1. Business Ethics, The Changing Environment, And Stakeholder Management
Chapter One
Business Ethics, The Changing Environment, And Stakeholder Management

2. Recent Examples of Ethical Events in Corporate America
Subprime lending crisis
Scandals
Enron
Tyco
WorldCom, etc.
Excessive CEO pay and relative firm performance
Sarbanes-Oxley Act of 2002
Outsourcing trends

3. Figure 1.1: Environmental Dimensions

4. Economic Factors
Increasingly global context for trade, markets, resources
Business expansion, product expansion
Stock & bond market volatility and interdependency
The effects of the European Union (currency exchange, negotiating power, etc.)
The rise of China and India

5. Technological Environment
Internet and telecommunication innovations
Change in jobs, financial transactions, market operations
Change in business best-practices
Integration of supply chains
Access to information
What privacy and surveillance issues arise for employers?

6. Political Environment
Rise of global terrorism
Change in international coalitions (NATO, EU)
Increased awareness of issues via electronic technology
Fall of communism/Soviet Union

7. Governmental and Regulatory Environment
Constantly changing/updating laws and procedures
Sarbanes-Oxley, 2002
2004 Federal Sentencing Guidelines
Changing standards for products, processes (e.g., FDA approval)
Judicial actions (e.g., Microsoft) against anticompetitive practices

8. Legal Environment Competing rights (Patriot Act)
Consumer protection (tobacco, gun control, Firestone tires)
Corporate copyright protection (Napster vs. recording industry)

9. Demographic Environment
Globalization
Workforce diversity and accompanying issues
Sexual harassment
Discrimination
Downsizing and outsourcing work force
Aging workforce

10. Figure 1.2: Stakeholders

11. Secondary Stakeholders
Local community groups
Special Interest groups
Consumer groups
Environmental groups
Media
Society-at-large
American Civil Liberties groups
ETC
Should managers pay attention to the needs of these groups? What priority should they have?

12. Stakeholder Management Approach
Six Steps to developing win/win strategies:
Identifying and prioritizing issues, threats, or opportunities
Mapping who the stakeholders are
Identifying their stakes, interests, and power sources
Showing who the members of coalitions are or may become
Showing what each stakeholder’s ethics are and should be
Developing collaborative strategies and dialogue from a higher ground perspective to move plans and interactions to the desired closure for all parties

13. What is Business Ethics?
Laura Nash has defined business ethics as “the study of how personal moral norms apply to the activities and goals of commercial enterprise,” as dealing with three basic areas of managerial decision making:
Choices about what the laws should be and whether to follow them
Choices about economic and social issues outside the domain of law
Choices about the priority of self-interest over the company’s interests

14. Unethical Business Practices of Employees
Showing respect to those who act unethically
Abusive or intimidating behavior
Misrepresentation of hours worked
Lying
Withholding information
Context issues:
Companies in transition (mergers, downsizing)
Younger employees and employees with lower tenure in the organization

15. Ethics and compliance Programs
Employees believe that nothing will be done if they report unethical behavior, or they are unsatisfied with the actions taken
Only 25% of employees:
are willing to seek advice about ethics questions that arise;
feel they are prepared to handle situations that could lead to misconduct;
indicate that they are rewarded for ethical behavior;
report that their company does not reward success obtained through
questionable means;
say they feel positively about their company
Employees feel that reports will not be held confidentially

16. Why does business ethics matter?
Financially and Economically
Relationships and Reputation
Morale and Productivity
Culture and Communication
Integrity and the Common Good

17. Figure 1.3: Five Levels of Business Ethics

18. Key Questions if Faced with an Ethical Dilemma
What are my core values and beliefs?
What are the core values and beliefs of my organization?
Whose values, beliefs, and interests may be at risk in this decision? Why?
Who will be harmed or helped by my decision or by the decision of my organization?
How will my own and my organization’s core values and beliefs be affected or changed by this decision?
How will I or my organization be affected or by the decision?

19. Figure 1.5: 5 Business Ethics Myths

20. Why Use Ethical Reasoning In Business?
Laws are insufficient
Free-market and regulated-market mechanisms are insufficient
Complex moral problems require an intuitive or learned understanding and concern for fairness, justice, and due process to people, groups, and communities

21. Kohlberg’s Levels and Stages Of Moral Development
Level 1: Preconventional level (self- orientation)
Stage 1: Punishment
Stage 2: Reward seeking
Level 2: Conventional level (others orientation)
Stage 3: Good person
Stage 4: Law and order
Level 3: Postconventional level (universal, humankind orientation)
Stage 5: Social contract
Stage 6: Universal ethical principles