BUSN 3rd kelly mcgowen chapter4

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BUSN

Business Ethics & Social Responsibility: Doing Well by Doing Good

©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Business Ethics and Social
Responsibility:
Doing Well by Doing Good

• What is ethics? Business ethics?
• What are the universal ethical standards?
• What is an ethical dilemma?
• How does ethics relate to the individual and the
organization?
• What is social responsibility and its impact on
stakeholders?
• What is the role of social responsibility in the global
arena?
• How do companies evaluate their efforts to be socially
responsible?
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©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.


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Business Ethics & Social Responsibility: Doing Well by Doing Good

Ethics & Social Responsibility:
A Close Relationship

ETHICS
Beliefs about
right and wrong

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SOCIAL
RESPONSIBILITY
The obligation of a business
to contribute to society

©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Business Ethics & Social Responsibility: Doing Well by Doing Good

Defining Ethics: Murkier Than You’d Think

©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Business Ethics & Social Responsibility: Doing Well by Doing Good

Universal Ethical Standards

Developed by
Character Counts,
a nonpartisan
organization of
educators,
community leaders,
and ethicists.

Source: The Six Pillars of Character, Josephson Institute website, accessed February 2, 2009

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©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Business Ethics & Social Responsibility: Doing Well by Doing Good

Business Ethics: Not an Oxymoron

Ethical Dilemma
Negative Consequences
Two unfavorable options

most challenging
business decisions seem
to arise when values are
in conflict

Ethical Lapse

Business Ethics – the
application of right and
wrong in the workplace.

Clear misconduct

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©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Business Ethics & Social Responsibility: Doing Well by Doing Good

Ethics: Multiple Touchpoints

Individuals must make their own
ethical choices
BUT

The organization can have a significant
influence on decisions
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©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Business Ethics & Social Responsibility: Doing Well by Doing Good

Ethics and the Individual: The Power of One

Framework for Ethical Decisions:
1. Do you understand the
dimensions of the problem?

2. Who would benefit? Who would
suffer?
3. Are the alternative solutions
legal? Are they fair?
4. Does your decision make you
comfortable?
5. Could you defend your decision
on the nightly news?

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©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Business Ethics & Social Responsibility: Doing Well by Doing Good

Ethics and the Organization: It Takes a Village

• Ethical influence starts at the top.
• Actions matter more than words.
• The appearance of shaky ethics can be deeply
damaging
“CEOs in particular must communicate their
personal commitment to high ethical standards
and consistently drive the message down to
employees through their actions.”

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©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Business Ethics & Social Responsibility: Doing Well by Doing Good

Creating and Maintaining and Ethical Organization

• Organizational Culture
• Role of Top Management
• Code of Ethics
1.
2.
3.
4.
5.
6.

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Executive Buy-in
Clear expectations
Integrated approach
Global and local
Whistleblower support

Reporting and Enforcement

©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Business Ethics & Social Responsibility: Doing Well by Doing Good

Ethics at Work: How would you judge the actions of
these business leaders?

Sherron Watkins, former vice president of Enron reported the accounting
Irregularities that led to the discovery of corporate fraud.
Stanley O’Neal began as Merrill Lynch began racking up losses
that led to its collapse, he announced his “retirement.”
Martha Stewart was convicted of obstructing justice in a $40,000
well timed stock sale.
Whole Foods CEO, John Mackey posted thousands of comments on Yahoo Finance,
hyping his company and attacking Wild Oats, which he was planning to purchase.
Sanjay Kumar of Computer Associates was convicted of
massive accounting fraud in 2006.

Pierre Omidyar, the founder of eBay has given away over
$100 million to Tufts University Micro Finance Fund.
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©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Business Ethics & Social Responsibility: Doing Well by Doing Good

Capitalism with a Conscience

• The gains in wealth, healthcare, education,
and technology have not been evenly spread
• Half of the world’s population lives on less
than $2.00 per day
• 94% of the world’s earnings go to 40% of
the people
• Bill Gates has called for a new approach to
economics: creative capitalism
• Nobel Peace prize winner Muhammad
Yunus recognizes the power of business to
solve societal issues

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©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Business Ethics & Social Responsibility: Doing Well by Doing Good

Defining Social Responsibility:
Making the World a Better Place

Social Responsibility is the obligation of a
business to contribute to society.

