Business Ethics(for MBA Marketing Course)

Dr Robert ShawSchool of ManagementGuangdong University of Foreign Studies

Saturday 10 May 2014, 2 pm

Today1. The questions asked

2. What is business ethics?a. What is ethics?b. What is “business”?

3. Western theoriesa. Of business & societyb. Of ethics

4. Business ethics in China

(Annex: Thoughts on case studies in business ethics)

Questions asked

1. What is business/marketing ethics?

2. How do companies do it?

3. Does business/marketing ethics go against profit maximization?

4. At least, tell me what benefits will my company/organization gain by sticking to the ethical principles.

Questions asked

4. What are the costs of being ethical? Nowadays many Chinese SMEs are merely striking for survival. Isn’t it too unrealistic?

5. Isn’t business ethic more of a concern of government? What can a company do to make a change?

6. I am not the big boss in my organization. What can I do to make a difference?

Questions asked

All the questions assume:

1.A neoliberal perspective

2.A purpose for the MBA

3.What the discipline of business ethics is

Questions asked

About the answers:

1.Personal response

2.You should develop your own views

3.We should discuss (argue) these things

A few more questions

1. What is “social responsibility” ?

2. What is “mutual respect” ?

3. What is “integrity” ?

What is ethics? Four topics

1. Facts & values

2. Scope of ethical decision-making

3. Moral autonomy

4. The use of theory

Breaking free

Types of hegemony•Global•Political •Religious•Community•Science / technology

Immanuel Kant

1. German

2. Died 1804

3. Theory of moral autonomy

4. Basic theory of the west today

Königsberg

Russia invades Königsberg

1. There are three ways we can think:

a. Scientific approach

b. Aesthetic approach

c. Ethical approach

2. These ways seek to answer different kinds of questions

What can we know?

Modern science begins: Galileo 伽利略

1564 – 1642Italian 意大利人

Mathematics, Pisa数学家，皮艾萨市

Professor, Padua教授，帕多瓦市 1592

1609 Telescope 望远镜

Sister Maria Celeste 玛莉修女

Convent at aged 1313岁进入修道院

124 letters124封信

伽利略的女儿

23

1609 Telescope望远镜， 1609年

24

28

29

Isaac Newton

1664, 22 years-old

Trinity College, University of Cambridge

Questiones quædam Philosophiæ(Certain philosophical questions)

Amicus Plato amicus Aristoteles magis amica veritasPlato and Aristotle are my friends, but truth is a better friend

Truth and authority – now an issue again

32

Newton’s optics 牛顿光学

1666Where is truth?真理在哪 ?

Isaac Newton –questions about his work艾萨克 · 牛顿 - 关于他著作的问题

William Blake 1804威廉 · 布雷克（英国诗人和画家）

British Library London

大英图书馆，伦敦

  Science Ethics

Question How are things?What happened?What will happen?

What ought to I do?What sort of person should I become?

Time Explains the pastPredicts the future

Now!

Laws or rules Essential Elusive

Methods IncrementalDevelopmental

HolisticIrreducible

Outputs LawsFacts

DecisionsActions

Development On-going Static

Mode Descriptive Prescriptive     

Moral autonomy

1. The moral person / leader / manager is

EITHER Heteronomous – follows rules of others

OR Autonomous – independent in thought and action

2. If you are morally autonomous, youa. Make your own decisionsb. Do so rationallyc. Have strength-of-will, act as

you decide

The use of theory

1. Assume we have moral autonomy, on what basis should we make our moral decisions

2. Western theories generally taught in MBA:

a. Aristotle, virtues, codes of ethics

b. Hedonism

c. Utilitarianism

d. Deontology

 

Stoicism or

Cynicism

Virtue Ethics

Deontology Utilitarianism

Basic idea How to survive in bad times

How to make people behave according to rules

Individual people are most important.Act for the reasons.

Consider the outcome/results/consequence of your options.

Focussed on Your survival Behaviour Intentions Results

Underlying idea

The world is bad

People should show good character

There are higher values to which we should aspire.

