Ethics in the World of Business

Topic 1
 What is ethics?

• The standards of moral behaviour, i.e.

behaviour that is accepted by society as
right versus wrong ( Nickels,2005).
 Personal Ethics

• Ethics begins with each of us.

• It is related to our upbringing which is

influenced by socialization, culture and
religion.
 Conduct of Business
• Ethical issues are not only faced by managers but by all
people, includes employees, consumers and members of
the public.

• Corporate activities affect all, and so conduct of

business is a matter of concern for everyone with a
stake in ethical management.

• Ethical issues in business are closely tied up to

important matters of public policy, to legislative and
judicial processes of government.
 Business Decision Making
• In making decision, business people most of the time are
faced with questions about ethics in their relationship
with customers, employees and members of society.

• If ethically correct course of action is clear, they will act

accordingly.

• Exception occurs when there is uncertainty about ethical

obligations in particular situations or when
considerations of ethics conflict with demands of business.
 Cont…
• Business people can rely to some extent on the everyday rules
of right conduct. However, business activity also has some
features that limit the applicability of our normal ethical views.

• What we ought to do depends to some extent on situation and

roles we occupy.

• Slightly different rules or codes of ethics are needed to guide us

in different departments of lives.
Levels of Decision Making
Three distinctive levels:
1. Individual
2. Organization
3. Business system

Identifying the appropriate level for a decision

important, because an ethical problem may
have no solution on the level it is approached.
 Three Points of View
• Business decision making involves many factors, ethics
is only one.

• To understand the relevancy of ethics in business

conduct; three viewpoints should be understood :

– The economic – thinking about business benefits

– The legal – thinking about administrative decision
– The moral – thinking about what is the best thing to
do
Features of Moral Point of View
1. Willingness to seek out and act on reasons
2. Requires us to be impartial – must regard
the interests of everyone including
ourselves as equally worthy of
consideration and equal weight in
deciding what to do.
 An Integrated Approach
Decision making in business involves an
integration of all three points of view.

Business ethics is the attempt to think clearly

and deeply about the ethical issues in
business and to arrive at conclusions that
are supported by the strongest possible
arguments.
 Ethics + Economics + Law
Both economics and law are critical to
business decision making and it would be
helpful to observe ethical standards as
means to the end of profit making.
 3 check questions when faced by an
ethical dilemma in business decisions

1) Is it legal?
Am I violating any law or company policy?

2) Is it balanced?
Am I acting fairly?

3) How will it make me feel about myself?

Will I be happy after taking such actions?
 Case Study 1: The Job Dilemma
• You have a long standing consulting relationship with a large
consumer products company. This company represents 50% of your
consulting revenues and is clearly your most important client.

The CEO has called to ask you to commit a significant amount of

time over the next couple if months to assist with a large merger
project. The company is merging with a large conglomerate whose
primary business is the sale and distribution of tobacco products.

The CEO is relying on you to assist in facilitating a smooth

integration of the two companies. You promised yourself that, since
your father died of lung cancer, you would never work for a tobacco
company.

Is there a way that you can accept the consulting assignment and
will still keep your promise to yourself? How will you handle this if
you decide that you cannot work for the tobacco company?
 Short case 2 : Time Crunch
Jenny has been working extra hours at her part time
job in a clothing store. The store needs her help
because the Mega Sale rush is starting to promote sales
for the coming Hari Raya festival.

She also needs the money to pay next semester’s

tuition and to fix her car so that she can drive home for
the long semester holidays. The coming holiday season
also means the end of the semester, and unfortunately,
final exams. Jenny simply doesn’t have time to study
for all of her exams and also work the extra hours she
needs.
 Case Study - Time Crunch (cont…)

Something has to give, and she decides to fake being sick on the
day of her biology exam so that she can take the make up exam the
next week and have more time to study.

She knows that it won’t be hard to get a note from the busy
school health clinic saying that she’s too sick to take the exam. Her
friend Debbie works there and can “ borrow “ a page of their
letterhead stationery.

“ Even if I have to lie, it’s fair that I get extra time to study, “
Jenny tells herself,” because I have to work, and I can’t study all the
time like students who get mommy and daddy to pay for
everything.”
 Case Study - Time Crunch (cont…)

1. Jenny seems to see her lie as a simple case of manipulating

an unfair system. Is there anything wrong with
manipulating the system? Is her strategy fair to the other
students in her biology class?

2. Jenny seems to justify her behaviour with a vague idea

that “unfair” differences between people that have
nothing to do with effort or intelligence such as wealth,
should not be reflected in their grades.

What do you think about her claim that she deserves

more time to study than other students because they don’t
have to earn money?