Business Ethics Chapter 1

Two critical questions:

>What is the purpose of the modern corporation? >To whom, or what, should the firm be responsible?

Business

An organization that is engaged in making a product or providing a service for a profit (M&H) TE= rules and responsibilities apply to ANY ORGANIZATION inc. 501's; Government.

Society

Human beings and the social structures they collectively create.

Economic Transactions

with the company as it carries out its primary purpose of providing society with goods and services. >Employees >Stockholders >Customers >Suppliers >Retailers/Wholesalers >Creditors

"Stakeholder Theory of the Firm"

>Argues the corporation serves a broader purpose, to create value for society >Must make profit for owners to survive, however, creates other kinds of value too >Corporations have multiple obligations, all "stakeholder" groups must be taken into account- or risk ultimate failure

Forces that Shape the Business and Society Relationship

>Evolving government regulation of business. >Globalization >Explosion of new technology >Dynamic Natural Environment >Changing societal expectations >Growing emphasis on ethical values

"Ownership Theory of the Firm"

>Firm is the property of its owners >Purpose is to maximize returns to shareholders >Shareholders' interests are paramount and take precedence over all others (Purpose is make $$- Friedman)

Business Considerations

>Internal, external and technological factors affecting a business are changing; An organization must adapt >A Business must meet its economic and social objectives >A purpose of a business is to make a profit and/or create "value" for its stakeholders

Non-Market Stakeholder

>No direct economic interchange >Are affected by or can affect its actions -General Public -Communities -Government -Activists Groups -Media -Business Support Groups

Stakeholder Power

>Voting Power >Economic Power >Political Power >Legal Power >Community/peer power

Stakeholder

Not the same as a stockholder. A stockholder is one kind of stakeholder.

Instrumental Argument

Says that stakeholder management is more effective as a corporate strategy.

Normative Argument

Says that stakeholder management is simply the right thing to do.

Descriptive Argument

Says that the stakeholder view is simply a more realistic description of how companies really work.