CHAPTERS OVERVIEW

Part III – Business

Management
(Chp 7-9)

Part IV – Management
of Human Resources
Part I – Business Part II – Business (Chp 10-11)
Trends Ownership
(Chp 1-4) (Chp 5-6)
Part V – Marketing
(Chp 13-16)

Part VI – Managing
Financial
Resources(Chp 17-18)
 Part1 Business Trends:
Cultivating a Business in Diverse, Global
Environment
Chapter 1: Taking Risk and Making Profit within Dynamics Business
Environment
Chapter 2: Understanding Economics and How It Affect Business
Chapter 3: not covered
Chapter 4: Demanding ethical and socially responsible behavior

Adapted from slide of textbook: William G Nickels, James McHugh, Susan

McHugh. Understanding Business. McGraw-Hill Irwin 11th edition. 2015

Business Administration - Faculty of Computer Science, Universitas Indonesia 2018

 Chapter 4
Demanding Ethical and Socially Responsible
Behaviour

McGraw-Hill/Irwin Copyright © 2015 by the McGraw-Hill Companies, Inc. All rights reserved.

Business Administration - Faculty of Computer Science, Universitas Indonesia 2018

Learning Objectives

Explain why obeying the law is only the first

1 step in behaving ethically.

Ask the three questions you need to answer

2 when faced with a potentially unethical action.

Describe management’s role in setting ethical

3 standards.

Distinguish between compliance-based and

4 integrity-based ethics codes, and list the six
steps in setting up a corporate ethics code.

Define corporate social responsibility and

5 compare corporations’ responsibilities to
various stakeholders.
 WHAT is a PONZI SCHEME?

• A fraud by paying returns to existing investors from funds

contributed by new investors [1]
• New investors are promised opportunities claimed to
generate high returns with little or no risk.
• Fraudsters focus on attracting new money to make
promised payments.
• Ponzi Scheme di Indonesia
• Otoritas Jasa Keuangan (OJK) mencatat setidaknya
ada 400 perusahaan investasi illegal alias investasi
bodong di Indonesia. Investasi tersebut
menawarkan metode yang beragam, namun tetap
saja tujuannya adalah memperoleh keuntungan 4-5

dalam waktu sekejap [2]

Source:
[1] Securities and Exchange Commission, www.sec.gov, accessed November 2014.
[2] https://ekonomi.kompas.com/read/2016/12/30/203000726/skema.ponzi.dominasi.investasi.bodong.di.indonesia
 HOW DO WE RESTORE OUR TRUST?

• Ponzi schemes, corruptions, and other unethical

business broke our trust.

• How to restore it?

Punish those Make accounting Consider what is

who have broken records more ethical, not just
the law. transparent. what is legal.

4-6
 WHAT are ETHICS?

• Ethics -- The standards of moral

behavior. Behaviors that are accepted
by society as right versus wrong.
• Basic Moral Values:
Right: Wrong:

• Integrity • Cheating
• Respect for human life • Cowardice
• Self-control • Cruelty
• Honesty
• Courage 4-7

• Self-sacrifice
 ETHICS and YOU

• Plagiarizing from online materials

is the most common form of
cheating in schools today.

• Studies found a strong relationship

between academic dishonesty and
dishonesty at work.

• When facing ethical dilemma,

ask yourself these questions:
- Is it legal?
- Is it balanced?
- How will it make me feel about
myself? 4-8
 MANAGING BUSINESS ETHICALLY

• Organizational ethics begin at the top.

• Managers can help instill corporate values in employees.
• Trust between workers and managers must be based on fairness,
honesty, openness and moral integrity.
• Factors influencing managerial ethics

Individual Organizational Environmental

• Values • Top Level • Competition
Management
• Work Philosophy • Economic
Background Conditions
• Firm’s Reward
• Family Status System • Social/Cultural
Institutions
• Personality • Job Dimensions
4-9
 SETTING CORPORATE ETHICAL
STANDARDS

• An increasing number of companies

have adopted written codes of ethics.

• Compliance-Based Ethics Code --

Emphasize preventing unlawful behavior by
increasing control and by penalizing
wrongdoers.

