Pwpt-111ethical Roots and Responsibility of Business

8/2/2019 Pwpt-111ethical Roots and Responsibility of Business

1/55


2/55

Business is criticized

For being unresponsive to consumer

demands, employees needs, its ownshareholders and the public.


3/55


For enjoying a symbiotic relationship with

a government that give it inordinate powerto serve its own interest.


4/55


For falling to provide employment for all

who want to work


5/55


For promoting a biased distribution of

income


6/55


For plundering the planet with it voracious

appetite for resources


7/55


For producing trivial products


8/55


If only business people werent wholly and

solely preoccupied with profit , theargument goes these criticisms would

disappear.


9/55


The Solution.

The public expect the corporation to be

socially responsible , behave ethically and

have a conscience.


10/55

Origins of Business Ethics

Religious underpinning of BE

1. View wealth as Divine Favor

2. Merchants are stewards or trustees for

the public good


11/55

Gathering wealth and acting as stewards tothe less fortunate became symbolic of thereligious dimension of business so much sothat what has been called the divine rightof businessmen

God gave control; of property to men whowould protect the labourer


12/55

The perspective of stewardship changed as

America grew from family house holdoperations to factory production

-the use of machinery replaced the personal

approach and individualism of the earlier

business ethics


13/55

Survival of the fittest became moreimportant than stewardship

-Carnegie believe that only the wealthcould endow society with what is necessaryfor cultural development

Only wealth persons could contribute suchthings as a library that were needed forsocial improvement.


14/55

The wealth-not the poloiticians, or the

common laborer could decide what is good

for society in the long run


15/55

Resulted in

-large scale confrontations betweenmanagement and labor

--signaled the death knell of the idea of

stewardship.


16/55

Quick Quiz - When In Doubt, Ask Yourself...

Are my actions legal?

Am I being fair and honest?Will my action stand the test of time?How will I feel about myself afterwards?How will it look in the newspaper?Will I sleep soundly tonight?What would I tell my child to do?

If you are still not sure what to do, ask...and keep asking until you are certain you are doing the right

thing.


17/55

Why Ethical Decisions are

Difficult

1. Managers confront difference between

facts and values.

--Facts are statement of what is.

--Values expresses what ought to be.


18/55

Ex:

Medicine for the AIDS

Cost to manufacture azidothymidine (AZT) is 30cents

Sold for $ 1.60

For AIDS victim annual cost $10000.

Is it fair for the company to charge that price andmake a profit which will be use to furtherresearch in other medicines


19/55

2 It is often the case that good and evil existsimultaneously

Ex: Nestle sales of infant formula in countriessuch as Kenya and Zambia lead to infant deaths.

--mother mixed powdered milk with

contaminated local water causing babies to die ofdysentery

--save babies where mother not available.


20/55

3 Knowledge of consequences limited.

Impact of business policy in a complex

world is uncertain.


21/55

Table: Principle Causes of

Ethical Compromises

1. Meeting overly aggressive financial or

business objectives

2. Meeting Schedule Pressures

3. Helping the organization Survive

4.Rationalization that Others Do It 5. Resisting Competitive Threats

6. Saving Jobs


22/55

Influences on Ethical Behavior 1. Personal Values

2. Attitude/behavior of Supervisor

3. Attitude/behavior of Senior Management

4. Internal Drive to Succeed

5. Performance Pressures

6. No threats of punishment

7. Friends/ coworkers


23/55

Reasons for NOT Reporting

Observed Misconducts 1. Was afraid of not being considered a team

player

2. Didnt believe corrective action would betaken

3. Feared retribution from supervisor ormanagement

4. No one else cares about business ethics sowhy should I

5 Didnt trust organization to keep reportconfidential.


24/55

THE SOCIAL RESPONSIBILITY OF

BUSINESS

WHAT ARE THE SOCIAL RESPONSIBILITY

OF BUSINESS?

WHAT ARE THE ETHICAL BEHAVIOUR OF

BUSINESS CONSIST OF?

CAN A CORPORATION HAVE A

CONSCIENCE?


25/55

THE SOCIAL RESPONSIBILITY OF

BUSINESS

BEFORE WE CAN ANSWER THEABOVE QUESTIONS, WE NEED TO

UNDERSTAND

WHAT IS A BUSINESS,

WHAT IS THE PURPOSE OFBUSINESS.


26/55

WHAT IS A BUSINESS

A business consist of

i. Capital Owners

ii. Employees

iii. Consumers

All three co-produce the product.

