5 business ethics, competitve advantage and cobp
TRANSCRIPT
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ETHICS, BUSINESS DECISIONS,
COMPETITVE ADVANTAGE AND
CODE OF BUSINESS PRINCIPLE
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SEQUENCE
What are business ethics?What are some of the approaches of
dealing with ethics?
UtilitarianismUniversalism
Rights
Why should companies be concerned with
ethic?
Which theories should be used?
Competitive Advantage
Code of Business Principle
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Some Surveys
International Survey of more than 300
companies worldwidetop ethical issues
Employees conflict of interest 91%
Inappropriate gifts 91%
Sexual Harassment 91%
Unauthorized Payments 85%
Wall Street J survey of 1400 workingwomen
Managers lying, expense-account abuses,
office nepotism, taking credit for other work
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Business Ethics
Business Ethics meansconducting all aspects of
business and dealing with all
stakeholders in an ethicalmanner
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Common examples
Individual values and the company
Receiving or offering kickbacks
Stealing from company
Padding expense accounts to obtainreimbursements for questionable expenses
Divulging confidential information or trade
secrets
Using company property and materials forpersonal use
Conflict of interest
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Language of Ethical Lapse
Everybody else does it
Not a valid choicespecially if law is being
broken
If we dont do it, someone else will
Well wait until the law enforcers tell us its
wrong
Whats legal may not be ethicalIt does not really hurt anyone
The system is unfair
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Individual determinants
Religion
Belief that the divine reveals the nature of
right and wrong in various areas of lifeEx: Reciprocity, promise keeping, fairness,
charity and responsibility to othersall
found in Confucianism, Hinduism,
Buddhism, Judaism, Christianity and Islam
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Other determinants
Moral philosophy
Lawrence Kohlberg's stages of
development
Kantian Ethics on morality
Cultural differences
Ethical philosophies
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Lawrence Kohlbergs Six stages
Pre-Conventional
1. Obedience and punishment orientation (How can I avoid
punishment?)
2. Self Interest Orientation
Conventional3. Interpersonal accord and conformity (social norms)
4.Authority and Social order maintaining Orientation(law and order morality)
Post Conventional5. Social contract Orientation
6. Universal ethical principles
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Common approaches to Business ethics
Utilitarianismbasic premise is that an
action is judged as right or wrong
depending on the consequences of theaction
Universalismthe means justify the ends
of an action, not consequences
Rightsbased on entitlements and
unquestionable claims
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Problems with Utilitarianism
Not always possible to calculate utility or toanalyze massive amount of information
Ignores distribution of goodis it uniformlydistributed or favours specific group?
No common definition of what is good?
Assumes that all can be measured in a
common numerical scaleAction that produces the greatest balanceof value for greatest number of people.
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Kantian Ethics
Universalityit counters the natural
temptation to make exceptions for
ourselves or to apply double standards
Also provides hypothetical answersunderlying the common question What if
everyone did that?
Provides a strong foundation for rights
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Weaknesses
Does not lend itself to precise method for
decision making
Difficult to think of all humanity each time a
decision has to be madePlaces greater emphasis on welfare of
every person, but does not really draw a
line
Hard to receive conflicts when criteria has
to treat everyone equallydecisions
typically involve conflicts of interests
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Why Ethics?
Laws are insufficient and do not cover all
aspects or gray areas of a problem
Freemarket and regulatedmarket
mechanism do not effectively inform
owners and managers about how torespond to complex crises
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Globalization, Business Ethics
&
Competitive Advantage
Globalization has brought about greater
involvement with ethical considerations and
most importantly achieving competitive
advantage through business ethics.
Globalization and business ethics are linked
as they affect a companys ability to committo its shareholders, in particular to external
investors, and preserve the trust needed for
further investment and growth.
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Ethics of Scandal
Versus
Ethics of Strategy
It is increasingly important for companies to
deal with ethics as a corporate strategy that,
if uniquely implemented, could achievecompetitive advantage for the company
rather than waiting to react to possible
ethical issues of importance to the targeted
stakeholders.It is the necessity of being ethically
proactive company rather than being
ethically reactive company.
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Business Ethics as
Competitive Advantage
As the speed of comparable tangible assets
acquisition accelerates and the pace ofimitation quickens, firms that want to sustain
distinctive global competitive advantages
need to protect, exploit and enhance their
unique intangible assets, particularlyINTEGRITY(building firms of integrity is the
hidden logic of business ethics).
