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Chapter 1:

People may face the need to make ethical decisions in their daily lives
and not every decision can be covered by economic, legal or company
rules and regulations. Responsible decision making must rely on the
personal values and pricnples of individuals involved.
Before ethics and business was an oxymoron of sorts. This is because
people thought that business by nature was wrong or weird. (sort of
like today and politics) But now, people understand that there is too
much harm that occurs when there is a wrong ethical decision being
made. Too many people are hurt, like in the case of Enron where
everyone remotely affiliated with the company was hurt. The
consequences of unethical behavior and unethical business institutions
are too serious for too many people to be ignored.
Business should mind how they affect their stakeholders. In a general
sense, a business stakeholder will be anyone affected, for better or
worse, by deciisons made within a firm.
It is now clear thata company can lose in the marketplace, it can go
out of business, and its employees can go to jail in case no one is
paying attention to the ethical standards of the firm. Along with the
negative comes the positive. There are benefits to having ethical
business practices such as a competitive business advantage. This is
because a firms reputation for being ethical or charitable can
encourage purchasers to buy from said company. Also, internally,
organizational structure and efficiency can increase due to trust,
loyalty, commitment, creativity and initiative that flourish when a
company has ethical standards and meets them.
Some famous ethicists are Aristotle, John Stuart Mill, and Immanuel
Kant. Ethics refers not only to an academic discipline, but to that arena
of human life studied by this academic discipline, namely, how human
beings should properly live their lives.
As individuals, we need to recognize that our social environment will
greatly influence the range of options that are opten to us and can
significantly infelunce our behavior. Otherwise good people can, in the
wrong circumstances, do bad things and less ethically motivated
indviduals can, in the right circumstances, do the right thing.
Ethics is normative, in that it deals with our reasoning about how we
should act. Social sciences such as psychology and sociology also
examine human decision making and actions, but these sciences are
descriptive rather than normative. They explain how and why pople do

act the way they do while ethics is normative in that it says this is how
people should act. A normative discipline means that it deals with
norms, those standards of appropriate and proper (or normal) behavior.
Norms establish the guidelines or standards for determining what we
should do, how we should act, what type of person we should be.
Morality is the aspect of ethics referred to by the phrase personal
integrity. Social ethics is the collective nature of everyone and raises
questions of justice, public policy, law, civic virtues, organizational
structure, and political philosophy. Within a business setting,
individuals will constantly be asked to make decisions affecting both
their own personal integrity and their social responsibilities.
Expressed in terms of how ew should lie, the major reason to study
ethics becomes clear. Whether we explicitly EXAMINE tehse questions
or not, each and every one of us ANSWERS them every day in the
course of living our lives. Our only real choice is whether we answer
them deliberately or unconsciously.
Values are those beliefs that incline us to act or to choose one way
rather than another.
A corporations culture is a way of saying that a corporation has a set of
identifiable values that establish the expectations for what is normal
within that firm.
Ethical value serve the ends of human well being. Acts and choices
that aim to promote human welfare are acts and choices based on
ethical values. Secon, the well being promoted by ethical values is not
a personal and selfish wellbeing. So one can say that ethical values are
those beliefs and pricniples that impartially promote human well being.
(Controversy may arise when we try to specify more precisely what is
involved in human well being, but we can start with some general
observations> happiness certainly is a part of it, as is respect, dignity,
integrity, and meaning. Freedom and autonomy surely seema part of
human well ebing as do companionship and health. Once again
controversy will arise because well being may be understood in many
forms. In case you believe ina life after this oen, then well being would
mean doing what God told you so you can have a good life on earth
and in the afterlife. However, in case you dont, then your idea of well
being will differ and what you do to seek that will differ greatly. Is it
possible to reach consensus that well being is NOT doing whatever it is
we feel like doing? By this, can we all agree, that man, should he
completely left to himself, will hurt himself. Not necessarily destroy
(though possible), but, hurt. In case we can agree to this, then we can

