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Be 1


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Be 1

  1. 1. What is Business Ethics ?
  2. 2. Business Ethics <ul><li>The application of general ethical concepts to the unique situations confronted in business. It asks what is right or wrong behavior in business and what principles or rules can be used as guidance in business situations. </li></ul>
  3. 3. Two Characteristics <ul><li>Tells people what they ought to do </li></ul><ul><li>Set of principles or rules </li></ul>
  4. 4. Why Study Ethics? <ul><li>Will not make you more ethical </li></ul><ul><li>Help in trying to do the right thing </li></ul>
  5. 5. What is Ethics? <ul><li>Ethics and Religion </li></ul><ul><li>Ethics and Social Responsibility Ethics - two levels of concern individual organizational </li></ul><ul><li>Soc. Responsibility - Win -Win </li></ul><ul><li>Ethics - Don’t do things that may be in your own self interest </li></ul>
  6. 6. Relativism Egoism Utilitarianism Deontologism The 4 Concepts of Ethics
  7. 7. Concepts of Ethics <ul><li>Developed by moral philosophers over generations </li></ul><ul><li>Used to distinguish ethical from unethical behavior </li></ul><ul><li>Each has problems </li></ul>
  8. 8. Relativism <ul><li>There is no universal standard by which morality can be judged </li></ul><ul><li>What is correct for one society may be wrong for another </li></ul><ul><li>Ethics and morality are relative </li></ul><ul><li>What do you think of this? </li></ul>
  9. 9. Relativism - Problems <ul><li>There are no absolutes - murder, slavery, torture, rape OK </li></ul><ul><li>What is meant by a society? Sub-societies </li></ul><ul><li>Leads to conclusion - each person’s opinion is correct </li></ul><ul><li>Nothing that anyone does is morally wrong </li></ul>
  10. 10. Egoism <ul><li>One ought to act in his or her own self interest </li></ul><ul><li>Ethical behavior is that which promotes one’s own self interest </li></ul><ul><li>Does not mean should not obey laws - only do so if in self interest </li></ul>
  11. 11. Egoism <ul><li>What do you think of this concept? </li></ul><ul><li>Problem - Externalities associated with private actions - OK to dump toxic wastes as long as don’t get caught </li></ul>
  12. 12. Utilitarianism <ul><li>The morality of an action can be determined by its consequences </li></ul><ul><li>An action is ethical if it promotes the greatest good for the greatest number </li></ul>
  13. 13. Benefits and Costs of an Action to Whomsoever They Accrue <ul><li>B 1 + B 2 + B 3 + . .+B n > C 1 + C 2 + C 3 + . . .+C n </li></ul><ul><li>Then the Action is Ethical </li></ul><ul><li>B 1 + B 2 + B 3 + . .+B n < C 1 + C 2 + C 3 + . . .+C n </li></ul><ul><li>Then the Action is Unethical </li></ul>
  14. 14. Utilitarianism Example <ul><li>Harry Truman and Decision to Drop Bomb on Japan </li></ul>
  15. 15. What do you think of this concept? <ul><li>How do you quantify benefits and costs? </li></ul><ul><li>How do you value benefits and costs? </li></ul><ul><li>Can lead to unjust consequences </li></ul><ul><li>Restrictions against the majority to protect a minority is not utilitarian </li></ul>
  16. 16. Deontologism <ul><li>Derived from the Greek word for Duty </li></ul><ul><li>Actions are not justified by their consequences. Factors other than good outcomes determine the rightness of actions </li></ul>
  17. 17. Utilitarianism Vs. Deontologism <ul><li>Utilitarianism - The ends justify the means </li></ul><ul><li>Deontologism - It is the means which are important </li></ul>
  18. 18. Catagorical Imperative <ul><li>Developed by Immuel Kant </li></ul><ul><li>“I ought never to act except in such a way that I can also will that my maxim should become a universal law” </li></ul><ul><li>Are you willing to permit everyone to adopt the action? </li></ul><ul><li>Yes - Moral No - Immoral </li></ul>
  19. 19. Guidance in Dealing with People <ul><li>People should never be treated as a means to an end, but as ends in themselves </li></ul><ul><li>To treat people as ends requires respect for persons </li></ul><ul><li>Reject slavery </li></ul><ul><li>Deals with murder, rape, etc </li></ul><ul><li>How to deal with employees </li></ul>
  20. 20. General Ethical Behavior <ul><li>Builds security, friendliness, cooperation and trust in a society </li></ul><ul><li>These are public goods created by generally ethical behavior </li></ul>
