Business in a Changing World Chapter 2 Business

2 -3

Ethisphere links ethics to profits Publication that illuminates the relationship between ethics and profits. 2 -4

Business Ethics & Social Responsibility Exec who allegedly made $270 M off Enron to pay SEC $31. 5 M Business Ethics – principles and standards that determine acceptable conduct in business 2 -5

Business Ethics & Social Responsibility A Timeline of Ethical and Socially Responsible Concerns 2 -6

Business Ethics & Social Responsibility Social responsibility– business’s obligation to maximize its positive impact and minimize its negative impact on society 2 -7

Business Ethics & Social Responsibility Laws and regulations encourage businesses to conform to society’s standards, values, and attitudes. Sarbanes-Oxley Act - 2002 2 -8

The Role of Ethics in Business Concern about unethical business practices continue – Health. South’s accounting improprieties and securities fraud 2 -9

The Role of Ethics in Business Unethical and/or Illegal • Accounting fraud • Deceptive advertising • Unfair competitive practices • Internet theft 2 -10

The Role of Ethics in Business Ethical Conduct • Builds trust • Promotes confidence • Validates relationships Learn how to recognize and resolve ethical issues 2 -11

Recognizing Ethical Issues in Business Ethical issue – an identifiable problem, situation, or opportunity that requires a person to choose from among several actions that may be evaluated as right or wrong, ethical or unethical. 2 -12

Recognizing Ethical Issues in Business How to judge the ethics of a situation – examine the situation from your stakeholders’ position, including customers and competitors 2 -13

Recognizing Ethical Issues in Business Types and Incidences of Observed Misconduct Many business issues may seem straightforward and easy to resolve on the surface, but are in reality very complex. 2 -14

Sources of Unethical Behavior in Organizations 1. Overly aggressive financial or business objectives 2. Abusive & intimidating behavior 3. Conflict of interest 4. Fairness & honesty 5. Communications 6. Business relationships 2 -15

Sources of Unethical Behavior Abusive and intimidating behavior “Bullies” behavior: 2 -16

Sources of Unethical Behavior in Organizations Conflict of interest – – the most common ethical issue identified by employees. – Advance personal interests over others’ interests – Benefit self at the expense of the company 2 -17

Least Corrupt Countries 2 -18

Business Ethics Fairness & honesty – the heart of business ethics • How employees use resources • No harm to customers • Accurate representations • Disclosure 2 -19

Business Ethics Most Popular Office Supplies Employees Pilfer “More Employees Taking Supplies, ” The News Journal 2 -20

Personal Ethics Honesty? 25, 000 high school students: • 62% cheated on exams at least once • 35% copied documents from Internet • 27% shoplifted • 23% cheated to win at sports 2 -21

Ethical Concerns Communications • False/misleading advertising • Deceptive personal selling tactics • Product safety and quality • Unsubstantiated claims • Product labeling 2 -22

Ethical Concerns Business Relationships • Relationships with customers • Relationships with suppliers • Relationships with co-workers 2 -23

Ethical Concerns Plagiarism The act of taking someone else’s work and presenting it as your own without mentioning the source 2 -24

Making Decisions About Ethical Issues Questions to Consider in Determining Whether an Action Is Ethical Open discussion of ethical issues does not eliminate ethical problems; it does promote trust and learning in an organization. 2 -25

Improving Ethical Behavior in Business Ethical decisions in an organizations are influenced by three key factors 2 -26

Improving Ethical Behavior in Business Codes of Ethics – Formalized rules and standards that describe what a company expects of its employees. 2 -27

Improving Ethical Behavior in Business Key Things to Consider in Developing a Code of Ethics 2 -28

Codes of Ethics National Business Ethics Survey (NBES) According to the NBES, employees in organizations with written standards of conduct are more likely to report misconduct when they observe it. 2 -29

Codes of Ethics Whistleblowing The act of an employee exposing an employer’s wrongdoing to outsiders, such as the media or government regulatory agencies. 2 -30

Business Ethics – Taking Responsibility 2 -31

Nature of Social Responsibility 4 Dimensions 1. 2. 3. 4. Economic Legal Ethical Voluntary (philanthropic) 2 -32

Pyramid of Social Responsibility 2 -33

Nature of Social Responsibility Corporate Citizenship The extent to which businesses meet the legal, ethical, economic, and voluntary responsibilities placed on them by their stakeholders. 2 -34

Nature of Social Responsibility Best Corporate Citizens 1. 2. 3. 4. Intel Corporation Eaton Corporation Nike Inc. Deere and Co. 2 -35

Nature of Social Responsibility Arguments For and Against Social Responsibility 2 -36

Social Responsibility Issues Owners & Stockholders • • Primary concern with profit or ROI Financial community at large Proper accounting procedures Protecting owner’s rights and investments 2 -37

Social Responsibility Issues Employee Relations • • Provide a safe workplace Adequate compensation Listen to grievances Fair treatment 2 -38

Social Responsibility Issues Consumer Relations Consumerism – the activities that independent individuals, groups, and organizations undertake to protect their rights as consumers. 2 -39

Social Responsibility Issues Environmental Issues • Animal rights • Pollution • Going Green 2 -40

Social Responsibility Issues Community Relations • General community and global welfare • Hardcore unemployed • Charitable contributions (United Way) • Avon’s Breast Cancer Awareness Crusade 2 -41