The effects of business ethics
Download
1 / 37

The Effects of Business Ethics - PowerPoint PPT Presentation


  • 61 Views
  • Updated On :

The Effects of Business Ethics. Andy Gustafson Creighton University. Point #1: Business Is Global. Effects of Mortgage Securities failure in US: 1. IMF calculates worldwide losses in Trillions 2. Multi-Billion in Rescue Packages in US 3. 572 Billion in Rescue assurances in Ireland

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'The Effects of Business Ethics' - wardah


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
The effects of business ethics l.jpg

The Effects of Business Ethics

Andy Gustafson

Creighton University


Point 1 business is global l.jpg
Point #1: Business Is Global

  • Effects of Mortgage Securities failure in US:

  • 1. IMF calculates worldwide losses in Trillions

  • 2. Multi-Billion in Rescue Packages in US

  • 3. 572 Billion in Rescue assurances in Ireland

  • 4. France 280 Billion Euro Bank Bailout

  • 5. 90 Billion British rescue package

  • 6. Spain ‘’Bank Assurances” 72 Billion


More effects of us problems l.jpg
More Effects of US Problems

  • 7. German DAX index -38%

  • 8. Brazillian BM&F Bovespa -40%

  • 9. Shanghai SE Composite -60%

  • 10. Russian RTS -67%

  • 11. US S&P -33%

  • 11. Iceland is perhaps going to go bankrupt

  • 12. Sovereign Wealth Funds have pulled out Billions from US


Current financial crisis is due to ethical lapses at every level l.jpg
Current Financial Crisis is Due to Ethical Lapses at Every level

  • 1. People borrowing for houses beyond their means

  • 2. Banks and Mortgage Brokers not taking responsibility for shaky loans

  • 3. Financial Firms wrapping shaky loans into debt securities, a novel financial tool.

  • 4. Creative Accounting Irregularities

  • 5. Investment/Financial firms focused on short-term

  • 6. Analysts under-representing risks

  • 7. Wall Street & Stock Consumers acted recklessly

  • 8. Lack of regulation and oversight

  • 9. Conflicts of interests throughout system


Root symptoms l.jpg
Root Symptoms level

  • Imprudence (unwise risk taking)

  • Taking responsibility without understanding risks

  • Short term view

  • Unrealistic optimism

  • Greed

  • Passing consequences to the unknowing


Our financial crisis is in part due to ethical lapses l.jpg
Our Financial Crisis is In part due to ethical Lapses level

  • Failure to lead

  • Failure to take responsibility

  • Failure to watch out for interests of others

  • Self centered exuberance


What is ethics l.jpg
What is Ethics? level

  • Minimal: What we shouldn’t do

    • Don’t steal, don’t kill, don’t lie

  • Better: What we should do (justice)

    • Be fair, Be honest, Fulfill duties, work hard

  • Best: What we could do to make things excellent for all of us…

    • Improve Current Methods

    • Aim High & Create a Beautiful World as we make $


  • Business its purpose goal l.jpg
    Business: Its purpose/goal level

    The purpose of business is to make me money, and increase stockholder value

    (Milton Friedman)


    Business as a means to transform culture and society l.jpg
    Business as a Means to Transform Culture and Society level

    • How can we use our power, position, and money to leverage real change in the world around us through business decisions which will change the face of our

      cities and communities

      where we are?


    Business ethics l.jpg
    Business Ethics??? level

    • Business needs ethics to thrive:

      • Trust is foundational to contracts

      • Customer Satisfaction/loyalty

      • Happy Employees = productive employees

      • Transparency is essential to development

      • Unethical practices ultimately undermine business

      • Globalization requires some common values

      • Many Customers want ethical businesses

      • Ethics is important for branding/marketing


    Question l.jpg
    Question: level

    • Does Ethical perception play a significant role in consumer behaviors?

      --In other words—

    • Do Customers really buy products according to the ethics of companies??


