MBA 6301 Business Ethics

2004 Prentice Hall, Inc.

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Learning Facilitator
Charles Brewton Tennessee State University, Ph.D. The University of Memphis, M.B.A. Georgia Institute of Technology, B.S.
Text: Business Ethics Ethical Decision Making and Cases

2004 Prentice Hall, Inc.

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Course Administration 
 

Time Expectations Course Grading 
   

Unit quizzes 24% Section Exam 1 20% Section Exam 2 20% Participation/ Discussion 15% Final Exam 21%
2004 Prentice Hall, Inc. 3

Inc.One Assignment  Business Ethics     Bring in two (2) documented cases Source: Newspaper or Internet Subject: Violation of ethics as it relates to Vietnamese organizations English language 5% of participation grade 2004 Prentice Hall. 4 .

A Review of 286 AACSB Member Schools Reveals. Programs.6% (overall) require an ethics course   68% of private 30% public  Source: Cheryl L..  Required ethics course(s):  40. #3 (Fall): 71-79. Buff and Virginia Yonkers (2004) How Will They Know Right From Wrong? A Study of Ethics in the Mission Statement and Curriculum of AACSB Undergrad. Vol. Mkt. 5 . 2004 Prentice Hall. Marketing Education Review. 14. Inc..

Inc. Psychology professor Steven Davis says that cheating by high school students has increased from about 20 percent in the 1940 s to 75 percent today. 6 .In a recent Wall Street Journal article. 2004 Prentice Hall. cheating in college is for a career. Students say cheating in high school is for grades.

good from evil. 7  . Ethics entails action. The second involves the commitment to do what is right. Inc. p. and propriety from impropriety. it is not just a topic to mull or debate.TWO KEY ASPECTS OF ETHICS  The first involves the ability to discern right from wrong. (Taken from Maxwell. good and proper. Ethics 101. 18) 2004 Prentice Hall.

74)  2004 Prentice Hall. Ethics 101. 8 . 43% of employees admitted to having engaged in at least one unethical act in the last year. and 72% believed that actions in business and golf parallel each other. p. and 75% observed such an act and did nothing about it.STATISTICS. (John Maxwell. Inc. 10)  Another recent survey found that 82% of business executives admitted to cheating at golf. (John Maxwell. p. STATISTICS In a recent workplace survey. Ethics 101.

This was particularly true for professional and managerial employees. 82% said they would rather work for an ethical company at less pay than an unethical company at higher pay. 2004 Prentice Hall. a combined total of 94%.    57% said it was critical and 37% said it was important . 36% have left a job because they disagreed with their company s ethical practices. Inc. 9 .SURVEY RESULTS ON ETHICS IN THE WORKPLACE Employees want to work for ethical companies.

SURVEY RESULTS ON ETHICS IN THE WORKPLACE   56% say their companies embrace ethical values in their corporate culture. However. 2004 Prentice Hall. Inc. 30% believe their companies merely follow the letter of the law and company policies. 10 .

Principle of Employee Conduct     10% Follow their own beliefs 40% Try to follow company policies & rules 40% Go along with the work group 10% Take advantage if the risk is low 2004 Prentice Hall. Inc. 11 .

..Common Unethical Acts. Inc. 12 . 2004 Prentice Hall.       lying to supervisors falsifying records alcohol and drug abuse conflict of interest stealing gift/entertainment receipt in violation of company policy  1997 Society for Human Resource Management/Ethics Resource Center. Business Ethics Survey.

.Classification of Ethical Issues.. Inc. 13 .     conflict of interest honesty and fairness communications organizational relationships 2004 Prentice Hall.

gifts.  exists when an individual must choose whether to advance his/her own interests. or others examples include bribes or personal payments. 14  .. Inc. or special favors intended to influence decision making 2004 Prentice Hall.Conflict of Interest.. the organization s.

August 2.000 adults) 2004 Prentice Hall. 2004. (Progressive Auto Insurance survey of 1. 15 .What one might do for $500    Stop going to movies for 6 months (62%) Get a tattoo (39%) Cheat on spouse (4%)  Source: Anything for Money? Business Week. 9. p. Inc.

