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Business EthicsBusiness Ethics

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Questionable Ethical Standards• A growing number of “normal” businesses are

coming into question – Weapons sales– Nuclear technology– Land mines– Infected blood products– White collar crime– Discrimination against women &

minorities– Price fixing– Bid rigging– Drugs– Asbestos– Cigarettes– Alcohol

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Comparison of Business Ethics and Social Responsibility

Business EthicsRefers to the principles and standards that define acceptable conduct in the world of business.

Social Responsibility

Refers to a business’s obligation to maximize its positive impact and minimize its negative impact on society.

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Ethical Issue Categories

• Conflict of interest• Fairness and honesty• Communications• Business relationships

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Factors Influencing Managerial Ethics

IndividualFactors

OrganizationalFactors

EnvironmentalFactors

•Values

•Work Background

•Family Status

•Personality

•Economic Conditions

•Social and Cultural Institutions

•Competition

•Top Level Management Philosophy

•The Firm’s Reward System

•Job Dimensions

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Codes of Ethics

Formalized rules and standards that describe what a company expects of its employees

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Framework for Ethical and Moral Decision making

1. Recognize a Moral issue2. Get the facts3. Evaluate the alternatives from

various moral perspectives4. Make a decision5. Act, then reflect on the decision

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Objectives of Ethics• Ethics studies human conduct and evaluates these as

moral or immoral and right or wrong and good or bad.

• Ethics sets moral standards and norms for human behaviour.

• Ethics evaluates past behaviour against standards and norms and then makes judgment upon human behaviors as right or wrong and moral or immoral.

• Ethics prescribes moral standard behaviour and also provides solution about how to behave in a given specific situation.

Characteristics of Moral Standards• Moral standards deals with matters we think

of serious consequences for human well being.• Moral standards cannot simply be established

or changed by the law or authority. • Moral standard override self interest .• Moral standards are based on impartial

considerations.• Moral standards are associated with special

moral vocabulary.

SIX STEP APPROACH TO FORMING A CODE OF ETHICS

• Top management must adopt & unconditionally support an explicit corporate code of conduct.

• Employees must understand that ethical behavior begins at the top & that senior management expects all employees to act accordingly

• Managers & others must be trained to consider the ethical implications of all business decisions

• An ethics office must be set up.• Outsiders must be told about the ethic program.• The ethics code must be enforced

Ten Moral Rules/Commandments• Don’t kill• Don’t cause pain• Don’t disable• Don’t deprive of freedom• Don’t deprive of pleasure• Don’t deceive• Keep your promise• Don’t cheat• Obey the law• Do your duty

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Questions to Consider in Determining Whether an Action is Ethical

• Are there any potential legal restrictions or violations that could result from the action?

• Does you company have a specific code of ethics or a policy on the action?

• Is this activity customary in your industry? Are there any industry trade groups that provide guidelines or codes of conduct that address this issue?

Branches of Ethics

• Normative Ethics• Meta Physics• Applied Ethics• Moral Ethics• Descriptive Ethics

• Normative ethics: Deals with how individuals can decide the correct moral action that they should take in a given situation of ethical nature.( Two philosophers Socrates and John stuart mill)

• Meta ethics: Understand the nature of ethical properties and judgments such as true values can be found and theory behind moral principles.

• Applied ethics: It deals with ethical theories developed by various philosophers in our every day of life. Ex: Should you turn in your friend at workplace for taking home office supplies? Is it right have an abortion ?

• Moral ethics: The branch of ethics raises questions like: How people develop their morality? Why certain aspects of morality differ across cultures? Why certain aspects of morality are generally universally applicable?

• Descriptive ethics: This branch of ethics focuses on application aspect of ethics. Speaking alternatively, this branch of ethics studies how people actually conduct in real world, rather than attempts to just theorize about how people should conduct in their day to day affairs.