ETHICS & BUSINESS
                            AN OXYMORON?




  WUNNHAFF A Baaltches 17/06/2009   ACCOMPANY
jeudi 31 déce...
GETTING USED TO IT
             •   Calvin :
                  • Did you read this? This movie star made over
            ...
BUSINESS



                       The Social Responsibility of
                     Business is to Increase its Profits

 ...
FRIEDMAN’S
                                       ARGUMENTS
                   there is one and only one social responsibi...
ADAM SMITH: THE
                              INVISIBLE HAND
                                                             ...
E PUER BEISPILLER


                   Enron

                   Nike

                   Parmalat

                   Sub...
ENRON

                   Old-fashioned business: selling energy

                         Generational change / J. Skilli...
NIKE


                   Business model: Design of sport shoes / offshore manufacturing

                         Child w...
SUB-PRIME


                   “Every American should own their home”

                         House prices boom

       ...
MADOFF


                   “The Madoff Strategy” (Split-strike strategy)

                         Clones less successful...
WISE WORDS

                   It seemed the world was divided into good and bad people.
                   The good ones ...
BAHA’I SCHRËFTEN

                   ... the fundamental cause of this world unrest is attributable, not so much to the
  ...
MANAGEMENT
                                    EDUCATION

                   Bad Management Theories Are
                 ...
GHOSHAL’S CRITIQUE


                   “Scientific” approach

                   Ideology-based gloomy vision, partial ana...
WISE WORDS #

                         Harvard makes mistakes too, you
                         know. Kissinger taught the...
A-Players & B-Players
                              C-Players               A-Players
                                10% ...
Porter’s Five Forces
                                constraining your strategic choices


                               ...
Force Field Analysis
                         Driving Forces            Opposing Forces




                              ...
Agency theory
                         Definition

                A theory explaining the relationship between principals...
GHOSHAL ON
                     SHAREHOLDER VALUE

                   Assumption: Perfectly efficient labor markets
       ...
PRINCIPLES FOR
                 RESPONSIBLE BUSINESS
              CAUX ROUND TABLE
              Moral Capitalism for a b...
10 GLOBAL COMPACT
                               VALUES
                   Human Rights
               Principle 1: Busine...
THE STAKEHOLDER
                             CONCEPT

                                        General Good

              ...
EBBF CORE VALUES

             1. Ethical business practices

             2. Social responsibility in business

         ...
THE TRIPLE
                                         BOTTOM-LINE

                                        The Triple Bottom...
MORAL LEADERSHIP

                                                        Service
                                        ...
CORPORATE CULTURE
                         !




jeudi 31 décembre 2009
INITIATIVEN

                   Micro-finance

                   UN Global Compact

                   Global Ethics Forum...
SUCCESSES


                   2003: Grameen Bank and its founder Mohammad
                   Yunus jointly receive the No...
More than any other time in history, mankind faces a
                   crossroads. One path leads to despair and utter
  ...
AN DU AN ECH?


                           What can we do?



                          DISCUSSIOUN!


jeudi 31 décembre 2...
Business & Ethics
Business & Ethics
Business & Ethics
Business & Ethics
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Business & Ethics

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Concepts/quotes to use for presentation on business ethics or corporate social responsibility

