CHAPTER 2

BUSINESS ETHICS
AND SOCIAL
RESPONSIBILITY

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 ETHICS

IS THE STUDY OF
HOW PEOPLE
OUGHT TO ACT

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NOT HOW THEY
ACT

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WORLDCOM

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HEALTHSOUTH

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ImClone

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WORLDCOM

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HEALTHSOUTH

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ImClone

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 LAW AND ETHICS
MAY
NOT ALWAYS AGREE

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SOMETIMES IT IS ETHICAL TO
COMMIT AN ILLEGAL ACT

AND

SOME LEGAL ACTS ARE

UNETHICAL

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THERE ARE TWO TYPES OF
LAWS

JUST AND UNJUST

AN UNJUST LAW IS NOT LAW AT ALL

(Dr. Martin Luther King, Jr., quoting St. Augustine)

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WHY BOTHER WITH ETHICS?
Society as a whole benefits

People feel better when they behave

ethically

Unethical behavior can be costly

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 ETHICAL CHECK LIST
What are the facts?
What are the critical issues?
Who are the stakeholders?
What are the alternatives?
Is it legal?
How would it look in the light of the day?

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 ETHICAL CHECK LIST, CONT’D.
What are the consequences?
Does it violate important values?
Does it violate the Golden Rule?
Is it just?
Has the process been fair?

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ETHICAL RESPONSIBILITIES
1. To other
2. To customers
3. employees
4. To stakeholders
5. To the company
6. To society
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 THE BEST BEHAVIOR

The best way to infuse ethics

throughout an organization is
for top management to
behave ethically themselves.

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Ethical behavior offers significant
advantages: society as a whole
benefits; executives who
behave ethically have happier,
more fulfilled lives; and
unethical behavior can destroy
a company!
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CHESTER’S
RULES
FOR
ETHICAL
BEHAVIOR

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WHEN IN DOUBT,

DON’T

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IF IT SMELLS BAD,

IT PROBABLY IS

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 IF IT SOUNDS TO
GOOD TO BE TRUE,

IT PROBABLY IS

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 NEVER DO
ANYTHING YOU
WOULD BE
EMBARRASSED TO
TELL YOUR
MOTHER ABOUT
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