MGT' OF ETHICS 6540 Moral Problems in Business Management

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MGT. OF ETHICS6540Moral Problems in Business
Management
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• What does right really mean?

• How do you know when something is truly right
  or truly wrong?

• Why do peoples views on what is right and
  wrong differ?

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• Why would a local construction worker in Moab
  feel differently about allocation of additional
  land for development and expansion than a young
  environmentalist who enjoys hiking in the
  mountains?

• How do you attempt to convince people who
  disagree with you about what is right?

• What arguments should that unemployed
  construction worker make if he/she were at a
  meeting with the young environmentalist? What
  arguments should the environmentalist make?

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Moral Standards

• Do moral standards in business differ in some
  ways from those of our personal life?

• Business managers do not know how to apply the
  beliefs and standards they hold to the ethical
  problems they encounter.

• The goal Bring managers to think in a
  structured, orderly way about their obligations
  to other people.

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How?

• The course should be
• Short
• Direct
• Focused
• Lively and move along quickly
• Convey a method of analysis - not a standard of
  behavior

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• Direct
• Recognition of ethical problems
• Understanding of ethical analysis
• Reliance upon personal values

• Focused
• Ethical problems in management are complex
• Ethical problems in management are pervasive
• Ethical problems in management are personal

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Specific Incidents That Demand Our Attention to
Ethics of Management

• H.B. Fuller Company
• Beech-Nut Nutrition Company
• Dow Corning
• Sears Roebuck and Company
• Tobacco Industry
• The Enron Case
• Firestone Tire Failure on Ford SUVs. 60 minutes
  earlier film about failures in Venezuela

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General issues also shape the business ethics
relationship

• Sexual harassment in the workplace
• Toxic waste disposal crisis
• Use of lie detectors
• Minority rights
• AIDS in the workplace

• Smoking in the workplace
• Drug testing
• Insider trading
• Whistle blowing
• Product liability

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1. What groups will benefit?
2. What groups will be harmed?
3. Whose rights will be exercised?
4. Whose rights will be ignored?
5. Express the moral problem so that everyone
will believe that his or her moral concerns have
been recognized and included.
6. What are the economic benefits?
7. What are the legal requirements?
8. What are the ethical duties?
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Method of analysis
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Complex Nature of Moral Problems in Business
Benefits Some Harms to Others Rights
Exercised Rights Denied
Moral Problems in a Business Firm
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Individual Determinants of Moral Standards
Religious/Cultural traditions

Personal Goals Personal Norms Personal beliefs
Personal Values
Subjective standards of moral behavior
Economic/social situations
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Analytical Process for the Resolution of Moral
Problems
Understand all moral standards
Determine the economic outcomes



Consider the legal requirements
Define complete moral problems
Propose convincing moral solution
Recognize all moral impacts Benefits to some
Harms to others Rights exercised Rights denied
Evaluate the ethical duties
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Building Trust, Commitment and Effort within an
Organization
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Extending Cooperation, Innovation and Unification
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Analytical Process for the Resolution of Moral
Problems
Understand all moral standards
Determine the economic outcomes



Consider the legal requirements
Define complete moral problems
Propose convincing moral solution
Recognize all moral impacts Benefits to some
Harms to others Rights exercised Rights denied
Evaluate the ethical duties
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Chapter TwoMoral Analysis and Economic Outcomes
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Microeconomic theory of best for society is
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Economic Theory

• Managers should optimize profits and
• Ensure that those markets are competitive

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Pareto Optimality

• Increase in the well-being of some and decrease
  in the well-being of others. Any lasting harms
  should be remedied by political, not financial,
  procedures!

• Is it possible to rely totally on the economic
  concept of Pareto Optimality in making decisions?

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Few trends could so thoroughly undermine the
very foundations of our free society as the
acceptance by corporate officials of a social
responsibility other than make as much money for
their stockholders as possible. -Milton Friedman
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Personal Demand Curve
Price
Individual Demand
Units
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Market Demand and Supply Curve
Market Supply
Price
Market Demand
Units
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Marginal Cost Curve
Marginal Costs
Dollars
Marginal Revenues
Units
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• The executives who happened to hold duplicate
  positions following a merger and consequently
  were to be victims of downsizing.

• The wholesalers who helped to successfully
  establish a new product but now represent a much
  more costly means of reaching the market.

• The dam, which is to be built on private land,
  but which will block a river used by local
  residents and summer vacationers for years.

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• Since no one is perfect then legal requirements
  (decisions by full society) and observing ethical
  duties (principles for a good society) are
  needed.

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Factor Supply Curves
Labor Supply
Capital Supply
Dollars
Material Supply
Units
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Product markets for goods and services, with
aggregate demand and supply curves that determine
the prices to be charged
Consumers, whose marginal utilities for a mix of
goods and services can be expressed as individual
demand curves
Producing firms, whose marginal costs determine a
company supply curve for the goods and services
and whose marginal productivity rates determine
company demand curves for the various input
factors
Political process, for a partial redistribution
of income from owners and workers to individual
consumers and public agencies within the society
Microeconomic Theory
Owners of land and capital, whose supplies are
fixed over the short term, and workers, whose
marginal utility for income limits the labor
supply, also over the short term
Factor markets for material, labor, and capital,
with aggregate demand and supply curves that
determine the prices to be charged