business_ethics_global_03 - Business Ethics & Global...

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Unformatted text preview: Business Ethics & Global Business Ethics & Global Strategies January 25, 2012 The hot topic The hot topic • • • • • • Enron Martha Stewart Worldcom (MCI) Strong AIG You and me Ethics Survey Results Ethics Survey Results 250 200 150 100 50 0 Life Time Last Year Ethics Ethics • Ethics: moral principles or beliefs about what is right or wrong • Organizational stakeholders: shareholders, employees, customers, suppliers, and others who have an interest, claim, or stake in an organization and in what it does Business ethics Business ethics • Principles of conduct within organizations that guide decision making and behavior • Business ethics: positive relation with long­term performance Consequences of unethical Consequences of unethical behavior “I paid the price. I lost my job. I lost my firm. I’ve got less money today than I had as the newly elected CEO. I lost my partner capital. I lost my retirement. I don’t have any stock options. I may never work again.” Joe Berardino (2002) Arthur Andersen In 1913, the president of a local railroad insisted that Andersen approve a transaction that would have inflated earnings.He told the executive there was “not enough money in the city of Chicago” to make him do it. Lou Pai vs. Skilling Lou Pai vs. Skilling Enron Retail division head Lou Pai to Jeff Skilling: The story on the slide was the same one Skilling had heard before. Because of high fixed costs, the potential profit margin for the business was low. Pai began explaining the numbers. Skilling didn’t want to hear it. “Lou, you’re too {expletive deleted} smart for this,” he snapped. “I don’t want to ever see this slide again.” Pai’s face was hard. “Jeff, it’s the truth.” “I just don’t want to see that slide ever again.” Pai slammed his hand on the table. “It’s the {expletive deleted} facts, Jeff!” “It may be the facts,” Skilling shouted back. “But I don’t want you think about that way.” Conspiracy of Fools by Kurt Eichenwald Ethics Model Ethics Model • Utilitarian model: produce the greatest good for the greatest number of people • Moral rights model: protests and maintains the fundamental rights and privileges of the people • Justice model: distribute benefits and harms among stakeholders in a fair, equitable or impartial way Basic principle of business Basic principle of business ethics Ethical behavior=more gain > few gain Unethical behavior=few gain > more gain Theory of unethical behavior Theory of unethical behavior Three factors for unethical behavior Motive­benefit self or the org Opportunity­can do Absence of effective control­prevent them (McKendall, Sanchez, & Sicilian, 1999) Factors leading to unethical Factors leading to unethical behavior Executive (employee) pay = function (organizational performance) Unethical behavior= function (+Benefits if behaving unethically ­ probability of being caught * penalty if being caught) Simple ethical tests Simple ethical tests • TV test • Family test • Golden rule The widespread of global The widespread of global competition • Two way traffic • Foreign revenues exceed over 50% in many companies National culture National culture • • • • Power distance Individualism vs. collectivism Femininity vs. muscularity Uncertainty avoidance Institutional Contexts Institutional Contexts Five contexts • Political & social systems: (within) • Openness: (bridge) • Product markets: (consumers) • Labor markets: (employees) • Capital markets: (money) Poor transport infrastructure– Poor transport infrastructure High costs of land access to ports Logistics costs of container transport from Inland China (Chongqing) to U.S. West Coast Activity Land access to port Port handling Maritime transport Port handling Land access to final destination Total US$ per TEU 2300 200 751 150 250 3,650 Note: a TEU is a twenty foot equivalent unit, the size of a standard container Source: Carruthers and Bajpai (2002) % of total cost 63% 5% 21% 4% 7% 100% Slow and costly bureaucratic procedures— Slow and costly bureaucratic procedures— Customs Clearance Time Average days for customs clearance Air Sea LCL Sea FCL France 1 4 2 Germany 1 1 1 Greece 1 1 1 Netherlands 1 2 2 Spain 2 2 2 Sweden 1 2 2 USA 2 3 3 Average sample of developed countries 1.3 2.1 3.9 China 4 30 5 Hong Kong 2 4 3 Indonesia 3 4 4 Malaysia 4 4 4 Philippines 4 5 3 Singapore 2 3 3 Taiwan 4 10 7 Thailand 5 5 5 Vietnam 5 7 7 Average sample of Asia countries 3.7 8.0 4.6 Notes: LCL is Less than Container Load; FCL is Full Container Load. Source: International Exhibition Logistics Associates ( Three Strategies Three Strategies • • • Adapt your strategies Change the contexts Stay away Homework Assignment Homework Assignment Go the library and find the following paper, Collins, James C.; Porras, Jerry I. Building a visionary company. California Management Review, Winter95, Vol. 37 Issue 2, p80, 21p. Answer the following questions. What is a visionary company? Between Microsoft and Apple, which do you think is more of such a company? Also, read the mission, vision statements of UTPA at the following website. Are they good statements? Why? Turn in your answers Wednesday (February 1). Register for Glo­Bus, and read the guidelines for Glo­Bus simulation. ...
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This note was uploaded on 02/26/2012 for the course MANAGMENT 4333 taught by Professor Drwoo during the Spring '12 term at American Indian College.

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