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Lecture 10

AFM 333 Lecture 10: D.light Design

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Accounting & Financial Management
AFM 333
Mark Anarson

Relatvism – ethical truths differ from group to group (ex Japanese company may think bribery is wrong but will pay bride in countries where practice is customary and culturally allowed Normativism – believe that ethical behavioural standards are universal, firms and individuals should try to uphold them around the world In countries with questionable ethical norms, it is usually best to maintain ethical standards superior to what is required by local laws and values. This strategy helps garner goodwill in the local market and averts potentially damaging pub- licity in the firm’s other markets. An ethical dilemma is a predicament with major conflicts among different interests and in which determining the most appropriate course of action is confounded by a set of solutions that are equally justifiable, and often equally imperfect. Possible actions may be mutually exclusive: The choice of one automatically negates the other(s) (ex. child labor but if you fire her she’ll have to turn to prostitution…) Corporate governance is the system of procedures and processes by which corporations are managed, directed, and controlled. It provides the means through which firms undertake ethical behaviors, CSR, and sustainability. How does corporate governance help firms support ethical behaviors, CSR, and sus- tainability? First, individual employees must learn to recognize and manage the ethical problems that confront the firm. Let’s explore this issue in detail. Scholars have devised five standards that managers can use to examine ethical 28 dilemmas. According to the utilitarian approach, the best ethical action is the one that provides the most good or does the least harm or, stated differently, produces the great- est balance of good over harm to customers, employees, shareholders, the community, and the natural environment. In the rights approach, the decision maker chooses the action that best protects and respects the moral rights of everyone involved. It is based on the belief that, regardless of how you deal with an ethical dilemma, human dignity must be preserved. Accord- ingly, humans are entitled to certain moral rights, including the right to live life as one desires, to be free from harm, to pursue happiness, and so forth. The fairness approach suggests that everyone should be treated equally and fairly. Workers should be paid a fair wage that provides a decent standard of living, and col- leagues and customers should be treated as we would like to be treated. The common good approach suggests that actions should be based on the welfare of the entire community or nation. It asks which action contributes most to the quality of life of all affected people. The interlocking relationships of society are the basis of ethical rea- soning in this view. Respect and compassion for all, especially the vulnerable, should be the basis for decision making. Finally, the virtue approach argues that ethical actions should be consistent with cer- tain ideal virtues that provide for the full development of our humanity. The most im- portant virtues are truth, courage, compassion, generosity, tolerance, love, integrity, and prudence. . Recognizeanethicalproblem.Thefirststepistoacknowledgethepresenceofanethical problem. Ask questions such as: Is there something wrong? Is an ethical dilemma present? Is there a situation that might harm personnel, customers, the community, or the nation? In international business, recognizing the issue can be tricky because subtleties of the situation may be outside your knowledge or experience. Often, it is best to rely on your instincts: If some action feels wrong, it probably is. 2. Get the facts. Determine the nature and dimensions of the situation. Have all the rele- vant persons and groups been consulted? What individuals or groups have a stake in the outcome? How much weight should be given to the interests of each? Do some parties have a greater stake because they are disadvantaged or have a special need? 3. Evaluate alternative courses of action. Identify potential courses of action and evaluate each. Initially, consistent with the pyramid of ethical behavior, review any proposed action to ensure it is legal. If it violates host or home country laws or international treaties, it should be rejected. Next, review any proposed action to ensure it is acceptable according to company policy, the firm’s code of conduct, and/or its code of ethics. If discrepancies are found, the action should be rejected. Finally, evaluate each proposed action to assess its consistency with accepted ethical standards, using the approaches described earlier: ▪ Utilitarian—which action results in the most good and least harm?
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