CHAPTER 4: HANDOUTS

THE ETHICAL AND SOCIAL ENVIRONMENT

INDIVIDUAL ETHICS IN ORGANIZATION

 Ethics: an individual’s personal beliefs about whether a behavior, action, or decision is right or wrong.
 Ethical behavior: conforms to generally accepted social norms.
 Unethical behavior: does not conform to generally accepted social norms.
3 Stages of Moral and Personal Development
1. BEGINNING: Follows rules to avoid punishment. Acts in own interest. Obedience for one’s own sake.
2. ESTABLISHING: Person lives up to Expectations of others. Fulfills duties and obligations of social
system, and lives within the guidelines of the law.
3. POSTESTABLISHING: Individual follows self-chosen principles of what is justice and right. Is also
aware the others have different values and seeks solutions to ethical Dilemmas.
Managerial ethics -Standards of behavior that guide individual managers in their work.
Three Basic Areas of Concern: Managers need to approach the following from an ethical and moral
perspective:
 Relationships of the firm to the employees.
 The employees to the firm.
 The firm to other economic agents.
How an Organization Treats Its Employees. Important areas of managerial ethics include:
- Hiring. -Firing. -Wages. -Working conditions. -Employee privacy. -Employee respect.
How Employees Treat the Organization. Especially in regard to:
- Conflicts of interest. -Security. -Confidentiality. -Honesty.
Most companies have policies that guard against violation of these ethical issues.
How Employees and Organization Treat Other Economic Agents
• Ethics play a part in the relationship between the firm and its employees with other economic agents.
• Behaviors between the organization and these agents that may be subject to ethical ambiguity include:
– Advertising, Promotions, Financial disclosures, Purchasing, Shipping, Solicitation, Bargaining,
Negotiation, and other business relationships.
Ethics in an Organizational Context
• Actions of peer managers and top managers, as well as the organization’s culture, all contribute to the
ethical context of the organization.
• Organizational practice may strongly influence the ethical standards of employees.
Managing Ethical Behavior
• Top management establishes the organization’s culture and defines what will and will not be acceptable
behavior.
• Code of ethics: a formal written statement of the values and ethical standards that guide a firm’s
actions.
Emerging Ethical Issues in Organizations
• Ethical leadership: since leaders serve as role models for others their very action is subject to scrutiny.
• Issues in Corporate Governance: ensuring that the business is being properly managed and that the
decisions made by its senior management are in the best interest of shareholders and stake holders.
Ethical Issues in Information Technology
• Online privacy has become an issue as companies sort out the ethical and management issues.
• Management can address this issue by posting privacy policies on the web.
• Medical and financial data can be reviewed and corrected.
Social Responsibility
The set of obligations an organization has to protect and enhance the society in which it functions.
Areas of social responsibility: Stakeholders, The natural environment, Toward general social welfare.
Arguments For and Against Social Responsibility
• FOR: Because organizations create many of the problems, such as air and water solution and resource
depletion, they should play a major role in solving them.
• AGAINST: Widening the interpretation of social responsibility will undermine the U.S. economy by
detracting from basic mission of business.
Organizational Approaches to Social Responsibility
• Defensive stance, in which an organization does everything that is required of it legally but nothing
more.
• Accommodative stance, in which an organization meets its legal and ethical obligations and also goes
beyond these requirements in selected cases.
• Proactive stance, in which an organization views itself as a citizen in a society and proactively seeks
opportunities to contribute to that society.
The Government and Social Responsibility
• Direct regulation: government attempts to influence business by establishing laws and rules that dictate
what businesses can and cannot do in prescribed areas.
• Indirect regulation: the government can indirectly influence the social responsibility of organizations
through its tax codes.
How Organizations Influence Government
• Personal contacts: political leaders and executives travel in the same circles and may be able to
contact a politician directly.
• Lobbying: persons or groups to represent an organization formally.
• Political action committees: created to solicit and distribute money to political candidates.
• Favors: organizations sometimes rely on favors and other influence tactics to gain support.
Managing Social Responsibility
• Legal compliance: the extent to which an organization complies with local, state, federal, and
international laws.
• Ethical compliance: an organization and its members follow basic ethical (and legal) standards of
behavior.
• Philanthropic giving: awarding of funds or gifts to charities or other social programs.
• Whistle-Blowing: the disclosure by an employee of illegal or unethical conduct on the part of others
within the organization.
Evaluating Social Responsibility
• Corporate social audit: a formal and through analysis of the effectiveness of a firm’s social
performance.
 CHAPTER 5: HANDOUTS
THE GLOBAL ENVIRONMENT
The Meaning of International Business (Lowest to Highest)
• Domestic business: a business that acquires all its resources and sells its products or services within a
single country.
• International business: a business that is primarily based in a single country but acquires some
meaningful share of its resources or revenues (or both) from other countries.
• Multinational business: one that has a worldwide marketplace from which it buys raw materials, borrows
money, and manufactures its products and to which it subsequently sells its products.
• Global business: a business that transcends national boundaries and is not committed to a single home
country.
Terms to Remember: The Three Elements of the Global Economy
1a. Market economy: Economy based on the private ownership of business and allows market factors such
as supply and demand to determine business strategy.
1b. Market system: Clusters of countries that engage in high levels of trade with each other.
2. High potential/high growth economies, who have been relatively underdeveloped and immature and,
until recently, were characterized by weak industry, weak currency, and relatively poor consumers.
3. Other economies, exporting countries with property ownership, and the development of infrastructure,