    Answer yes l.jpg
    Answer: Yes. level

    • Boycotts by ethical shoppers cost big brands at least £2.6bn a year

    • 2002 ethical consumption in the UK was worth £19.86bn in 2002

      (Co-operative Bank EP Index, 2003)


    Consumers care about ethics l.jpg
    Consumers Care about Ethics level

    Co-operative Bank

    Ethical Consumerism Report

    • In 2002 every household in the UK spent an average £366 ($730) in line with their ethical values

    • In 2006 they spent £664 ($1330)

      (+ 81 per cent)


    The ethics factor l.jpg
    The “Ethics Factor” level

    • In developed competitive markets, many companies distinguish themselves by positioning their brand as ‘ethical’ or ‘socially concerned’


    Ethics rankings l.jpg
    Ethics Rankings level

    • The 100 Best Corporate Citizens list ranks firms based on eight categories: 

    • Shareholders

    • community

    • governance

    • diversity

    • employees

    • environment

    • human rights

    • product


    Business ethics 100 best corporate citizens 2007 l.jpg
    Business Ethics 100 Best Corporate Citizens 2007 level

    1. Green Mountain Coffee 13. Texas Instruments

    • 2. Advanced Micro Devices 14. Herman Miller

    • 3. NIKE 15. Rockwell Collins

    • 4. Motorola 16. Interface,

    • 5. Intel Corporation 17. Steelcase

    • 6. IBM Inc. 18. Dell Inc.

    • 7. Agilent Technologies 19. Cisco

    • 8. Timberland 20. Lam Research

    • 9. Starbucks 21. Johnson & Johnson

    • 10. General Mills 22. Adobe Systems Inc.

    • 11. Salesforce.com, Inc. 23. Kimberly-Clark Corp

    • 12. Applied Materials 24. Gaiam, Inc.


    Business ethics 100 best corporate citizens 200717 l.jpg
    Business Ethics 100 Best Corporate Citizens 2007 level

    • 25Gap, Inc. (The) 39United Parcel Service

    • 26Chaparral Steel 40Microsoft

    • 27Pitney Bowes, Inc. 41Chittenden, Inc

    • 28Freddie Mac 42PepsiCo, Inc.

    • 29Google, Inc. 43Energy Conversion Devices

    • 303M Company 44McGraw-Hill

    • 31Heartland Financial USA 45Ecolab

    • 32Chicago Mercantile Ex 46Wells Fargo

    • 33Southwest Airlines Co. 47Autodesk

    • 34Eastman Kodak 48Xilinx,

    • 35Cummins, Inc. 49Xerox Corporation

    • 36American Express 50TradeStation Group

    • 37Northwest Natural Gas 51Kellogg Company

    • 38Wainwright Bank & Trust


    Most ethically perceived brands l.jpg
    Most Ethically levelPerceived Brands

    • United Kingdom United States Germany

    • 1. Co-op 1. Coca Cola 1. Adidas

    • 2. Body Shop 2. Kraft 2. Nike

    • 3. Marks Spencer 3. Procter Gamble 2. Puma

    • 4. Traidcraft 4 Johnson & Johnson 4. BMW

    • 5. Cafédirect 4. Kellogg’s 5. Demeter

    • 6. Ecover 4. Nike 5. gepa

    • 7. Green Black 4. Sony 7. VW

    • 7. Tesco 8. Ford 8. Sony

    • 9. Oxfam 8. Toyota 8. Trigema

    • 10. Sainsbury’s 10. LEVI 10. Bio Produkte

    • 11. Innocent 10. Starbucks 10. Body Shop

    • 12. Waitrose 12. Ben Jerry’s 10. Hipp

    • 13. Clipper Tea 12. Dell 10. Mercedes

    • 14. Asda.. 14. Campbell’s 10. Wrangler


    Big brands want ethical brands l.jpg
    BIG Brands want Ethical Brands level

    • Cadbury Schweppes bought Green & Black's, a niche but fast growing UK-based organic and fair trade chocolate firm.