realize that not all of mans impulses, motivations, etc will bring about
well being. The question is then, to align the impulses one acts on with
ones beliefs and ideals as to reach a state of well being meaning in
line with ones beliefs about what is right and wrong. To reach a state
of goodness and peace of mind where inner conflict is minimalized
below the necessary threshold where contentment of heart is reached
and thus quietness of mind)
In the tradition of ethical values, one must consider the law. You may
have 5 options. Option 1 is the best 2 is less good 3 more so and so on.
Option 1, though ethical is completely illegal so you are forced to use
option 2. Sometimes the law will give you 5 options but one of them
are unethical, for example, the law doesnt say you cant fire an
employee for no reason, even though this is unethical.
Coporations hire ethics officers to make sure that they are in
accordance with the law. Though this is common sense, these
coporations may think because we are abiding by the law, we are
ethical and need not do anything further since we are a good
company however the book argues that it is not sufficient in order to
be an ethical company. Examples given are Nazi Germany and
apartheid in South Africa. Some countries make child labor or sexual
discrimination legal, but businesses that choose to adopt such
practices do not escape ethical responsibility (and the condemnations
of the people) for doing so. For example, there is are infamous movie
producers in Egypt that produce horrible movies that corrupt the
youth. They display sexualized women, gangsters, life of crime and
drugs but GLORIFY it. Youth are then encouraged to reenact these
scenes and this further corrupts Egyptian society. Legal, yes
ethical. -.- who are we kidding?
The law can be an efficient mechanism to prevent serious harms, but it
is not very effective at promoting goods. Which is why you need ethics
beyond the law because it doesnt prohibit lying per se, and it doesnt
penalize parents for not loving their children or treating them the best
that they can.
Telling business that its ethical responsibilities end with obedience to
the law is just inviting more and more legal regulation. This is because
theyd have to cover almost every aspect of business by law.
Law cant possibly anticipate eery new dilemma business might face,
so often there may not be a regulation for the particular dilemma
confronting a business leader.

Most of the cases of corporate scandal mentioned at the start of this


chapter involved attorneys and accountants who advised their clients
that what they were doing could be defended in court. What this
suggests is that when you are doing something unethical, because the
law cant grab hold of you, then you can go ahead and use the loop
hole anyway, which is wrong. The history of ethics is the history of how
osme of the most insightful human beigns have sought to answer the
questions of how should we live.
Practical reason deals with our choices, decisions, and actions and is
reasoning about what we should do and theoretical reason is reasoning
about what we should believe.
Theoretical reason is the pursuit of truth, which (according to the book)
is the highest standard for what we should believe. According to this
tradition, science is the great arbiter of truth.

Chapter 2:
The first step in the ethical decision making process is to determine
the facts. Making an hoesnt effort to understand the situation, to
distinguish fact from opinion is essential. However perceptual
differences in how indivuduals experience and understand siutations
can explain many ethical disagreements.
The second step is to identify the ethical issues involved. You need to
recognize a decision or issue as an ehical decision first because in case
you dont you can make decisions that dont take ethical matters into
account making you ethically accountable.
How does one determine that a question raises an ethical issue at all?
When does a business decision become an ethical decision?
In order to know this one should be sensitive to ethical issues and
know that this sensitivity must be cultivated in ethically responsible
people. One needs to ask how ones own decisions will impact the well
being of the people involved.
Normative myopia, or short sightedness about values may occur when
one is so focused on the financial aspects of decisions and fails to
balance it against the ethical aspects so that it doesnt cross any
ethical boundaries.
The third step involved in ethical decision making involves one of its
more vital elements. One is to identify and consider all of the people
affected by a decision, the people often called stakeholders.
Considering issues from a variety of perspectives other than ones
own, and other than what local conventions suggest, helps make ones
decisions more reasonable and responsible. Making decisions from a
narrow and personal point of view likewise guarantees that one is not

likely to make a decision that gives due consideration other persons


and perspectives.
The fourth step is to consider the available alternatives. One can do
this by using creativity in identifying options or ones moral
imagination. Using ones moral imagination is one element that
distinguishes good people who make ethically responsible decisions
from good people who do not.
The Fifth step in the ethical decision making process is to compare
and weigh the alternatives. This means to create a mental spreadsheet
that evaluates the impact of each alternative you have devised on
each stake holder you identified. Weighing the alternatives will involve
predicting the likely, the foreseeable, and the possible consequences
to all the relevant stakeholders. A critical element of this evaluation is
to try to find ways to mitigate, minimize, or compensate for any
possible harmful consequences or to increase and promote beneficial
consequences.
Consequences or justifications are not the only means for comparing
alternatives. Some alternatives might concern matters of principles,
rights, or duites that override consequences. This is a matter of person
beliefs that one has. Should one stick to ones beliefs and face
discrimination, or assimilate (and in the process lose ones identity)
and face no discrimination.
When comparing and weighing alternatives one should oconsider the
effect of a decision on ones own integrity and character.
The Sixth step is to make a decision.
The seventh step is to monitor and learn from the outcomes and to
modify our actions accordingly when faced with similar challenges in
the future.
The reason why good people do bad things is because of willfull
and intentional ignorance. For example, some cognitive barriers are
rationalizations of a decision made. We tell ourselves that it is ok, that
this isnt wrong, in order to remove any feelings of guilt from our
minds.
Another cigintive barrier is that we sometimes only consider limited
alernatives. For example, upon discovering a lost ipod, you might
conclude that in case you dont take it someone else will. Because the
original owner will lose out in boht cases, it is better that you
benefitfrom the loss than someone else. Instead one can discipline