All three form an integrated interdependentsystem


27/55

Owners risk capital and expect to be paid fairprofit

Employees supply energy, knowledge andimagination in exchange for appropriate monetaryand psychological income

Consumers supply the essential revenues out ofwhich come wages and profits.


28/55

If the system members dont get what they

expect , they reduce the quality or quantity

of their contribution.


29/55

Together andonly togethercan they

produce the output they subsequently share


30/55

What each member receives is constrained

by what other members require

No member in the longrun can enjoy a

disproportionate share

They are ALL interdependent.


31/55

Besides being interdependent, the members of thesystem are entirely EQUALLYin important

The capital providers claim that they are the mostimportant because they provide the fuel for thebusiness.

The consumers think that they are the mostimportant because the whole point of the businessis to provide goods and services for them.


32/55

However no member of a system is

primary.

The contribution of every member is

necessary and no single contributor is

sufficient,

therefore they are all equal.


33/55

If managers do not manage business as a

system and only give profit the priority,

then some members of the system will

reduce the value of their contribution

economic performance will suffer

and societys purpose for the business

institution will be compromised.


34/55

Managements values govern how the business isrun.

It pervades all aspects of the business operation.

It is a key responsibility of business leadership,therefore to manage these values throughout theorganization so that they are effective in everyaction.


35/55

Some people claim that the values of businesspeople are on par with the general values in

American culture- no better no worse. If that istrue, its too bad. Business leaders should havemore strongly held values than the rest of societybecause they have fiduciary responsibility - aposition of trust with employees, stockholdersand customers, in short with society.

Business have responsibility to the society.


36/55

Business-Government-Society

BUSINESS - encompassing a broad range of actions

and institutions

---enterprises ranging from a burger standto a multinational corporation.


37/55

Government

-the structures and processes which publicpolicies, programs and rules are

authoritatively made for society.

---local, state and federal governments


38/55

SOCIETY.

A network of human relations with three

interrelated parts.

1. Ideas 2. Institutions

3 material things.


39/55

Ideas

---intangible objects of thought

--------values and ideologies


40/55

Institutions

----formal patterns of relations that link

people together to accomplish a goal

Ex: labor union, corporations


41/55

Material things Includes

Natural Resources

Land

Manufactured goods ---these help shape and are partly the

products of ideas and institutions.


42/55

BGS- importance A business must be responsive to both

Economic Non economic environment


43/55

A company works within a society.

---If society does not accept a companys

actions

---------company punished and constrained.


44/55

In 1911

Standard Oil forced to split up.

In Ma Bell

Forced to split up

Microsoft????


45/55

STAKEHOLDER VERSUS

STOCKHOLDER MODEL

Corporations affect positively or negatively

peoples lives.

Individuals may benefit or are harmed by the

corporations activities.

Therefore , Corporations have stakeholders.


46/55

The stakeholders are groups and individual

who benefited from or are harmed by, and

whose rights are violated or respected by

the Corporations activities.


47/55

The notion of the stakeholder is built on

two principles, the Principle of Corporate

Rights and the Principle of Corporate

Effect.


48/55

Principle of Corporate Rights

The corporate and its managers may not

violate the legitimate rights of others to

determine their own future.


49/55

The Principle of Corporate Effect

The corporation and its managers areresponsible for the effects of their action on

others.


50/55

The traditional business model -

Corporations task to dominate its environment inorder to maximize stockholder wealth .

The purpose of the corporation is to benefit onegroup of stakeholdersits owners, thestockholders.


51/55

In the STAKEHOLDER MODEL - thewelfare of each stakeholder must be

considered.

Stakeholder model asserts that the

management has a moral duty to lookbeyond profits and see a range ofstakeholders interest.


52/55

Primary Stakeholders have an immediate

and continuous and powerful impact on the

corporation

----they are:- stockholder(owners),

customers, employees, communities and

governments as well as suppliers andcreditors.


53/55

Secondary Stakeholders have less power to

influence the corporations activities but

are affected by its operations

----they are :- environmentalists, the media,

trade associations, universities


54/55

Why do stockholders have special claimson the firm

----they are its owners


55/55

Why do stakeholders have rights to claim

over the corporation?

--the stakeholders interest have an impact

on the corporation

--the corporation has a moral obligation not

to harm those whom its action affect.

Pwpt-111ethical Roots and Responsibility of Business

Documents