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2 chapter Business Ethics and Social Responsibility Business Essentials, 7 th Edition Ebert/Griffin Instructor 2 chapter Business Ethics and Social Responsibility Business Essentials, 7 th Edition Ebert/Griffin Instructor Lecture Power. Points Power. Point 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 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 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 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 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 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 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 The Stakeholder Model of Responsibility • Customers – Businesses strive to treat customers fairly and honestly • Employees – Businesses treat employees fairly, make them a part of the team, and respect their dignity and basic human needs • Investors – Businesses follow proper accounting procedures, provide information to shareholders about financial performance, and protect shareholder rights and investments • Suppliers – Businesses emphasize mutually beneficial partnership arrangements with suppliers • Local and International Communities – Businesses try to be socially responsible © 2009 Pearson Education, Inc.

Contemporary Social Consciousness • The Concept of Accountability – The expectation of an expanded 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 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 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 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 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 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 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.