oneself to explore additional methods of resolution and not allow the


normative myopia to pull ones attention away from the ethical issue
surround ones possible gain of an ipod.
Using a simple decision rule might appear to relieve us of
accountability for the decisiosn, weven when it may not be the best
possible decision. For example, finders keepers, losers weepers or
last in first out (when firing someone). This rules by which you are
basing your decision off of may be questionable in and of themselves
but they will be used to relieve yourself of accountability.
Also people do something callsed satisficing which is that people
select the option that suffices, even when its not the best one. After
spending an hour to reach a decision and a btter one is found, rarely
will somone (after a consensus is reached) say WHOA, waiting a
minute, lets spend another couple of hours and figure out a BETTER
answer! The very fact that a decision was reached by consensus can
convince everyone involved that it must be the most reasonable
decision.
Other stumbling blocks are less intellectual or cognitive than they are a
question of motivation and willpower. Sometimes it is simply easier to
do the wrong thing.
Its easy to cross your ethical boundary just a bit this time. Then a bit
more a second time. Then a bit further. Until (after disaster strikes) you
realize that you are much further from your ethical boundaries than
you ever set out to be.
Also people dont do the right thing because they lack the courage to
do the right thing. Sometimes those in power force you, through
intimidation and fear, to stay quiet in the face of ethically questionable
decisions.

Personal and professional decision making are both decisions that we


have to make in our social roles as friends, sons or daughters, spouses,
or institutional roles such as manager, teacher, student body president.
Managers, executives, and board memebrs have the ability to reate
and shape the organizational context in which all employees make
decisions. They have a responsibility to promote organizational
arrangements that encourage ethical behavior and discourage
unethical behavior.
The problem with cheating:
Cheaint occurs when a person obtains an unfair advantage. When a
society condones this behavior in schools, explicity or implicitly, by not
putting an end to it, it makes it all the more difficult for us to maintain
vibrant, trusting communities as adults.
Eating at the dinner table together is important as studies show. This is
because kids can engage in conversation and become aligned with
their parents day after day and be exposed to their parents.
Although people rationalize cheating as its just schoo the reality is
that behavior in the classroom mirrors what happens in the so called
real world. The student who sits behind you becomes the person who
sits next to you at the office.
IN a complex corporate situation, the indivudal requires and deserves
the support of hthe group. When people cannot find such support in
their organizations, they dont know how to act. Managements
challenge is to be sensitive to the individual needs, to sheape them,
and to direct and focus them for the benefit of the group as a whole.
Greshams law of currency: The bad practices of pervious travelers
have driven out the values that new travelers might have followed if
they were at home.
Scripts:
Ethical problems occur because people go through monotonous tasks
without thinking about them. Changing things up may change this.
Repitition, distraction, and our natural tendeny to exclude those
unfamiliar to us cloud our best thinking and forestall the expression of
our virtues. In moral exclusion people perceive certain individuals or
groups as outside the boundary in which moral values and
considerations of fairness apply. (this is seen a lot in religions and
political thought)

Anyone can offer prescriptions for what you should do and how you
should act, but philosophical ethics answers the question why? as
well by connecting its prescriptions with an underlying account of a
good and meaningful human life.
Philosophical ethics deals with a basis that people, regardless of their
theological perspectives, can agree on based off of a human level of
understanding. help the poor to go to heaven would not be regarded
as philosophical ethics because it presupposes that you as a person
believe in an afterlife. However help the poor to reduce human
suffering is something that many can agree on and therefore would
likely to consider from a HUMAN perspective regardless of the
theological considerations.
There are several persepectives from which we can view ethics. The
perspective of utilitarianism which is an ethical tradition that directs us
to decide based on overall consequences of our act; deontological
ethical traditions, which direct us to act on the basis of maral principles
such as respectinghuman rights; a theory of social justice that takes
fairness as the primary social principle. There is also virtue ethics,
which directs us to consider the moral character of invidiuals and how
various character traits can contribute to, or obstruct, a happy and
meangiful human life.
Utilitarianism beigns with the convition that we should decide what to
do by considering the consequences of our actions. The idea is to make
better decisions. better decisions are defiend as decisions which
lead to consequences that promote HUMAN well ebing: the happiness,
health, dignity, integrity, freedom, and resepct of all the people
affected.
To understand why democracy is a good thing we need to
understand its roots. Democracy is a reaction to the monarchy where
the mass is used to serve a few. This is a monarchy, in history at least
monarchies are infamous for such. To fix this problem, democracy was
born which was the idea of helping as many people as possible reach
the maximum amount of happiness as possible. A decision that
promotes the greatest amount of values for the greatest number fo
people is the most reasonable decision from an ethical point of view (in
the lense of utilitarianism). Utilitarianism doesnt believe in something
as RIGHT OR WRONG but rather it is relative to the consequences of
such an action. Based off of this lying could be good in case it brought
about more overall good than telling the truth. Based off of this theory
social sciences such as ecnomoics, anthropology, political science,

sociology, public policy, psychology and medical and health scieneces


could help determine the likely consequeneces of child labor in a
particular culture.

