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Ethical Behavior

Ethical Behavior. Ethics Defined. Set of moral standards for judging whether something is right or wrong Philosophical approaches: Utilitarianism – greatest good for most Individual rights Justice -- consideration of fairness. Why Focus on Ethics?. Customers Expect and Demand Ethics

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Ethical Behavior

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  1. Ethical Behavior

  2. Ethics Defined • Set of moral standards for judging whether something is right or wrong • Philosophical approaches: • Utilitarianism – greatest good for most • Individual rights • Justice -- consideration of fairness

  3. Why Focus on Ethics? • Customers Expect and Demand Ethics - Customers Repulsed and Turn From Businesses They View As Unethical - Ethics/Trust Foundation of Business • Good Ethics Improves the Work Climate - Employees Know Expectations / Respect and Support • Empowered Workers Need Guidelines

  4. Whom must we treat ethically? • Customers • Suppliers • Distributors • Investors • Creditors • Employees • Public

  5. Traditional View of Economic Transactions • The agent in any principal/agent relationship can not be trusted. • Identifying ethical and trustworthy agents is extremely difficult. • Organizations must structure themselves as if all agents can not be trusted. • Thus, substitutes for trust and ethical conduct are necessary.

  6. Total Quality Management Just-in-Time Inventory Systems Relationship Marketing Empowerment of Employees Corporate Downsizing International/global Organizations Flatter Organizational Structures Current Business Trends

  7. Some Questions Regarding Ethical Conduct • Is acting ethically altruistic or self-serving? • What is the relationship between ethics and law? • Can an unethical business organization be successful? • If everyone could be trusted to act ethically, how would the role of the legal profession change?

  8. Ethical Behavior • Martha Stewart/ImClone scandal alleging insider trading • WorldCom investigated for financial misstatements over $3.8 billion • Enron • Arthur Anderson • Dynergy • Tyco • Merrill Lynch

  9. Unethical Practices in Marketing • Entertainment & gift giving • False or misleading advertising • Misrepresentation of goods, services or corporate capabilities • Falsifying information • Exploitation of children or other groups • Invasion of privacy • Sex appeals in advertising • Unsafe products • Price discrimination

  10. Ethical Guidelines & Corporate Social Responsibility • Code of ethics • guidelines to help managers and other employees make better decisions • Research findings: • 60% companies responding maintain ethics code • 33% offer ethical behavior training • 33% employ an ethics officer • Corporate social responsibility

  11. How Ethical Are You? • Take the ethics quiz: • http://www.worldbank.org/wbi/corpgov/eastasia/m5/m5selftest.htm

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