Ethics Ch1

Topics: Ethics, Business ethics, Morality Pages: 37 (2210 words) Published: March 5, 2015
AN INTRODUCTION TO
BUSINESS ETHICS
CHAPTER ONE: WHY STUDY ETHICS?

THIS CHAPTER SEEKS TO


Identify reasons why the study of ethics is important



Explain the nature and meaning of business ethics



Explain the difference between ethical values and
other values



Clarify the difference between ethics and the law



Describe the distinction between ethics and ethos



Introduce the distinction between personal morality,
virtues and social ethics
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Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

DISCUSSION CASE: MADOFF
 Madoff

pleads guilty to 11 counts of financial
fraud and theft in March 2009
 Is sentenced to 150 years in prison
 A Ponzi scheme is a fraud that attracts
investors with a promise of high returns
 The perpetrator benefits either by
disappearing with the money or living a
wealthy lifestyle by skimming
 Many would say this is a complete failure of
government regulations
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Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

DISCUSSION QUESTIONS








Identify what ethical issues and questions are
involved in the Madoff case.

Identify all the people you think may have been
harmed, and how they were harmed, by the Madoff
fraud.
Do you think that a scandal such as this is the result
mostly of unethical individuals, or are there
organizational issues that allowed, encouraged, or
were responsible for the harms? To what degree was
this case mostly a failure of individuals, or
organizational structure, or of government?
Can you imagine anything that would have
prevented the Madoff fraud?
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Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

WHY STUDY BUSINESS ETHICS?
Is it an oxymoron like “jumbo-shrimp”?
 Is it a discipline of sentimentality and personal
opinion?
 Who’s to say what is right and what is wrong?
 Is there a place for ethics in business?


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Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

THE QUESTIONS TODAY ARE LESS ABOUT
WHY OR SHOULD ETHICS BE A PART OF
BUSINESS, THAN ABOUT WHICH ETHICS
SHOULD GUIDE BUSINESS DECISIONS AND
HOW ETHICS CAN BE INTEGRATED WITHIN

BUSINESS.

1-6

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Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

CONTEXT: WHO WAS HARMED BY THE
COLLAPSE OF ENRON?
Stockholders
 Employees
 Consumers in California
 Suppliers
 Enron’s accounting firm, Arthur Anderson
 The Houston, TX community
 Families of employees, investors and suppliers


1-7

McGraw-Hill/Irwin

Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

REASONS TO BE CONCERNED WITH
ETHICS
The Law: In 2002, Congress passed the
Sarbanes-Oxley Act
 Financial risks
 Reputation and competitive advantage
 Consumer boycotts
 Efficiency and effectiveness
 Employee trust, loyalty, commitment and
initiative


1-8

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Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

WHAT DO MANAGERS THINK?
 2003:

Deloitte polled 5000 directors of the
top 4000 publicly traded companies and
reported that 98 percent believed ethics
and compliance programs are essential to
corporate governance.
 80% of those surveyed had developed
codes of ethics beyond those required by
Sarbanes-Oxley
 90% included statements concerning the
company’s obligation to its stakeholders.
McGraw-Hill/Irwin

1-9

Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

THE NEED TO STUDY BUSINESS ETHICS
If business managers see the need to focus on
ethical behavior, so should business students
 Preparation for career in contemporary business
 Consumers are affected by decisions made by
businesses


1-10

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