Transcript Chapter 2 BA 18

Business Ethics
Chapter 2
Ethics? What is Ethics?
Effective immediately, MSNBC will no
longer simulcast the "Imus in the
Morning" radio program.
Effective immediately, MSNBC will no
longer simulcast the "Imus in the
Morning" radio program. This decision
comes as a result of an ongoing review
process, which initially included the
announcement of a suspension. It also
takes into account many conversations
with our own employees. What
matters to us most is that the men
and women of NBC Universal have
confidence in the values we have set
for this company. This is the only
decision that makes that
possible. Once again, we apologize to
the women of the Rutgers basketball
team and to our viewers. We deeply
regret the pain this incident has
caused.
—Statement from NBC News
Levels of Corporate
Social Responsibility
Societal Responsibility
Stakeholder Responsibility
Ecological
General
Customers Profit Responsibility
Owners/Stockholders
Public
Suppliers/Distributors
Public Interest Groups
Source: Marketing, 5/E by Berkowitz, Kerin, Hartley, and Rudelius.
The Social Contract
Environment
Employees
The Social Contract Theory
The social contract defines the
permissible scope of business conduct
and goes beyond the purely economic
issues. If society wants more from
business than profits, business must
accept this mandate in order to
survive in society. To do otherwise is
to breach the social contract.
Executive's Fatal Flaw:
Failing to Understand
New Demands on CEOs
January 4, 2007; Page A1
RE: Robert Nardelli's demise as chief executive of Home Depot
“What Mr. Nardelli missed, however, is that in the post-Enron
world, CEOs have been forced to respond to a widening array of
shareholder advocates, hedge funds, private-equity deal makers,
legislators, regulators, attorneys general, nongovernmental
organizations and countless others who want a say in how public
companies manage their affairs. Today's CEO, in effect, has to play
the role of a politician, answering to varied constituents. And it's in
that role that Mr. Nardelli failed most spectacularly.”
Wall Street Journal, January 4, 2007
Chairman and CEO, John Mackey
Dixie Chicks Break Social Contract
with Americans
http://www.youtube.
com/watch?v=dYyIO
YEewxY&feature=rel
ated
Consequential and
Nonconsequential Principles
Consequential
(Teleological)
Principles
Egoism
Utilitarianism
Feminism
Nonconsequential
(deontological) Principles
Categorical Imperative
Kant – 18th Century German
Philosopher
Veil of Ignorance
John Rawls
A Theory of Justice
(1971)
Political Liberalism (1993)
Ethical Relativism (vergers
on Political Correctness)
The Golden Rule
Egoism – Compassion or
Competition?
“From an organizational perspective, egoism
involves those actions that best promote the
long-term interests of the organization.
Thus, a corporation may establish a minority
hiring program or a college scholarship
program, and in doing so, the corporation may
well be acting in a purely egoistic manner.
These programs may advance the long-term
interest of the corporation by improving its
public image, reducing social tensions, or
avoiding legal problems that might
otherwise have arisen.”
Dr. Ned
Doffoney
accepts a
$50,000
donation to the
OAB A Legacy
Renewed
campaign from
Ken Hatfield,
vice president
of
communications
and public
affairs for the
Fresno Bee on
August 9.
Is this a form of Egoism?
Vons on Facebook…
Mayor Ashley Swearengin = Representing FRESNO
Egoism – An act is ethical when It promotes the best long-term
Interest of the firm, or in this case City of Fresno.
Ethics…
Ethical Theories:
Egoism – An act is ethical when It
promotes the best long-term Interest of
the firm.
Utilitarianism – The most ethical decision
for the greatest good. One that promotes
the best ethical conclusion without
compromising the overall situation.
Ethics… Continued
Feminism – The ethics of caring.
Recognizing the importance of personal
relationship.
Categorical Imperative – Only when we act
from a sense of duty and responsibility do
actions have ethical worth.
Veil of Ignorance – Rational agents,
unaware of their personal characteristic or
places in society., choose the principles
they wish to have govern everyone in
society.
Kantian Ethics
A moral theory that says people owe moral
duties that are based on universal rules.
Based on the premise that people can use
reasoning to reach ethical decisions.
This theory would have people behave
according to the categorical imperative:
“Do unto others as you would have them
do unto you.”
Rawls’s Social Justice Theory
A moral theory that says each person is
presumed to have entered into a social
contract, with all others in society, to
obey moral rules that are necessary for
people to live in peace and harmony.
Fairness is considered the essence of justice.
Rawls proposed that the least advantaged
must receive special assistance to allow them
to reach their potential.
Rawls’s Social Justice Theory
(continued)
The principles of justice should be
chosen by persons who do not yet know
their station in society.
This “veil of ignorance” would permit
the fairest possible principles to be
selected.
Ethical Relativism
A moral theory that holds that individuals
must decide what is ethical based on their
own feelings as to what is right or
wrong.
There are no universal ethical rules to
guide a person’s conduct.
If a person meets his or her own moral
standard in making a decision, no one can
criticize him or her for it.
“The “What Feels Good” approach to
life!”
How Do You See Yourself?
