BA204

• Ethics is derived from the Greek word “ethos” meaning character and is known as moral philosophy
• Moral philosophy involves systematizing, defending, and recommending concepts of right and wrong conduct
• Three categories of ethics:

  • Metaethics: study of the concept of ethics
  • Normative Ethics: study of how to determine ethical values
  • Descriptive Ethics: study of the use of ethical values
• Business Ethics is the study of how personal moral norms apply to the activities and goals of commercial enterprise
• Types of Business Ethics:

  • Moral Management: follows ethical principles and precepts, striving for success within the ideas of fairness and justice
  • Amoral Management: neither moral nor immoral, ignoring ethical considerations intentionally or unintentionally
  • Immoral Management: synonymous with unethical practices in business, actively opposing ethical behavior
• Myths in Business Ethics:

  • Ethics is a personal, individual affair not a public or debatable matter
  • Business and ethics do not mix
  • Ethics in business is relative
  • Good business means good ethics
  • Information and computing are amoral
• Ethical Subjectivism: ethical choice of the individual decides the rightness or wrongness of behavior
• Ethical Relativism: no principle is universally applicable, so it would be inaccurate to measure the behavior of one society with another’s principles or standards
• Consequentialism: an act is ethically permissible if it maximizes value, based on the concept of value and its maximization
• Deontological Ethics: ethical values can be developed from the concepts of reason, focusing on the motive behind an action rather than its consequences
• Ethics of Virtue: emphasizes traits like courage, honesty, tolerance, and generosity as a way of living
• Ethical Dilemma in Business: ethical models can be used to define ethical situations and manage ethical dilemmas that may occur in the organization
• The Golden Rule Model: specifies treating others as one would like to be treated, a basis for the modern concept of human rights
• The Kantian Model: based on the hypothesis that everybody has fundamental rights, any action is ethically correct if it reduces the collective violation of stakeholders' rights
• Ethical Values and Actions: integral part of ethical societies, actions taken to show commitment towards building a better life
• Major Categories of Ethical Actions:

  • Community Service: aims at helping organizations and people in the community
  • Social Issues Support: aims at giving emotional and physical support to organizations and people in society
• Destructive Actions: can harm individuals and others, motivated by passion, anger, and naivety about effects
• Constructive Actions: considered as desired-prompted duties, performed by people who consider it their responsibility or duty
• Types of Constructive Actions:

  • Obligatory Actions: can be performed by anyone, affecting everybody and everything
  • Prohibited Actions: does not prove to be of worth for people
  • Optional Actions: beneficial to human beings, performed for personal benefits
• Ethical Decision-Making: a method of evaluating and choosing alternatives based on ethics management
• Types of Decision:

  • Strategic Planning Decisions: involve developing objectives and allocating resources for achieving them
  • Management Control Decisions: taken by middle-level managers, dealing with resource use
  • Operational Control Decisions: deal with day-to-day problems affecting the organization
• Pricing strategy involves processes and methodologies businesses use to set prices for their products and services
• Product pricing strategy determines the amount a business should charge for its products
• Requirements in strategic pricing:

  • It must be flexible due to inevitable changes in price levels and economic conditions
  • Management needs to establish a coherent set of pricing policies and procedures consistent with the company’s strategic goals
  • It requires a new relationship between marketing and finance to find a balance between customer value and the firm's need to cover costs and earn profits
• Value-based segmentation evaluates groups of customers based on the revenue they generate and the costs of establishing and maintaining relationships with them
• Value-based segmentation helps companies determine the most and least profitable segments to adjust their marketing budgets accordingly
• The goal of any market segmentation is to divide a market into subgroups with common criteria differentiating their buying behaviors
• Value-based market segmentation process:

  1. Determine basic segmentation criteria

  2. Identify discriminating price drivers

  3. Determine operational constraints and advantages

  4. Create primary and secondary segments

  5. Create detailed segment descriptions

  6. Develop segment metrics and fences
• Metrics are the basis for tracking the value customers receive and how they pay for it, while fences are policies that customers must follow to qualify for price discounts or rewards
• Value-based pricing reflects differences in the value of customers, proactive companies anticipate disruptive events and develop strategies in advance, and profit-driven companies evaluate success based on earnings relative to alternative investments