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2 chapter

Business Ethics and Social Responsibility

Business Essentials, 7th Edition Ebert/Griffin

Instructor Lecture PowerPoints

PowerPoint Presentation prepared by Carol Vollmer Pope Alverno College

2009 Pearson Education, Inc.

Ethics in the Workplace

Beliefs about whats right and wrong or good and bad

Ethical Behavior
Behavior conforming to individual beliefs and social norms about whats right and good

Unethical Behavior
Behavior conforming to individual beliefs and social norms about what is defined as wrong and bad

Business Ethics
The ethical or unethical behaviors by employees in the context of their jobs
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Individual Values and Codes

Sources of Personal Codes of Ethics
Childhood responses to adult behavior Influence of peers Experiences in adulthood Developed morals and values

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Business and Managerial Ethics

Managerial Ethics
The standards of behavior that guide individual managers in their work Ethics affect a managers behavior toward:
Employees The organization Other economic agentscustomers, competitors, stockholders, suppliers, dealers, and unions

Ethical Concerns
Ambiguity (e.g., financial disclosure) Global variation in business practices (e.g., bribes)
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Assessing Ethical Behavior

Simple Steps in Applying Ethical Judgments
Gather the relevant factual information Analyze the facts to determine the most appropriate moral values

Make an ethical judgment based on the rightness or wrongness of the proposed activity or policy

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Assessing Ethical Behavior

Ethical Norms and the Issues They Entail
Utility: Does a particular act optimize the benefits to those who are affected by it? Do all relevant parties receive fair benefits? Rights: Does the act respect the rights of all individuals involved? Justice: Is the act consistent with whats fair? Caring: Is the act consistent with peoples responsibilities to each other?

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Social Responsibility
Social Responsibility
The overall way in which a business attempts to balance its commitments to relevant groups and individuals (stakeholders) in its social environment

Organizational Stakeholders
Groups, individuals, and organizations that are directly affected by the practices of an organization and, therefore, have a stake in its performance

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The Stakeholder Model of Responsibility

Businesses strive to treat customers fairly and honestly Businesses treat employees fairly, make them a part of the team, and respect their dignity and basic human needs

Employees Investors


Businesses follow proper accounting procedures, provide information to shareholders about financial performance, and protect shareholder rights and investments
Businesses emphasize mutually beneficial partnership arrangements with suppliers Businesses try to be socially responsible
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Local and International Communities

Contemporary Social Consciousness

The Concept of Accountability
The expectation of an expanded role for business in protecting and enhancing the general welfare of society

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Areas of Social Responsibility

Responsibility Toward the Environment
Properly disposing of toxic waste Engaging in recycling Controlling air, water, and land pollution Green Marketing
The marketing of environmentally friendly goods Includes a number of strategies and practices:
Production processes Product modifications Carbon offsets Packaging reduction Sustainability

Greenwashing: Using advertising to project a green image without substantially altering processes or products
Federal Trade Commission (FTC) started hearings in January 2008 regarding green marketing claims
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Areas of Social Responsibility (contd)

Responsibility Toward Customers
Involves providing quality products and pricing products fairly

Social activism dedicated to protecting the rights of consumers in their dealings with businesses

Basic Consumer Bill of Rights

To possess safe products To be informed about all relevant aspects of a product To be heard To choose what to buy To be educated about purchases To receive courteous service
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Areas of Social Responsibility (contd)

Unfair Pricing
Collusion: When two or more firms agree to collaborate on such wrongful acts as price fixing Price gouging: Responding to increased demand with overly steep (and often unwarranted) price increases

Ethics in Advertising
Truth in advertising Morally objectionable advertising
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Areas of Social Responsibility (contd)

Responsibility Toward Employees
Legal and social commitments to:
Not practice illegal discrimination Provide a physically and socially safe workplace Provide opportunities to balance work and life Provide protection for whistleblowers (an employee who discovers and tries to put an end to a companys unethical, illegal, or socially irresponsible actions by publicizing them)

Responsibility Toward Investors

Proper financial management (no insider trading) Proper representation of finances
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Implementing Social Responsibility (SR) Programs

Arguments Against SR
The cost of SR threatens profits. Business has too much control over which SR issues would be addressed and how SR issues would be addressed. Business lacks expertise in SR matters.

Arguments for SR
SR should take precedence over profits. Corporations as citizens should help others. Corporations have the resources to help. Corporations should solve problems they create.
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Approaches to Social Responsibility

Obstructionist Stance
A company does as little as possible and may attempt to deny or cover up violations

Defensive Stance
A company does everything required of it legally but no more

Accommodative Stance
A company meets its legal and ethical requirements and also goes further in certain cases

Proactive Stance
A company actively seeks to contribute to the well-being of groups and individuals in its social environment
2009 Pearson Education, Inc.