1. One of the myths in business ethics says that ethics is a personal, individual affair, not a public or debatable matter. Do you agree/disagree with the statement? Please elaborate your answer.

Answer: I disagree with this statement, because ethics is personal or religious beliefs, and that one decides what is right and wrong in the privacy of one’s conscience. Every individual must make moral choice in life. This individual ethical choice is most often influenced by discussions, conversations, and debates, and made in group context. Therefore, to argue that ethics related to business issues is mainly a matter of personal or individual choice is to underestimate the role organization play in shaping and influencing members’ attitudes and behaviors.

2. Why do you think it is important to teach ethics in business school? Do you think ethics can be taught and trained? Why/why not?

Answer: Most activity in business is making a lot of decisions. These decisions depend on facts, inferences, and rigorous, ethical reasoning. And yes it can be taught and trained, either ethics course or training sessions to teach us how ways of thinking and behaving in situations. Besides, as a businessman, we have to look at difference perspective to make a decision.

3. What are the benefit of using stakeholder theory approach in ethical decision making? How does this approach work?

Answer: With stakeholder management approach, including frameworks for analyzing and evaluating a corporation’s relationships (present and potential) with external groups, aims ideally at reaching “win-win” collaborative outcomes. This “win-win” means making moral decision that benefits the common good of all constituencies within the constraints of justice, fairness, and economic interest. The aim in using the stakeholder approach as communication strategy is to change perceptions and “rules of engagement” to create “win-win” outcomes.

4. Why does every ethical issue have dilemmas? Do you believe ethical dilemmas can be prevented and solved morally without the use of principles? Explain.

Answer: Decision choices presented by an ethical dilemma usually involve solutions that do not satisfy all stakeholders. In some situations, there may be a resolution to an ethical dilemma that is the “right” thing to do, although none of the stakeholders’ material interests are benefited. Ethical dilemmas that involve many stakeholders require a reasoning process that clearly states the dilemma objectively, and then proceeds to articulate the issues and different solution alternatives. Although ethical reasoning has been defined, in part, by acting on “principled thinking,” it is also true that moral creativity, negotiating skills, and knowing your own values also help solve tough “real world” situations.

MM5001 // Business Ethics, Law, and Sustainability // YP52B // Page 1

Yes I believe ethical dilemmas can be prevented with deciding what is right and wrong in an international context also involves understanding laws and customs, and the level of economic, social, and technological development of the nation or region involved. On the other hand, we should not easily accept stereotypical descriptions of how to do business by means of what may be considered “local customs.”

5. Why is utilitarianism useful for conducting stakeholder analysis? What are the problems using this principle?

Answer: Utilitarianism is a useful principle for conducting a stakeholder analysis, because it forces decision makers to (1) consider collective as well as particular interests, (2) formulate alternatives based on the greatest good for all parties involved in a decision, and (3) estimate the costs and benefits of alternatives for the affected groups.

The problems are:

• No agreement exists about the definition of “good” for all concerned. Is it truth, health, peace, profits, pleasure, cost reductions, or national security?9

• No agreement exists about who decides. Who decides what is good for whom? Whose interests are primary in the decisions?

• The actions are not judged, but rather their consequences. What if some actions are simply wrong? Should decision makers proceed to take those actions based only on their consequences?

• How are the costs and benefits of nonmonetary stakes, such as health, safety, and public welfare, measured? Should a monetary value be assigned to non-marketed benefits and costs?10 What if the actual or even potentially harmful effects of an action cannot be measured in the short term, but the action is believed to have potentially long-term effects, say in 20 or 30 years? Should that action be chosen?

• Utilitarianism does not consider the individual. It is the collective for whom the greatest good is estimated. Do instances exist when individuals and their interests should be valued in a decision?

• The principles of justice and rights are ignored in utilitarianism. The principle of justice is concerned with the distribution of good, not the amount of total good in a decision. The principle of rights is concerned with individual entitlements, regardless of the collective calculated benefits.

Even given these problems, the principle of utilitarianism is still valuable under some conditions: when resources are fixed or scarce; when priorities are in conflict; when no clear choice fulfils everyone’s needs; and when large or diverse collectives are involved in a zero-sum decision, that is, when a gain for some corresponds to a loss for others.

MM5001 // Business Ethics, Law, and Sustainability // YP52B // Page 2

6. In your opinion, what are the problems with the free-market society? What are the problems with the regulated market society? Is there any third way solution?

