MGMT449 chap009


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MGMT449 chap009

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MGMT449 chap009

  2. 2. WHAT DO WE MEAN BY BUSINESS ETHICS?  Business Ethics ● Is the application of general ethical principles to the actions and decisions of businesses and the conduct of their personnel. ● Are not materially different from ethical principles in general because business actions have to be judged in the context of society’s standards of right and wrong. 9–2
  3. 3. WHERE DO ETHICAL STANDARDS COME FROM—ARE THEY UNIVERSAL OR DEPENDENT ON LOCAL NORMS? Sources for Ethical Standards The School of Ethical Universalism The School of Ethical Relativism Integrated Social Contracts Theory 9–3
  4. 4. EXAMPLES OF ETHICAL RELATIVISM ISSUES Variations in Ethical Standards The Use of Underage Labor The Payment of Bribes and Kickbacks Relativism Equates to Multiple Sets of Standards The Use of Local Morality to Guide Ethical Behavior 9–4
  5. 5. INTEGRATIVE SOCIAL CONTRACTS THEORY  Provides a middle-ground balance between universalism and relativism.  Posits that the collective views of multiple societies form universal (first order) ethical principles that all persons have a contractual duty to observe in all situations.  Within the contract, cultures or groups can specify locally ethical (second-order) actions. 9–5
  6. 6. CONSEQUENCES OF ETHICALLY QUESTIONABLE STRATEGIES When Strategies Fail the Ethical Litmus Test Sizable civil fines and stockholder lawsuits Devastating image and public relations hits Sharp stock price drops as investors lose confidence Criminal indictments and convictions 9–6
  7. 7. WHAT ARE THE DRIVERS OF UNETHICAL STRATEGIES AND BUSINESS BEHAVIOR? Faulty Oversight and Self Dealing Pressure for Shortterm Performance Unethical Strategies and Business Behaviors A Weak or Corrupt Ethical Environment 9–7
  8. 8. WHAT ARE THE DRIVERS OF UNETHICAL STRATEGIES AND BUSINESS BEHAVIOR?  Drivers of Unethical Business Behavior: ● Faulty internal oversight allows self-dealing in the pursuit of personal gain, wealth, and self-interest. ● Short-termism pressure to meet or beat short-term performance targets. ● A culture that puts profitability and business performance ahead of ethical behavior. 9–8
  9. 9. WHY SHOULD COMPANY STRATEGIES BE ETHICAL?  The Moral Case for an Ethical Strategy: ●  Because a strategy that is unethical is morally wrong and reflects badly on the character of the firm’s personnel. The Business Case for Ethical Strategies: ● Because an ethical strategy can be both good business and serve the self-interest of shareholders. 9–9
  10. 10. STRATEGY, CORPORATE SOCIAL RESPONSIBILITY, AND EVIRONMENTAL SUSTAINABILITY  Corporate Social Responsibility (CSR) ● Is a firm’s duty to operate in an honorable manner, provide good working conditions for employees, encourage workforce diversity, be a good steward of the environment, and actively work to better the quality of life in the local communities where it operates and in society at large. 9–10
  11. 11. WHAT DO WE MEAN BY SUSTAINABILITY AND SUSTAINABLE BUSINESS PRACTICES?  Sustainability ●  Is the relationship of a firm to its environment and its use of natural resources. Sustainable Business Practices ● Are those practices of a firm that meet the needs of the present without compromising the ability to meet the needs of the future. 9–11
  12. 12. SUSTAINABILITY AND SUSTAINABLE BUSINESS PRACTICES  Environmental Sustainability Strategy ● Consists of the firm’s deliberate actions to:  Protect the environment.  Provide for the longevity of natural resources.  Maintain ecological support systems for future generations.  Guard against ultimate endangerment of the planet. 9–12
  13. 13. CRAFTING CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY STRATEGIES Pursuing a Sustainable CSR Strategy in the Firm’s Value Chain Activities Moral Case: Stakeholder Benefits Business Case: Competitive Advantage 9–13
  14. 14. THE MORAL CASE FOR CSR AND ENVIRONMENTALLY SUSTAINABLE BUSINESS PRACTICES The Implied Social Contract: “To Do the Right Thing” Operate ethically and legally Provide good work conditions for employees Be a good environmental steward Display good corporate citizenship 9–14
  15. 15. THE BUSINESS CASE FOR CSR AND ENVIRONMENTALLY SUSTAINABLE BUSINESS PRACTICES  Increased reputation and buyer patronage  Reduced risk of reputation-damaging incidents  Lower turnover costs and enhanced employee recruiting and workforce retention  Increased revenue enhancement opportunities due to support of CSR and sustainability  CSR and sustainability best serve long-term interests of shareholders 9–15
  16. 16. COMBATING THE EVASION OF CSR AND SOCIALLY HARMFUL BUSINESS PRACTICES Increased public awareness of misdeeds of bad behavior by firms Increased legislation and regulation to correct and punish firms Harmful and Unethical Business Actions and Behaviors Refusal to do business with irresponsible firms 9–16