What is Ethics?

 

 Ethics comes from the Greek word ethos, meaning character or custom. 

 

 Ethics is the discipline dealing with what is good and bad and with moral duty and obligation. 

 

 

 Moral: Concerned with principles of right and wrong or conforming to standards of behavior and character based on those principles. (e.g. a moral life)

 

 Values: Abstract ideas about what a group believes to be good, right and desirable; form bedrock of a culture. 

 

 Freedom, democracy, justice, love, religion. 

 

 Norms: The social rules and guidelines that prescribe appropriate behavior in a particular situation.

 

 Dress code, correct utensils, neighborly behavior, time.

 

 Theft, adultery, incest. 

 

What is Business Ethics?

 

 Business Ethics consists of those principles and practices that are concerned with morals and good conduct as they are applicable to business situations. 

 

Why do we need ethics in business?

 

 Businesses are confronted by many interests both inside and outside the organization. 

 

Responsibilities of business:

 

Inner circle: efficient performance of economic function. 

 

Intermediate circle: environmental protection, resource conservation, employee and customer relations. 

 

Outer circle: reducing inflation and unemployment, dealing with hunger and poverty, supporting education, arts. 

 

 Businesses are expected to contribute towards social improvement. 

 

Morality and Obligations of business: business activity is human activity, therefore, can be evaluated from the moral point of view, just as any other human activity is evaluated. 

 

 To be honest, fair and just in dealing with others, in carrying out agreements and contracts, pay off debts, maintaining a safe and healthy working environment, loyalty to employee (paying fair wages), employers, customers, admit manufacturing errors, should not advertise an unsafe product and make claims which are not true. 

 

 

General ethical dilemma

 

 Would you steal a drug (medication) to save your spouse?

Or refrain from theft even though that would lead to his/her death?

 

 The car accident dilemma… 

 

 The child labor dilemma…

 

 

Types of Ethical study

 

Descriptive ethics: simply involves describing how people behave and/or what sorts of moral standards they claim to follow. Descriptive ethics incorporates research from the fields of anthropology, psychology, sociology and history as part of the process of understanding what people do or have believed about moral norms. 

 

What do people think is right? 

 

Normative ethics: is the study of ethical theories that prescribe how people ought to act, the study of moral problems which seeks to discover how one ought to act, not how one does in fact act or how one thinks one should act. 

 

It involves creating or evaluating moral standards. Thus, it is an attempt to figure out what people should do or whether their current moral behavior is reasonable. Also involves examining the moral standards people currently use in order to determine if they are justifiable, as well as attempting to construct new moral standards which might be better.

 

How should people act? 

What is Right and what is Wrong?

What is Good and what is Evil? 

 

Metaethics: is the study of what ethical terms and theories actually refer to. It deals with the meaning of moral terms and the logic of moral reasoning. 

 The analysis of moral reasoning involves clarifying and evaluating presuppositions and investigating the validity of moral arguments. 

 

What does 'right' mean? 

"What is goodness?" and "How can we tell what is good from what is bad?" 

 

Special ethics: applies general ethics to solve particular problems. 

 

 

 

 

The Case of McDonalds in China

 Guanxiwang 

 Opened in 1992 in Beijing after a decade of market research. 

 Largest, 2 blocks from Tiananmen Square.

 

The Tiananmen Square protests of 1989, referred to in much of the world as the “Tiananmen Square massacre” and in Chinese as the “June Fourth Incident” or "June Fourth Movement”  or "Six Four Incident”. 

 

There were a series of demonstrations in and near Tiananmen Square in Beijing beginning on 14 April 1989; led mainly by students and intellectuals; against the government's authoritarianism and voiced calls for economic change and democratic reform within the structure of the government. 

 The protests were sparked by the death of Hu Yaobang, a political leader (6th General Secretary of the CPC).  

 

By the eve of Hu's funeral, 100,000 people had gathered at Tiananmen Square.

The movement lasted seven weeks after Hu's death on 15 April. In early June, the People's Liberation Army moved into the streets of Beijing with troops and tanks and cleared the square with live fire.

Some of the early estimates were based on reports of a figure of 2,600 from the Chinese Red Cross. The official Chinese government figure is 241 dead, including soldiers, and 7,000 wounded. 

 

 High sales within 2 years. 

 Beijing City Govt. à vacate for Hong Kong developer Li Ka- shing. 

 McDonalds still had 18 years left. 

 In the courtà refusal, had to move. 

 Lacked the guanxi of Li Ka- shing. 

 The lawsuit reduced whatever guanxi Mc had with Govt. 

 The key to getting things doneà personal powers, relationships, connections rather than the rule of law. 

 Guanxi means ‘relationships’ ; in business context ‘connections’. 

 Guanxiwang means ‘relationship network’. 

 

 The concept is deeply rooted in Chinese culture, the Confucian philosophy of valuing social hierarchy and reciprocal obligations (2000 years old). 

 Importance of relationships. 

 Confucian thoughtà people are not created equal. Loyalty and obligations to one’s superiors (or to family) is sacred duty, at the same time loyalty has its price. 

 Guanxiwang for business in China. 

 

 

                        The Corporation

 

 The word “corporation” derives from corpus, the Latin word for ‘body’ or a ‘body of people’.

 

 The oldest commercial corporation of the world is the Stora Kopparberg mining community in Falun, Sweden, obtained a charter from King Magnus Eriksson in 1347. 

 

 A corporation is a business owned by many people but treated by law as one person. 

 To form a corporation, you need to get a corporate charter from the state your headquarters is in.

 To raise money, you can sell stock, or shares of ownership in your corporation. 

 For each share of common stock, the stockholder gets a share of the profits and a vote on how the business is run.

 You also must have a board of directors who control the corporation.  

 

 A corporation is a legal form of business organization considered to be an entity separate and apart from its owners. In effect it is an artificial person created by law. Its birth certificate is the corporate charter. 

 

 Corporate charter is a document issued by a government that contains all information stated in the original application for a charter plus the powers, rights, and privileges of the corporation as prescribed by law. 

 

A corporation: 

 

 Can sue or be sued

 Make contracts

 Own property

 Be a partner in a partnership

 Doesn’t cease to exist when its owners die

 

Approaches to Social Responsibility

 

 

 

 

 

 

 

Social Obstruction

 

 Do as little as possible to address social or environmental problems

 Hide Questionable Behavior

 Deny or avoid responsibility

 Example: Astra USA. (AstraZeneca, Swedish)

 A senior executive was charged with sexual harassment & misusing corporate assets. 

 Officials denied wrongdoing without inquiry. 

 

Social Obligation

 

 Do what is required legally, but nothing more.

 Corporate responsibility is to generate profits.

 Example: Philip Morris International (PMI).

 Leading International tobacco company, products sold in 160 countries (aprox.), owns 7 of the top 15 brands of the worldà Marlboro, L&M, Longbeach, Chesterfield and so on. 

 Marketing in USA versus African countries. 

 

Social Response

 

 Meet ethical and legal requirements and more.

 Agree to participate in social programs.

 Respond to requests from non-profits.

 No proactive behavior to seek such opportunities.

 

Social Contribution

 

 Strong support of social responsibility.

 View themselves as citizens in a society and proactively seek opportunities to contribute.

 Example: McDonald’s, Prothom-alo. 

 Ronald McDonald House program by McDonald’s. 

                                  Versus

 McDonald’s misleading consumers about the nutritional value of its food products. 

 

Course objectives and outcomes