Chapter 3 Business Ethics

Utilitarianism

- An approach to ethical reasoning in which ethically correct behavior is related to an evaluation of the consequences of a given action on those who will be affected by it.

Duty-based ethics

- An ethical philosophy rooted in the idea that every person has certain duties to others, including both humans and the planet

A Four-Part Analysis

1.The legal implications of each decision 2.The public relations impact 3.The safety risks for consumers and employees 4.The financial implications

Cost-benefit analysis

A decision-making technique that involves weighing the costs of a given action against the benefits of the action

Ethical reasoning

A reasoning process in which an individual links his or her moral convictions or ethical standards to the particular situation at hand.

Outcome-based ethics

An ethical philosophy that focuses on the impacts of a decision on society or on key stakeholders.

Fostering of Unethical Conduct

Business owners and managers sometimes take more active roles in fostering unethical and illegal conduct, with negative consequences for their businesses

Business ethics

Ethics in a business context; a consensus of what constitutes right or wrong behavior in the world of business and the application of moral principles to situations that arise in a business setting.

Categorical imperative

In deciding whether an action is right or wrong, or desirable or undesirable, a person should evaluate the action in terms of what would happen if everybody else in the same situation, or category, acted the same way.

Corporate social responsibility (C S R)

The concept that corporations can and should act ethically and be accountable to society for their actions.

Stakeholders

•- Groups, other than the company's shareholders, that are affected by corporate decisions. •Stakeholders include: •Employees •Customers •Suppliers

Outcome-based ethics

•Focuses on the consequences of an action rather than on the nature of the action itself or any set of pre established moral values or religious beliefs •Looks at the impacts of a decision in an attempt to maximize benefits and minimize harms

Gray Areas in the Law

•Laws cannot codify all ethical requirements. •Laws may sometimes be difficult to interpret and apply due to a number of reasons, including: •Broad language •Application of a law to more than just the intended situation •Unclear guidance on the purpose of a law •Ambiguous or weak provisions

unrealistic Goals for Employees

•Managers who set unrealistic production or sales goals increase the probability that employees will act unethically.

Ethics

•Moral principles and values applied to social behavior. •Ethics has to do with an action's fairness, justness, rightness, wrongness

Private Company Codes of Ethics

•Most companies attempt to link ethics and law through the creation of internal codes of ethics. •Company codes are not laws. •Instead, they are rules that the company sets forth and that it can enforce. •Codes of conduct typically outline the company's policies on particular issues and indicate how employees are expected to act.

Industry Ethical Codes

•Numerous industries have developed codes of ethics. •Violation of a code may result in the discipline of an employee or sanctions against a company from the industry organization. •Internal codes are not laws, so their effectiveness is determined by the commitment of the industry or company leadership enforcing them.

Attitude of Top Management

•One of the most important ways to create and maintain an ethical workplace is for top management to demonstrate its commitment to ethical decision making.

Business as a Pure Profit Maximizer

•Originally, the only perceived duty of a corporation was to maximize profits and generate revenues for its owners. •In theory, if all firms strictly adhered to the goal of maximizing profits, it would lead to the most efficient allocation of scarce resources.

Kantian Ethical Principles

•Qualitatively different from other physical objects •Endowed with moral integrity & the capacity to reason & conduct their affairs rationally

Triple bottom line

•The idea that investors and others should consider not only corporate profits, but also the corporation's impact on people and on the planet in assessing the firm. •The bottom line is: •People •Planet Profits

The Moral Minimum

•The minimum degree of ethical behavior expected of a business firm, which is usually defined as compliance with the law. •Businesspersons must remember that an action that is legal is not necessarily ethical.

Principles of Rights

•The principle that human beings have certain fundamental rights (to life, freedom, and the pursuit of happiness, for example).