• Integrity-Based Ethics Code -- Define

the organization’s guiding values, create an
environment that supports ethically sound
behavior and stress a shared accountability.

4-10
 HOW to IMPROVE BUSINESS ETHICS

Top management must adopt and unconditionally support an explicit corporate code of
conduct.

Employees must understand that senior management expects all employees to act
ethically.

Managers and others must be trained to consider the ethical implications of all
business decisions.

An ethics office must be set up with which employees can communicate anonymously.
Whistleblowers -- Insiders who report illegal or unethical behavior.

Involve outsiders such as suppliers, subcontractors, distributors and customers.

4-11

The ethics code must be enforced.

 CORPORATE SOCIAL RESPONSIBILITY

• Corporate Social Responsibility (CSR) -- The concern

businesses have for the welfare of society.
• CSR is based on a commitment to integrity, fairness,
and respect.
• CSR proponents argue that businesses owe their
existence to the societies they serve and cannot exist
in societies that fail.
• The social performance of company has several
dimensions:
Corporate
Corporate Corporate Corporate
social
philanthropy responsibility policy
initiatives
4-12
 DIMENSIONS OF COMPANY’S SOCIAL
PERFORMANCE

Corporate • Includes charitable donations.

Philanthropy

• Include enhanced forms of corporate philanthropy.

Corporate • Usually are more related to the company’s
Social Initiatives competencies

Corporate • Includes everything from hiring minority workers to

making safe products, minimizing pollution, using
Responsibility energy wisely, and providing a safe work environment.

Corporate 4-13
• The position a firm takes on social and political issues.
Policy
 RESPONSIBILITY TO CUSTOMERS

PRESIDENT KENNEDY’S BASIC

RIGHTS of CONSUMERS

The Right to The Right to

Safety be Informed

The Right to The Right to

Choose be Heard

4-14
 HOW DO CUSTOMERS KNOW?

• The primary use of social media is to communicate CSR

efforts.

• Social media allows companies to reach a broad,

diverse group and connect directly to them.

• Now more than ever, it’s important for companies to live

up to their expectations.

4-15
 SOCIAL CUSTOMER CONTACT
Do’s and Don’ts of Using Twitter for Business

Do Don’t

Engage followers in discussion relevant

Start political rants.
to your industry.

Think about your message before

tweeting. Deleted tweets can still be Tweet impulsively.
found!

Frequently offer new content. Let your account lie dormant.

Create separate accounts for business Make personal announcements via

and personal use. your company’s Twitter account.

Source: Entrepreneur, www.entrepreneur.com, accessed September 2014. 4-16

 SOCIAL CUSTOMER CONTACT
Do’s and Don’ts of Using Twitter for Business

Source: Entrepreneur, www.entrepreneur.com, accessed September 2014. 4-17

 RESPONSIBILITY TO INVESTOR

• Insider Trading -- Insiders using private company

information to further their own fortunes or those of their
family and friends.

• Unethical behavior does financial damage to a

company and investors are cheated.

4-18
 RESPONSIBILITY to EMPLOYEES

Offer salaries
Create jobs and benefits
and provide Treat that help
a chance for employees employees
upward with respect. reach their
mobility. personal
goals.

4-19
 INDONESIA MOST ATTRACTIVE
EMPLOYERS (FROM STUDENTS
PERSPECTIVES)

Source: https://universumglobal.com/rankings/indonesia/ 4-20

 RESPONSIBILITY TO SOCIETY and
ENVIRONMENT
• Over one-third of working Americans receive their
salaries from nonprofits – who are dependent on
funding from others.

• The green movement emerged as concern about global

warming increased.

• Many companies are trying to minimize their carbon

footprints – the amount of carbon released during an
item’s production, distribution, consumption and
disposal.

• Environmental efforts may increase costs, but can offer

good opportunities.

4-21
 SOCIAL AUDITING

• Social Audit -- A systematic evaluation of an

organization’s progress toward implementing socially
responsible and responsive programs.

• Five Types of Watchdogs

1) Socially conscious investors
2) Socially conscious research
organizations
3) Environmentalists
4) Union officials
5) Customers

4-22
Thank You