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Business Ethics (OCR exam board)


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Business Ethics (OCR exam board)

  1. 1. Business EthicsBusiness Ethics
  2. 2. What questions do you think of when you look at this picture?
  3. 3. ‘BEING GOOD IS GOOD BUSINESS’ Dame Anita Roddick (Body Shop)
  5. 5. The Ford Pinto Case 1970 During crash tests which proceeded sales of the Pinto to the public, a serious design flaw was discovered. The gas tank was so designed that when it was involved in a rear end collision at an impact speed of 20 MPH or greater, the tank was likely to rupture, causing a fire and explosion. Following crash tests, the conclusion was that the rear end structure was not satisfactory. Suggested changes would have cost about $11 per car. A confidential company memo directed that the safety features not be adopted until required by law. Ford Motor Company knew about the problems. Summary: • Design was rushed. The normal time to produce an automobile is 43 months - Ford took 25 for the Pinto. • Before production, Ford engineers discovered flaws in the car car’s design. In nearly all rear-end crash test collisions the Pinto's fuel system would rupture extremely easily. • Because assembly-line tooling was already in place when engineers found this defect, top Ford officials decided to manufacture the car anyway, even though Ford owned the patent on a much safer gas tank.
  6. 6. Other Major Engineering Failures Pick one to further research at home. Consider the ethics involved and how to apply these to the arguments: •The DC 10 Cargo Door •Interstate 35W Bridge, •Minneapolis, MN (2007) •Columbia Space Shuttle (2003) •Challenger Space Shuttle (1986) •Kansas City Hyatt Regency Walkway Collapse, MO (1981) •Teton Dam (1976) •Tacoma Narrows Bridge, WA (1940)
  7. 7. Ethical Questions? • Should supermarkets be allowed to charge for carrier bags? • Should supermarkets sell lager cheaper than bottled water? • Should businesses profit from gambling? • Is ethical shopping a luxury we cant afford? • Why should a company pay more than minimum wage unless it has to?
  8. 8. Social responsibility businesses have a duty and an obligation to consider the effects of their activities on society as a whole. Shareholders • The key priority of a business should be to make a profit for its shareholders • These are people who have invested money into the success of a business. More successful: more return on your money. Stakeholders • CSR- Corporate Social Responsibility. • The process whereby a business monitors and ensures its compliance not only with the law but with accepted ethical standards as well. • The wider needs of employees, consumers and the community should be considered
  9. 9. Milton Friedman "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.“ Milton Friedman (US economist -1912- 2006) Milton Friedman's Theory on Corporate Social Responsibility •Milton Friedman's statement that a business's social responsibility lies in making profit has shown a controversial point of view in modern business. •On one hand, it is correct to say that the main focus of a business should be to make profit. Without profit, a business cannot survive. In a way, Friedman's theory does promote social responsibility to society. The increase of profits in a company benefits the economy which benefits the citizens of that economy. •Friedman also believed that social responsibility should not be forced by the government. However companies can still maintain their successful path while pursuing several different methods of social responsibility simultaneously. Responsibility to stakeholders can still be achieved while helping to strengthen the community.
  10. 10. Alternative Perspective to Milton Friedman's Theory • There are many ways that an organization can be socially responsible. There are three main focuses of a company wanting to promote social responsibility: The environment: • Simple steps to environmental social responsibility can be taken such as cleaner smoke stacks or cautious examination of wastes dumped into water supplies. These may not be the quickest/ cheapest but is important for organizations to be conscious of the environment around them. • The community: • planning new developments should take into consideration the effect that it will have on local economic and social patterns. • participating in local charities and benefits. Their employees: • If companies show their employees that they care about them the employees will care more about the company. • Also, bad relations with employees will eventually begin to show in the community (i.e social networking sites)
  11. 11. What are Stakeholders?Internal stakeholders (groups within a business) • Owners who are interested in how much profit the business makes. • Managers who are concerned about their salary. • Workers who want to earn high wages and keep their jobs. • Suppliers who want the business to continue to buy their products. • Lenders who want to be repaid on time and in full. External stakeholders (groups outside a business) • Customers who want the business to produce quality products at reasonable prices. • The community which has a stake in the business as employers of local people. • Local environment. For example, noisy night-time deliveries or a smelly factory would be unpopular with local residents. Sometimes these interests can conflict.
