5 business ethics, competitve advantage and cobp

8/12/2019 5 Business Ethics, Competitve Advantage and Cobp

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ETHICS, BUSINESS DECISIONS,

COMPETITVE ADVANTAGE AND

CODE OF BUSINESS PRINCIPLE


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SEQUENCE

What are business ethics?What are some of the approaches of

dealing with ethics?

UtilitarianismUniversalism

Rights

Why should companies be concerned with

ethic?

Which theories should be used?

Competitive Advantage

Code of Business Principle


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Some Surveys

International Survey of more than 300

companies worldwidetop ethical issues

Employees conflict of interest 91%

Inappropriate gifts 91%

Sexual Harassment 91%

Unauthorized Payments 85%

Wall Street J survey of 1400 workingwomen

Managers lying, expense-account abuses,

office nepotism, taking credit for other work


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Business Ethics

Business Ethics meansconducting all aspects of

business and dealing with all

stakeholders in an ethicalmanner


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Common examples

Individual values and the company

Receiving or offering kickbacks

Stealing from company

Padding expense accounts to obtainreimbursements for questionable expenses

Divulging confidential information or trade

secrets

Using company property and materials forpersonal use

Conflict of interest


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Language of Ethical Lapse

Everybody else does it

Not a valid choicespecially if law is being

broken

If we dont do it, someone else will

Well wait until the law enforcers tell us its

wrong

Whats legal may not be ethicalIt does not really hurt anyone

The system is unfair


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Individual determinants

Religion

Belief that the divine reveals the nature of

right and wrong in various areas of lifeEx: Reciprocity, promise keeping, fairness,

charity and responsibility to othersall

found in Confucianism, Hinduism,

Buddhism, Judaism, Christianity and Islam


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Other determinants

Moral philosophy

Lawrence Kohlberg's stages of

development

Kantian Ethics on morality

Cultural differences

Ethical philosophies


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Lawrence Kohlbergs Six stages

Pre-Conventional

1. Obedience and punishment orientation (How can I avoid

punishment?)

2. Self Interest Orientation

Conventional3. Interpersonal accord and conformity (social norms)

4.Authority and Social order maintaining Orientation(law and order morality)

Post Conventional5. Social contract Orientation

6. Universal ethical principles


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Common approaches to Business ethics

Utilitarianismbasic premise is that an

action is judged as right or wrong

depending on the consequences of theaction

Universalismthe means justify the ends

of an action, not consequences

Rightsbased on entitlements and

unquestionable claims


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Problems with Utilitarianism

Not always possible to calculate utility or toanalyze massive amount of information

Ignores distribution of goodis it uniformlydistributed or favours specific group?

No common definition of what is good?

Assumes that all can be measured in a

common numerical scaleAction that produces the greatest balanceof value for greatest number of people.


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Kantian Ethics

Universalityit counters the natural

temptation to make exceptions for

ourselves or to apply double standards

Also provides hypothetical answersunderlying the common question What if

everyone did that?

Provides a strong foundation for rights


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Weaknesses

Does not lend itself to precise method for

decision making

Difficult to think of all humanity each time a

decision has to be madePlaces greater emphasis on welfare of

every person, but does not really draw a

line

Hard to receive conflicts when criteria has

to treat everyone equallydecisions

typically involve conflicts of interests


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Why Ethics?

Laws are insufficient and do not cover all

aspects or gray areas of a problem

Freemarket and regulatedmarket

mechanism do not effectively inform

owners and managers about how torespond to complex crises


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Globalization, Business Ethics

&


Globalization has brought about greater

involvement with ethical considerations and

most importantly achieving competitive

advantage through business ethics.

Globalization and business ethics are linked

as they affect a companys ability to committo its shareholders, in particular to external

investors, and preserve the trust needed for

further investment and growth.


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Ethics of Scandal

Versus

Ethics of Strategy

It is increasingly important for companies to

deal with ethics as a corporate strategy that,

if uniquely implemented, could achievecompetitive advantage for the company

rather than waiting to react to possible

ethical issues of importance to the targeted

stakeholders.It is the necessity of being ethically

proactive company rather than being

ethically reactive company.


