1. Provide a brief definition of ‘ethical issue’ and ‘ethical dilemma’. briefly give examples for each one.

2. Briefly define each component of the four factors in”framework for understanding ethical decision making in business”. And within each, provide relevant examples relating to each component.

3. rovide a brief definition of each stakeholder type(primary stakeholder/secondary stakesholder), and briefly give examples for each one.

b) Briefly define each component of ‘the four steps of social responsibility’. And within each, provide relevant examples relating to each component.

request: the essay should demonstrate correct application and use of Harvard style in-text referencing and a reference list. as for the resources, it should be come from journals and database, instead of purely website.


This paper provides us a brief description of the ethical issues and ethical dilemma.  It also describes the framework for understanding ethical decision making in a business organisation considering the different stakeholder associated with them. Ethics can be observed from two different viewpoints, personal ethics from the view point of an individual and business ethics or from the view point of a group. Business ethics point to standards or codes of behaviour expected by the group to which the individual belongs. This could be social ethics, national ethics, professional ethics, company ethics, or even family ethics. A Personal ethics are determined by what an individual believes about morality and right and wrong. The difference between personal and business ethics can range from subtle to the extreme. Personal ethics can affect all areas of life, including family, finances, relationships, and tend to be unchanging. Business ethics can change from company to company throughout ones’ work history.

Although codes of conduct or ethics may change from business to business, an individual’s moral compass remains intact, depending on what moral issue is presented. Just because an issue does not infringe upon the company’s code of ethics, it may come close to or step over the boundary of an individuals’ personal ethics or vice-versa. This is what is commonly known as an ethical dilemma. Usually most businesses code of ethics are similar to the individuals set of values depending on the culture of the organization.

An example of such a dilemma would be that of a defence lawyer defending a client whom he discovered in the middle of a trial that was guilty of the crime. The lawyer’s code of ethics towards of defending his clients’ innocence is conflicted against his personal moral code of the guilty being punished.



Framework for Understanding the Ethical Decision Making Process in Business


Source: Business Ethics- Ethical Decision Making and Cases 8E – Ferrel, Fraedrich (Ch. 5)

Ethical Issue Intensity is the importance of an ethical issue or perceived as relevance to an individual, to a work group or an organization. It reflects the ethical sensitivity of the individual or work group as well as ethical decision process. A Moral Intensity relates to a person’s perception of social pressure and the harm the decision will have on others. (Ferrel, Fraedrich, Ch. 5)

 Individual Factors: – People usually base their ethical issues decision on their own values mainly on the principles of right or wrong.  Research shows that in ethical decision making women are generally more ethical than males.  Education, Nationality, and Age are other individual factors focus of control that relates to individual differences in relation to a generalized belief about how one is affected by internal versus external events or reinforcements. (Ferrel, Fraedrich, Ch. 5)

Organizational Factors: – Corporate culture is a set of values, norms, and artifacts that employees of an organization share those who have influence in a work group (e.g. managers, co-workers, subordinates) are referred to as significant others Obedience to authority helps to explain why many employees simply follow the directives of a superior.

Opportunity: – It describes the conditions in a firm or an organization that limit/permit ethical or unethical behaviour. It is related to individuals’ immediate job context where they work, with whom they work, and the nature of the work Opportunities. Any misconduct could be reduced by establishing formal codes, policies, and enforced rules.

In order to understand the Ethical Decision Making Process in Business the above factors needs to be considered. Thus, Making decisions involves making a choice between two or more alternatives (Nickels, McHugh, & McHugh, 2010). Some of these choices are small, like what flavor of ice cream to buy, whereas other choices are big, like should a corporate executive take a bribe. Making ethical decisions is important for an organization’s success.