and are import players.
Managing the Process of Globalization
• Exporting: making a product in the firm’s domestic marketplace and selling it in another country.
• Importing: bringing a good, service, or capital into the home country from abroad.
• Licensing: an arrangement whereby a firm allows another company to use its brand name, trademark,
technology, patent, copyright, or other assets in exchange for a royalty based on sales.
Processes of Globalization
• Strategic alliance: a cooperative arrangement between two or more firms for mutual gain.
• Joint venture: a special type of strategic alliance in which the partners share ownership of a new
enterprise.
• Direct investment: when a firm headquartered in one country builds or purchases operating facilities or
subsidiaries in a foreign country.
• Maquiladoras: light assembly plants built in northern Mexico close to the U.S. border that are given
special tax breaks by the Mexican government.
Environmental Challenges of International Management
• Economic system: most countries today are moving toward market economies.
• Natural resources: different countries have various availability of natural resources.
• Infrastructure: the schools, hospitals, power plants, railroads, highways, ports, communication systems,
air fields, and commercial distribution systems of a country.
NAFTA - North American Free Trade Agreement: Agreement among the U.S., Canada, and Mexico
European Union (EU): First and most important international market system.
Pacific Asia: A market system located in Southeast Asia.
The Political Legal Environment
• Government stability is important to managers seeking international opportunities. No business wants
to set up shop in a foreign market only to see its investment disappear in the face of government
nationalization or civil unrest.
• Nationalized: taken over by the government.
Controls on International Trade
• Tariff: a tax collected on goods shipped across national boundaries.
• Quota: a limit on the number or value of goods that can be traded.
• Export restraint agreements: accords reached by governments in which countries voluntarily limit the
volume or value of goods they export and import from one another.
The Cultural Environment: Individual differences across cultures:
- Social orientation: a person’s beliefs about the relative importance of the individual versus groups to
which that person belongs.
- Power orientation: the beliefs that people in a culture hold about the appropriateness of power and
authority differences in hierarchies such as business organizations.
Differences Across Cultures
• Uncertainty orientation: the feeling individuals have regarding uncertain and ambiguous situations.
• Goal orientation: the manner in which people are motivated to work toward different kinds of goals.
• Time orientation: the extent to which members of a culture adopt a long-term versus a short-term
outlook on work, life, and other elements of society
Globalization and Organizational Size
• Multinational corporations transfer capital, technology, human resources, inventory, and information
from one market to another, seeking new expansion opportunities.
• Medium-size organizations may buy and sell products made abroad and compete with businesses from
other countries in their own domestic market.
Small Organizations
• Some serve as local suppliers, for example: Local parts suppliers have been successfully selling
products to Toyota and Honda plants in the U.S.
• Beyond serving as local suppliers, some small businesses also buy and sell products and services
abroad.
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CHAPTER 6: HANDOUTS
THE MULTICULTURAL ENVIRONMENT
The Nature of Organization and Social Culture
• Organization culture: the set of values, beliefs, behaviors, customs, and attitudes that help the
members of the organization understand what it stands for, how it does things, and what it considers
important.
• Multiculturalism: the broad issues associated with differences in values, beliefs, behaviors, customs,
and attitudes held by people in different cultures.
Diversity and Multiculturalism in Organizations
• All organizations are becoming more diverse and multicultural.
• The reasons for increasing diversity and multiculturalism
– Legislation: diversity improves the quality of the workforce, changing demographics, the
globalization movement.
Dimensions of Diversity and Multiculturalism
• Age distributions: average age of the workforce is increasing; median age is expected to rise from 35.5
to 38 years.
• Gender: more women are entering the workforce causing organizations to change the relative
proportion women to men, to create a fair balance.
The Glass Ceiling
 • A barrier that keeps women from advancing to top management positions in many organizations.
• This ceiling is a real barrier that is difficult to break, but is also subtle that is difficult to discern.
Ethnicity
• The third major dimension of cultural diversity in organizations is ethnicity.
• Ethnicity refers to the ethnic composition of a group or organization.
• The biggest projected changes involve whites and Hispanics, the percentage of whites in the workforce
is expected to drop from 72% to 62.4%.
• Hispanics will climb from 11.5% to 17.6%, while other groups will rise at a lower rate.
Effects of Diversity and Multiculturalism in Organizations
• Diversity, multiculturalism, and competitive advantage, for example:
– Organizations that learn to manage diversity and multiculturalism generally have higher levels of
productivity and lower levels of turnover and absenteeism.
• Conflict can rise through misunderstood, misinterpreted, or inappropriate interactions between people
of different groups.
Managing Diversity and Multiculturalism in Organizations
• Understanding is an important element of managing diversity and multiculturalism.
• Empathy: people in organizations should try to understand the perspective of others.
• Tolerance: learning to accept all aspects of another person’s beliefs or behavior.
• Willingness to communicate: initiate two-way communication between people.
Organizational Approaches
• Organizational policies that an organization adopts to affect directly and indirectly how people are
treated.
• Organizational practices through benefits packages and flexible work hours.
• In addition, making sure that all committees and executive teams are diverse.

Toward the Multicultural Organization

• An organization that has achieved high levels of diversity is able to capitalize fully on the advantages of
diversity and has few diversity-related problems.
• Few, if any organizations have become truly multicultural.
• More and more organizations are moving in this direction.