Business ethics

chapter one
The Importance of Business Ethics
1-Define
2-Why study
3-History
4-Benefits

The Importance of Business Ethics

Main Elements
1.
2.
3.
4.

Business ethics defined

Why study business ethics?
The development of business ethics
Developing an organizational and
global ethical culture
5. The benefits of business ethics
6. Summary

Ethics defined
Ethics is the study and philosophy of
human conduct, with an emphasis on
determining right from wrong.
Values and principles are very
important of reference.
Society is the source of such values.
That is why what is ethical for one
society might not be ethical for
another one.

The Importance of Business Ethics

Introduction
Next class you need to read and discuss an
ethical dilemma in chapter one. And
Monsanto attempts to balance
stakeholders interests case study.

Business ethics defined

business ethics comprises the principles,

values, and standards that guide
behavior in the world of business.
Principles: values are specific boundaries for
behavior that are universal and absolute.
Values: are used to develop norms that are
socially enforced like integrity, trust and
credibility.

Why Study Business Ethics?

Customers declining trust is a big issue.
See Check figure 1-1
Examples and specific issues:
Abusive behavior
Harassment
Bully
Accounting fraud
Conflict of interest
Defective products
Bribery
And theft
Are all examples of declining ethical standards.
Check the story of Johnson & Johnson

Why Study Business Ethics?

Insider trading is a serious issue in business and
ethics. Getting inside information and using it to
ones own interest.
We call it corruption
is the process of using inside information.
Code of ethics
Gifts , discrimination acts, injustice.
Falsification, deception and forgery, (Plagiarism
Universities, schools, research, publications)
And many, many other aspects.

The reason for studying business

ethics
Business ethics is very important course for business
leaders because they can identify ethical issues when they
arise and use the approaches available for resolving them
a. True
b. False
. Studying business ethics is an awareness program. It gives
you the awareness to recognize right from wrong. You may
identify ethical issues when they arise and use the
approaches available for resolving them. You will also learn
more about the ethical decision making process and about
ways to promote ethical behavior within your org. you will
be able to cope with conflicts between your own personal
values and those of the org in which you work.

The development of business ethics

Check table 1-2 and see for yourself
a.
b.
c.
d.
e.

According to the development and evolvement of business ethics (from the 60s up to
the 21st century), the 21st century is characterized by
Financial misconduct
Sustainability
Intellectual property theft
Cybercrime
All of the above

Developing an organizational and global ethical culture

Its hard to develop a global ethical

culture.
But its very important to create certain
regulations, I mean governmental
rules and regulations beside
organizational ones in order to have
an ethical culture.

The Benefits of Business Ethics

1- employee commitment and trust

2- ethics contribute to investor loyalty
3-ethics contribute to customer
satisfaction
These three within an ethical culture
will lead to:
4- ethics contribute to profit.
See figure 1-3.

Stakeholder relationships, social

responsibility, and corporate
governance
Chapters main chapter
elements: two
Stakeholders define ethical issues in
business
Social responsibility and the importance of a
stakeholder orientation
Social responsibility and ethics (Corporate
Social Responsibility).
Corporate governance provides formalized
responsibility to stakeholders
Implementing a stakeholder perspective

Stakeholders define ethical issues in

business
The relationship between companies and
their stakeholders is two-way
communication. What this statement
means?
The conclusion of this point is that
companies need to reconsider its
relationship with all the surrounding
parties and constituencies in the society

Identifying your
stakeholders
1- primary stakeholders
2- secondary stakeholders
Explain figure 2-2- what do the arrows
represent in the figure.
- .
are those whose continued association is absolutely necessary for a firms survival

a.
b.
c.
d.
e.

Primary stakeholders
Secondary stakeholders
The media
Trade associations
Special interest groups

Social responsibility and the

importance of stakeholder orientation

What is meant by stakeholders orientation?

Conclusion: ethics and social responsibility cannot be just a reactive approach
to issues as they arise.
Firms and corporations need to view ethical concerns as a part of their
foundation and incorporate ethics in their business strategy
- Which of the following is true regarding socially responsible organizations
a. Social responsibility is an integral part of the organization s business
strategy
b. Social responsibility and strategy are two different issues and separated
from each other.
c. Organizations must be socially responsible in order to improve their
reputation in their target market
d. None of the above.

Social responsibility and

ethics
SR and Ethics are interchangeable.
Socially responsible orgs are more ethical
entities than others.
ISO 26000 for CSR
ISO 1400 for the environment
ISO 1800 for health and safety!
Going green- many companies are going green
Renewable energy investments. Example the
wind and the solar energy.

Social responsibility and

ethics
What is corporate Citizenship?
The extent to which businesses strategically meet the economic, legal,
ethical, and philanthropic responsibilities placed on them by their
various stakeholders.
What is reputation and why is it important in this context?
.. Is the extent to which businesses strategically meet economic,
legal, ethical, and philanthropic responsibilities placed on them by
their various stakeholders
a. Business ethics
b. Corporate governance
c. Corporate citizenship
d. Stakeholder orientation
e. All of the above.

Corporate governance
How Corporate Governance provides formalized responsibility to
stakeholders?
Two views of corporate governance:
A- shareholder model of Corporate Governance
B- stakeholder model of Corporate Governance
The role of boards of directors
Greater demand for accountability and transparency
Executive compensation
- After taking this business ethics course, which of the followings do
you suggest for business leaders?
a. To adopt the share holder approach
b. To adopt the stakeholder approach
c. To adopt the economic approach
d. To adopt the customer approach

Implementing a stakeholder
perspective
1- assessing the corporate culture
To implement the stakeholders perspective,
you need to have it in your mission, norms,
values and system. You need to have a
visionary leadership. Your culture must
support it.
2- identifying stakeholder groups
Some stakeholders exert more influence and
power than others. The company must
identify these groups, prioritize, and evaluate.

Implementing a stakeholder
perspective
3- identifying stakeholder issues
Overweight in the US is an issue. Climate change
for some companies is an issue, GM food and
biotechnology for Monsanto is an issue. Carbon
dioxide emission for Toyota is an issue
4- assessing org commitment to social
responsibility
The previous steps lead to step four where
companies could act socially responsible with
accordance to their stakeholders issue

Implementing a stakeholder
perspective
5- identifying resources and determining urgency
Resources must be specified and urgency must be
considered. Resources must be quickly allocated
based on that urgency. Use porter strategy.
6- gaining stakeholder feedback.
This is an information and data collection exercise
here. Via public and private data mining to find out
what our stakeholders think of us.
Next with chapter 3 Emerging Business Ethics Issues.
Read the chapter dilemma.
Chapter 3 is a presentation chapter- an individual task.