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 Merck & cos refusal to withdraw vioxx , an arthritis drug

Wal Mart (The high cost of low price?Greenwald,2005,movie)

Sweatshop labour and Lifestyle good manufacturers

Royal Dutch Shell in Nigeria,Myanmar

IKEA and child labour
Pepsis Logo On moon!(?)
Cargill, Monsanto and GM corps

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Business Ethics
The study of business situations,activities,and
decisions where the issues of right and wrong
are addressed

Crane and Matten ,2007

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Morality ------Ethics ------- Ethics Theory ----- Solution to problems

Morality : Norms ,values, beleifs embedded in social processes which define
rights and wrongs
Ethics: Study of morality and application of reason to elucidate rules and
principles that determine right and wrong for a situation
Morality can be privatised but not ethics; its about other people
Ethics supposedly offers a solution to moral uncertainty

Ethics( Bauman1993, Smith,1999)

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An oxymoron( Collins,1994)
Rights and wrongs keep shifting from moral positioning to commercial business,
Strategic and financial dimensions!

ethics is a broad and murky area and the workplace is full of ethical dilemmas
and issues
(Orsini and McDouggal,1999)
In corporate world as well as ones personal life ethics is knowing what is right
and wrong, and/or learning the same in the environment in which one is
involved
An ethical issue may not have a concrete answer;therefore a persons decision
may depend on that persons situation
Ethics boils down to "choosing the good over the bad, the right over the wrong, and
the fair over the unfair".
Even though these choices may sound simple they are oftentimes complex and
subtle.

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Source(www.benetton.com )

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Why?
Business scandals and ethical failures
Dutch tulipomania( 1637)Ponzy scheme(1920),Ivar Kruger(1930),Nick
Leeson and Barings bank(1995)

Ethical infractions and power to comply

Improve human condition (Michalos, 1998)
Ever growing power and influence of businesses, public uneasiness
(Bernstein,2000) -- Occupy Wall street, Shareholder
upheavels -- WSF vs WEF
Ethical market ?? Business ethics industry ??

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Whether a business is considering how to treat employees ,create

its products,serve its customers or participate in the community, the
ethical answers all revolve around doing the right thing rather
than what may be the most profitable or expedient in the short term

Keep asking when confronted by an ethical dilemma

Is it legal?
Is it balanced?
Would you be happy if you were in other partys shoes?
Is it right ?( Are you proud of yourself for the course of action you
are taking?)
(Smith ,2002)
The more complex the dilemma, the more important it is to
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A Descriptive tool to be used to show how decisions are made, rather

than how they should be made (Sanford Krolich )
INDIVIDUALISM
WIIFM (What's in It For Me)
The concern for what will happen to
ourselves as the result of
the decision we make.
This is where we find the hidden
agendas and concerns for oneself

ALTRUISM
The concern for the impact of our
decision on others or on our
relationship with others.
This is where we find concern for
what they will say, think,feel or do

IDEALISM
The concern for how the decision
aligns with our beliefs and
values.
This is where we find concern with
whether a decision is right,fair&good

PRAGMATISM
The concern for the practical
consequences of the decision.
This is where we find concern for
what will happen as a result
of the decision.
What is the impact of the decisions on
goals and objectives?

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 Two people in identical circumstances may not make the

same division bcoz of the differences in ethical value
What does ethics mean to you ?
(Sociologist Raymond Baumhart questions executives)

Ethics has to do with what my feelings tell me is right/wrong

Its got to do with my religious beliefs
Being ethical means doing what the law requires
Ethics consists of the standards of behaviour our society
accepts
I dont know what the word means

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ECONOMIC RESPONSIBILITY

Proceed cautiously

Proceed cautiously
Go for it!

ETHICAL RESPONSIBILITY

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LEGAL RESPONSIBIL

Seek ways to increase

profitability
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Stakeholders potential for threat

High

low

TYPE 4 MIXED BLESSING

TYPE I SUPPORTIVE
--- INVOLVE

-- COLLABORATE
TYPE 3 NON SUPPORTIVE
---DEFEND

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TYPE 2 MARGINAL
---- MONITOR

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Globalisation and sustainability

Business ethics

: Key contexts for

( Crane&Matten,2007)

Globalistaion:
Internationalisation?Liberalisation?Universalisation?Westernisation
Progressive eroding of relevance of territorial bases for Social, Economic
and political activities, process and relations (Jan Art Scholte,2000)
- Communication infrastructure
- global products/brands
-Network capitalism ( Castells,1996)
Cultural issues
Dialectical effect (Child ,2000)
Legal Issues
Global financial market
Accountability issues
- Are MNC s accountable-( own mass media ,news & entertainment, influence

governments, control global portfolio of products ,pay salaries and taxes

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The upside (Indian ) story

most Indian firms are making their mark not by trying to be the workshop of
the world, but by aspiring to be multinationals: active, in control and
physically present in lots of countries, doing everything from development
and manufacturing to branding and distribution

