Ethical consciousness of business

La w of the jungle Anything for profit Profit maximization in short-term Profit maximization in long-term Stake holder concept Corporate citizenship

Important theories in ethics

1. 2. 3. 4. 5. Metaethics Normative ethics Prescriptive Universal Overriding Public Practical

 1. 2. 3.

Teleological ethical theory Deontological ethical theory Egoism Utilitarianism Altruism Virtue ethics

Ethical organisation and Corporate code

Theory of corporate morale and excellence. Ethic and stake holder theory. Ethics and Corporate Governance.

Theory of corporate morale and excellence

Espoused value Value in practice.

Corporate code
Compliance codes. Corporate credos. Management philosophy statements. Special documents. Circulated letter. Compliance certificates Purchase order.

Ethics and Rules of Law

1. 2. 3. 4. Law Universal Published Accepted Enforced

Law and Moral Standard

Law and moral standard overlap to a certain extent. The law does not always represent collective moral judgement. Law tend to be negative while moral standard tend to be positive.

Ethic and Environment

Anthropocentrism Axiological Eco-centric

Environment Issues
Toxic wastage Contamination of ground water Oil spills destroying sea shore Fossil fuel producing carbon dioxide Fluro carbons depleting ozone layer

Ethical issues in strategic management

CEOs Remuneration. Change in organization ownership. Global strategic operations.

Ethical decision making model

Evaluate decision from ethical point 1. Identify the affected group 2.Right of stakeholder violated Evaluate the moral principal Establish moral intent Engage in ethical behaviour.

An ethical approach to strategic management

Stakeholder theory , strategy and ethics. Loyalty and psychological contract. Cultural Relativism.

Ethical issues in Marketing Management

Ethical Issues in Marketing Mix Product Price Place Promotion People, Physical Evidence and Process

Marketing Research
The right to be informed of critical research results. Issues involving the right of the research. Protecting against improper solicitation of proposals Misrepresentation of Findings. Excessive requests. Reneging on promises.

 Right to expect ethical subject behaviors. Availability of funds

Ethical issues in operation Management

Receiving raw materials Storing them in safe and secured environment. Supervising movement of materials in whole plant Ensuring that the employee produce right quality Scheduling order Maintaining the established qulity standards

Negotiating with customer and suppliers. Packaging the products. Distributing the products. Ensuring proper health and safety for workers in work environment . Initiating employee suggestion scheme. Taking decision on operational and quality issues.

Service
Receiving incoming calls and mails. Storing documents of relevance Prioritizing of the job according to their importance Negotiating with suppliers Dealing with enquires Taking decision on the policy that have to be implemented.

 Ensuring the health and safety of the workers. Maintaining of equipment Ensuring quality management.

 Total quality management Forecasting Improving technology

Ethical issues in global issues

Low wage rates. Reduced transportation cost The opportunity to be closer to the suppliers. Saturation of local markets To maintain growth rate To exploit opportunities in new markets Recession or domestic market completion.

Political activities
MNC have been accused of : Supporting repressive regimes Paying bribe to secure political influence. Not respecting human rights. Paying protection money to terrorist groups. Destabilizing national govt of which they do not approve

Sales marketing and advertisement

Undermine ancient cultures and traditions. Misleading and deceitful advertising in third world countries. Promote goods that waste valuable resources in poorer nations Providing products that are inappropriate to local needs Not accepting responsibility for unsafe products Environmental degradation.

Environmental issues
Depleting natural resources Polluting the environment Not paying compensation for environmental damage Causing harmful changes in local living conditions Paying little regard to accidents and causing major environmental catastrophes.

Technology issues
Not engaging research and development Encouraging brain drain from poorer countries Making the host countries technologically dependent on the home country. Not giving local employees access to information about key technologies Not transferring latest technology. Dumping old or outdated technologies to earn revenues.

Personal management and Industrial Relations

Refuse to recognize trade union who engage in collective bargaining. Not ensuring equal opportunities for all in work place. Using expatriate staff for all significant managerial positions. Ignoring occupational health and safety needs of local workers. Exploiting host countries labor. Not involving local employees in managerial decision making.

Trade union in western countries

Exporting jobs through investment in forgin production Exploiting low-paid foreign worker. Transferring skill to other nations and enabling the latter to compete more fiercely in home country market. Taking advantages of investment policies , tax burden , offered by foreign nation.

