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Chapter 1

The Foundation of Ethical


Thought
Understanding Business Ethics
Stanwick and Stanwick
1st Edition
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Ethical Thoughts
The biggest corporation, like the
humblest citizen, must be held to
strict compliance with the will
of the people.
Theodore Roosevelt (in office 1901 -1909)

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Ethical Thoughts
We demand that big business give
people a square deal, in return we must
insist when anyone engaged in big
business honestly endeavors to do
right, he shall himself be given a square
deal.
Theodore Roosevelt

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Ethics in Action
Trevor Field wanted to give back to the
community
Watched women in South Africa carry water from
the watering hole everyday, when they could be
doing more productive things
Designed a water pump that could be used by
children when they play to pull water from the
deeper points in the ground where the water is
not contaminated and is cooler works like a
merry-go-round
Field sells advertising for the water towers where
the water is collected
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Ethics in Action
Each pump costs about $7,000 (US $) to
install
PlayPumps International received a check in
2006 from the US government, the Case
Foundation and the MCJ Foundation to help
support the expansion of Fields project
Fields goal is to raise $45 million (US $) by
2010 to help ten million African citizens gain
access to clean drinking water
Copyright 2009 Pearson Education, Inc. publishing as Prentice Hall

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Ethics in Action
The Rise of business ethics has to do with
the rise of capitalist economy. It can create
a sense of balance.

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Ethics
The values an individual uses to interpret whether
any particular action or behavior is considered
acceptable or appropriate.
Some authors suggest below questions to ask:
Is the behavior or action consistent with the overall basic
duties of the individual in question? Conflict of interest,
selling weapons in areas where children are used in
wars.
Does the behavior or action acknowledge and respect the
underlying rights of all the individuals who will be
impacted by the action? Torture.
Would the behavior or action be considered the best
practice in that specific set of circumstances? In Law, the
matter depends on the profession.
Does the behavior or action match the overall entrenched
beliefs of the individual? This could prove dangerous.
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What is Ethics
Is it law? Penalty, enforceability, aim.
Is it knowledge and logic? It could evolve
over time (e.g. boxing sports, gladiators,
ethics and sports is a new subject; do you
believe that cage-fighting is ethical. It is a
big business.
Give three examples of businesses which
ethically may look wrong.
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What is Ethics
Ethics shows where we are and where we
will be. (happiness, values, less suffering)
Also, the means to achieve that. (should I
quit my job and join humanitarian
groups?)

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Business Ethics
The collective values of a business
organization that can be used to evaluate
whether the behavior of the collective
members of the organization are
considered acceptable and appropriate

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Foundation of Ethical Theory


Initially classified based on what
perspective is considered by the reader
Descriptive ethics
Analytical ethics
Normative ethics

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Descriptive Ethics
The presentation of facts related to the
specific ethical actions of an individual or
organization
Used when an observer wants to
understand the course of events that
generated the ethical issue
No interpretation of the facts or
assumptions concerning why that course
of action took place
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Analytical Ethics
Understanding the reasons a course of action that may
have an ethical impact took place
Also called metaethics
Moves from the how and when inquiry, which is the
basis of the descriptive ethics viewpoint, to asking why
Hypotheses can be developed to help understand the
relationships among different variables impacting
ethical behavior
Addresses the motive behind the actions instead of
just being satisfied with a description of the actions

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Normative Ethics
A prescribed course of action that attempts to ensure that
ethical behavior will be followed in the future
Moves the evaluation of ethical behavior from the past to
future tense
Presents information on what should be done in the
future rather than what was done in the past, both part
of descriptive and analytical ethics
Allows employees and managers to address potential
ethical issues before they occur
Use of ethical tools (like ethics codes) help direct the
normative ethical behavior by presenting what are
acceptable and unacceptable types of behavior tolerated
within the firm. That is usually used when you want to
change (non binding change; e.g. discrimination in the USA)
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Existentialism
Based on the underlying belief that the only
person who can determine right and wrong is
the person making the decisions
Each individual determines his or her own
actions and is ultimately responsible for the
consequences of those actions.

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Property Principle
Based on the belief that every employee
should respect property as well as the rights
of the owners of the property
Expected that the employee should be a good
steward to the resource that he/she has access
to.
Examples: theft, misappropriation of funds, wasting
resources, misappropriation of intellectual property.
Using Government cars for personal stuff.
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Reliability Principle
Based on the belief that it is the
employees responsibility to honor the
commitments he or she has made to the
firm
Examples: breaching a promise or contract,
not fulfilling a promised action, ensuring that
suppliers and other business partners are
paid in a timely manner

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Transparency Principle
Based on the belief that every employee should conduct
business in a truthful and open manner.
Assumes that employees will not make decisions based on a
personal agenda
Examples: keep accurate and current records of business
obligations, fraudulent and deceptive actions of the employee,
financial information is presented in a truthful and accurate
way.
Marketing not to mislead, proper customer warnings
(health and safety).
It established trust among employees and by companies.
-- we can see its application in distributing prizes and in
tenders. The impact of transparency on customers and
employees in a business is huge.

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Dignity Principle
Based on the belief that each employee needs to respect
the dignity of all individuals
Encourages the enhancement of human development
not only within the company and the marketplace, but
also in the society at large
Examples: ensuring the human rights of health,
safety and privacy. Unions, dealing with other
cultures in sensitivity.
(direct or indirect use of child labor should be
rejected).

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Fairness Principle
Based on the belief that stakeholders who
have a vested interest in the firm should
be treated fairly
Reciprocal fairness (other treat the firm
properly), distributive fairness (resources
allocation), fair competition (price, number
of products in geographic places and
market share), procedural fairness
(notifying the government of violations).
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Citizenship Principle
Based on the belief that every employee should act as a
responsible citizen in the community
Expected that employees respect the laws of the
community criminal, competition, environmental,
corporate social responsibility.
No involvement by employees in politics, employees
participate in community work.

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Responsiveness Principle
Based on the belief that employees have
a responsibility to respond to the
requests for information about the
operations from various stakeholders.
Expected to react in a timely manner.

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Questions for Thought


Choose an event in your life where you
believe you acted ethically. Discuss the
event in terms of the teleological
frameworks discussed in the text.
Using the same event you chose in
question 1 above, discuss the event in
terms of the deontological frameworks
discussed in the text.
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Questions for Thought


Choose any Fortune 500 Company. Locate the
companys code of ethics published on the
companys Web page. Evaluate the code of
ethics in terms of the Global Business Standards
Codex.
Using the principles set forth in the Global
Business Standards Codex, find an example of a
company that does or did not follow one of the
principles. Discuss the implications of the
companys actions.
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