16 ...Honesty & Fairness. Inc.  following applicable laws & regulations & not knowingly harming stakeholders Is advertising prescription drugs on TV and in magazines fair?   Are long distance information ads that place the cost of the call in very small print at the bottom of the screen fair? 2004 Prentice Hall.

17 . dogs & monkeys recognize inequities 2004 Prentice Hall.Do Animals Recognize Fairness? Research shows people. Inc.

Inc. product safety information.. 18   .Communications. & product composition Are health foods and medicinal supplements using puffery in their advertising? 2004 Prentice Hall.  refers to the transmission of information and the sharing of meaning examples: deceptive advertising..

.Organizational Relationships. not pressuring others to behave unethically  2004 Prentice Hall. meeting obligations & deadlines.  behavior of organizational members toward stakeholders includes confidentiality. Inc. 19 ..

containing aspects of fairness and duty to the profession and the general public System or code of morals of a particular religion. 20 . others. or profession The branch of philosophy that deals with issues of right and wrong in human affairs Personal code of conduct based on respect for one's self. group. and one s surroundings 2004 Prentice Hall. a code of professional standards. Inc. rules and standards of conduct With regard to professions.What is Ethics?      A system of moral principles.

Inc. 21 .Universal Human Values         Love Truthfulness Fairness Freedom Unity Tolerance Responsibility Respect for Life  Rushmore Kidder. 8/94 2004 Prentice Hall. The Futurist.

What is Business Ethics? 2004 Prentice Hall. 22 . Inc.

General Business Ethics 

Philosophy of Business 

If to maximize the returns to its shareholders, then it should be seen as unethical for a company to consider the interests and rights of anyone else. 

  

Corporate social responsibility Relations between different companies Political contributions Corporate governance.
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Business Ethics
Business Ethics is that branch of ethics that examines:  Ethical rules and principles within a commercial context  The various moral or ethical problems that can arise in a business setting  Any special duties and obligations that apply to persons who are engaged in commerce
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What is business ethics? (a managerial perspective) 
      

defining appropriate behavior establishing organizational values nurturing individual responsibility providing leadership & oversight relating decisions to stakeholder interests developing accountability relating consequences auditing & improvement 

Copyright O.C. Ferrell; March 2005

2004 Prentice Hall, Inc.

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Two Characteristics Tells people what they ought to do Set of principles or rules 2004 Prentice Hall. Inc. 26 .

27 .Relativism Egoism The 4 Concepts of Ethics Utilitarianism Deontologism 2004 Prentice Hall. Inc.

28   .Concepts of Ethics  Developed by moral philosophers over generations Used to distinguish ethical from unethical behavior Each has problems 2004 Prentice Hall. Inc.

Inc.Relativism    There is no universal standard by which morality can be judged What is correct for one society may be wrong for another Ethics and morality are relative What do you think of this? 2004 Prentice Hall. 29  .

Problems    There are no absolutes . slavery. torture. Inc. 30 . rape OK Leads to conclusion .Relativism .murder.each person s opinion is correct Nothing that anyone does is morally wrong 2004 Prentice Hall.

31 .Egoism    One ought to act in his or her own self interest Ethical behavior is that which promotes one s own self interest Does not mean should not obey laws only do so if in self interest 2004 Prentice Hall. Inc.

Egoism  What do you think of this concept? Typical Problem OK to dump toxic wastes as long as don t get caught  2004 Prentice Hall. 32 . Inc.

Inc.Utilitarianism  The morality of an action can be determined by its consequences An action is ethical if it promotes the greatest good for the greatest number  2004 Prentice Hall. 33 .

34 . Inc.What do you think of this concept?     How do you quantify benefits and costs? How do you value benefits and costs? Can lead to unjust consequences Restrictions against the majority to protect a minority is not utilitarian 2004 Prentice Hall.

