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Ethics . . .

Ethics is the study of right


and wrong and of the
morality of the choices
individuals make.
An ethical decision is one
that is right according to
some
standard
of
behavior.

Business Ethics
Business Ethics is the application of moral
standards to business situations.
Cigarette companies are being fined for their
advertising practices.

Group Pressure
Businesses are often influenced by group
pressure in their ethical practices:
Investors want management to make
sensible financial decisions that will
increase sales, profits and returns on their
investments.
Customers expect a businesss products
to be safe, reliable and reasonably priced.

Group Pressure (continued)


Employees demand to be treated fairly in
hiring, promotion, and compensation
decisions.
Creditors require payments to be made on
time and accounting information provided
by the business to be accurate.
Competitors
expect the businesss
competitive practices to be fair and
honest.

Common Ethical Issues


Fairness and Honesty

Discrimination

Deceiving or intimidating
others

Conflict of Interest
When an employee takes
advantage of a situation
for his or her benefit
(bribe), rather than for the
employers interest

Organizational Relationship

Taking credit for others work

Pressuring others to behave


unethically

Communication
When communication in
business,
especially
advertising, is false or
misleading

Case - Deceiving Others

BMW received a court order to pay $2 million to a


U.S. buyer because it had failed to inform him that
his car paint had been damaged and retouched.
Identify the ethical issue that is violated by BMW
a)
b)
c)
d)

Organizational Relationships
Fairness and Honesty
Conflict of Interest
Communication

Case Taking Credit for Others Work


Assume that you are an employee in
XYZ
Company.
Your
manager
requested a report about the The
Demand and Supply of the Real-Estate
Market in Bahrain'. After submitting the
report, which is part of your duties, you
found that your manager submitted it to
the CEO under his name only.
Identify the ethical issue that is
violated by the manager
a) Fairness and Honesty
b) Organizational Relationships
c) Conflict of Interest
d) Communication

Case - Bribe

Assume that you are a 'contract manager' in XYZ


company. You received an expensive watch from
one of the bidders.
Identify the ethical issue that you violated
a)
b)
c)
d)

Fairness and Honesty


Organizational Relationships
Conflict of Interest
Communication

Case - Misleading Advertising


This is a billboard ad
that is located near to a
school. Identify the
ethical issue that is
violated in the ad
a) Fairness and Honesty
b) Organizational
Relationships
c) Conflict of Interest
d) Communication

Encouraging Ethical Behavior


Government,
Trade
and
Professional
Organizations provide ethical guidelines for
businesses to follow.
Businesses provide a code of ethics to
employees to encourage ethical behavior.
A Code of Ethics is a written guide to acceptable
and ethical behavior as determined by that
organization.
It contains uniform policies,
standards and punishments for violations.
(Figure 2.2, p 40)

Encouraging Ethical Behavior (continued)


Employees know what is expected of them and
what will happen if they violate the rules when a
written code of ethics is provided and enforced.
Code cannot cover every situation.
Businesses must create an environment in
which employees recognize the importance of
following the written code.
Managers have to provide direction by
encouraging communication, serving as a role
model, and training employees to make ethical
decisions.

Social Responsibility - SR
The recognition that
business
activities
have an impact on
society
and
the
consideration of that
impact in business
decisions

. . .Bahraini Companies
Alba allows the villagers near the plant to take fresh water from
their plant site. They also allow them to use the medical facility
when necessary.
GPIC set up a fish nursery in the sea outside their plant to prove
that they are not polluters of water. Fish are donated to charities
and serve an environmental purpose as they attract flamingos back
to the island.
Businesses organize walk-a-thons and other events to raise money
for various charities on the island.
Hotels and other organizations volunteer to clean beaches annually.
Some organizations provide scholarships for students to attend
universities in Bahrain and around the world.
Some organizations are taking responsibility to prevent air, water,
land and noise pollution near and around their plants.

. . .International Companies
McDonalds
Provides low-cost housing for people who have seriously ill
children Ronald McDonald Houses.
Practices recycling and waste control in its 30,000
restaurants around the world no longer uses styrfoam
containers for its sandwiches and drinks .

Starbucks
Uses only materials that may be recycled, including the
coffee grounds.
Buys coffee directly from farmers instead of wholesalers.
Provides loans for small coffee farmers.

Models of Social Responsibility


Business decisions are made within the firm;
so social responsibility begins with the
attitude of management.
Government
regulations
and
public
awareness have increased the social
responsibility of businesses.

Models of Social Responsibility


The
Economic
Model
of
Social
Responsibility states that society will
benefit most when business is left alone to
produce and market profitable products
that society needs.

Models of Social Responsibility


The Socioeconomic Model of Social
Responsibility states that business should
emphasize not only its profits but also the
impact of its decision on society.

Comparison of Models of Social


Responsibility
Arguments For Social Responsibility:
1. Since business is a part of society, it cannot ignore
social issues.
2. Business has the technical, financial and managerial
resources needed to tackle todays complex social
issues.
3. By helping resolve social issues, business can create a
more stable environment for long-term profitability.
4. Socially responsible decision making by firms can
prevent increased government intervention, which
would force businesses to do what they decided not to
do voluntarily.

Comparison of Models of Social


Responsibility
Arguments Against Social Responsibility:
1. Business managers are primarily responsible to
investors, so management must be concerned with
providing a return on owners investments.
2. Corporate time, money and talent should be used to
maximize profits, not to solve societys problems.
3. Social problems affect society in general, so individual
businesses should not be expected to solve these
problems.
4. Social issues are the responsibility of government
officials who are elected for that purpose and are
accountable to the voters for their decisions.

?What is Consumerism
Consumerism includes all
activities
undertaken
to
protect
the
rights
of
consumers.

Consumerism
Six Basic Rights of Consumers

The Right to Safety


The Right to Be Informed
The Right to Choose
The Right to Be Heard
The Right to Consumer Education
The Right to Service

The Right To Safety


Safe for intended use
Explicit directions for
proper use
Tested for quality and
reliability

The Right To Be Informed


Access to complete information
about the product before they
buy it
Ingredients and Nutrition on
food containers
Fabric and laundering methods
clothing
Interest rate Loans

Potential dangerous of usage


Side effects of medicine

The Right To Choose


A choice of product
offered by many
manufacturers and
sellers to satisfy a
particular need
Competition:
reduction in prices

The Right To Be Heard


Someone will listen
and take appropriate
action
when
the
consumer complains
Consumers Relations/
Services: Created a
competitive edge

The Right To Consumer


Education
Entitles people
to
be
fully
informed about
their rights as
consumers

The Right To Courteous Service


Entitles customer to
receive convenient,
courteous
and
responsive
treatment
from
manufacturers and
sellers

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