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Fundamentals of Business Ethics

Differentiate between ethical and moral issues. Compare personal ethics and business ethics. Identify common ethical problems in business.

Organizational Values

Analyze the relationship between organizational values andorganizational culture.

Compare personal values and organizational values.

Ethical Managerial Decision-Making

Identify ethical problems faced by managers. Apply the steps of ethical and moral decision making to address

management issues. Use different ethical perspectives to make management decisions.

Ethical and Legal Issues in Business

Analyze ethical and legal issues in business decisions. Describe the influence of stakeholder groups on legal and ethical

business decisions.

Cross-Cultural Ethics and Social Responsibility

Analyze ethically and socially responsible business practices across

cultures.

Legal, Social and Ethical Responsibilities in Business

In the past decade, individuals have been questioning legal, social, and ethicalissues concerning organizations closer than ever before. With the aid of themedia, business practices have become more transparent. Bateman and Stair(2007) State, Theres an increased readiness to believe negative things aboutcorporations today, which makes it a dangerous time for companies (p.150). Inorder to remain credible in the publics eye, it is imperative that companies keep

good moral ground. Examining the pitfalls of organizations, such as HollingerInternational (HII), that have been scrutinized for engaging in legal, social andethically unsound behaviours, can set organizations on the right path.

Background

Hollinger International Inc. (HII) is a public newspaper publishing company(Boritz and Robinson, 2004). The controversy surrounding HII surfaced in 2003,

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while the company was under the management of Conrad Black. An articleappeared in the Star reporting that Black and his associates faced a total of 42charges relating to an alleged $US 60 million in theft, as well as charges ofreceiving unauthorized bonuses and other perquisites (Westhead and Doolittle,2007).

Legal responsibility

All companies are subject to legal responsibilities and are required to follow thelaw, which impact organizations planning process. In order to operate soundly, acompany must familiarize itself with external factors that govern the industry thatthe company operates within. A legal issue presented in the HII case revolvedaround Blacks breeching of fiduciary and contractual duties by diverting toanother company a valuable opportunity that properly belonged to thecorporation (Delaware, 2004, p.1) Black and his associates had received much oftheir ill-gotten gains from so-called non competition payments related toHollinger Internationals sale of newspapers from 1998 to 2002 (Westhead and

Doolittle, 2007). It was reported that in order to transfer HII corporate assets,Black and his associates failed to disclose material information in required filingswith the SEC, that they falsified corporate books and records (p.4), and failedto accurately reflect transactions. Securities legislation requires the disclosure ofcertain prescribed information concerning the business and affairs of publiccompanies. This includes periodic financial statements, insider trading reports,an annual information form (AIF), press releases and material change reports(Canadian Securities Institute, 2008).

Social responsibility

In order to thrive in the publics eye, a company must meet certain socialresponsibility requirements, thus in the planning stages it must consider where itcan provide value beyond its products and services. For example, a companycan meet its social responsibilities by supporting important causes and makingcharitable donations (Bateman and Stair, 2006). HII made several charitabledonations while under Blacks management, however, the chief executivesmotives are questionable as he was embezzling funds from the very company hewas making contributions with (Fabrikant, 2004).

Ethical responsibility

In the planning process, organizations must think about setting guidelines inorder to govern their businesss practices and to protect the company, itsemployees and shareholders; this is usually done by establishing ethical codes of

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conduct. The Caux ethics is a system of principles designed to helporganizations establish ground rules for ethical practice. The first principle is tothe responsibility of businesses beyond shareholders toward stakeholders andstates that Businesses have a role to play in improving the lives of all theircustomers, employees, and shareholders by sharing with them the wealth they

have created ( Bateman & Stair, 2006, p. 175). Black failed to honor the firstprinciple of HIIs ethical responsibility by selling one of its assets, the AmericanTrucker, to another corporation and transferring the US$ 2 million non-competition agreement payment to a related entity, therefore directly benefitingfrom the transaction at the expense of HIIs shareholders (Boritz and Robinson,2004).

HII had a legal and ethical code of conduct in place, however, it did not provideadequate protection for the organization and its shareholders. The code ofconduct was amended on November 29, 2004 and provides greater detail toemployees, officers and directors on the companys ethical guidelines in anumber of areas (para 2, SEC). Some of the amended guidelines include,related party transactions, protection and proper use of assets, and publiccompany reporting. The new amendment addresses unethical behavior in suchthat it is difficult to manipulate the law in order to behave unethically.

Conclusion

Under Blacks management, HII has been subject to legal, ethical and socialresponsibility issues. The poor legal and ethical code of conduct, established byHII, has no doubt played a role in facilitating Blacks unethical practices. Thedownfall of HII is an example of the devastating effects unethical behaviour canhave on a company.