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8/2/2019 Business Ethics Ppts
http://slidepdf.com/reader/full/business-ethics-ppts 1/35
BUSINESS ETHICS
&SOCIAL
RESPONSIBILITY
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DEFINING ETHICS
• Understanding of right and wrong
• Ability to distinguish between the
right and the wrong.
• Integral part of life • Running a business is a part of life
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WHAT IS ETHICS?
Ethics
Right or wrong, good or bad, in actions that affect othersBusiness ethics
Ethical or unethical behavior by employees of organizations.
“Ethics refers to a set of moral principles which should play
a very significant role in guiding the conduct of managersand employees in the operation of any enterprise.”
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BUSINESS ETHICS
• Focuses on - Stakeholders, and employees
• Quality of product and services
• Customer satisfaction.
• Community and environment
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BUSINESS ETHICS ARE IMPLEMENTED TO….
• Define the framework of the acceptable
behavior.
• Follow high standards of practice.
• Create benchmarks for self evaluation.
• Enhance sense of community.
• Create transparency in the business
activities. • Foster higher standards of business
ethics.
• Comply with government laws and norms.
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BEHAVIORS IN AREAS (FROM A WALL STREET JOURNAL SURVEY):
– Government: 66%
– Sales 51%
– Law 40% – Media 38%
– Finance 33%
– Medicine 21%
– Banking 18%
– Manufacturing 14%
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WHO IS RESPONSIBLE FOR ETHICS IN THE COMPANY?
“Everyone”
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COMMON APPROACHES TO BUSINESS ETHICS
Utilitarianism – basic premise is that anaction
is judged as right or wrong depending onthe
consequences of the action
Universalism – the means justify the ends
of anaction, not the consequences
Rights – based on entitlements and
unquestionable claims
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NEED FOR ETHICS IN MANAGEMENT
Environmental Pressure
Credibility
Moral Consciousness
Legal Pressure
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STEPS IN MAKING ETHICAL DECISIONS
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TOOLS OF ETHICS It is for improving our ethical reasoning.
Values: Relatively permanent desires that seemto be good in themselves. Values lead to qualityimprovement.
“Value represent basic conviction that a specificmode of conduct is personally or sociallypreferable to an opposite mode of conduct.”
Characteristics of Value: Part of culture, LearnedResponse, Inculcated, Social phenomenon,Gratifying Responses, Adaptive Process
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Rights: Claims that entitle a person to take aparticular decision.
Duties: Obligation to take specific steps or obey thelaw.
Moral Rules: Rules for behavior that often becomeinternalized as moral values.
Human Relationships
Morality of care: primacy of relationship, Attachment &Interdependence
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Common morality: The body of moral rules governingordinary ethical problems.
Promise keeping
No malevolence
Mutual aid
Respect for a person Respect for property
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INSTITUTIONALIZING ETHICS
Social Audit : Report describing a company‟s activities in a given area of social interest, such asenvironmental protection, workplace safety, orcommunity involvement.
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THE CHALLENGE OF RELATIVISM
Moral Relativism : The idea that we can not decidematters of right and wrong, good and evil, in anyrational way.
Naïve Relativism : The idea that all human beingsare themselves the standard by which their actionsshould be judged.
Cultural Relativism : The idea that morality isrelative to a particular culture, society or community.
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CASE: INFOSYS TECHNOLOGIES
• Have a distinctive work culture and valuesystem.
• Great importance on customer delight,leadership, integrity, transparency,
fairness and pursuit of excellence. • Open door policy. • Value employees and encourage them to
make decisions about their own work. •
Treated as a flat organization when itcomes to communication and informationsharing
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SHIFT TO ETHICS BECAUSE OF FOLLOWING TYPE OF FRAUDS…
Does Satyam‟s story tell
the myth
and reality of Indiancorporate
ethics?
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CORPORATE ETHICS: INDIVIDUAL’S PERSPECTIVE
Signs of ethical deterioration.
In business, people have made
immoral millions
In government, public officialsare involved in bribery.
In education, cheating scandals
among students are common.
under-the-table payments for
admission
People believe that they have to
cheat to win.
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CORPORATE ETHICS: MANAGEMENT PERSPECTIVE
Accountable for corruption in a company.
Board‟s decisions on resource allocation,
Performance targets or promotions
Always trump official statements of ethicalvalues.
Whistleblowers are to be given protection
Influence the „pressures‟ which the CEOs
handle in managing ethics.
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PRINCIPALS FOR ETHICALLY RUN BUSINESS
• Principle 1 – Productivity Is Much MoreImportant Than Profitability
• Principle 2 – The Customer Is Not Sheep That Can
Be Sheared • Principle 3 – The Buyer's Domain Is More
Important Than the Middlemen's Domain
• Principle 4 – Be Diplomatic With Your Competitors
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RESPONSIBILITY Social Responsibility has been defined by Davis as
follows:
“Social Responsibilities refer to the businessman‟s decisions and actions taken to reasons at leastpartially beyond the firm‟s direct economic ortechnical interest.”
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DIFFERENCE BETWEEN ETHICS AND SOCIAL RESPONSIBILITY
Ethics provides guidelines for human behaviorin every field, whether organizational or non-organizational. Social responsibility works inorganizational context.
Ethics is concerned with micro aspect, that isrelating to daily operating decisions withlimited social impact. Social responsibility is
concerned with macro aspect relating todecisions with broad implications for a largesegment of the society.
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Why corporate responsibility is needed?
Business is using the resources from thesociety like material, manpower and
many the other things which it need to
return it back.Business is with the people, of thepeople and for the people.
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RESPONSIBILITY TOWARD CUSTOMERS
Consumer Rights
Fair Pricing
Ethics in Advertising
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RESPONSIBILITY TOWARD EMPLOYEES
Legal and Social Commitments
Safe work environment Equal pay
no discrimination Good human relations Freedom, Self Respect & Self- Realization Increase in productivity and efficiency by
recognition on merit, by providing opportunities forcreative talents and incentives.
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RESPONSIBILITY TOWARD INVESTORS
1. NO improper financialmanagement
2. NO insider trading
3. NO misrepresentation offinances on financialstatements
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RESPONSIBILITY TOWARD LOCAL COMMUNITIES
EnvironmentAir pollution
Water pollutionLand pollutionClean up toxic wasteUse recycling
Growth / infrastructure Social well-being of all members of
the community
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WHICH THEORY SHOULD BE USED FOR BUSINESS ETHICS?
Each approach has strengths
and weaknesses
Need to look at situation andapply best analysis/judgment
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SR BY McDonalds
McDonalds having long chain of food chains in many countries & they do some CSR practices there
McDonald now using the recyclable paper in food packaginginstead of plastic
They are using less light during day hours
They process their waste & then dispose it & have differentdust bins for different wastes
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Advantages of SR
Ethical thing to do. Improves the firms Image
Avoids Excessive regulation
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An improved social environment
will be beneficial to the firm.
It can increase employee
motivation.
Helps to correct social problemscaused by the business.
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Disadvantages of SR
It will reduce economic efficiency and
profit.SR behavior imposes additional costs
which reduce competitiveness.
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The only social responsibility of businessis to create shareholder wealth.
The pursuit of social goals dilutesbusinesses 'primary purpose.Costs will be passed on to customers.