CHAPTER ONEBusiness Ethics, The Changing Environment, And Stakeholder Management*Presented by:Marina Riyanti (023121---)Fanny Rahmalia (023121285)Maria J Fransisca (023121289)

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Chapter TopicsBusiness ethics and the changing environmentWhat is business ethics? Why does it matter?Levels of business ethicsWhy use ethical reasoning in business?Can business ethics be taught and trained?

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Business Ethics and the Changing EnvironmentBusinesses & governments operate in changing technological, legal, economic, social & political environments with competing stakeholders & power claims.Stakeholders are individuals, companies, groups & nations that cause and respond to external issues, opportunities, and threats.The rate of change and uncertainty in which stake- holders & society must make & manage business & moral decisions have accelerated due to the impact of:Internet and information technologiesGlobalizationDeregulationMergersWars

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FIGURE 1.1Environmental Dimensions Affecting Industries, Organizations, and Jobs

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Environmental Forces and StakeholdersLocal, national, and international environments are increasingly moving toward and into a global system of dynamically interrelated interactions among local, national, and regional politics, economies, regulations, technologies, demographics, and international law.Economic environmentTechnologicalPoliticalGovernmental and regulatory LegalDemographic

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Stakeholder Management ApproachThe stakeholder management approach is a way of understanding the effects of environmental forces and groups on specific issues that affect real-time stakeholders and their welfare.This approach attempts to enable individuals and groups to articulate collaborative win-win strategies: based on:Identifying and prioritizing issues, threats, or opportunitiesMapping who the stakeholders areIdentifying their stakes, interests, and power sourcesShowing who the members of coalitions are or may becomeShowing what each stakeholders ethics are and should beDeveloping collaborative strategies and dialogue from a higher ground perspective to move plans and interactions to the desired closure for all parties

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FIGURE 1.2Primary vs. Secondary Stakeholder Group

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What is Business Ethics? Why Does It Matter?Ethical solutions to business and organizational problems may have more than one right alternative and sometimes, no right solution may seem available.We can learn from case studies, role playing, and discussions about how our actions affect others in different situations.Laura Nash has defined business ethics as the study of how personal moral norms apply to the activities and goals of commercial enterprise, as dealing with three basic areas of managerial decision making:Choices about what the laws should be and whether to follow themChoices about economic and social issues outside the domain of lawChoices about the priority of self-interest over the companys interests

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What Are Unethical Business Practices?Surveys have identified the following recurring themes to prominent everyday ethical issues facing businesses and their stakeholders:Managers lying to employeesOffice nepotism and favoritismTaking credit for others workReceiving/offering kickbacksStealing from the companyFiring an employee for whistle-blowingPadding expense accountsDivulging confidential information or trade secretsTerminating employment without sufficient noticeUsing company property/materials for personal use

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What Are Unethical Business Practices?The most unethical behavior, per one survey, happens in the following areas:GovernmentSalesLawMediaFinanceMedicineBankingManufacturing

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Why Does Ethics Matter In Business?Doing the right thing matters to employers, employees, stakeholders, and the public.For companies, it means saving billions of dollars each year in lawsuits, settlements, and theftTobacco industryDow CorningCosts to businesses include:Deterioration of relationshipsDamage to reputationDeclining employee productivity, creativity, and loyaltyIneffective information flow throughout the organizationAbsenteeism

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Levels of Business EthicsBecause ethical problems are not only an individual or personal matter, it is helpful to see the different levels at which issues originate and how they move to other levels.Because business leaders and professionals must manage a wide range of stakeholders inside and outside their organizations, understanding the issues that stakeholders face facilitates our understanding of the complex relationships between participants involved in solving ethical problems.

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FIGURE 1.3Business Ethics Levels

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Why Use Ethical Reasoning In Business?Ethical reasoning is required in business for at least three reasons:Many times laws are insufficient and do not cover all aspects or gray areas of a problemFree-market and regulated-market mechanisms do not effectively inform owners and managers about how to respond to complex issues and crises that have far-reaching ethical consequencesComplex moral problems require an intuitive or learned understanding and concern for fairness, justice, and due process to people, groups, and communities

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Can Business Ethics Be Taught And Trained?Ethic courses should not:Advocate a set of rules from a single perspective Not offer only one best solution to specific ethical problemsNot promise superior or absolute ways of thinking and behaving in situations

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Can Business Ethics Be Taught And Trained?Ethic courses and training can do the following:Provide people with rationales, ideas, and vocabulary Help people make sense of their environmentsProvide intellectual weapons Enable employees to act as alarm systems for company practicesEnhance conscientiousness and sensitivityEnhance moral reflectiveness and strengthen moral courageIncrease people's ability to become morally autonomous ethical dissentersImprove the firms moral climate

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Can Business Ethics Be Taught And Trained?Other scholars argue that ethical training can add value to the moral environment of a firm and to relationships in the workplace by:Finding a match between employers and employees valuesManaging the push-back pointHandling an unethical directiveCoping with a performance system that encourages unethical means

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Stages Of Moral DevelopmentKohlbergs 3 levels of moral development: Level 1: Pre-conventional level (self-orientation)Stage 1: PunishmentStage 2: Reward seekingLevel 2: Conventional level (others orientation)Stage 3: Good personStage 4: Law and orderLevel 3: Post-conventional level (universal, humankind orientation)Stage 5: Social contactStage 6: Universal ethical principles

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