
Standards of moral behavior, that is,
behavior is accepted by society as ‘right’
versus ‘wrong’

The study of how people try to live their
lives according to the standard of “right” or
“wrong” behavior – in both how we think
and behave toward others and how we
would like them to think and behave
toward us.

Application of standards of moral behavior to
business situation.
or…

The study of how personal moral norms apply
to activities and goals of commercial
enterprise.
… Who are Stakeholders?

Someone with a share or interest(benefit) in a
business enterprise including stockholders,
employees, customers, suppliers /vendor
partner, retailer/ wholesaler, federal
government, creditors, and community.
STAKEHOLDERS

Suppliers/Vendor partners
INTEREST IN ORGANIZATION



Retailers/ Wholesalers


Prompt payment for
delivered goods
Regular orders with and
acceptable profit margin
Accurate deliveries of
quality products on time
and at a reasonable cost
Safe and reliable product
STAKEHOLDERS

Stockholders
INTEREST IN ORGANIZATION



Employees



Growth in the value of
company stock
Dividend income
Stable employment
Fair rate of pay
Safe & comfortable
working environment
STAKEHOLDERS

Federal government
INTEREST IN ORGANIZATION



Creditors


Tax revenue
Operation in compliance
with all relevant legislation
Principle and interest
payments
Repayment of debt
according to the agreed
schedule
STAKEHOLDERS
INTEREST IN ORGANIZATION

Customers

“Fair Exchange” – a
product or service of
acceptable value and
quality for the money
spent

Community

Employment of local
residents
Economic growth
Protection of local
environment


STAKEHOLDERS

Stockholders
INTEREST IN ORGANIZATION




Employees



Misleading financial
information on which to
base investment decisions
Loss of stock value
Cancellation of dividend
Loss of employment
Unfair rate of pay
Unsafe & uncomfortable
working environment
STAKEHOLDERS
INTEREST IN ORGANIZATION

Suppliers/Vendor partners

Delayed payment for
delivered goods and
services

Retailers/ Wholesalers

Inaccurate deliveries of
quality products and at
unreasonable cost
Unsafe and unreliable
product

STAKEHOLDERS

Federal government
INTEREST IN ORGANIZATION



Creditors


Loss of tax revenue
Failure to comply with all
relevant legislation
Loss of principle and
interest payments
Failure to repay debt
according to the agreed
schedule
STAKEHOLDERS

Customers
INTEREST IN ORGANIZATION



Community
Poor service quality
Poor product quality
Unemployment of local
residents
 Economic decline
 No protection of local
environment


Impacts of operating firm unethically :




Financial penalties: lawsuits, theft
Deterioration (becoming worse) of relationships
Damage to reputation
Declining employee productivity, creativity, loyalty,
ineffective information flow throughout organization,
absenteeism (regular absence from work w/o good
reason)
 Difficulties for recruiting and retaining valued
professionals due to bad reputation of company
(The goal of living an ethical life)
“Do unto others as you would have them do
unto you.” or
“Treat others as you would like to be
treated.”

Not everyone thinks like that…

So, if you apply the golden rule to everyone
you met, you possibly get in trouble.

Example:
 If you are the person who values on honesty as a
priority, and you found an expensive wallet fall on
the sidewalk, you will definitely try to return it to
the owner.
 However, if you lost your wallet, could you
automatically expect that the person who found it
would make the same effort to return it to you?

Situation in which there is no obvious “right”
or “wrong” decision, but rather “right” or
“right” answer.

Example:
 You are the manager of the restaurant which is not popular
among customer, sales in each day is quite low, some days could
sell only few serves.
 You, as the manager, notices one of ingredient (which is very
expensive as it has to be imported from overseas) use in cooking
process already expired. Then you report to your boss.
 Due to the fact that, revenues from sales is not quite good, he
asks you to continue using that expired ingredient as it just only
be used for 2 dishes on the menu (out of 30 dishes).

Example (con’t):
 In addition, chef also has to taste the dish has this ingredient
before serving every time whether it still be the same taste for
customer or not.
 The boss says, whenever the taste changes, he will order a new
batch of this ingredient from overseas.
 What would you do after got your boss’s answer like this?
1.
Analyze the consequences: who will be
affected by your action (negative and positive
effects) both in long run and short run?
2.
Analyze the actions: consider all options from
a different perspective, which option offers actions
that are least problematic?
3.
Make a decision
1.
2.
3.
4.
5.
What are the facts?
What can you guess about the facts you
don’t know?
What do the fact mean?
What does problem look like through the
eyes of people involved?
What will happen if you choose one thing
rather than another?
6. What do your feelings tell you?
7. What will you think of yourself if you decide
one thing or another?
8. Can you explain and justify your decision to
others?
Business Ethics
 Deals with what is “right” and “wrong” in
organizational decisions, behavior, and policies
 Provides principles and guidelines that assist
people in making informed choices that balance
economic interests and social responsibilities.