Topic 1: Ethics and Business

Learning Outcomes
1. Able to explain the reasons as to why positive business ethics
is important in the business environment.
2. Able to explain the nature of business ethics as an academic
discipline.
3. Able to distinguish the ethics of personal integrity from the
ethics of social responsibility.
4. Able to distinguish ethical norms and values from other
business-related norms and values.
5. Able to distinguish legal responsibilities from ethical
responsibilities.

Why is ethics important in

the business environment?
1. Unethical behavior not only creates legal risks for a business, it
creates financial and marketing risks as well.
2. Managing these risks requires managers and executives to remain
vigilant about their companys ethics.
3. A firms ethical reputation can provide a competitive advantage,
or disadvantage, in the marketplace and with customers,
suppliers, and employees.
4. Managing ethically can also pay significant dividends in
organizational structure and efficiency.
5. Trust, loyalty, commitment, creativity, and initiative are just some
of the organizational benefits that are more likely to flourish within

The nature of business ethics

Business and marketing activities and/vs. ethical
concerns (moral values)
1. Excessive intake of food!
2. Excessive personal borrowing!
3. Subliminal advertising!
4. Cost cutting and saving!
How could the relationship be managed!

Definitions
Ethics (p.593) = ethos. Refers to those values, norms,
beliefs, and expectations that determine how people
within a culture live and act.
Values (p.598). Those beliefs that incline us to act or
choose in one way rather than another.
Ethical values (p.593). Those properties of life that
contribute to human well-being and life well lived, such
as happiness, respect, dignity, integrity, freedom,

3. Ethics of personal integrity and

ethics of social responsibility
Business Ethics as Personal Integrity
- Behavior are influenced by social context.
- Personal ethics have impact on perception of trust and
creditability.
Business Ethics as Social Responsibility
- Businesses are enacting corporate environment.
- Business ethics impact on long term corporate
reputation.

How do we live?
As an individual; As a member of a society; As an
employee in a business; As a leader in society; As a
business leader; As a corporation; As an organization.
Our action (behaviour) speak of our ethics.
So our actions in conducting our business speak of our
business ethics.

4. Ethical norms and values versus other

business-related norms and values
Ethical norms and values.
The norms refers to standards of appropriate and proper (or normal)
behavior. But what are they?
- What did you do in the recent big flood? What people would normally do?
Business-related norms and values.
- What did corporations do in the recent big flood? What companies would
normally do?
-

What could have been done? What should have been done?

Norms and values

Norms
- Norm establish the guidelines or standards for determining
what we should do, how we should act, what type of person
we should be?
- Norm appeal to certain values that would be promoted or
attained by acting in a certain way.
- Normative disciplines presuppose some underlying values.
Values
- Values are the underlying beliefs that incline us to act or
to decide one way rather than another.
- Ethical values serve the ends of human well-being.

5. Legal responsibilities and

ethical responsibilities
- The law provides an important guide to ethical decision-making. But legal
norms and ethical norms are not identical nor do they always agree.
- Some actions are not legally required though they may be ethically warranted
(and meet ethical standards).
- Some actions that may be legally permitted fail many ethical standards.
- Would a business fulfills its social responsibility simply by obeying the law?
- Individual businesses may decide to go beyond the legal minimum, but these
choices are voluntary and a matter of corporate philanthropy and charity.

6. Ethical responsibilities go
beyond legal compliance
Could you cite an example of a law in Malaysia?
Perhaps on treatment of employees, customers
etc.
Could you cite examples of actions taken by
businesses in Malaysia (their behaviours) in
responding to this law?

7. Ethical decision making is

a form of practical reasoning.
Ethical decision-making process (p.593).
- A rational process.
- Requires a persuasive and rational justification.
- Goes through a logical process of decision making.
- Takes into account of facts, alternatives, consequences to
stake holders, and ethical principles.

Rizals caf.
Rizal caf is open for business! It targets neighbourhood shopping centres.
Its layout offers a separate area for men and women. It serves only local
coffee it buys local coffee beans directly from local farmers and roasts
them in-house. It does offer local tea and other hot drinks as well as fruit
juices. But it shuns carbonated drinks. Its a non-smoking caf and it
prohibits mobile phone conversation in the caf. It does not offer free wi-fi.
It has a reading corner and a stock of books for customers to borrow
mainly novels. Its menu comprises, arguably, health products - low fat and
low sugar. It avoids serving products made from refined flour, rice and
sugar. Once in a month, it organises a day for free advices given by
professionals: medical doctors, gym instructors, lawyers, nutritionists, and
the like. It hires just about anyone who are willing to undergo a month
training and has passed its training programme.

Questions
1. Have the management of Rizal caf made ethical
decisions?
2. What are the facts?
3. What are the issues?
4. What are the alternatives?
5. Who are the stakeholders?
6. What are the consequences of various
actions/behaviours to stake holders?