Business ethics

1. ORGANIZATIONAL
EETTHHIICCSS

2. Topic Outcomes
At the end of this chapter, students should be
able to:
Explain the ethical issues in various
2
components of organization.

3. Organizational Culture Ethical
Climate
Organizational culture can be defined as
values, beliefs, and norms shared by all
employees of that organization.
In most organizations, a moral atmosphere can
be detected – people ccaann ffeeeell aanndd ppiicckk ssuubbttllee
hints and clues that tell them what behavior is
approved and what is forbidden.
The unspoken understanding among
employees of what is and is not acceptable
behaviour is called ethical climate.

4. Business Ethics Across Organizational
Functions
Supply Chain
Management
Operation Distribution
Sales
Marketing
Service
Primary
Functions/
Activities
Product RD, Technology, and System Development
Human Resource Management
Accounting and General Administration
SupportFunctions/
Activities

5. Ethics in RD
• RD carries responsibility for company’s growth –
without new product to sell, organization can lose
customers.
• RD incorporate customers feedback from market
research – however, this tie with rreessppoonnssiibbiilliittyy ttoo
produce product of the highest quality, safety, and
reliability i.e. defective product not only put
customer at risk, they also generate negative press
coverage very expensive lawsuit.
• Discussion: Is Proton being ethical when producing
car of quality what people claims as “tin sardin”
quality?

6. Ethics in Manufacturing
• Manufacturer faces with question of “do you want it
built fast, or do you want it to be built right?”.
• From an organization perspective, you want both,
especially if you know your biggest competitor also
racing to put a new product on tthhee mmaarrkkeett,, aanndd iiff
they get there before you do, your sales projection
will not be met.
• Questions: You want to build product with precise
design specifications, but what if there is supply
problem? Do you wait and hold up delivery, or do
you go with an alternative (and less reliable)
supplier?

7. Ethics in Marketing
• Relations with customers tend to generate many
ethical problems. The marketing processes i.e.
advertising, pricing, public relations, and sales – are
potential problem areas.
•• DDiissccuussssiioonn::
1) What role does marketing play in the perception
that coffee brewed at Starbuck is superior than
coffee brewed at home?
2) What role does McDonald play in promoting
McDonald HappyMeal for kids when almost all of
its products categorized as unhealthy?

8. Ethics in Human Resource
• HR is an important function in an organization.
• The HR processes are also pruned towards unethical
business conduct.
• Discussion:
1) Interview held for pre-cchhoosseenn ccaannddiiddaatteess..
2) Monitoring staff using CCTV.
3) Taking disciplinary action to staff for the statement
from facebook. Can employer monitor staff posting
through facebook and take disciplinary action against
the staff based from his posting?

9. Ethics in IT
• IT is one of the fastest growing areas in business
ethics.
• Ethical challenges such as invasions of privacy; the
collection, storage, and access ooff ppeerrssoonnaall aanndd
business information especially through e-commerce
transactions; confidentiality of electronic mail
communication – are some of ethical issues in IT.
• Issue: Selling of customers personal details to
marketing company.

10. Building Ethical Safeguard into
Company
How to control unethical issues or conduct in
organization or promote ethical behaviour:
1) Top Management Commitment and Involvement
2) Ethics PPoolliicciieess oorr CCooddeess
3) Ethics Officers, or Compliance Officer
4) Ethics Audit
5) Whistle Blowing Policies
6) Corporate Ethics Awards

11. Building Ethical Safeguard into
Company
How to control unethical issues or conduct in
organization or promote ethical behaviour:
1) Top Management Commitment and Involvement
2) Ethics PPoolliicciieess oorr CCooddeess
3) Ethics Officers, or Compliance Officer
4) Ethics Audit
5) Whistle Blowing Policies
6) Corporate Ethics Awards

12. Conflict of Interest
“A situation where one relationship or obligation places
you in direct conflict with an existing relationship or
obligation”
Discussions:
1) How to overcome the issues of conflict of interest?
2) In a case where your personal interest conflict to
organizational interest, which interest should comes
first?

13. Self-check Exercise
Instruction
1) Watch the video.
2) Identify what kind of ethical issues exist in the video
and discuss to your classmates.

14. 14