ocean, just South-East of Sri Lanka. The Maldivian archipelago consists of 1192 islands each surrounded by shallow, crystal clear lagoons enclosed within naturally protective coral reefs. The climate is tropical, with two monsoons, keeping the islands unvaryingly warm throughout the year.

As a country renowned worldwide for its natural geographical beauty, around 111 of Maldives’ islands have been developed into luxury resorts for tourists, from which the country generates most of its income. Additionally, the Maldives sits astride busy sea-lanes that connect Asia with the rest of the world.

The local population, which is close to 350,000, is spread out across 188 islands, but most concentrated in the capital city of Malé, which is not only the political capital but also the centre of commerce in the country. The population is homogenous, speaking one language and practising one religion. In addition to the local language, English is widely spoken and is the main medium of instruction in schools and the primary medium of communication in business.

The Maldivian Rufiyaa (MVR) is the main unit of currency used in the country. The most common foreign currency used within the country is the US dollar.

The main port of entry to Maldives is through Ibrahim Nasir International Airport at Hulhulé, an island adjacent to Malé. There are three additional international airports, one in Hanimaadhoo located in the northern tip of Maldives, the second in the southernmost Gan Island and the third in Maamigili.

There are 5 domestic airports within the Maldives, and a large fleet of seaplanes providing daily and easy access to the 112 resort islands across the country. The other modes of transport most widely used by residents are ferries or motorboats that regularly travel through Maldivian seas.

The Malé port and harbour lie on the western side of the capital and receive the bulk of imports into the country.

Maldives has had a nimble ascent to an upper middle-income country with the highest GDP per capita in South Asia.

Nominal GDP per capita - USD 6,722
Total Population: 380,728
GDP Growth Rate: 8.5%
Foreign Exchange Rate: USD 1 = MVR 15.42

Children of the Maldives

Island of Huraa in the Maldives (Kaafu Atoll)

Written by: Mohamed Sanih

Island of Huraa, Maldives

About the Island

Huraa Island is located north of Male, the capital of Maldives. Carefully placed between the islands Himmafushi and Thulusdhoo, it is home to about 750 people. It is not far off from the airport and a 25 – 35 minute speed boat ride from the airport will get you there.

North of the island is covered, rather unusually, by a brackish water mangrove with a sparse coconut plantation around the island. The resort island Four Seasons Kuda Huraa is barely 30 seconds away which is quite segregated from the rest of the island. There’s a lot of interesting things to talk about in this island which we’ll be doing under the next few headings.

Island Facilities

The island of Huraa is a rather small island, so do not expect too many facilities. The island boasts only one café which is mostly used by locals. Guest houses mostly provide “all inclusive” services, leaving little (if any) need for the café.

There are three neighboring resort islands not far off the island. Four Seasons Island Resort, which was earlier mentioned, is only about 100 – 200 meters away from Huraa; while the others, Club Med Kani Resort and Chaaya Island Resort Dhonveli, are a tad farther. On the whole, the island is home to 5 guest houses. So, there are enough facilities available for foreigners to lodge.

There are many gift shops around Huraa from which you can pick up souvenirs. For the most part, souvenir prices in Huraa are usually lower than those in Male, so be sure to pick up your souvenirs from here if you’ll be visiting. If you are looking for locally made souvenirs, you’ll find more of those here in Huraa than in Male.

Island Activities

There are more than a few activities to keep you occupied in Huraa. The island organizes a bikini beach where you can swim, snorkel, and get some tan in the sun, playing around in your bikinis. The beach environment promotes other activities as snorkeling or dolphin watching, making Huraa ideal for beach holidays.

Prepare to enjoy some refreshing time with barbecue on a picnic island. Safari ride and photos with sharks and turtles, water surfing on a surfboard, wetbike, and catamaran, and wakeboarding among others. With lots of coral reef, your time under the water can be as fulfilling as that which you spend atop the waters.

You would also have the opportunity to receive some certification after completing an Open Water course. Of course, as a beach community, you can also expect training in surfing and diving which you can begin to practice right away.