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Also

Videocon Thompson, Daewoo

HPCL- KPL
Reliance Flag Telecom
Havells acquisition of Sylvania
Godrejs acquisition of South African Hair Die and cosmetics maker
IBM reaching 1,00,000 workforce in India
Posco s $ 12 bn proposed investment in Orissa, as an export hub
Maruti exports 10% of production to Europe
Hyundai instrumental in 70 Korean firms ( automotive component
suppliers) investing
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The grey areas:

Free Trade: Low productive /Low wage jobs replaced by High

productive /High wage jobs?
TRIPS ??
- Monopolies insulated from competition?
- Does it accelerate innovation?
- (ALAM cartel and Ford)
- - reducing interconnectivity
- Botswana and US drug giants
- Bio piracy, Drug rediscovery (Basmati rice/ Neem tree oil/turmeric)
- Does intellectual property rights reduce product innovation by
increasing monopoly power ?
- What are the benefits of an open architecture?

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-Nestles campaign to persuade third world mother to use infant

formula
- GMs campaign against public transportation
( GMs revenue $ 191 bn is greater than the GDP of 148 countries,
Wal-Marts $286 bn is greater than the combined GDP of Sub
Saharan Africa)
- MicroSoft Vs Netscape and Real Networks
Of late many brands are preaching value based culture!
- Pepsi performance with purpose
- Chevron purveyor of human energy
- Do they really walk the talk??
- ( 43 % companies use command and control management (blind
obedience), 54% top down but with skilled leadership, 3% self
governance) - Source: Boston Research Group Study,2010

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Tax havens
Tax as a morally neutral battle of wits against the fiscal authorities: quite
different from money-laundering or fraud ??
Companies legal duty to shareholders necessitates using offshore
finance to reduce and simplify taxes
Bank secrecy is human right ??
-

FTSE 100 index has 8492 off shore subsidiaries

Mauritius is the biggest investor in India , British Virgin Island one of the
biggest in China ( Source: Action Aid Report, 2010)

tax havens make it harder to gain a true picture of where debt and risk
lie, for example in hedge funds trading exotic derivatives. Enrons
finances were obscured by its habit of hiding debt in its hundreds of
subsidiaries in the Caribbean.

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The Nike Case: The promise and perils of globalisation

( Source: A note on Corporate citizenship, Sloan School of
Management,MIT,2003)
A case of inherent benefits and risks in globalisation
How to balance company performance and responsibilities ?
Global athletic footwear market - Top 10 control 70%
Nike focuses on Design,Development and marketing; contract
manufacturing
Founded in 1964 by Phil Knight
Manufacturing 70 Japanese
1982 80% from Korea and Taiwan ---late 80s Indonesia ,China and
Vietnam
Today 700 factories,51 countries, 500,000 workers(only22000 direct
employees)
Diversified into Apparel and sports equipments
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Operation styles
Footwear ( 78 suppliers ,mostly in Korea and Vietnam,)
Apparel ( Source from multi product suppliers, short life
cycle,less control)
ISSUES
Low wages in Indonesia : 6 factories (4 owned by Korean
suppliers,25,000 workers)( Minimum dialy wage ,$1 was not
given as company was exempted by govtmnt , even with $1 a
worker could only meet 70% of bare minimum expenses of an
individual ,let alone a family)
Also, human rights violations, poor working conditions,physical and
sexual abuse ( NewYork Times, WSJ,Reuters,USA
Today,AP,CBS News)
Nikes response: we are marketers and designers ;not
manufacturers
( In 2000 Nike stopped applying for exemptions and started giving
$30 per month, after companys sales went down world over)
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 Child labour in Pakistan

70% of worlds soccer balls are made in Sialkot
( Saga, Nikes main supplier,had outsourced stitching to industrial
units where child labour was rampant )
After ILO investigations business shifted to lesser known interiors!
Health and safety problems in Vietnam
-(Toulene release in main subcontracters plant)
Anti Nike campaigns : Just Stop It!
Nike watch, Oxfam Australia,Clean cloth
campaigns

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Nikes Response
- Supplier code of conduct : Criticism : Minimalist ; illiterate workers
could not enforce code of conduct
US occupational health and safety norms for manufacturers
Labour practices and Environmental action Teams
inspection in apparel factories by own managers
SHAPE initiatives- a supplier mentoring programme
Membership in UN Global Compact, Global alliance for workers
and communities
P R blitzkrieg ??