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Business & Ethics

  1. 1. ETHICS & BUSINESS AN OXYMORON? WUNNHAFF A Baaltches 17/06/2009 ACCOMPANY jeudi 31 décembre 2009
  2. 2. GETTING USED TO IT • Calvin : • Did you read this? This movie star made over twenty million last year! • What would YOU do with twenty million bucks? • Hobbes : • Beats me. I think it is ridiculous that anyone makes that kind of money • Calvin : • OK. Say you only made fifteen million • Hobbes : • Let’s say eighteen jeudi 31 décembre 2009
  3. 3. BUSINESS The Social Responsibility of Business is to Increase its Profits The New York Times Magazine, September 13, 1970 Milton Friedman Nobel Memorial Prize in Economic Sciences, 1976 jeudi 31 décembre 2009
  4. 4. FRIEDMAN’S ARGUMENTS there is one and only one social responsibility of business - to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud. What does it mean to say that "business" has responsibilities? Only people can have responsibilities. A corporation is an artificial person ... In a free-enterprise, private-property system, a corporate executive is an employee of the owners of the business. He has direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of the society. In most of these cases, what is in effect involved is some stockholders trying to get other stockholders (or customers or employees) to contribute against their will to "social" causes favored by the activists... jeudi 31 décembre 2009
  5. 5. ADAM SMITH: THE INVISIBLE HAND As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that Every individual endeavours to employ his capital of foreign industry, he intends only his own so that its produce may be of the greatest value. security; and by directing that industry in such He generally neither intends to promote the public a manner as its produce may be of the greatest interest, nor knows how much he is promoting it. value, he intends only his own gain, and he is in He intends only his own security, only his own this, as in many other cases, led by an invisible gain. And he is in this led by an invisible hand to hand to promote an end which was no part of his promote an end which was no part of his intention. intention. Nor is it always the worse for the By pursuing his own interest he frequently society that it was no part of it. By pursuing his promotes that of the society more effectually than own interest he frequently promotes that of the he really intends to promote it. society more effectually than when he really intends to promote it. 1776 jeudi 31 décembre 2009
  6. 6. E PUER BEISPILLER Enron Nike Parmalat Sub-Prime Madoff jeudi 31 décembre 2009
  7. 7. ENRON Old-fashioned business: selling energy Generational change / J. Skilling & A. Fastow / Innovative business model New accounting rules “Unanticipated” problems Stock market, rating agencies and banks’ pressure More “innovation” and collapse jeudi 31 décembre 2009
  8. 8. NIKE Business model: Design of sport shoes / offshore manufacturing Child work Nike: “We are not responsible for our suppliers business practices” Employees: “Actually, we should take that responsibility” Process of reflection and new rules / influence jeudi 31 décembre 2009
  9. 9. SUB-PRIME “Every American should own their home” House prices boom Flexible mortgages Securitization Collapse jeudi 31 décembre 2009
  10. 10. MADOFF “The Madoff Strategy” (Split-strike strategy) Clones less successful: guru, insider knowledge (“front-running”) Sooner or later FED will close him down, but for now it’s a good investment “Feeder Funds” Liquidity crisis and collapse jeudi 31 décembre 2009
  11. 11. WISE WORDS It seemed the world was divided into good and bad people. The good ones slept better while the bad ones seemed to enjoy the waking hours much more. Money is better than poverty, if only for financial reasons. Organized crime in America takes in over forty billion dollars a year and spends very little on office supplies. This guy goes to a psychiatrist and says, 'Doc, my brother's crazy, he thinks he's a chicken.' And the doctor says, 'Well why don't you turn him in?' and the guy says, 'I would, but I need the eggs.' Woody Allen jeudi 31 décembre 2009
  12. 12. BAHA’I SCHRËFTEN ... the fundamental cause of this world unrest is attributable, not so much to the consequences of what must sooner or later come to be regarded as a transitory dislocation in the affairs of a continually changing world, but rather to the failure of those into whose hands the immediate destinies of peoples and nations have been committed, to adjust their system of economic and political institutions to the imperative needs of a rapidly evolving age? Are not these intermittent crises that convulse present-day society due primarily to the lamentable inability of the world’s recognized leaders to read aright the signs of the times, to rid themselves once for all of their preconceived ideas... The World Order of Bahá'u'lláh, Shoghi Effendi The Guiding Principles of World Order Pages 34-38 jeudi 31 décembre 2009
  13. 13. MANAGEMENT EDUCATION Bad Management Theories Are Destroying Good Management Practices (2005) SUMANTRA GHOSHAL (1948-2004) Advanced Institute of Management Research (AIM), UK and London Business School jeudi 31 décembre 2009