35 .Utilitarianism Example  Harry Truman and Decision to Drop Bomb on Japan 2004 Prentice Hall. Inc.

36 .Deontologism   Derived from the Greek word for Duty Actions are not justified by their consequences.  the act may be considered the right thing to do even if it produces a bad consequence 2004 Prentice Hall. Inc.

Deontology Example  Allow or assist suicide for someone suffering from incurable painful disease Execution of convicted murderers 2004 Prentice Hall. Inc. 37  .

Inc.Utilitarianism Vs. Deontologism  Utilitarianism . 38 .It is the means which are important  2004 Prentice Hall.The ends justify the means Deontologism .

   Business ethics is not likely to succeed as deontological (duty bound) ethics Has to be based on the utilitarian concept of greatest happiness or good (and goods too) for the greatest number (and for the longest possible time) Upholds the principles of equitable (fair) and consistent distribution of resources and profit among different stakeholders 2004 Prentice Hall. 39 . Inc.

Inc. If it s necessary. 2. If it s legally permissible. so I ve got it coming. 4. I m overworked and underpaid. 2004 Prentice Hall.COMMON RATIONALIZATIONS IN ETHICS DECISIONS 1. 5. It s all for a good cause. it s ethically proper. 3. 40 . I was just doing it for you. it s ethical.

It s O. 2004 Prentice Hall. 9. 41 . I m just fighting fire with fire. Inc. It doesn t hurt anyone. 8.COMMON RATIONALIZATIONS IN ETHICS DECISIONS 6. since I m not gaining anything personally. Everyone s doing it (universalism). 7.K.

Inc.Ethical Tests 2004 Prentice Hall. 42 .

Is It Legal? I Ethical . 43 .Illegal I and IV Easy II and III Difficult 2004 Prentice Hall.Legal II Ethical .Legal IV Unethical .Illegal III Unethical . Inc.5 Ethical Tests 1.

Inc. Equitable & Fair Test Are you willing to allow everyone to practice the proposed action or do you want to be a special case? 2004 Prentice Hall. Benefits Cost Test Do the benefits exceed the costs to whomsoever they accrue? 3. 44 .Ethical Tests 2.

Inc.If you would like others to do the same to you 2004 Prentice Hall. Light of Day Test What would be your reaction if the action were brought out into the open for public scrutiny? 5. Do Unto Others Test Golden Rule .Ethical Tests 4. 45 .

passes the test 2004 Prentice Hall. If others feel it is OK .Ethical Tests 6. Ventilation Test Seek out others views. Inc. Discuss the 5 tests with them. 46 .

Inc. 47    .Examples  Robbing a Bank Driving Above the Speed Limit Cheating on an Exam Having Sex with an Intern 2004 Prentice Hall.

Ethical Dilemmas in Business   Conflict of Interest Have two interests . 48 . Inc.cannot pursue one without having negative impact on other Two Types Private Interest Conflicts with Corporate Business Interest Conflicts with Public 2004 Prentice Hall.

Inc.Conflict of Interest Mini-Case       Personnel Director Brother . 49 .in .law out of work Lackluster performer Unemployment about to run out .will lose house Sister asks you to recommend him for job What would you do? 2004 Prentice Hall.

Whistleblowing    Act of disclosing wrongdoing in an organization Like blowing a whistle to call attention to a thief Types Internal External 2004 Prentice Hall. 50 . Inc.

Singles out specific individuals as threats to organization or the public 2004 Prentice Hall. Inc.Can Cause Bitterness in Organization    Dissent .Must speak out against others in organization Breach of Loyalty . 51 .Perceived as one who violates confidentiality and loyalty Accusation .

sex lives and mental stability questioned Physical abuse and murder possible 2004 Prentice Hall. Inc. 52 .Possible Retaliation      Fired Blacklisted Transferred to undesirable locations Lifestyles.

Inc.Failure to Reveal Wrongdoing  Severe problems for society or organization Can be implicated as an accessory before or after the fact  2004 Prentice Hall. 53 .

