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Business ethics
Chapter no :12Ethical management
system
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Group members:
Murk Afzal Gujjar
Mahrunnisa
Bharti Kewalramani
Samer Hussain
Nawal Saeed Parsa Rafique
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ETHICAL MANAGEMENT SYSTEM A system that basically helps minimizing the unethical acts in an
organization.
BetterCorporate Governanceensures a good EthicalManagement System.
Better Corporate Governance ??
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CORPORATE GOVERNANCE
Corporate governance is the set ofprocesses, customs, policies, laws and
institutions affecting the way a corporation
is directed, administered or controlled
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CORPORATE GOVERNANCE
Structure vary from country tocountry
Standardized on American
patterns
Globalized CapitalismSelf Governance
Substituting Governmentalregulation of market
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IMPORTANCE
McKinsey & Co. investor Survey, 2002
85% investors consider corporategovernance to be equally or more important
than financial issues, in deciding whichcompany to invest in
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CORPORATE GOVERNANCE SHOULD
Ensure that managers effectively execute
the strategy laid down
by the B.O.Ds
Avoid fraud, deception, malpractices
within the corporation.
Provide opportunities to share holders toexamine the functioning and true
performance of the corporation
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Principles of CorporateGovernance
Fairness-stake holders interest should also be
considered.
Accountability
Responsibility
Transparency-especially of financial performance.
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Moral Responsibilities
Maximization of long run profits
Diligent and competent in performing the
duties
Recognize that directors are agents of the
shareholders
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Minimizing Corporate Risk
A major objective of corporate strategy
Types of Risk: Business
Financial
Operational
Political
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How to Minimize Risk?
A key element of the ethical management system isa mechanism for identifying and minimizing ethical
risk. Risk is minimized mainly by an ethics committee. The risk of unethical behavior within the corporation
is determined by the firms culture , policies andoperational procedures .
Stakeholders perceptions should be consideredboth for evaluating the corporations ethicalperformance and for identifying stakeholdersexpectations.
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Triple bottom line
Approach to achieve cost savings and
improve environmental performance. Benefits of TBL:
Enhanced reputation Benchmarked performance Improved operations and management
Improved risk management Increased confidence from investor,insurers
and I financial organizations Improved communication with
stakeholders.
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Contd
Improved Communication with stakeholders
Increased confidence from investors andfinancial organizations
Corporations should show that their actionswill have beneficial consequences on
selected stakeholders
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ETHICAL MANAGEMENT AND
REPORTING
For minimizing risk, corporations should take
Ethical Management and Reporting seriously
Ethical Risks is identified by Ethics
Committee
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BETTER RISK MANAGEMENT
Identify stakeholders whose ethical
perspective matter
Prioritization of stakeholders interest in terms
of legal, technological, social, political and
financial power of different stakeholdergroups
Planning
Formulation
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CODE OF ETHICS
A statement which explicates morallyacceptable behavior within a corporation
Raises Ethical awareness & expectations
Provide guidance for ethical decision making
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Contd
External code of ethics target
stakeholders specially customers
Codes may be imposed by management
on employees
Likely to be effective when they are
genuinely negotiated
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ASPIRATIONAL OR
DIRECTIONAL CODES
Aspirational Code is relatively short
statement of expected ethical norms
Directional codes provide guidelines about
employee behavior in differentcircumstances
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DIRECTIONAL CODES
A statement of the rationale for the code
Expected ethical standards of behavior
Guidelines for conduct in specified situations
Sanctions for violating of guidelines
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