1 / 14

Chapter 4 Ethics and Business Decision Making

Chapter 4 Ethics and Business Decision Making. §1: Business Ethics . Ethics is the study of right and wrong behavior; whether an action is fair, right or just. In business, ethical decisions are the application of moral and ethical principles to the marketplace and workplace.

vivian
Download Presentation

Chapter 4 Ethics and Business Decision Making

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Chapter 4 Ethics and Business Decision Making

  2. §1: Business Ethics • Ethics is the study of right and wrong behavior; whether an action is fair, right or just. • In business, ethical decisions are the application of moral and ethical principles to the marketplace and workplace.

  3. Why is Business Ethics Important? • Directors and Officers owe a complex set of ethical duties to the company, shareholders, customers, community, employees, and suppliers. • When these duties conflict, ethical dilemmas are created. • Case 4.1:Time Warner Entertainment Co. v. Six Flags Over Georgia, LLC. (2002).

  4. § 2: Setting the Right Ethical Tone • Importance of Ethical Leadership. • Attitude of Top Management. • “Looking the Other Way”. • Case 4.2: In re the Exxon Valdez (2004). • Creating Ethical Codes of Conduct. • Costco. • Clear Communications to Employees. • Johnson and Johnson: web-based ethical training.

  5. Corporate Compliance Programs • Sarbanes-Oxley and Web-based reporting. • A number of contexts, within the employer-employee relationship, are fraught with ethical considerations, such as: • Having a system in place to detect, prevent, eliminate, and punish behavior of a harassing nature toward employees. • Avoiding wrongful discharge, either actual or constructive. • Adhering to ethical principles during corporate restructuring and downsizing. • Case 4.3: Securities and Exchange Commission v. WorldCom, Inc. (2003).

  6. § 3: Companies That Defy The Rules • Enron: Accounting Issues. • “Anticipated” future earnings. • Managers’ salaries based on inflated earnings. • Enron: Off-The-Books Transactions. • Moved losses from one ‘shell’ to another. • Transferred debts to partnerships in Cayman Islands.

  7. Defying the Rules • Enron: Self-Dealing. • Executives with their family. • Enron: Corporate Culture. • Rejected outside advice on “house of cards”. • No investigation of internal practices. • Merck and Vioxx. • Merck disregarded known risks. • Waited to be proven wrong ($250 M verdict).

  8. § 4: Business Ethics and the Law • Legal compliance is the moral/ethical minimum. • Simply obeying the law does not necessarily make the business practice ethical. • “Gray Areas” in the law. • Business leaders must contemplate the ethical implications of a business decision.

  9. § 5: Approaches to Ethical Reasoning • Duty Based Ethics - derived from religious and philosophical principles. • Religious Ethical Standards. • Kantian Ethics. • Rights Principles. • Outcome-Based Ethics - seek to ensure a given outcome. • Utilitarianism.

  10. Religious Ethical Standards • The rightness or wrongness of an action is usually judged according to its conformity to an absolute rule that commands a particular form of behavior. • The motive of the actor is irrelevant in judging the rightness or the wrongness of the action. • These rules often involve an element of compassion.

  11. Kantian Ethics • Premised on the belief that general guiding principles for moral behavior can be derived from human nature. • The categorical imperative is a central postulate of Kantian ethics. • The rightness or wrongness of an action is judged by estimating the consequences that would follow if everyone in a society performed the act under consideration.

  12. Rights Principle • This principle derives from the belief that every duty gives rise to a corresponding right. • The belief in fundamental rights is a deeply embedded feature of Western culture. • The ethicality of an action is judged by how the consequences of the action will affect the rights of others.

  13. Outcome-Based Ethics: Utilitarianism • An action is ethical based on whether it produces the greatest good for the greatest number of people upon which it has an effect. • A cost-benefit analysis must be performed to determine the effects of competing alternatives on the persons affected. • The best alternative is the one that produces the greatest good for the greatest number.

  14. §6: Business Ethics on a Global Level • American companies must be trained in cross-cultural business practices. • Monitoring the Employment Practices of Foreign Suppliers. • Corporate Watch groups can disseminate information instantly around world. • Foreign Corrupt Practices Act. • Bribes and Accounting Practices.

More Related