050 221 Business Ethics

What is Ethics?

What is Ethics?

Standards of moral behavior, that is, behavior is accepted by society as ‘right’ versus ‘wrong’

The study of how people try to live their lives according to the standard of “right” or “wrong” behavior – in both how we think and behave toward others and how we would like them to think and behave toward us.

What is Business Ethics?

What is Business Ethics?

Application of standards of moral behavior to business situation.

or…

The study of how personal moral norms apply to activities and goals of commercial enterprise.

Business always related to stakeholders. … Who are Stakeholders?

Who are Stakeholders?

Someone with a share or interest(benefit) in a business enterprise including stockholders, employees, customers, suppliers /vendor partner, retailer/ wholesaler, federal government, creditors, and community.

Stakeholders

Stakeholder Interests

STAKEHOLDERS

Suppliers/Vendor partners

Retailers/ Wholesalers

INTEREST IN ORGANIZATION

Prompt payment for delivered goods

Regular orders with and acceptable profit margin

Accurate deliveries of quality products on time and at a reasonable cost

Safe and reliable product

Stakeholder Interests

STAKEHOLDERS

Stockholders

Employees

INTEREST IN ORGANIZATION

Growth in the value of company stock

Dividend income

Stable employment Fair rate of pay Safe & comfortable

working environment

Stakeholder Interests

STAKEHOLDERS

Federal government

Creditors

INTEREST IN ORGANIZATION

Tax revenue Operation in

compliance with all relevant legislation

Principle and interest payments

Repayment of debt according to the agreed schedule

Stakeholder Interests

STAKEHOLDERS

Customers

Community

INTEREST IN ORGANIZATION

“Fair Exchange” – a product or service of acceptable value and quality for the money spent

Employment of local residents

Economic growth Protection of local

environment

Stakeholder Impact from Unethical BehaviorSTAKEHOLDERS

Stockholders

Employees

INTEREST IN ORGANIZATION

Misleading financial information on which to base investment decisions

Loss of stock value Cancellation of dividend

Loss of employment Unfair rate of pay Unsafe & uncomfortable

working environment

Stakeholder Impact from Unethical BehaviorSTAKEHOLDERS

Suppliers/Vendor partners

Retailers/ Wholesalers

INTEREST IN ORGANIZATION

Delayed payment for delivered goods and services

Inaccurate deliveries of quality products and at unreasonable cost

Unsafe and unreliable product

Stakeholder Impact from Unethical BehaviorSTAKEHOLDERS

Federal government

Creditors

INTEREST IN ORGANIZATION

Loss of tax revenue Failure to comply with

all relevant legislation

Loss of principle and interest payments

Failure to repay debt according to the agreed schedule

Stakeholder Impact from Unethical BehaviorSTAKEHOLDERS

Customers

Community

INTEREST IN ORGANIZATION

Poor service quality Poor product quality

Unemployment of local residents

Economic decline No protection of local

environment

Why does ethics matter in business?

Why does ethics matter in business? Impacts of operating firm unethically :

Financial penalties: lawsuits, theft Deterioration (becoming worse) of relationships Damage to reputation Declining employee productivity, creativity, loyalty,

ineffective information flow throughout organization,absenteeism (regular absence from work w/o good reason)

Difficulties for recruiting and retaining valued professionals due to bad reputation of company

The Golden Rule

“Do unto others as you would have them do unto you.” or

“Treat others as you would like to be treated.”

(The goal of living an ethical life)

Danger of The Golden RuleNot everyone thinks like that…

So, if you apply the golden rule to everyone you met, you possibly get in trouble.

Danger of The Golden Rule

Example: If you are the person who values on

honesty as a priority, and you found an expensive wallet fall on the sidewalk, you will definitely try to return it to the owner.

However, if you lost your wallet, could you automatically expect that the person who found it would make the same effort to return it to you?

What is Ethical Dilemma?

What is Ethical Dilemma? Situation in which there is no

obvious “right” or “wrong” decision, but rather “right” or “right” answer.

Ethical Dilemma Example:

You are the manager of the restaurant which is not popular among customer, sales in each day is quite low, some days could sell only few serves.

You, as the manager, notices one of ingredient (which

is very expensive as it has to be imported from overseas) use in cooking process already expired. Then you report to your boss.

Due to the fact that, revenues from sales is not quite good, he asks you to continue using that expired ingredient as it just only be used for 2 dishes on the menu (out of 30 dishes).

Ethical Dilemma Example (con’t):

In addition, chef also has to taste the dish has this ingredient before serving every time whether it still be the same taste for customer or not.

The boss says, whenever the taste changes, he will order a new batch of this ingredient from overseas.

What would you do after got your boss’s answer like this?

3 –Step Process of Resolving Ethical Dilemmas

1. Analyze the consequences: who will be affected by your action (negative and positive effects) both in long run and short run?

2. Analyze the actions: consider all options from a different perspective, which option offers actions that are least problematic?

3. Make a decision

8 Questions should consider when resolving an ethical dilemmaby Arthur Dobrin

1. What are the facts?2. What can you guess about the facts

you don’t know?3. What do the fact mean?4. What does problem look like

through the eyes of people involved?

5. What will happen if you choose one thing rather than another?

8 questions should consider when resolving an ethical dilemmaby Arthur Dobrin

6. What do your feelings tell you?7. What will you think of yourself if you

decide one thing or another?8. Can you explain and justify your

decision to others?

Summary

Business Ethics

Deals with what is “right” and “wrong” in organizational decisions, behavior, and policies

Provides principles and guidelines that assist people in making informed choices that balance economic interests and social responsibilities.