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 Business Ethics management is the direct attempt to formally or

informally manage ethical issues or problems through specific policies,
practices and programmes
Components
Mission or value statements
Code of ethics
Reporting /advice channels
Risk analysis and management
Ethics managers ,officers and committees
Ethic consultants
Ethics education and training
Auditing,accounting&reporting( GRI etc..)
CAUX round table
UN global Compact
Social accounting: intended audience being stakeholders other than
share holders, voluntary process, social,ethical, environmental
issues..stakeholder survey and dialogue (FTSE4Good/Dow Jones
sustainability indices)
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Developing a corporate policy-Code of ethical

conduct
Inspiration & Guidance
Support
Deterrence & Discipline
Education &training
Contribution to professions public image
Protecting the status quo
Promoting business interest
Infosys
C-LIFE
Customer delight
Leadership by example
Integrity & Transparency
Fairness & pursuit of excellence
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Nokia - Code of Business Conduct and Ethics

Nokia's goal is not mere minimum legal compliance, but as an
industry leader to be among the world's best in corporate
responsibility, practicing good corporate citizenship wherever it does
business

Thrust Areas
Ethics and the Law
Human Rights
Conflicts of Interest, Gifts & Bribes
Workplace Practices
Environment
Suppliers
Implementation

Nokia employees communities imbibe this thru

Induction, Training & Internal communities

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Discrimination

Any factor that is unrelated to job performance might be used to

discriminate against employees
Uncommon(?) marital status,physical appearance, sexual
orientation..etc
Managing diversity ?
Equal opportunity programme(EOE)
..Whats Reverse Discrimination?( retributive justice?)

Employee privacy

Physical privacy own space( electronic surveillance???)

Social privacy
Informational privacy (background checks by pvt security firms??
Psychological privacy-( controlling emotions.. Stewards, retail sales
girls)
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If spying on employees is counterproductive to fostering trust and integrity in

the work place?
-- With the abuse of company time is a perfectly legitimate complaint of
companies, we might ask if policing to prevent or identify such an abuse
legitimates su a far reaching incursion into workers privacy ( Crane&
Matten ,2007)
Some other issues
Presenteeism
Work-life balance
Industrial spying
Fair wages
Flexible working patterns (part time instead of full time jobs??)
Flexibility .management can do what it wants????
Team working . Reducing individuals discretion???( Legge,1998)

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Whistle blowing

When an employee blows the whistle on questionable or illegal conduct , is

retaliation un lawful, unethical or just to be expected ?

Whistle-blowing - the act of a man or woman who, believing that the public interest

overrides the interest of the organization he/she serves, publicly blows the whistle if
the organization is involved in corrupt, illegal, fraudulent, or harmful activity

(Nader, Petkas, and Blackwell, 1972)

Incompetence
Criminal Behavior
Unethical Policies
Threat to Public Safety
Injustices to Workers

The SOX( Sarbanes- Oxley act),2002, provides for civil and criminal
protection for whistle blowers
Satyendra Dubey Incident (2003)
S Manjunath incident (2005)
(Public Interest Disclosure and Protection to Persons Making the Disclosure
Bill, 2010 )

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BoP thesis ( Prahlad and Hart)

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eliminate poverty through profits".

Bottom of the pyramid thesis(BOP)
CK Prahlad
A Neo- Liberal perspective
that markets and large corporations, not government, are the best
vehicle for justice, access and transparency; or that consumerism
could be more empowering than citizenship
MNC Vs NGO
Social Engineering
Globally coordinated attacks on leading brandscalled "smart
mobs" provided NGOs with a new mechanism to influence not just
the regulatory compliance of single companies, but the practices of
whole industries

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 industries like food retailing and financial services, which

traditionally serve lower-income consumers in Western
markets, have failed to establish substantial market
share in large developing country markets
many corporate breakthroughs in BOP markets have
been secured either by copying the models developed by
civil society organizations (CSOs) or by establishing
business partnerships with CSOs
Micro credit boom in South Asia to Solid waste Micro
enterprises of south America, SHGs, Community
networking
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Sustainability

Development that meets the needs of the present without

compromising the ability of future generation to meet their own
( World commission on Environment &Development,1987)
- Economic/Social/Environmental
Triple bottom Line (Elkington,1998)
People, Profit and Planet
BPs backtracking on sustainability!
GRI (Global Reporting Initiatives), UN Global Compact
( Electrolux ,Bodyshop, British Airways)

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 The three components of sustainability

Social

Economic

Environmental

Source: Crane and Matten (2004), Figure 1.5, page 22

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