"Bussiness Ethics Responsibility of Stakeholders"
Business Ethics: An overview of responsibility of Stakeholders Presented by Gaurav Garg MBA-II(A), 2645 What is Ethics….. • Ethics is a set of values and rules which define the right and wrong conduct. • Ethics means norms, morals and ideals prevailing in a society. Principles of Ethics • Honesty • Respect • Responsibility • Fairness • Care 6 Primary sources of Ethics • Genetic inheritance • Religion • Philosophical systems • Codes of conduct • Legal system • Cultural experience Business Ethics Business + Ethics = Business Ethics • Business commonly referred to a commercial activity aimed at profit motive. • Business ethics refers to moral principles and rules of conduct which are applied to business. • Business Ethics means conducting all aspects of business and dealing with all stakeholders in an ethical manner… Some Unethical Practices Related to: • Consumers • Government • Community • Employees • Economy Unethical behavior occurs for many reasons which include : • Lapses in individual ethics • Ruthless pursuit of self-interest • Outside pressure CORPORATE GOVERNANCE • Structure vary from country to country • Standardized on American patterns • Globalized Capitalism… Self Governance • Substituting Governmental regulation of market CORPORATE GOVERNANCE SHOULD • Ensure that managers effectively execute the strategy laid down by the B.O.D’s • Avoid fraud, deception, malpractices within the corporation. • Provide opportunities to share holders to examine the functioning and true performance of the corporation Principles of Corporate Governance • Fairness. • Accountability • Responsibility • Transparency. Organizational Stakeholders • A corporate stakeholder is a party who affects, or can be affected by, the company's actions . • To be effective, an organization must at least minimally satisfy the interests of all the groups that have a stake in the organization. Stakeholders of the Organization Customers Owners Employees Unions Suppliers Local Government Community Strategic Society in partners General Types of stakeholders Responsibilities & Characteristics of Stakeholders 1. Owners and Shareholders • The number of owners and the roles they carry out differ according to the size of the firm • In small businesses there may be only one owner (sole trader) or perhaps a small number of partners (partnership) • In large firms there are often thousands of shareholders, who each own a small part of the business 2. Managers • Organize • Make decisions • Plan • Control • They are accountable to the owner(s) 3. Employees: • A business needs staff or employees to carry out its activities • Employees agree to work a certain number of hours in return for a wage or salary • Pay levels vary with skills, qualifications, age, location, types of work and industry and other factors 4. Customers: • Customers buy the goods or services produced by firms • They may be individuals or other businesses • Firms must understand and meet the needs of their customers, otherwise they will fail to make a profit or, indeed, survive 5. Suppliers: • Firms get the resources they need to produce goods and services from suppliers • Businesses should have effective relationships with their suppliers in order to get quality resources at reasonable prices • This is a two-way process, as suppliers depend on the firms they supply 6. Community: • Firms and the communities they exist in are also in a two-way relationship • The local community may often provide many of the firm’s staff and customers • The business often supplies goods and services vital to the local area 7. Government: • Economic policies affect firms’ costs (through taxation and interest rates) • Legislation regulates what business can do in areas such as the environment and occupational safety and health • Successful firms are good for governments as they create wealth and employment ETHICS & STAKE HOLDER THEORY • Maximize stake holder value. Develop ethical responsible behavior of managers. • Managerial decisions should also reflect ethical responsibilities- distribution of benefit and allocations of costs in a manner that is considered right, just by the stake holders.. Stakeholders’ Concerns Stakeholder Group Examples of Concerns Owners and Investors Financial Soundness Consistency in meeting shareholder expectations Sustained profitability Timely and accurate disclosure of financial information Stakeholders’ Concerns (cont.) Stakeholder Group Examples of Concerns Customers Product/service quality, innovativeness, and availability Responsible management of defective or harmful products/services Safety records for products/services Pricing policies and practices Honest, accurate, and responsible advertising Stakeholders’ Concerns (cont.) Stakeholder Group Examples of Concerns Employees Nondiscriminatory, merit-based hiring and promotion Wage and salary levels and equitable distribution Availability of training and development Workplace safety and privacy Stakeholders’ Concerns (cont.) Stakeholder Group Examples of Concerns Society Environmental issues • Environmental sensitivity in packaging and product design • Recycling efforts and use of recycled materials • Pollution prevention • Global application of environmental standards Stakeholders’ Concerns (cont.) Stakeholder Group Examples of Concerns Society Community involvement • Percentage of profits designated for cash contributions • Innovation and creativity in social welfare • Product donations • Availability of facilities and other assets for community use • Support for employee volunteer efforts Conclusion