Chapter 02 Business Ethics McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Business Ethics and Social Responsibility Ethics: The study and practice of decisions about what is good or right Ethics: The study and practice of decisions about what is good or right Business Ethics: The application of ethics to the problems and opportunities experienced by businesspeople Business Ethics: The application of ethics to the problems and opportunities experienced by businesspeople Ethical Dilemma: A problem about what a firm should do for which no clear, right decision is available Ethical Dilemma: A problem about what a firm should do for which no clear, right decision is available Social Responsibility of Business: Expectations that the community imposes on firms doing business inside its borders Social Responsibility of Business: Expectations that the community imposes on firms doing business inside its borders 2-2

The “WPH” Process of Ethical Decision Making: W—WHO (Stakeholders) Consumers Consumers Owners or Investors Owners or Investors Management Management Employees Employees Community Community Future Generations Future Generations 2-3

The “WPH” Process of Ethical Decision Making: P—PURPOSE (Values) Freedom Freedom Security Security Justice Justice Efficiency Efficiency 2-4

Primary Values and Business Ethics: Freedom To act without restriction from rules imposed by others To act without restriction from rules imposed by others To possess the capacity or resources to act as one wishes To possess the capacity or resources to act as one wishes To escape the cares and demands of this world entirely To escape the cares and demands of this world entirely 2-5

Primary Values and Business Ethics: Security To possess a large enough supply of goods and services to meet basic needs To possess a large enough supply of goods and services to meet basic needs To be safe from those wishing to interfere with your property rights To be safe from those wishing to interfere with your property rights To achieve the psychological condition of self- confidence to such an extent that risks are welcome To achieve the psychological condition of self- confidence to such an extent that risks are welcome 2-6

Primary Values and Business Ethics: Justice To receive the products of your labor To receive the products of your labor To treat all humans identically, regardless of race, class, gender, age, and sexual preferences To treat all humans identically, regardless of race, class, gender, age, and sexual preferences To provide resources in proportion to need To provide resources in proportion to need To possess anything that someone else is willing to grant you To possess anything that someone else is willing to grant you 2-7

Primary Values and Business Ethics: Efficiency To maximize the amount of wealth in society To maximize the amount of wealth in society To get the most from a particular output To get the most from a particular output To minimize costs To minimize costs 2-8

The “WPH” Process of Ethical Decision Making: H—HOW (Guidelines) Public Disclosure Public Disclosure Universalization Universalization Golden Rule Golden Rule 2-9