Morality v. Immorality? Do you see
yourself as being moral with a sense
of duty and responsibility? Do you
see yourself as being amoral, with a
sense of knowing right from wrong,
but choosing to do wrong because it
meets your needs at the time of the
action?
Ethics Check
Questions:
Is It Legal?
What are the consequences?
Is It Balanced?
Does it promote fairness?
How Will It Make Me Feel About
Myself?
Can I live with this decision?
Ruggerio’s Three common
Concerns in Ethical Decision
Making:
The obligations that arise from
organizational relationships.
The ideals involved in any decisions
that are made
The effects or consequences of
alternative actions.
Amoral Personality
Being neither moral nor immoral:
Lying outside the sphere to which
moral judgments apply.
A personality that has neither a
conscience or normal fear factor.
An Amoral Personality
While leading the life of
a happy family man in
the New Jersey
suburbs, Richard
Kuklinski was also
living a bizarre
double-life as a Mafia
hit man. Kuklisnki tells
first had how he
brutally murdered
men at close range,
dismembered and
disposed of them
before returning home
to his family.
The Iceman Tapes - Conversations with a Killer (part 2)
Moral Personality
Any actions that honor obligations
while simultaneously advancing ideals
and benefiting people can be
presumed to be moral actions.
Ethics in Business
Fact or fiction?
Business Attitude
Caveat emptor – “Buyer Beware”
Corporate Culture Influence- “Top-Down”
Approach to the way business gets done.
The “Game Theory” as a way of business
Bluffing
Lying
Cheating
Anderson Cooper on the Donald/Rosie Feud
ETHICAL? SLANDER? LAW SUIT Or ENTERTAINMENT?
Real or not?
YOU CAN’T BELIEVE EVERYTHING YOU SEE!
PBS ALTERS TRANSCRIPTS…
http://www.americanthinker.com/blog/2011/09/pbs
_alters_transcript_to_hide_obama_gaffe.html
Scott Thompson apologizes; director in charge of vetting
to step down
http://www.newser.com/story/145584/yahoo-board-probesceos-fake-resume-debacle.html
Business
Scandals:
Enron
Adelphia Communications
systematically and fraudulently
excluded billions of dollars in
liabilities from its consolidated
financial statements by hiding them
on the books of off-balance sheet
affiliates.
Global Crossing
conflict-of-interest offenses
committed by a former accounting
executive and scads of internalcontrol blunders at the company.
World Com
Arthur Andersen
Martha Stewart
SEC Investigations (2002)
Accounting
Arthur Andersen
Deloitte & Touche
Ernst & Young
KPMG
PriceWaterhouse
Coopers
Energy
CMS Energy
Dynergy
Enron
Halliburton
Reliant Resources
Source: Business Week, June 10, 2002
Software
Computer Associates
Network Associates
Telecom
Global Crossing
Lucent Technologies
Qwest Communications
WorldCom
Wall Street
Credit Suisse First Boston
Hedge Funds
Capital Markets
Merrill Lynch
The Smartest Guys in the
Room…
Corporate Scandal Fines
Company
Arthur Andersen
Citigroup
Merrill Lynch
Credit Suisse
First Boston
Source: Business Week, Nov. 4, 2002
Fine
Reason
$500,000
Obstruction of Justice
Shredding Enron
Documents
$5,000,000
Analyst Issued
Misleading Information
$100,000,000
Conflict of Interest
Between Investment
Bank & Research Dept.
$100,000,000
IPO Shares Unfairly
Distributed
Bush Administration Policy in response to
corporate wrong doing:
Sarbanes-Oxley Act of 2002
Requires that chief executive officers and
chief financial officers certify the
accuracy of quarterly financial reports.
(e.g., a signature must accompany the
documents sent in as financial statements of
the company.)
Reports knowingly falsified could result in
fines up to $1 million and incarceration for
up to 10 years.
Corporate Citizenship
A theory of responsibility that says a
business has a responsibility to do good.
Business is responsible for helping to solve
social problems.
Corporations owe a duty to promote the
same social goals as do individual members
of society.
BP Oil Spill… 2010
BP Oil Spill
BP Clean-up
Corporate Citizenship
(continued)
This theory argues that corporations owe a
debt to society to make it a better place.
This duty arises because of the social
power bestowed on corporations.
A major criticism of this theory is that the
duty of a corporation to “do good” cannot
be expanded beyond certain limits.
A Business Approach to Ethics
U.S. businesses need to develop a model or
a framework of ethical behavior.
Business should adopt a “synthesis”
approach of revolving ethical issues.
Considering “Obligations, Ideals and
Effects” and it is weighed towards
stakeholders, employees, customers and
community.
Business Ethics
Business should establish rules and
standards, but those rules and
standards also need to change as
society and the business environment
changes.
Only people, not corporations, have
the power to make those changes.
How does that effect you?
Video to view:
The Smartest Guys In The Room
Magnolia Home Entertainment
110 minutes
Rated R
http://www.youtube.com/view_play_list?
p=04BAE9B96F17CE61&search_query=en
ron+the+smartest+guys+in+the+room
Ethics Resource Center:
http://www.ethics.org/index.html
Ethics and Social
Responsibility of Business
Chapter 2
Ethics? What is Ethics?