ch. 2 - biz ethics & social responsibility

bus 207 prof wu

Ethics

The study & practice of deciding what is good or right.

Example: Asking 'is this shady or is it fine?' when a business hides a product flaw.

Business Ethics

Applying ethics to business decisions.

Example: A company choosing not to sell customer data because it's wrong.

Ethical Dilemma

A no-win situation where every choice has pros and cons.

Example: Boss tells you to hide a mistake—telling the truth causes trouble, lying is wrong.

Social Responsibility of Business

Expectation that businesses consider community impact, not just profit.

Example: A company paying more to reduce pollution so the community stays safe.

unethical business executives & ethical failures

- bernard madoff: ponzi scheme

- harvey weinstein: sexual misconduct

- wells fargo scandal (2016)

ethical businesses

Patagonia & Starbucks: focus on sustainability & environment as well as employee benefits

Principles of Contract Law

Rules that make deals enforceable so businesses can rely on agreements.

Example: Selling an iPad for $150—if someone backs out, contract law decides what happens.

Values

Core beliefs about what is important or good.

Example: A business valuing honesty chooses to disclose defects even if profits drop.

honesty > profit

CVS CEO example: CVS prides itself on better health for its customers but also sold cigarettes; In 2014, CEO Larry Merlo stopped its sale in stores despite it being a huge profit maker

Stakeholders

Anyone affected by a business's actions.

Example: Customers, employees, suppliers, owners, and the community when prices change.

WH Framework

W - WHO: Stakeholders - groups of people affected by the firm's decisions (customers, owners, management, employees, community, future gens)

H - HOW: Ethical Guidelines - provides one path to ethical conduct (public disclosure test, universalization test, and golden rule)

Golden Rule

Treat others how you want to be treated.

Example: A company provides clear refund policies because they'd want honesty too.

Universalization Test

Ask: what if everyone did this? Would society function?

Example: If everyone lied on resumes, hiring would collapse.

Public Disclosure Test

'TV test'—would you do it if everyone knew?

Example: A CEO hiding a data breach wouldn't want that on the news.