Utilitariansim answer the fundamental question what should we do by


referring to the rule maximize the overall happiness. How then do we
do this is the question. The book states two ways with which this isi
possible. One way is through government bodies who are trained to
manage societies (yeah right) and the other is the consumer based
market approach where consumers are to make decisions for
themselves with regards to which decisions they would like to make in
the free market. As in they are to decide which risks they are to take.
The products with the highest risks of course will be cheaper (because
people will not buy them) and thus the market will produce products
that are safer. This means that the legislative body is not needed to
force people to be in any certain way or producers to produce in any
certain way. They will be guided by the invisible hand. This dispute is
the dispute between the administrative and the market verisons of
utilitarianism.
Utilitarian ethics is not without its down sides. The more people you
consider in utilitarian thinking, the less feesable it becomes. Some
people argue that all beings capable of feeling pleasure and pain
should be considered when a decision is made, whether they be of
present or future generations as well.
Utilitarian ethics also states (in one way or another) that the end
justifies the means. However this goes against the idea that there are
certain duties that one needs to uphold regardless. They state that one
does not need to be held accountable to any certain rule except to
increasing the overall happiness. One can break a contract in case it
will hurt the overall happiness. One doesnt need justice, fairness, etc
in case it doesnt increase the overall happiness.
But utilitarian ethics does contribute positively in the sense that we are
reminded of the significance of consequences.

Responsible decisiosn making also involves matters of duties,


principles, and personal integrity. Such philosophy is expounded upon
in the light of deontological thought where one makes decisions based
on ethical principles. This approach follows rules that should be
followed even when doing so prevents good consequences from

happening or even in case it results in bad consequences. There are


legal rules, organizational rules, role based rules, and professional
rules. These rules are a part of a social agreement or social contract
which functions to organize and ease relations between individuals. No
group could function when members are free at all times to decide for
themselves what to do and hwo to act.
German philosopher Immanuel Kant argued that there is essentially
one such fundamental ethical principle: respsect the dignifty of each
individual human being. This is the first form of the famous Kantian
categorical imperative. Another less abstract version requires us to
treat all person as ends in themesleves and never only as maens to our
own ends. Humans are subjects because they make decisiosn and
perform actions rather than being ojects that are acted upon.
Based off of this principle based ethics and the Kantian ceatgorical
emperitive we have to respect eachother as humans. What makes
one human is autonomy. Humans are subjects in the senese that they
originate action, they choose, they act for their own ends and are more
than the mere conditioning of their environment. To treat a human as a
mean or an object is to deny them this distinctive and essential human
characteristic and would be to deny them their very humanity. in
summary we can say that rights offer protection of certain central
human interests, prohibiting the sacrifice of these interests merely to
privde a net increase in the overall happiness.
According to the Kantian categorical imperitive, the deontological
perspective, natural rights are more fundamental and persistent that
the legal rights created by governments and social contracts.
Moral rights and legal rights:
Legal rights are those granted by the government and moral rights are
the common sense, deeper than law, sort of rights. As a legal right you
are entitled to minimum wage, equal opportunity etc. You bargain for
certain benefits in exchange for your work. However you cannot
bargain your moral rights in exchange for work. For example, you cant
allow people to sexually harass you in order to work, etc.

Social Justice: Rawlsian Justice as Fairness


Veil of ignorance
Unanimous agreement

These two factors together are what come together as the original
position. These attempt to make the priniples chosen to be fair. His
idea is that our decisions out to be made in such a way, and oru social
institutions ought to be organized in such a way, that they would prove
acceptable to us no matter whose point of view we take.
(the idea of greed and self interest as many times an anti-makeup
to behavior. Something that makes things uglier. One says every
action is a greedy one. Fine, this is possible. There seems to be an
apparent struggle between self itnerst and altruism or between
motivation that is self regarding and motivation that is oterh
regarding but I doubt that any one decision is completely one or the
other. By taking care of yourself you take care of others and when you
take care of others you take care of yourself. Our interest lies in all of
us. Our individual interest lies in the interest of all of us. And the interst
of all of us lies in the interest of each of us.)