Indeed, there are a plethora of activities you could enjoy during your vacation getaway on the island. As a traditionally fishing community, you can always visit the local fishermen at the harbor, watching them as they land their catch. And when watching begins to bore you, you can always try your hands on fishing yourself.

Bring out the foodie in you as you explore the delicious local dishes on offer. With lots of palm trees, crabs, and fruits in general, you have more than a few eating options. From the amazing hamburgers to the enticing stuffed baguettes prepared in the local bakery, you wouldn’t be missing home too much.

From the picturesque views to the rather comfortable guest houses, and all of the possible beach and water activities, you’ll find your stay in Huraa refreshing. With the islands of Diffushi, Thulusdhoo, and Himmafushi all present, you can take the time to visit one or some of these as part of your getaway.

Seize the Opportunity to Invest in Huraa Today

The people of Huraa are traditionally engaged in fishing activities. In recent times, though, tourism has come to play more of an important role in the local economy. During this time, more and more guest houses have begun to spring up in the island.

Huraa is well located in the North Male Atoll region, a short distance off of Maldives’ capital city Male. This prime location coupled with its unique vegetation environment – the mangrove swamp located in the northern parts of the island has been declared a protected nature environment due to its great climate for unique protected birds – makes it an ideal tourist hub.

The people of the island of Huraa are a welcoming people, taking to tourism as a second major occupation. Investing in the real estate sector in Huraa by way of Guest House Development will see you partake in this recent upsurge in tourism.

Thanks to its naturally relaxing and welcoming environment, you will have little to bother about as it involves environmental beautification. More importantly, the welcoming nature of the island’s people, who will make up the staff of your guest house, will naturally ensure that your guest house will feel more like a home to guests than a lodge.

Huraa is mostly known for its range of beach activities, and setting this up for lodgers will be fairly easy considering the wide availability of natural beach environment. From shark and underwater safari to snorkeling, kayaking, or whatever other activity you choose to set up for your guests, you are already equipped with the perfect environment.

Anti-Corruption, Business Ethics and Professional Conduct

Written by: Mohamed Sanih, Gn. Fuvamulah, Maldives

This was my first article for a resort staff newsletter and I hope by sharing, people will find it useful and helpful. I will give a brief introduction into “Anti-Corruption, Business Ethics and Professional Conduct”.

I would like to give you some clues on how to conduct yourself professionally, which adhere to anti-corruption and business ethics in general.

Organization ethical culture need to have an open door and honest policy by always doing the right thing to deliver results.

A successful business relationship whether with work colleagues or with other stakeholders will always depend on honesty and integrity of the individual and which will reflect back on the organization that person is working.

All employees need to have thorough knowledge of the codes and procedures of the company and corporate head office policy, including employee code of ethics and conduct. There should be a continuous commitment to use good judgment and common sense in trying to do the right thing and always work in the best interests of the company.

The term integrity is defined in this article as:

Having the best ethical standards, showing honesty, respect for your fellow colleagues & stakeholders and open communication (not hiding or keeping things secret which can prove detrimental or damaging to the organization).

The best Code of Conduct which I came across was from InterContinental Group, where they ask these simple questions, which if answered properly in your conscience, you will know whether it is something right or wrong?

They are as follows:

Is it Legal?

Is it Ethical?

Is it Safe?

Is it consistent with the Code and IHG’s policies and procedures?

Is it consistent with our Winning Ways?

Would I be comfortable explaining it to my friends and family?

How would I feel if it was made public in the newspapers or online?

Further, workers should not misuse, own or sell anything (including but not limited to information, confidential matters etc.) which is a property or asset of the company.

In short if I were to summarize “what is Anti-Corruption and Business Ethics?’

I would conclude by saying that it is always doing the right thing, by using your common sense and judgment on doing what is right. What you feel and what your conscience tell you to do which is the right thing.

BCG Matrix - Product Life Cycle Theory

By: Mohamed Sanih, Gn. Fuvamulah, Maldives

The BCG Matrix is a famous model developed by the Boston Consulting Group which shows the various stages in a product life cycle in a simple and understandable manner.

