Ethics, Ethical dilemma AND SOCIAL RESPONSIBILITY

1. ETHICS , ETHICAL DILEMMA
AND SOCIAL
RESPONSIBILITY

2. WHAT IS ETHICS ?
It is defined as the set of moral principles that distinguished what is right
from what is wrong
What is ethics and business ?
Ethics is concerned with right and wrong and how conduct should be
judged to be good or bad. It is about how we should live our lives and, in
particular, how we should behave towards other people. Business life is a
fruitful source of ethical dilemmas because its whole purpose is material
gain, the making of profit. Success in business requires a constant, avid
search for potential advantage over others and business people are under
pressure to do whatever yields such advantage.

3. APPROACHES TO UNDERSTAND ETHICS
 Non cognitivism , ethical relativism and intuitionism
Moral statements arise from the culture belief and emotion of speaker. The
view that right and wrong are cultural determined is called ethical relativism
or moral relativism . This is clearly a matter of significance in the context of
international business
 Cognitivism
Cognitivism approaches to ethics are built on the principle that objective ,
universally applicable moral truth exist and can be known. Law and religion in
relation to ethics

4. APPROACHES TO UNDERSTAND
ETHICS (CONT’D
a) Religions are universally applicable principles but they are not reliable
guides to ethical conduct since they differ so much .
b) Cognitivist ethics and law can be seen as parallel and connected systems of rules
for regulating conduct . Ethics and laws are not the same thing . The law must be
certain and therefore find it difficult to deal with problems of conduct that are
subject to opinion and debate .
 Consequentialist ethics : utilitarianism
This approach to ethics is to make moral judgements about courses of action by
reference to their outcomes or consequences .
Utilitarianism can be summed up in the ‘greatest good ‘

5. APPROACHES TO UNDERSTAND
ETHICS (CONT’D
 Deontological ethics
a) Concerns with application of universal ethical principle in order to drive rules or
conducts . Deontology lays down a prior criteria by which actions maybe
judged in advance .
For Kent , moral conduct is defined by categorical imperatives. We must act in
certain ways because it is right to do so - right conduct is an end in itself .
Two formulations of the categorical imperative are :
a) Never act in a way that you would condemn in others .
b) Do not treat people simply as a means to an end .

6. APPROACHES TO UNDERSTAND
ETHICS (CONT’D
 Natural Law
It is based on the idea that a set of natural moral rules exist and we can learn
about them . It mostly deal with rights and duties . Where there is a right ,
there is also a duty respect that right
 Duty and consequences
We act in a certain way because we are obeying inflexible moral rules .If
people have absolute right that we must respect whatever the circumstances
.

7. APPROACHES TO UNDERSTAND
ETHICS (CONT’D
 Virtue ethics
This approach consists of pursuing a harmonious or virtuous life and a
rational judgement about what constitutes good . This consist of avoiding
extremes of any kind .

8. ETHICAL DILEMMAS
Various approaches to ethics and conflicting views of business responsibility can
create ethical dilemmas for managers. This can impact the development of policy
and unavailability of guidance from more senior people
 Dealing with unpleasantly authoritarian governments can be supported on the
grounds that it contributes to economic growth and prosperity and all the benefits
they bring .
 Honesty in advertising is an important problem . Creating the impression that
purchasing a particular product will enhance the happiness .

9. ETHICAL DILEMMAS (CONT’D
• Dealing with employees are colored by the opposing views of corporate
responsibility and individual rights .
• Payments by companies to officials who have power to help or hinder the payers .
In the ethics of corporate conduct , Clarence Walton discusses the line distinctions
which exist in this area .
a) Extortion
b) Bribery
c) Grease money
d) Gifts

10. THE SCOPE OF CORPORATE ETHICS
Corporate ethics may be considered in three contexts .
• the organization’s interaction with national and international society
• The effects of the organization’s routine operations
• The behavior of individual members of staff
Corporate ethical codes
The organization often publish corporate codes of ethical standards . However , care
must be taken over such a document .

11. THE SCOPE OF CORPORATE ETHICS
(CONT’D
a) It should not be over prescriptive or over detailed , since the encourages a
legalistic approach to interpretation and a desire to seek loopholes in order to
justify previously chosen courses of action
b) It will only have influence if senior management adhere to it consistently in their
own decisions and actions
Ethical codes and policies on behavior can , of course , be linked to and summarized
in the mission statement

12. SOCIAL RESPONSIBILITY :
There is a fundamental split of views about the organisation’s relationship
with its stakeholders and the nature of corporate responsibility.
Stakeholders : It is a group or individuals whose interests
are directly affected by the activities of a firm or organisation.

13. Stakeholders Objectives
Employees and managers
•Job security
•Job satisfaction
•Career development &relevant
training
Customers
•Certain quality and reasonable price
•Certain no. of years
Suppliers
•Regular order in return for reliable
delivery and good service.
Shareholders •Long term wealth
Stock holders
•Payment of interest due
•Maintain value of security
Society as a whole
•Control pollution
•Financial assistance to charities, sports

14. STAKEHOLDER RISKS
Stakeholder Interests to defend Response to risk
Internal
Managers and employees • Jobs / Careers • Pursuits of systems goals rather
than shareholder interest
• Money • Industrial action
• Promotion • Negative power to impede
implementation
• Benefits • Refusal to relocate
• Satisfaction • resignation

15. Stakeholders Interest to defend Respond to risk
Connected
Shareholders • Increase in shareholder wealth
measured by profitability , P/E
ratios , market capitalization ,
dividends and yield
• Risk
• Sell share or replace
management
Bankers • Security of loan
• Adherence to loan
agreements
• Denial of credit
• Higher interest charges
• receivership
Suppliers • Profitable sales
• Payment for goods
• Long – term relationship
• Refusal of credit
• Court action
• Wind down relationship
Customers • Goods as promised
• Future benefits
• Buy elsewhere
• Complain
• Sue

16. Stakeholders Interest to defend Response to risk
External
Government • Jobs , training , tax • Tax increases
• Regulation
• Legal action
Interest / pressure groups • Pollution
• Rights
• Other
• Publicity
• Direct action
• Sabotage
• Pressure on government

17. STAKEHOLDER THEORY:
• Strong view- Each stakeholder in the business has a legitimate claim on
management action. Management’s job is to balance stakeholder demand.
• Weak view-Satisfying stakeholders such as customers is a good thing –but
only because it enables the business to satisfy the primary purpose , the
long term growth in owner wealth.

18. INTERNAL AND EXTERNAL
COALITIONS
External coalition Internal coalition
Owners
Associates
Employee association
Public
The chief executive
Line managers
Operators
Support staff
Ideology

19. CHOICES TO THEM:
1. Loyalty - They can do as they are told.
2. Exit - For example by selling their shares, or getting a new job
3. Voice - They can stay and try to change the system.
Existing structures and systems can channel stakeholder influence:
1. Location of power
2. Conduits of information
3. Limit choices
4. Embody culture

20. CORPORATE SOCIAL
RESPONSIBILITY:
The extent to which an organisation recognises obligations to society in
general is as much subject to debate as its relationships with stakeholder
groups.
Corporate governance: It is the conduct of the organisation’s senior
officers. Abuses have led to a range of measures to improve corporate
governance. Non executive directors have a particular role to play.