  21. 21. What are Characteristics of Public Goods? <ul><li>Not subject to exclusion - cannot exclude people from consumption even if they do not contribute </li></ul><ul><li>Joint Supply - Provide for one individual, provide for all </li></ul><ul><li>Free Rider Problem </li></ul>
  22. 22. Catagorical Imperative and Public Goods <ul><li>Security, Friendliness, Cooperation and Trust </li></ul><ul><li>Not Subject to Exclusion </li></ul><ul><li>Joint Supply </li></ul><ul><li>Free Rider Problem </li></ul>
  23. 23. Examples <ul><li>Is it Ethical to Rob Banks? </li></ul><ul><li>Is it Ethical to Give Everyone in this Class an A? </li></ul>
  24. 24. What Do You Think of Deontologism? <ul><li>Conflicts between duties </li></ul><ul><li>Utilitarians argue that secretly appeal to consequences to demonstrate the rightness of actions </li></ul>
  25. 25. Ethical Tests
  26. 26. Is It Legal Test? Quadrant II Ethical and Illegal Quadrant IV Unethical and Illegal Quadrant I Ethical and Legal Quadrant III Unethical and Legal Ethical Unethical Legal Illegal Corporate Decisions Codification Manifestation
  27. 27. Ethical Tests <ul><li>1. Is It Legal? I Ethical - Legal II Ethical - Illegal III Unethical - Legal IV Unethical - Illegal </li></ul><ul><li>I and IV Easy </li></ul><ul><li>II and III Difficult </li></ul>
  28. 28. Ethical Tests <ul><li>2. Benefit Cost Test Do the benefits exceed the costs to whomsoever they accrue? </li></ul><ul><li>3. Categorical Imperative Are you willing to allow everyone to practice the proposed action or do you want to be a special case? </li></ul>
  29. 29. Ethical Tests <ul><li>4. Light of Day Test What would be your reaction if the action were brought out into the open for public scrutiny? </li></ul><ul><li>5. Do Unto Others Test Golden Rule - If you would like others to do the same to you - passes the test </li></ul>
  30. 30. Ethical Tests <ul><li>6. Ventilation Test Seek out others views. Discuss the 5 tests with them. If others feel it is OK - passes the test </li></ul>
  31. 31. Examples <ul><li>Robbing a Bank </li></ul><ul><li>Driving Above the Speed Limit </li></ul><ul><li>Cheating on an Exam </li></ul><ul><li>Having Sex with an Intern </li></ul>
  32. 32. Ethical Dilemmas in Business <ul><li>Conflict of Interest Have two interests - cannot purse one without having negative impact on other </li></ul><ul><li>Two Types Private Interest Conflicts with Corporate Business Interest Conflicts with Public </li></ul>
  33. 33. Conflict of Interest Mini Case <ul><li>Personnel Director </li></ul><ul><li>Brother - in - law out of work </li></ul><ul><li>Lackluster performer </li></ul><ul><li>Unemployment about to run out - will loose house </li></ul><ul><li>Sister asks you to recommend him for job </li></ul><ul><li>What would you do? </li></ul>
  34. 34. Whistleblowing <ul><li>Act of disclosing wrongdoing in an organization </li></ul><ul><li>Like blowing a whistle to call attention to a thief </li></ul><ul><li>Types Internal External </li></ul>
  35. 35. Can Cause Bitterness in Organization <ul><li>Dissent - Must speak out against others in organization </li></ul><ul><li>Breach of Loyalty - Perceived as one who violates confidentiality and loyalty </li></ul><ul><li>Accusation - Singles out specific individuals as threats to organization or the public </li></ul>
  36. 36. Possible Retaliation <ul><li>Fired </li></ul><ul><li>Blacklisted </li></ul><ul><li>Transferred to undesirable locations </li></ul><ul><li>Lifestyles, sex lives and mental stability questioned </li></ul><ul><li>Physical abuse and murder possible </li></ul>
  37. 37. Failure to Reveal Wrongdoing <ul><li>Severe problems for society or organization </li></ul><ul><li>Can be implicated as an accessory before or after the fact </li></ul>
  38. 38. Ethics of Whistleblowing <ul><li>When is it ethical to reveal wrongdoing ? </li></ul><ul><li>When is it ethical to remain silent? </li></ul>
  39. 39. Whistleblowing Example <ul><li>In charge of Quality Control </li></ul><ul><li>Company makes parts for automobile brakes </li></ul><ul><li>Find defect in brake part </li></ul><ul><li>Could cause failure in brakes </li></ul><ul><li>Failure not certain </li></ul><ul><li>May take many years to develop </li></ul>