Answer: Free-market society problems:

• Mechanisms do not effectively inform owners and managers on how to respond to complex crises that have far-reaching ethical consequences

• Children and other vulnerable groups are not aware of the effects of advertising on their buying choices.

• Many firms’ advertising activities truthfully inform consumers about product reliability, possible product dangers, and proper product use.

Regulated-market problems:

• Regulated-market have the same problem with free-market, that mechanisms do not effectively inform owners and managers on how to respond to complex crises that have far-reaching ethical consequences

• There are many bigger profit that company can’t take, for instance, paper company can’t cut all trees because its regulated by government.

Third way solution:

• Limited liability laws. Capitalism requires capital – lots of it. But without limited liability laws, investors are unlikely to risk investing their money in business.

• Property rights. Without the right to own property and dispose of it as you wish, capitalism as we know it could not exist. This legal rights are created and protected by the government.

• Bankruptcy protection. Business inherently risky and one of the largest risks is business failure, particularly during recessions and depressions.

• A stable money supply. Without reliable money, markets would be based primarily on barter and thus be extremely limited.

• Patents and copyrights. Large portions of our economy would grind to a halt if the government did not grant patents and copyrights.

• Banking regulation and insurance. As we have seen recently, a capitalist economy depends heavily on stable banks to finance growing businesses.

• International trade law. Global capitalism would be impossible without trade. Governments create the legal frameworks – the treaties and international trade laws – that facilitate and make this trade possible. “free trade” is a misnomer because it implies that it is international trade that exist free of any political framework.

MM5001 // Business Ethics, Law, and Sustainability // YP52B // Page 3

7. Do you think ethics have universal values and apply similarly in different cultures? In a country that has diverse cultures like in Indonesia, can we have different ethical principles among those local cultures?

Answer: I think ethics do not have universal values and apply similarly in different cultures. But, If there was a set of universal ethical principles that applied to all cultures, philosophies, faiths and professions, it would provide an invaluable framework for doing business. I think, if we have a company, we should have strong corporate cultures, because (1) have a widely shared philosophy, (2) value the importance of people, (3) have heroes (presidents and products) that symbolize the success of the company, and (4) celebrate rituals, which provide opportunities for caring and sharing, for developing a spirit of “oneness” and “we-ness.” Also, individuals and teams in ethical cultures demonstrate a tolerance and respect for individual differences, compassion, ability to forgive and accept, and freedom and courage to do the right thing in questionable situations.

Yes, in Indonesia we can have different ethical principles among those local cultures. Besides, whether an action is right or wrong depends on the norms of the society in which it is practiced.

8. Do you agree with the statement that Corporate Social Responsibility (CSR) will help corporation to attain sustainability? Please explain.

Answer: Yes I agree, with managing corporate social responsibility (CSR) from the corporate board of directors to the marketplace requires commitment, and significant time, effort, and resources from organizations. At stake is a company’s reputation, and even survival. External regulation is also required to help define guidelines and practices for companies to act responsibly toward their stakeholders, communities, and society.

9. What are the reasons for corporations to initiate their CSR programs? Is it only for obligatory reason or are there other reasons?

Answer: Corporate social responsibility (CSR) involves an organization’s duty and obligation to respond to its stakeholders’ and the stockholders’ economic, legal, ethical, and philanthropic concerns and issues. This definition encompasses both the social concerns of stakeholders and the economic and corporate interests of corporations and their stockholders. Generally, society cannot function without the economic, social, and philanthropic benefits that corporations provide. Leaders in corporations who use a stakeholder approach commit to serving broader goals, in addition to economic and financial interests, of those whom they serve, including the public.

MM5001 // Business Ethics, Law, and Sustainability // YP52B // Page 4

CSR brings a whole bunch of benefits to your company and to the rest of society. You can do some good in the world while possibly cutting costs and making your company look absolutely fantastic, such as:

a. Customer engagementHalf of the point of CSR is to benefit the company and improve its reputation. Basically, you want people to know about it. Using CSR can help you to engage with your customers in different and new ways. It can be easier to strike up conversations with your customers since the message is about something “good”.

b. Employee engagementAlong the lines of customer engagement, it’s important and beneficial that your employees know what’s going on within the organization. You are missing an opportunity if you keep your business’ CSR in the dark. Employees will gain a sense of pride and happiness towards the company if they are aware something good is going on.

