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Lecture 6

Lecture 6 note

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University of Toronto Mississauga
Dave Swanston

MGM101 Lecture 6 Notes October 19, 12 Business Ethics Len Brooks  The study of right and wrong behavior and how people make these judgments  In making decisions, we need to think in terms not of what is in our personal best interests, but what is in the best interests of the stakeholders and the public at large.  Ex. Enron – ethical failure. Produced lack of confidence within the market which further led to loss of jobs o Subprime lending fiasco  US people extended mortgages to people who have no prospects and dint even bother to check if they were lying on their resumes which were bundled up and sold to unknown investors  They chose to be greedy and self-interested  Underpins all personal, professional and business actions o Facilities all dealings – trust  Based on ethical behavior o Lowers costs of transactions o Alternative to more regulation o Bad ethics can rock our world o Signals intentions – hiring, values o Motivates personnel, prospective hires, and customers o Stakeholders are very interested o Sound framework for decisions and actions  Developments  Ethical corporate cultures  Corporate social performance  Ethical regulation  Scandals produce bad reputation  Case Study o Three problems  Pricing  Using normal profit margin between ten and twelve thousand dollars per year or 50 000 per year so that only a certain amount of the pop. can afford it  Distribution  Supply  Anyone who is affected by or can affect the objectives of the org. o The media is very important because they can really affect the objective of the company and influence the reputation of the company  They are extremely important within the stakeholders model  Determinants of value… success = f(trust + respect)  Code of Conduct is the name for a statement that describes the required responsibilities, actions, and rules of behaviour of an organization’s employees.  Whistleblowing is the process through which an individual informs someone in authority of a dishonest act or the dishonest behaviour of another person.  Regulating Ethics: management teams, governments and agencies worldwide have created regulations that define how organizations should comply with financial integrity obligations and ethical decision making and behaviour. The criminal acts associated with organizations such as Enron, Tyco, and WorldCom in the United States, led to the passing of the Sarbanes- Oxley Act of 2002 (SOX). In Canada, the equivalent to SOX grew, initially, out of a provincial government of Ontario budget measures act titled Bill 198 (in Canada, securities regulation is handled at the provincial level versus the national level, as is the case i
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