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Why Be Ethical ?
 

Why Be Ethical ?

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    Why Be Ethical ? Why Be Ethical ? Presentation Transcript

    •  
    • OUTLINE
      • What is ethics?
      • Advantages of being ethical
      • Disadvantages of being unethical
      • Financial Crisis and the collapse of ethical behavior
      • What are Business Ethics?
      • How to follow business ethics?
      • Examples of companies which follow business ethics
      • Advantages of Business Ethics
      • Violation of Ethics by Corporations
    • What is Ethics?
      • Deals with morality
      • “ Integrity” forms a major part of ethics
      • Distinguishing between right and wrong
    • Advantages of Being Ethical
      • Honorable, loyal and supportive people
      • Happiness
      • Security
      • Just in affairs
      • Honest and open people
    • Disadvantages of Being Unethical
      • “ Being unethical itself is a disadvantage”
    • Financial Crisis and the Collapse of Ethical Behavior
      • Financial Crisis began in august 2007
      • Was mainly due to the unethical behavior of the banks.
        • Bankers first used to care about the ‘quality’
        • Now they care about ‘quantity’
      • Banks just wanted to build leverage
    • Financial Crisis and the Collapse of Ethical Behavior
      • Banks also sold mortgage loans to people who could not afford them
        • Through misleading advertisements
      • Other causes
        • Poor risk control
        • Ignored the unstructured expansion of real estate market
      • This resulted in a huge loss for the society.
    • Business Ethics
      • “ GOOD ETHICS MEANS GOOD BUSINESS”
      • When business people talk about business ethics they often mean either of the following:-
        • Avoid breaking the criminal law
        • Avoid actions resulting in civil law suits
        • Avoid actions that would affect the company image.
    • How To Follow Business Ethics?
      • Be Trustful
      • Have Clear Documents
      • Become Community Involved
      • Maintain Accounting Control
      • Be Respectful
    • The Tylenol Crisis
      • Around 20 people died in America within 15 minutes after eating Tylenol.
      • 65 Milligram of Cyanide found in drug capsule.
      • J & J stopped production/advertisement and recalled 31 million bottles.
      • Perrier water did something different
      • This helped J&J regain their lost reputation.
      • Tylenol marketed again
      • Product did not loose market because of ethical decision made by J&J
    • Levi-Strauss and Child labor
      • Became aware of its suppliers in Bangladesh employing children under the age of 14.
      • Did not stain the relation with supplier but chose an alternative course of action.
      • Required the children sent to school and paid wages to families.
    • Aaron Feuerstein & Malden mills
      • 3 of the 4 buildings which formed Malden mills burned to ground
      • Employees thought Feuerstein is going to pocket insurance claims and shut down the factory.
      • He did the opposite
      • Output reached 230000 yards per week as compared to 130000 yards before.
      • The increased productivity result of employees creativity and commitment.
    • Prisoners Dilemma
      • Both players in prisoners dilemma get higher payoff when they cooperate rather than defect.
      • Businesses which follow ethical behavior get better results and add more value to society
    • Advantages of Ethical behavior in business
      • Increase efficiency and productivity.
      • Customer loyalty and more business.
      • Increase employee motivation and efficiency.
      • Better recruitment.
      • Win Win situation for organization and various stakeholders.
    • Violation of Ethics by Corporations
      • Social Responsibility
        • Union Carbide : Dec 1984 Bhopal, India- Toxic chemical used in pesticide was stored in tank, failure to bring down temperature led to gas leak and form a toxic cloud over Bhopal.
        • 2500 deaths and 300,000 injured and genetic birth defects.
        • Reaction of carbide was sceptical on basis of imperfect information.
        • Carbide faced negative consequences as their image was hit and led to decline in share prices and incurring a loss of market value worth 900m.
        • Trails were held in India in contrast to U.S. Insufficiency of strict laws regarding environment and labour in India Carbide was freed from all litigation with a fine of $425m.
    • Violation of Ethics by Corporations
      • Ethics Affecting Consumers
        • Hayward and Guzman :Disposable contact lenses.
        • Pricing decision for two kinds of disposable lenses :1 st 2 week disp. Lenses without rigorous care.
        • 2 nd 24 hr disp lenses to replace traditional glasses.
        • According to higher sales of any one of those lenses H&G would replace the bundle of lenses in other carton in order to sell other lenses would cheat their consumers
    • Violation of Ethics by Corporations
      • Employee Ethical issues
        • Stamford Machine Corporation (manufacturer of typewriters, photocopiers and projectors): May 2001
        • White sales manager accused of discriminating 6 black sales people
        • Exclude them from earning higher commission and promotions by not assigning them to profitable territories.
    • Violation of Ethics by Corporations
      • Affect of Ethics on Shareholder
      • Acme Hardware 1986
        • Managers of seven stores manipulated with net income computations leading to higher profits and more rewards and bonuses for them
        • Inventory was recorded as lower of cost (FIFO method)
        • Expenses of advertising were recorded either as a advance in the end of the year or beginning of next year rather than in period in which advertisements are run.
    • Cost of Lack of Integrity in the US
      • Employee Fraud - $400B
      • Time Theft - $230B
      • Employee Dishonesty - $120B
    • References
      • http://www.ritholtz.com/blog/2008/12/the-financial-crisis-and-the-collapse-of-ethical-behavior/
      • www.about.com
      • http://www.inc.com/articles/2000/11/14278.html
      • Frank, F 2004, what price the moral high ground: Ethical dilemmas in competitive environments, Princeton University Press, Oxford shire.
    • References
      • Hartley, R (2005). Mistakes and Successes . U.S.A: Leyh Publishing. 159-171.
      • Weiss, J 2006, Business ethics: A stakeholder and issues management approach, Thomson Higher education, Mason.
      • Sharp, D (2006). Cases in Business Ethics . 4th ed. U.S.A: Sage Publications. 43-78.
      • THANK YOU
      • ANY
      • QUESTIONS