Chapter 2 Flashcards
Ethics
> The study of right and wrong and of the morality of the choices individuals make
An ethical decision is one that is “right” according to some standards of behavior
business ethics
The application of moral standards to business situations
Ethical issues
Fairness and honesty
- Business people are expected to refrain from knowingly deceiving, misrepresenting, or intimidating others
Organisational relationships
- A business person should put the welfare of others and that of the organisation above his or her own personal welfare
>What about reciprocity?
Conflict of interest
- Issues arise when a businessperson takes advantage of a situation for personal gain rather than for the employer’s interest
>Can employees receive gifts from suppliers?
>E.g. Car salesperson
Communications
- False, misleading, or deceptive
Factors affecting ethical behavior
- Individual
> Individual knowledge of an issue
> Personal values
> Personal goals - Social
> Cultural norms
> Coworkers
> Significant others
> Use of the Internet - Opportunity
> Presence of opportunity
> Ethical codes
> Enforcement
Encouraging ethical behavior
=> Trade association guidelines
=> Individual companies
> Code of ethics
A written guide to acceptable and ethical behavior as defined by an organisation; it outlines policies, standards, and punishments for violations.
> Organisational environment
- Management direction.
- Employee training.
- Whistle blowing.
Ethics in South Africa
- No legislation.
- The King report (currently King IV TM).
- The Ethics Institute.
- The South African Business Ethics Survey 2019.
Therefore, we must rely on ethical codes of companies
Social responsibility - SR
The recognition that business activities have an impact on society and the consideration of that impact in business decision making.
=>SR costs money but is also good business.
=> How socially responsible a firm acts may affect the decisions of customers to do or continue to do business with the firm.
Two views of SR
Economic model
> Society will benefit most when business is left alone to produce
and market profitable products that society needs.
> Managerial attitude: SR is someone else’s job; the firm’s primary
responsibility is to make a profit for its shareholders.
> Is paying tax not enough?
> SR is the problem of government, environmental groups, and
charitable foundations.
Socioeconomic model
> Business should emphasize not only profits but also the impact
of its decisions on society.
> The corporation is a creation of society and it must act as any
responsible citizen would.
> Firms take pride in their social responsibility obligations.
> It is in the best interest of firms to take the initiative in social
responsibility matters.
Social responsibility - pro/con
Pros
> Because business is part of our society, it cannot ignore social
issues.
> Business has the technical, financial, and managerial resources
needed to tackle today’s complex social issues.
> By helping resolve social issues, business can create a more
stable environment for long-term profitability.
> SR decision making by firms can prevent increased government
intervention, which would force businesses to do what they fail
to do voluntarily.
Cons
> Primarily responsible = stockholders.
> Resources (time, money, and talent) used to maximize profits.
> Social problems affect society in general, individual businesses
should not be expected to solve these problems.
> Social issues ultimately the responsibility of government
officials.
Comparison
=> Economic model primary emphasis
- Production
- Exploitation of natural resources
- Internal, market-based decisions
- Economic return (profit)
- Firm’s or manager’s interest
- Active government involvement
=> Socioeconomic model primary emphasis
- Quality of life
- Conservation of natural resources
- Market-based decisions, with some community controls
- Balance of economic return and social return
- Firm’s and community’s interests
- Minor role for government
Public responsibilities of business
Consumerism
> Consumers have rights
Public health
> Whose responsibility?
> Fast food chains and obesity?
Consumer rights - Consumer Protection Act
- Right to privacy
- Right to choose your product
- Right to fair and honest dealing
- Right to disclosure of information
- Right to fair and responsible marketing
- Right to accountability by suppliers
- Right to fair value, good quality and safety
- Right to be heard, and to be paid back
Employment practices
- Maybe SA’s biggest need?
- Such as affirmative action.
- Focusing on training programs for the hard-core unemployed.
Environmental concerns
> Pollution: water, air, land, noise (SA examples)
Does SA have legislation?
Do businesses pollute? And in SA?
Who should be held responsible for pollution?
