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Business ethics

chapter one . The Importance of Business . E. thics . The Importance of Business Ethics . M. ain . E. lements . Business ethics defined. Why study business ethics?. The development of business ethics .

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Business ethics

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Business ethicschapter one

The Importance of Business


thics Slide2

The Importance of Business Ethics Main E


Business ethics defined

Why study business ethics?

The development of business ethics

Developing an organizational and global ethical culture

The benefits of business ethics


The Importance of Business Ethics


Next class you need to read and discuss “an ethical dilemma in chapter one. And

Monsanto attempts to balance stakeholder’s interests

case study.

We did this introduction last timeSlide4

Business ethics defined

An inquiry into the nature and grounds of morality where the term morality means moral judgment, standards, and rules of conduct.

Also, the study of human conduct

In summary

business ethics

comprises the principles, values, and standards that guide behavior in the world of business.


values are specific boundaries for behavior that are universal and absolute.


are used to develop norms that are socially enforced like integrity, trust and credibility.


Why Study Business Ethics?

Customers’ declining trust is a big issue.

See Check figure 1-1

Examples and specific issues:

Abusive behavior



Accounting fraud

Conflict of interest

Defective products


And theft

Are all examples of declining ethical standards.

Check the story of



Why Study Business Ethics?

Insider trading is a serious issue in business and ethics. Getting inside information and using it to ones’ own interest.

We call it corruption

Code of ethics

Gifts , discrimination acts, injustice.

Falsification, deception and forgery, in sports (drug)

Universities, schools, research, publications

And many, many other aspects. Slide7

The reason for studying business ethics

Studying business ethics is an awareness program. It gives you the awareness to recognize right from wrong. You may identify ethical issues when they arise and use the approaches available for resolving them. You will also learn more about the ethical decision making process and about ways to promote ethical behavior within your org. you will be able to cope with conflicts between your own personal values and those of the org in which you work. Slide8

The development of business ethics

Check table 1-2 and see for yourself


Developing an organizational and global ethical culture

Its hard to develop a global ethical culture. why?

But its very important to create certain regulations, I mean governmental rules and regulations beside organizational ones in order to have an ethical culture. Slide10

The Benefits of Business E


1- employee commitment

2- investor loyalty

3-customer satisfaction

These three within an ethical culture will lead to:

4- ethics contribute to profit. Slide11

Stakeholder relationships, social responsibility, and corporate governance chapter two

Chapter’s main elements:

Stakeholders define ethical issues in business

Social responsibility and the importance of a stakeholder orientation

Social responsibility and ethics (

Corporate Social


Corporate governance provides formalized responsibility to stakeholders

Implementing a stakeholder perspectiveSlide12

Stakeholders define ethical issues in business

The relationship between companies and their stakeholders is two-way communication. What this statement means?

The conclusion of this point is that companies need to reconsider its relationship with all the surrounding parties and constituencies in the societySlide13

Identifying your stakeholders

1- primary stakeholders

2- secondary stakeholders

Explain figure 2-2- what do the arrows represent in the figure.Slide14

Social responsibility and the importance of stakeholder orientation

What is meant by stakeholder’s orientation?

What about classical theory


modern theory?

Conclusion: ethics and social responsibility cannot be just a reactive approach to issues as they arise.

Firms and corporations need to view ethical concerns as a part of their foundation and incorporate ethics in their business strategySlide15

Social responsibility and ethics

SR and Ethics are interchangeable.

Socially responsible orgs are more ethical entities than others.

ISO 26000 for CSR

ISO 1400 for the environment

ISO 1800 for health and safety!

Going green- many companies are going green

Renewable energy investments. Example the wind and the solar energy. Slide16

Social responsibility and ethics

What is corporate Citizenship?

The extent to which businesses strategically meet the economic, legal, ethical, and philanthropic responsibilities placed on them by their various stakeholders.

What is reputation and why is it important in this context?Slide17

Corporate governance

How Corporate Governance provides formalized responsibility to stakeholders?

Two views of corporate governance:

A- shareholder model of Corporate Governance

B- stakeholder model of Corporate Governance

The role of boards of directors

Greater demand for accountability and transparency

Executive compensation Slide18

Implementing a stakeholder perspective

1- assessing the corporate culture

To implement the stakeholder’s perspective, you need to have it in your mission, norms, values and system. You need to have a visionary leadership. Your culture must support it.

2- identifying stakeholder groups

Some stakeholders exert more influence and power than others. The company must identify these groups, prioritize, and evaluate. Slide19

Implementing a stakeholder perspective

3- identifying stakeholder issues

Obesity, overweight in the US is an issue. Climate change for some companies is an issue, GM food and biotechnology for Monsanto is an issue. Carbon dioxide emission for Toyota is an issue

4- assessing org commitment to social responsibility

The previous steps lead to step four where companies could act socially responsible with accordance to their stakeholders’ issueSlide20

Implementing a stakeholder perspective

5- identifying resources and determining urgency

Resources must be specified and urgency must be considered. Resources must be quickly allocated based on that urgency. Use porter strategy.

6- gaining stakeholder feedback.

This is an information and data collection exercise here. Via public and private data mining to find out what our stakeholders think of us.

Next with chapter 3 Emerging Business Ethics Issues. Read the chapter dilemma.

Chapter 3 is a presentation chapter- an

individual task.