Happiness (in some form or other) is the goal.Everyone is important.

Business situations

The employee in a difficult position.

Company control of staff.

Genuine attempts to do the right thing. Companies policy

Attempts to do what is best for everyone . Government

Theorists Greeks but not in the original form. Derived works okay.

Aristotle Kant BenthamJ S Mill

Sources Your textbook can be cited in this particular case. But try to find something beyond that.

Anything by Jonathon Barnes is good.Quote Aristotle.

Quote KantOr works about Kant

Quote BenthamUniversity College London website on BenthamMill is clear

Western ethics – a tradition of 2,500 years

Parmenides & Kant – rationalityAristotle – flourishing & codes of ethicsKant –moral autonomy & deontologyBentham & Mill –utilitarianism

School of Athens Raphael, Sistine Chapel, 1511

1-Plato, 2-Aristotle, 3-Socrates, 4-Xenophon, 5-Æschines, 6-Alcibiades, 7-Zeno, 8-Epicurus, 9-Federico Gonzaga, 10-Averroes, 11-Pyhthagoras, 12-Francesco, 13-Heraclietus, 14-Diogenes, 15-Archimedes, 16 -Zoroaster, 17-Ptolemy, 18 Raphael.

What is “business”?

1. Decision-making in business effects many people and groups (stakeholders)

2. Convergence of lines of reasoning (case studies always come back to the same issues, the big theoretical debates)

3. The topics in business ethics courses have changed

Traditional business ethics topicsThe subject business ethics appeared in the 1960s

Employee dishonestyCodes of conductFair working conditions - health and safetyRespect for other culturesHonesty in marketingMonitoring emailTaking and giving bribesChild labour in foreign countriesWhistle blowingWorkplace rights - drug testing, surveillanceCorporate social responsibility

New topics

Social justice –distribution of wealthEconomic theory – neoliberalismReasonable profitCapitalism & socialism & democracyCorporations & moralityThe effect of technology on societyEthics of cyberspace Human rightsSocial marketingAnimal rightsOpen access to data/science/government information

Allegations about marketing campaigns

1. Stereotyping

2. Subliminal messages

3. Exploiting culture

4. Vulnerable targets

5. Minimal legal compliance

The new business ethicsBusiness Ethics is now about Leadership

Public policy

Economics

Social theory

Political theory

Methods of critical analysisDraws upon the disciplineof philosophy

What can you do?

Make yourself into a LEADER

1.Be well informed

2.Learn to be critical-minded

3.Learn to be open-minded

4.Be autonomous

5.Participate

Western theory - business/society1. Goals of a business

2. Milton Friedman & The Chicago School

3. Neo liberalism

The goal of business

1. The goal of business is to make a profitNet shareholder value

2. Contribute to societyThe long view

Not this (goals within a business)

The worlds dumbest idea

1. Ideas have many origins

2. Milton Friedman

3. The goal of business is to make a profit

4. Social responsibility is the role of government, not business

Milton Friedman1. 1912-20062. American economist & statistician

3. University of Chicago

4. New York Times, September 13, 1970www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html

5. Newsweek columns influential, 1966-1984

6. Profits + markets = neo liberal philosophy

The Chicago School of Economics

1. Friedman from 1946

2. Produced several Nobel Prize winners

3. New York Times, September 13, 1970www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html

4. The goal of business is to make a profit

5. Social responsibility is the role of government, not business

Global economic crisis

Business ethics in China

1. Business ethics with Chinese characteristics

2. Alternative theorists

3. Ethics in China is a tradition of contention – there is no settled Chinese way or theory

Corruption

Politicians and the public expect business practitioners to be honest, to obey the law, to be concerned about the environment and the national interest

There are spectacular examples of failure in the West and in China

Illegality

The challenge – new responsibilities

Their first democratic labour union elections 2012

All-China Federation of Trade Unions 中華全國總工會

HRM model

71

Western concerns in business decision-making

72

Chinese concerns in business decision-making

Alternative theorists

Thank you.

