Chapter 4 Ethics, Law, Business

I. Ethics and Values Why Study Ethics? What is Ethics? Value Systems and Moral Beliefs 6 Influences That Shape Value System Values in Conflict Values in Conflict

A. Why Study Ethics? The primary goal of American business is to make a profit and our laws influence the daily activities of business. Does this mean that whatever activities the business engages in are acceptable as long as the activities pursue profit and are legal?

B. What is Ethics? ETHICS is the process by which we make decisions, the value system we apply when making moral choices, and the inherent rightness or wrongness of those decisions? ETHICS and MORALITY are not the same Ethics – philosophical, rational basis for fair and honest conduct Morals – are more universal guidelines that determine action or character

C. Value Systems and Moral Beliefs Everyone’s moral beliefs and value system start to form early in life based on observations of others Individuals bring their own value systems and moral beliefs into the workplace to make decisions about what is right and wrong

D. 6 Influences That Shape the Value System Family (greatest influence) Proximity (peer) groups Educational systems Religious organizations Media Role Models

E. Values in Conflict Our values often come into conflict with one another When conflict arises, the values compete to form a structured system for making future decisions In a workplace setting, values in conflict, may make relationships uncomfortable or even hostile

II. Ethical Theories Egoism Consequential Approach Deontological Approach Social Contract Theory

A. Egoism An EGOIST believes that people should act only in their own self interest Me, me, me

B. Consequential Approach Outcome-Based A CONSEQUENTIALIST believes that the rightness or wrongness of an action depends on its consequences Utilitarianism – the greatest good for the great number

C. Deontological Approach Duty-Based “Do unto others as you would have done unto you.” Immanuel Kant – “Do unto others as you would have them do unto everyone.” Prima Facie Duty – moral rules that bind us unless they conflict with other more compelling prima facie duties. Rights Theory – a mixed deontological theory emphasizing rights rather than duties

D. Social Contract Theory A SOCIAL CONTRACT is an unwritten agreement establishing certain standards of behavior and rights among members of society. Governments rely on social contracts to avoid anarchy. Relativist – “ When in Rome, do as the Romans do.” Libertarians - emphasize individual freedom based on property rights and a minimal role for government.

III. Business Decision Making Profit Maximizing Ethics and the Law Ethical Decision Making

A. Profit Maximizing Is it profitable? Is it profitable? Businesses will cease to exist without profit Businesses will cease to exist without profit The desire to maximize profit can be a powerful influence on a person’s decision resolving an ethical dilemma

B. Ethics and the Law Is it Legal? Obeying the letter of the law is the minimum standard of behavior we expect from business Anti-trust laws and environmental protection legislation are examples of ways in which the law imposes rules for corporations to follow

C. Ethical Decision Making Is it ethical? Ethical decisions may arise in business because of the conflict to maximize profits and the welfare of those affected by that goal 7 General Rules: Honor confidentiality Avoid conflict of interest Obey the law Exercise due care Act in good faith Respect the liberty and rights of others Respect human well-being

IV. Balancing Corporate Responsibility Optimizing Profits Steps to Solving Ethical Dilemmas

A. Optimizing Profits Optimizing profits involves making profits while at the same time staying within legal and ethical limits  Public opinion  Self-Critical Analysis  Codes of Ethics  Self-Governing Organizations

B. Steps to Solving Ethical Dilemmas 8 Decision-Making Steps 8 Decision-Making Steps Determine the true facts Establish the major issues Determine the options available Are the options legal? Determine how each option would look in the light of day Does the option violate company policy? Or company code of ethics? Deontology

Chapter Summary Ethics and Values Why Study Ethics? What is Ethics? Value Systems and Moral Beliefs 6 Influences That Shape the Value System Values in Conflict Ethical Theories Egoism Consequential Approach Deontological Approach Social Contracts Theory Business Decision Making Profit Maximizing Ethics and the Law Ethical Decision Making Balancing Corporate Responsibility Optimizing Profits Steps to Solving Ethical Dilemmas