The BCG Matrix can be either used to measure a single product or more commonly a group of products in an portfolio which will be in the various stages of the product life cycle. e.g. some maybe a cash cow, while others maybe a problem child or question mark?

The company should decide which products needs to be abandoned, and which ones to pursue depending on various factors such as market penetration, product success, saturation of the market, low growth, cash generating, high expenditure products, research and development etc.

The BCG Matrix has four categories and they are:

1. Question Mark or Problem Child
2. Stars
3. Cash Cows
4. Dogs

• Question Mark or Problem Child

This is normally a product which has a small market share in a fast growing industry. A problem child or question mark (product) will consume a lot of cash & resources in a company (e.g. for market penetration, product awareness, etc.) than it generates. 

Products within this quadrant in the BCG matrix may remain uncertain for a number of years, during which time it may evolve into a Star (high market share / fast growing industry) or Dog (small market share / mature industry).

Most products or businesses start off as problem child and represents the biggest challenges to management. As management need to decide whether to put into the resources and huge cash reserves to make this product a success (Star) or when to put the stop limit or abandon the product before it becomes a Dog.

• Star in the BCG Matrix

The product which we think of when thinking about Stars are telecom products. If we look at any best 5 telecom companies, share of market is high but the company growth rate is much higher. Since, these two factors, there is always high competition and juggle to invest and harvest between telecom companies i.e. invest the money into new products or taking out cash from time to time.

Stars can always be taken over by another company due to high competition which capitalize on the high market growth rate. With a successful strategy a star can become a cash cow in the long term.

Star Strategies can be as follows:

-          Marketing and Sales Promos
-          Advertising
-          And Various other marketing activity

Cash cow will normally already have these strategies due to which it has resulted in the formation of the cash cow. Stars on other hand, due to high competition and high market share, the marketing strategy will of high expense with a lot of marketing activities to maintain market share, so as to gain and retain the respective market share. 

• Cash Cow in the BCG Matrix

They’re the market leaders and exhibit a return which is greater than market growth rate. Thus generating more cash than need to be expensed. The cash from such products should be harvested, extracting the profits and investing little cash as possible.

Cash from cash cows will be used to turn “problem child or question marks” into Stars, to cover admin costs, marketing costs, fund R&D development, debts and pay returns to shareholders.


Cash cows generate stable cash flow and their value is accurately determined by calculating present value of its cash stream using a discounted cash flow analysis.

• Dogs in the BCG Matrix

Dogs are generally has a low market share in a slow growing mature industry. These kind of products generally either barely generate enough cash to maintain their market share in their industry.

Even though of the fact barely getting back original investment money or making a loss it gives the social advantage of giving employments and conceivable cooperative energies that help different specialty units.

From a bookkeeping perspective such a unit is useless, not producing money for the organization. They reduce the company’s return on assets ratio, utilized by numerous financial specialists to judge how well an organization is being overseen. 


Dogs, it is thought, ought to be sold off or generally discontinued in the long term.

The BCG Matrix has two axis one for Market Growth and another for Market Share, as can be seen from the below diagram:

Example of an BCG Matrix slide can be seen below for Nestle:

http://www.valuebasedmanagement.net/methods_bcgmatrix.html

Excellent Video on BCG Matrix:

ACCA P1 Governance, Risk and Ethics: Summary Synonyms for Last Minute Exam Preparation

Corporate Governance Concepts - HAIR DRIFT

Honesty or (Probity): Create a culture of honesty & ethical stance within the organization.

Accountability: Providing comprehensive information to all concerned stakeholders and effective risk management within the organization.

Integrity: Have a high standard of strict moral and ethical values or codes.

Responsibility: Having a clear responsibility for corporate governance decisions and the clarification of individual roles and responsibilities.

Decision Taking: Take clear cut decisions to improve the wealth of an organization.

Reputation: Maintain a culture to develop reputation and moral stance and also to comply with the corporate governance concepts.

Independence: There should not be a conflict of interest between the executive directors and non-executive directors. NED's or non-excutive directors should be fully free and independent to make their decisions within the organization.

Fairness: All stakeholders should be dealt ethically and equal by the organization and should take into account their legitimate interests.

