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Wk 1-2 Business Ethics

Learning Coach Dr. Mohan Lal Agarwal Professor, Marketing IMT Dubai Email:magarwal@imtdubai.ac.ae Mobile: (055) 6589767

Learning Agenda
1. 2. 3. 4. 5. 6. 7. 8. About the course Define ethics Perspective variety on ethics Ethical tests Dilemmas Whistle blowing Bribery Managerial implications

#1: Who am I?
Teach at such leading business schools as California State Polytechnic University (USA), Bentley College (USA), University of Manitoba (Canada), Tec De Monterrey (Mexico), ESSEC Business School, Paris (France), Leicester Business School (UK), Southern Denmark University (Denmark), University of Queensland and Bond University, Australia. Taught at the IIM Calcutta, IIM Lucknow, IIM Indore, MDI, IMT, XIM, SP Jain, XLRI Jamshedpur. Invited for a professional interaction in a number of countries including Australia, Austria, Belgium, Canada, Denmark, France, Finland, Germany, Holland, Hong Kong, Italy, Luxembourg, Male, Mexico, Nepal, Singapore, Switzerland, Sri Lanka, Taiwan, UAE, the UK and the USA.

#1.1: Recent Teaching Awards

2011: Best Professor in Marketing Management in Asia, World Education forum, Dubai, UAE 2010: International Best Case Writing Award Winner, New Delhi, India 2009: Dean Recognition for outstanding teaching; University of Manitoba, Canada. 2008: Dean Recognition for outstanding teaching; University of Manitoba, Canada. 2006: Educator award, Lerner School of Business, University of Delaware, (USA), Nominated 2005: Master Teaching Award Marketing Management Association, USA, Nominated 2004: Distinguished Teaching Award, California State University, San Luis Obispo (USA). 2003: Most Outstanding Marketing Teaching Award, California State University, (USA). 2001: Ishan National Teaching Award, New Delhi (India). 2000: US Fulbright Fellowship (USA) 1993: Euro-India Cooperation and Exchange Program (France) Fellowship 1989: Association of Management Development Institutes in South Asia (AMDISA) Fellowship 1986: British Council Commonwealth Fellowship (UK)

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#1.2: Learning Outcomes It enables you to:

1. Demonstrate conceptual understanding of the ethical processes and principles. 2. Comprehend the real life case situations and apply the acquired knowledge. 3. Exhibit skills in managing ethical decisions and situations in marketing, Finance, Operations and HR. 4. Understand the fundamentals and process of contract.

#1.3: Modular Approach

Marketing Module test Accounting and Finance HR Module test Operations Module test Contract Module test Total 20% 20% 20% 20% 20% 100%

#1.4: We will learn through 1. 2. 3. 4. 5. 6. Conceptual inputs; Class participation; Guest speakers TB Cases / Exercises; Video case discussions Web exercises

What is business ethics?

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#1: Business Ethics

The application of general ethical concepts to the unique situations confronted in business. It asks what is right or wrong behavior in business and what principles or rules can be used as guidance in business situations.

#1.1: Two Characteristics

Tells people what they ought to do Set of principles or rules

#1.2: Why Study Business Ethics?

Will not make you more ethical

Relativism

Egoism

Help in trying to do the right thing

#2: Concepts of Ethics Utilitarianism Deontologism

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Concepts of Ethics
Developed by moral philosophers over generations Used to distinguish ethical from unethical behavior Each has problems

#2.1: Relativism
There is no universal standard by which morality can be judged. What is correct for one society may be wrong for another. Ethics and morality are relative.

#2.1a: Relativism - Problems

There are no absolutes - murder, slavery, torture, rape OK What is meant by a society? Sub-societies Leads to conclusion - each persons opinion is correct Nothing that anyone does is morally wrong

#2.2: Egoism
One ought to act in his or her own self interest Ethical behavior is that which promotes ones own self interest Does not mean should not obey laws only do so if in self interest

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#2.2a: Egoism
Problem - Externalities associated with private actions - OK to dump toxic wastes as long as dont get caught

#2.3: Utilitarianism
The morality of an action can be determined by its consequences An action is ethical if it promotes the greatest good for the greatest number. Example: Harry Truman and Decision to Drop Bomb on Japan

