Business Ethics and its introduction.

1. Business ethicsBusiness ethics

2. Chapter TopicsChapter Topics
1.1. Business ethics and the changing environmentBusiness ethics and the changing environment
2.2. What is business ethics? Why does it matter?What is business ethics? Why does it matter?
3.3. Levels of business ethics.Levels of business ethics.
4.4. Five myths about business ethicsFive myths about business ethics
5.5. Why use ethical reasoning in business?Why use ethical reasoning in business?
6.6. Can business ethics be taught and trained?Can business ethics be taught and trained?

3. What is ethics?What is ethics?
 Ethics is the branch of philosophyEthics is the branch of philosophy
that focuses on morality and the waythat focuses on morality and the way
in which moral principles are appliedin which moral principles are applied
to everyday life. Ethics has to doto everyday life. Ethics has to do
with fundamental questions such aswith fundamental questions such as
“What is fair?” “What is just?” “What“What is fair?” “What is just?” “What
is the right thing to do in thisis the right thing to do in this
situation?” Ethics involves an activesituation?” Ethics involves an active
process of applying values, whichprocess of applying values, which
may range from religious principlesmay range from religious principles
to customs and traditions.to customs and traditions.

4. What is business ethics?What is business ethics?
 Business ethics focuses on whatBusiness ethics focuses on what
constitutes right or wrong behavior inconstitutes right or wrong behavior in
the world of business. Corporatethe world of business. Corporate
business executives have abusiness executives have a
responsibility to their shareholdersresponsibility to their shareholders
and employees to make decisionsand employees to make decisions
that will help their business make athat will help their business make a
profit. But in doing so, businessprofit. But in doing so, business
people also have a responsibility topeople also have a responsibility to
the public and themselves tothe public and themselves to
maintain ethical principles.maintain ethical principles.

5. Business Ethics and theBusiness Ethics and the
Changing EnvironmentChanging Environment
 Businesses & governments operate in changingBusinesses & governments operate in changing
technological, legal, economic, social & politicaltechnological, legal, economic, social & political
environmentsenvironments with competing stakeholders & powerwith competing stakeholders & power
claims.claims.
 Stakeholders areStakeholders are individuals, companies, groups &individuals, companies, groups &
nationsnations that cause and respond to external issues,that cause and respond to external issues,
opportunities, and threats.opportunities, and threats.
 The rate of change and uncertainty in which stake-The rate of change and uncertainty in which stake-
holders & society must make & manage business &holders & society must make & manage business &
moral decisions have accelerated due to the impact of:moral decisions have accelerated due to the impact of:
 Internet and information technologiesInternet and information technologies
 GlobalizationGlobalization
 DeregulationDeregulation
 MergersMergers
 WarsWars

6. Environmental Forces andEnvironmental Forces and
StakeholdersStakeholders
 Local, national, and international environmentsLocal, national, and international environments
are increasingly moving toward and into aare increasingly moving toward and into a
global system of dynamically interrelatedglobal system of dynamically interrelated
interactions among local, national, and regionalinteractions among local, national, and regional
politics, economies, regulations, technologies,politics, economies, regulations, technologies,
demographics, and international law.demographics, and international law.
 Economic environmentEconomic environment
 TechnologicalTechnological
 PoliticalPolitical
 Governmental and regulatoryGovernmental and regulatory
 LegalLegal
 DemographicDemographic

7. Stakeholder ManagementStakeholder Management
ApproachApproach
 TheThe stakeholder management approachstakeholder management approach is a way ofis a way of
understanding the effects of environmental forces andunderstanding the effects of environmental forces and
groups on specific issues that affect real-timegroups on specific issues that affect real-time
stakeholders and their welfare.stakeholders and their welfare.
 This approach attempts to enable individuals and groupsThis approach attempts to enable individuals and groups
to articulate collaborative win-win strategies: based on:to articulate collaborative win-win strategies: based on:
 Identifying and prioritizing issues, threats, or opportunitiesIdentifying and prioritizing issues, threats, or opportunities
 Mapping who the stakeholders areMapping who the stakeholders are
 Identifying their stakes, interests, and power sourcesIdentifying their stakes, interests, and power sources
 Showing who the members of coalitions are or may becomeShowing who the members of coalitions are or may become
 Showing what each stakeholder’s ethics are and should beShowing what each stakeholder’s ethics are and should be
 Developing collaborative strategies and dialogue from a higherDeveloping collaborative strategies and dialogue from a higher
ground perspective to move plans and interactions to the desiredground perspective to move plans and interactions to the desired
closure for all partiesclosure for all parties