54 . Inc.Ethics of Whistleblowing  When is it ethical to reveal wrongdoing ? When is it ethical to remain silent?  2004 Prentice Hall.

55 . Inc.Whistleblowing Mini-case       In charge of Quality Control Company makes parts for automobile brakes Find defect in brake part Could cause failure in brakes Failure not certain May take many years to develop case 2004 Prentice Hall.

56 . your boss He tells you to overlook defect . Inc.)   Go to VP of Production.company may lose too much money What would you do?  2004 Prentice Hall.Whistleblowing Example (cont.

Inc. Make sure situation involves an imminent threat to society or to the business 2. 57 . Should you remain anonymous? 5. Get another job first!!! 2004 Prentice Hall.Cautious Approach to Whistleblowing 1. Examine internal whistleblowing first 4. Document all allegations 3.

Inc.5 million in wrongful death payouts 2004 Prentice Hall. 58 .Case: Ford Pinto The Use of Risk/Benefit Analysis      Faulty gas tank placement People die in gas tank explosions $11/car to change design 180 less deaths predicted $137 million to change design vs $49.

Inc.1972 Ford Pinto Runabout 2004 Prentice Hall. 59 .

Ford Pinto (cont d)  Several Reasons not to use benefit analysis   Unethical to allow people to die ? Negative publicity Existing case law Encourages precautions & safety Provides precedent for other companies to follow  Arguments in favor of using benefit analysis    2004 Prentice Hall. 60 . Inc.

Inc. to induce that person to either do something improper or to influence decisions or actions Extortion . usually to a public official.Bribery  A payment. 61  .same as bribery .recipient of payment initiates transaction 2004 Prentice Hall.

Mini-Case Bribery   International consulting firm . Inc. 62 . must deposit $250.000 in official s personal Swiss bank account 2004 Prentice Hall.designs and supervises construction of hydroelectric power generating systems Your proposal is far superior to any other   Technically lowest bid  To get job.

Inc. 63 .Should you pay the money?     Foreign Corrupt Practices Act of 1997 Grease payment allowed Standard Practice in most foreign countries Results in lost business opportunities for US companies 2004 Prentice Hall.

no such plans contemplated Is This Ethical? 2004 Prentice Hall. 64 . In reality . Inc.Mini-Case: Bluffing and Deception      Negotiating a labor contract Plant has experienced losses over past several years .not clear why Want concessions from labor Tell labor that plant will be closed if no concessions are made.

Inc.Case: Polaroid in and Out of South Africa      Apartheid System 17% White 70% African Whites only could be in government. possess firearms Enforced segregation of races Blacks relegated to native reserves 2004 Prentice Hall. 65 .

87% Black workers paid less than Whites 2004 Prentice Hall. Inc.Apartheid (cont.)    Blacks allowed to own 13% of land Whites . 66 .

67 .US Involvement in South Africa   320 American companies there American companies controlled    43% of petroleum market 23% of auto sales 70 percent of computer business 2004 Prentice Hall. Inc.

Inc.Polaroid    Rumors that products used in Pass Book System Sent 4 US employees to South Africa 1970 No sales to government Improve salaries for Blacks for local distributors and suppliers Training program so Blacks could take better jobs Some profits for Black education 2004 Prentice Hall. 68 .

Success of Program     Improvements in Black salaries. 69 . advancement and benefits Principle of same pay for same job accepted Ban on direct sales successful Ban on indirect sales not successful 2004 Prentice Hall. Inc.

Sales to Government through Frank and Hirsch    Secretly selling Polaroid products to government Billed as shipments through drugstore in Johannesburg Polaroid terminated its involvement in South Africa . Inc. 70 .1977 2004 Prentice Hall.

Inc.Ethical Questions    What is the ethics of American companies doing business in a country with human rights abuses? Was Polaroid responsible for the use of its products? Are companies responsible for the use of their products? 2004 Prentice Hall. 71 .

Inc. 72 .Ethical Questions  Was Polaroid s presence a positive or negative influence on Blacks? 2004 Prentice Hall.

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