Social Responsibility

The social responsibility involves in conducting the business activities in accordance with principles and functions recognized by and acceptable to the society. On behalf of the business, the managers discharge various social responsibilities. Their social responsibility is concerned with the adoption of such a business policy, procedure and decisions so that the social objectives and values are maintained. The significance of social responsibility of management is to bring economic and social harmonization among the multiple objectives and limited resources. In consideration of changing socio-economic perspective, the social responsibility of management may be discussed with respect to employees, shareholders, creditors, investors, customers, government and the society at large.

There is also a theory for four-stage model to explain organisation’s social responsibility for which ethical manager are responsible for:

Stage 1 – Leaders who promote stakeholders, particularly shareholder’s, interests by maximizing profits and increasing costs. This is to preserve the interest of the owners. The responsibility to shareholders may be stated in the following directions, such as the maximum utilization of resources supplied by them, payment of fair and regular dividend, offering opportunity for applying voting rights in the election of directors. . (George, R. T., 2010).

Stage 2 – Leaders who accepts responsibilities for employees. Employees are the members of the enterprise. For its success they will try their best. The cordial relations between management and employees will ensure the increase in production of the enterprise. So, the management should discharge its responsibility to its employees in the following way – provision for right work for right man, selection of employees fairly, honestly and impartially, provision of security of job, provision for training and development, proper and fair payment of remuneration for their efforts, provision for good work environment, payment of remuneration for their efforts, provision for good work environment, payment of financial and psychological rewards to the employees etc. Along with the above arrangements, various information relating to the enterprise should be supplied to the employees at different times so that a sense of belongingness arises within themselves. They will feel that they are the important elements of the organization and get inspired to devote themselves to the achievement of the objectives. (George, R. T., 2010).

Stage 3 – Leaders and managers who accepts additional responsibilities for creditors and debtors. The management has one of the primary responsibilities to deal with its customers. This is possible with the arrangements – fair and reasonable price charged, supply of goods and services with uniform quality and standard, no unsocial practices like hoarding, artificial scarcity and profiteering, etc. The management may discharge its responsibility to creditors and suppliers through the ways – (1) Inter-business co-operative relationship should b formed among the different undertakings, (2) the management must supply accurate and relevant information to the creditor and other suppliers, (3) In due time all the payments i.e., price for goods purchased from suppliers, interest on loans, etc should be made.

Stage 4 – Leaders and managers accepting responsibilities for the whole society. The management should comply with rules and regulations framed from time to time by the government and pay taxes. Also the management has its responsibility to keep watch as to the social environment not to be polluted on account of business activities. It should also take part in social welfare schemes and take part in different development programmes.


Every day individuals and organizations face countless decisions. Ethical decision making is important to an organization’s success. Understanding that personal and organizational values effect decision making is important. Ethical decision making is a choice that individuals make, but these choices can have significant consequences for an organization. Ethics awareness inventories identify individual ethical perspectives, and also give people insight into how personal values can conflict with organizational values









(2006, January). Ethics and values in the aboriginal workplace. The Aboriginal Financial Officers Association of Canada, 11-12.

(2011). The thoroughbred code of ethics. Norfolk Southern Corporation. Retrieved from

(2011, March 23). Optimistic outlook follows ‘strong’ 2010, Norfolk southern CEO says in annual report. PR Newswire US. Retrieved January 29, 2012 from University of Phoenix Library.

George, R. T. (2010). Business Ethics (7th ed.). Boston, MA: Printice Hall.

Trevino, L. k., & Nelson, K. A. (2006). Managing Business Ethics (4th ed.). Danvers , MA: John Wiley & Sons, Inc

Nickels, W., McHugh, J., & McHugh, S. (2010). Understanding business (9th ed.). New York, NY: McGraw-Hill/Irwin.

Norfolk Southern. (2011). Our Values, SPIRIT. Retrieved January 29 2012 from

University of Phoenix. (2011). Ethics awareness inventory. Retrieved from University of Phoenix, MGT521 – Management website.

Vantuono, W. (1998). The world’s best freight railroad and the man at the top. Railway Age, 199(1), 33. Retrieved January 29, 2012 from University of Phoenix Library.


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