Chapter 2 Business Ethics and Social Responsibility | Business Ethics | Stakeholder (Corporate)

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
• Ethics
– Beliefs about what’s right and wrong or good and bad

• Ethical Behavior
– Behavior conforming to individual beliefs and social norms about what’s 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
© 2009 Pearson Education, Inc.

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

© 2009 Pearson Education, Inc.

Business and Managerial Ethics
• Managerial Ethics
– The standards of behavior that guide individual managers in their work – Ethics affect a manager’s behavior toward:
• Employees • The organization • Other economic agents—customers, competitors, stockholders, suppliers, dealers, and unions

• Ethical Concerns
– Ambiguity (e.g., financial disclosure) – Global variation in business practices (e.g., bribes)
© 2009 Pearson Education, Inc.

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

© 2009 Pearson Education, Inc.

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 what’s fair? – Caring: Is the act consistent with people’s responsibilities to each other?

© 2009 Pearson Education, Inc.

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

© 2009 Pearson Education, Inc.

The Stakeholder Model of Responsibility
• Customers
– 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

• Suppliers

– 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
© 2009 Pearson Education, Inc.

• 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

© 2009 Pearson Education, Inc.

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
© 2009 Pearson Education, Inc.

Areas of Social Responsibility (cont’d)
• Responsibility Toward Customers
– Involves providing quality products and pricing products fairly

• Consumerism
– 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
© 2009 Pearson Education, Inc.

Areas of Social Responsibility (cont’d)
• 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
© 2009 Pearson Education, Inc.

Areas of Social Responsibility (cont’d)
• 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 company’s unethical, illegal, or socially irresponsible actions by publicizing them)

• Responsibility Toward Investors
– Proper financial management (no insider trading) – Proper representation of finances
© 2009 Pearson Education, Inc.

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.
© 2009 Pearson Education, Inc.

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.

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