CHAPTER ONE

Business Ethics, The Changing Environment, And Stakeholder Management

Environmental Dimensions

Economic Factors

Increasingly global context for trade, markets, resources Business expansion, product expansion Stock & bond market volatility and interdependency across international regions The rise of China and India

Technological Environment

Internet and telecommunication innovations Change in jobs, financial transactions, market operations Access to information

Political Environment

Rise of global terrorism Change in international coalitions Increased awareness of issues via electronic technology

Governmental and Regulatory Environment

Constantly changing/updating laws and procedures Changing standards for products, processes (e.g., ISI approval)

Legal Environment

Judicial actions against anticompetitive practices(MRTP act, competition act) Consumer protection (tobacco ) Corporate copyright protection

Demographic Environment

Globalization Workforce diversity and accompanying issues

Sexual

harassment Discrimination

Downsizing and outsourcing work force Aging workforce

Stakeholders

Secondary Stakeholders

Local community groups Special Interest groups Consumer groups Environmental groups Media Society-at-large
Should managers pay attention to the needs of these groups?

What is Business Ethics?

Laura Nash has defined business ethics as the study of how personal moral norms apply to the activities and goals of commercial enterprise, as dealing with three basic areas of managerial decision making:
1. 2. 3. Choices about what the laws should be and whether to follow them Choices about economic and social issues outside the domain of law Choices about the priority of self-interest over the companys interests

Unethical Business Practices

Showing respect to those who act unethically Abusive or intimidating behavior Misrepresentation of hours worked Lying Withholding information Sexual harassment Invasion of privacy on the internet Employee rights and issues

Why does business ethics matter?

Financially and Economically Relationships and Reputation Morale and Productivity Integrity and the Common Good

Five Levels of Business Ethics

Key Questions if Faced with an Ethical Dilemma

What are my core values and beliefs? What are the core values and beliefs of my organization? Whose values, beliefs, and interests may be at risk in this decision? Why? Who will be harmed or helped by my decision or by the decision of my organization? How will my own and my organizations core values and beliefs be affected or changed by this decision? How will I or my organization be affected or by the decision?

Figure 1.5: 5 Business Ethics Myths

Why Use Ethical Reasoning In Business?

Laws are insufficient Free-market and regulated-market mechanisms are insufficient Complex moral problems require an intuitive or learned understanding and concern for fairness, justice, and due process to people, groups, and communities

Kohlbergs Levels and Stages Of Moral Development

Level 1: Preconventional level (selforientation)
Stage 1: Punishment Stage 2: Reward seeking

Level 2: Conventional level (others orientation)

Stage 3: Good person Stage 4: Law and order

Level 3: Postconventional level (universal, humankind orientation)

Stage 5: Social contract Stage 6: Universal ethical principles

Stakeholder management approach

Ethical principles can result in significant competitive advantage Provides a framework that enables users to map and, ideally, manage corporation relationships (present and potential) with groups to reach win-win collaborative outcomes.

Stakeholder Management Approach

Six Steps to developing win/win strategies:
1. 2. 3. 4. 5. 6. Identifying and prioritizing issues, threats, or opportunities Mapping who the stakeholders are Identifying their stakes, interests, and power sources Showing who the members of coalitions are or may become Showing what each stakeholders ethics are and should be Developing collaborative strategies and dialogue from a higher ground perspective to move plans and interactions to the desired closure for all parties