BAM 193: Good Governance & Social Responsibility
Teachers Guide Module #3
Name: _______________________________________________ Class number: _________________
Section: ____________ Schedule: _________________________ Date: ________________________
Lesson title: Ends, Means, and Character in Business Materials:
Profitability and Success: Thinking Long Term Activity Sheet
Lesson Objectives: References:
1. Differentiate the philosophical approach and the scientific Business Ethics
approach to ethical behavior. By: Stephen M. Byars & Kurt
2. Differentiate short term and long term perspective and their Stanberry
effects and benefits
Productivity Tip:
“A good investment of your time is studying to become better at what you do daily” ― Sunday Adelaja
A. LESSON PREVIEW/REVIEW
Introduction
There are different approaches to how and what determines a person’s predisposition to either ethical
or unethical behavior. And in general peoples’ behavior on a professional level will be a reflection of
their behavior at a personal level and vice versa, since a person can’t rapidly change their style and
preferences when it comes to their thinking patterns. Recognition and understanding of these
approaches to behavioral patterns and attitudes started a very long time ago and has been a subject
of curiosity and debate ever since.
And even today having advanced as a race, as societies, as countries we still have very varied and
individual viewpoints to various subjects in various situations, but for the vast majority,
commonalities exist. And these commonalities are what is generally considered the norm by society
both locally and globally in terms of the global business arena.
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 and
beyond the basic requirements all take time and money. However, the extra cost and effort 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 business.
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BAM 193: Good Governance & Social Responsibility
Teachers Guide Module #3
Name: _______________________________________________ Class number: _________________
Section: ____________ Schedule: _________________________ Date: ________________________
B. MAIN LESSON
Content and Skill Building
Below are the notes about the lesson for today. You may underline or highlight words or phrases that
you think is the main focus of the lesson.
LO 1. Differentiate the philosophical approach and the scientific approach to ethical
behavior
How, then, should we behave? Philosophy and science help us answer this question. From
philosophy, three different perspectives help us assess whether our decisions are ethical on
the basis of reason. These perspectives are called normative ethical theories and focus on how
people ought to behave; we discuss them in this chapter and in later chapters. In contrast,
descriptive ethical theories are based on scientific evidence, primarily in the field of psychology,
and describe how people tend to behave within a particular context; however, they are not the
subject of this book.
The first normative approach is to examine the ends, or consequences, a decision produces in
order to evaluate whether those ends are ethical. Variations on this approach include
utilitarianism, teleology, and consequentialism. For example, utilitarianism suggests that an
ethical action is one whose consequence achieves the greatest good for the greatest number
of people. So if we want to make an ethical decision, we should ask ourselves who is helped
and who is harmed by it. Focusing on consequences in this way generally does not require us
to take into account the means of achieving that particular end, however. That fact leads us to
the second normative theory about what constitutes ethical conduct.
The second approach does examine the means, or actions, we use to carry out a business
decision. An example of this approach is deontology, which essentially suggests that it is the
means that lend nobility to the ends. Deontology contends that each of us owes certain duties
to others (‘deon’ is a Greek word for duty or obligation) and that certain universal rules apply to
every situation and bind us to these duties. In this view, whether our actions are ethical depends
only on whether we adhere to these rules. Thus, the means we use is the primary determinant
of ethical conduct. The thinker most closely associated with deontology is the eighteenth-
century German philosopher Immanuel Kant (Figure 1).
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BAM 193: Good Governance & Social Responsibility
Teachers Guide Module #3
Name: _______________________________________________ Class number: _________________
Section: ____________ Schedule: _________________________ Date: ________________________
Figure 1. Immanuel Kant was an eighteenth -century philosopher, now associated with
deontology, who spent nearly all his professional life teaching at the university in Konigsberg
(which today is Kaliningrad, the western most point in Russia). (credit right: modification of
“Kant foto” by Becker”/Wikimedia Commons, Public Domain)
The third normative approach, typically called virtue theory, focuses on the character of the
decision maker – a character that reflects the training we receive growing up. In this view, our
ethical analysis of a decision is intimately connected with the person we choose to be. It is
through the development of habits, the routine actions in which we choose to engage, that we
are able to create a character of integrity and make ethical decisions. Put differently, if a two
year-old is taught to take care of and return borrowed toys even though this runs contrary to
every instinct they have, they may continue to perfect their ethical behavior so that at age forty,
they can be counted on to safeguard the tens of millions of dollars’ investors have entrusted to
their care in brokerages.
Virtue theory has its roots in the Greek philosophical tradition, whose followers sought to learn how
to live a flourishing life through study, teaching, and practice. The cardinal virtues to be practiced
were courage, self-control, justice, and wisdom. Socrates was often cited as a sage and a role
model, whose conduct in life was held in high regard.
