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Why Be Ethical ?
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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