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Business Ethics as
Competitive Advantage
(Cont.)
both inside and outside of the organization behavior
that is trusting, trustworthy, and cooperative, not
opportunistic, will give the firm a competitive
advantage.
Sustainable global competitive advantage occurs when a
company implements a value-creating strategy which
other companies are unable to imitate.
For example, a company with superior business
leadership skills in enhancing integrity capacity increasesits reputation capital with multiple stakeholders and
positions itself for competitive advantage. The purpose of
ethics is to enhance our lives and our relationships
Th C d O i ll k h ld i ll d ll
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Obeying
The Law
Standard
of Conduct
Business
Integrity
Conflict
of Interest
Community
Consumers
Employees
Business
Partners
Environment
Impact on Society
Responsible
Management
Practices
Mutually
Beneficial
Relationships
Public
Activities
Innovation
Competition
Shareholders
The CodeOur impact on all stakeholders, internally and externally
Foundation of Trust
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Standard Of Conduct
Foundation of Trust
Be open in your communication
Respect others, guarding against oppressive
behaviour
Treat people fairly and equally; no favouritism
Manage Organisations and your own reputation
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Obeying the LawWe must
obey the laws of the country
Foundation of Trust
Obeying the countrys law is the minimum
standard you are expected to follow
Manage your personal conduct
Adhere to proper corporate conduct
Pleading ignorance is no defense
B i i t it W t
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Business integrityWe must
never give or receive bribes or
improper advantages
Foundation of Trust
Improper advantages include things like gifts over
a certain amount, excessive entertainment,
consulting fees
Make sure there is proper accounting, including
accurate financials, data integrity
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Conflict of interestOur personal activities
should not conflict with our responsibilities
to the company
Foundation of Trust
Ensure there is no conflict of interest in recruiting family
members or people you have personal connections with
Ensure there is no conflict of interest when providing
business opportunities to people you are connected with
You have a duty to protect proprietary information
Do not abuse your Organisation position for personal gain
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Community involvementOrganisation must
strive to be a good corporate citizen and work in
partnership with the communities in which we
operate
Mutually Beneficial Relationship
Have strong tradition of doing well by doing good
Have a robust CSR programme of campaigns,
partnerships and ongoing activities
Conduct brand imprints
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Business partnersExpect business
partners to behave in a way that is
consistent with the business principles!
Mutually Beneficial Relationship
Ask business partners to obey the law and respect
our Code & encourage them to sign up to it as well
We conduct due diligence on our business
partners
We source alternative partners
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Business partnersThe basic requirements
all should follow
Mutually Beneficial Relationship
Obey the law
Do not take, give or encourage bribery
Respect employees dignity
Recognize the right to freedom of association
Ensure safe and healthy working conditions
Ensure product safety
Care for the environment
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EmployeesRespect the basic rights of
employees & the dignity of colleagues
Mutually Beneficial Relationship
Practice respectful management methods
Do not discriminate-gender, sex, race, religion, age
Do not harass or bullyand do not accept it
(physical or psychological)
You have a right to air your views
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EmployeesBeliefs)
Mutually Beneficial Relationship
Communicate and consult with employees
Encourage and appreciate diversity, mutual trust
and respect
Develop individuals skills and capabilities
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ShareholdersProvide all shareholders with
reliable information on activities and financial
performance
Responsible Management Practices
Practice international standards of corporate
governance
Ensure timely and accurate disclosure of material
information
Non compliance can lead to wide ranging
consequences
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Innovation
Our scientific innovations need to respect theconcerns of our consumers and of society.
We must ensure the health of consumers
We must ensure the highest standards of
product safety
Responsible Management Practices
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CompetitionOrganisation should
believe in vigorous, yet fair competition
Responsible Management Practices
We manage fairly our pricing, promotion and
sale of products (no illicit agreements that
distorts market)
We manage fairly our relationships with
suppliers and competitors
We follow global guidelines to ensure
compliance with competition/anti-trust laws
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Consumerscommitted to offering
products that offer good quality and value
Ensure that products are safe and clearly and
accurately advertised and labeled
Products are designed to increase the quality of life
We aim to foster complete trust