Deck 1: Ethics and Business

Question 1

Other than ethical values, what values might a business manager use in reaching decisions? Are there classes in your college curriculum, other than ethics, which advise you about proper and correct ways to act and decide?

Answer 1

Business ethics:
It allows the individual to understand the policies regarding various responsibilities. In general law guides the business ethics, and business ethics guides the business to gain acceptance in the market. Business ethics is the study of situations, and activities within the organization to have a conscience over the decision.
Other than ethical values, the values to be possessed by a business manager are as follows:
• Accountability in terms of meeting the deadlines with a fair and square practice,
• Being positive towards understanding other, and considering their opinion,
• Respect towards the organization, etc.
These values will build the culture within the organization, and will allow the individuals to align towards the culture. The basic advantage of having these values is that it not only guides the leader to take right decision straight forward, but also allows them to understand the opinion of other. So, by doing this the common purpose of the organization to be fair can be met.
In the worst scenario, if these values are not met the company will lose its potential in the market. This will have an adverse impact on the relationship among the stakeholders.
No, the ethics cannot be learnt in your college curriculum, as it depend the conscience of an individual to decide on what is right and wrong. It is the inbuilt quality which can be developed based on the culture. It is not a skill to be possessed. In general, all the activities within the college is a curriculum that student can accept to act ethically.

Question 2

Why might legal rules be insufficient for fulfilling one's ethical responsibilities? Can you think of cases in which a business person has done something legally right, but ethically wrong? What about the opposite - are there situations in which a business person might have acted in a way that was legally wrong but ethically right?

Answer 2

Some actions can be legally right but ethically wrong. The practice is more so evident in corporate entities. There are professionals who for their personal benefits do things that are legally right but are unethical in nature.
A case where a business person has done something legally right but ethically wrong is explained below:
It was legally right when mangers of the company cheated shareholders by foregoing profitable projects at the expense of company's growth. The managers had fooled the shareholders by not acting in their interests which was their responsibility. So, the act done by the manager was ethically wrong.
Lying about something is legally light but ethically wrong. For example, an analyst lies by projecting wrong financial data of the business growth which is legally right but ethically wrong.
Mr. Martin Shkeli, the founder and CEO of start-up Pharma Company had raised the price of the drug called Daraprim from $13.5 to $750. The move had affected not only the low income groups but also the middle family groups. Mr. M had done ethically wrong but legally right.
A case in which a business person might have acted in a way that was legally wrong but ethically right is mentioned below:
Mr. B, who was a broker at JP Morgan, used to avoid underperforming and unsuitable products for clients acting in their interests. He was being pushed to sell JP Morgan's products than act in client's interest. He reported the issue to his supervisors and colleagues, that was illegal as per firm's legal requirements but at the same time it was ethical to act in the best interest of his clients.

Question 3

What might be some benefits and costs of acting unethically in business? Distinguish between benefits and harms to the individual from benefits and harms to the firm.

Answer 3

Unethical practices in business world are not a new thing and to control that, strict rules and regulations have been in place for long. However, there is still the presence of illicit activities in business organizations.
The benefits of acting unethically in business are listed below:
• Easy profits : When a person takes alternate route to maximize the business growth , he/she tends to make profits easily and in a very short span of time.
• Competitive : When a firm indulges in unethical activities, it strives to have an edge over other market leaders and gain the top position in the industry. A market leader attracts customers and persuades them to invest in their business and buy the best quality products.
• Good reputation : If the company has adequate fund and sufficient resources, it would make use of all unethical means to maintain good reputation in the market. A reputed name attracts many consumers as they tend to buy products and services that are renowned and best.
Among all the benefits that the company is reaping, the shareholders would be at great loss as they would be duped at the cost of the huge investment that have made in the company. The shareholders such as creditors, debtors, banks or government institutions would receive forge returns that would harm them financially and would make them bankrupt.
Hence, the financial gains that the firms and their employees would earn would eventually harm them one or the other day and it would be challenging for the tainted firm to remove stains for their unethical business conduct. Moreover, the firm would lose trust and the long standing relationship with their customers and shareholders.

Question 4

Review the distinction between personal morality and matters of social ethics. Can you think of cases in which some decisions would be valuable as a matter of social policy, but bad as a matter of personal ethics? Something good as a matter of personal ethics and bad as a matter of social policy?

Question 5

As described in this chapter, the Americans with Disabilities Act requires firms to make reasonable accommodations for employees with disabilities. Consider such conditions as obesity, depression, dyslexia, arthritis, hearing loss, high blood pressure, facial scars, and the fear of heights. Imagine that you are a business manager and an employee comes to you asking that accommodations be made for these conditions. Under what circumstances might these conditions be serious enough impairments to deserve legal protection under the ADA? What factors would you consider in answering this question? After making these decisions, reflect on whether your decision was more a legal or ethical decision.

Question 6

Do an internet search on Malden Mills and research the present status of the business and Aaron Feuerstein's ownership. How much of a difference would it make if Malden Mills was a publicly traded corporation rather than privately owned? Can any lessons be drawn from the present situation?

Question 7

Construct a list of all the people who were adversely affected by the collapse of Enron. Who, among these people, would you say had their rights violated? What responsibilities, if any, did the managers of Enron have to each of these constituencies?

Question 8

What difference, if any, exists between ethical reasons and reasons of self-interest? If a business performs a socially beneficial act in order to receive good publicity, or if it creates an ethical culture as a business strategy, has the business acted in a less than ethically praiseworthy way?

Question 9

During the recession of 2008-2009, many reputable companies suffered bankruptcies while others struggled to survive. Of those that did remain, some opted to reduce the size of their work forces significantly. In a business environment during those times, consider a company that has been doing fairly well, posting profits every quarter and showing a sustainable growth expectation for the future. However, the general ill ease in the market has caused the company's stock price to fall. In response to this problem, the CEO decides to layoff a fraction of his employees, hoping to cut costs and to improve the bottom line. This action raises investor confidence; consequently, the stock price goes up. What is your impression of the CEO's decision? Was there any kind of ethical lapse in laying off the employees, or was it a practical decision necessary for the survival of the company?

Question 10

Every year, Ethisphere Magazine publishes a list of the world's most ethical companies. Go to their website; find and evaluate their rating methodology and criteria; and engage in an assessment (i.e. provide suggestions for any modifications you might make or a more or less comprehensive list, and so on).