8. What is Business Ethics?What is Business Ethics?
Why Does It Matter?Why Does It Matter?
 Ethical solutions to business and organizational problems mayEthical solutions to business and organizational problems may
have more than one right alternative and sometimes, no righthave more than one right alternative and sometimes, no right
solution may seem available.solution may seem available.
 We can learn fromWe can learn from case studies, role playing, andcase studies, role playing, and discussionsdiscussions
about how our actions affect others in different situations.about how our actions affect others in different situations.
 Laura Nash has defined business ethics asLaura Nash has defined business ethics as “the study of how“the study of how
personal moral norms apply to the activities and goals ofpersonal moral norms apply to the activities and goals of
commercial enterprise,commercial enterprise,”” as dealing with three basic areas ofas dealing with three basic areas of
managerial decision making:managerial decision making:
 Choices about what the laws should be and whether to followChoices about what the laws should be and whether to follow
themthem
 Choices about economic and social issues outside the domainChoices about economic and social issues outside the domain
of lawof law
 Choices about the priority of self-interest over the company’sChoices about the priority of self-interest over the company’s
interestsinterests

9. What Are UnethicalWhat Are Unethical
Business Practices?Business Practices?
 Surveys have identified the following recurringSurveys have identified the following recurring
themes to prominent everyday ethical issues facingthemes to prominent everyday ethical issues facing
businesses and their stakeholders:businesses and their stakeholders:
 Managers lying to employeesManagers lying to employees
 Office nepotism and favoritismOffice nepotism and favoritism
 Taking credit for other’s workTaking credit for other’s work
 Receiving/offering kickbacksReceiving/offering kickbacks
 Stealing from the companyStealing from the company
 Firing an employee for whistle-blowingFiring an employee for whistle-blowing
 Padding expense accountsPadding expense accounts
 Divulging confidential information or trade secretsDivulging confidential information or trade secrets
 Terminating employment without sufficient noticeTerminating employment without sufficient notice
 Using company property/materials for personal useUsing company property/materials for personal use

10. What Are UnethicalWhat Are Unethical
Business Practices?Business Practices?
 The most unethical behavior, per oneThe most unethical behavior, per one
survey, happens in the following areas:survey, happens in the following areas:
 GovernmentGovernment
 SalesSales
 LawLaw
 MediaMedia
 FinanceFinance
 MedicineMedicine
 BankingBanking
 ManufacturingManufacturing

11. Why Does Ethics Matter InWhy Does Ethics Matter In
Business?Business?
 ““Doing the right thing” matters to employers,Doing the right thing” matters to employers,
employees, stakeholders, and the public.employees, stakeholders, and the public.
 For companies, it means saving billions of dollarsFor companies, it means saving billions of dollars
each year in lawsuits, settlements, and thefteach year in lawsuits, settlements, and theft
 Tobacco industryTobacco industry
 Dow CorningDow Corning
 Costs to businesses include:Costs to businesses include:
 Deterioration of relationshipsDeterioration of relationships
 Damage to reputationDamage to reputation
 Declining employee productivity,creativity, andDeclining employee productivity,creativity, and
loyaltyloyalty
 Ineffective information flow throughout theIneffective information flow throughout the
organizationorganization
 AbsenteeismAbsenteeism

12. Levels of Business EthicsLevels of Business Ethics
 Because ethical problems are not only anBecause ethical problems are not only an
individual or personal matter, it is helpful toindividual or personal matter, it is helpful to
see the different levels at which issuessee the different levels at which issues
originate and how they move to otheroriginate and how they move to other
levels.levels.
 Five levels are:Five levels are:
 IndividualIndividual
 OrganizationalOrganizational
 AssociationAssociation
 SocietalSocietal
 InternationalInternational
 Examination of theExamination of the RU 486RU 486 storystory

