9/11 Chapter 2 Notes Ethics

Business Ethics
-Ethics is the study of right and wrong behavior; whether an action is
fair, right or just
-In business, ethical decisions are the application of moral and ethical
principles to the marketplace and workplace
Why is business ethics important?
-Directors and Officers owe a complex set of ethical duties to
their stakeholders (internal and external)
-When these duties conflict, ethical dilemmas are created
-An unethical individual can make a major impact on business,
economy ect
-If Officers or board members are not following ethical standards
to a key
then issues will arise
-The Moral Minimum
-The law is the lowest common denominator
-If it is illegal, you cannot do it
-Normally considered as mere compliance with the law
-Gray Areas in the law
-Make it difficult for companies to navigate and forecast
-There is not Black and White everything is gray
-Short-Run Profit Maximization
-Some argue businesses only goal should be to maximize profit.
But executives need to distinguish between short-term and long-term
maximization
-Importance of Ethical Leadership
-Attitude of Top Management
-Behavior of Owners and Manager
-Ultimately effects the rest of the company and employees
-Good moral code should be produced and published
-Creating Ethical Code of Conduct
-One of the most effective ways to promote ethical behavior in
an
organization. Ethics Training for Employees
-Ethical input from stakeholders
-The Sarbanes-Oxley Act and web-based reporting systems
(EthicsPoints)
-Act created after the early 2000s in response to the huge
business
meltdowns
-Tightens up accounting and number reporting
-Corporate Stock Buybacks
-Rationale: Corporate management believes stock is
undervalued, so instead
of issuing dividends it buys stock in the
market, thus boosting share value
-Can easily get out of hand with artificial inflation of stock
prices
Approaches to Ethical Reasoning

-Duty Based Ethics Derived from religious and philosophical principles

-Religious Ethical Standards
-Kantian Ethics
-The Principles of Rights
-Certain unalienable rights reserved by the individual
-Duty-Based Ethics
-Religious Ethical Standards
-The rightness or wrongness of an action is usually judged
according
to its conformity to an absolute rule
-Kantian Ethics
-Premised on the belief that general guiding principles from
moral
behavior can be derived form human nature
-Rightness or wrongness of an action is judged by
estimating the
consequences that would follow if
everyone on a society performed
the act under
consideration
-Principle of Rights
-Belief that every duty gives rise to a corresponding right,
deeply
embedded in Western culture
-Ethically of a action is judged by how the consequences of
the action
will affect the rights of others
-Outcome Based Ethics: Utilitarianism
-Action is ethical based on whether it produces the greatest good
for the
greatest number of people
-If it affects the majority adversely, it is morally wrong
-More of a Cost-Benefit
-Applying the utilitarian theory requires:
-Determination of individuals affected;
-Cost-Benefit analysis, and
-Choice among alternative actions
-Corporate Social Responsibility
-Those who manage corporations should be accountable to
society for their actions
-Stakeholder Approach: corporations have a duty not only
to
shareholders but other groups affected but he
corporate actions
-Stakeholders have more power in this day and age
because of the
level of accountability the Internet has
brought to the table
-Corporate Citizenship Promote goals that society considers
worthwhile and take positive steps towards solving problems
-A way of doing business. Poll found that 70% of executives
polled
agreed that corporate citizenship should be a
priority

-Employee Recruiting and Retention. Younger employees

look for
firms that are committed to socially responsible
goal and community
projects
Business Ethics on a Global Level
-American companies must be trained in cross-cultural business
practices
-Monitoring of employment practices of foreign suppliers
-Corporate Watch groups can hold corporations
accountable
-Foreign Corrupt Practices Act
-Prohibition Against Bribery of Foreign Officials. But FCPA does
not permit grease payment to minor officials
-Nor does FCPA prohibit payments to foreign officials which are lawful
in the country
-Bribery by Foreign Companies

The Cover Method

-First I Ask Some Questions to COVER my bases
F - Facts
I - Issues
A Alternatives
S Stakeholder
C - Codes
O Outcomes
V - Values
E - Editorial
R Rules
-Due Diligence
-Prior to philosophical analysis of a situation, it is important to
conduct due
diligence
-Steps
1. Determine the Facts
2. Identify the ethical issues
3. Consider alternatives
4. Identify the Stakeholders
-Philosophical Analysis
-C Code Look to legalistic documents to see if the action is
legal
-Look into laws and regulations in your area of business or
industry
-O Outcomes Outcome is based in a philosophy known as
Utilitarianism
-Actions are right in the proportion to their tendency to
promote
happiness or absence or pain, and wrong
insofar as they tend to
produce pain or displeasure
-Is the Benefit greater than the cost
-V Value Duty Based philosophical theories

-Divine Command theory of ethics is based in religion and

looking to a
higher being to determine what is right and
wrong
-Rights-based theory address fundamental rights that we
believe
should be supported such as basic human,
unalienable rights
-E Editorial Combines some aspects of the outcome analysis
with come
aspects of the values analysis. There may be a
mention of the publicity effect
in the outcome analysis there
probably should be for any major decision.
This analysis what is
the most newsworthy aspect of each alternative.
-R Rule Based in the categorical imperative philosophy of
Immanuel Kant. Asks the decision maker to evaluate each alternative
as if that
alternative were to become the rule for all others to follow.
-Conclusion Typically listed as preliminary because quite often
students finish the exercise wanting more information.
Appendix A
Utilitarianism John Stuart Mill (1806-1873) stated that actions are
right in proportion to their tendency to promote happiness or absence
of pain, and wrong insofar as they tend to produce pain or
displeasure.
-Committed to the maximization of the good and the minimization of
hard and evil
-Consists of a cost-benefit analysis for each alternative
-Utilitarianism will choose an alternative that creates the greatest
good for the greatest number.
Deontological Ethics Duty based ethics. The Divine Command
theory of ethics such as the teachings of religion.
-Corporate Social Responsibility is the idea that corporations should go
beyond obeying the law, profit and minimal ethical standards to
affirmatively reach out and promote philanthropy.
-Immanuel Kants (1724-1804) categorical imperative at its basest
level, asks a decision-maker to envision alternate worlds where
choosing each alternative is the rule followed by all similarly situated
persons or entities. Then the decision-maker must evaluate each
alternative world to determine which world the decision-maker feels is
the best world.