1. ACC704 TOPIC 3 Emerging business ethics issues and Institutionalization of business ethics

2. Emerging business ethics issues
Recognizing an ethical issue is difficult
Is business a game?
Is business a war?
What do you see as some causes of unethical behavior?
Ethical issues and dilemmas in business
The challenge of determining an ethical issue in business

3. Ethical issues and dilemmas in business
Ethical issue is a problem, situation, or opportunity that requires an individual, group, or organization to decide as right or wrong.
Ethical dilemma is a problem, situation, or opportunity that requires an individual, group, or organization to choose among several wrong or unethical actions. (less unethical).
Meeting overly aggressive objectives
Meeting schedule pressures
Helping the organization survive
Saving jobs

4. Recognizing an ethical issue
Not recognizing an ethical issue is very dangerous for business orgs
When you think of just making profit and increase sales then.
“Business is business” mentality.
Example: Do not care about environment – dumping rubbish

5. Recognizing an ethical issue honesty
Honesty: truthfulness or trustworthiness.
Honesty relates to truthfulness, integrity and trustworthiness.
To tell the truth and nothing but the truth.
Fairness relates to being just, equitable, and impartial.
Example: Jiff Skilling of Enron was dishonest because he thought of business as a game and warfare.
Mahendra Patel – business as a game. Using his chairmanship power to purchase the clock for the Post Office from his business.

6. Fairness Being just equitable, and impartial Equity Reciprocity
Optimization not maximization by selecting the right people into the right job.
discrimination is unfair game to play.
Example: Women workers

7. Integrity Being whole, credible, honest and reliable.
Its uncompromising adherence to ethical values. Integrity is a very important value for business people in the 21st century.
Example: PS Commerce – dishonest about air ticket.

8. Ethical issues and dilemmas in business
Abusive or intimidating behavior. Very bad for employees.
It begins by physical threat to false accusation, insults, harshness, roundness, profanity(curse), swearing.
Intent at the center.
Bullying in the workplace
Bullying between companies org.

9. Lying Distorting the truth, some is related to joking
Lying be commission- like gimmicks in advertising
Example – Consumer watch dog
lying by omission
Example: Court case – lie about whereabouts during a crime

10. Conflict in interest
To avoid it you need to separate your private interests from your business dealings.
Bribery is a significant concern.
Separating managing from ownership.
The individual must be able to separate personal interests from business dealings.

11. Bribery Offering something in order to get illegal advantage.
Making payment
It is common for Japanese businesses to set out a small tray near a cash register so that customers can place their money on the tray rather than handing it directly to the cashier.
should not be confused with the North American "Take a penny, leave a penny" tray for small change
Example – Tips at bars or restaurants

12. Bribery Gifts – Japanese Business
The ritual of gift giving is more important than the value of the gift.
Allow your Japanese counterpart to initiate the gift giving. Present a gift in a modest fashion, saying, "This is just a small token," or "This is an insignificant gift."
It is very important to receive a gift properly. Give a gift and receive a gift with both hands and a slight bow. The Japanese may refuse a gift once or twice before accepting it.
Do not give anyone a gift unless you have one for everyone present.
Correct wrapping is very important. Appearance counts for as much or more than the contents.
Be prepared to give and receive a gift at a first business meeting. Gifts are frequently given at the end of a first meeting. Not giving a proper gift could ruin a business relationship.

13. Corporate intelligence and marketing intelligence
CI is a legitimate inquiry into meaningful information that can be used for staying competitive.
Is it legal or illegal?
What is the role of technology and internet?
Monitoring of employees
Consumer privacy
Hacking
Shoulder surfing

14. Corporate intelligence
Spying or espionage hacking: is an internet method for obtaining trade secrets
System hacking when the attacker has access to a user account.
Remote hacking: attempting to remotely penetrate a system across the internet
Physical hacking: entering a facility personally.

15. Corporate intelligence
There is more into the topic when:
hackers or spy agents try to enter into the military and national secrets of one country in espionage and spying purposes for another country.
Social engineering: when a hacker deceives you or trick you to reveal your password or other corporate or individual information.

16. Discrimination
Race, gender, and age discrimination are a major source of ethical and legal debate in the workplace.
discrimination is a social, cultural and psychological problem. Discrimination in some cultures is more severe than other cultures- what do you think?
Affirmative action programs

17. Environmental issues Are emerging ethical issues
Kyoto protocol: international and global treaty in a world commitment to reducing emission of carbon dioxide in an attempt to reducing the global warming and pollution(USA did not sign the treaty).
Water pollution
30 million plastic bottles are thrown daily for a total 11 billion a year in the US
is nuclear power a green energy?