Thoughts for MBA students on case studies

(applies to all management subjects, not just business ethics)

Case study methods

1. Describe what companies did

2. Ask for the students opinion

3. Gives an official viewpoint

4. Confront moral/ethical dilemmasStudent gives own opinionStudent applies theory

Case studies may

1. Describe what companies did GOOD FUN

2. Ask for the students opinion POINTLESS

3. Gives an official viewpoint DANGEROUS

4. Confront moral/ethical dilemmasStudent gives own opinion PERHAPSStudent applies theory DO

ETHICS !

Case studies may

Ethical dilemma (who, when, what)

Options for analysis

Ethical theory

Apply the theory to the options

Draw conclusions

Case study technique

1.State the ethical dilemmas that the case involves

2.Select the decision-maker you will focus on

3.Describe the decision options for the dilemma

4.List the stakeholders

5.Say how each stake holder is affected by the decision, positively and negatively

Ten steps

6. Say why you are going to use a particular ethical theory

7. Outline the ethical theory you are going to apply to the case

8. Systematically apply the ethical theory to the options

9. Draw conclusions based on the application of the ethical theory

10.State the limitations of the analysis

Ten steps to produce a case study

Made in China

Case study 1

I don’t buy anything which has ‘Made in China’ written on it. I just don’t. I used to earlier when I got tempted by the low cost of stuff from China. But that was then. I’m much wiser now. After having heard of all the stories of their toys, rubber products and now milk products I just hate the sight of a ‘Made in China’ label.

Although I’ll admit here that stuff made under the known brand names like Lenovo or HP or some such company having their own plant in China are still okay though there are a few exceptions to this too (remember ‘Made in China’ Barbie dolls which were recalled).

But apart from the quality of items which come out of China is hugely suspect. Take their $1 watches which don’t last for more than a week to their bathroom slippers which has a whole lot of chemicals (check the picture) to their milk products which is killing and maiming their own kids. What’s their problem? Why can’t they make good stuff? Why can’t they ensure quality of their items? These are quite pertinent questions. Wouldn’t you say? Lets try and find out.

First, let’s admit that it’s a communist state. Some of you guys will say - so what? I’ll explain. Because it is a communist state till very recently individual enterprise was not permitted in the country. Most of the stuff that was produced was under the watchful eyes of the state. And the state ensured quality of stuff being made.

But ever since their economy started opening up and individual enterprise was permitted they did not have any means of checking the quality of all the stuff being produced. Their people hurriedly put up millions of small factories with the help of easy loans which were now available to them.

Their only goal was to make money. And so they started producing stuff which was pretty cheap so that the demand for their items would be huge. They did not care for the quality of their own stuff. They just wanted their profits. The Chinese government couldn’t care less either as whole lot of money was coming to the country. And so you have cheap Chinese stuff flooding the world market which is of very low quality.

This is where the question of ‘Business Ethics’ comes up. In any other country which has always promoted capitalism the companies in those countries aim to build not just their products but their brand name as well. And to do that they have to make good stuff which actually wins over the trust of the consumers. Take for instance any stuff being marketed under the label of Spencers. I’m sure the company takes lot of pride in the quality of their stuff and likewise. And so a consumer buys their items with a blind faith in the quality of those items. This is what Business Ethics is all about. The onus of maintaining the quality of goods is on the company. The governments also do their bit by way of having checks at various levels.

Now compare this with China. Out of all those millions of companies do you know the name of any one Chinese company leave aside having faith in their product? At least I don’t. In fact I can see you guys nodding your heads. You see till such time these companies try and make decent stuff with a better quality management system in place they cannot build consumer confidence in their products.

Their strategy of making cheap and low quality stuff will soon backfire as the consumers worldwide have started realizing the worth (and ill effects) of goods made in China. These companies will have look beyond short term returns which will take a dip when their goods start competing with the rest of the world.

