MGT. OF ETHICS 6540 Moral Problems in Business Management

1. MGT. OF ETHICS6540Moral Problems in Business Management

2. What does “right” really mean? • How do you know when something is truly “right” or truly “wrong”? • Why do people’s views on what is “right” and “wrong” differ?

3. Why would a local construction worker in Moab feel differently about allocation of additional land for development and expansion than a young environmentalist who enjoys hiking in the mountains? • How do you attempt to convince people who disagree with you about what is “right”? • What arguments should that unemployed construction worker make if he/she were at a meeting with the young environmentalist? What arguments should the environmentalist make?

4. Moral Standards • Do moral standards in business differ in some ways from those of our personal life? • Business managers do not know how to apply the beliefs and standards they hold to the ethical problems they encounter. • The goal: Bring managers to think in a structured, orderly way about their obligations to other people.

5. How? • The course should be: • Short • Direct • Focused • Lively and move along quickly • Convey a method of analysis - not a standard of behavior

6. Direct: • Recognition of ethical problems • Understanding of ethical analysis • Reliance upon personal values • Focused: • Ethical problems in management are complex • Ethical problems in management are pervasive • Ethical problems in management are personal

7. Specific Incidents That Demand Our Attention to Ethics of Management • H.B. Fuller Company • Beech-Nut Nutrition Company • Dow Corning • Sears Roebuck and Company • Tobacco Industry • The Enron Case • Firestone Tire Failure on Ford SUVs. 60 minutes earlier film about failures in Venezuela

8. General issues also shape the business ethics relationship: • Sexual harassment in the workplace • Toxic waste disposal crisis • Use of lie detectors • Minority rights • AIDS in the workplace • Smoking in the workplace • Drug testing • Insider trading • Whistle blowing • Product liability

9. 1. What groups will benefit? 2. What groups will be harmed? 3. Whose rights will be exercised? 4. Whose rights will be ignored? 5. Express the moral problem so that everyone will believe that his or her moral concerns have been recognized and included. 6. What are the economic benefits? 7. What are the legal requirements? 8. What are the ethical duties?

10. Method of analysis

11. Complex Nature of Moral Problems in Business Benefits Some Harms to Others Rights Exercised Rights Denied Moral Problems in a Business Firm

12. Individual Determinants of Moral Standards Religious/Cultural traditions } Personal Goals Personal Norms Personal beliefs Personal Values Subjective standards of moral behavior Economic/social situations

13. Analytical Process for the Resolution of Moral Problems Understand all moral standards { Determine the economic outcomes } } Define complete moral problems Consider the legal requirements Propose convincing moral solution Recognize all moral impacts: Benefits to some Harms to others Rights exercised Rights denied Evaluate the ethical duties

14. Building Trust, Commitment and Effort within an Organization

15. Extending Cooperation, Innovation and Unification

16. Analytical Process for the Resolution of Moral Problems Understand all moral standards { Determine the economic outcomes } } Define complete moral problems Consider the legal requirements Propose convincing moral solution Recognize all moral impacts: Benefits to some Harms to others Rights exercised Rights denied Evaluate the ethical duties

17. Chapter TwoMoral Analysis and Economic Outcomes

18. Microeconomic theory of best for society is:

19. Economic Theory • Managers should optimize profits and • Ensure that those markets are competitive

20. Pareto Optimality • Increase in the well-being of some and decrease in the well-being of others. Any lasting harms should be remedied by political, not financial, procedures! • Is it possible to rely totally on the economic concept of Pareto Optimality in making decisions?

21. “Few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than make as much money for their stockholders as possible.” -Milton Friedman

22. Personal Demand Curve Price Individual Demand Units

23. Market Demand and Supply Curve Market Supply Price Market Demand Units

24. Marginal Cost Curve Marginal Costs Dollars Marginal Revenues Units

25. The executives who happened to hold duplicate positions following a merger and consequently were to be victims of “downsizing”. • The wholesalers who helped to successfully establish a new product but now represent a much more costly means of reaching the market. • The dam, which is to be built on private land, but which will block a river used by local residents and summer vacationers for years.

26. Since no one is perfect then legal requirements (decisions by full society) and observing ethical duties (principles for a good society) are needed.

27. Factor Supply Curves Labor Supply Capital Supply Dollars Material Supply Units

28. Product markets for goods and services, with aggregate demand and supply curves that determine the prices to be charged Consumers, whose marginal utilities for a mix of goods and services can be expressed as individual demand curves Producing firms, whose marginal costs determine a company supply curve for the goods and services and whose marginal productivity rates determine company demand curves for the various input factors Political process, for a partial redistribution of income from owners and workers to individual consumers and public agencies within the society Microeconomic Theory Owners of land and capital, whose supplies are fixed over the short term, and workers, whose marginal utility for income limits the labor supply, also over the short term Factor markets for material, labor, and capital, with aggregate demand and supply curves that determine the prices to be charged