  40. 40. Whistleblowing Example (cont.) <ul><li>Go to VP of Production, your boss </li></ul><ul><li>He tells you to overlook defect - company may loose too much money </li></ul><ul><li>What would you do? </li></ul>
  41. 41. Challenger Disaster <ul><li>Morton-Thiokol </li></ul><ul><li>“O” rings </li></ul><ul><li>Cold in Florida </li></ul><ul><li>Engineers warned “O” Rings could fail </li></ul><ul><li>NASA management made decision to launch Space Shuttle anyway </li></ul>
  42. 42. Cautious Approach to Whistleblowing <ul><li>1. Make sure situation involves an imminent threat to society or to the business </li></ul><ul><li>2. Document all allegations </li></ul><ul><li>3. Examine internal whistleblowing first </li></ul><ul><li>4. Should you remain anonymous? </li></ul><ul><li>5. Get another job first!!! </li></ul>
  43. 43. Bribery <ul><li>A payment, usually to a public official, to induce that person to either do something improper or to influence decisions or actions </li></ul><ul><li>Extortion - same as bribery - recipient of payment initiates transaction </li></ul>
  44. 44. Case <ul><li>International consulting firm - designs and supervises construction of hydroelectric power generating systems </li></ul><ul><li>Your proposal is far superior to any other technically lowest bid </li></ul><ul><li>To get job, must deposit $250,000 in official’s personal Swiss bank account </li></ul>
  45. 45. Should you pay the money? <ul><li>Foreign Corrupt Practices Act of 1997 </li></ul><ul><li>Grease payment allowed </li></ul><ul><li>Standard Practice in most foreign countries </li></ul><ul><li>Results in lost business opportunities for US companies </li></ul><ul><li>American tax dollars may be used to pay bribe </li></ul>
  46. 46. Bluffing and Deception <ul><li>Negotiating a labor contract </li></ul><ul><li>Plant has experienced losses over past several years - not clear why </li></ul><ul><li>Want concessions from labor </li></ul><ul><li>Tell labor that plant will be closed if no concessions are made. In reality , no such plans contemplated </li></ul><ul><li>Is This Ethical ? </li></ul>
  47. 47. Managerial Implications <ul><li>Top Management Leadership Organizational Culture </li></ul><ul><li>Realistic Goal Setting </li></ul><ul><li>Ethics Audit </li></ul><ul><li>Code of Ethics </li></ul><ul><li>Ethics Committee </li></ul>
  48. 48. Managerial Implications <ul><li>Ethics Advocate </li></ul><ul><li>Whistleblowing Mechanism </li></ul><ul><li>Ethics Training </li></ul>
  49. 49. Polaroid in and Out of South Africa <ul><li>Apartheid System </li></ul><ul><li>17% White 70% African </li></ul><ul><li>Whites only could be in government, possess firearms </li></ul><ul><li>Enforced segregation of races </li></ul><ul><li>Blacks relegated to “native reserves” </li></ul>
  50. 50. Apartheid (cont.) <ul><li>Blacks allowed to own 13% of land </li></ul><ul><li>Whites - 87% </li></ul><ul><li>Black workers paid less than Whites </li></ul>
  51. 51. US Involvement in South Africa <ul><li>320 American companies there </li></ul><ul><li>American companies controlled 43% of petroleum market 23% of auto sales 70 percent of computer business </li></ul>
  52. 52. Polaroid <ul><li>Rumors that products used in Pass Book System </li></ul><ul><li>Commission to South Africa No sales to government Improve salaries for Blacks for local distributors and suppliers Training program so Blacks could take better jobs Some profits for Black education </li></ul>
  53. 53. Success of Program <ul><li>Improvements in Black salaries, advancement and benefits </li></ul><ul><li>Principle of same pay for same job accepted </li></ul><ul><li>Ban on direct sales successful </li></ul><ul><li>Ban on indirect sales not successful </li></ul>
  54. 54. Sales to Government through Frank and Hirsch <ul><li>Secretly selling Polaroid products to government </li></ul><ul><li>Billed as shipments through drugstore in Johannesburg </li></ul><ul><li>Polaroid terminated its involvement in South Africa </li></ul>
  55. 55. Ethical Questions <ul><li>What is the ethics of American companies doing business in a country with human rights abuses? </li></ul><ul><li>Was Polaroid responsible for the use of its products? </li></ul><ul><li>Are companies responsible for the use of their products? </li></ul>
  56. 56. Ethical Questions <ul><li>Was Polaroid’s presence a positive or negative influence on Blacks? </li></ul><ul><li>What is happening in South Africa today? </li></ul>