  14. 14. GHOSHAL’S CRITIQUE “Scientific” approach Ideology-based gloomy vision, partial analysis, unbalanced assumptions, pretense of knowledge Negative assumptions Self-fulfilling prophecies jeudi 31 décembre 2009
  15. 15. WISE WORDS # Harvard makes mistakes too, you know. Kissinger taught there. His lack of education is more than compensated for by his keenly developed moral bankruptcy. jeudi 31 décembre 2009
  16. 16. A-Players & B-Players C-Players A-Players 10% 10% B-Players 80% jeudi 31 décembre 2009
  17. 17. Porter’s Five Forces constraining your strategic choices Threat Threat of Substitute of new Entrants Products & Services Rivalry Bargaining Bargaining Power Power Buyers Suppliers jeudi 31 décembre 2009
  18. 18. Force Field Analysis Driving Forces Opposing Forces Change jeudi 31 décembre 2009
  19. 19. Agency theory Definition A theory explaining the relationship between principals, such as a shareholders, and agents, such as a company's executives. In this relationship the principal delegates or hires an agent to perform work. The theory attempts to deal with two specific problems: first, that the goals of the principal and agent are not in conflict (agency problem), and second, that the principal and agent reconcile different tolerances for risk. www.investorwords.com 17/06/2009 jeudi 31 décembre 2009
  20. 20. GHOSHAL ON SHAREHOLDER VALUE Assumption: Perfectly efficient labor markets Wages necessarily represent fair value, otherwise workers can immediately and costlessly move to another job Shareholder carry the greater risk and their return must be maximized Truth is of course exactly the opposite: Most shareholders can sell their shares far more easily than workers can change jobs Workers’ contribution is more valuable; capital is a commodity jeudi 31 décembre 2009
  21. 21. PRINCIPLES FOR RESPONSIBLE BUSINESS CAUX ROUND TABLE Moral Capitalism for a better world PRINCIPLES FOR RESPONSIBLE BUSINESS PRINCIPLE 1 - RESPECT STAKEHOLDERS BEYOND SHAREHOLDERS PRINCIPLE 2 – CONTRIBUTE TO ECONOMIC, SOCIAL AND ENVIRONMENTAL DEVELOPMENT PRINCIPLE 3 – RESPECT THE LETTER AND THE SPIRIT OF THE LAW PRINCIPLE 4 – RESPECT RULES AND CONVENTIONS PRINCIPLE 5 – SUPPORT RESPONSIBLE GLOBALISATION PRINCIPLE 6 – RESPECT THE ENVIRONMENT PRINCIPLE 7 – AVOID ILLICIT ACTIVITIES (published: March 2009) jeudi 31 décembre 2009
  22. 22. 10 GLOBAL COMPACT VALUES Human Rights Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights; and Principle 2: make sure that they are not complicit in human rights abuses. Labour Standards Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; Principle 4: the elimination of all forms of forced and compulsory labour; Principle 5: the effective abolition of child labour; and Principle 6: the elimination of discrimination in respect of employment and occupation. Environment Principle 7: Businesses should support a precautionary approach to environmental challenges; Principle 8: undertake initiatives to promote greater environmental responsibility; and Principle 9: encourage the development and diffusion of environmentally friendly technologies. Anti-Corruption Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery. • jeudi 31 décembre 2009
  23. 23. THE STAKEHOLDER CONCEPT General Good Clients Shareholdes Local Suppliers community Organization Employees Management Environment Government jeudi 31 décembre 2009
  24. 24. EBBF CORE VALUES 1. Ethical business practices 2. Social responsibility in business 3. Values-based leadership 4. Sustainable development 5. A new paradigm of work 6. Partnership of women and men in all fields of endeavour 7. Non-adversarial decision making through consultation jeudi 31 décembre 2009
  25. 25. THE TRIPLE BOTTOM-LINE The Triple Bottom Line [A] sustainable corporation is one that • creates profit for its shareholders while • protecting the environment and • improving the lives of those with whom it interacts… It operates so that its business interests and the interests of the environment and society intersect. Andrew Savitz, The Triple Bottom Line: How Today's Best-Run Companies Are Achieving Economic, Social and Environmental Success -- and How You Can Too jeudi 31 décembre 2009
  26. 26. MORAL LEADERSHIP Service Truth Nobility Transformation Transcendence Capabilities Life-long learning jeudi 31 décembre 2009
  27. 27. CORPORATE CULTURE ! jeudi 31 décembre 2009
  28. 28. INITIATIVEN Micro-finance UN Global Compact Global Ethics Forum Organizations like EBBF Self-control and ISO 26000 Sustainability and CSR audits jeudi 31 décembre 2009
  29. 29. SUCCESSES 2003: Grameen Bank and its founder Mohammad Yunus jointly receive the Nobel Peace Prize making Grameen Bank the first business to be awarded this honor Norway: quota of women on boards Many single examples of responsible businesses or initiatives jeudi 31 décembre 2009
  30. 30. More than any other time in history, mankind faces a crossroads. One path leads to despair and utter hopelessness. The other, to total extinction. Let us pray we have the wisdom to choose correctly. It is impossible to travel faster than light, and certainly not desirable, as one's hat keeps blowing off. jeudi 31 décembre 2009
  31. 31. AN DU AN ECH? What can we do? DISCUSSIOUN! jeudi 31 décembre 2009
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