18. Fraud
Fraud: any intentional communication that deceives, manipulates or conceals facts in order to create a false impression. You still can List any unethical practices that are related to our local culture and their impact on our business.

19. Types of fraud Accounting fraud
Marketing fraud: communicating misleading marketing information or marketing in general. Specifically via the communication and promotional side of the 4ps.
Consumer fraud: is when consumers attempt to mislead or deceive businesses for their own gain- shoplifting, price tag switching, lying …etc
What do you think about “the customer is always right?
Consumer protection organizations.
Gimmicks in advertising is an example.

20. Other ethical issues Insider trading
Intellectual property rights: the legal protection of intellectual property such as journals, periodicals, music, books, and movies.
Privacy issues
The Challenge of Determining An Ethical Issue In Business.

21. Organizational Ethics
“I very much doubt that the Enron executives came to work one morning and said, "Let's see what sort of illegal scheme we can cook up to rip off the shareholders today." More likely, they began by setting extremely high goals for their firm and for a time exceeded them. In so doing they built a reputation for themselves and a demanding expectation among their investors. Eventually, the latter could no longer be sustained. Confronting the usual judgmental decisions which one presented to executives virtually every day, and not wanting to face reality, they gradually began to lean more and more towards extreme interpretations of established accounting principles. The next thing they knew they had fallen off the bottom of the ski jump.” Norman R. Augustine, Retired Chairman of Lockheed Martin Corporation in his 2004 acceptance of the Ethics Resource Center’s Stanley C. Pace Leadership in Ethics award

22. Defining Organizational Ethics
Business Ethics separate from General Ethics for 2 reasons:
Other parties have a vested interest in the ethical performance of an organization
In a work environment, you may be placed in a situation where your personal value system may clash with the ethical standards of the organization’s operating culture

23. Defining Organizational Ethics
Organizational culture – the values, beliefs, and norms that all the employees of that organization share
Value chain – the key functional inputs that an organization provides in the transformation of raw materials into a delivered product or service

24. Defining Organizational Ethics
Key Functions
Research & Development
Manufacturing
Marketing (and advertising)
Sales
Customer service

25. Ethics in R & D Directly involved in future growth
Without new products to sell, organizations can lose their customers to competitors who are offering products that are ‘better, faster, cheaper’
Critical commitment to product quality, safety, and reliability

26. Ethics in R & D
‘Better, cheaper, faster’ mean compromises have to be made in functionality or manufacturing in order to meet a targeted cost figure

27. Ethics in R & D
Too many features out - marketing and advertising have no story to tell - sales people will face difficulties in selling against competition.
Too few changes made - company won’t be able to generate a profit.

28. Ethics in R & D
Do we use the best materials available or the second best to save some money?
Do we run a full battery of tests?

29. Ethics in Manufacturing
Now it falls to the manufacturing team to actually get the thing built.
“Do you want it built fast, or do you want it built right?”
From an organizational perspective, you want both.
Compromise - which corners can be cut and by how much.

30. Ethics in Marketing
Marketers see themselves as providing products (or services) to customers who have already expressed a need for and a desire to purchase those products.
Critics of marketing see it as a more manipulative process whereby unsuspecting customers are induced to buy products they don’t really need and could quite easily live without by ‘slick’ commercials and advertisements.

31. Ethics in HR The HR Relationship:
The creation of the job description for the position.
The recruitment and selection of the right candidate for the position.
The orientation of the newly hired employee
The efficient management of payroll and benefits for the (hopefully) happy and productive employee.
The documentation of periodic performance reviews.
The documentation of disciplinary behavior and remedial training if needed.
The creation of a career development program for the employee.
Coordination of final paperwork - severance benefits and Exit Interview.

32. Ethics in HR
HR professionals must help ensure that ethics is a top organizational priority.
HR must ensure that the leadership selection and development processes include an ethics component.
HR is responsible for ensuring that the right programs and policies are in place.
HR must stay abreast of ethics issues (and in particular the changing legislations and sentencing guidelines for unethical conduct).

33. Ethics in Finance Financial Transactions The Accounting Function
The Auditing Function

34. Ethics in Finance Ethical Challenges: GAAP
The generally accepted accounting principles that govern the accounting profession – not a set of laws and established legal precedents, but rather a set of standard operating procedures within the profession
A set of accurate financial statements that present an organization as financial stable, operationally efficient, and positioned for strong future growth can do a great deal to enhance the reputation and goodwill of an organization

35. Ethics in Finance Ethical Challenges: Creative Bookkeeping Techniques
It is legal to defer receipts from one quarter to the next to manage your tax liability
Conflicts of Interest
A situation where one relationship or obligation places you in direct conflict with an existing relationship or obligation

36. End of Topic 3