Nearly 80% of Americans consider
corporate citizenship when making
investment and purchasing decisions.

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©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Business Ethics & Social Responsibility: Doing Well by Doing Good

The Spectrum of Social Responsibility

©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Business Ethics & Social Responsibility: Doing Well by Doing Good

Social Responsibility at Work:
How would you judge the actions of these firms?

1. Clorox introduced a line of “99% natural cleaning” products
called Green Works. The Sierra Club endorsed the product line.
Clorox makes annual contributions to the Sierra Club
2. Tapping the potential of their fans, MTV has drawn millions of
young people to the polls for the 2008 presidential election
3. As obesity among kids grows, Kraft Foods pledged to stop
advertising unhealthy yet profitable foods
4. After receiving $45 billion in taxpayer bailout funds, Bank of
America sponsored a five-day carnival-like event outside the
2009 Super Bowl.
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©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Business Ethics & Social Responsibility: Doing Well by Doing Good

The Stakeholder Approach:
Responsibility to Whom?

Stakeholders are any
groups that have a stake
or a personal interest in the
performance and actions
of an organization.

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©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Business Ethics & Social Responsibility: Doing Well by Doing Good

The Stakeholder Approach:
Responsibility to Whom?

EMPLOYEES

Creating Jobs that Work

CUSTOMERS

Value, Honesty and Communication

INVESTORS

Fair Stewardship and Full Disclosure

COMMUNITY

Business and the Greater Good

ENVIRONMENT

Sustainable Development

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©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Business Ethics & Social Responsibility: Doing Well by Doing Good

Responsibility to Employees:
Creating Jobs that Work

• Meet Legal Standards
• Workplace Safety

• Minimum Wage/Overtime
Requirements
• Value Employees
• Provide Work/Life Balance

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©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Business Ethics & Social Responsibility: Doing Well by Doing Good

Responsibility to Customers:
Value, Honesty and Communication

CONSUMERISM:
• The Right to Be Safe
• The Right to Be Informed
• The Right to Choose
• The Right to be Heard
Planned Obsolescence –
Deliberately designing products to fail in order to shorten
the time between consumer repurchases
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©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Business Ethics & Social Responsibility: Doing Well by Doing Good

Apple Angst

• Apple introduced the iPhone on
June 9, 2007 to rave reviews
despite $599 price tag
• Apple dropped the price to $200
to increase customers
• Customers were livid!
• CEO, Steve Jobs apologized and
gave customers $100 store credit

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©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Business Ethics & Social Responsibility: Doing Well by Doing Good

Responsibility to Investors:
Fair Stewardship and Full Disclosure

• Legal Requirements
Sarbanes-Oxley
• Responsible use of
Corporate Dollars
Honesty
• Is Optimism or Pessimism
Socially Responsible?

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©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Business Ethics & Social Responsibility: Doing Well by Doing Good

Responsibility to Community:
Business and the Greater Good

Cause-related Marketing –
partnerships between businesses
and nonprofit organizations,
designed to spike sales for the
company and raise money

for the nonprofit
Corporate Philanthropy business donations to
nonprofit groups, including
both money and time

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Corporate
Responsibility actions of the business
rather than donations of
money and time

©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Business Ethics & Social Responsibility: Doing Well by Doing Good

Responsibility to the Environment:
Sustainable Development

Sustainable Development
Beyond federal, state and local laws:
doing business to meet the needs of
this generation without harming the
ability of future generations

Carbon Footprint
Amount of harmful greenhouse gases a
firm emits

Green Marketing
Marketing environmental products and
practices for competitive advantage
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©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Business Ethics & Social Responsibility: Doing Well by Doing Good

Ethics and Social Responsibility in the Global Arena:
A House of Mirrors?

Corruption is part of the
culture in many countries
 Bribes or Gifts

Labor issues in host countries
can be complicated
 Living Wage
 Child Labor

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©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Business Ethics & Social Responsibility: Doing Well by Doing Good

Monitoring Ethics and Social Responsibility:
Who is Minding the Store?

SOCIAL AUDIT
A systematic evaluation of
how well a firm is meeting its
ethics and social
responsibility objectives.

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©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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