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Strategy and Ethics. Ethics involves notions of Right and wrong Fair and unfair Moral and immoral Business Ethics is the application of general ethical principles and standards to the actions and decisions of business organizations and the conduct of their personnel

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strategy and ethics
Strategy and Ethics
  • Ethics involves notions of
    • Right and wrong
    • Fair and unfair
    • Moral and immoral
  • Business Ethics is the application of general ethical principles and standards to the actions and decisions of business organizations and the conduct of their personnel
  • Ethical principles in business are not materially different from ethical principles in general
  • Business actions are judged by the general ethical standards of society
  • Legal versus Ethical Behavior
business ethics in the global community
Business Ethics in the Global Community
  • Some notions of right and wrong are universal while others are not (universalism vs. relativism)
  • Cross-culture variability in ethical standards
  • Determining what is ethical when local standards vary
  • Managers have to figure out how to navigate the gray zone when cross-culture ethics differ
  • Should adhere to higher standard(s)
  • 3 Schools of Thought
    • Ethical Universalism
    • Ethical Relativism
    • Integrative Social Contracts Theory
ethical universalism
Ethical Universalism
  • Ethical Universalism
    • The most important concepts of what is right and wrong are universal and transcend culture, society, and religion
    • Results in a set of universal ethical standards that apply to members of all societies, all companies, and all businesspeople
    • Sets limits and puts boundaries on ethical behavior
ethical relativism
Ethical Relativism
  • Ethical Relativism
    • Differing religious beliefs, customs and behavioral norms across countries and cultures give rise to multiple sets of standards concerning what is ethically right or wrong
    • What is ethical or unethical depends on the prevailing local ethical standards and can vary from one nation to another
    • There can be multiple sets of ethical standards
    • There is no one-size-fits-all set of ethical norms
integrative social contracts theory
Integrative Social Contracts Theory
  • Integrative Social Contracts Theory
    • Provides a middle position
    • The ethical standards a company should try to uphold are governed by both:
      • A common or universal set of ethical standards that apply everywhere
      • Ethical standards that vary according to local custom (i.e., cultures, traditions, and shared values)
    • The more stringent standards should always take precedence
three categories of management morality
Three Categories of Management Morality
  • Moral Managers
    • Are dedicated to high standards of ethical behavior both personally and on the part of their organizations
  • Immoral Managers
    • Are actively opposed to or have no regard for ethical standards in business behavior
  • Amoral Managers
    • Do not pay attention or are blind to business ethics or believe that business and ethics don’t mix
drivers of unethical strategies and business behavior
Drivers of Unethical Strategies and Business Behavior
  • Apparent pervasiveness of immoral and amoral business people
  • Confusion over conflicting ethical standards
  • Faulty oversight that allows for the overzealous pursuit of personal gain, wealth, and self interest
  • Heavy pressures to beat earnings targets
  • Unethical company cultures
approaches to managing a company s ethical conduct
Approaches to Managing a Company’s Ethical Conduct
  • Unconcerned or nonissue approach
    • Do what is legal; do what we can get away with
  • Damage control approach
    • Prevent adverse publicity; use window dressing
  • Compliance approach
    • Put a compliance system in place to control ethical behavior
  • Ethical culture approach
    • Use culture and peer pressure to control ethical behavior
why should company strategies be ethical
Why Should Company Strategies Be Ethical?
  • An unethical strategy is morally wrong and reflects badly on the company
    • Puts reputation at risk and can have costly consequences
    • Time consuming and costly to rehab reputation
    • May be shunned by customers
    • Makes it difficult to recruit and retain employees
  • An ethical strategy is good business and is in the self-interest of shareholders
strategy and corporate social responsibility
Strategy and Corporate Social Responsibility
  • Companies should balance strategic actions to benefit shareholders against the duty to be a good corporate citizen
  • Should consider the effect that company actions will have on:
    • Employees
    • Local communities
    • The environment
    • Society at large
  • Companies must demonstrate a social consciousness
what is meant by corporate social responsibility
What is Meant by Corporate Social Responsibility?
  • 5 Components of Socially Responsible Business Behavior
linking strategy and social responsibility
Linking Strategy and Social Responsibility
  • There is no generic approach linking strategy and social responsibility
  • Social Responsibility Strategy - the particular combination of socially responsible endeavors a company elects to pursue
  • Social responsibility must be rooted in the company and it’s values
  • Each company’s version of being socially responsible is unique
the moral and business case for csr
The Moral and Business Case for CSR
  • It’s the right thing to do
  • Corporations have a duty to be good corporate citizens
  • A business is obligated to act as a responsible citizen and do its fair share to promote the general welfare
  • Should act in the overall best interests of society as well as shareholders
  • It generates internal benefits
  • It reduces the risk of reputation-damaging incidents and can lead to increased buyer patronage
linking a company s strategy to its ethical principles and core values
Linking a Company’s Strategy to Its Ethical Principles and Core Values
  • Vision/Mission
  • Code of ethics
  • Core values and a values statement
  • Culture - perspective
  • Should not be window dressing
  • Communication
  • Leading by example
  • Should influence and be part of strategy