Business Ethics Flashcards
what is two major influences that shape moral behaviour of business?
an organisation is composed of individuals, who all have their own moral codes, values and principals. naturally they bring these to bear on the decisions that they have to make as part of their working lives
businesses have cultures that shape corporate ethical standards. this determines the variety of circumstances having an ethical dimension
some ethical stances
viewing shareholders or owners short term intrests as their only responsibility
recognmising that well-managed relationships with other stakeholders bring long-term benefits to shareholders or owners - they relaise that the expenditure on welfare is sensible, while not seeing it as an ethical duty
including the intrests and expectations of stankeholders in their mission- organisations are likely to go beyond their minimum obligations e.g. avoid selling anti-social products and be prepared to accept reductions in profitability for the social good
taking an ideological approach and placing financial consideration as secondary- extent to which the account is viable depends on how accountable the organisation is to its shareholders or owners
ethical issues that will affect a business
treating workers well and paying a living wage
not harming the enviornment through actions of the business
behaving responsibly towards all stakeholders by being aware of the impact of production on others such as the local community
working with the community through sponsorship or charity work
not discriminating in any way. sometimes this may be a legal requirment but a ethical business may go beyond what is required by law
ethical issues that will affect a business
treating workers well and paying a living wage
not harming the enviornment through actions of the business
behaving responsibly towards all stakeholders by being aware of the impact of production on others such as the local community
working with the community through sponsorship or charity work
not discriminating in any way. sometimes this may be a legal requirment but a ethical business may go beyond what is required by law
benefits of ethical behaviour
attract new customers to the business
attract new and better quality employees
encourage employees to stay with a business
encourage investment
create positive publicity
result in increased sales and profits
ethical issues
finance and accounting
human resources
managment
sales/marketing
suppliers/production
interllectual property and skills
financial and accounting issues
auditor conducts the audits an shouls not accept addiional appointmants which could lead to the erosion of independence on the auditors part
e.g. consulatancy work
directs have a duty to detact and report fradulent activity in a business- not responsibility for auditor
human resouces issues
required to pay staff a minimum hourly wage rate
employees should not work over 48 hours per week
some buisiness might resort to use of casual staff appointed on fixed term contracts- minimise amount expended on salries, wages and related costs
managment issues
good ethical behavior to ensure that non-executive directors are appointed to the boards- to provide a degree of independent scruitiny to the decisions and policies of board
board approve of ethical training; managing discriminative behavior, ensuring provision of accurate financial performance data, increasing public perception that the product portfolio is not tested using animals and encouraging the use of sustainable resources
supplier issues
busines may insist that raw materials used in production are sourced ethically- labour employed extracting raw materials lawfully
e.g. children under age of 16 involved in mining
business entity may want to highlight that its products are souced from sustainable materials or can be recycled
intellectual property and skills
business is expected to respect intellectual and property rights of competitiors- e.g. copyright, use of patents and liscences
e.g. financial services on internet can use ‘phishing’ where the online identity of a user can be stolen by another business pretending to represent the original financial services provider- website can be very similar
ethical code
code of ethics
code of practice
EC: an instruction from an organisation to its employees to indicate how they shold react to situations relating to moral values
COE: a document summarising the approach that staff should take in response to issues which challenge the social responsibility and professional integrity of business
COP: a document summarising the recommended policies that shouls be adopted in relation to business or professional activites, usually within specific industries. such codes are typically of a vountary nature and approved by government
code of pratice may include:
personal integrity- deals wth suppliers and handling firms resources
coprate integrity- forbidding collusion with competitorsand predatory priceing
enviornmental responsiability- highlighting a duty to minimise pollution emissions and maximise recycling
social responsibility- provide products of genuin value that are prompted with honesty and dignity
advantages of behaving ethically
the firm can base their marketing campagins on their ethical behaviour, as campagins are publicised and customers are more aware of heir ethical stance. this helps business to orperate morally and prepare to think carefully before spending their money
companies gain comsiderable public relations advanatges from ethical behaviour- enhance image of business, positive sales and profits
positive effects on workforce - may expect to recruit staff who are highly motivated- leads to higher productivity and competitve advantage
may attract better quality staff- more innovative, productive and efficient- generation of better ideas
disadvanatge of behaving ethically
reduced profitability- company may have to turn down oppourtunity to invest in projects with high returns, exploiting cheaper labour in less developed countries, additional costs in training to get staff to behave ethically— however depends on nature of the business, can be uncovered to use price premimum or niche markets
conflict with existing policies- create conflict between divisions- staff may percieve implementation as autocratic and move towards centralisation, it may be difficult to implement into everyday activites
pople have different views on what is ethical and views change overtime