Transparency: Organization agents or directors should have an honest and open relationship with all stakeholders in their decision making process. And provide full disclosure of all material matters (whether financial or non-financial) which concern the company and this should be done in a ethical and transparent manner.

Corporate Governance Purposes -PIGCREW

Practice methods - governance provides practice methods to aid those who are managing a company
Investment - governance creates assurance and trust thereby attracting investment
Growth - governance creates conditions for growth of the economy

Control - it is set in place to control excessive behaviour in the organisation
Rules - it creates rules within which the organisation is operated
Employment - it creates employment as well as deals with several employment issues
Wealth - it supports a wealth-creating capitalist system

The role of the Chairman can be defined best by the synonym (RAISE DIP) for the ACCA P1 Paper: Governance, Risk and Ethics.

The best description can be found in Derek Higgs Report and they can be summarized as follows:

R: Run or leadership of the board and effectiveness of the board to set their roles and agenda.

A: Accurate, timely and clear information to the Board of Directors.

I: Information facilitating & contribution of the non-executive directors.

S: Self sufficiency in performing complex and difficult decisions.

E: Effective communication between executive and non-exectuive directors (NEDS) and also with the shareholders.


D: Develop and process the needs of both executive and non-exectuive directors.

I: Induction and training programs for the Board of Directors.

P: Performance evaluation of the Directors.

Role of the Non-Executive Director are as follows: ("CSSR")

Non-Executive Directors should:

C: Contribute and challenge the organizational strategy for it's continued success.

S: Satisfy themselves that the there is adequate internal controls and risk management system in place. And also that the financial information generated by the organization is accurate.

S: Scrutinize management performance and monitor the reporting of performance for meeting agreed goals and objectives.

R: Responsible for the remuneration of Executive Directors and have a major role in contractual and disciplinary measures if necessary to be taken against executive directors. And are primarily involved in removing, appointing senior management and succession planning. Also, hold executive directors to account for their actions and to represent the shareholder interest.


The following quote is taken directly from Derek Higgs Report: 

"The role of the non-executive director is frequently described as having two principal components: monitoring executive activity and contributing to the development of strategy. Both Cadbury and Hampel identified a tension between these two elements.

A number of consultation responses identified the personal attributes required of the effective non-executive director. They are founded on:

• integrity and high ethical standards
• sound judgement;
• the ability and willingness to challenge and probe; and
• strong interpersonal skills."

The role and function of the Audit Committee can be defined best by the synonym (CLARISSA) from the ACCA P1 Paper: Governance, Risk and Ethics:

The below is an summary transcript of each without an broader definition:

(CLARISSA) 

C: Create a an environment of discipline and control

L: Lend accuracy and truthfulness and credibility in the financial statements.

A: Assisting the Finance Head or Chief Financial Officer in providing a forum of communication.

R: Review and check the financial statements for quality control and accuracy.

I: Independent Review & Judgement

S: Strengthen the position of the Internal Auditor within the company and provide support to their concerns and needs and provide such information to the concerned stakeholders in an transparent manner.

S: Strengthen the position of the External Auditor within the company and provide support to their concerns and needs and provide such information to the concerned stakeholders in an transparent manner.

A: Assist in any disputes between the External Auditors and the Board of Directors and provide solution in relation to such matters.

Agency theory - directors act as agents of shareholders

Potential problem - strategy to benefit directors, not shareholders, different attitude to risk (not their investment), short-termism
Goal congruence - incentives to align interests (profit related pay and share option schemes)

Rules or principles-based approaches

Rules - SOX, legally enforced, section 404 ICFR penalises SMEs
Principles - UK Combined Code of CG, comply or explain, SMEs more leeway, not legally compulsory, market benefits or penalties for non-complier

Risk Committee - majority of NEDs, 1 - from AC, 1 - risk expertrole

Assess ICs
Performs risk assessment of key operations
Oversees implementation and effective operation of risk strategy

Nomination committee - majority of NEDsrole

Identify appropriate people to join board
Determine packages and their compositions for prospective EDs

