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ETHICS PROBLEMS IN ORGANIZATIONS Focus on Stakeholders. referencing Chapter 8 Trevino & Nelson, Managing Business Ethics . NY: Wiley, 1999. Understand the “stakeholder approach” to classifying ethical performance of firms.

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ethics problems in organizations focus on stakeholders

ETHICS PROBLEMS IN ORGANIZATIONS Focus on Stakeholders

referencing

Chapter 8

Trevino & Nelson, Managing Business Ethics. NY: Wiley, 1999.

objectives
Understand the “stakeholder approach” to classifying ethical performance of firms.

Identify categories of ethical problems at the organizational-level based on internal and external stakeholders.

3. Appreciate the concept of “escalation” in which matters starting as small issues become crises.

Objectives
8 steps to sound ethical decision making chapter 4 pp 85 90
8 Steps to Sound Ethical Decision-Making(Chapter 4, pp. 85-90)
  • Gather the Facts of the Situation
  • Define the Ethical Issues
  • Identify the Affected Parties (Stakeholder Analysis)
  • Identify the Consequences (Long v. Short-term, Symbolic Consequences)
  • Identify the Obligations
  • Consider Your Character and Integrity
  • Think Creatively About Potential Actions
  • Check Your Gut.
a stake
A “Stake”
  • A “Claim”
  • A right to something
  • A demand for something due or perceived to be due.
stakeholder analysis also called constituent analysis see pg 86
Stakeholder Analysis(also called “Constituent Analysis”) see: pg. 86
  • Identify the parties affected (both harm & benefits) by your decisions.
  • Being able to see the situation through others’ eyes is a key moral reasoning skill.
  • “Role taking” (Kohlberg)
  • Start with those most immediately affected and work outward to include those who potentially may feel ‘collateral effects’.
stakeholders include
Employees

Mangers

Owners (Shareholders)

Customers

Suppliers

Community

Stakeholders Include

~ Internal ~

~ External ~

classifying stakeholders
Groups or individuals with whom the organization has a contractual relationship.

Customers, employees, shareholders, vendors & suppliers and government

Groups or individuals to whom the organization has obligations, but who are not contractual partners.

Community groups, citizens, other businesses, professional entities.

Classifying Stakeholders

~ Primary ~

~ Secondary ~

factors that affect ethical behavior
Factors that Affect Ethical Behavior

Issue

Intensity

Individual

Characteristics

MODERATORS

Ethical

Dilemma

Stages of

Moral

Development

Ethical/

Unethical

Behavior

Structural

Characteristics

of Organization

Organizational

Culture

issue escalation
Issue Escalation
  • Through mismanagement, denial, or malevolence, small problems mushroom into huge ethical, legal and public relations nightmares.
ethics and consumers
Ethics and Consumers

Marketing : an exchange-based function in which relationships, trust and norms play critical roles.

As a consequence, the marketing function is fundamentally intertwined with ethical issues.

consumer ethics
Consumer Ethics

Few laws protecting consumers before 1960’s.

Pure Food & Drug Act (1906) prohibited adulteration of food & drugs.

McPherson v. General Motors gave the right to sue auto mfgs. For defective vehicles.

1962 Kennedy Principles: 4 Consumer Rights

  • Right to Safety
  • Right to be Heard
  • Right to Choose
  • Right to be Informed
due care theory consumer products services
“Due Care” TheoryConsumer Products & Services
  • Design:meet gov’t regs & specs; be safe under all foreseeable conditions, including misuse.
  • Materials:meet govt regs; be durable to withstand reasonable use.
  • Production:products made without defects.
  • Quality Control:products inspected regularly.
  • Packaging, Labels, Warnings:safely packed; clear directions for use; clear description of hazards.
  • Notification: manufacturers should have system to recall dangerous products after distribution.
share holder ethics
Shareholder Ethics
  • Clear ethical obligation to “owners”
  • Serve the interest of owners & try to perform well economically over time.
  • Perform well in long term, not just short run.
community obligations
Community Obligations
  • Companies are citizens in their communities.
  • Because of their size and complexity of relationships w/ community, they can have a disproportionate impact.
  • The most common issues are environmental.
corporate social responsibility
Corporate Social Responsibility

INSTITUTIONALIZATION

PARTNERSHIPS

VOLUNTARISM

PHILANTHROPY

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