Corporate responsibility
. Share holder responsibility: Maintaining good relationship with top management. Exercising their voting right. Organisation responsibility: Fair and competitive return on investment Disclosing information Protecting shareholders assets Attending request , suggestion and complaints.

 Responsibility of employer and employees To adequate compensation. To provide dignified working condition. To share information. To engage negotiations on conflict issues. To protect employees from injury and illness at work place. To encourage talent

External stake holders

Consumers : To produce according to customers need. To offer good quality at reasonable price. Prompt and adequate service. Improving standard of living Ensuring health and safety of consumers

Suppliers
Seek fairness in all activities , including pricing and licensing. Free from coercion and unnecessary litigation. Develop long term relationships Share information related to planning process. Pay suppliers due on time Prefer suppliers whose employment respect humanvalue.

Creditors
To pay on right time. To develop good relationship.

competitors
Foster open market for trade and investment. Mutual respect among competitors. Refrain from seeking favouritisms from govt machineries. Respect both tangible and intellectual property right. Refuse industrial espionage .

Community
Respecting human rights and democratic Institutions. Support public policy that brings harmonious relationship between business and society. Collaborate in various activity to improve health and living standard . Support peace , security and social integration. Encourage charitable donation, education and cultural contribution .

Corporate Governance
Corporate Characteristics of corporation Limited liability Transferability Legal personality Centralized management

Purpose of a Corporation
Human satisfaction Social structure Efficiency and efficacy Ubiquity and flexibility Identity.

Corporate governance
Ethical issues Efficiency issues Accountability issues Some other issues. The growth of private companies The magnitude and complexity of corporate groups Rise in hostile activities of predators Insider trading

Litigation against directors Need for restructuring of boards Change in auditing practice

Corporate governance vs corporate management

Corporate governance External focus Opensystem Strategy- oriented Concerned with where the co is going Corporate management Internal focus Closed system Task- oriented Concerned with getting the co there

Theories in corporate governance

Macgregor y theory. Stewardship theory Agency theory.

Models of corporate governance

Anglo- American Model German model. Japanese model. Indian model.

Anglo Model
Elect

Board of Directors (Supervisors)

Appoints & Supervisors Own

Shareholders (Owners)

Officers (Managers)
Lien Manage Hold Stake

Creditors

Stakeholders

Company

Structural Framework

Legal System

German Model
Appoint1/2

Supervisory Board

Appoints & Supervisors

Reports to

Management board (Including labor relations director) Employees & Labour union
Appoint1/2

Independently runs (day to day)

Company
Own

Shareholder (owns)

Corporate governance Board structures and style

Executive director. Non-executive directors Nominee directors Representative directors Alternative directors. Shadow directors Associate directors.

Types of Board structure

All- Executive Board Major Executive Board Major outside Board Two-tier supervisory Board.

Issues in Designing A Board

The Board Size The Role of the Chairman and the Chief Executive Subsidiary Company Boards.

Board style
High Relation among Directors

CCB

PB

RSB
Low

RB
high

Commitment to effective communication

Roles and Responsibilities of Directors

The performance role The conformance role

Responsibilities of Directors
Responsibilities to shareholders Obligation to maintain honesty and integrity.

Legal aspect and Liabilities of Directors

Misrepresentations in offer documents and annual accounts. Failure to refund subscription money to investors. Contravention of the Law.

Duties of Directors
Exercise care in discharge of functions as directors. Attend board meeting and devote sufficient time and attention to the affairs of the company. Not to be negligent and not to commit or let other commit tort liable acts. Not to misuse powers.

Protect interests of creditors Maintain confidentiality Not to waste company assets. Not to make secret profits .

Role of chairman
Work with management. Good understanding of financial standing of the company Where company is heading towards. Competent to help CEO

 Relationship with CEO Relationship with Executive Directors Relationship with non-executive Directors.

Function of Chairman
Ensure policy and practice are in place. Directors make good decisions Act decisively in time of crisis. Act as representative of the company.

Role of CEO
Relationship with Directors Relations with Directors

Function of CEO
Assist the executive directors in formulating strategic proposals to be endorsed by the board. Provide leadership and direction to all his executive directors. Act as representative of executive directors when interacting with non-executive directors. Interact with major investors , media and Govt.

 To provide source of inspiration leadership. Identify the situations that requires intervention.