Remuneration committee - majority of NEDsrole

Determine appropriate packages and their compositions for EDs
Cross directorship and cross shareholdership are prohibited

THE TURNBULL CRITERIA TO ASSESS THE NEED FOR INTERNAL AUDIT

CCC PINS

C: Cost-benefit considerations
C: Changes in organisational structure
C: Changes in key risks

P: Problems with internal control systems
I:  Increased number of unexplained or unacceptable events
N: Number of employees
S:  Scale, diversity and complexity of the company’s operations

Turnbull guidance for sound ICs (sound = effective)

Principles of ICs embedded to activities (not stand alone)
Quickly response to risks
Immediate reporting to man-t

Public sector organisations

Hospitals, schools, local government authorities, state-controlled companies, NGOs
Purpose - implement government policy. It cannot be left for profit (eg. loss-making route may be retained to support economic development in a region)
Focus - value for money (EEE)
Agency relationship - man-t as an agent for taxpayers
Problem - strategic objectives hardly to define and monitor their achievements

Charities & voluntary organisations
Accountability relationship - charity - donor - purpose of donation and actual use of it


Risk


Strategic risk

responsible - board
arises from fundamental decisions related to organisation's objectives
Business and Non-business
Business - product and service related (marketing and development, economic risk, technological risk)
Non-business not related to product and service (long-term financing)

UK Cadbury report - matters:
significant acquisition and disposal
investments
capital projects
treasury policies

Managing - if problem is global (raw material supplier uncertainty), - not avoided in short term, - redesign production - reduce or eliminate risk in long-term
Avoid risk - lost business opportunity - competitor may take up these opportunities and boost its business

Operational risk
responsible - risk committee - line managers - employees
arises from internal resources, systems, processes, employees risks
stoppage line - machine failure
key staff leaving - dissatisfied
lost of sales - poor quality

Managing - controls to detect or correct problem - to reduce or eliminate risk

Guide to risks - FROP LIFE

Financial risk
Reputation risk
Operational risk
Product risk

Legal & political risk
Information technology risk
Fraud risk
Entrepreneurial or economic risk

Risk framework - ALARM

Appetite
List (risk register)
Assess (TARA)
Response
Monitor

TARA

High probability * High impact = Avoid
High probability * Low impact = Transfer
Low probability * High impact = Reduce
Low probability * Low impact = Accept

ERM model COSO's enterprise risk management 8 components

1 - Internal environment - tune of organisation influencing risk appetite, attitude to risk man-t & ethical values (criticism - external environment ignored)
2 - Objective setting - to support company's mission (consistent with risk appetite)
3 - Event identification - which may affect achievements of objectives. Negative impact - risks, positive impact - opportunities
4 - Risk assessment - probability and impact of risks
5 - Risk response - reduce, accept, transfer, avoid
6 - Control activities - policies & procedures to check effectiveness of risk responses
7- Implementation & communication - data - man-t & staff responsibility
8 - Monitoring - modified if necessary

Ethics

Gray, Owen & Adams - 7 positions on CSR
PRESSSD

Pristine capitalist - shareholders most important
Radical feminist - do not fellow male dominate, soft treatment of female
Expedients - opportunities for business > SR is secondary
Social contract - entity exists till it serves the society
Social ecologist - recognise social & environmental footprint
Socialist - SR is first, good production is second
Deep ecologist - attention to nature, save planet for the future generations

Pristine capitalist:

• underpinning value is shareholder wealth maximisation.
• anything that reduces shareholder wealth (such as acting in a socially responsible way) is theft from shareholders.

Radical feminist:

• society and business should be based on feminine characteristics such as equity, dialogue, compassion and fairness.

Expedients:

• recognise some social responsibility expenditure may be necessary to strategically position an organisation so as to maximise profits.
• this is back to the concept of 'enlightened self-interest'.

Proponents of social contract:

• businesses enjoy a licence to operate granted by society so long as the business acts in an appropriate way.

Social ecologist:

• recognises that a business has a social and environmental footprint and therefore bears responsibility for minimising that footprint.

Socialist:

• actions of business are those of the capitalist class oppressing other classes of people.
• business should be conducted so as to redress imbalances in society.

