1 The Contemporary Business World Business Essentials 6

1 The Contemporary Business World Business Essentials 6 e Ronald J. Ebert Ricky W. Griffin 2 BUSINESS ETHICS AND SOCIAL RESPONSIBILITY © 2007 Prentice Hall, Inc. All rights reserved. Power. Point Presentation by Charlie Cook The University of West Alabama

Ethics in the Workplace Ethics Ø Beliefs about what’s right and wrong or good and bad Ethical Behavior Ø Behavior conforming to individual beliefs and social norms about what’s right and good Unethical Behavior Ø Behavior conforming to individual beliefs and social norms about what is defined as wrong and bad Business Ethics Ø The ethical or unethical behaviors by employees in the context of their jobs © 2007 Prentice Hall, Inc. All rights reserved. 2– 2

Individual Values and Codes Sources of Personal Codes of Ethics Ø Childhood responses to adult behavior Ø Influence of peers Ø Experiences in adulthood Ø Developed morals and values © 2007 Prentice Hall, Inc. All rights reserved. 2– 3

Business and Managerial Ethics Ø The standards of behavior that guide individual managers in their work Ø Ethics affect a manager’s behavior toward: v employees v the organization v other economic agents—customers, competitors, stockholders, suppliers, dealers, and unions Ethical Concerns Ø Ambiguity (e. g. , financial disclosure) Ø Global variation in business practices (e. g. , bribes) © 2007 Prentice Hall, Inc. All rights reserved. 2– 4

Assessing Ethical Behavior Simple Steps in Applying Ethical Judgments Ø Gather the relevant factual information Ø Analyze the facts to determine the most appropriate moral values Ø Make an ethical judgment based on the rightness or wrongness of the proposed activity or policy © 2007 Prentice Hall, Inc. All rights reserved. 2– 5

Assessing Ethical Behavior Ethical Norms and the Issues They Entail Ø Utility: Does a particular act optimize the benefits to those who are affected by it? Do all relevant parties receive “fair” benefits? Ø Rights: Does the act respect the rights of all individuals involved? Ø Justice: Is the act consistent with what’s fair? Ø Caring: Is the act consistent with people’s responsibilities to each other? © 2007 Prentice Hall, Inc. All rights reserved. 2– 6

Company Practices and Business Ethics Encouraging Ethical Behavior Involves: Ø Adopting written codes of conduct and establishing clear ethical positions for the conduct of business Ø Having top management demonstrate its support of ethical standards Ø Instituting programs to provide periodic ethics training Ø Establishing ethical hotlines for reporting and discussion of unethical behavior and activities © 2007 Prentice Hall, Inc. All rights reserved. 2– 7

FIGURE 2. 2 Core Principles and Organizational Values © 2007 Prentice Hall, Inc. All

Social Responsibility Ø The overall way in which a business attempts to balance its commitments to relevant groups and individuals (stakeholders) in its social environment Organizational Stakeholders Ø Groups, individuals, and organizations that are directly affected by the practices of an organization and, therefore, have a stake in its performance © 2007 Prentice Hall, Inc. All rights reserved. 2– 9

FIGURE 2. 3 Major Corporate Stakeholders © 2007 Prentice Hall, Inc. All rights reserved.

The Stakeholder Model of Responsibility Customers Ø Businesses strive to treat customers fairly and honestly Employees Ø Businesses treat employees fairly, make them a part of the team, and respect their dignity and basic human needs Investors Ø Businesses follow proper accounting procedures, provide information to shareholders about financial performance, and protect shareholder rights and investments Suppliers Ø Businesses emphasize mutually beneficial partnership arrangements with suppliers Local and International Communities Ø Businesses try to be socially responsible © 2007 Prentice Hall, Inc. All rights reserved. 2– 11

Contemporary Social Consciousness The Concept of Accountability Ø The expectation of an expanded role for business in protecting and enhancing the general welfare of society © 2007 Prentice Hall, Inc. All rights reserved. 2– 12

Areas of Social Responsibility Toward the Environment Ø Controlling air, water, and land pollution Ø Properly disposing of toxic waste Ø Engaging in recycling © 2007 Prentice Hall, Inc. All rights reserved. 2– 13

Areas of Social Responsibility (cont’d) Responsibility Toward Customers Ø Involves providing quality products and pricing products fairly Consumerism Ø Social activism dedicated to protecting the rights of consumers in their dealings with businesses Basic Consumer Rights Ø To possess safe products Ø To be informed about all relevant aspects of a product Ø To be heard Ø To choose what to buy Ø To be educated about purchases Ø To courteous service © 2007 Prentice Hall, Inc. All rights reserved. 2– 14

Consumer Rights (cont’d) Unfair Pricing Ø Collusion: When two or more firms agree to collaborate on such wrongful acts as price fixing Ø Price gouging: Responding to increased demand with overly steep (and often unwarranted) price increases Ethics in Advertising Ø Truth in advertising Ø Morally objectionable advertising © 2007 Prentice Hall, Inc. All rights reserved. 2– 15

Areas of Social Responsibility (cont’d) Responsibility Toward Employees Ø Legal and social commitments to: v not practice illegal discrimination v provide a physically and socially safe workplace v provide opportunities to balance work and life v 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 Ø Proper financial management (no insider trading) Ø Proper representation of finances © 2007 Prentice Hall, Inc. All rights reserved. 2– 16

KEY TERMS accommodative stance business ethics collusion consumerism defensive stance ethical behavior ethics insider trading managerial ethics organizational stakeholders © 2007 Prentice Hall, Inc. All rights reserved. social audit social responsibility unethical behavior 2– 17