Business Ethics

The standards of conduct and moral values governing actions and decisions in the work environment. Business also must take a wide range of social issues into account,including how a decision will affects the environment,employees,and customer. Social responsibility is a related term refers to the philosophies, policies,procedure,and actions directed toward the enhancement of societys welfare as a primary objective.

Business Ethics
Businesses must find the delicate balance between doing what is right and doing what is profitable. When that balance is skewed,they can experience serious consequences. In business,as in life,deciding what is right or wrong in a given situation is not always a clear-cut choice. Businesses have many responsibilities to customers,to employees,to investors,and to a society as a whole. Sometimes conflicts arise in trying to serve the divergent needs of separate constituencies.
2

The Pyramid of Social Responsibility

PHILANTHROPIC Responsibilities
Be a good Corporate Citizen. Contribute resources to the community; improve quality of life.

ETHICAL Responsibilities
Be ethical. Obligation to do what is right, just and fair; Avoid harm.

LEGAL Responsibilities
Obey the Law Law is societys codification of right and wrong; Play by the rules

ECONOMIC Responsibilities
Be Profitable

The foundation upon which all others rest

Forces Shaping Business Ethics and Social Responsibility

Four main forces shape business ethics and social responsibility: Individual, Organizational, Legal, Societal forces. Each of the forces interacts with the other three,and the interactions powerfully impact both the strength and direction of each influence.
5

FORCES SHAPING BUSINESS ETHICS AND SOCIAL RESPONSIBILITY Individual Organizational

Forces

Legal

Societal
6

 The discussion of business ethics begins by focusing on individual ethics. Business ethics are shaped by the ethical climate within an organization. Codes of conduct and ethical standards play increasingly significant roles in businesses where doing the right thing is both supported and applauded.
7

INDIVIDUAL BUSINESS ETHICS

In todays business environment,individuals can make the difference in ethical expectations and behavior. As we,executives,managers,and employees demonstrate our personal ethical principles-or lack of ethical principles-the expectations and actions of those who work for us,as well as those who work with us,can change.

 Individuals typically develop ethical standards in the three stages . Stage 1:Preconventional Individuals is mainly looking out for his or her own interests.Rules are followed only out of fear of punishment or hope of reward. Stage 2:Conventional: Individual considers the interests and expectations of others in making decisions.Rules are followed because it is a part of belonging to the group.
9

 Stage 3: Individual follows personal principles for resolving ethical dilemmas.He or she considers personal,group,and societal interests.A persons family,educational,cultural,and religious backgrounds can play a role. We have different styles of deciding ethical dilemmas,no matter what our stage of moral development. One study suggests that men and women tend to use different techniques for resolving ethical situations.
10

Common Business Ethical Dilemmas

Conflict Of Interest Honesty and Integrity Whistle-Blowing

Loyalty Versus Truth

11

Common Business Ethical Dilemmas

1-Conflict of Interest:A conflict of interest exists when a businessperson is faced with a situation where his or her decision may be influenced by the potential for personal gain. Bribes are one type of conflict of interest. 2-Honesty and Integrity: Honesty and integrity are traits highly valued by employers.Honesty is an ethical principle that permeates work situations.Integrity means doing what you say you will do and accepting responsibility for mistakes.
12

 3-Loyalty versus Truth:Business people expect their employees to be loyal and to act in the best interests of the company.An ethical conflict can arise,however,when individuals must decide between loyalty to the company and truthfulness in business relationships. 4-Whistle-Blowing:When an individual does encounter unethical or illegal actions at work,he or she must decide what action to take.Whistle-blowing is the term for an employees disclosure to the media or government authorities of illegal,immoral,or unethical practices of the organization. Whistle-blowing and other ethical issues arise relatively infrequently in firms with strong organizational climates of ethical behavior.
13

INTEGRITY: Doing what you say you will do and accepting responsibility for mistakes

14

Structure of an Ethical Environment

Ethical Leadership

Ethical Action

Ethical Reasoning
Ethical Awareness
15

Regulation of Competition
Competition is the cornerstone of a private enterprise economy. In a regulated industry,competition is either limited or eliminated,and close government control is substituted for free competition. The second form of government regulation is,enactment of statutes,has led to both state and federal laws that affect competition and various commercial practices. Regulated Industry:An Industry in which competition is either limited or eliminated,and government monitoring substitutes for market control.

