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Business: A changing world, chapter 2, 9th edition

Business: A changing world, chapter 2, 9th edition



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Published by sairabellus
Business: a changing world chapter 2 9th edition. This is the second chapter of the 9th edition of
Business: a changing world chapter 2 9th edition. This is the second chapter of the 9th edition of

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Published by: sairabellus on Jan 07, 2014
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age 34
Chapter Outline
 Introduction Business Ethics and Social Responsibility The Role of Ethics in Business
 Recognizing Ethical Issues in Business
 Fairness and Honesty
 Making Decisions about  Ethical Issues
 Improving Ethical Behavior in Business
 The Nature of Social Responsibility
Social Responsibility Issues
Learning Objectives
After reading this chapter, you will be able to:
LO 2-1
 Define business ethics and social responsibility and examine their importance.
LO 2-2
 Detect some of the ethical issues that may arise in business.
LO 2-3
 Specify how businesses can promote ethical behavior.
LO 2-4
 Explain the four dimensions of social responsibility.
LO 2-5
 Debate an organization's social responsibilities to owners, employees, consumers, the environment, and the community.
LO 2-6
 Evaluate the ethics of a business's decision.
News Corporation's Corporate Culture: An Accident Waiting to Happen
Rupert Murdoch and his company News Corp. seemed invincible. As the owner of such media as Fox News and
The Wall Street Journal,
 the company commanded the respect of politicians and public. Now the conglomerate faces the biggest challenge in its history after a phone hacking scandal was unveiled at company-owned tabloid
News of the World.
 In 2007, a reporter at
News of the World 
 was arrested for phone hacking. An investigation concluded that only one person at the company was guilty. However, new findings reveal that hacking was more widespread. The resulting outrage forced deputy chief operating officer James Murdoch to close the 167-year-old
News of the World,
 and both Rupert and James Murdoch testified before the U.K. Parliament. Additionally, suggestions that the police had accepted bribes from
News of the World 
 led the Metropolitan police examiner to resign.
Page 35
Although James Murdoch had received an e-mail in 2008 alluding to more widespread hacking, he claims that he did not read the entire e-mail. It has been alleged that he might have purposely avoided knowledge of the misconduct, similar to what may have happened with the leaders at Enron. How did such widespread misconduct go unchecked? In the United Kingdom, newspapers like
News of the World 
 connect authority figures and the general public. Because
News of the World 
 held such sway, politicians courted News Corp. officials. Additionally, the Murdoch family owns 40 percent of the company's voting stock. If board members displeased him, Murdoch could choose new directors. Shareholders even sued Murdoch in 2011 after News Corp. acquired his daughter's company. Murdoch's aggressive strategies could have reduced oversight and created a culture of winning at any cost.
Page 36
With leadership problems and a lack of internal controls, a disaster was inevitable. Preliminary investigations have alleged that
News of the World 
engaged in ―serious criminality,‖ including massive
bribery. It is likely that several key officials at
News of the World 
 will face scrutiny and potential charges.
Business Ethics and Social Responsibility
LO 2-1
In this chapter, we define business ethics as the principles and standards that determine acceptable conduct in business organizations. Personal ethics, on the other hand, relates to an individual's values, principles, and standards of conduct. The acceptability of behavior in business is determined by not only the organization but also stakeholders such as customers, competitors, government regulators, interest groups, and the public, as well as each individual's personal principles and values. The publicity and debate surrounding highly visible legal and ethical issues at a number of well-known firms, including Diamond Foods, Bank of America, and Citigroup, highlight the need for businesses to integrate ethics and responsibility into all business decisions. The most recent global financial crisis took a toll on consumer
trust of financial services companies. Words used to describe these companies in a survey were ―greedy,‖ ―impersonal,‖ ―opportunistic,‖ and
―distant.‖ Most unethical activities within organizations are supported by
an organizational culture that encourages employees to bend the rules. On the other hand, trust in business is the glue that holds relationships together. In Figure 2.1, you can see that trust in banks is lower than in other industries.
American Trust in Different Institutions
 Source: Edelman,
 2012 Edelman Trust Barometer Global Results,
 http://trust.edelman.com/trust-download/global-results/  (accessed January 25, 2012). Organizations that exhibit a high ethical culture encourage employees to act with integrity and adhere to business values. Many experts agree that ethical leadership, ethical values, and compliance are important in creating good business ethics. To truly create an ethical culture, however, managers must show a strong commitment to ethics and c
ompliance. This ―tone at the top‖ requires top managers to
acknowledge their own role in supporting ethics and compliance, create strong relationships with the general counsel and the ethics and compliance department, clearly communicate company expectations for ethical behavior to all employees, educate all managers and supervisors in the business about the company's ethics policies, and train managers and employees on what to do if an ethics crisis occurs.
Page 37

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