Deep ecologist:

• humans have no more intrinsic right to exist than any other species.

AAA model
FEN ABCD

Fact
Ethic
Norm

Alternative course
Best course
Consequence
Decision

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tucker's model - 5 questions

Please Look For Red Shoes

Profitable?
Legal?
Fair?
Right?
Sustainable? (or environmental)?

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mendelow framework
influence of stakeholder = Power * Interest

Low power * Low interest = Minimal effort
Low power * Hight interest = Keep informed
High power * Low interest = Keep satisfied
High power * High interest = Key players

Instrumental & normative motivations of stakeholder theory

Instrumental - take into account stakeholders opinion only if they are consistent with other, more important objectives (profit maximisation, gaining market share, etc.)

Normative - Kant's theory based, moral framework, see shareholders as ends in themselves, not to achievements of other ends)

Category of stakeholders - PINK LAVR

Primary / secondary
Internal/ external
Narrow / wide
Known / unknown

Legitimate / unlegitimate
Active / passive
Voluntary / involuntary
Recognised / unrecognised

Approaches to Corporate Social Responsibility (CSR) - PRAD

Proactive - promote interests of stakeholders & stakeholders
Reactive - avoid CSR, try to hide from stakeholders / society
Accommodative - balance the interests of shareholders with other stakeholders
Defensive - rely only on legally established rules to take minimal CSR

Corporate Social Responsibility (CSR) - PELE

Philanthropic - what is desirable?
Ethics - what is right?
Legal - compliance with law
Economy - focus on profitability

Kohlberg's stages of moral development

3 levels (6 stages)

Level 1 - Pre-conventional
1. Obedience & punishment orientation (How to avoid punishment)
2. Self-interest orientation (What's in it for me?)

Level 2 - Conventional
3. Interpersonal accord & conformity (social norms, good boy/girl attitude)
4. Authority & social-order maintaining orientation (Law & order morality)

Level 3. Post-conventional
5. Social contract orientation
6. Universal ethical principles


Pre-Conventional Level:

Stage 01: is generally found in the elementary school level where people behave according to generally accepted norms. Because they are ordered to do so by someone with authority e.g. school teacher or their parents and non-obedience is generally met with punishment.

Stage 02: is where they behave according to their own interests so that they are rewarded. E.g. a parent may encourage a child with potential rewards for good behaviour or grades.

Conventional Level: Generic norm of thinking within our society.

Stage 03: Good boy / girl attitude where the approval others are sought so as to be accepted within the society or culture.

Stage 04: Obedience to law and order as an obligation by an responsible corporate citizen.

Post-Conventional Level: This level of thought or moral attitude are not reached by most individuals within our society as per Kohlberg.

Stage 05: Social Contract is mutual dependence and having an genuine interest in the betterment & welfare of others in general. Have a understanding between moral and legal rights and the recognition that rules should not be followed where it is deemed ethically & morally wrong.

People believe that rules & regulations should exist for their general good and where this is deemed otherwise, under Social Contract obligations they must be broken.

Stage 06: Principle Conscience is where universally accepted ethical principles are followed and this may sometimes not fit the law. Examples of such are: Human Rights, Justice and Equality. Some individuals will be prepared to break the law, in order to defend such principles.


http://kfknowledgebank.kaplan.co.uk/KFKB/Wiki%20Pages/Theories%20of%20Corporate%20Social%20Responsibility.aspx

Ethical Theories: Absolutism and Realavitism similar to Deontological and Teleologocal - ACCA P1

PRINCIPLES > ACTIONS > OUTCOMES

Absolutist……………………Relativist
“it’s always wrong to steal”…….. “Robin Hood was Ethical.”
Absolutist and Relativist are two categories of ethical decision making:

Absolutist: Actions are ethical if they follow moral principles of right and wrong (e.g. the 10 commandments). The outcome of the decision is not considered. E.g. the statement, “It’s wrong to steal,” is following an absolutist approach to ethics.

Relativist: The outcome of a decision determines if it is ethical–principles are ignored. E.g “Robin Hood was Ethical–he stole from the rich, and gave to the poor.” No mention of principles, only the outcome–that he helped poor people. This is a relativist approach.

