The

Mature Business
w BSM 600w

Ranjita.singh@ryerson.ca
 What are Business Ethics?
The same as Ethics in General!
The dierence between right and wrong
Business ac?ons have to be judged in the context
of societys standards of right and wrong.
 Why ethics are compromised/dicult
to maintain
Self-dealing
managers take advantage of their posi?on to further
their own private interests rather than those of the
rm.
Short-termism
managers focus short-term performance objec?ves
at the expense of longer-term strategic objec?ves
(usually to boost bonuses), sacricing long run
performance.
Costs of Ethical Wrongdoing
 Triple BoQom Line

Prot People

Planet
 1
You are nancial director of a large mul?na?onal
organisa?on and have been privy to informa?on
about a takeover bid to acquire a rival rm. A
family friend is considering selling shares in this
rival organisa?on and has asked you, as an
expert in the industry, for advice on this maQer.
What would you do?
 2
Na?onal Automo?ves assembles a safety system for
passenger automobiles. This system substan?ally
reduces severe injuries to drivers involved in accidents.
In an eort to increase prots, Na?onal recently took
steps to cut costs and increase produc?on. Na?onal has
begun using some less expensive components. These
components increase the systems es?mated failure rate
from 12 to 15 failures per 10,000 accidents. Despite this
increase, the company con?nues to meet the
governments safety standard of 20 failures per 10,000
accidents.
 3
Don SuQon applied for a payroll clerk job with
Search Services, a market research rm. To
improve his chances of ge]ng the job, he
exaggerated his work experience on his rsume.
Don was hired. A`er one year, he received
above-average ra?ngs during his annual
performance review. Shortly therea`er, his boss
met Dons former supervisor and learned the
truth.
If you are his boss, what would you do?
4) Apples problem in enforcing Supplier Code of Conduct

Is it fair for Apple to prescribe that its

suppliers comply with universal standards
that are at wide variance rela?ve to local
market labor prac?ces and condi?ons?

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 THE NEW EXTERNAL ENVIRONMENT OF BUSINESS

The Global Financial crisis

Global Social Upheaval and Ecological Concern
Instability in the natural world
Accelera?ng technological change
New compe?tors
Social pressures

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THE ROLE OF STAKEHOLDERS IN CORPORATE
RESPONSIBILITY AND SUSTAINABILITY

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 CORPORATE RESPONSIBILITY AND
SUSTAINABILITY

Civil Foundation : laws, norms, and customs that

companies are subject to
Strategic Frontier: when a firm can strategically position
itself as advancing corporate responsibility and
enhancing shareholder value
Structural Frontier : when a firm provides benefits to
society but fails to add benefit to shareholders

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 PRINCIPAL AREAS OF CORPORATE
RESPONSIBILITY AND SUSTAINABILITY
1) Equity - CEO pay is about 300 times average worker salary

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 PRINCIPAL AREAS OF CORPORATE
RESPONSIBILITY AND SUSTAINABILITY
2) Health and Safety
Occupational accident
and illnesses cost about
4% of GDP.
Absenteeism costs
employers $3.5 billion.
The 2013 rail fire in Lac
Megantic killed 47 and
caused $200 million in
damages.

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 PRINCIPAL AREAS OF CORPORATE
RESPONSIBILITY AND SUSTAINABILITY
3) Ethics the Madoff Affair - client
The publics confidence in accounts missing $65
business corporations has billion
been reduced Arthur Anderson
Scandals include: accounting firm after
Enron - shares fell from being found guilty to
criminal charges
over $90 to less than $1
surrendered its license
WorldCom - $73 billion
to practice 85,000
loss employees affected

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Deriving compe??ve advantage

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 MANAGING IN A CHANGING WORLD

Short- vs. long-term goals New Forms of Leadership

Long-term thinking is There is no dominant
necessary for long term model of leadership or
success. profile of a successful
leader.
Corporate Governance Leadership requires
There will be pressure providing meaning to
for companies to make peoples own
aspirations.
their activities more
transparent and subject
to greater scrutiny.

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