Virtue ethics:
A branch within philosophical ethics which deals with what tpype of
person you should become (by the character traits or virtues which
youd embody) that would be necessary to lead a full and good human
life. Virtue ethics seeks to undersand how traits are formed and which
traits bolster and which undermine a meaningful, worth while, and
satisfying human life so that we can take responsibility for the person
we become. Virtue ethics calls on us to reflect on two deeper
questions.Given a more detailed and textured description of maral
behavior, which set of virtues are more likely to embody a full,
satisfying, meaningful, enriched, and worthy human life? Virtue ethics
also reminds us to oibserve how character trais are formed and
conditioned. Virtue ethics reminds us to look to the actual practices we
find in the business world nd ask what type of people tehse practices
are creating. How can one disassociate himself and his own vales from
his work, and the social institutions and practices that encrouage it.
To make ethical decisiosn look at page 88 that has the decision making
process for ethical decision making.
Humn rights versus legal rights:
Human rights differ from legal rights in that , unlike legal rights, the
existence of human rights is not contingent upon any institution.

(end of chapter 3)

Chapter 4:
Individuals can be hindered or helped in making the right, or the
wrong, decision by the expectations, values, and structure of the
organization in which they live and work.
Every organization has a culture which is fashioned by a shared pattern
of beliefs, expecations and meanings that influence and guide thinking
and heaviors of the members of that organization.
Culture of an organization is something that you can either work well
with or it will work against you. They are the written and unwritten
rules of the work place. This occurs namely because people hide things
from themselves and dont want to admit them openly (unwritten
rules) and others they dont mind to (written rules). One might enter a
corportate culture with ones own expectations and be surprised to find
the culture quite different from the one he was expecting and may
clash (for better or worse). Culture changes and in order for one to
change the culture, strong leaders are necessary to have a significant
impact on a culture.
Culture is present in and can be deteremined by exploring any of the
following, among others:
Tempo of work, the organizations approach to humor, methods of
problem solving, the competitive environment, incentives, individual
autonomy, hierarchical structure.
Culture can be so apart of a person that one does not recognize its
existence.
IN situations wehre the alw is an incomplete guide for ethical decision
making, the business culture is likely to be the determining factor in
the decision.
Corporate culture can help or hurt ethical decision making. It is the
sum total of all the corporate practices that encourage, shape, or allow
some types of decisions and discourage others.
The cultivation of habits, including the cultivation of ethical virtue, is
greatly shaped by the culture in which one lives.
Corporate culture shapes you and you shape the culture. Its said in the
book that the culture shapes you more so that you shape it (but I
suppose thats the whole nature vs. nuruture debate again).
Corporations can have one of two cultures. It can have a compliance
based culture or a values based culture. A values based culture
perceived as more flexible and far sighted. A value absd culture is one

that reinforces a particular set of values rather than a particular set of


rules. They have their codes of conduct but value based culture
recognizes that where a rule does not apply, the firm must rely o the
personal integrity of its workforce when decisions needs to be made.
However on the other end there is the compliance based culture
where obedience to the rules as a primary responsibility of ethics is
emphasized. They care a lot about compliance with the law and with
internal codes. This works well in some cases but is problematic
because its only as good as the specifics of the particular rules that are
laid out for people.
Ethical leadership and corporate culture:
When there are ethical bossed and they are people oriented, receptive,
when they listen and are open and have traits of integrity, honesty and
trustworthiness this sets a tone at the top management level which
resonates throughout the rest of the culture. People see ethical
leaders goal is not simply job performance, but performance that is
consistent with a set of ethical values and principles. Behaviors and
traits must be visible. Quietly ethical people at top management wont
necessarily set the tone. Traits and behaviors must be socially visible
and understood in order to be noticed and influence perceptions. When
a company allocates money towards a people they show how
important these people are through thebudget that they allocate to
them. For example in case there are ethical officers that examine the
ethical nature of a company and they are highly paid, have exclusive
positions, and are highly trained, then the corporation will see that it is
really important to have an ethical culture. However in case these
people only work part time, are voulenteers, and know ethical behavior
through the goodness of their hearts (however beautiful that is), the
employees cant take such a person seriously nor the notion of ethics.
Budgeting determines importance.

One can distinguish between good leaders and ethical leaders. Good
leaders are leaders who are able to guide, direct and escort others
towards a destination. A good leader is someone who does this
previously mentioned process successfully and effieciently. However,
not every good leader is an ethical one and vice versa. Some means
may be ethical and better than others (persuasion rather than
coercion). However, it is not means alone that makes one an ethical
leader. The other element of ethical leadership involveds the end or
gaol towards which the leader leads.

Building a values based corporate culture:


Every person has an impact on the coroporate culture, although,
except for perhaps the key leadership, no one individual can build or
change the culture alone. Culture derives from eladership, integration,
and assessment/monitoring.