There is something else which needs to be talked of over here. Let the Chinese do what they want. Why can’t the other governments check the quality of stuff coming into their countries? Why can’t they make it mandatory for all these Chinese companies to get their stuff evaluated before they’re allowed into the markets? I know it cannot be for Chinese companies alone. So let them make it mandatory for everyone. And their laboratory guys can also make decent money for checking their stuff. Quite simple actually. Wouldn’t you say? Tell me.

Real estate marketing

Case study 2

Case Study:Ethical Marketing and Advertising

1. Jason Davis, a well known estate agent is approached in January by Hill Properties to arrange the sale of a small Central London office block - "Hill House".

2. Jason informs Hill Properties that according to his estimates, the selling price should be around £1.2M. The general view of his colleagues in the firm is that the most he is likely to sell the property for is £1M but he does not disclose this view to his clients.

3. Hill Properties are impressed by the estimated sales price and by Davis's sales pitch, which involves commissioning a glossy brochure and an extensive national advertising campaign, both at the clients' cost. His company is appointed sole agent in February. At the clients' demand, the property is placed on the market for £1.5M. Jason does not object.

4. Jason produces a sales sheet describing the property in a very positive light although he has not checked many of the facts. However, he includes a large print disclaimer from any liability for misrepresentation. He has been informed in the past by his solicitors that such a disclaimer would ensure that he could incur no liability to any purchaser for any damages arising from misrepresentation.

5. Jason discovers that a rival agent is also trying to sell another office block of the same calibre to this potential buyer and immediately drops broad hints about the unsuitability of the other property and about the unreliability of the other agent. (Only some of his comments are in fact valid.) As a result, negotiations on the purchase of "Hill House" progress. A selling price of £1.2M is agreed in principle and the solicitors for the two parties start dealing with the documentation.

6. The buyer drags out the negotiations on the details over a period of two months involving Hill Properties in considerable legal fees and loss of interest. Jason "encourages" the negotiations along by hinting to the buyer that it may be possible to "shave off" something from the price as the sale negotiations progress. During this time Jason is approached by various other potential purchasers, but they are informed that the property is under offer.

7. The two sides finally meet to sign the sale agreement in June. Out of the blue, the buyer refuses to sign unless £200,000 is "shaved-off" the purchase price. Hill Properties are shocked by the tactics but realise that they will be unable to put the property back on the market to find another buyer until the autumn, causing serious cash flow problems. Reluctantly, they agree to sell at £1M.

8. Jason subsequently receives two crates of vintage champagne from the buyer for having helped them obtain the property. They are pleased with the price they have paid.

Answer: The Jewish Perspective

Jason, as an expert in real estate, is expected to be totally honest and forthcoming with his clients who are the vendors of the property. He has a responsibility to tell his clients the consensus view of the property value.

Whether or not a legal liability exists, Jason must describe the property honestly and while he certainly may put the best spin on the property, he must be certain of his facts and be scrupulously honest about what he says concerning it.

It is clearly prohibited for Jason to spread untruths concerning rivals.

He must maintain his client's best interests uppermost in all his actions.

Marketing manager

Case study 3

You are a marketing section manager in a medium sized American company.

Your company is a telemarketer.

You have 9 people working for you (7 men and 3 women).

Business is good and you want to appoint two more staff.

You need people to telephone prospective clients and sell your products.

You sell exercise books, pens and other stationary.

The advertisement

Job Description:Location: Parsippany, NJCompensation: 30-35K plus a significant bonus structureHours are flexible!

In search of a full time telemarketer for a client in the Parsippany, NJ area. This position features flexible hours and a significant bonus structure!Must have telemarketing experience and a proven sales record. Successful candidates are aggressive, possess a pleasant phone manner, and able to secure their own leads based on referrals. Apply for this great opportunity today! You can view all of our jobs online at http://www.appleone.com/?sc=11&id=844292

You advertise and get 23 good applications.

You decide to interview 5 of them.

Write the list of criteria you would apply to make the selection.