business ethics - intro

7/30/2019 Business Ethics - Intro

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BUSINESS ETHICS

Prof. Kanchan Hinduja


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What is Ethics?

Ethics:

is a branch of philosophy.

is a normative science because it is concerned

with the norms of human conduct.

as a science, it must follow the same rigours of

logical reasoning as other sciences.

as a science, involves systemising, defending

and recommending concepts of right and wrong

behaviour.


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What is business ethics?

Business ethics focuses on what constitutesright or wrong behavior in the world of business.

Corporate business executives have aresponsibility to their shareholders andemployees to make decisions that will help theirbusiness make a profit. But in doing so,

business people also have a responsibility to thepublic and themselves to maintain ethicalprinciples.


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Although ethics provides moral guidelines, individuals

must apply these guidelines in making decisions.

Ethics that applies to business (business ethics) is not aseparate theory of ethics; rather, it is an application of

ethics to business situations. Although all people have

ethical responsibilities, higher ethical standards are

imposed upon professionals who serve as socialmodels, such as physicians, attorneys, and

businesspeople.


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What is not Business Ethics?

1. Ethics is different from religion.

2. Ethics is not synonymous to law.3. Ethical standards are different from cultural

traits.

4. Ethics is different from feelings.5. Ethics is not a science in the strictest sense of

the term.

6. Ethics is not just a collection of values.


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The Relationship Between Law

and Ethics

The law is an expression of the ethical beliefs of our

society.

Law and ethics are not the same thing. The question,Is an act legal? is different from the question, Is an

act ethical? The law cannot codify all ethical

requirements. Therefore, an action might be unethical,

yet not necessarily illegal. For example, it might beunethical to lie to your family, but it is not necessary

illegal.


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Similarly, just because an act is illegal does not

necessarily mean it is immoral. Rosa Parks was actingillegally when she refused to give up her seat on the bus

to a white male, but that does not necessarily mean she

was acting unethically. Should an individual obey the

law even if it would be unethical to do so? Under thetheory of civil disobedience espoused by Martin Luther

King, Mahatma Gandhi and others, an immoral law

deserves to be disobeyed.


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Stakeholders


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StakeholdersResponsibilities to stakeholder groups:

Shareholders Generate profits

and pay dividendsCustomers provide good quality products

at reasonable prices. Safety, honesty, decencyand truthfulness

Employees health and safety at work,security, fair pay

Suppliers pay on time, pay fair ratesfor the work done, provide element of security


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Stakeholders

Local Community provide employment, safeworking environment, minimise pollution and

negative externalitiesGovernment abide by the law, pay taxes,

abide by regulations

Management their aims versus thoseof the organisation as a whole

Environment limit pollution, congestion,environmental degradation, development, etc.


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Ethical issues for business

Product safety standards

Advertising contents

Working environment

Unauthorized payments

Employees privacyEnvironmental issues


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Business Ethics

Tensions:

Profits versus higher wages

Expansion versus developmentProduction versus pollution

Supplier benefits versus consumer prices/lower

costsSurvival of the business versus needs of

stakeholders


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Business EthicsExamples:

Production of children's toys

Coffee industry

Baby milk

Music industry

McDonalds food quality, litter

Chocolate industry

Jewellery diamonds and gold

Chemical industry


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THEORIES OF ETHICAL CONDUCT

Theories of ethics present standards by which a

person can analyze and evaluate his or her own

moral conduct.Over the centuries, two different philosophical

frameworks developed: ethical standards based

on universal duties (deontology) and ethicalstandards based on consequences

(utilitarianism).


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Deontology

Deontology is the philosophical practice of

defining and adhering to an absolute set of

standards by which ethical behavior can bemeasured. It tries to define universal duties that

serve as moral guides to decision making.

When a moral dilemma arises, a person canapply these universal standards to determine a

course of action that is good.


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In deontology, a person fulfills absolute moral

duties regardless of whether good comes from

the actions. A person decides upon actions byasking if a particular action is morally right or

wrong. The act of carrying out that duty is

important rather than the consequences of theact. An example of a set of deontological rules

would be the Ten Commandments.


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The Rights Model

The rights model analyzes ethical issues byfocusing on an actions impact on human rights.

Under this model, human rights are the rights allpeople have. An action that maximizes respectfor human rights and minimizes their violation ismorally correct. When encountering ethical

dilemmas, a person applying the rights modelselects the action that minimizes the violation ofstakeholders rights.


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The two necessities to be fully human are

freedom and well-being. Thus, two basic

categories of human rights exist within themodel: (1) rights of liberty, and (2) rights of well-

being.


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Rights of Liberty

Privacy

Free consent

Free speech

Freedom of conscience

Right to life


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Rights of Well-Being

Employment

Food

Housing

Education


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Under the rights model, each person possesses

certain fundamental human rights because of the

fact that they are a human being. Each personslife has an infinite value.


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Utilitarianism

Utilitarianism is an approach to establishing

ethical standards based on the consequences of

an action. In an ethical dilemma, a personselects the action that brings about the greatest

amount of good for the greatest number of

people. The model determines correctness interms of social benefit. Many business people

favor the cost/benefit approach of utilitarianism.


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Applying the Rights Model Identify the facts.

Identify the ethical issues.

Identify the alternative courses of action.

Identify the stakeholders.

Determine to which extent each alternative respects the

dignity and fundamental rights of stakeholders or

violates their rights. Choose the alternative that maximizes the dignity of

stakeholders and minimizes the violation of their rights.


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Applying Utilitarianism Identify the facts.

Identify the ethical issues.

Identify the alternative courses of action.

Identify the stakeholders.

For each alternative, calculate the costs and benefits

(identify who would be harmed and who would benefit).

Choose that alternative which results in the greatestamount of good for the greatest number of

stakeholders.


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Making Ethical Judgments

Behavior or act

that has been

committed

Prevailing

norms of

acceptability

Value judgments

and perceptionsof the observer

compared with


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Ethics, Economics, and Law


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3 Models of Management Ethics

1. Immoral ManagementA style devoid of ethical

principles and active opposition to what is ethical.

2. Moral ManagementConforms to high standards ofethical behavior.

3. Amoral Management

Intentional - does not consider ethical factors

Unintentional - casual or careless about ethical

considerations in business


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Three Approaches to Management Ethics


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Three Models of Management

Morality and Emphasis on CSR

business ethics - intro

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