    • Nestlé launched Fairtrade certified Partners' Blend coffee

    • Kraft Foods introduced their Kenco Sustainable Development coffee brand


    Unethical behavior costs companies l.jpg
    Unethical Behavior Costs Companies: level

    • Corporate Scandals—United States

    • - Enron

    • - Tyco

    • - Adelphia

    • - Xerox

    • - Rite-Aid

    • - Martha Stewart & Madoff

    • - ImClone

    • - K-Mart

    • - Boeing

    • - WorldCom


    Corporate scandals europe l.jpg
    Corporate Scandals-- Europe level

    • - Mannesmann

    • - ELF

    • - Royal Dutch Shell

    • - VW

    • - ABB

    • - France Telecom

    • - ABN-Ambro

    • - Heidelberg Cement

    • - Ahold

    • - Bank of Italy

    • - Siemens

    • - Daimler-Chrysler

    • - Parmalat


    Recent subprime scandals l.jpg
    Recent “Subprime” Scandals level

    • AIG

    • Goldman Sachs

    • Bear Stearns

    • Pricewaterhouse Coopers

    • Countrywide


    These scandals cost l.jpg
    These Scandals cost $ level

    • Settlements

    • - AIG ($1.6B)

    • - Time Warner-AOL ($510M)

    • - KPMG ($465M)

    • - Adelphia ($715M)

    • - Tyco ($750M)

    • - HCA ($1.7B)

    • - Prudential ($600M)

    • - Tenet ($325M)

    • Marsh McLennan ($850M)

    • Cardinal Health ($600M)


    Results of recent scandals l.jpg
    Results of Recent Scandals level

    • Investors have become more demanding about transparency

    • Consumers have become more demanding about corporate behaviors (accounting, environment, production methods, etc)

    • In U.S., government has become involved to ease investors’ concerns– more regulation for business!!


    Environmentally green l.jpg
    Environmentally “green” level

    • “Today, social norms regarding the environment are changing and consumers are increasingly holding brands accountable for what they do … As a result, more and more companies are making investment decisions that incorporate brand impact and brand risk into their equations.” (David Wigder)


    What can be done l.jpg
    What Can Be Done? level

    • There are a number of ways to improve the ethical image of your brand.

    • Superficial changes are not enough, and authentic ethical commitment of a brand is displayed in real action on the part of companies in order to have real effect.



    Example cocacola l.jpg

    Coke is proactively redesigning its bottle to reduce material use and pledging to recycle 100% of bottles sold in the US.

    Results:

    Reduce Material Costs 10%

    Improve Public Relations/Image with Public

    Example: CocaCola


    Ethical production l.jpg
    Ethical Production material use and pledging to recycle 100% of bottles sold in the US.

    • Nike was criticized for sweatshop labor issues in East Asia, and many consumers boycotted Nike.


    Nike s response l.jpg
    Nike’s Response material use and pledging to recycle 100% of bottles sold in the US.

    • Nike responded to these criticisms, changed some of their production arrangements, and returned to the list of the “100 most ethical companies” list


    Financial honesty and transparency l.jpg
    Financial Honesty and Transparency material use and pledging to recycle 100% of bottles sold in the US.

    • Bad Example:


    Financial honesty and transparency32 l.jpg
    Financial Honesty and Transparency material use and pledging to recycle 100% of bottles sold in the US.

    • Wells Fargo Bank is known for its disclosure of financial data.


    Treatment of workers l.jpg
    Treatment of Workers material use and pledging to recycle 100% of bottles sold in the US.

    • Costco is well known for its great treatment of employees


    Slide34 l.jpg
    vs material use and pledging to recycle 100% of bottles sold in the US.

    • 48% Insured 82% Insured

    • 2 yr wait for ins. 6 month wait

    • 66% paid by walmart 92% paid by costco

    • 50% Turnover 92% Turnover

    • $7.50-11.45/hr $10.50-17/hr


    Strong moral leadership l.jpg
    Strong Moral Leadership material use and pledging to recycle 100% of bottles sold in the US.

    • “CEO leads troubled Tyco into turnaround”

    • Ed Breen, CEO

    • “Cleaned House”:

    • Fired Management

    • Fired Board


    Slide36 l.jpg

    • What Causes Unethical Behavior? material use and pledging to recycle 100% of bottles sold in the US.

    • Irrational exuberance + uninhibited self-interest

    • Arrogance

    • Fraud

    • Conflicts-of-interest

    • Preferential treatment

    • Accounting arbitrage

    • Failure of independent auditors

    • Failure of analysts

    • Failure of rating agencies

    • Failure of regulators

    • Failure of board oversight

    • Culture of greed


    Slide37 l.jpg

    Corporate Culture and Performance material use and pledging to recycle 100% of bottles sold in the US.

    Starbucks

    Nordstroms

    FedEx

    Southwest Airlines

    Costco

    Kiewit

    Google