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Ethics in business


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Ethics in business

  1. 1. EthicsoMore Than LegalityoStandards are
  2. 2. The Legal Ethical GridEthicalbutIllegalUnethicalAndIllegalLegalAndEthicalLegalButUnethicalLegalEthical UnethicalIllegal
  3. 3. Factors InfluencingManagerial EthicsIndividualIndividual OrganizationalOrganizational EnvironmentalEnvironmentaloValuesValuesoWorkWorkBackgroundBackgroundoFamily StatusFamily StatusoPersonalityPersonalityoTop Level Mgmt.Top Level Mgmt.PhilosophyPhilosophyoThe Firm’s RewardThe Firm’s RewardSystemSystemoJob DimensionsJob DimensionsoCompetitionCompetitionoEconomicEconomicConditionsConditionsoSocial/CulturalSocial/CulturalInstitutionsInstitutions
  4. 4. Fines & ReasonsCompany Fine ReasonArthur Andersen $500,000Obstruction of JusticeShredding EnronDocumentsCitigroup $5,000,000Analyst IssuedMisleadingInformationMerrill Lynch $100,000,000Conflict of InterestBetween InvestmentBank & ResearchDept.Credit SuisseFirst Boston $100,000,000IPO Shares UnfairlyDistributedSource: Business Week, Nov. 4, 2002
  5. 5. Crisis of TrustAll CorporationsFair Amount 41%Only A Little 35%Not At All 13%A Great Deal 10%No Opinion 1%Your EmployerA Lot 50%Only Somewhat 39%Not At All 8%No Opinion 3%Source: USA Today/CNN/Gallup Poll, Jan. 25-27, 2002
  6. 6. Ethical DecisionResolved Through: Religious Teachings Individual Rights Legislation Court Decisions
  7. 7. Codes of Ethics Compliance-Based Increasing control andpenalizing wrongdoers Integrity-Based Define guiding values Support ethicalbehaviour Shared accountability
  8. 8. Six Steps to Improve Ethics1. Top management support2. Expectations begin at the top3. Ethics imbedded in training4. Ethics office set up5. External stakeholders informed6. There must be enforcement
  9. 9. Responsibility Defined Corporate Social Responsibility-the concern businesses have forthe welfare of society Corporate Philanthropy –charitable donations Corporate Responsibility – actingresponsibly within society Corporate Policy –position onsocial and political issues
  10. 10. Reaction to the New SocialResponsibility Many companies have undertaken aSocial Audit - a systematic evaluationof the company’s position and progresson social issues Shareholders and other stakeholdershave actively encouraged companies tobecome proactive on social issues
  11. 11. Conundrums of Doing BusinessGlobally What do you do when: You are forbidden to trade – Cuba Ethical norms of the host countryviolate the laws of the home country Social responsibility has whole newmeaning Environmental practices differ from thehome company