Chapter 4 Conducting Business Ethically and Responsibly
Sr. Chapter Chapter HeadingNo.No.1. 3 Understanding the Global context of business (031012)2. 4 Conducting Business Ethically and Responsibly (250212)3. 6 Organizing the Business Enterprise4. 7 Understanding Entrepreneurship and Small Business5. 8 Managing Human Resources6. 9 Understanding Employee Motivating, Satisfying and Leadership7. 11 Understanding Marketing Processes and Consumer Behavior8. 16 Managing Quality and Productivity9. 17 Managing Information Systems and Communication Technology10. 19 Understanding Money and Banking11. 20 Intermediate Term and Lease Financing
Marks Distribution50 Terminal Examination20 Mid Term Examination15 Quizzes15 Final Assignment 3
ETHICS IN THE WORKPLACE Assessing ethical behavior Company practices and Business Ethics SOCIAL RESPONSIBILITY The Stakeholder Model of Responsibility AREAS OF SOCIAL RESPONSIBILITY Responsibility Towards the Environment Responsibility Towards Customers Responsibility Towards Employees Responsibility Towards Investors IMPLEMENTING SOCIAL RESPONSIBILITY PROGRAMS approaches to social responsibility Managing Social Responsibility programs Social responsibility and the Small business
Definitions• Business • A business (also known as enterprise or firm) is an organization engaged in the trade of goods, services, or both to consumers. Businesses may be privately owned, not-for-profit or state-owned.• Ethics: • Beliefs about what is right and wrong or good and bad in actions that affect others • Or • Ethics are moral principles by which people conduct themselves personally, socially, and professionally
Definitions• Personal ethics: • moral principles that guide an individual• Business ethics: • rules, based on moral principles, used by a business/ manager/ employer.• Ethical Behavior • Behavior conforming to generally accepted social norms concerning beneficial and harmful actions• Unethical Behavior • Behavior that does not conform to generally accepted social norms concerning beneficial and harmful actions
Definitions• whistleblower • (an informant who exposes wrongdoing within an organization in the hope of stopping it) "the law gives little protection to whistleblowers who feel the public has a right to know what is going on";
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?
ClassifyingBusiness Decisions Ethical Ethical Ethical but and Illegal Legal Unethical Unethical and butUnethical Illegal Legal Illegal Legal
Factors That Cause WorkersTo Act Unethically Pressure to meet sales, budget or profit goals Lack of recognition Personal financial worries Balancing work & family Poor communication
Top Five Unethical/Illegal Behaviors of Workers Cut corners in quality control Covered up incidents Abused or lied about sick days Lied to or deceived customers Put inappropriate pressure on others
Fostering Ethical Behavior Leadership Codes of Conduct Compliance-based Integrity-Based Social Audits Whistle Blowing
Three Levels of Social Responsibility Societal Responsibility Stakeholder Responsibility General Profit Responsibility Ecological Customers Employees Public Environment Owners/Stockholders Suppliers/Distributors Public Interest GroupsSource: Marketing, 5/E by Berkowitz, Kerin, Hartley, andRudelius.
RESPONSIBILITY TO…… EMPLOYEES Creating Jobs that Work CUSTOMERS Value, Honesty and Communication INVESTORS Fair Stewardship and Full DisclosureCOMMUNITY Business and the Greater GoodENVIRONMENT Sustainable Development 23
RESPONSIBILITY TO EMPLOYEES:CREATING JOBS THAT WORK A. Meet Legal Standards B. Workplace Safety C. Minimum Wage/Overtime Requirements D. Value Employees E. Provide Work/Life Balance 24
RESPONSIBILITY TO CUSTOMERS CONSUMERISM: • The Right to Be Safe • The Right to Be Informed • The Right to Choose • The Right to be Heard 25
ROTTEN APPLE? Planned Obsolescence – APPLE COMPUTERS:Deliberately designing products • iPods had irreplaceable battery. to fail in order to shorten the time between consumer • Batteries died after 18 months. repurchases • Customers were encouraged to purchase new iPods • Two customers posted high profile protest movies online. • APPLE announced replacement program. 26
RESPONSIBILITY TO INVESTORS FAIR STEWARDSHIP AND FULL DISCLOSUREA. Legal RequirementsB. Responsible use of Corporate Dollars A. HonestyC. Is Optimism or Pessimism Socially Responsible?
RESPONSIBILITY TO COMMUNITY Cause-related Marketing –partnerships between businesses and nonprofit organizations, designed to spike sales for the company and raise money Corporate Responsibility for the nonprofit. The actions of the business rather than donations of Corporate Philanthropy - money and time. business donations to nonprofit groups, including both money and time. 28
RESPONSIBILITY TO ENVIRONMENT Green Marketing – marketing environmental products and practices to gain a competitive edge. 29
RESPONSIBILITY TO ENVIRONMENTA. Responsibility to environment is a part of responsibility to communityA. Reducing the amount of trash is more important than recyclingA. Although consumers support green marketing, they may not be willing to sacrifice quality 30
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 priority over profits. – Corporations as citizens should help others. – Corporations have the resources to help. – Corporations should solve problems they create.
Approaches to Social Responsibility Obstructionist stance: A company does as little as possible for SR and may involve attempts to deny or cover up violations Defensive Stance: A company meets only minimum legal requirements in its commitments to groups and individuals for SR Accommodative stance A company, if specially asked to do so, exceeds legal minimums to groups and individuals in its social environment Proactive stance A company actively seeks opportunities to contribute to the well-being of groups and individuals in its social responsibility
FIGURE 2.4: Spectrum of Approaches to CorporateSocial Responsibility
Managing Social Responsibility Programs1. Social responsibility must start at the top and be considered as a factor in strategic planning.2. A committee of top managers must develop a plan detailing the level of management support.3. One executive must be put in charge of the firm’s agenda.4. The organization must conduct occasional social audits—systematic analyses of its success in using funds earmarked for its social responsibility goals.
Social Responsibility and the Small Business• Large Business versus Small Business Responses to Ethical Issues – Differences are primarily differences of scale – More issues are questions of individual ethics• Ethics and social responsibility are decisions faced by all managers in all organizations, regardless of rank or size
Corporate Annual Giving Merck $221.0* Johnson & Johnson 176.2 Pfizer 123.9 Eli Lilly 121.4 IBM 116.1 Microsoft 104.7 Intel 101.0 Bank of America 91.5 Source: The Taft Group * In Millions