Before impacting the culture through a code of conduct or statement of


values, a firm must first determine its mission.
As with the construction of a personal code or mission, it is critical to
first ask yourself what you stand for or what the company stands for.
Why does the firm exist, what are its purposes, and how will it
implement these objectives. Once you make these determinations,
how will you share them and encourage a commitment to them among
your colleagues and subordinates. Second step is developing a set of
guiding principles for the firm to articulate the vision clearly with
regards to the firms direction.
Third step is to identify clear steps as to how this cultural shift will
occur. You need to have a process and prcodueres in place that support
and then sustain your vision of ethical business practice to profit.
Finally, to have an effective code that will successfully impact culture,
there must be a belief through the organization that this culture is
actually possible, achievable. When conflicts remain that will prevent
certain components from being realized, or when key leadership is not
on board, no one will have faith in the changes articulated.
Communication of culture must be incorporated into the firms
vocabulary, habits, and attitudes to become an essential element in
the coporate life, decision making, and determination of success.
In the corporate world its important that ethical decision making be
apart of a workers performance review in order for it to be taken
seriously. There are problems with ethical decision making behavior.
The issue is the barrier that has been put up in the psyche of a childs
mind that is reinforced into adulthood. This barrier is the memory of
the negative social consequences of being a tattle tale or a snitch.
Whistleblowing in the coporate world however is a positive thing with
regards to exposing bad behavior such as harassment or
embezzlement, fraud, etc. However there are many negative
consequences to both the firm and the whistleblower which is why

(according to the book) its best to try to resolve the conflict internally
first and also advises the company to have mechanisms that are
effective for employees to be able to report any behavior that was
unethical.
An unethical corporate culture can cause an internal risk to the
companys business practices and can harm stock holders and other
stakeholders (both internally and externally). This is why its important
to fix these problems right away. A first clear sign of a toxic corporate
culture would be a lack of generally accepted base values for the
organization. How does the firm treat its customers, suppliers, clients,
and workers? Management of its internal and external stakeholders are
a good measure of the firms internal values. Manage finances?
After the chapter finishes, the readings section talks about how one
must balance between different stakeholders in order to stay in line
with the companies expectations of itself. For example, the adage the
customer is always right isnt necessarily always right. Sometimes the
firm needs to fire a customer because the customer has hurt one of the
firms employees. Not all firms put their customers first, other firms put
their employees first.

Chapter 5:
CSR (corporate social responsibility) encompasses the responsibilities
that businesses have to the societies within which these businesses
operate. Or a concept whereby companies decide voluntarily to
contribute to a better society and a cleaner environment. It might be a
good idea for business to identify its stakeholder groups and
incorporate their needs and values within its strategic and operational
decision making process.
Coproprate citizenship model of CSR often exists where there is a
strong leader with a sense or responsibility and connection to the
community. These CSR efforts are solely for the public good and do not
expect a commercial reutn on their contributions.
Social Contract model of CSR holds that there is a corporate
responsibility to respect the moral rights of various stakeholders due to
the argument that corporations reap the benefits of serving as a

community citizen and therefore owe a reciprocal obligation to that


community.
Enlightened self interest model of CSR states that incorporating CSR
can lead to differentiation and competitive market advantage for the
business, something that can contribute to the companys brand for
the present and future. Its a business strategy to reduce risk, incrase
market reputation, enhance brand image, strengthen stakeholder
relationships, and protect long-term strategic interests.
Ethical custom seems to be a restricting function on businesss pursuit
of profits as well as the legal constraints of the law.
The prioritization of stakeholdres is often determined by acompanys
mission, practice, board, or custom. All too often,however, the
prioritization is presumed rather than intenonally discussed and
challenged, which might lead to entrenchment rather than
enhancement of the firm. Too true, even in life, where people are in
relationships and they dont really discuss their code of conduct on
what they think is right and wrong, they realize down the line, that the
gaps between them are big and that its best they part ways. This
happens after a large initial investment into the relationship which is a
waste in my opinion. To avoid this one should first be skeptical and look
for deal breakers rather than attempt to get so close to someone
only to realize later on that you have to leave them after all the
investment because they didnt change like youd hope.
Vestment in loyalty and shared beliefs between the manufacturer and
its customers has been shown in countlress industries to be a
profibatle profit maximizing process.
Businesss social responsibilities is to be concerened with societys
interests that restrict or bind businesss behavior. Social responsibility
is what a businesses should or ought to do for the sake of society. First
it has the responsibility to obey the law. Not to cause harm to others,
to prevent harm even in those cases where one is not the cause (this is
less binding than the first), responsibilities to do good. Even when not
explicitly prohibited by law, ethics would demand that we not cause
avoidable harm. Also not to violate anyones rights.
To further understand what giving back to the society means in the
context of preventing harm where one is not the cause we can look at
one such Pharmaceutical Company called Merck. Merck has donated
700 million tablets of a drug called Mectizan which has helped people
living in Africa, asia, central America and south America be healed from

