Unit 305 Operations Management

Business Values and Ethics

Topic 2 Introduction to
Business Ethics

Unit Objectives
Students will understand:
Why Business Ethics are important
The Objections to practicing Business
Ethics
The counter arguments to the
Objections
Different considerations that can be
used to analyze the ethical nature of
a Business situation
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What is Business Ethics

A specialized study of moral right
and wrong as applies to business
policies, institutions, and behavior
Define acceptable conduct in a business
Should underpin how management
make decisions

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Why Business Ethics is

Important
Each year over $1 trillion is paid in
bribes which result in approximately
$2.6 trillion in overall costs, more
than 5% of global GDP.
Corruption materially undermines
competition, particularly in highgrowth emerging markets, and
inflicts enduring harm on society. (
www.ethics.org, 2009)
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Why Business Ethics

Important
Ethical Motivation
Employees working for an organization
will feel better about themselves and
therefore more motivated to work hard
Ethical employee=happy
employee=motivated
employee=productive employee

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Why Business Ethics

Important
Balancing Needs and wishes of
Stakeholders
Businesses are not just about money
they are about giving back to society,
the community
Those companies that do so will also
have an enhanced reputation and be
more profitable
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Why Business Ethics

Important
Global Challenges
Need to learn about the different values
and cultures of the regions it operates in
Dont want to offend
Lose reputation, lose business

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Why Business Ethics

Important
Ethical pay-offs
Organizations risk not only losing
customers and employees, but being
exposed to civil and criminal liability
Sound ethical policy reduced risk
exposure

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Why Business Ethics

Important
Employee Retention
Danger of losing employees who dont
want to work for an unethical
organization
Significant costs involved in replacing
key people

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Why Business Ethics

Important
Prevention and Reduction of Criminal
Penalties
In addition to the loss of reputation and
business, nobody really wants to end up
in court or even worse jail

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10

Why Business Ethics

Important
Preventing Lawsuits
In additional to criminal offences, organizations
need to be vigilant to civil offences
Discrimination, sexual harassment, favoritism
big concerns
Sound ethical policies can pre-empt unwanted
behaviors
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Why Business Ethics

Important
Market Leadership
Use ethical behavior as a unique selling
feature to stand out in the market place
Ethical organizations are considered
more profitable organizations

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Why Business Ethics

Important
Setting the Example
Dont follow the crowd
Be the example that changes the way
your industry operates!

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Arguments against Implementation

of Business Ethics
1. In perfectly competitive markets,
the pursuit of profits will ensure
members of society are served in
the most socially-beneficial way.
(the invisible hand of the market)
But
Hard to find an example of perfect
competition
Not all steps to increase profit are
socially-beneficial
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Arguments against Implementation

of Business Ethics
2. Business managers should do what
is in the best interests of the
organization. (loyal agent
argument).
Usually a very short-term view of benefit
Usually only a financial view
Basically says ethics dont matter at all
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Arguments against Implementation

of Business Ethics
3. To be ethical, it is enough for
business people merely to obey the
law. Business ethics is to obey the
law.
Ethics is not limited to what is legal
Provides a useful excuse to act
unethically
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Workplace Ethical or Unethical

Considerations
1.
2.
3.
4.
5.
6.

Legalism
Egoism
Non-consequentialism/Moral Realism
Conventionalism
Utilitarianism
Contractarianism

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Workplace Ethical or Unethical

Considerations
Legalism
A strict following of the law
Not illegal? No problem!

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Workplace Ethical or Unethical

Considerations
Egoism
What is the best course of action for
my own well-being?
Whats in it for me!

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Workplace Ethical or Unethical

Considerations
Non-consequentialism/Moral Realism
What is my Duty?
What is the universal right thing to
do
What would I want others to do in the
same situation

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Workplace Ethical or Unethical

Considerations
Conventionalism
What is right or wrong is really
dependent of the particular society
What is right for one society may be
wrong for another
Japan compared to America?

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Workplace Ethical or Unethical

Considerations
Utilitarianism
What will bring the greatest amount
of happiness for the greatest number
of people
What will cause the least harm

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Workplace Ethical or Unethical

Considerations
Contractarianism
Have I agreed to any course of action
or behavior?
Can be either in a formal contract or
as a member of a particular group or
society

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Business Ethics Case Study

Youre a manager for ABC Company.
Your boss just told you a big secret he wants yo
to keep that the company will have to lay off
200 workers. Luckily, your job wont be
affected.
But a rumor is circulating in the company, and
one of the workers who will be let go and is an
old friend of yours asks the question. Am I
going to lose my job? Im about to finalize the
purchase of a new house. I need to know.
What would you say?
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Business Ethics Case Study

What would you say from the perspective
of each of the Workplace Ethical
Considerations?
1. Legalism
2. Egoism
3. Non-consequentialism/Moral realism
4. Conventionalism
5. Utilitarianism
6. Contractarianism
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References

Unit 305 Operations Management

SBS Course Text Book: Business Values & Ethics

A Framework for Thinking Ethically Santa Clara
University. http://
www.scu.edu/ethics/practicing/decision/thinking.htm
l
CONSIDERATIONS FOR A GLOBAL BUSINESS ETHICS
FRAMEWORK Paul Ostasiewski Assistant Professor of
Marketing/Management Wheeling Jesuit University
https://
www.wju.edu/academics/bus/iscm/ostasiewski1.pdf