Individual assignment of business ethics and legal

environment
Master of business administration
Name Tsion yosef
Id no new
Section 2

Submitted to yidnekachew
As part of society why we care about business ethics?
Ethical behavior and corporate social responsibility can bring significant benefits to a business.
The multidisciplinary study of business, ethics and society focuses on sustaining, growing and
sharing value, not just for business and their shareholder, but for stakeholders and the societies in
which they operate. Ethics concern an individual’s moral judgmental about right and wrong.
Ethical behavior and corporate social responsibility can bring significant benefits to a business.
For example, they may:

 attract customers to the firm’s products, thereby boosting sales and profits
 make employees want to stay with the business, reduce labor turnover and therefore
increase productivity
 attract more employees wanting to work for the business, reduce recruitment costs and
enable the company to get the most talented employees
 attract investors and keep the company’s share price high, thereby protecting the business
from takeover.

Unethical behavior or a lack of corporate social responsibility, by comparison, may damage a

Ensuring that employees understand the company’s corporate values is achieved by the statement
of ‘Our Business Principles’ which makes clear the behavior it seeks from employees

Trust of the consumers of the organization

Morality The only definition which can be given to morality is “That which is selfish is immoral
and that which is unselfish is moral”. The natural tendency of every human being; taking
everything from everywhere and heaping it around one center, that center being men own
individual self. When this tendency begins to break, then begins morality. This is fundamental
basis of all morality.