c. Brand differentiationBrand differentiation used to be the main reason why companies would participate in CSR. Now that CSR has become more common, using it for brand differentiation has become more difficult.

d. Long-term plansCSR is a company’s way of looking into the future. It’s an effort to look into the company’s interest and sustainability. CSR initiatives help organizations step back and forget about next quarter for a minute to focus on ten years from now.

e. Cutting costsCompanies can use less packaging or less energy, for example, and -boom- you have sustainability and CSR while saving some dollars.

f. InnovationInnovation is a great benefit to both a company and to society. A company will make plans and research to development some type of sustainability and end up with a product that can truly change the world for the better. For example, Unilever was able to innovate new products like conditioner for hair that uses less water. Things like this may have not come to be without the idea of sustainability and CSR.

MM5001 // Business Ethics, Law, and Sustainability // YP52B // Page 5

10. What traits should be preserved for us in order to be survived in globalization era?

Answer: We must be:a. Open to other cultures and flexible.b. Aware of verbal and nonverbal differences in communication with a

person from another culture.c. Aware that management practices developed in one culture may not be

easily transferred to another.d. Aware of the cultural influences on behaviour.e. Adaptive.f. Loyal, honest, and ethical.g. Have multidisciplinary perspectives, which are needed for problem

solving.

And also, we have to increase our:

a. Strategic awarenessb. Adaptability to new situationsc. Sensitivity to different culturesd. Ability to work in international teamse. Language skillsf. Understanding international marketingg. Relationship skillsh. Family supporti. International negotiating skillsj. Self-reliancek. Open, non-judgmental personalityl. Flexibility of thinkingm. Sensitivity to othersn. Ability to see the “big picture”o. Leadership skillsp. Drive and determinationq. Intellectual capability

Question from Cases:

Enron

1. What led to the collapse of Enron?o Enron was able to hide huge derivative losses that would have stopped its

growth much sooner if widely understood. Publicly traded corporations are required to make their financial statements public, but Enron's finances were an impassable maze of carefully crafted imaginary transactions between itself and its subsidiaries that masked its true financial state. In other words, losses were held off the book by subsidiary companies, while assets were stated.

MM5001 // Business Ethics, Law, and Sustainability // YP52B // Page 6

o The disgrace drove so much business away from and created such liability for accounting firm Arthur Anderson that it was itself forced out of business. By this time, though, the true value of the company had been revealed and the stock price collapsed, leaving employees with worthless options and pension packages. Of course, executives that understood the real picture sold their shares in advance of the collapsed and waltzed away with billions.

2. How did Enron’s corporate culture promote unethical decisions and actions?

Answer: Enron failure did not happen by accident. It was facilitated by a corporate culture that encouraged greed and fraud, as exemplified by the energy traders who extorted California energy consumers. Rather than focus on creating real value, management's only goal was in maintaining the appearance of value, and therefore a rising stock price. This was exacerbated by a fiercely competitive corporate culture that rewarded results at any cost. Some divisions of Enron replaced as much as 15 percent of its work force annually, leaving employees to scramble for any advantage they could find to justify their continued employment.

Sampoerna

What is the most challenging cross-cultural issue in Sampoerna after the acquisition process by Philip Morris?

Answer:

MM5001 // Business Ethics, Law, and Sustainability // YP52B // Page 7

If we look at portion of family members, portion members with university degree, distribution of members’ company origin, and distribution of members’ nationalities are the biggest challenging cultural issue that could Sampoerna face after the acquisition, because they work together with Philip Morris which had a strong culture. But this cross-cultural can lead a brighter future for HM Sampoerna. Angky Camaro, managing director, said that "The international experience of our new Board member, combined with the continuity and deep local expertise of our current Board, will make HM Sampoerna an even more formidable competitor in Indonesia’s cigarette market.".

Citibank

What factors has made Citibank fail to maintain its standard operation procedure in both Melinda Dee and Irzen Octa cases?

Answer: Regulatory oversights as well as loose corporate governance certainly have contributed. Additionally, there seems to be a growing “conduct gap” between a corporation’s beliefs and its actions. Citibank has certainly created a strong and aspirational set of values and principles with their code of conduct. Unfortunately, this commitment has not been adopted by all employees. There clearly has been a failure by corporate leaders to create or govern the appropriate ethical culture.

MM5001 // Business Ethics, Law, and Sustainability // YP52B // Page 8