Download Business Law Today 8th Edition 2008

BUSINESSthLAW TODAY
Essentials 8 Ed.
Roger LeRoy Miller - Institute for University Studies, Arlington, Texas
Gaylord A. Jentz - University of Texas at Austin, Emeritus
Chapter
2
© 2008 West Legal Studies in Business
A Division of Thomson Learning
Ethics and Business
Decision Making
1
Learning Objectives
 What is ethics? What is business ethics?
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Why is business ethics important?
How can business leaders encourage their
companies to act ethically?
What are corporate compliance programs?
How do duty based ethical standards differ
from outcome-based ethical standards?
What types of ethical issues might arise in
the context of international business
transactions?
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A Division of Thomson Learning
2
Business Ethics
 Ethics is the study of right and wrong
behavior; whether an action is fair, right
or just.
 In business, ethical decisions are the
application of moral and ethical
principles to the marketplace and
workplace.
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Why is Business Ethics Important?
 Directors and Officers owe a complex
set of ethical duties to the company,
shareholders, customers, community,
employees, and suppliers.
 When these duties conflict, ethical
dilemmas are created.
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Importance of Ethical Leadership
 Importance of Ethical Leadership.
CASE 2.1 In re the Exxon Valdez (2004).
 Creating
Ethical Codes of Conduct.
Costco.
Clear Communications to Employees.
Johnson and Johnson: web-based ethical
training.
 Corporate Compliance Programs 
Sarbanes-Oxley and Web-based reporting.
 Conflicts and Trade-Offs.
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Corporate Compliance
 A number of contexts, within the
employer-employee relationship, are
fraught with ethical considerations,
such as:
Having a system in place to detect, prevent,
eliminate, and punish behavior of a harassing
nature toward employees.
Avoiding wrongful discharge, either actual or
constructive.
Adhering to ethical principles during
corporate restructuring and downsizing.
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Companies That Defy the Rules
 Enron’s Growth and Demise in a
Nutshell.
 Merck & Company – A Brief History of
Vioxx.
Merck’s awareness of the risks.
Merck’s choice.
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Business Ethics and the Law
 Legal compliance is the moral/ethical
minimum.
 Simply obeying the law does not
necessarily make the business practice
ethical.
 “Gray” areas in the law.
Business leaders must contemplate the
ethical implications of a business decision.
CASE 2.2 Guin v. Brazos Higher
Education Service Corp. (2006).
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Approaches to Ethical Reasoning
 Duty Based Ethics - derived from
religious and philosophical principles.
Religious Ethical Standards.
Kantian Ethics.
Rights Principles.
 Outcome-Based Ethics - seek to ensure
a given outcome.
Utilitarianism.
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9
Corporate Social Responsibility
 Profit Maximization: a corporation exists
to use its resources to increase its profits,
within the bounds of the law.
 Stakeholder Approach. Corporate
actions affect others.
 Corporate Citizenship. Corporations
should be good citizens.
 Maximum vs. Optimum Profits.
CASE 2.3 Fog Cutter Capital Group Inc. v.
Securities Exchange Commission (2007).
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Business Ethics on a Global Level
 American companies must be trained in
cross-cultural business practices.
 Monitoring the Employment Practices
of Foreign Suppliers.
Corporate Watch groups can disseminate
information instantly around world.
 Foreign Corrupt Practices Act.
Bribes and Accounting Practices.
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A Division of Thomson Learning
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