13. Asking Key QuestionsAsking Key Questions
 The following questions can be asked when aThe following questions can be asked when a
problematic decision or action is experienced orproblematic decision or action is experienced or
perceived before it becomes an ethical dilemma:perceived before it becomes an ethical dilemma:
 What are my core values and beliefs?What are my core values and beliefs?
 What are the core values and beliefs of myWhat are the core values and beliefs of my
organization?organization?
 Whose values, beliefs, and interests may be at risk inWhose values, beliefs, and interests may be at risk in
this decision? Why?this decision? Why?
 Who will be harmed or helped by my decision or byWho will be harmed or helped by my decision or by
the decision of my organization?the decision of my organization?
 How will my own and my organization’s core valuesHow will my own and my organization’s core values
and beliefs be affected or changed by this decision?and beliefs be affected or changed by this decision?
 How will I and my organization be affected by theHow will I and my organization be affected by the
decision?decision?

14. Five Myths About BusinessFive Myths About Business
EthicsEthics
 AA mythmyth is “a belief given uncriticalis “a belief given uncritical
acceptance by the members of a group,acceptance by the members of a group,
especially in support of existing orespecially in support of existing or
traditional practices and institutions.”traditional practices and institutions.”
 Myth 1: Ethics is a personal, individualMyth 1: Ethics is a personal, individual
affair, not a public or debatable matteraffair, not a public or debatable matter
 Myth 2: Business and ethics do not mixMyth 2: Business and ethics do not mix
 Myth 3: Ethics in business is relativeMyth 3: Ethics in business is relative
 Myth 4: Good business means good ethicsMyth 4: Good business means good ethics
 Myth 5: Information and computing areMyth 5: Information and computing are
amoralamoral

15. Why Use Ethical ReasoningWhy Use Ethical Reasoning
In Business?In Business?
 Ethical reasoning is required in business for atEthical reasoning is required in business for at
least three reasons:least three reasons:
 Many times laws are insufficient and do not cover allMany times laws are insufficient and do not cover all
aspects or gray areas of a problemaspects or gray areas of a problem
 Free-market and regulated-market mechanisms do notFree-market and regulated-market mechanisms do not
effectively inform owners and managers about how toeffectively inform owners and managers about how to
respond to complex issues and crises that have far-respond to complex issues and crises that have far-
reaching ethical consequencesreaching ethical consequences
 Complex moral problems require an intuitive orComplex moral problems require an intuitive or
learned understanding and concern for fairness,learned understanding and concern for fairness,
justice, and due process to people, groups, andjustice, and due process to people, groups, and
communitiescommunities

16. Can Business Ethics BeCan Business Ethics Be
Taught And Trained?Taught And Trained?
 Ethic courses and training can do theEthic courses and training can do the
following:following:
 Provide people with rationales, ideas, and vocabularyProvide people with rationales, ideas, and vocabulary
 Help people make sense of their environmentsHelp people make sense of their environments
 Provide intellectual weaponsProvide intellectual weapons
 Enable employees to act as alarm systems for companyEnable employees to act as alarm systems for company
practicespractices
 Enhance conscientiousness and sensitivityEnhance conscientiousness and sensitivity
 Enhance moral reflectiveness and strengthen moral courageEnhance moral reflectiveness and strengthen moral courage
 Increase people's ability to become morally autonomousIncrease people's ability to become morally autonomous
ethical dissentersethical dissenters
 Improve the firm’s moral climateImprove the firm’s moral climate

17. Can Business Ethics BeCan Business Ethics Be
Taught And Trained?Taught And Trained?
 Other scholars argue that ethical trainingOther scholars argue that ethical training
can add value to the moral environmentcan add value to the moral environment
of a firm and to relationships in theof a firm and to relationships in the
workplace by:workplace by:
 Finding a match between employer’s andFinding a match between employer’s and
employee’s valuesemployee’s values
 Managing the push-back pointManaging the push-back point
 Handling an unethical directiveHandling an unethical directive
 Coping with a performance system thatCoping with a performance system that
encourages unethical meansencourages unethical means