Dr Matherly MAN4701 STUDY GUIDE 2 SPRING 2013 Business Society EXAM 1 CHAPTER 4 is a conception of right and wrong conduct It tells us whether our behavior is Ethics moral or immoral and deals with fundamental human relationships how we think behave toward others and how we want them to think and behave toward us o Ethical principles are guides to moral behavior o Business ethics is the application of general ethical ideas to business behavior Arguments in favor of being ethical in business o Meet Demands of Business Stakeholders meeting stakeholder s expectations is good business When a company upholds ethical standards consumers may conduct more business with the firm and the stockholders may benefit as well some businesses know that o Enhance Business Performance whether at the organizational or individual level businesses increasingly are recognizing that ethics pay and are encouraging ethical behavior through rewards program and other incentives or accommodations Business executives recognize that ethical actions can directly affect their organization s bottom line and have chosen to reward accordingly o Comply with Legal Requirements doing business ethically is also often a legal requirement Two legal requirements in particular provide direction for companies interested in being more ethical in their business operations Although they apply only to U S based firms these legal requirements also provide a model for firms that operate outside the United States U S Corporate Sentencing Guidelines for businesses to promote ethics at work The sentencing guidelines come into play when an employee of a firm has been found guilty of criminal wrongdoing and the firm is facing sentencing for the criminal act since the firm is responsible for actions taken by its employees which provide a strong incentive Sarbanes Oxley Act ethical standards in how they conduct and monitor business operations this law seeks to ensure that firms maintain high Dr Matherly MAN4701 STUDY GUIDE 2 SPRING 2013 o Prevent or Minimize Harm to prevent harm to the general public and the corporation s many stakeholders businesses and their employees should act ethically o Promote Personal Morality with their own sense of right and wrong Knowing that one works in a supportive ethical climate contributes to one s sense of psychological security most people want to act in ways that are consistent Reasons why Ethical Problems Occur o Personal Gain and Selfish Interest desire for personal gain or even greed causes some ethical problems Businesses sometimes employ people whose personal value are less than desirable who will put their own welfare ahead of all others regardless of the harm done to other employees the company or society o Competitive Pressures on Profits competition they sometimes engage in unethical activities to protect their profits Intense competitive pressure in the global marketplace has resulted in unethical activity such as the practice of price fixing when companies are squeezed by tough o Conflicts of Interest interest conflicts with acting in the best interest of another when the individual has an obligation to do so a conflict of interest occurs when an individual s self o Cross Cultural Contradictions corporations do business in other societies where ethical standards differ from those at home some of the knottiest ethical problems occur as Analyzing Ethical Problems in Business o Virtue Ethics Pursuing a Good Life Virtue ethics focuses on character traits that a good person should possess theorizing that moral values will direct the person toward good behavior Virtue ethics is based on a way of being and on valuable characteristics rather than on rules for correct behavior o Utility Comparing Benefits and Costs Utility is the overall amount of good that can be produced by an action or a decision Utilitarian reasoning is often referred to as cost benefit analysis because it compares the costs and benefits of a decision a policy or an action o Rights Determining and Protecting Entitlements Dr Matherly MAN4701 STUDY GUIDE 2 SPRING 2013 Human rights are another basis for making ethical judgments A right means that a person or a group is entitled to something or is entitled to be treated in a certain way The most basic human rights are the rights to life safety free speech freedom being informed due process and property o Justice Is It Fair Justice or fairness exists when benefits and burdens are distributed equitably and according to some accepted rule For society as a whole social justice means that a society s income and wealth are distributed among the people in fair proportions CHAPTER 5 Making Ethics Work in Corporations o Building Ethical Safegaurds into the company need guidance on how to handle day to day ethical situations their own personal ethical compass may be working well but they need to receive directional signals from the company managers and employees Top Management Commitment and Involvement Research has consistently shown that the tone at the top the example set by top executives is critical to fostering ethical behavior When senior level managers and directors signal employees through their own behavior that they believe ethics should receive high priority in all business decisions they have taken a giant step toward improving ethical performance throughout the company Ethics Policies or Codes and employees when they encounter an ethical dilemma a written set of rules used to guide managers Ethics and Compliance Offers organization to investigate breaches of ethical conduct promulgate ethics statements and generally promote ethical conduct at work a manager designated by an Ethics Reporting Mechanisms customers or suppliers to report an ethical concern directly to someone in authority in an organization a program that enables employees Ethics Training Programs further reinforce their ethical expectations for their employees programs developed by businesses to Dr Matherly MAN4701 STUDY GUIDE 2 SPRING 2013 Ethics Audits an assessment used ny an organization to target the effectiveness of their ethical safeguards or to document evidence of increased ethical employee behavior CHAPTER 8 Public Policy is a plan of action undertaken by government officials to achieve some broad purpose affecting a substantial segment of a nation s citizens Public policy while differing in each nation is the basic set of goals plans and actions that each national government follows in achieving its