2. 2
ETHICS AND SOCIAL RESPONSIBILITY
ETHICS
Beliefs about
right and wrong.
SOCIAL
RESPONSIBILITY
The obligation of a business
to contribute to society.
A close relationship, but not the same
4. 4
BUSINESS ETHICS: NOT AN OXYMORON
Ethical Dilemma
– Two unfavorable options with Negative consequences.
– most challenging business decisions seem to arise when
values are in conflict
– Business Ethics – the application of right and wrong in
the workplace
– Ethical LapseClear misconduct
5. 5
ETHICS AND THE INDIVIDUAL
• 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? Or to
your mother? Or to God?
6. 6
Creating and Maintaining an Ethical Organization
• Organizational Culture sets the ethical culture and is
led by Top Management
• An effective Code of Ethics has:
– Executive buy-in
– Clear expectations
– Integrated approach
– Global and local
– Whistleblower support
– Reporting and enforcement
7. 7
ETHICS FAME AND SHAME
Dennis Kozlowski, former CEO of Tyco
was convicted of looting
millions from the company.
Ethics Hall of Shame
Brian Mulroney, former Prime Minister of
Canada, admitted he accepted $225,000 in
cash, six years after doing so (and then
paid tax on half of it.)
Martha Stewart was convicted of
obstructing justice in a $40,000 well-
timed stock sale.
Sheron Watkins, former vice president of
Enron reported the accounting irregularities
that led to the discovery of corporate fraud.
Ethics Hall of Fame
Pierre Omidyar, the founder of eBay has
given away over $100 million to help
give economic power to the world’s poor.
Paul Newman’s food company donates
100% of the profits to charity, totaling
more than $150 million to date.
8. 8
SOCIAL RESPONSIBILITY
a commitment to minimize business negative effects and
maximize the positive ones.
Responsibility to
Whom?
Stakeholders are any
groups that have a stake –
or a personal interest - in the
performance and actions
of an organization.
10. 10
RESPONSIBILITY TO EMPLOYEES: CREATING JOBS THAT WORK
• Meet legal standards
• Workplace safety
• Minimum wage/Overtime requirements
• Value employees
• Provide work/life balance
12. 12
ROTTEN APPLE?
Planned Obsolescence –
Deliberately designing products to fail in order to shorten the time
between consumer repurchases
APPLE COMPUTERS:
• iPods had irreplaceable battery.
• Batteries died after 18 months.
• Customers were encouraged to purchase new iPods
• Two customers posted high profile protest movies online.
• APPLE announced replacement program.
13. 13
RESPONSIBILITY TO INVESTORS
• Legal requirements
• Responsible use of corporate
resources
• Is optimism or pessimism socially
responsible?
FAIR STEWARDSHIP AND FULL DISCLOSURE
14. 14
RESPONSIBILITY TO COMMUNITY
Corporate Philanthropy - business
donations to nonprofit groups, including
both money and time.
Corporate Responsibility - The actions
of the business rather than donations of
money and time.
15. 15
RESPONSIBILITY TO ENVIRONMENT
Green Marketing –
marketing environmental products and
practicesto gain a competitive edge.
Greenwashing – marketing environmental
practices when there is no real green effort.
16. 16
RESPONSIBILITY TO ENVIRONMENT
• Responsibility to environment is a part of
responsibility to community
• Reducing the amount of trash is more important
than recycling
• Although consumers support green marketing, they
may not be willing to sacrifice quality
17. 17
ETHICS AND SOCIAL RESPONSIBILITY IN THE GLOBAL ARENA
• Corruption is part of the culture in many countries
– Bribes or gifts
• Labour issues in host countries can be complicated
– Living wage
– Child labour
– Code of Conduct
18. 18
MONITORING ETHICS AND SOCIAL RESPONSIBILITY
SOCIAL AUDIT
A systematic evaluation of how well
a firm is meeting its ethics and social
responsibility objectives