ETHICS ACROSS TIME AND CULTURES
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BAM 193: Good Governance & Social Responsibility
Teachers Guide Module #3
Name: _______________________________________________ Class number: _________________
Section: ____________ Schedule: _________________________ Date: ________________________
Aristotle and the Concept of Phronesis, or Practical Wisdom
Phrónēsis (fro-NEE-sis) is a type of practical wisdom that enables us to act virtuously. In “The Big Idea: The Wise Leader,” a
Harvard Business Review article on leadership and ethical decision-making, Ikujiro Nonaka, a Japanese organizational theorist,
and Hirotaka Takeuchi, a professor of Management Practice at Harvard Business School, discuss the gap between the theory
and practice of ethics and which characteristics make a wise leader. The authors conclude that “the use of explicit and tacit
knowledge isn’t enough; chief executive officers (CEOs) must also draw on a third, often forgotten kind of knowledge, called
practical wisdom. Practical wisdom is tacit knowledge acquired from experience that enables people to make prudent
judgments and take actions based on the actual situation, guided by values and morals.”
The concept of practical wisdom dates back to Aristotle, who considered phronesis, which can also be defined as prudence,
to be a key intellectual virtue. Phronesis enables people to make ethically sound judgments. According to the authors,
phronetic leaders:
• practice moral discernment in every situation, making judgments for the common good that are guided by their
individual values and ethics;
• quickly assess situations and envision the consequences of possible actions or responses;
• create a shared sense of purpose among executives and employees and inspire people to work together in pursuit of
a common goal;
• engage as many people as possible in conversation and communicate using metaphors, stories, and other figurative
language in a way that everyone can understand; and
• encourage practical wisdom in others and support the training of employees at all levels in its use.
In essence, the first question any company should ask itself is: “Do we have a moral purpose?” Having a moral purpose requires
focusing on the common good, which precedes the accumulation of profit and results in economic and social benefits. If
companies seek the common good, profits generally will follow.
Critical Thinking
In the article cited, the authors stress the importance of being well versed in the liberal arts, such as philosophy, history,
literature, and in the fine arts to cultivate judgment. How do you think a strong background in the liberal arts would impart
practical wisdom or help you make ethical decisions?
LO 2. Differentiate short term and long term perspective and their effects and benefits
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, stockholder,
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. In addition to taking this more nuanced view of profits, managers must also use a
different time frame for obtaining them. Wall Street’s focus on periodic (i.e., quarterly and
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BAM 193: Good Governance & Social Responsibility
Teachers Guide Module #3
Name: _______________________________________________ Class number: _________________
Section: ____________ Schedule: _________________________ Date: ________________________
annual) earnings has led many managers to adopt a short-term perspective, which fails to take
into account effects that require a longer time to develop. For example, charitable donations in
the form of corporate assets or employees’ volunteered time may not show a return on
investment until a sustained effort has been maintained for years. A long-term perspective is a
more balanced view of profit maximization that recognizes that the impacts of a business
decision may not manifest for a longer time.
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. Companies that act in this way may emerge from any industry or country. Examples
include Fluor, the large U.S. engineering and design firm; illycaffè, the Italian food and beverage
purveyor; Marriott, the giant U.S. hotelier; and Nokia, the Finnish telecommunications retailer.
The upshot is that when consumers are looking for an industry leader to patronize and would-be
employees are seeking a firm to join, companies committed to ethical business practices are often
the first to come to mind.
Why should stakeholders care about a company acting above and beyond the ethical and legal
standards set by society? Simply put, being ethical is simply good business. A business is
profitable for many reasons, including expert management teams, focused and happy
employees, and worthwhile products and services that meet consumer demand. One more and
very important reason is that they maintain a company philosophy and mission to do good for
others.
Year after year, the nation’s most admired companies are also among those that had the highest
profit margins. Going green, funding charities, and taking a personal interest in employee
happiness levels adds to the bottom line! Consumers want to use companies that care for others
and our environment. During the years 2008 and 2009, many unethical companies went
bankrupt. However, those companies that avoided the “quick buck,” risky and unethical
investments, and other unethical business practices often flourished. If nothing else, consumer
feedback on social media sites such as Yelp and Facebook can damage an unethical
company’s prospects.
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BAM 193: Good Governance & Social Responsibility
Teachers Guide Module #3
Name: _______________________________________________ Class number: _________________
Section: ____________ Schedule: _________________________ Date: ________________________
CASES FROM THE REAL WORLD
Competition and the Markers of Business Success
Perhaps you are still thinking about how you would define success in your career. For our purposes here, let us say that
success consists simply of achieving our goals. We each have the ability to choose the goals we hope to accomplish in
business, of course, and, if we have chosen them with integrity, our goals and the actions we take to achieve them will
be in keeping with our character.
Warren Buffet (Figure 1), whom many consider the most successful investor of all time, is an exemplar of business
excellence as well as a good potential role model for professionals of integrity and the art of thinking long term. He had
the following to say: “Ultimately, there’s one investment that supersedes all others: Invest in yourself. Nobody can take
away what you’ve got in yourself, and everybody has potential they haven’t used yet. . . . You’ll have a much more
rewarding life not only in terms of how much money you make, but how much fun you have out of life; you’ll make more
friends the more interesting person you are, so go to it, invest in yourself.”
