Business Ethicsmisbahuddin azzuhri

Ethical Issues & Dilemmasin Business

Business Ethics

Justice as an Objective• Distributive justice-an evaluation of the

outcomes or results of a business relationship

• Procedural justice-based on the processes and activities that produce the outcomes or results

• Interactional justice-based on an evaluation of the communication processes used in business relationships (often based on the accuracy of information provided)

Ethical Issues are...• problems, situations, or

opportunities requiring an individual to choose among actions that may be evaluated as right or wrong, ethical or unethical

• ethical issues arise because of:– conflict among

personal/organizational values– conflicts with societal values

What do you see as some of the causes of unethical behavior?

Influences on Ethical Behavior...• personal values• attitudes/behaviors of supervisor• attitudes/behaviors of senior

management• internal drive to succeed• performance pressures• no threat of punishment• friends/coworkers

Causes of Unethical Behavior...• meeting overly aggressive

financial or business objectives• meeting schedule pressures• helping the organization survive• rationalizing that others do it• resisting competitive threats• saving jobs

Classification of Ethical Issues...• conflict of interest• honesty & fairness• communications issues• organizational relationships

Conflict of Interest...• exists when an individual must

choose whether to advance his or her own personal interests, those of the organization, or some other group

• must be able to separate personal interests from business dealings

• bribery is a significant concern

Honesty & Fairness• honesty relates to truthfulness,

integrity & trustworthiness• fairness related to being just,

equitable & impartial• breaking or bending laws violates

trust• business should not be played as

a “game”• lack of rules & poor enforcement

leads to unethical behavior

Communications...• issues involved relate to

advertising, product safety, pollution, & employee work conditions

• lying is a major ethical issue with internal & external communications

• false advertising relates to:– exaggerated claims– concealed facts & ambiguous

statements– lying

Organizational Relationships...• relate to behavior of organizational

members toward customers, suppliers, subordinates, superiors, peers & others

• plagiarism is one ethical issue of concern to organizations

Ethical Issues Related to Ownership...• owners have an obligation to

society as well as their employees & customers– minimize pollution– compensate workers fairly– produce safe products

• must be sensitive to legal & ethical risks of their industry & region

Financial Responsibilities...• reporting & use of the

companies finances• pricing products/services

fairly• avoiding any antitrust

activities– price fixing

• sensitivity to socially responsible investing

Employees & Management Concerns...• employee theft, sabotage &

competitive intelligence• fear of layoffs• salary plateaus• upward mobility • discrimination• privacy & data access• health & safety

Consumer & Marketing Issues...• Must consider consumer

feedback– safety– environmental (can lead to

boycotts)– maximize positive publicity &

avoid negative

Ethical Dilemmas

Ethical Responsi

bility

Legal Responsibility

Economic

Responsibility

132b

2a

Venn Diagram for Ethical Decision Making• Area 3: Legal and ethical, but not profitable. Find ways to seek profitability

• Area 2a: Profitable and legal. Proceed cautiously

• Area 2b: Profitable and ethical. Probably legal too. Proceed cautiously

• Area 1: Profitable, legal, ethical. Go for it!

That’s AllMisbahuddin Azzuhri

Case Discussion• Case 1: Wal-Mart: The Challenge of

Managing Relationships with Stakeholders

• After Class Discussion please submit the results according to your group opinion