Teemee Jan Tang IT-ETHICS
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Book Review
Name of the Book: Hard Like Water, Ethics in Business
Author: Vincent Di Norcia
Chapter 1: Owning Values
This chapter is all about helping business identify their stakeholders and make good relationship with them. It also tells us about what are the ethical values involved in owning a business. Being responsible and be able to measure the risk, competency of your employees and enhance company’s responsiveness to problems and change are some of the key elements in avoiding the downfall of your business and making it grow and have stability. This chapter also tells us an inclusive ownership system should improve the quality not only the stakeholder relations but also the ownership decisions in acquisitions, buy-outs, bankruptcies and franchisor/franchisee relations. Then it also discusses the causes of bankruptcies, how to prevent and what to do in case you are in that situation. Sample causes of bankruptcy that are written in the book are overly risky investments and overly leveraged or speculative financing, not able to measure the level of risk of actions of the business, overtrading, overextension and overexpansion. This chapter explains the use of a stakeholder map which helps to see how the stakeholders most directly at risk from a problem or a decision have the greatest concern to share in solving the problem or making a decision.
“A corporation represents far more than its current stock price. It embodies obligations to employees, customers, suppliers and communities” – Robert S. Saul, Peters Merchant Bank
In my own understanding, this phrase tells us that a corporation, making profit is not the only thing. They should also think the welfare of its employees, customer, suppliers and communities. They are also responsible for their employees because they are the ones who give them salary for support to their family and for their living. They must also be responsible in selling their products and services to customers because the customers are the one who gives them profit and making their business alive and develop. So they must able to meet customer expectations and avoid errors in their business operation. Supplier is also important to the company because they are responsible for the production of what the business is selling and the availability of products that they can sell to it. So you must develop a good relationship with your suppliers. The communities that your business is serving are also important because they compose of your target market so you must develop a good image to them.
Chapter 2: Managing Values
The idea of this chapter is to identify some of the ethical values at work in managing companies and identifying the risk of every actions of the company does. This chapter features some stories about how companies handle risk. This chapter tells us that every investment and business decision involves a degree of risk. It also discusses the two types of risk, capital risk and pay-off risk. In a Capital risk, stakes are high. One is putting most or all of its assets, capital base at risk so one therefore cannot afford to make mistakes and must assures of his decisions are correct because of betting all one’s assets and capital base. Pay-off risk one gambles a relatively small amount of its income in hope of a much greater gain. Usually one can afford the bet and take the losses. It also discusses some aspects of the business that can help increase profits and productivity like higher employee wages, improvement of products or marketing, reduction of debt, plant expansion, and investment in new technology. This also features the Risk matrix, its purpose is not only shows how to classify risks but also indicates that minimizing risks means avoiding unacceptable and worrying risks and moving from tolerable to acceptable levels of risk.
Milton Friedman on Social Responsibility
There is one and only one social responsibility of business, to increase its profits and to make as much money as possible while conforming to the basic rules of the society, those embodied in law and in ethical custom.
In my own understanding, this phrase tells us that the main goal of a business is to increase its profits and make money as much as possible because those are the reasons why businesses are established and for it to continue operating and avoid closure. But there are some rules that a business must follow. Like following the rules of the law, being responsible in the society on what kind of products or services you are selling and preventing environmental issues in your area, and avoid having ethical problems in your business like unequal treatment of customers, racism and have respect in the culture of people in your environment.
Chapter 3: Organizing Values
This chapter begins by telling us that every organization has its own value system or culture. Businesses can and should build on their own natural foundation of win/win exchange values rather than win/lose threat values. Exchange values involve the mutual transfer of benefits or such values offer for a win and win situation. They are preferable to win and lose threat values as a basis for interconnecting people over time in durable organizations and social relationships. This chapter also has stories about testing the loyalty of the personnel in their respective companies, whether they make the right decisions or not, and whether they are loyal to their boss or to their company. Another topic discusses in this chapter are the code of ethics and its three types. Code of ethics is the rules and procedures of professional conduct. Its three types are Value statements, which state the company’s core values, Compliance codes which typically state the company’s duty to obey the law, comply with regulations and follow its own internal procedures, and Performance codes which ensures that companies walk their talk and that ethics fill the organization.
“Loyalty to the corporation intensifies when it is perceived to be under attack from outsiders. The troops rally around the flag.” – Brian Grossman, Corporate Loyalty
In my own understanding, this means true loyalty by stakeholders in a corporation can be measure when there are problems encountered by the corporation externally. When the stakeholders still has loyalty and integrity in their corporation even though it encounters so many problems and “outsiders” are trying to break its image. When the stakeholders will still help in finding ways to eliminate problems and if they still believe in what the corporation stands for, those stakeholders are really the loyal ones.