river blindness which causes people to eventually lose their eye sight.
The company has given all these tablets because we are in the
business of preserving and improving human life. WHAT A BUSINESS!
So they did that by giving back. They werent obliged to, but the
question is, when theres a blind man heading towards a pit, how
obliged are you to scream and stop him from falling in.
Some companies engage in CSR but dont tell anyone about it. (P&G
spend 2.5 million in cash and products to help at the 9/11 site). Others
spend a lot to publicize the good that they do (Philip Morris Co. spent
250 million dollars on an advertising campaign that communicates its
charitable activities) The reason companies do this is because of
reputation mangamgemnt which works to make the firm look better in
peoples eyes. This develops something called a trust bank, which is
when consumers or other stakeholders teem to give the company slack
in case they hear something bad about the company. However some
firms think theyre doing good and market all the good that they do
while these same firms community development projects have created
community rifts in areas where their projects are at work. Can you
really say that theyre good or bad then unless you examine all the
facts for yourself? Does the company show you all the good and bad so
that you can judge for yourself or does the company only tell you how
awesome it is?
Some firms engage in CSR only to make more money. The reason for
this is that a company (like a certain tobacco company) was financing
the arts of a certain community (a socially charitable event) only to be
able to target these people and improve revenues for the company.
How sick is that!?
Does good ethics mean good business? Theorists continue to dispute
whether ethical decisions lead to more significant profits than unethical
decisions. While we are all familiar with examples of unethical
decisions leading ot high profits, there is a general agreement that, in
the long run, ethics pays off. Better good will, better reputation, less
risk. According to the book, it is better for the business to stick with the
good path because it is more profitable in a sustainable manner rather
than quick profits that will eventually cause it to lose out (ENRON).

Chapter 9 notes:

Environmental protection is an important aspect of eithical decision


making. When doing business one must be aware of something which
is the fact that one lives inside the environment and is not distinct from
it. Man is made from the Earth. In a book called Collapse it was noted
how environmental degredation has caused the collapse of societies
before this one. The idea now is to see environmental protection not so
much as a burden to business growth but rather a necessary part of it.
This Triple Bottom Line approach takes economic, ethical and
envrinoemtnal sustainability into consideration.
The nautral envirnoemnt is viewed as essential and vaulble to protect
human life and health but also for other reasons. Beauty and grandeur
of the natural world provide great aesthetic and inspirational value and
pschologcal values as serenity and exhilaration.
Along with the environment which can be viewed as trees,
mountains, rivers, lakes, forests, deserts, etc there are those that live
within that ecosystem. The animals. The animals do feel pain because
they have central nervous systems as humans do meaning that they
have the capacity to feel pain. That being said, shouldnt man be
responsible to treat these less powerful beings with kindness? Immerse
yourself in the words of Black Adam, an antihero from the DC Universe,
when you crush an ant beneath your feet do you feel remorse? No. Is
this because you are evil or because you recognize yourself as a higher
form of life? something to think about.

The clean air act of 1970, federal water pollution act of 1972, and the
endangered species act of 1973 were part of the US national
consensus for addressing environmental problems.
Society had two options to further help these laws enacted. They could
demand environmentally friendly products in the marketplace. As
citizens, individuals could support envionrmental legisltation.
Sustainable development and sutainable business practice suggests a
readically new ision for integrating financial and envionrmental goals,
copared to the growth model that preceeded it. These are three goals,
economic, eivnormental and ethical stuatianbility are referred to as the
three pillars of sustainability.
The goal of this practice would be to develop recommendations that
would pave roads towards economic and social development that
would not achieve short term encomic growth at the expense of long
term einvornmental and economic sustainability. sustainable