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BAM 193: Good Governance & Social Responsibility
Teachers Guide Module #3
Name: _______________________________________________ Class number: _________________
Section: ____________ Schedule: _________________________ Date: ________________________
Skill-building
Question 1.
How many ‘Normative Ethical Theories’ were covered in this lesson and what are they.
Question 2.
‘Kantianism’ or ‘Deontology’ is associated with which of these approaches and why?
Question 3.
Which Greek philosopher was considered to have been an example of the Virtue Theory?
Question 4.
Which are considered the cardinal virtues in the Virtue Theory?
Question 5.
State three traits or practices common among so called phronetic leaders:
1. _______________________________________________________________
2. _______________________________________________________________
3. _______________________________________________________________
Question 6.
Explain the basic difference between short-term and long-term perspectives.
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BAM 193: Good Governance & Social Responsibility
Teachers Guide Module #3
Name: _______________________________________________ Class number: _________________
Section: ____________ Schedule: _________________________ Date: ________________________
Question 7.
List three examples of short-term objectives
Question 8.
List three examples of long-term objectives
Question 9. As per your understanding explain the significance of the statement “Lose money
for the firm, even a lot of money, and I will be understanding; lose reputation for the firm, even a
shred of reputation, and I will be ruthless” by Warren Buffett.
Check for Understanding
Study the following statement made by Warren Buffett “Ultimately, there’s one investment that
supersedes all others: Invest in yourself. Nobody can take away what you’ve got in yourself, and
everybody has potential they haven’t used yet… You’ll have a much more rewarding life not only in
terms of how much money you make, but how much fun you have out of life; you’ll make more friends
the more interesting person you are, so go to it, invest in yourself.”, as shown in ‘Cases from the Real
World’ from this lesson. In brief give your interpretation of the meaning and value in this statement.
C: LESSON WRAP-UP
FAQs
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BAM 193: Good Governance & Social Responsibility
Teachers Guide Module #3
Name: _______________________________________________ Class number: _________________
Section: ____________ Schedule: _________________________ Date: ________________________
1. Is it possible to be always 100% ethical?
Well, being a 100% ethical may be difficult in today’s world just like it was difficult back in the days of
Socrates, but as explained in the lesson, being ethical means considering and acting upon the option
which serves the greater good, not only for yourself, but for all concerned. It doesn’t mean that you’ll
always be able to make everyone happy or do right by everyone.
2. What if we make an unethical decision or execute an unethical action due to lack of awareness?
Everyone makes mistakes, the correct thing to do is, accept your mistake, apologies sincerely (meaning
to actually feel remorse), learn from your mistake and try to do better in future instances which are
similar.
3. Should a company be more focused on stakeholders or stockholders?
It may depend on the perspective in the short-term, but on the long term it should ideally be both,
because learning to manage the needs of both and achieve goals and objectives which are rewarding
and contribute positively to both will determine the longevity of an organization.
4. How do we chose when and how to balance the different requirements?
This comes with experience and training, but as individuals we must always strive to analyze and chose
the most ethical options in life so that that becomes a part of our nature, and the decisions become
easier as we grow older in life as the answers become more obvious. We will learn more about it in the
next lesson.
Thinking about Learning
A. Work Tracker
You are done with this session! Let’s track your progress. Shade the session number you just
completed.
B. Think about your learning
List down the 3 things you learn from this module:
_______________________________________________________________________________
_______________________________________________________________________________
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BAM 193: Good Governance & Social Responsibility
Teachers Guide Module #3
Name: _______________________________________________ Class number: _________________
Section: ____________ Schedule: _________________________ Date: ________________________
KEY TO CORRECTIONS
Activity 3.
Question 1.
Short-term perspectives are company goals and objectives which are targeted or measured in a
relatively limited period of time (ie: quarterly, bi-annually, annually) whereas long-term perspectives are
principles and values which a company will hold true to for extended periods of time (ie: its vision,
mission, core values, etc.,)
Question 2. (Any three of these, or other justifiably valid objectives or goals)
A: Sales Targets
B: Revenue Targets
C: Profitability Targets
D: Staff Recruitment
E: Operational Expenditure Controls
F: Promotions or Discounted offers
Question 3. (Any three of these, or other justifiably valid objectives or goals)
A: Expansion Plans
B: Staff Retention
C: Market Share and Penetration
D: Brand Loyalty (customer & employee)
E: Industry Leader
F: Environmental Protections and Care
G: Community Development Programs
Question 4.
As a company, based on market conditions seasonal fluctuations etc., earnings, sales, profitability
margins and such will fluctuate and a company may sometimes lose money. But if a company loses its
respect and reputation in the markets and communities which make up their potential customers, then
they will not be able to do business as the customers will reject them. So loss of reputation is more
harmful to a business, than the temporary loss of money.
Note: Essay type answers are only sample answers, student answers may be worded differently, but
should
ideally capture the essence of the meaning.
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