ETHICS
Sabrina12
Ch11EthicsintheWorldofBusiness.pptxEthics in the World of Business
2 distinguishing features of business
Economic Character
-Not family, friends, or neighbors
-Buyers and sellers, employers and employees
-Employment (special relationship)
Takes place in an organization
Hierarchal system of functional defined position
CEOs, Directors, VS, ect., are not free to act on their own sent of standards
Raises ethical issues
3 levels of decision making
1. Individual
Requires an individual to make a decision about their own response
Ex: Employee finds out boss is stealing
2. Organizational
The decision maker is acting on behalf of the company
Ex: Sexual harassment, how the boss should react
3. Business System
Problems that result from accepted business practices & cannot be affectively addressed by a single organization
Ex: Lower pay for women's work
3 points of view that business decisions are made:
Economic point of view
What is good for the business
Legal point of view
From the view of the law
Moral point of view
Requires us to be impartial
Must regard the interest of everyone involved, not just the decision maker
Integrated Approach
Ethics, Economics, and Law
Businesses are:
Economic organizations that operate within a framework of law and regulation
To Produce goods, services, and jobs with the greatest efficiency
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The relationship of ethics & economics
According to Economic Theory:
Firms in a free market utilize scare resources or factors of production in order to produce and output.
Demand is determined by consumers preferences
Firms seek to maximize their preferences or utility by increasing their output:
Under fully competitive conditions, the result is economic efficiency
The relationship of ethics and law
Business activity takes place within an extensive framework of law and some people hold that law is the only set of rules that applies to business activity
2 schools of thoughts
1.) Law and ethics govern two different realms
Law prevails in public life
Ethics in private matters
2.) Law embodies the ethics of business
Ethical rules that apply to business are enacted by legislators and enforced by judges
Arguments: Why the law is not enough?
The law is:
Inappropriate for regulating certain aspects of business activity
Slow to develop in new areas of concern and often unsettled
Employs moral concepts that are not precisely defined
Ethical management and the management of ethics
Ethical Management:
Acting ethically as a manager by doing the right thing
Management of Ethics:
Acting effectively in situations that have an ethical aspect.
Ethics and the role of managers
Ethical dilemmas for top managers are due to conflicts between three main roles:
Managers as economic actors
Managers as company leaders
Managers as community leaders
Business ethics versus morality
Morality
Describes a sociological phenomenon, the existence in a society of rules and standards of conduct.
Without rules “do not kill” and “do not steal” makes stable communities impossible
Moralities are specific to society and exist at certain times and places; example- present and past.
Business ethics versus morality
Ethics
Ethics is a synonym for morality, but can be restricted to rules and norms of specific kinds of conduct or codes of conduct for specialized groups.
ethical theory
Ethical theory is also necessary when reasonable people disagree about controversial issues in business.
The most common ethical questions in business are : Where to draw lines? & How to balance competing concerns? (example)
Controversial issues in business ethics are difficult because they are not easily settled by our ordinary moral beliefs, simple rules, and principles of morality.
fiduciary duties
Fiduciaries, Agents, and Professionals
Fiduciaries: entrusted with the care of another’s assets
3 Fiduciaries Elements
Candor: Ex: Disclose all information
Care: Ex: Trustee of a trust
Loyalty: Ex: Act in the interest
of the beneficiary
Ethic cases
Johnson and Johnson: Tylenol Crisis
Problems
Management’s solution & consequences
Brand name reputation outcome
Toys “R” Us
Home Depot
Dura-Stick
KPMG
