Business Ethics

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CHAPTER 9
Business Ethics and Social Responsibility
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Quotes of the Day

• The one and only social responsibility of
  business is to increase its profits.
• Milton Friedman (b. 1912),
• Nobel laureate in economics

The business of business is serving society, not
just making money. Dayton Hudson corporate
constitution
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Ethics
Ethics is the study of how people ought to act.
Law and ethics may not always agree...
Sometimes it is ethical to commit an illegal
act...
And some legal acts are unethical!
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Why Bother With Ethics?
There is little evidence that ethical behavior
increases profits or that unethical behavior
decreases profits so why bother?

• Society as a whole benefits by encouraging
  economic competition no one wants to compete
  with unfair competitors.

• People feel better when they behave ethically.

• Unethical behavior can be costly, if there is
  public outrage leading to a boycott.

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Questions to Ensure Ethical Behavior

• What are the facts?
• What are the critical issues?
• Who are the stakeholders?
• What are the alternatives?
• What are the implications of each choice?
• Are the alternatives legal?
• Do they look bad?
• What are the consequences of this choice?
• Does this action violate important values?
• Is more than one alternative right?

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Responsibility in Advertising
Businesses must take a stand on sexual and racial
exploitation in advertising.

• Alternatives in advertisement ethics
• Ignore ethics and try to create ads that sell the
  most product, no matter the underlying message.
• Try generally to minimize exploitation.
• Include a systematic, focused review of
  underlying messages as part of the development
  process.
• Refuse to create any ads that are even
  potentially offensive.

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Other Responsibilities

• To customers
• Privacy issues are controversial -- can a
  business sell lists that include your address?
  Your phone number? Your sexual preference?

• To employees
• Employers must take reasonable measures to ensure
  the safety of workers.
• Decisions about firing workers or cutting jobs
  raise ethical questions.

• To shareholders
• Questions are often raised about uses of a
  companys profits -- distributed to shareholders,
  raising executives salaries, improving business?

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Other Responsibilities (contd)

• To -- and in -- foreign countries
• Companies with operations in foreign countries
  are often criticized for deplorable working
  conditions and low wages.
• Response to these criticisms is often that even
  low-wage jobs are better than destitution and
  that these jobs are the beginnings of economic
  growth.

• Employees responsibility to company
• Should employees report unethical behavior among
  co-workers? Should promotion decisions be made
  based on friendships?
• These questions show the difficult choices that
  have to be made every day in the work place.

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The Best Insurance
Even employees who are ethical in their personal
lives may find it difficult to uphold their
standard at work if those around them behave
differently.
The surest way to infuse ethics throughout an
organization is for top executives to behave
ethically themselves.
Click here to view an online discussion of
ethical issues.
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Ethical behavior offers significant advantages
society as a whole benefits executives who
behave ethically have happier, more fulfilled
lives and unethical behavior can destroy a
company.
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Link to the Internet
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