Independent University

School of Business

MBA 550: Strategic Management

Spring Semester 2017
Lecture 10
Todays lecture outline
Ethics
Define & Discuss
Sources of ethics
Business ethics
Benefits of business ethics
Ethical issues in business
Code of ethics in business
Common unethical acts
Real life examples
Companys responsibility
Models of business ethics
Making decisions on ethical issues
 What is Ethics?
Can be defined as a system of right &
wrong
Ethics accepted principles of
right/wrong governing conduct ...
Assists individuals decide whether an act
is:
Moral or immoral
Socially desirable or undesirable
 What is Ethics?
Ethics is the set of moral principles by
which people conduct themselves
personally, socially, or professionally.
Ethics involves:
Having guidelines for human behaviour

Studying moral choices & values

Choosing between right & wrong
What is Ethical Behaviour?
Ethical behaviour means:
Knowing the difference between right &
wrong
Consciously choosing to do right.
Sources of Ethics
Genetic Inheritance: the qualities of goodness is a
product of genetic traits strengthened over time by
the evolutionary process.
Religious beliefs: religious morality is clearly a
primary focus in shaping our societal ethics.
Philosophical Systems: the quality of pleasure to be
derived from an act was the essential measure of its
goodness.
Cultural Experience: individual values are shaped in
large measure by the norms of the society.
Sources of Ethics
The legal system: laws represent a rough
approximation of
societys ethical standards.
National & ethnic beliefs.
Family practices.
Educational experiences.
Senior management influence
Friends/peers
Sources of Ethics
Media
Corporate mission, vision, & values
statements
Union contracts
Competitive behaviour
Activists or advocacy groups
Business or industry organizations
Professional associations
What is Business Ethics?
Business ethics means applying
principles of right & wrong to situations
in the workplace.
Business ethics is about:
Decision-Making
By People in Business
According to Moral Principles or Values
What is Business Ethics?
Principles & standards which guide
behaviour in the world of business
Right or wrong, acceptable or
unacceptable behaviour within the
organisation
Determined by key stakeholders
What is Business Ethics?
Ethics of business: rules, standards, codes, or
principles that provide guidelines for morally
right behaviour and truthfulness in specific
situations.
Value judgments: subjective evaluations of
what is considered important.
Moral standards: the means by which
individuals judge their actions & the actions of
others.
Business Ethics
Many accepted principles
codified in laws:
Tort product liability
Contract contracts/breaches of contracts
Intellectual property protection of intellectual
property
Antitrust law competitive behaviour
Securities law issuing/selling securities
 Benefits of Ethics in Business
Fostering a more satisfying & productive working
environment
Building & sustaining organisation reputation
Maintaining the trust of staff to ensure continued
self-regulation
Providing ethical guidance for employees prior to
making difficult decisions
Aligning the work efforts of employees with the
Organisations broader mission & vision
Benefits of Ethics in Business
Increased employee loyalty, higher
commitment & morale as well as lower staff
turnover
Attraction of high-quality staff
Reputation benefits (customers & suppliers)
More open & innovative culture
Encourages personal sacrifices
Generation of good-will in the communities in
which the business operates
 Ethical dilemmas
No agreement over accepted
principles
None of available alternatives seem
acceptable
Behaving ethically=beyond staying
within law
 Some myths about business ethics
Its easy to be ethical.
Unethical behaviour is part of business.
There are no rewards for being ethical.
Ethical behaviour will prevent me from being
successful.
Business is like sport push the rules & try
not to get caught.
Is about character education & teaching
moral philosophy
Ethical issues in Business

Product safety standards

Advertising contents
Unauthorised payments
Employee privacy
Information manipulation
Ethical issues in Business
Anticompetitive behaviour
Opportunistic exploitation
Substandard working conditions
Environmental degradation
Corruption
Code of Ethics in Business
A systematic set of rules &
procedures used to guide the
behaviour of an individual, a
business, or a culture.
The code of ethics is in writing &
available to everyone who is
expected to abide by them.
Code of Ethics in Business
Responsibilities of Business:
not to do harm knowingly
to adhere all applicable laws &
regulations
the accurate representation of their
education, training & experience
Code of Ethics in Business
Honesty & Fairness:
being honest in serving consumers, clients,
employees, suppliers, distributors & the public.
Rights & Duties of parties:
products & service offered are safe & fit for their
intended use
communications about offered product &
services are not deceptive
all parties intend to discharge their obligations,
financial & otherwise, in good faith
 Principle of employee conduct!
10% follow their own beliefs
40% try to follow company policies &
rules
40% go along with the work group
10% take advantage if the risk is low
Golden Rules of Ethics @ Workplace
Body Language
Avoid Creating Disturbance
Trust & Respect for Others Work
Dont Interfere In Others Work
Respect the Privacy of your Co-workers
Avoid Ethnic & Gender Biasness
Improve Your Self Presentation
Avoid Lobbying
No/Least Personal Work During Work Hours
Common unethical acts
(reported by employees)
Lying to supervisors
Falsifying records
Alcohol and drug abuse
Conflict of interest
Stealing
Receiving a gift/entertainment in violation of company
policy
Improper accounting procedures
Sexual harassment
Discrimination
Violation of environmental laws
Why misconduct is not reported
Fear of not being considered a team
player.
Did not think that corrective action
would be taken.
Fear of retribution from management.
No-one else cares why should I?
Did not trust the organisation to keep the
report confidential.
What is the companys responsibility?
Attitude of the Board & senior
management
The tone from the top
Provide a ready avenue for discussion of
ethical issues
Designated privacy officer(s)
Training & open forums
What is the companys responsibility?
Unethical business practices can
affect your business indirectly.

The amount you make in profits

from one unhappy customer can
translate into a lot more lost
because of missed repeat business.
What is the companys responsibility?

Treating employees unethically can

also backfire.
Mistreating employees leads to a
high turnover rate. This increases the
cost of hiring & training new
employees.
What is the companys responsibility?
Establish an ethical workplace.
Create a written code of ethics to set
guidelines to help the business owner &
employees make ethical decisions.
Establish company policies & procedures to
let business owners & employees know how
to act in certain situations.
Treat all employees fairly.
Making decisions on ethical issues
Always:
Take time out to reflect on issue
Consideration before action
Discuss with a trusted person (could be a
peer employee or the privacy officer)
Consider taking up with senior
management, if appropriate
Making decisions on ethical issues

Here are some steps if you find

yourself in an ethical dilemma:

1. Identify the ethical dilemma.

2. Discover alternative actions.
Making Decisions on Ethical Issue..

3. Decide who might be affected.

4. List the probable effects of the
alternatives.
5. Select the best alternative.
 Important Ethical Questions

When considering a questionable

course of action, you have to ask
yourself these important questions:

Is it against the law?

Does it violate company or professional
policies?
 Important Ethical Questions

What if everyone did this? How

would I feel if someone did this to
me?
Am I sacrificing long-term benefits
for short-term gains?
 Graphic Organizer
Graphic
Important Organizer
Ethical Questions
Does it violate the law or policies? YES UNETHICAL
NO

What if everyone did this, but its bad? YES UNETHICAL

NO

Would this sacrifice long-term benefits for MAY BE

short-term gain? YES
UNETHICAL
NO

ETHICAL DECISION
 Finally!
Ethics can be a learned behaviour.to a
point
Will be assimilated over a period of time,
primarily during more vulnerable years
Youth family/schooling
Young adult university/workplace
Will be dispersed during more secure
years
Mature adult workplace/social group