Ethics in Business

Question 1

Why is ethics important in business?

Answer 1

The key to governance for sustainability is determined by the extent of ethical consciousness

The business world has control of the world’s resources and makes decisions every day that affect those resources and the lives of millions of people, so it is imperative that those who operate within the business world have an understanding of various ethical philosophie

Question 2

What are the 2 ethical theories?

Answer 2

1. Teleological Theories

2. Deontological Theories

Question 3

Teleological Theories

Answer 3

Concerned with the consequences of decisions

An accountant or manager making decisions that would optimise the greatest possible good for the greatest number of people is following a teleological approach to decision making

Question 4

Two common forms of Teleological

Answer 4

i. Utilitarianism

ii. Ethical Egoism

Question 5

Utilitarianism

Answer 5

“All individuals maximising their utility will lead to society’s utility being maximised also”

Question 6

Jeremy Bentham’s theory:

Answer 6

□ Happiness is defined as a utility

□ Society’s utility is the sum of each individual’s utility

Question 7

John Stuart Mill advanced this theory:

Answer 7

□ The theory that maximisation of an individuals utility should not be at the expense of the group or community

BUT
□ That behaviour should be based on what provides the greatest good to the greatest number

□ The idea is to maximise the utility of society as a whole rather than of individuals

Question 8

Ethical Egoism

Answer 8

“The individual decision maker decides what is best for himself or herself”

□ this type of thinking underlies the assumptions in agency theory and is relevant to modern corporate governance

Question 9

Deontological Theories

Answer 9

○ Concerned with the action or decision itself

Accountants or managers taking actions based on their sense of duty would subscribe to this approach - that duty may be based on a set of rules or professional guidelines

Question 10

Theory of Kantianism

Answer 10

○ Theory proposed by Kant that an action is morally right if it is motivated by a good will that stems from a sense of duty

Question 11

Categorical Imperative

Answer 11

how Kant proposes that one determines if an act is done in good will

Question 12

Two definitions of categorical imperative

Answer 12

1) I ought never to act except in such a way that I can also will that my maxim should become a universal law
- Similar to the ‘do unto others as you would have them do unto you’ - It is not ethical if; if everyone did the same, would it be acceptable? would humanity be okay?
2) Act in such a way that you always treat humanity…never simply as a means, but always at the same time as an end
- You should not take advantage of people to achieve a certain end