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nBusiness ethics involves
applying general ethical principles and standards to behavior in business situations
nEthical principles in business are
not different from ethical principles in general
Business actions are
- general ethical standards of society
- by a set of rules businesspeople
- apply to their own conduct
The litmus test of a company’s code of ethics is
the extent to which it is embraced in crafting strategy and in operating the business day to day!
Three schools of thought regarding extent
to which ethical standards can be applied
- Ethical Universalism
- Ethical Relativism
- Integrative Social Contracts Theory
- standards of what is ethical and
- what is unethical resonate with peoples
- of most societies regardless of
- more/less emphasis on some values than others
- different standards of right and wrong
- different social mores
- and behavioral norms
Integrative Social Contracts Theory
nthe ethical standards a company should try to uphold are governed by both
- limited number of universal ethical principles that are widely recognized as
- putting legitimate ethical boundaries on actions and behavior in all situations
- circumstances of local cultures,
- traditions, and shared values that further prescribe what constitutes
- permissible behavior and
Three Categories of Management Morality
nEvidence indicates a sizable majority of managers
Amoral or Immoral
What Are the Drivers of Unethical Strategies and Business Behavior?
Large numbers of immoral and amoral business people
- Overzealous pursuit of personal gain,
- wealth, and other selfish interests
- Heavy pressures on company managers
- to meet or beat earnings targets
- Company cultures that place profits and
- good performance ahead of ethical behavior
The Business Costs of Ethical Failures
- Level 1
- government fines, civil, costs to share holders
- Level 2
- legal, providing education, corrective actions, admin
- Level 3
- customer defections, loss of reputation, employee moral
Approaches to Managing a Company’s Ethical Conduct
Unconcerned or Nonissue Approach
Damage Control Approach
Ethical Culture Approach
A company’s social responsibility strategy consists
- actions to improve the well-being of all its stakeholder and to be a good
- corporate citizen its contributions of
Ethical principles in business
are not materially different from ethical principles in general and have to be judged in the context of society's standards of right and wrong, not by a special set of rules that business people decide to apply to their own conduct.
According to the school of ethical universalism
The most important concepts what is right and what is wrong are universal and transcend culture, society, and religion
If one adopts the thinking of the school of ethical relativism, then
there are multiple sets of ethical standards because what is ethical or unethical depends on local customs and social mores and can vary from one culture or nation to another.
aying bribes and kickbacks to expedite winning orders from customers or to facilitate business transactions
is a thorny ethical issue for multinational companies because in some countries such payments are considered unethical whereas in other countries the payment of bribes and kickbacks is very much in accord with local customs and social mores (which makes such payments "ethically acceptable" according to the school of ethical relativism).
According to integrated social contracts theory,
universal ethical principles based on the collective views of multiple societies form a social contract that all individuals and organizations have a duty to observe in all situations.
Unethical managerial behavior tends to be driven by such factors as
overzealous or obsessive pursuit of personal gain, wealth, and other selfish interests; a company culture that puts the profitability and good business performance ahead of ethical behavior; and heavy pressures on company managers to meet or beat performance targets.
The business case for an ethical strategy
emphasizes that pursuing unethical strategies not only damages a company's reputation but can also have costly consequences that are wide ranging.
Which one of the following is not a key trait of the ethical culture approach to managing ethical conduct?
The ethical culture approach is especially well-suited for companies that favor a light approach to ethics compliance.
The notion of social responsibility as it applies to businesses concerns
a company's duty to operate in an honorable manner, provide good working conditions for employees, be a good steward of the environment, and actively work to better the quality of life in the local communities where it operates and in society at large.
An environmental sustainability strategy consists of a company's deliberate actions to
meet the current needs of customers, suppliers, shareholders, employees and other stakeholders in a manner that protects the environment, provides for the longevity of natural resources, maintains ecological support systems for future generations, and guards against ultimate endangerment of the planet.
Management's handling of the strategy implementation/execution process can be considered successful
f and when the company meets or beats its performance targets and shows good progress in achieving its strategic vision for the company.
Which of the following is not one of the principal managerial components associated with implementing and executing strateg
Reducing the layers of management to a bare minimum and making sure employees are empowered
The three organization-building actions paramount in the task of trying to execute a company's strategy are
taffing the organization, building and strengthening core competitive and competitive capabilities, and structuring the organization and work effort.
The overriding aim in building a management team should be to
assemble a critical mass of talented managers who can function as agents of change, work well together as a team, and produce organizational results that are dramatically better than what a few star managers acting individually can achieve.
Employee training and retraining
becomes particularly significant in a company's organization-building effort if it opts to decentralize decision-making and empower its employees—empowered employees have to be trained to make the correct decision
Which one of the following is not part of organizing the work effort in ways that promote successful strategy execution?
Forming a special department or work unit to lead the company's effort to capture strategic and resource fits
Which one of the following falsely describes a centralized approach to decision-making?
Hierarchical command-and-control structures speed an organization's responses to changing conditions because top-level managers are in a position to quickly review the situation and make a final decision.
The basic tenets of a decentralized organizational structure include the thesis that
a company that draws on the combined intellectual capital of all its people can outperform a command-and-control company and decision-making authority should be put in the hands of the people closest to and most familiar with the situation, and these people should be trained to exercise good judgment.
One of the big challenges of organizing and managing a work environment where employees are empowered to make decisions in their area of responsibility is
how to exercise control over the actions and decisions of empowered employees so that the business is not put at risk while trying to capture the benefits of employee empowerment.