Chapter 1 Business Ethics

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chapter 1

BUSINESS ETHICS, THE CHANGING ENVIRONMENT, AND STAKEHOLDER MANAGEMENT

|TOPICS COVERED |

1.1Business Ethics and the Changing Environment
1.2WHAT IS BUSINESS ETHICS? WHY DOES IT MATTER?
1.3LEVELS OF BUSINESS ETHICS
1.4FIVE MYTHS ABOUT BUSINESS ETHICS
1.5WHY USE ETHICAL REASONING IN BUSINESS?
1.6CAN BUSINESS ETHICS BE TAUGHT AND TRAINED?
1.7PLAN OF THE BOOK

|lecture outline |

1.1Business Ethics and the Changing Environment

Businesses and governments operate in changing technological, legal, economic, social, and political environments with competing stakeholders and power claims. Stakeholders are individuals, companies, groups, and nations that cause and respond to external issues, opportunities, and threats. Disruptive technologies, increased working hours, increased personal and professional stress create pressure on stakeholders. Examples include: Enron, Adelphia, and others; excessive CEO pay and poor corporate performance; new regulation (eg., Sarbanes-Oxley Act of 2002); and increased outsourcing.

A.Seeing the “Big Picture”

1.Thomas Friedman has written a vivid account of the accelerating trend
toward globalization in The Lexus and the Olive Tree.

B.Environmental Forces and Stakeholders

1.Organizations are embedded in and interact with multiple changing local,
national, and international environments.

2.The economic environment continues to evolve into a more global context of
trade, markets, and resource flows.

3.Technologically, the advent of electronic communication and the Internet is
changing economies, industries, companies, jobs, and the way business is
conducted.

4.Politically, the fall of communist regimes and the rise of global terrorism are
also changing trading and business partners.

5.Governmental and regulatory laws and procedures also are changing.

6.Legal questions and issues affect all of the environmental dimensions and every
stakeholder.

7.Demographically, the workforce has become more diverse.

C.Stakeholder Management Approach

1. The stakeholder management approach is a way of understanding the ethical effects of environmental forces and groups on specific issues that affect real-time stakeholders and their welfare.

2. Begins by enabling win-win strategies based on:

a. identifying and prioritizing issues, threats, or opportunities.

b. mapping who the stakeholders are.

c. identifying their stakes, interests, and power sources.

d. showing who the members of coalitions are or may become.

e. showing what each stakeholder’s ethics are (and should be).

f. developing collaborative strategies and dialogue from a “higher ground” perspective to move plans and interactions to the desired closure for all parties.

1.2WHAT IS BUSINESS ETHICS? WHY DOES IT MATTER?

Ethical “solutions” to business and organizational problems may have more than one alternative and sometimes no right solution may seem available. Learning to think, reason, and act ethically can enable us to be aware of and recognize a potential ethical problem. Laura Nash defined business ethics as “the study of how personal moral norms apply to the activities and goals of commercial enterprise.” Nash stated that business ethics deal with three basic areas of managerial decision making that include: choices about what the laws should be and whether to follow them; choices about economic and social issues outside the domain of law; and choices about the priority of self-interest over the company’s interests.

A.Unethical Business Practices of...
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