Reference no: EM13833260

Prepare interpretation of each scenario in 50-70 word.

Part 1- Business Ethics Defined-

A useful working definition of business ethics is a consciousness of what is right or wrong in the workplace and taking responsibility for an ethical course of action in business operations given its impact on its owners, investors, employees, customers, and the community at large (collectively known as stakeholders). Attention to business ethics is critical during times of fundamental change such as the financial crisis that began in late 2008. In such volatile times, unethical and/or illegal practices are often highlighted as the media and public become aware of the internal strife within preeminent companies that led to their near or total collapse. Some of the practices that were deemed to be acceptable in various areas of the financial services and corporate sectors are now deemed dubious and even immoral. Practices that were sanctioned as ethical, such as corporate jets, bonuses, and corporate sponsorship of stadiums and events, have become a symbol of reckless corporate spending. Consequently, companies that fail to be committed to managing business ethics as part of their business model have no clear moral compass to guide leaders through complex dilemmas about what is right or wrong. Attention to ethics in the workplace sensitizes business owners and managers in terms of how they should act. Perhaps most important, attention to ethics in the workplace helps ensure that when leaders and managers are struggling in times of crises and confusion, they retain a strong moral compass. Attention to business ethics provides numerous other business and community benefits as well Ethics is also a useful tool for managers in preventing legal liability for the company.

Part 2- Moral Philosophy and Ethical Decision Making

Certain moral philosophies may influence moral judgments such as one's assessment of whether a given situation is viewed as ethical or unethical. This assessment, in turn, then dictates one's reaction and subsequent behavior when confronted with an ethical dilemma. Morals refer to generally accepted standards of right and wrong in a given society. These standards may be based on the law and/or religious and personal belief systems. Ethics is the tens used to describe having a conscious system in use for deciding moral dilemmas. Individual approaches to thinking ethically may be based on several broad sources of ethical standards that stem from certain historical theories of morality. Although a close examination of moral philosophy is outside the scope of this textbook, it is important to understand two major approaches and how they apply in a business context.

Part 3- Principles-Based Approach

Ethical decisions that are made according to a set of established principles or standards such as religious tenets or codes such as the Koran (Islamic canonical law) or the Old Testament (Judea-Christian tradition) employ a principles-based approach. These religious-based principles are the source of individual decision making and not subject to exceptions, but are tempered by other religious principles such as mercy and justice.

In addition to religious-based principles, some philosophers and ethicists also use the notion that humans have certain inherent moral rights that spring from their ability to reason and choose freely what they do with their Hoes. Famed Prussian-born philosopher Immanuel Kant's (1724-1804) work on a form of principle-based ethics, which he called duly-based ethics in his famous essays Critique of Practical Reason, is based on an inherent notion that humans act in accordance with and from a sense of duty to human dignity. Kant theorized that rights imply duties and the duty to respect other's rights was paramount in acting morally.

The notion of categorical imperatives is a central theme in Kant's work. This school of thought is centered on the belief that ethical dilemmas must be resolved through a categorical imperative test whereby individuals make ethical decisions with an eye toward the potential consequences if everyone in society acted the same way. In other words, when considering how to prevent people from acting in a certain way, the question posed Ls 'What if everybody took those same actions?" This question is sometimes called a universalization test. If one can consistently act in accordance with the notion that society benefits from everyone acting the same way, then the action is moral.

Part 4- Strategic Advantages of Values Management

Menacing ethos In the workplace involves identifying and prioritizing values to guide behaviors in the organization, and establishing associated policies and procedures to ensure those behaviors are conducted. Values management is also crucial. In other management practices such as managing a diverse workforce, total quality management, and strategic planning.

This means that values management has strategic Impedance on par with other types of managerial systems. There are both business and pubis policy benefits to values management. Managing values in the workplace legitimizes managerial actions, strengthens the coherence and balance of the organization's culture, improves trust in relationships between Individuals and groups, supports greater consistency. In standards and qualities of products, and cultivates greater sensitivity to the impact of the enterprise's values and messages. Indeed, companies that have embraced a values management system often report that it has strategic advantages.