Deontological: This is in the absolutist category–ethics based on an “inner sense of duty” to follow a moral code. (Another absolutist approach would be the “normative” approach towards stakeholders, which also comes up in the exam.)

Teleological is in the relativist category (you could argue these terms are actually synonyms). What is ethical is either (a) what is best for me, or (b) what is best for society. (the instrumental view towards stakeholders is another example of a relativist approach).

You can explore these concepts more deeply by looking at Kant and other theorists. But for P1, it’s more important that you can dissect the case study and explain which of the characters is taking the absolutist approach, and which is taking the relativist approach, and why.

Copy Extracted & Retrieved from: 

http://opentuition.com/topic/ethical-theories-2/

Kohlberg's Three Levels of Moral Development

Lawrence Kohlberg was an Harvard University professor, and is famous for his work on the theory of moral development, which became popular via his research work during his time in Harvard Moral Education Center.

Kohlberg said that most people progressed with their sense of moral reasoning in relation to ethical behaviour through three stages or levels.

These three stages can be further broken down into six identifiable levels, but mostly generalized as three stages.

This article will be useful for students studying the ACCA P1 Paper: Governance, Risk and Ethics.

Kohlberg's classification can be outlined in the following manner:

Pre-Conventional Level:

Stage 01: is generally found in the elementary school level where people behave according to generally accepted norms. Because they are ordered to do so by someone with authority e.g. school teacher or their parents and non-obedience is generally met with punishment.

Stage 02: is where they behave according to their own interests so that they are rewarded. E.g. a parent may encourage a child with potential rewards for good behaviour or grades.

Conventional Level: Generic norm of thinking within our society.

Stage 03: Good boy / girl attitude where the approval others are sought so as to be accepted within the society or culture.

Stage 04: Obedience to law and order as an obligation by an responsible corporate citizen.

Post-Conventional Level: This level of thought or moral attitude are not reached by most individuals within our society as per Kohlberg.

Stage 05: Social Contract is mutual dependence and having an genuine interest in the betterment & welfare of others in general. Have a understanding between moral and legal rights and the recognition that rules should not be followed where it is deemed ethically & morally wrong.

People believe that rules & regulations should exist for their general good and where this is deemed otherwise, under Social Contract obligations they must be broken.


Stage 06: Principle Conscience is where universally accepted ethical principles are followed and this may sometimes not fit the law. Examples of such are: Human Rights, Justice and Equality. Some individuals will be prepared to break the law, in order to defend such principles.


I have shown some examples below for better clarification and understanding:

Sources:

https://explorable.com/theory-of-moral-development

https://en.wikipedia.org/wiki/Lawrence_Kohlberg's_stages_of_moral_development

http://www.simplypsychology.org/kohlberg.html

https://www.csudh.edu/dearhabermas/kohlberg01bk.htm

References

Bee, H. L. (1994). Lifespan development. HarperCollins College Publishers.

Colby, A., Kohlberg, L., Gibbs, J., & Lieberman, M. (1983). A longitudinal study of moral judgment. Monographs of the Society for Research in Child Development, 48 (1-2, Serial No. 200). Chicago: University of Chicago Press.

Gilligan, C. (1977). In a different voice: Women's conceptions of self and of morality. Harvard Educational Review, 47(4), 481-517.

Kohlberg, L. (1958). The Development of Modes of Thinking and Choices in Years 10 to 16. Ph. D. Dissertation, University of Chicago.

Kohlberg, L. (1984). The Psychology of Moral Development: The Nature and Validity of Moral Stages (Essays on Moral Development, Volume 2). Harper & Row

Piaget, J. (1932). The moral judgment of the child. London: Kegan Paul, Trench, Trubner & Co.

Rest, J. R. (1979). Development in judging moral issues. University of Minnesota Press.

Rosen, B. (1980). Moral dilemmas and their treatment. In, Moral development, moral education, and Kohlberg. B. Munsey (Ed). (1980), pp. 232-263. Birmingham, Alabama: Religious Education Press.