QMB 3602 Business Ethics chapter 2

What are some problems that are seen with the ethical standards in business? List the specific issues.

Misuse of company resources, abusive behavior, harassment, accounting fraud, conflicts of interest, defective products, bribery, and employee theft.

Some of the World's Most Ethical Companies

Office, Ford Motor Company, Starbucks, Target, Microsoft Corporation, UPS, L'OREAL, PepsiCo

reversibility test

Would I still think the choice of this option good if I were one of those adversely affected by it?

Publicity Test

Would I want my choice published in the newspaper?

Morals

a persons personal philosophies about what is right or wrong.

Ethical

following standards of acceptable behavior as judged by stakeholders

Econmic

maximizing stakeholders wealth and /or value

Stakeholder Interaction Model

offers a conceptualization of the relationship between businesses and stakeholders.

Corporate Citizenship

often used to express the extent to which business strategically meet the economic, legal, ethical, and philanthropic responsibilities placed on them by various stakeholders.

Reputation

one of an organization's greatest intangible assets with tangible value.

Executive Compensation

one of the biggest issues corporate boards of director face.

Principles

specific and pervasive boundaries for behavior that often become the basis for rules (human rights, freedom of speech).

Ethical Culture

Organizational principles, values and norms as defined by the company and industry and adhered to by a company and its personnel.

Sustainability

Organizations responsibility as it relates to profit,people and the planet environment (air, land and water). Economically sustainable, socially sustainable and environmentally sustainable.

Ethical and Socially Responsible Concerns in the 1990s

Sweatshops and unsafe working conditions in third-world countries.

Value Dilemmas

Two or more beliefs/ideas in conflict with one another

Organizational Test

What does my companies ethics officer or legal council say about this?

Professional test

What would a profession's ethics committee say about this option?

Colleague Test

What would my colleagues say when I describe my problem and suggest this option as a solution?

Legal

abiding by all laws and government regulations

The Dodd-Frank Wall Street Reform and Consumer Protection Act

addressed some of the issues related to the financial crisis and recession. This act was also the most sweeping financial legislation since the Sabanes-Oxley Act and possibly since laws put into effect during the Great Depression.

Stakeholder Model of Corporate Governance

adopts a broader view of the purpose of business. Although a company certainly has a responsibility for economic success and viability to satisfy its stockholders, it must also answer to stakeholders, including employees, suppliers, government regulators, communities, and special interest groups with which it interacts.

Corporate Social Responsibility

an organization's obligation to maximize its positive impact on stakeholders and minimize its negative impact. Actions an organization takes to protect its stakeholders (customers, community...not investors).

Business Ethics

comprises organizational principles, values, and norms that may originate from individuals organizational statements, or from the legal system that primarily guide individual and group behavior in business.

Stakeholders

customer, investors and shareholders, employees, suppliers, government agencies, communities, and many other who have a "stake" or claim in some aspect of a company's products operations, markets industry, and outcomes.

Sarbanes-Oxley Act

made to address the loss of confidence in financial reporting and corporate ethics. Passed by Congress in 2002 and is the most far-reaching change in organizational control and accounting regulations since the securities and Exchange Act of 1934

Interlocking Directorate

the concept of board members being linked to more than one company

Stakeholder Orientation

the degree in which a firm understands and addresses stakeholder demands.

Primary Stakeholders

those whose continued association is absolutely necessary for a firm's survival. EX: employees, customers, investors, and shareholders, as well as the governments and communities that provide necessary infrastructure.

moral dilemma

two or more morals in conflict with one another.

Defense Industry Initiative on Business Ethics and Conduct (DII)

was developed to guide corporate support for ethical conduct.

CR's Best Corporate Citizens

Microsoft Corporation, Nike, Inc.

Philanthropic

"giving back" to society

Steps to Utilize framework to Manage Responsibility and Business Ethics

1) Assessing the Corporate Culture 2) Identifying Stakeholder groups 3) Identifying Stakeholder issues 4) Assessing organizational commitment to social responsibility 5) Identifying resources and determining urgency 6) Gaining stakeholder feedback

Bottom Line for Business Ethics

1) Firm Survival 2) Profitability 3) Stakeholders [customers, employees, channel members (wholesalers, distributors, retailers.)] 4) Contribute to societal goals (community country, world)

Stakeholder Orientation Three Activities

1) the organization-wide generation of data about stakeholder groups and assesment of the firm's effects on these groups; 2) the distribution of this information throughout the firm; and 3) the responsiveness of the organization as a whole to this information.

Defensibility Test

Could I defend my choice of this option before a Congressional committee, my peers, my parents?

Harm Test

Does this option do less harm than any other alternative?

Benefits of business ethics

Employee commitment, investor loyalty, customer satisfaction, profits

Examples of Stakeholder Issues

Employees, Customers, Investors, Suppliers, Community, and Environmental Groups

Ethical and Socially Responsible Concerns in the 2000s

Financial misconduct

Federal Sentencing Guidelines for Organizations (FSGO)

approved by congress in November 1991, set the tone fro organizational ethical compliance programs in the 1990s.

Ethics

behavior or decisions made within a group's values.

Secondary Stakeholders

do not typically engage in transactions with a company and therefore not essential to its survival. Ex: nedia, trade associations, and special interest groups (like the American Association of Retired People)

Four levels of social responsibility

economic, legal, ethical, and philanthropic

Values

enduring beliefs and ideals that are socially enforced (trust and integrity)

Stakeholder Model of Corporate Governance

founded in classic economic precepts, including the goal of maximizing wealth for investors and owners

Corporate Governance

involves the development of formal systems of accountability, over-sight, and control. Strong corporate governance mechanisms remove the opportunity for employees to make unethical decisions.