development is development that meets the needs of the present


without compromising the ability of future gneratiosn to meet their
own needs.
The Circular flow model is criticized due to two things. Resources are
treated as infinite, and as a result, economic growth seen as infinite as
well. So the idea is to devlop an economic system that uses resreouces
only a ta rate that can be sutained over the long term and that
recycles or resuses both the by products of the production process and
the products themselves.
Over the long term, reserouces and energy cannot be sued, nor waste
produced at rates at which the biospohere cannot resplace or absorb
them without jeopardizing its ability to sustain human life. These are
called the biophyslca limits to growth The biosphere can produce
resources indefinitely and it can absorb wastes indefinitely but only at
a certain rate and with a certain type of economic activity. This the
goal of sustainable development.
The conclusion is that over the long run, resources and energy cannot
be used, nor waste pproduced, at reates at which the biosphere cannot
replace or absorb them without jeopardizing its ability to stuain human
life.
Backcasting is a lot like forcasting except for the fact that its the exact
opposite. Back casting is looking at the future and what we know what
the future must be because of present constraints then looking back at
the past to see how we need to shape the present so that it reaches
the future.
Why reach sustainability in the first place?
Sustainability is a prudent long term strategy that enables us to keep
active during the times where business is rough. It allows businesses to
be able to survive while resources are low because they were not
frguile, but resrouceful and effiecient, during the times where materials
were abudnent. So when demand for resrouces increases due to
increase in population and overall expectations in consumer lifestyle
and resources diminish, the best would be those that would be able to
best use there resources long term.
The huge unmet market potential among the worlds developing
economies can only be met in sutainable ways. In case China were to
consume oil at the same rate as the United States, it alone would
consume more than the entire worlds daily production and would more
than triple the emission of atmospheric carbon dioxide. To meet

Chinese demand, new sustainable technologies and products will be


needed.
Significant cost savings can be achieved through sustainable practices
because when you are efficient and use energy wisely, you dont waste
money on wasted resrouces.
Competitive advantages exist for sutainable businesses.
Enviornmentally conscious consumers and enjoy competitive
advantage attracting workers who will take pride in working for
progressive firms. (bit of a stretch, and potential isnt shown to be
limited as the market would say it is)
Sustainability is a good risk management strategy. Steer away from
government sanctions due to unsustainable practices. So its best to
stay ahead of the curve to avoid being left behind plus you can set the
stage for what the regulations should be since you would be the best
practice company that would set the standard. Consumer boycotts of
unsustainable firms.
Ecoefficiency is the idea that resources should not be used or
consumed faster than the envirnoments ability to produce them.
Biomimicry in the business sense is where one firm uses the wastes of
another firm to make its own products. It is broken down into two
words. Bio meaning life and mimicry is the imitation of a process.
Businesses seek to use biomimicry in the sense of using waste (such as
a plant using CO2) to create its food.
Cradle to greave, or lifecycle means that the business is responsible
not only for producing the product but for the entire life of its products
including the ultimate disposal even after the sale.
Cradle to cradle responsibility ups the ante even further and says not
only should the business be responsible for properly taking care of the
product from production to death in its lifecycle but it should also
reincorporate it into another production process after it is disposed of
as waste to further increase productivity.
So far we have ecnoefficiency and biomimicry. A third sustainable
business principle involves a shift in business model form products to
services.
Service based economy is different from envisioning an ecnomy based
off of need of products. Instead of looking at an issue as a need for
washing mahines, you would look at it as clothes cleaning. Instead of
carpets it would be floor covering, air conditioning, cool air. And so

forth. This view recognizes that there is more than one way to satisfy
the need that said product does satisfy opening the floor for ingenuity
and innovation.

if environmentalists want business to produce products that are


friendlier to the environment, they must convince Americans to
purchase them. Business will respond to the market.
Our stolen future (1996) a groundbreaking study on certain sytheitc
chemicals and the environment, assert that astoundingly small
qunitities of these hormonally active compounds can werak all manner
of biolocial havoc, particularly in those exposed in the womb.
Cradle to cradle vs. cradle to the grave. Cradle to cradle is having
responsibility of your product from the cradle (meaning its
inception/beginning) to the cradle of another production line where
your waste becomes the compononet in another assembly so that it is
reused as biomimicry would suggest. Where the waste of a plant (say
the fallen leaves of a tree) become a part of the production of fertile
soil. This is where cradle to cradle is more alert to the environment
with regards to biomimicry (a more sustainable approach to production
and waste disposal) than cradle to grave production where the
products usefulness ends at the end of its life cycle.
In case peple are to prosper within the natural world, all the products
and materials manufactured by industry must after each useful life
provide nourishment for something
There is no need for shampoo bottles, toothpaste tubes, yogurt
cartons, juice containers, and other packaging to last decades (or even
centuries) longer than what came inside them. High quality plastic
computer cases would continually circulate as high quality computer
cases, instead of being downycled to make soundproof barriers or
flowerpots.
THE NEXT INDUSTRIAL REVOLUTION

Introduces no hazardous material into the air, water or soil


Measures prosperity by how much natural capital we can ccrue in
productive ways
Measures productivity by how many people are gainfully and
meaningfully employed
Measures progress by how many buildings have no smokestacks
or dangerous effleunts

Does not require regulations whose purpose is to stop us from


killing ourselves too quickly
Produces nothing that will require future generations to maintain
vigilance
Celebrates the abundance of biological and cultural diversity and
solar income

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