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Ghillyer6e PPT Ch03
Ghillyer6e PPT Ch03
Organizational
Ethics
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Learning Outcomes
• Define organizational ethics.
• Explain the respective ethical challenges facing the functional
departments of an organization.
• Discuss the position that a human resource (HR) department
should be at the center of any corporate code of ethics.
• Explain the potential ethical challenges presented by generally
accepted accounting principles (GAAP).
• Determine potential conflicts of interest within any
organizational function.
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Defining Organizational Ethics 1
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Defining Organizational Ethics 2
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Figure 3.1: Representative Company Value Chain
Sources: Michael E. Porter, Competitive Advantage: Creating and Sustaining Superior Performance (New York: Simon and Schuster, 2008);
and Arthur A. Thompson Jr., Alonzo J. I. Strickland III, and John E. Gamble. Crafting & Executing Strategy: The Quest for Competitive
Advantage: Concepts and Cases, 14th ed. (New York: McGraw-Hill, 2005), p. 99.
Copyright © 2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Ethical Challenges in Research and Development
Critical commitment to the consumer in the provision of product
quality, safety, and reliability.
• Noncompliance can lead to negative press coverage, expensive lawsuits,
and risk of bankruptcy.
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Ethical Challenges in Manufacturing
Ethical challenges inherent in arriving at a compromise.
• Supply problem while building a product based on design specifications.
• Should the delivery be delayed, or an alternative and less reliable supplier be
used?
• Will there be assurance of quality from the alternative supplier?
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Ethics in Marketing
Marketers provide products or services to customers who have
already expressed a need for and a desire to purchase those
products.
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Ethical Challenges in Marketing: Utilitarianism
versus Universal Ethics
Utilitarianism.
• Ethical choices that offer the greatest good for the
greatest number of people.
Universal ethics.
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Ethical Challenges in Marketing
Code of ethics adopted by American Marketing Association
(AMA) recommends the following:
• Do no harm.
• Foster trust.
• Improve customer confidence.
• Establish clear ethical values of honesty, responsibility, fairness, respect,
openness, and citizenship.
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Ethical Challenges in Human Resource (HR) 1
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Ethical Challenges in Human Resource (HR) 2
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Areas in Finance Function
Financial transactions: Handling flow of money through an
organization.
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Internal Auditors
According to the Institute of Internal Auditors, internal auditors
should:
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Ethical Challenges in the Finance, Accounting, and Auditing
Departments
Internal employees should not:
• Falsify documents.
• Steal money from an organization.
• Undertake any other form of fraudulent activity related to the
management of an organization’s finances.
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Generally Accepted Accounting Principles (GAAP)
• Govern the accounting profession.
• Not a set of laws and established legal precedents but a set of
standard operating procedures within the profession.
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Creative Bookkeeping Techniques 1
• Falsifying accounts.
• Underreporting income.
• Overvaluing assets.
• Taking questionable deductions.
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Creative Bookkeeping Techniques 2
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