#2.3b: Problems with Utilitarian ethics

How do you quantify benefits and costs? How do you value benefits and costs? Can lead to unjust consequences Restrictions against the majority to protect a minority is not utilitarian

#2.4: Deontologism
Derived from the Greek word for Duty Actions are not justified by their consequences. Factors other than good outcomes determine the rightness of actions

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#2.4a: Utilitarianism Vs. Deontologism

Utilitarianism - The ends justify the means Deontologism - It is the means which are important

#2.5: Categorical Imperative

Developed by Immuel Kant I ought never to act except in such a way that I can. Also will that my maxim should become a universal law Are you willing to permit everyone to adopt the action? Yes - Moral No - Immoral

#2.5b: Problems of Deontologism?

Conflicts between duties Utilitarians argue that secretly appeal to consequences to demonstrate the rightness of actions

#3: Ethical Tests

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#3a: Ethical-Legal Test

Ethical Quadrant II Ethical and Illegal
Codification Manifestation

#3a: Ethical-Legal Tests; Which one is easy?

I Ethical - Legal II Ethical - Illegal III Unethical - Legal IV Unethical - Illegal

Quadrant I Ethical and Legal

Illegal

Corporate Decisions

Legal

Quadrant IV Unethical and Illegal Unethical

Quadrant III Unethical and Legal

#3b: Benefit Cost Test

2. Benefit Cost Test Do the benefits exceed the costs to whomsoever they accrue?

#3c: Categorical Imperative

Categorical Imperative Are you willing to allow everyone to practice the proposed action or do you want to be a special case?

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#3d: Light of Day Test

Light of Day Test What would be your reaction if the action were brought out into the open for public scrutiny?

#3e: Do Unto Others Test

Do Unto Others Test Golden Rule - If you would like others to do the same to you - passes the test

#3f: Ventilation Test

6. Ventilation Test Seek out others views. Discuss the 5 tests with them. If others feel it is OK passes the test

#4: Ethical Dilemmas in Business

Conflict of Interest : Have two interests cannot purse one without having negative impact on other Two Types : Private Interest Conflicts with Corporate or Business Interest Conflicts with Public

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#5: Whistle-blowing
Act of disclosing wrongdoing in an organization Like blowing a whistle to call attention to a thief Types Internal External

#5a: Can Cause Bitterness in Organization

Dissent - Must speak out against others in organization Breach of Loyalty - Perceived as one who violates confidentiality and loyalty Accusation - Singles out specific individuals as threats to organization or the public

#4b: Possible Retaliation

1. 2. 3. 4. Fired Blacklisted Transferred to undesirable locations Lifestyles, sex lives and mental stability questioned 5. Physical abuse and murder possible

#5c: Failure to Reveal Wrongdoing

Severe problems for society or organization Can be implicated as an accessory before or after the fact

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#5d: Ethics of Whistle blowing

When is it ethical to reveal wrongdoing ? When is it ethical to remain silent?

#5e: Cautious Approach to Whistle blowing

1. Make sure situation involves an imminent threat to society or to the business 2. Document all allegations 3. Examine internal whistle blowing first 4. Should you remain anonymous? 5. Get another job first!!!

#6: Bribery
A payment, usually to a public official, to induce that person to either do something improper or to influence decisions or actions Extortion - same as bribery - recipient of payment initiates transaction

More on bribery
Foreign Corrupt Practices Act of 1997 Grease payment allowed Standard Practice in most foreign countries Results in lost business opportunities for US companies tax dollars may be used to pay bribe

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#7: Bluffing and Deception

Negotiating a labor contract Plant has experienced losses over past several years - not clear why Want concessions from labor Tell labor that plant will be closed if no concessions are made. In reality , no such plans contemplated Is This Ethical?

Managerial Implications of business ethics

Top Management Leadership Organizational Culture Realistic Goal Setting Ethics Audit Code of Ethics Ethics Committee

Managerial Implications
Ethics Advocate Whistle blowing Mechanism Ethics Training

Thank You!
Dr. Mohan Lal Agarwal Professor, Marketing IMT Dubai Email:magarwal@imtdubai.ac.ae Mobile: (055) 6589767

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