Course : Business Ethics

Effective Period: September 2018

Business Ethics, The Changing

Environment, And Stakeholder
Management

Session 1
 Acknowledgement

These slides have been adapted from:

Weiss, J.W (2014). Business Ethics: A stakeholder

and Issues Management Approach. Sixth Edition
ISBN: 9781626561403

Chapter 1
 Learning Outcomes

After studying this chapter, the students should

be able to define and explain:
• Business ethics
• Example of ethics in business practices
• Level of ethical analysis
• Five Myths about Business Ethics
• The reason using ethical in Business
 Recent Examples of Ethical Events
in Corporate America

• Subprime lending crisis

• Scandals
– Enron
– Tyco
– WorldCom, etc.
• Excessive CEO pay and relative firm
performance
• Sarbanes-Oxley Act of 2002
• Outsourcing trends
Figure 1.1: Environmental Dimensions
 Economic Factors

• Increasingly global context for trade,

markets, resources
• Business expansion, product expansion
• Stock & bond market volatility and
interdependency
• The effects of the European Union
(currency exchange, negotiating power,
etc.)
• The rise of China and India
 Technological Environment

• Internet and telecommunication

innovations
• Change in jobs, financial transactions,
market operations
• Change in business best-practices
• Integration of supply chains
• Access to information

• What privacy and surveillance issues arise

for employers?
 Political Environment

• Rise of global terrorism

• Change in international coalitions
(NATO, EU)
• Increased awareness of issues via
electronic technology
• Fall of communism/Soviet Union
 Governmental and Regulatory
Environment

• Constantly changing/updating laws

and procedures
– Sarbanes-Oxley, 2002
– 2004 Federal Sentencing Guidelines
• Changing standards for products,
processes (e.g., FDA approval)
• Judicial actions (e.g., Microsoft)
against anticompetitive practices
 Legal Environment

• Competing rights (Patriot Act)

• Consumer protection (tobacco, gun
control, Firestone tires)
• Corporate copyright protection
(Napster vs. recording industry)
 Demographic Environment

• Globalization
• Workforce diversity and
accompanying issues
– Sexual harassment
– Discrimination
• Downsizing and outsourcing work
force
• Aging workforce
Figure 1.2: Stakeholders
 Secondary Stakeholders

• Local community groups

• Special Interest groups
• Consumer groups
• Environmental groups
• Media
• Society-at-large
• American Civil Liberties groups
• ETC

• Should managers pay attention to the needs of these

groups? What priority should they have?
 Stakeholder Management
Approach

• Six Steps to developing win/win strategies:

1. Identifying and prioritizing issues, threats, or

opportunities
2. Mapping who the stakeholders are
3. Identifying their stakes, interests, and power sources
4. Showing who the members of coalitions are or may
become
5. Showing what each stakeholder’s ethics are and
should be
6. Developing collaborative strategies and dialogue
from a higher ground perspective to move plans and
interactions to the desired closure for all parties
 What is Business Ethics?

Laura Nash has defined business ethics as “the

study of how personal moral norms apply to
the activities and goals of commercial
enterprise,” as dealing with three basic
areas of managerial decision making:
1. Choices about what the laws should be and
whether to follow them
2. Choices about economic and social issues
outside the domain of law
3. Choices about the priority of self-interest over
the company’s interests
 Unethical Business Practices of
Employees

• Showing respect to those who act

unethically
• Abusive or intimidating behavior
• Misrepresentation of hours worked
• Lying
• Withholding information

• Context issues:
– Companies in transition (mergers,
downsizing)
– Younger employees and employees
with lower tenure in the organization
 Ethics and compliance Programs

• Employees believe that nothing will be done if they report

unethical behavior, or they are unsatisfied with the actions
taken
• Only 25% of employees:
– are willing to seek advice about ethics questions that
arise;
– feel they are prepared to handle situations that could
lead to misconduct;
– indicate that they are rewarded for ethical behavior;
– report that their company does not reward success
obtained through
– questionable means;
– say they feel positively about their company

• Employees feel that reports will not be held confidentially

 Why does business ethics
matter?

• Financially and Economically

• Relationships and Reputation
• Morale and Productivity
• Culture and Communication
• Integrity and the Common
Good
 Figure 1.3:
Five Levels of Business Ethics
 Key Questions if Faced with an
Ethical Dilemma

• What are my core values and beliefs?

• What are the core values and beliefs of my
organization?
• Whose values, beliefs, and interests may be at
risk in this decision? Why?
• Who will be harmed or helped by my decision or
by the decision of my organization?
• How will my own and my organization’s core
values and beliefs be affected or changed by this
decision?
• How will I or my organization be affected or by
the decision?
 Figure 1.5:
5 Business Ethics Myths
 Why Use Ethical Reasoning In
Business?

• Laws are insufficient

• Free-market and regulated-
market mechanisms are
insufficient
• Complex moral problems require
an intuitive or learned
understanding and concern for
fairness, justice, and due process
to people, groups, and
communities
 Kohlberg’s Levels and Stages Of Moral
Development

– Level 1: Pre-conventional level (self-

orientation)
• Stage 1: Punishment
• Stage 2: Reward seeking
– Level 2: Conventional level (others
orientation)
• Stage 3: Good person
• Stage 4: Law and order
– Level 3: Post-conventional level
(universal, humankind orientation)
• Stage 5: Social contract
• Stage 6: Universal ethical principles
 Project Assignment

In this course student must develop group (max 5-6 members) and
conducting a project with the following task;
1. Develop a pilot social project where you demonstrate your own
model of "Corporate Social Responsibility" or "Creating Shared
Value" scheme for a client from a list of companies that will be
provided by the lecturer.
2. The pilot project must include: stakeholder analysis (internal and
external), ethical assessment and justification, as well as, business
justification (depends on the type of CSR - ethical, altruist, or
strategic). You are expected to collect information from the field.
3. During 12 &/or 13th class meetings, you will present your pilot
project in front of the class wherein each group will be given 20
minutes for the presentation (all members must speak) in front of
the class. You are encouraged to use multimedia (video, pictures,
etc) to complement the presentation. Client companies may or
may not attend the presentation.
 Project Assignment Cont’
4. Write a group report (±3000 words, Font: Arial, 11 pts, 1.5 spacing) to elaborate your
project. You are expected to submit the final report at least at the end of the courses.
Please refer to the scoring rubric to see how the report will be assessed. The expected
outline of the report:
– Executive summary
– Introduction
• Background of the company (industry, market, products, etc)
• Existing social programs
• Opportunity and Challenges (ethical issues - if any)
– Research methodology
• Data analysis method(s)
• Data collection
– The Project
• Stakeholder Analysis
• The Social Project
• Business and Ethical Justification
– Conclusion & Recommendation
– Reference
– Appendices (if applicable)
 Project Assignment Cont’

5. Make sure that all group members participate actively in the

project.

6. Start to collect your data as early as possible since study-load

often increases exponentially toward the end of term.

7. Use APA referencing style.