Ferrell7e Student Ch02

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Ferrell7e Student Ch02

  1. 1. Business Ethics: Ethical Decision Making and Cases, Seventh Edition <ul><li>O.C. Ferrell </li></ul><ul><ul><li>University of New Mexico </li></ul></ul><ul><li>John Fraedrich </li></ul><ul><ul><li>University of Wyoming </li></ul></ul><ul><li>Linda Ferrell </li></ul><ul><ul><li>University of New Mexico </li></ul></ul>For in-class note taking, choose Handouts or Notes Pages from the print options, with three slides per page.
  2. 2. Chapter 2 Stakeholder Relationships, Social Responsibility, and Corporate Governance
  3. 3. Stakeholders Define Business Ethical Issues <ul><li>Stakeholders </li></ul><ul><ul><li>Customers </li></ul></ul><ul><ul><li>Investors </li></ul></ul><ul><ul><li>Employees </li></ul></ul><ul><ul><li>Suppliers </li></ul></ul><ul><ul><li>Government agencies </li></ul></ul><ul><ul><li>Communities </li></ul></ul>
  4. 4. Stakeholder Types: Primary <ul><li>Absolutely necessary for survival </li></ul><ul><ul><li>Employees </li></ul></ul><ul><ul><li>Customers </li></ul></ul><ul><ul><li>Investors </li></ul></ul><ul><ul><li>Shareholders </li></ul></ul>
  5. 5. Stakeholder Types: Secondary <ul><li>Do not typically engage in transactions or title to the goods </li></ul><ul><ul><li>Media </li></ul></ul><ul><ul><li>Trade associations </li></ul></ul><ul><ul><li>Special interest groups </li></ul></ul>
  6. 6. Stakeholder Orientation <ul><li>The degree to which a firm understands and addresses stakeholder demands. </li></ul><ul><li>Consists of three activities: </li></ul><ul><ul><li>Generation of data about stakeholder groups </li></ul></ul><ul><ul><li>Distribution of this information throughout the firm </li></ul></ul><ul><ul><li>The firm’s response to this intelligence </li></ul></ul>
  7. 7. Relationship Between Social Responsibility and Profitability <ul><li>Social responsibility is the organization’s obligation to maximize its positive impact and minimize its negative impact on stakeholders. </li></ul><ul><li>Four levels of social responsibility: </li></ul><ul><ul><li>Economic </li></ul></ul><ul><ul><li>Legal </li></ul></ul><ul><ul><li>Ethical </li></ul></ul><ul><ul><li>Philanthropic </li></ul></ul>
  8. 8. Corporate Governance <ul><li>Consists of the formal systems of accountability, oversight, and control. </li></ul><ul><li>Accountability </li></ul><ul><ul><li>Alignment of decisions with strategic direction </li></ul></ul><ul><li>Oversight </li></ul><ul><ul><li>System of checks and balances </li></ul></ul><ul><li>Control </li></ul><ul><ul><li>Auditing and improvement </li></ul></ul>
  9. 9. Corporate Governance <ul><li>Shareholder model </li></ul><ul><ul><li>Maximize wealth for owners and investors </li></ul></ul><ul><li>Stakeholder model </li></ul><ul><ul><li>Concerns of employees, owners, suppliers, government regulators, and communities taken into consideration </li></ul></ul>
  10. 10. Corporate Governance <ul><li>Fiduciaries </li></ul><ul><ul><li>Persons placed in positions of trust to act in the best interest of the organization </li></ul></ul><ul><ul><li>Both directors and officers of corporations are fiduciaries for the shareholders </li></ul></ul>
  11. 11. The Role of Boards of Directors <ul><li>Ultimate responsibility for their firms’ success or failure, as well as their ethics and actions </li></ul><ul><li>Increased demands for accountability and transparency </li></ul><ul><li>Issues of executive compensation </li></ul>
  12. 12. Implementing a Stakeholder Perspective <ul><li>Step 1: Assessing the corporate culture </li></ul><ul><li>Step 2: Identifying stakeholder groups </li></ul><ul><li>Step 3: Identifying stakeholder issues </li></ul><ul><li>Step 4: Assessing organizational commitment to social responsibility </li></ul><ul><li>Step 5: Identifying resources and determining urgency </li></ul><ul><li>Step 6: Gaining stakeholder feedback </li></ul>

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