4-1

The Nature of Ethics

Ethics The inner-guiding moral
principles, values, and beliefs that
people use to analyze or interpret a
situation and then decide what is the
right! or appropriate way to behave
4-"
The Nature of Ethics
Ethical Dilemma
#uandary people find themselves in
when they have to decide if they
should act in a way that might help
another person even though doing so
might go against their own self-
interest
4-$
Ethics and the %aw
Neither laws nor
ethics are fixed
principles
4-4
&ta'eholders and Ethics
Stakeholders
The people and groups that supply a
company with its productive resources
and have a claim on its resources
4-(
&toc'holders

)ant to ensure that managers are

behaving ethically and not ris'ing
investors* capital by engaging in
actions that could hurt the company*s
reputation

)ant to ma+imize their return on

investment
4-,
-anagers

.esponsible for using a company*s

financial capital and human resources
to increase its performance

/ave the right to e+pect a good return

or reward by investing their human
capital to improve a company*s
performance

0re#uently 1uggle multiple interests

4-2
Employees
3ompanies can act ethically toward
employees by creating an
occupational structure that fairly and
e#uitably rewards employees for their
contributions
4-4
&uppliers and 5istributors

&uppliers e+pect to be paid fairly and

promptly for their inputs

5istributors e+pect to receive #uality

products at agreed-upon prices
4-6
3ustomers

-ost critical sta'eholder

3ompany must wor' to increase

efficiency and effectiveness in order to
create loyal customers and attract
new ones
4-17
Ethical 5ecision -odels
8tilitarian .ule

5ecision that produces the greatest good

for the greatest number

/ow do you measure the benefits and harms

that will be done to each sta'eholder group9

/ow do you evaluate the rights and importance

of each group9
4-11
Ethical 5ecision -odels

-oral .ights rule

5ecision that best maintains and protects

the fundamental or inalienable rights and
privileges of the people affected by it

:ustice rule

5ecision that distributes benefits and

harms among people and groups in a fair,
e#uitable, or impartial way
4-1"
Ethical 5ecision -odels
Practical rule
- 5ecision that a manager has no
hesitation about communicating to
people outside the company because
the typical person would thin' it is
acceptable
4-1$
;ractical 5ecision -odel
1< 5oes my decision fall within the
acceptable standards that apply in
business today9
"< =m > willing to see the decision
communicated to all people and groups
affected by it9
$< )ould the people with whom > have a
significant personal relationship approve
of the decision9
4-14
)hy should managers behave ethically9
The relentless pursuit of self-interest
can lead to a collective disaster when
one or more people start to profit from
being unethical because this
encourages other people to act in the
same way
4-1(
Trust and .eputation
Trust person*s
confidence and
faith in another
person*s goodwill
Reputation esteem
or high repute that
individuals or
organizations gain
when they behave
ethically
4-1,
&ocietal Ethics
&tandards that govern how members of
a society should deal with one another
in matters involving issues such as
fairness, 1ustice, poverty, and the
rights of the individual
;eople behave ethically because they have
internalized certain values, beliefs, and
norms
4-12
?ccupational Ethics
&tandards that govern how members of a
profession, trade, or craft should conduct
themselves when performing wor'-related
activities

-edical @ legal ethics

4-14
>ndividual Ethics
;ersonal standards and values that
determine how people view their
responsibilities to other people and
groups

/ow they should act in situations when

their own self-interests are at sta'e
4-16
?rganizational Ethics
Auiding practices and beliefs through
which a particular company and its
managers view their responsibility
toward their sta'eholders

Top managers play a crucial role in

determining a company*s ethics
4-"7
&ocial .esponsibility
)ay a company views its duty or
obligation to ma'e decisions that
protect, enhance, and promote the
welfare and well-being of sta'eholders
and society as a whole
4-"1
=pproaches to &ocial .esponsibility
4-""
.ole of ?rganizational 3ulture
Ethical values and norms help
organizational membersB

.esist self-interested action

.ealize they are part of something bigger

than themselves
4-"$
Ethics ?mbudsman
-anager responsible for
communicating and teaching ethical
standards to all employees and
monitoring their conformity to those
standards