Ethics - 1 Key Definitions  Moral: “relating to principles of right and wrong”  Ethics: “the discipline of dealing with what is good and bad and with moral duty and obligation”

Ethics - 2 Study of Ethics  Process of determining what is and is not a reasonable standard of moral conduct.  Process of problem-solving to resolve situations in which there is actual or potential harm to an individual or group.

Ethics - 3 BUSINESS ETHICS  The study of morality as applied to business  Aims at developing reasonable moral standards for business conduct

Ethics - 4 STAGES OF MORAL DEVELOPMENT Lawrence Kohlberg  Preconventional – Self 1.Obey or Pay 2.Self-Satisfaction  Conventional – Group 3.Group Approval 4.Law and Order  Postconventional – Universe 5. Standards of Society 6. Logical Moral Principles

Ethics - 5 BUSINESS ETHICS Levels of Analysis  Individual –Role of individual –Impact on individual  Organizational –Impact of organization –Decisions, policies, structures  Systemic –Social systems –Economic and political institutions

Ethics - 6 Stakeholder Analysis Any individual, group or item that can affect or is affected by an organization’s decisions. Firm Investors Competitors Employees Media Labor Unions Government Suppliers Environmentalists Creditors Financial Community

Ethics - 7 APPROACHES TO MORAL REASONING  Utilitarianism – Examines net welfare produced for all stakeholders  Rights – Emphasizes rights and duties of stakeholders  Justice – Focuses on fair processes and equitable distribution of the benefits and burdens imposed by an action or policy on stakeholders

Ethics - 8 UTILIARIANISM CRITERIA “Greatest Good for the Greatest Number” 1.Identify alternatives 2.Determine costs and benefits of each alternative for each primary stakeholder 3.Select alternative that produces greatest net good for greatest number of stakeholders Which one do I choose???

Ethics - 9 RIGHTS APPROACH “Action is correct if it respects the rights of stakeholders affected by the action”  Moral entitlements by virtue of being human  Rights independent of being members of social institutions

Ethics - 10 RIGHTS APPROACH Moral Duties  Duty Not to Interfere  Duty to Protect Rights

Ethics - 11 JUSTICE APPROACH  Equal Treatment –Stakeholders treated the same except when they differ in relevant ways  Consistent Administration of Rules –Policies and procedures, job descriptions, salary negotiations should be administered fairly and evenhandedly  Restitution –People should be accountable for injustices they commit except for those which are uncontrollable

Ethics - 12 LOGICAL APPROACH Moral Decision Making  What are the facts?  What are the ethical issues?  Who are the primary stakeholders?  What are the alternatives?  What are the practical constraints?  What actions should be taken?

Ethics - 13 MISCONCEPTIONS ABOUT BUSINESS ETHICS  Business ethics = an oxymoron  Proper ethical analysis = clear cut solutions  Ethics = Legal compliance  Ethical analysis = an “ivory tower” approach  Good ethics = good “business”