8/3/2019 Ethics in strategic management

1/25

Ref: Essentials of strategic management,by

8/3/2019 Ethics in strategic management

2/25

Ethics?The inner-guiding moral principles, values, and beliefs that people use to analyzeor interpret a situation and then decide what is the right or appropriate way tobehave

8/3/2019 Ethics in strategic management

3/25

Ethical Dilemmas

Situations where there is no agreement about exactly what the accepted principles of rightand wrong are or where non of the available alternatives seems ethically acceptable.

8/3/2019 Ethics in strategic management

4/25

Ethics codified intolaws.

8/3/2019 Ethics in strategic management

5/25

Potential conflict between the goals of the enterpriseor the goals of individual managers and thefundamental rights of important stakeholders-stockholders, customers, employees, suppliers,competitors, communities and the general public.

8/3/2019 Ethics in strategic management

6/25

Unethical behaviorUnethical behavior arises in a corporate setting when managers decide to put theattainment of their own personal goals or the goals of the enterprise above thefundamental rights of one or more stakeholder group(may arise from agencyproblem)

8/3/2019 Ethics in strategic management

7/25

Self-dealing:

When managers find a way to feathertheir own nests with corporate

monies.

8/3/2019 Ethics in strategic management

8/25

Occurs when managers use their control overcorporate data to distort or hid information in

order to enhance their own financial situation orthe competitive position of the firm

8/3/2019 Ethics in strategic management

9/25

Covers a range of actions aimed at harmingactual or potential competitors, most often byusing monopoly power, thereby enhancinglong-run prospects of the firm.

8/3/2019 Ethics in strategic management

10/25

When managers of a firm seek unilaterallyrewrite the terms of a contract with suppliers,buyers or complement providers in a waythat is more favorable to the firm.

8/3/2019 Ethics in strategic management

11/25

When managers under invest in working

conditions or pay employees below marketrates, in order to reduce their cost ofproduction.

8/3/2019 Ethics in strategic management

12/25

The key to strong corporate governanceprocedures is an independent board ofdirectors that is willing to hold top managersto account for self-dealing and is able to

question the information provided to them bymanagers.

8/3/2019 Ethics in strategic management

13/25

8/3/2019 Ethics in strategic management

14/25

Stockholders have the right to timely and accurateinformation about their investment and it isunethical to violate that right.

8/3/2019 Ethics in strategic management

15/25

To make the shareholders feel secured byprotecting their investments

To be transparent

To allow them to participate in decision making

To ensure them good dividend

8/3/2019 Ethics in strategic management

16/25

To offer the products at reasonable prices. To provide pre-purchase and post purchase service

to the consumers.

To facilitate research and development to meet thecustomer requirements.

To maximize imperfections in distribution systems

To provide sufficient and unnecessary information

about the products.

8/3/2019 Ethics in strategic management

17/25

To offer employees fair wages To establish better working conditions

To provide them fair work standards and norms.

To provide labour welfare activities

To educate the employees by adopting proper trainingmethods.

To recognize and appreciate the work of theemployees and reward

them or to promote them. To install grievance handling cell.

To enable them to involve in decision making

8/3/2019 Ethics in strategic management

18/25

Suppliers have the right to expect contractsto be respected, and the firm should not takeadvantage of a power disparity between itselfand a supplier to opportunistically rewrite a

contract.

8/3/2019 Ethics in strategic management

19/25

Competitors have the right to expect that thefirm will abide by the rules of competiton andnot violte the basic principles of antitrustlaws.

8/3/2019 Ethics in strategic management

20/25

To be pollution free and maintain ecological balance. To invest more in research and development so as to

improve the standard

of living of the society.

To develop alternative recourses thereby preventingcurrent resources

being used from exhaustion.

To improve the efficiency of business operations.

To include in social welfare activities To contribute to national effort to build up a better

society.

8/3/2019 Ethics in strategic management

21/25

Ethics corresponds to basic human needs. It creates credibility with the public

It gives management credibility with theemployees

It helps in better decision making

Law cannot protect society, but ethics can.

8/3/2019 Ethics in strategic management

22/25

Builiding an organizational culture that placesa high value on ethical behaviour requiresincentive and promotional systems thatreward people who engage in ethical behavior

and sanction those who do not.

8/3/2019 Ethics in strategic management

23/25

To establish the right kind of ehtical culturein a organization, business people must bealbe to think through the ethical implicationsof decision in a systematic way.

8/3/2019 Ethics in strategic management

24/25

Does my decision fall within the accepted valuesor standards that typically apply in theorganizational environment( as articulated in acode of ethics or some other corporatestatement)?

Am I willing to see the decision communicated toall stakeholders affected by it- e.g., by having itreported in newspapers or on television?

Would the people with whom I have a significant

personal relationship, such as family members,friends or even managers in other businesses,approve of the decision?

8/3/2019 Ethics in strategic management

25/25