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Page 92 BUSINESS ETHICS, CORPORATE SOCIAL RESPONSIBILITY, CORPORATE GOVERNANCE, AND CRITICAL THINKING You are a senior associate consultant at Accent Pointe Consulting LLP, a consulting firm. The engagement partner has asked you to prepare an engagement plan and budget. You make sure that your plan and budget are in line with your knowledge of what can and must be done to meet the client's needs. The proposed fee is $100,000. When you present the budget to the engagement partner, she goes ballistic. “What's this $100,000? This is Accent Pointe Consulting. This is the big time. What kind of consultant are you?” “A good one,” you reply. “I've created a reasonable plan, and for what we are doing for the client, that is a high-end fee.” The partner, however, does not buy your arguments. “You make this contract $200,000,” she orders you, “and find a way in your engagement plan to back up that price.” What action will you take? What process and guidelines will you use to determine what is the right thing to do in this context? If you decide that $100,000 is the correct contract price, how do you resist the partner's request to make you bill the client for $200,000? Will you take a different action if you know that a year from now the firm's partners will vote on whether you should be made a partner, and you believe the engagement partner's recommendation will be critical to your becoming a partner? Will you take a different action if you are the engagement partner and have been ordered to bill the client $200,000 by a managing partner? Note that as a partner, your share of firm profits is determined by the number of “units” you have, which is largely a function of the amount the firm bills clients for whom you are the engagement partner. What action will you take if you discover that the managing partner's request to bill more is a relatively isolated incident in a firm that generally bills clients accurately? You don't know the managing partner's motivation for asking you to overbill the client. What action will you take if you discover that the firm has a culture that encourages overbilling clients? The overbilling culture evolved within the last decade from a desire of managing partners to enjoy a financial status more nearly equal to the corporate executives of their clients, many of whom receive annual compensation in the millions of dollars. Page 93 LEARNING OBJECTIVES After you have studied this chapter, you should be able to: 1 Appreciate the strengths and weaknesses of the various ethical theories. 2 Apply the Guidelines for Ethical Decision Making to business and personal decisions. 3 Recognize critical thinking errors in your own and others' arguments. 4 Utilize a process to make ethical decisions in the face of pressure from others. 5 Be an ethical leader. Why Study Business Ethics? Enron. WorldCom. Tyco. Adelphia. Global Crossing. ImClone. These business names from the front pages of the last decade conjure images of u.
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Chapter Introduction Ditty_about_summer/ Shutterstock.com Learning Objectives The five Learning Objectives below are designed to help improve your understanding. After reading this chapter, you should be able to answer the following questions: 1. What are two different views of the role of business in society? 2. How do duty-based ethical standards differ from outcome-based ethical standards? 3. What is short-term profit maximization, and why does it lead to ethical problems? 4. What are the four steps in the IDDR approach to ethical decision making? 5. What ethical issues might arise in the context of global business transactions? “New occasions teach new duties.” James Russell Lowell 1819–1891 (American editor, poet, and diplomat) One of the most complex issues that businesspersons and corporations face is ethics. Ethics is not as clearly defined as the law, and yet it can substantially impact a firm’s finances and reputation, especially when the firm is involved in a well-publicized scandal. Some scandals arise from conduct that is legal but ethically questionable. At other times, the conduct is both illegal and unethical. Business law and legal environment students must be able to think critically about both legal and ethical issues. As noted in the chapter-opening quotation, “New occasions teach new duties.” Suppose that Finn Clayborn dropped out of Harvard University to start a company in Silicon Valley that developed and sold finger-prick blood-test kits. Clayborn raised millions from investors by claiming that his new technology would revolutionize blood testing by providing a full range of laboratory tests from a few drops of blood. The kits were marketed as a better alternative to traditional, more expensive lab tests ordered by physicians. They were sold at drugstores for a few dollars each and touted as a way for consumers to test their blood type and monitor their cholesterol, iron, and many other conditions. Within six years, Clayborn and his company were making millions. But complaints started rolling in that the test kits didn’t work and the results were not accurate (because more blood was needed). Numerous consumers, drugstores, and government agencies sued the company for fraudulent and misleading marketing practices. Clayborn’s profitable start-up now faces an uncertain future. The goal of business ethics is not to stifle innovation. There is nothing unethical about a company selling an idea or technology that is still being developed. In fact, that’s exactly what many successful start-ups do—take a promising idea and develop it into a reality. But businesspersons also need to consider what will happen if new technologies do not work. Do they go ahead with production and sales? What are the ethical problems with putting a product on the market that does not function as advertised? To be sure, there is not always one clear answer to an ethical question. What is clear is that rushing to production and not thinking through ...
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ETH–1 Marketing Ethics � Prepared and written by Dr. Linda Ferrell, University of Wyoming Marketing ethics addresses principles and standards that define acceptable conductin the marketplace. Marketing usually occurs in the context of an organization, and unethical activities usually develop from the pressure to meet performance objec- tives. Some obvious ethical issues in marketing involve clear-cut attempts to deceive or take advantage of a situation. For example, two former senior executives with Ogilvy & Mather Advertising were sentenced to more than a year in prison for conspiring to overbill the government for an ad campaign warning children about the dangers of drugs. The executives were also required to perform 400 hours of community service, pay a fine, and draft a proposed code of ethics for the advertising industry.1 The requirement to draft a code of ethics implies that the court viewed the executives’ wrongdoing as a lapse of ethical leadership in the advertising industry. Obviously, mis- representing billing on accounts is a serious ethical issue which can evolve into mis- conduct with severe repercussions. The overbilling in this case was to benefit the advertising agency’s bottom line. The Ethics Resource Center (www.erc.org) reported in its most recent National Business Ethics Survey that “one in two employees witnessed at least one specific type of misconduct.”2 At least 52 percent of employees observed at least one type of mis- conduct in the past year, while the percentage of employees willing to report the misconduct dropped by 10 percentage points between 2003 and 2005.3 This may explain the increase in corporate whistle-blowing reports to the Securities and Exchange Commission. Even with a regulatory requirement that public companies have an anony- mous and confidential means of reporting misconduct under Sarbanes Oxley and the Federal Sentencing Guidelines for Organizations, companies are likely to learn about the ethical misconduct in marketing at the same time as the public. This overview of marketing ethics is designed to help you understand and navigate organizational eth- ical decisions. � Why Marketing Ethics Is Important There are many reasons to understand and develop the most effective approaches to manage marketing ethics. All organizations face significant threats from ethical mis- conduct and illegal behavior from employees and managers on a daily basis. Well- meaning marketers often devise schemes that appear legal but are so ethically flawed that they result in scandals and legal entanglements. For example, in one case, a sales- person pretended to be in shipping rather than sales to hopefully develop customer trust. The Colorado Consumer Protection Act was found to be violated in this case. There is a need to identify potential risks and uncover the existence of activities or events that relate to misconduct. Overbilling clients, deceptive sales methods, fraud, antitrust, and price fixing are all ...
ETH–1Marketing Ethics Prepared and written by Dr. Linda.docx
ETH–1Marketing Ethics Prepared and written by Dr. Linda.docx
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Nick Woo from AlignAI presented at the May 2024 Columbus Data and Analytics Wednesday meetup. The topic was a practical, business-oriented approach to identifying use cases for AI.
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