16

 Deregulation:the movement toward eliminating legal restraints on competition in various industries,has significantly reshaped the legal environment for many industries in the last two decades.

17

 Acting Responsibility to satisfy society: An important issue affecting business is the question of social responsibility.In a general sense,social responsibility is management's acceptance of the obligation to consider profit,consumer satisfaction,and societal wellbeing of equal value in evaluating the firms performance.

18

 Social responsibility is the recognition that business must be concerned with the qualitative dimensions of customer,employee,and societal benefits as well as the quantities measures of sales,revenue,and profit,by which business performance is traditionally measured.
Scientists say that social responsibility is a concept easier to measure than business ethics.

19

Responsibility to the General Public

The responsibility of business to the general public include dealing with public-health issues, Protecting the environment And developing the quality of the work force And also many argue that businesses have responsibilities to support charitable and social causes and organizations that work toward the greater public good.
20

To the general Public

To the Investor and the Financial Community

To the Customer

To the Employee
RESPONSIBILITY OF BUSINESS
21

BUSINESS RESPONSIBILITIES TO THE GENERAL PUBLIC 1-Consideration of Public Health: Smoking-Alcohol 2-Developing the quality of the Work Force On-the Job-Training-Education Benefits 3-Protecting the Environment Avoiding Pollution ,Recycling 4-Corporate Philanthropy Monetary Donations to Charitable and Social Organizations Supporting Employee-Volunteer Efforts-Donating Goods to Charitable and Social Organizations.
22

Responsibilities to the Customers

Business people share a social and ethical responsibility to treat their customers fairly and act in a manner that is not harmful to them. In the late 1960s Ralph Nader first pioneered Consumerism Consumerism is the public demand that a business consider the wants and needs of its customers in making decisions

23

CONSUMERISM
Consumerism is based on the belief that customers have Certain rights. The right to be Safe The right to be Informed The right to choose The right to be heard

24

The Right to be Safe

Companies must recognize obligation ,both moral and legal,to ensure the safe operation of their products. Product Liability refers to the responsibilities of manufacturers for injuries and damages caused by their products. Companies must consider all possibilities and provide adequate warning of potential dangers.And also they should put their products through testing to avoid safety problems.

25

The Right To Be Informed

Consumers should have access to enough education and product information to make responsible buying decisions.

Businesses should avoid misleading consumers.

The responsibility of business to preserve consumers right to be informed extends beyond avoiding misleading advertising.
26

The Right To Choose

Consumers have right to choose which goods and services they need and want to purchase. Socially responsible firms attempt to preserve this right, even if they reduce their own sales and profits in the process.

27

The Right To Be Heard

Companies exert considerable effort to ensure full hearing for consumer complaints.

Costumers should be able to express legitimate complaints to appropriate parties.

28

Responsibility To Employees
One of the most important business resources is an organizations work force. Companies that are able to attract skilled and knowledgeable employees are better able to meet the challenges of competing on a global basis.

29

Responsibilities To Employees
Workplace Safety: Quality of Life Issues Ensuring Equal Opportunity on the Job

30

Responsibilities To Investors and The Financial Community

Investors and the financial community demand that businesses behave ethically as well as legally in handling their financial transactions. When they fail in this responsibility, thousands of investors and consumers can suffer.
31

Ethics and Social Responsibility In the Global Marketplace

Global companies need to to carefully evaluate the cultures of the countries where they do business. Some Standards: Avoid using child or forced labor Provide safe working environment Respect workers rights to unionize Require no more than 48-hour work weeks Play wages sufficient to meet workers' basic needs.
32