  12. 12. Employers and Employees Balance of interests: Employers: want to plan for future, make profits and keep employees motivated. Employees: want best working conditions, job security •If employee is unhappy = high turnover, poor time keeping, absenteeism all result in less profit. •Internet allows for rapid sharing of information plus attitudes of websites which discusses businesses. •Whistle blowers is the term given to someone who risks their livelihood to tell the truth about companies and make businesses accountable of their actions.
  13. 13. Relationship between Business and Consumer • Originally this simply meant not conning the consumer to buy something he/she didn’t need (i,.e PPI). • But now the consumer wants to see social responsibility from the businesses it buys from • Consumer rights – Quality, safety, price and good customer service. Eg – Good treatment of employees – Putting back into the community – Environmental concern (think recyclable packaging etc) – Not using sweat shops etc • Consumers are crucial to change in business and how they are run • For example Nike and Gap over child labour. Nike now monitor its factories following the Panorama programme. Question is: would Nike have done this without been caught out by Panorama? Does this show does extrinsic motivations not because they knew what they were doing was wrong?
  14. 14. Globalisation (Companies become world wide) Process of globalisation is speeding up: • Technologies changing – communications even faster (i.e Skype communications) • Transport cheaper and faster • Removal of capital exchange controls – money can be moved easier • Consumer tastes have changed – willing to try foreign foods • UK gets year round food/produce because of globalisation Businesses are now freer to choose where they operate from: • Business taking trade to countries not influenced by unions/ equal rights = labour is cheaper • e.g. Manufacturing has moved to Indonesia or phone lines to India • Whereas Amnesty Internationals campaigns for global human rights acts  Gives jobs/ small income to poor communities X Use of sweatshops/ cheap labour/ no sick/ no holidays/ long hours X Global companies taking trade from smaller business e.g. Caribbean banana could not compete with Del Monte X Keep poor communities poor and companies rich (The poorest people have just 1.4% of global income)
  15. 15. But are Apple that ethical? ss-studies/comments/video-starter-inside- the-ipad-factory
  16. 16. Christian Views • "Do not defraud or rob your neighbour. Do not make your hired workers wait until the next day to receive their pay.” Leviticus 19:13 The Parable of the Rich Young Man • "Now a man came up to Jesus and asked, 'Teacher, what good thing must I do to get eternal life?' • 'There is only One who is good. If you want to enter life, obey the commandments.' 'Do not murder, do not commit adultery, do not steal, do not give false testimony, honour your father and mother, and love your neighbour as yourself.' • "'All these I have kept,' the young man said. 'What do I still lack?‘ • Jesus answered, 'If you want to be perfect, go, sell your possessions and give to the poor, and you will have treasure in heaven. Then come, follow me.' When the young man heard this, he went away sad, because he had great wealth. • "Then Jesus said to his disciples, 'I tell you the truth, it is hard for a rich man to enter the kingdom of heaven. Again I tell you, it is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God.' When the disciples heard this, they were greatly astonished and asked, 'Who then can be saved?'
  17. 17. Was Jesus teaching that we should give away all our money and become poor? No, that was not the lesson that day. What Jesus was really asking the young man to do was so grievous to him, so unacceptable, that he left sorrowing. This wealthy young man thought he was a righteous Jew. He had kept the commandments all his life. This is a private recommendation to one person. We can learn a lesson from it, but the lesson for us is not the thing Jesus is about to recommend to the young man. What was holding this man back was his love of money. Jesus knew what was motivating this young man. Even the apostle Paul, years later, wrote, "For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs" (1 Timothy 6:10). Story: Amos Unjust Steward Jesus – Justice/ exploitation.
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