Business ethics


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Business ethics

  2. 2. Ethics• Ethics Beliefs about what’s right and wrong• Ethical Behavior Behavior conforming to individual beliefs and social norms about what’s right and good• Unethical Behavior Behavior conforming to individual beliefs and social norms about what is defined as wrong and bad
  3. 3. Ethics, Contd. Sources of individual ethics:  Childhood responses to adult behavior  Influence of peers  Experiences in adulthood Managerial ethics  Behavior toward employees  Behavior toward the organization  Behavior toward other economic agents— customers, competitors, stockholders, and environment
  4. 4. Assessing Ethical Behavior Three-step model for applying ethical judgments to situations: gather relevant factual information determine the most appropriate moral values make an ethical judgment based on the rightness or wrongness of the proposed activity or policy
  5. 5. Four Ethical Norms Utility—does a particular act optimize what is best for those who are affected by it? Rights—does it respect the rights of the individual involved? Justice—is it consistent with what we regard as fair? Caring—is it consistent with people’s responsibilities to each other?
  6. 6. Business Ethics Business Ethics refer to the application of moral standards of right and wrong to business situations.
  7. 7. Factors Affecting Ethical BusinessBehavior Employees  Personal values & ethics Social Factors  Cultural norms  Coworkers – peer pressure Opportunity  Whether a business rejects or condones unethical behavior (look the other way).
  8. 8. Methods Companies Use toEncourage Ethical Conduct Top level management involvement Establish a written code of ethics Conduct ethics training programs Hire ethical people Whistle-blower hotline
  9. 9. Code of Ethics A Code of Ethics is a written guide to acceptable and ethical behavior. Outlining uniform policies, standards, and punishments for violations.
  10. 10. Social Responsibility Social responsibility is an obligation for businesses to consider society in its decision making and actions.
  11. 11. Stakeholder Model of SocialResponsibility Business is responsible to ALL stakeholders (employees, communities, environment, etc.)– not just stockholders. Business is part of society and can’t ignore social issues Business can create a more stable environment for long-term profitability by resolving social issues. Prevents government intervention, which could force businesses to do what they fail to do voluntarily Can be profitable and have public relations
  12. 12. Spending for SocialResponsibility AGAINST Companies are only responsible to stockholders, who want return on investment Corporate time, money, and talent should be used to maximize profits, not solve society’s problems Business should not be expected to solve social problems Social issues are responsibility of elected officials and the government
  13. 13. Methods companies use to developa program of social responsibilityincludes: Commitment of top executives, policy Part of strategic planning Appointment of a director Social Audit
  14. 14. Areas of Social Responsibility Environment green -- house gases, water, packaging, sustainability, product modification  EX: disposal of toxic waster, recycling; control of air, land & water pollution, Green Marketing Customers -- advertising, labeling, pricing  EX: for consumers -- quality products at fair prices Employees – fair recruiting, hiring, training, promoting, compensation, termination, whistle blowers Investors – no abuse of resources, misrepresenting finances, excessive salaries,
  15. 15. Implementing Social ResponsibilityPrograms Approaches to Social Responsibility
  16. 16. Social Responsibility and the SmallBusiness Large Business versus Small Business  Differences are primarily differences of scale  More issues are questions of individual ethics Ethics and social responsibility are decisions faced by all managers in all organizations, regardless of rank or size