BUS 131 Chapter 5
BUS 131 Chapter 5 BUS 131 - 010
Kutztown University of Pennsylvania
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BUS 131 - 010
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This 3 page Class Notes was uploaded by Whitney Davis on Saturday February 6, 2016. The Class Notes belongs to BUS 131 - 010 at Kutztown University of Pennsylvania taught by Dr. Slamon in Spring 2016. Since its upload, it has received 20 views. For similar materials see Business Law I in Business at Kutztown University of Pennsylvania.
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Date Created: 02/06/16
Chapter 5: Business Ethics Business Ethics Ethics o The study of what constitutes right or wrong behavior o Branch of philosophy Focuses on morality the way moral principles are derived and implemented o Fairness, justness, rightness, or wrongness of an action Business Ethics o Decisions businesses make or have to make Whether those decisions are right/wrong o How businesspersons apply moral/ethical principles in decision making Why is Studying Business Ethics Important? o Profit Maximization o Rise of Corporate Citizenship Triple bottom line – a corporation’s profits and impact on people/the planet The Important of Ethics in Making Business Decisions o What a business should evaluate when making decisions: The legal implications of each decision The public relations impact The safety risk for consumers and employees o Long- Run Profit Maximization Short-run – a company may increase profits by continuing to sell a product In long-run unethical conduct will cause profits to suffer Relationships of Law and Ethics o Moral Minimum Compliance with the law o Ethics and Private Law Company codes are rules the company sets that can also enforce o Ethical Uncertainty Difficult decision making Business Ethics and Social Media Hiring Procedures o Employers conduct Internet searches to discover what job candidates posted on personal blogs/social media. Use of Social Media to Discuss Work-Related Issues Ethical Principles and Philosophies Ethical reasoning o The application of morals and ethics to a situation Applies to businesses and individuals Duty-based ethics o Every person has certain duties to others including humans AND planet o Focuses on obligations of corporation o Religious Ethical Principles 10 commandments of Old Testament establishes fundamental rules for moral action Religious rules are absolute with respect to behavior of their adherents o Principles of Rights “Rights theory” Human beings have certain fundamental rights Conflicting rights Resolving conflict o Kantian Ethical Principles When people are treated merely as means to an end, they are being treated as equivalent of objects, and are being denied basic humanity (Kant) Categorical Imperative – individuals should evaluate their actions in light of consequences that follow if everyone in society acted in same way Outcome-based Ethics: Utilitarianism o Impacts of a decision on society or key stakeholders o Utilitarianism The premier philosophical theory for outcome-based decision making Developed by Jeremy Bentham o Cost Benefit Analysis An assessment of negative/positive effects of alternative actions on individuals o Problems with the Utilitarian Approach May not seem ethical Corporate Social Responsibility o Combines commitment to good citizenship with a commitment to making ethical decisions o CSR Involves commitment to selfregulation Corporations demonstrate they are promoting goals society deems worthwhile o Stakeholders Other groups affected by corporate decisions Making Ethical Business Decisions A systematic approach o Organizing ethical concerns and issues o Eliminates various alternatives o Identifies strength and weaknesses of remaining alternatives The Importance of Ethical Leadership o Attitude of Top Management Demonstrate its commitment to ethical decision making o Behavior of Owners and Management o Sarbanes-Oxley Act Requires companies to set up confidential systems so that employees and others can “raise red flags” about suspected illegal/unethical auditing/accounting practices Global Business Ethics Different ethical expectations/priorities vary with different religions, countries, regions and states Monitoring of Employments Practices of Foreign Suppliers o Corporate watch Groups that discover and publicize unethical corporate behavior Foreign Corrupt Practices Act o Prohibits U.S. businesspersons from bribing foreign officials to secure beneficial contracts o Prohibition Against the Bribery of Foreign Officials FCPA does not prohibit payment of substantial sums to minor officials whose duties are ministerial o Accounting Requirements To prevent bribes from being concealed in corporate financial records Second part of FCPA System must provide “reasonable assurance” o Penalties for violation Business firms that violate act may be fined up to $2 million Individual officers/directors who violate FCPA may be fined up to $100,000 May be imprisoned for up to 5 years
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