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Business Ethics as


As the speed of comparable tangible assets

acquisition accelerates and the pace ofimitation quickens, firms that want to sustain

distinctive global competitive advantages

need to protect, exploit and enhance their

unique intangible assets, particularlyINTEGRITY(building firms of integrity is the

hidden logic of business ethics).


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Business Ethics as


(Cont.)

both inside and outside of the organization behavior

that is trusting, trustworthy, and cooperative, not

opportunistic, will give the firm a competitive

advantage.

Sustainable global competitive advantage occurs when a

company implements a value-creating strategy which

other companies are unable to imitate.

For example, a company with superior business

leadership skills in enhancing integrity capacity increasesits reputation capital with multiple stakeholders and

positions itself for competitive advantage. The purpose of

ethics is to enhance our lives and our relationships

Th C d O i ll k h ld i ll d ll


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Obeying

The Law

Standard

of Conduct

Business

Integrity

Conflict

of Interest

Community

Consumers

Employees

Business

Partners

Environment

Impact on Society

Responsible

Management

Practices

Mutually

Beneficial

Relationships

Public

Activities

Innovation

Competition

Shareholders

The CodeOur impact on all stakeholders, internally and externally

Foundation of Trust


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Standard Of Conduct

Foundation of Trust

Be open in your communication

Respect others, guarding against oppressive

behaviour

Treat people fairly and equally; no favouritism

Manage Organisations and your own reputation


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Obeying the LawWe must

obey the laws of the country

Foundation of Trust

Obeying the countrys law is the minimum

standard you are expected to follow

Manage your personal conduct

Adhere to proper corporate conduct

Pleading ignorance is no defense

B i i t it W t


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Business integrityWe must

never give or receive bribes or

improper advantages

Foundation of Trust

Improper advantages include things like gifts over

a certain amount, excessive entertainment,

consulting fees

Make sure there is proper accounting, including

accurate financials, data integrity


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Conflict of interestOur personal activities

should not conflict with our responsibilities

to the company

Foundation of Trust

Ensure there is no conflict of interest in recruiting family

members or people you have personal connections with

Ensure there is no conflict of interest when providing

business opportunities to people you are connected with

You have a duty to protect proprietary information

Do not abuse your Organisation position for personal gain


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Community involvementOrganisation must

strive to be a good corporate citizen and work in

partnership with the communities in which we

operate

Mutually Beneficial Relationship

Have strong tradition of doing well by doing good

Have a robust CSR programme of campaigns,

partnerships and ongoing activities

Conduct brand imprints


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Business partnersExpect business

partners to behave in a way that is

consistent with the business principles!


Ask business partners to obey the law and respect

our Code & encourage them to sign up to it as well

We conduct due diligence on our business

partners

We source alternative partners


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Business partnersThe basic requirements

all should follow


Obey the law

Do not take, give or encourage bribery

Respect employees dignity

Recognize the right to freedom of association

Ensure safe and healthy working conditions

Ensure product safety

Care for the environment


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EmployeesRespect the basic rights of

employees & the dignity of colleagues


Practice respectful management methods

Do not discriminate-gender, sex, race, religion, age

Do not harass or bullyand do not accept it

(physical or psychological)

You have a right to air your views


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EmployeesBeliefs)


Communicate and consult with employees

Encourage and appreciate diversity, mutual trust

and respect

Develop individuals skills and capabilities


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ShareholdersProvide all shareholders with

reliable information on activities and financial

performance

Responsible Management Practices

Practice international standards of corporate

governance

Ensure timely and accurate disclosure of material

information

Non compliance can lead to wide ranging

consequences


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Innovation

Our scientific innovations need to respect theconcerns of our consumers and of society.

We must ensure the health of consumers

We must ensure the highest standards of

product safety



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CompetitionOrganisation should

believe in vigorous, yet fair competition


We manage fairly our pricing, promotion and

sale of products (no illicit agreements that

distorts market)

We manage fairly our relationships with

suppliers and competitors

We follow global guidelines to ensure

compliance with competition/anti-trust laws


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Consumerscommitted to offering

products that offer good quality and value

Ensure that products are safe and clearly and

accurately advertised and labeled

Products are designed to increase the quality of life

We aim to foster complete trust

5 business ethics, competitve advantage and cobp

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