2012 2013 Chapter 1 2013 by Cengage Learning

2012 -2013 Chapter 1 © 2013 by Cengage Learning Inc. All Rights Copyright © 2012 by Cengage. Reserved. Learning Inc. All rights reserved 11 © Quayside/Shutterstock. com Ethics and Social Responsibility

Learning Outcomes 1 Explain the concept of ethical behavior 2 Describe ethical behavior in business 3 Discuss corporate social responsibility-CSR Explain cause-related marketing-CRM 4 2

Values, Morals and Ethics Values • Personal/Family • Right and Wrong/Should and Shouldn’t Morals • Social/Society • Good and Bad http: //changingminds. org/explanatio Ethics ns/values_morals_ethics. htm • Professional/Business • Formal system/set of rules adopted by a group of people 3

The Concept of Ethical Behavior Explain the concept of ethical behavior 1 4

Ethical Behavior The moral principles or values that generally govern the conduct of an individual or a group. • There is no law for “cutting in line. ” (Cutting in line would anger most people) • Is it legal? • Is it ethical? 5 1

Ethical Behavior in Business Describe ethical behavior in business 2 6

Ethical Behavior in Business Morals The rules people develop as a result of cultural values and norms. Ethics The moral principles or values that generally govern the conduct of an individual Morals: involve “good” and “bad” Ethics: standards or codes of behaviors 7 2

Ethical Behavior in Business ? Fast Food Nation http: //www. youtube. com/watch? v=zc_z 623 Wsro 2 8

Ethical Development Levels More Childlike Preconventional Morality Conventional Morality More Postconventional Morality Mature 9 • Based on what will be punished or rewarded • Self-centered, calculating, selfish • Moves toward the expectations of society • Concerned over legality and the opinion of others • Concern about how they judge themselves • Concern if it is right in the long run 2

Dell: An Ethics Case • Documents from a lawsuit revealed that Dell shipped over 11. 8 million faulty computers from 2003 - 2005. • An internal investigation revealed extensive problems, but Dell tried to cover up the problem, telling its sales team not to mention bring it up. • Dell used faulty components to fix broken computers. • Dell took a $300 million charge to fix the computers, but only in response to stakeholder demands. At what level of ethical development did Dell operate? 10

Ethical Decision Making Influential Factors Extent of Problems Probability of Harm Top Management Actions Time Until Consequences Potential Consequences Number Affected Social Consensus 11 2

Creating Ethical Guidelines A Code of Ethics: 12 © i. Stockphoto. com/Steve Cady • Helps identify acceptable business practices • Helps control behavior internally • Avoids confusion in decision making • Facilitates discussion about right and wrong 2

Ethics in Other Countries Foreign Corrupt Practices Act (FCPA) • Prohibits U. S. corporations from making illegal payments to foreign officials. • Has been criticized for putting U. S. businesses at a disadvantage. • Has encouraged some countries to implement their own anti-bribery laws. 13 2

Corporate Social Responsibility Discuss corporate social responsibility 3 14

Corporate Social Responsibility Pros • It is the right thing to do • Businesses have the resources to devote to fixing social problems • Prevents government regulation and potential fines • It can be profitable Cons • Takes focus away from making profits • Business executives spend shareholder money on environmental initiatives • Do companies know what is best for the world? (Milton Friedman) 3 15

Sustainability • Socially responsible companies will outperform their peers. • It is in business’s best interest to find ways to attack society’s ills. http: //www. youtube. com/watch? v=l. E 0 NLv. W 79 SU 16 3

Exhibit 3. 1 Pyramid of Corporate Social Responsibility 17

Growth of Social Responsibility According to a recent study, (IBM Global Survey) the percentage of firms that consider social responsibility factors when making business decisions are as follows: Brazil Canada Australia United States India China Mexico 18 62% 54% 52% 47% 38% 35% 26% 3

Green Marketing “The development and marketing of products designed to minimize negative effects on the environment or improve the environment” – Environmentally aware customers pay more for products – Companies must try to educate customers of environmental benefits – Implications of Pricewaterhouse study (raw materials depleted in 25 years) 19 3

Cause-Related Marketing Explain cause-related marketing 4 20

TOMS: One for One • TOMS was founded on a simple premise: With every product you purchase, TOMS will help a person in need. One for One™. Using the purchasing power of individuals to benefit the greater good is what we're all about. • Visit www. TOMS. com to learn more. . . http: //www. youtube. com/user/tomsshoes? feature=results_main 21

Cause-Related Marketing For-profit and non-profit organizations cooperate to generate funds. • Generates about $7 billion annually • Too many causes cause customer cause fatigue 22 4