Chapter 9

Business Ethics/ Social Responsibility/

Environmental Sustainability

Strategic Management:
Concepts & Cases
13th Edition
Fred David

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Business Ethics

Social Responsibility

Environmental Sustainability

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Business Ethics

■ Principles of conduct within

organizations that guide decision
making and behavior

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Business Ethics

■ Code of Business Ethics

❑ A document that provides behavioral
guidelines that cover daily activities
and decisions within the organization

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Ethics Culture

■ Ethics training should include:

❑ A message from the CEO
❑ Development and discussion of codes
of ethics
❑ Procedures for discussing and
reporting unethical behavior

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Ethics Culture

■ To align ethical and strategic decision

making:
❑ Incorporate ethical considerations into
long-term planning
❑ Incorporate ethical considerations into
performance appraisals
❑ Encourage whistle-blowing
❑ Monitor department and corporate
performance regarding ethical issues
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Bribes

■ A gift bestowed to influence a recipient’s

conduct
■ Illegal in many countries, acceptable in others

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Business Ethics

Social Responsibility

Environmental Sustainability

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Social Responsibility

■ Actions an organization takes beyond

what is legally required to protect or
enhance the well-being of living things

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Social Policy

■ Concerns what responsibilities the firm has to

its employees, consumers, environmentalists,
minorities, communities, shareholders, and
other groups

■ Should be considered during each stage of

strategy formulation, implementation, and
evaluation

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Social Policies on Retirement

■ Worker shortages in countries around the

world are leading to changes in retirement
and immigration policies

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Business Ethics

Social Responsibility

Environmental Sustainability

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Environmental Sustainability

■ The extent that an organization’s

operations and actions protect, mend,
and preserve rather than harm or
destroy the natural environment

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Environmental Sustainability

■ Strategies of companies are scrutinized

and evaluated from a natural
environment perspective

■ Employees, consumers, governments,

and society are resentful of firms that
harm rather than protect the natural
environment
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Sustainability Report

■ Reveals how a firm’s operation impact

the natural environment
■ These reports are not required, but are
a good business practice

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Lack of Standards Changing

■ Making a claim that a product or

process is “green” is becoming more
difficult as standards are put into place

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Obama Regulations

■ New “clean technology” business

start ups
❑ Solar
❑ Wind
❑ Biofuels
❑ Insulation

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Managing Environmental Affairs in
the Firm
■ Managers must formulate strategies that preserve
and conserve natural resources and control pollution
■ Environmental strategies could include
❑ Developing or acquiring green businesses

❑ Divesting or altering environment-damaging

businesses
❑ Striving to become a low-cost producer through

waste minimization and energy conservation

❑ Pursuing a differentiation strategy through green

product features
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Students and Environmental Training

■ Companies prefer to hire graduates

with training in environmental
issues

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Reasons Why Firms Should “Be
Green”
■ Consumer demand
■ Public opinion
■ Environmental advocacy groups
■ Federal and state environmental regulations
■ Lenders
■ Consumers, suppliers, distributors, and
investors
■ Liability suits and fines
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Be Proactive, Not Reactive

■ Proactive – do more than the bare

minimum
■ Reactive – changing only when
forced to by the law or consumer
pressure

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ISO 14000/14001 Certification

■ International Organization for

Standardization (ISO)
■ A network of standards institutes of 147
countries
■ Largest developer of sustainability
standards in the world
■ Compliance is voluntary

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ISO 14000/14001 Certification

■ ISO 14000 - a series of voluntary standards

in the environmental field
■ ISO 14001 – a set of standards included
within ISO 14000
❑ Adopted by thousands of firms worldwide to

certify that they are conducting business in

an environmentally friendly manner
❑ Results in an environmental management
system (EMS)
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Electric Car Networks

■ Government funding for manufacturing

■ Recharging stations being installed in many
cities
■ Extensive research and development within
the auto industry
■ Companies are replacing gasoline powered
vehicles with hybrid electric-natural gas
vehicles

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March 2009 Copenhagen Meeting

■ Scientists warned that global warming is

worse than expected
■ Companies and governments encouraged to
vigorously implement strategies to cut
greenhouse gases
■ Kyoto Protocal expires in 2012
■ Results of March 2009 Copenhagen Meeting
are expected to replace the Kyoto Protocal

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