2. Can ethics and profitability co-exist?

 There are plenty of examples of businesses and their employees who make good
decisions that also turn out to be profitable. Yet we know that doing what's ethically right
does not always contribute to short-term profits. For example, refusing a bribe and
consequently losing a contract will negatively affect the profits a company could have
 received if the employee had decided to take the bribe. However, you could argue that
refusing the bribe actually contributes to long-term profits because a company that
refuses bribes won't have to deal with the inevitable consequences that would come when
the company is found in violation of the Foreign Corrupt Practices Act (FCPA). So, while
ethics may not be compatible with short-term profits, in the long-run a company can
pursue both ethics and profits.
 But such an answer is too easy. Despite the many proponents of a Corporate Social
Responsibility (CSR) or a Creating Shared Value (CSV) approach to business who seem
to suggest that doing well by the communities where businesses operate is not only
compatible with long-term profits but can enhance the long-term sustainability of a
company, there are surely times and situations where doing what is ethically correct will
not increase the long-term profitability of a company. Maybe a company refuses to do
business in an emerging market despite its profit potential because it cannot do so
ethically. Such a case is surely one where long-term profits are incompatible with the
ethical commitments of a company. So what should a company do when there is a
conflict between ethics and profits?
 The Ethics in Governance (EIG) Forum exists to help individuals and organizations
respond to this question. While we believe that doing what is ethically right is often in the
best interest of a company, this is not always true. There will be times when there is an
essential conflict between what's ethically good and even long-term profit. At those
times, where does our primary allegiance as human beings lie? Doing what's right or
pursuing profit?
 Dr. Kyle Hubbard serves as an advisor to the Ethics in Governance Forum. He specializes
in Business Ethics at Saint Anselm College and is passionate about encouraging his
students to place ethical values at the center of their career pursuits.
 Ethics and Profitability
 Few directives in business can override the core mission of maximizing shareholder
wealth, and today that particularly means increasing quarterly profits. Such an intense
focus on one variable over a short time (i.e., a short-term perspective) leads to a short-
sighted view of what constitutes business success.
 Measuring true profitability, however, requires taking a long-term perspective. We
cannot accurately measure success within a quarter of a year; a longer time is often
required for a product or service to find its market and gain traction against competitors,
or for the effects of a new business policy to be felt. Satisfying consumers’ demands,
going green, being socially responsible, and acting above will result in profits in the long
run. If we measure success from this longer perspective, we are more likely to understand
the positive effect ethical behavior has on all who are associated with a and beyond the
basic requirements all take time and money. However, the extra cost and effort business.
 Profitability and Success: Thinking Long Term
 Decades ago, some management theorists argued that a conscientious manager in a for-
profit setting acts ethically by emphasizing solely the maximization of earnings. Today,
most commentators contend that ethical business leadership is grounded in doing right by
all stakeholders directly affected by a firm’s operations, including, but not limited to,
stockholders, or those who own shares of the company’s stock. That is, business leaders
do right when they give thought to what is best for all who have a stake in their
companies. Not only that, firms actually reap greater material success when they take
such an approach, especially over the long run.
 Nobel Prize–winning economist Milton Friedman stated in a now-famous New York
Times Magazine article in 1970 that the only “social responsibility of a business is to
increase its profits.”
 This concept took hold in business and even in business school education. However,
although it is certainly permissible and even desirable for a company to pursue
profitability as a goal, managers must also have an understanding of the context within
which their business operates and of how the wealth they create can add positive value to
the world. The context within which they act is society, which permits and facilitates a
firm’s existence. Thus, a company enters a social contract with society as whole, an
implicit agreement among all members to cooperate for social benefits. Even as a
company pursues the maximizing of stockholder profit, it must also acknowledge that all
of society will be affected to some extent by its operations. In return for society’s
permission to incorporate and engage in business, a company owes a reciprocal
obligation to do what is best for as many of society’s members as possible, regardless of
whether they are stockholders. Therefore, when applied specifically to a business, the
social contract implies that a company gives back to the society that permits it to exist,
benefiting the community at the same time it enriches itself.
 As an example, consider the business practices of Toyota when it first introduced its
vehicles for sale in the United States in 1957. For many years, Toyota was content to sell
its cars at a slight loss because it was accomplishing two business purposes: It was
establishing a long-term relationship of trust with those who eventually would become its
loyal U.S. customers, and it was attempting to disabuse U.S. consumers of their belief
that items made in Japan were cheap and unreliable. The company accomplished both
goals by patiently playing its long game, a key aspect of its operational philosophy, “The
Toyota Way,” which includes a specific emphasis on long-term business goals, even at
the expense of short-term profit.
 What contributes to a corporation’s positive image over the long term? Many factors
contribute, including a reputation for treating customers and employees fairly and for
engaging in business honestly.
 Can profits and ethics coexist?
 The right thing may also be the smart thing, argues a researcher known for his studies of
baby boomers.
 Profit with Honor is such a boo k. In it, Daniel Yan kelovich brings decades of work
– as one of the world's most respected social science survey researchers and as a member
of numerous corporate boards – to bear on the issue of values and ethics. His subtitle,
"The New Stage of Market Capitalism," explains accurately if drably what he's after:
How businesses can combine ethics and profitmaking. Had I been his editor, I'd have
plumped for a more in-your-face subtitle – like, "Is Corporate Ethics an Oxymoron, and
If Not, What the Heck Can We Do About It?"
 Even if you're not in business, this question matters. It finds us today facing what
Yankelovich calls a "third wave of mistrust of business and other institutions," following
two earlier waves around the time of the Great Depression and again in the late 1960s.
 Yankelovich argues that the current mistrust, while fed by scandals at Enron, Tyco,
WorldCom, and elsewhere, springs from a convergence of three deeper trends:
 The deregulation of the 1980s and 1990s that "transformed the gatekeepers – the
accounting firms, the investment bankers, the business law firms, the regulatory agencies
– into enablers." The excesses of CEO pay, which tied it to "the vagaries of the stock
market" and "sorely tempted" CEOs to "take questionable shortcuts, or even cheat." The
importing in to business of bad cultural norms that include winning at all costs and
gaming the system.
 Fighting such trends with laws and compliance structures isn't enough. "If you want
positive results," he writes, "you need to give people a positive basis for trust and respect
and an ethical vision to live by, not merely severe punishment for misdeeds."
 Fair enough. But how? Unlike many laments about corporate malfeasance that are awash
with diagnoses but scant on prescriptions, this book steers directly toward a concept that
Yankelovich describes as "stewardship ethics." He sees it as "a new stage of enlightened
self-interest" that brings social norms together with business imperatives, focuses on
community, and "emphasizes the conscious effort required to reconcile profitability with
social good."
 Yankelovich locates his concept between two popular but (in his view) flawed theories
about business ethics. One is a laissez-faire approach that assumes "all reasonably honest
ways of making profit somehow serve the public good" with no additional ethical
imperatives required. The other is a corporate social responsibility approach. Arising
from the nonprofit sector, this theory finds profit making suspect, and seeks to burden
business with the correction of social ills unrelated to its core objectives.
 Were he a typical academic, Yankelovich would at this point ground his ideas in the
writings of the great thinkersTo be sure, he mentions Hegel, Marx, Tocqueville, and
Adam Smith, but almost impatiently. Instead, he moves directly to the heart of the
problem, which is the practicality of his theory. Will it matter? Will hard- driving
executives buy into stewardship ethics? Here he draws two strong arguments from his
own work over the years.
 The first concerns executive pay. He divides compensation into two pieces: "the wealth
needed to provide a CEO with financial security and a high-status lifestyle, and the
wealth desired mainly for scorekeeping purposes ('my bonus is bigger than yours')." His
own research has convinced him that baby boomers – who make up the bulk of today's
CEOs – desire more than money. He finds them "hungry for recognition and for the
conviction that they are leaving a valued legacy for the future." If that hunger can replace
the "scorekeeping" part of executive compensation – and Yankelovich thinks it can – then
stewardship ethics may well be attractive to the CEO.
 The second argument concerns our culture's broad social norms. "The good news is that
the larger culture is ready for less self-centered, more-communal-minded values," he
writes.
 In the hands of a less trusted author, either argument would require at least a chapter of
charts, graphs, and quotations. Who but Dan Yankelovich can talk so briefly about baby-
boomer longings or civil-society norms – and be so readily believed? If you hunger for
scholarly detail, "Profit with Honor" may not satisfy you. But if you suspect that what's
most needed today is a new vision for corporate ethics, this book makes perfect sense.