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  • 1. Ethics & Stakeholders Amali N Ediriweera Dept. of HRM FCMS- UoK
  • 2. Stakeholders
    • The people and groups that supply a company with its productive resources and have a claim on its resources.
  • 3. Stakeholders
  • 4. Stockholders
    • Want to ensure that managers are behaving ethically and not risking investors’ capital by engaging in actions that could hurt the company’s reputation
    • Want to maximize their return on investment
  • 5. Managers
    • Responsible for using a company’s financial capital and human resources to increase its performance
    • Have the right to expect a good return or reward by investing their human capital to improve a company’s performance
    • Frequently juggle multiple interests
  • 6. Employees
    • Companies can act ethically toward employees by creating an occupational structure that fairly and equitably rewards employees for their contributions
    • health and safety at work, security, fair pay
  • 7. Suppliers and Distributors
    • Suppliers expect to be paid fairly and promptly for their inputs
    • Distributors expect to receive quality products at agreed-upon prices
  • 8. Customers
    • Most critical stakeholder
    • Company must work to increase efficiency and effectiveness in order to create loyal customers and attract new ones
  • 9.
    • Local Community – provide employment, safe working environment, minimise pollution and negative externalities – provide external benefits?
    • Government – abide by the law, pay taxes, abide by regulations
    • Environment – limit pollution, jamming, development, etc.
  • 10. Business Ethics
    • Tensions:
    • Profits versus higher wages
    • Production versus pollution
    • Supplier benefits versus consumer prices/lower costs
    • Survival of the business versus needs of stakeholders
  • 11. Environment
    • Waste – land-fill? re-cycling? burning?
    • Energy use – renewable energy, non-renewable resources
    • Global Warming – fact or fiction?
    • Pollution:
      • Noise
      • Air
      • Land
      • Sea
      • Water
  • 12. Externalities
    • Impact on a third party of a business decision
      • Those affected not involved in the decision
      • Negative externalities – negative effects of business activity – pollution, urban development, etc
  • 13. Externalities
    • Positive Externalities:
      • Benefits to third parties of business activity
      • e.g. new infrastructure as a result of development, side effects of research and development, technology (the Internet?), convenience, improved standards of living
      • Out of town shopping centres – greater ease of access, everything in one place, pleasant environment to shop in, etc.
  • 14. Externalities
    • Government policies – encourage business activity that leads to positive externalities and discourage those that lead to negative externalities