Chapter 02: Business ethics
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Transcript of Chapter 02: Business ethics
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Chapter 2 Business Ethics
and Social
Responsibility
cc licensed ( BY NC ND ) flickr photo by Stephen Wu: http://flic.kr/p/tZ1LP
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cc licensed ( BY ) flickr photo by Robert Couse-Baker: http://flic.kr/p/dBYAqq
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Ford Pinto
• Developed by Ford in response to
popularity of small imports
• Developed in 25 months (usually 43)
• Limits of 2,000
– <2,000 lbs
– <$2,000.00
VW Beetle, ©carblueprints.info
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Ford Pinto
• 40 crash tests >25mph: all ruptured fuel tank without modification
• Ford owned a patent on a safer fuel tank design
• Cost-benefit analysis:
– Life = $200,000
– Cost of modification = $11
– 180 deaths/180 burn injuries: $49.5M
– 11M cars, 1.5M trucks: $137M
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Ethics: How do we know what is
right?
• Outcome-based: Utilitarianism
• Duty/responsibility-based: Deontology
• Categorical Imperative
• Religion: The Golden Rule
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Stakeholders
• Customers
• Suppliers
• Employees
• Investors/owners
• Society
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Duties/Responsibilities? • Customers?
– Safe products – Accurate information
• Suppliers? – Honesty – Payment
• Investors? – Disclosure – Profit
• Employees? – Equal treatment – Safety
• Society? – Externalities
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externalities
http://en.wikipedia.org/wiki/User:Mikm
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conflict of interest
Generally: when someone is involved in
multiple interests, one of which could
possibly corrupt the motivation for an act
in the other
Specifically: any situation in which someone
is in a position to exploit a professional or
official capacity in some way for their
personal benefit
en.wikipedia.org/wiki/Conflict_of_interest
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ethical fallacies
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cc licensed ( BY NC SA ) flickr photo by Avi: http://flic.kr/p/6KT6aR
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If I don't do it, someone else
will.
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cc licensed ( BY NC ) flickr photo by Brook Ward: http://flic.kr/p/dW4c2G
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I have a duty to my family.
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Entitled to own opinion but not
own facts • Use the facts given in the case
• Do not change facts to suit your
conclusion
• Conclusion must follow from facts
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Holland Hardware Case 1. What decision does Matt have to make?
2. Who are the stakeholders?
3. Do their interests conflict?
4. What externalities are involved?
5. What duties does Matt have?
6. Does Matt have a conflict of interest?
7. What is it?
8. What system of ethical reasoning should Matt use?
9. Why?
10. What decision should Matt make, and why?