List some examples of ethical businesses and unethical businesses.

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Presentation transcript:

List some examples of ethical businesses and unethical businesses.

Introduction to business ethics Learning objective: To know what is meant by corporate social responsibility To understand why businesses may take these on To consider whether it is unethical for a business to take on corporate social responsibility in the hope of increasing profits. Corporate social responsibility Key Words

Shareholder – someone who has invested money in a business in return for a share of the profits. “So the question is, do corporate executives, provided they stay within the law, have responsibilities in their business activities other than to make as much money for their shareholders as possible? Any my answer to that is, no they do not.” (Milton Friedman, 1974)

What is Business Ethics? The ethical relationship between businesses and stakeholders. The impact of globalisation on the environment and society in general. The issue of social responsibility for the modern business world.

Main issue: the purpose of business Is it all about making money – unbridled capitalism? Or do businesses have moral responsibilities towards their stakeholders?

The industrial revolution, unchecked, led to the employment of millions in unhygienic conditions, dangerous machinery, long hours, no holidays, pollution and very low wages. Worker had no rights. Is this acceptable? Since then, what has been put in place to improve conditions for workers?

What other considerations, aside from profit, should businesses have? Use materials from sustainable sources? Not testing products on animals? Offering staff a better wage? Corporate social responsibility is the concept that businesses should be accountable for the impacts they have on people and the environment.

“So the question is, do corporate executives, provided they stay within the law, have responsibilities in their business activates other than to make as much money for their shareholders as possible? Any my answer to that is, no they do not.” (Milton Friedman, 1974) For Friedman, it is actually unethical to do anything else. If you use money to fund corporate social responsibility, it is like stealing from shareholders. How far do you agree?

Why do businesses take on corporate social responsibility? Mind map some ideas. Improve image with customers? Attract certain shareholders Retain employees? Avoid strict government regulations

Stakeholder – An individual or group which either Is harmed by or benefits from the corporation Or - whose rights can be violated, or have to be respected, by the corporation.

For Cadburys, what are all the groups/people who have some stake in that business (i.e. Who are affected in some way by it)? Mind map

Discuss each group on your mind map – what is the moral responsibility that Cadburys has to each of those groups?

Stakeholders? Share holders Customers Management Local The Employees Community Employees The Business Government Environment Suppliers

Businesses’ responsibility to their stakeholders Shareholders Generate profits and pay dividends Customers provide good quality products at reasonable prices. Safety, honesty, decency and truthfulness Employees health and safety at work, security, fair pay Suppliers pay on time, pay fair rates for the work done, provide element of security Local Community provide employment, safe working environment, minimise pollution and negative externalities – provide external benefits? Government abide by the law, pay taxes, abide by regulations Management their aims versus those of the organisation as a whole Environment limit pollution, congestion, environmental degradation, development, etc.

Should businesses be ethical? Economist Milton Friedman. According to Friedman, corporate officers have no obligation to support such social causes as hiring the hard-core unemployed to reduce poverty, or reducing pollution beyond that mandated by law. Their sole task is to maximize profit for the company, subject to the limits of law and "rules of the game" that ensure "open and free competition without deception or fraud."

Should businesses be ethical? Friedman advances two main arguments for this position. First, corporate executives and directors are not qualified to do anything other than maximize profit. Business people are expert at making money, not at making social policy. They lack the perspective and training to address social issues.

Should businesses be ethical? Second, and more fundamentally, corporate officers have no right to do anything other than maximize profit. If they invest company funds to train the chronically unemployed or reduce emissions below legal limits, they in effect levy a "tax" on the company's owners, employees and customers in order to accomplish a social purpose. But they have no right to spend other people's money on social welfare projects.

Should businesses be ethical? Milton Friedman on self-interest and the profit motive

How would a utilitarian and a Kantian ethicist respond to the issue of corporate social responsibility?

Kantian Business Ethics http://www.youtube.com/watch?v=RZr36ifwF2I

Utilitarian Business Ethics http://www.youtube.com/watch?v=w34zmFb4Pwk