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Business Ethics Class Handout 1

The document discusses key concepts related to business ethics including definitions of business ethics, corporate social responsibility, mission statements, codes of ethics, and ethical and unethical business practices. It provides details on the shareholder and stakeholder perspectives and how to evaluate ethical dilemmas using a four way test.

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Serban Marian
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116 views10 pages

Business Ethics Class Handout 1

The document discusses key concepts related to business ethics including definitions of business ethics, corporate social responsibility, mission statements, codes of ethics, and ethical and unethical business practices. It provides details on the shareholder and stakeholder perspectives and how to evaluate ethical dilemmas using a four way test.

Uploaded by

Serban Marian
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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1.

Business Ethics

●Business ethics can be defined as written and unwritten codes of


principles and values that govern decisions and actions within a
company. In the business world, the organization's culture sets
standards for determining the difference between good and bad decision
making and behaviour.

● Business ethics= moral rules, principles of behaviour applied in


business

●In the most basic terms, a definition for business ethics boils down to
knowing the difference between right and wrong and choosing to do
what is right.

●shareholder perspective and the stakeholder perspective.

Shareholder Perspective

Those who approach ethical decision making from a shareholder


perspective focus on making decisions that are in the owners' best
interest. Decisions are guided by a need to maximize return on
investment for the organization's shareholders. Individuals who
approach ethics from this perspective feel that ethical business practices
are ones that make the most money.
Stakeholder Perspective

●Corporate social responsibility : the belief that companies should consider


the needs and interests of multiple stakeholder groups, not just those with a
direct financial stake in the organization's profits and losses.

●Organizations that approach business ethics from a stakeholder perspective


consider how decisions impact those inside and outside the organization.
Stakeholders are individuals and groups who affect or who are affected by a
company's actions and decisions. Shareholders are definitely stakeholders,
but they are not the only ones who fall under the definition of stakeholder.

●Stakeholders may include: employees, suppliers, customers, competitors,


government agencies, the news media, community residents and others. The
idea behind stakeholder based ethical decision making is to make sound
business decisions that work for the good of all affected parties.

What is Ethical Behavior?

●ethical dilemmas

●one way of dealing with ethical dilemmas is by using the four way test to
evaluate decisions. This test involves asking four questions:

1. Is my decision a truthful one?


2. Is my decision fair to everyone affected?
3. Will it build goodwill for the organization?
4. Is the decision beneficial to all parties who have a vested interest
in the outcome?

●word-of-mouth publicity/ advertising

2. Mission statement
● Written declaration of a firm's core purpose and focus which normally
remain unchanged, whereas business strategies and practices may frequently
be altered to adapt to the changing circumstances.

●Also called company mission, corporate mission, or corporate purpose.


E.g.

Ben & Jerry’s Ice Cream

A product mission stated as: "To make, distribute & sell the
finest quality all natural ice cream & euphoric concoctions
with a continued commitment to incorporating wholesome,
natural ingredients and promoting business practices that
respect the Earth and the Environment."

3. Code of ethics
  ●Written guidelines issued by an organization to its workers and
management, to help them conduct their actions in accordance with its
primary values and ethical standards.

●A guide of principles designed to help professionals conduct business


honestly and with integrity. A code of ethics document may outline the
mission and values of the business or organization, how professionals are
supposed to approach problems, the ethical principles based on the
organization's core values and the standards to which the professional will
be held.

4. Corporate social responsibility (CSR)

Companies have a lot of power in the community and in the national


economy. They control a lot of assets, and may have billions in cash at
their disposal for socially conscious investments and programs.

Some companies may engage in "green washing", or paying lip service


to corporate responsibility programs, but many large corporations are
devoting real time and money to environmental sustainability
programs, alternative energy/cleantech, and various social welfare
initiatives to benefit employees, customers, and the community at
large. ► Corporate social citizenship
6. Ethical/ Unethical Business Practices

●Ethical business practices are actions and attitudes held by a


business and its employees that are considered professionally
and morally responsible.

●These types of practices typically seek to promote the goals of


the company without sacrificing the common good of its
employees, customers, and even competitors.
●This often includes programs to ensure fair hiring and
promotion within a company, treating customers fairly, and
being honest in regard to programs to increase sales. Ethical
business practices are often initiated as a “top down” program,
with corporate officers and the heads of the company acting as
role models of behavior for other employees.

Ethical issues and society - examples


 Honesty, truthfulness and fairness in marketing
 Use of animals in product testing
 Agricultural practices e.g. intensive faming
 The degree of safety built into product design
 The extent to which a business accepts its alleged responsibilities
for mishaps, spillages and leaks
 The selling of addictive products e.g. tobacco, alcohol
 Involvement in the arms trade
 Trading with repressive regimes

Ethical issues arising from internal and industry practices - examples

 Treatment of customers - e.g. honouring the spirit as well as the


letter of the law in respect to warranties and after sales service
 The number and proportion of women and ethnic minority people
in senior positions
 The organisation’s loyalty to employees when it is in difficult
economic conditions
 Employment of disabled people
 Working conditions and treatment of workers
 Bribes to secure contracts
 Child labour in the developing world
 Business practices of supply firms

Unethical practices in marketing - examples

 Pricing lack of clarity in pricing


 Dumping – selling at a loss to increase market share and destroy
competition in order to subsequently raise prices
 Encouraging people to claim prizes while phoning premium rate
numbers
 High pressure selling - especially in relation to groups such as the
elderly
 Counterfeit goods and brand piracy
 Copyright infringement
 Copying the style of packaging in an attempt to mislead
consumers
 Deceptive advertising
 Irresponsible issue of credit cards and the irresponsible raising of
credit limits
 Unethical practices in market research and competitor
intelligence

Unethical practices relating to products - examples

 Selling goods abroad which are banned at home


 Omitting to provide information on side effects
 Unsafe products
 Built in obsolescence
 Wasteful and unnecessary packaging
 Deception on size and content
 Inaccurate and incomplete testing of products
 Treatment of animals in product testing
5. Ethical consumerism/ ethical purchasing

Ethical consumerism is the intentional purchase of products and


services that the customer considers to be made ethically. This may
mean with minimal harm to or exploitation of humans, animals and/or
the natural environment.
6. Sustainable development

Sustainable development is development that meets the needs of the


present without compromising the ability of future generations to meet
their own needs.

FOOD FOR THOUGHT?


►‘The Social Responsibility of Business is to Increase its Profits’
Milton Friedmann, 1970

►A business that makes nothing but money is a poor business.


Henry Ford

►Being good in business is doing good business.


Anita Roddick, British founder of The Body Shop

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