Business Ethics

Lecture Series

OVERVIEW OF BUSINESS ETHICS

Introduction .

deliberately misled or deceived customers Damaged image W.2 B ADM price fixing $100 M GENETECH tying personal loan to business deal CEO loses job BANKER¶S TRUST .TEXACO racial discrimination $176 M MERCURY FINANCE .overstating profit $ 2.R. GRACE sexual harassment CEO loses job BAUSCH & LOMB manipulation of accounting data earnings fell 54% .

1. 21% today) 5. Corp. Responsibility to address corporate issues (58% Execs) 2. Skepticism about µcause¶ related marketing (58% consumers. Do not buy (75% consumers) 58% execs 52% execs 35% MBAs 76% consumers 58% consumers 21% today 75% consumers . 35% MBAs) 3. leaders¶ responsibility is to the greatest good (52% Execs. Switch brands (76% consumers) 4.

Employee ownership leads to productivity (60% companies) 5. Business has too much power (71 %) 6. 71% 6. Social responsibility is important (26% investors) 2.1. Corporate role is more than to make a profit (95%) 1. Innovative workplace practices associated with productivity 4. 26% investors 2. 95% . Company image (84% employees) 3. 60% companies 5. 84% employees 4.

Pentagon fraud . .power in the market place * Who is responsible? ³Captain of the ship?´ * Does profitability excuse questionable behavior? .use of banned chemicals .Profit at Any Cost .age discrimination .theft .Corporate layoffs .selling products that do not meet specs.price fixing .retaliation against employees who exposed unsafe/illegal practices .Wall Street sins .

‡ Codes do not produce ethical behavior. . ‡ Our ethics tend to flow from our core values. ‡ People have intrinsic worth.

Conflicts of interest lead to ethical problems Individual behavior is strongly influenced by incentive Self-regulation and standard setting organizations fall short .

‡ Non-job failures: ± Cheating on your expense accounts ± Stealing supplies ± Sandbagging ‡ Job failures: ± Superficial performance appraisal ± Not confronting expense account ± Cheaters ± Falsely praising poor performers ± Denial of training opportunities ± Undermine management .

‡ Job distortions: ± Bribery ± Manipulation of suppliers/buyers ± Differential pricing ± Falsifying information ‡ Job ³creation´: ± Bending policies for certain customers ± Bending policies for salespeople ± Caught violating rules ± Arranging for promotions .

WHAT IS ETHICS? ‡ Ethics is a set of rules that define right and wrong conduct. ‡ Ethical rules tell us when our behavior is acceptable and when it is disapproved and considered to be wrong. religious beliefs and organizations are a major source of ethical guidance and moral meaning. . ‡ Ethical rules are guides to moral behavior. ‡ For many.

.WHAT IS BUSINESS ETHICS? ‡ Business ethics is the application of general ethical rules to business behavior.

IMPORTANCE OF BUSINESS ETHICS ‡ Public expects business to exhibit high levels of ethical performance and social responsibility. . ‡ High ethical performance also protects the individuals who work in business. ‡ Encouraging business firms and their employees to behave ethically is to prevent harm to society. ‡ Promoting ethical behavior is to protect business from abuse by unethical employees or unethical competitors.

REASONS FOR ETHICAL PROBLEMS ‡ Personal gain ‡ Dubious character ‡ Individual values in conflict with organizational goals ‡ Managers¶ attitudes and values ‡ Competitive pressures ‡ Cross-cultural contradictions .

or an action.METHODS OF ETHICAL REASONING ‡ Utilitarian: Compares the costs and benefits of a decision. policy. ‡ Rights: Respecting basic human rights. ‡ Justice: Justice or fairness exists when benefits and burdens are distributed equitably and according to some accepted rule. .

Majority may disregard rights of minority Basic human rights Difficult to balance are respected conflicting rights RIGHTS Respecting rights JUSTICE Distributing fair shares Benefits and costs are equally distributed Difficult to measure benefits and costs. LIMITATIONS UTILITARIAN Net benefits exceed Difficult to measure net costs some human and social costs. Lack of agreement on fair shares .METHODS OF ETHICAL REASONING METHOD CRITICAL DETERMINING FACTOR Comparing benefits and costs AN ACTION IS ETHICAL WHEN«.

AN ANALYTICAL APPROACH TO ETHICAL PROBLEMS STEP 1 Ask UTI ITY Do benefits exceed costs? I TS Are human rights respected? JUSTI Are benefits and costs fairly distributed? .

it is probably unethical. If yes and no are mixed. If no is the answer to all three questions.AN ANALYTICAL APPROACH TO ETHICAL PROBLEMS STEP 2 Compare results If yes is the answer to all three questions. . it could be either ethical or unethical. it is probably ethical.

AN ANALYTICAL APPROACH TO ETHICAL PROBLEMS STEP 3 ASSI PRI RITIES TO UTI ITY RI TS JUSTICE .

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