Part 5- Ethical Decision Making: A Manager's Paradigm

It is not uncommon for business ethics to be portrayed as a matter of resolving conflicts in which one option appears to be the dear choice. Case studies that present situations where an employee is faced with whether or not to lie, steal, cheat, abuse another, break terms of a contract, and so on are too simplistic. Ethical dilemmas faced by managers are often complex, with no clear ethical choice. The use of a paradigm in the following flowchart can help business owners and managers apply ethical decision making more consistently.

Part 6- AIG Bonusgate: Legal, Managerial, and Ethical Perspectives

When The New York Times reported that insurance giant American International Group (AIG) had distributed $165 million in performance bonuses to some of its executives, it lit a public and political firestorm. AIG was in the center of the financial crisis of 2008 that culminated in massive government bailouts for financial institutions and others who were considered too important to the financial infrastructure to be allowed to fail. Just months before the bonuses were distributed; AIG had received $173 billion in taxpayer money in exchange for an 60 percent stake in AIG for the U.S. government.

Political Reaction

After the news of the bonuses broke, President Obama immediately denounced the bonuses and castigated AIG for using funds from one the federal government's original bailout packages in November 2008. He promised the outraged American populace that the government would pursue all °legal means to prevent the bonuses from being paid." Yet, the White House subsequently revealed that Treasury Secretary Geitner had knowledge of the bonuses and did not move to stop them from being paid because they were contractual obligations between a private company and an employee.

Part 7- Corporate Social Responsibility

While business ethics may be thought of as an application of ethics to the corporate sector and useful as a paradigm for determining responsibility in business dealings, corporate social responsibility (CSR) involves a broader-based identification of important business and social issues, and a critique of business organizations and practices. The fundamental notion underlying CSR is that conscience resides not just in Individuals but also in a corporation. Thus, business organizations committed to CSR aim to achieve commercial success in ways that honor ethical values and respect people, communities, and the natural environment in a sustainable manner while recognizing the interests of its stakeholders. Stakeholders include investors, customers, employees, business partners, local communities, the environment, and society at large. This involves corporate citizenship, which is the adoption by a business of a strategic focus for fulfilling the economic, legal, ethical, and philanthropic social responsibilities expected of it by its stakeholders. There are essentially three schools of thought that define CSR in practice.

Part 8- The Broad View: Management's Hand

An underlying tenet of the broadest view of CSR is that corporations have a social responsibility and that profitability is secondary. Indeed, in the broadest terms, some business ethicists argue that corporations are only allowed to cyst because they can serve some public good. It is not necessary to justify the need for a greater corporate role in social responsibility. Thus, these groups often invoke a set of societal expectations with the idea that corporations conduct their business on such terms. The starting point is not business objectives, but socially defined goals.

Within the broad view, the majority is not willing to buy into such a radical notion that business prosperity should be an afterthought. Instead they argue that CSR is in the public's interest and a company's self-interest, and a company does well by employing socially responsible principles in their business operations. In this way, CSR may be thought of a form of enlightened self-interest because the long-term prosperity of a firm depends not on short-term profits but societal well being.
An integral part of the broad CSR perspective is the focus on what some ethicists call the triple bottom line. Essentially, the triple bottom line emphasizes not only the conventional creation of economic value (profits), but also a company's creation (or destruction) of environmental and social value. This naturally places a great deal more pressure on managers to perform, as it is not uncommon when these three sets of bottom line issues conflict. It is not enough, then, for managers to aggressively pursue a social agenda, but she/he must not lose sight of financial and environmental performance as well. Yet, this may be difficult to do in practice. It is easy fo managers to underestimate the linkage between enterprise sustainability and the creation of shareholder value. Rather than looking at the three bottom lines as being offsetting, it is more preferable to view them as possessing a cumulative strategic value to a company.