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Topic 1: Understanding

Business Ethics

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What is ethics?

Concerns itself with what is good or right in


human interaction. Revolves around 3 concepts
‘self’, ‘good’ and ‘other’.
Ethical behaviour results when one does not
consider what is good for oneself but also
considers what is good for others.

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What is ethics?

Ethics is about choices.


It is a concept that signifies how we act in order to make
the ‘right’ choice, and produce ‘good’ behaviour.
Ethics concerns individuals, groups, institution and
society.
In brief, ethics is considered as the moral standard by
which people judge behaviour.

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Ethics is not this:

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Business ethics

A branch of ethics that examines ethical rules


and principles within a commercial context, the
various morals or ethical problems that can arise
in a business setting and any special duties or
obligations that apply to persons engaged in
commerce.

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Why study Business Ethics?

The questions today are less about why or


should ethics be a part of business, than about
which ethics should guide business decisions
and how ethics can be integrated within
business.
Why explore ethics in business?
Because
Ethics Failures = Business Failures

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Why study business ethics?
Reports of unethical behavior are on the rise.
Society’s evaluation of right or wrong affects its
ability to achieve its business goals.
Studying business ethics is a response to FSGO
and stakeholder demands for ethics initiatives.
Individual ethics is not enough.
Studying business ethics helps identify ethical
issues to key stakeholders.

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Why study business ethics

Help business people begin to identify ethical


issues,
Recognize the approach available to resolve them,
Learn about the ethical decision-making process
and ways to promote ethical behaviour, and
Begin to understand how to cope with conflict
between personal values and organizational values.

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Why care about ethics?
Unethical behavior creates financial and marketing risks.

A company can go out of business, and its employees can go to jail, if no one
is paying attention to the ethical standards of the firm.

A firm’s ethical reputation can provide a competitive advantage, or


disadvantage.

Consumer boycotts give even the most skeptical business leader reason to
pay attention to ethics.

Managing ethically can also pay significant dividends in organizational


structure and efficiency.

Trust, loyalty, commitment, creativity, and initiative are just some of the
organizational benefits that are more likely to flourish within ethically stable
and credible organizations
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Ethical Issues on the Rise
Increased awareness of:
– Accounting fraud
– Insider trading of stocks and bonds
– Falsifying of organizational documents
– Deceptive advertising
– Defective products
– Bribery
– Employee theft

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A Timeline of Ethical and Socially
Responsible Concerns

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The result from unethical behavior

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ETHICS SCENARIO
People who come to work 20-30 minutes late, take an extra 30 minutes at
lunch and then leave 20 minutes early any time they think they can get
away with it.
People who drag out a project, look for every reason to not do it, turn in
shoddy work and then complain that they didn't get a bonus.
People that spend their day surfing the net for fun instead of doing the
R&D they're supposed to.
People who use other people's computers or common area PCs to surf
the net because they think it can't be traced back to them.
People that won't control costs and say "Why are you so worried, it's not
coming out of your pocket?"
People who won't control costs and say "It's a government contract." I'm
a supervisor. I see people trying to sleeze their way through the day
every day. Excuse me, I have to go fire someone.

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ETHICS SCENARIO
Ethics Discussion:
Rachel works in a real estate office that is equipped with up-
to-date copiers, scanners, and printers. She is frequently the
only employee working in the evenings and often has spare
time to do personal work. She has begun to use the office
equipment for her children's school reports and for her
husband's business. Do you think Rachel's use of the office
equipment is harmless, or is she behaving unethically?
Why? If you believe her behavior is unethical, what controls
could be in place to prevent it? Have you ever used office
resources for personal tasks? Under what conditions could
such use of office resources be justified?

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ETHICS SCENARIO
Ans:
Most copiers have a counter feature on them. You could
write down the number on the counter at the end of the
"day" shift and then again in the morning. Once you
establish a pattern of how many copies are made when she
is there you would have some ammunition to question her.
And yes, her behavior is unethical. That's not to say that
most companies don't expect a few personal copies here
and there, but if she is using equipment extensively and
especially for her husband's business, that is clearly
unethical

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Ethical issues/dilemma arise at
different levels
Ethical dilemma – problem or issue that confronts a
person, group or organisation and that requires a
decision or choice among competing claims and
interest.

Personal level – issues faced in personal lives that are


generally outside the context of our employment.

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Ethical issues/dilemma arise at
different levels
Organisational level – issues faced in your role
as managers or employees.
Carry consequences for company’s reputation
and success in community and determine the
kind of ethical environment or culture that will
prevail on a day-to-day basis at the office.

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Ethical issues/dilemma arise at
different levels
Industry of profession level
Eg. Stock brokerage, real estate, insurance,
financial services, accounting, journalism

Societal and global levels


Require managers to act in concert through their
companies and industries and professional
associations.
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Myths about business ethics
Ethics is personal

Information is neutral Business and


and amoral ethics
don’t mix

Business ethics
Good business is relative
means good ethics
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Myths about business ethics

Myth 1: ethics is a personal, individual affair, not a


public or debatable matter.
- individual ethics is based on personal or religious
beliefs, and that one decides what is right and wrong in
the privacy of one’s consciences.
- However, individuals do not operate in a vacuum.
Individuals are an important part of the organisational
structure.

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Myths about business ethics

Myth 2: Business and Ethics Do not Mix


- Business practices are basically amoral- not
necessary immoral because business operate in
a free market.
- Asserts that management is based on scientific,
rather than religious or ethical principles.
- However, business is a human activity and thus
can be evaluated ethically.
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Myths about business ethics

Myth 3: Ethics in Business is Relative


- No right or wrong way of believing or acting
exists.
- Right and wrong are in the eyes of the beholder.
- Question: relative to whom or what? And Why?

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Myths about business ethics

Myth 4: Good Business Means Good Ethics


- ` Just do a hard, fair day’s work and that has its own
moral goodness and rewards.
- Reasoning: ethics does not always provide solutions to
technical business problems.
- However, we should promote ethics not because good
ethics is good business but because we are morally
required to adopt the moral point of view in all our
dealings with other people.
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Myths about business ethics

Myth 5: Information and computing are amoral


- Information and computing are neither moral nor
immoral but are amoral.
- They are in a “gray zone”, a questionable area
regarding ethics.
- However, information can be used as a form of control,
power and manipulation
- The misuse of information and computing - darknside

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Con’t….

The questions today are less about why or


should ethics be a part of business, than about
which ethics should guide business decisions
and how ethics can be integrated within
business.

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The End

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