Business Copyright 2005 Prentice- Hall, Inc. 2-1

1-2 Session #2 Understanding the Environments of Business, Ethics, and Corporate Responsibility Understanding the Environments of Business, Ethics, and Corporate Responsibility Business Introduction - Teaching Team Business and Management Department Faculty of Economics UNPAD

Business UNDERSTANDING THE ENVIRONMENTS OF BUSINESS 1-3

Business Copyright 2005 Prentice- Hall, Inc. 2-4 Organizational Boundaries & Environments External EnvironmentExternal Environment Organizational Boundary- Separates Organization From EnvironmentOrganizational Boundary- Separates Organization From Environment

Business Copyright 2005 Prentice- Hall, Inc. 2-5 Dimensions of External Environments The Business Organization Economic Technological Political- Legal Business Sociocultural

Business Copyright 2005 Prentice- Hall, Inc. 2-6 Economic Environment Business CycleBusiness Cycle Aggregate OutputAggregate Output –Standard of Living –Gross Domestic Product (GDP) RealReal NominalNominal –Gross National Product (GNP)

Business Copyright 2005 Prentice- Hall, Inc. 2-7 Technological Environment  Product/Service Technologies  Business Process Technologies- Enterprise Resource Planning

Business Copyright 2005 Prentice- Hall, Inc. 2-8 Political-Legal Environment Regulation- Defines Relationship Between Government & BusinessRegulation- Defines Relationship Between Government & Business Government = Pro vs. Anti-Business SentimentGovernment = Pro vs. Anti-Business Sentiment

Business Copyright 2005 Prentice- Hall, Inc. 2-9 Sociocultural Environment Customer Preferences/Tastes- VaryCustomer Preferences/Tastes- Vary –International –National Ethical Compliance & Responsible BehaviorEthical Compliance & Responsible Behavior –Enron –Arthur Andersen

Business Copyright 2005 Prentice- Hall, Inc Business Environment Redrawing Corporate Boundaries- Core CompetenciesRedrawing Corporate Boundaries- Core Competencies Challenges/OpportunitiesChallenges/Opportunities –Outsourcing –Vertical Integration –Viral Marketing –Business Process Management –Post-9/11

Business ETHICS AND CORPORATE RESPONSIBILITY Copyright 2005 Prentice- Hall, Inc. 2-11

Business Copyright 2005 Prentice- Hall, Inc Ethics In The Workplace Beliefs in Right/Wrong & Good/Bad ActionsBeliefs in Right/Wrong & Good/Bad Actions Ethical- Conforms To Social NormsEthical- Conforms To Social Norms Unethical BehaviorUnethical Behavior Business EthicsBusiness Ethics

Business Copyright 2005 Prentice- Hall, Inc Individual Ethics Ambiguity/Law/Real WorldAmbiguity/Law/Real World Sources of Individual Values & CodesSources of Individual Values & Codes –Parents –Peers –Experience Personal PrioritiesPersonal Priorities –Financial Gain –Family/Friends

Business Copyright 2005 Prentice- Hall, Inc Business Ethics ManagerialManagerial Behavior TowardBehavior Toward –Employees –Organization –Others

Business Copyright 2005 Prentice- Hall, Inc Ethical Norms  Utility  Rights  Justice  Caring

Business Copyright 2005 Prentice- Hall, Inc Model Of Ethical Judgment Making

Business Copyright 2005 Prentice- Hall, Inc Social Responsibility Business Commitments To StakeholdersBusiness Commitments To Stakeholders Stakeholders Affected:Stakeholders Affected: –Groups –Individuals –Organizations

Business Copyright 2005 Prentice- Hall, Inc Stakeholders

Business Copyright 2005 Prentice- Hall, Inc Social Responsibility - Environment PollutionPollution –Air –Water Toxic WasteToxic Waste RecyclingRecycling

Business Copyright 2005 Prentice- Hall, Inc Consumer Rights Safe ProductsSafe Products Informed About ProductInformed About Product To Be HeardTo Be Heard Choose What To BuyChoose What To Buy To Be EducatedTo Be Educated Courteous ServiceCourteous Service

Business Copyright 2005 Prentice- Hall, Inc Unfair Pricing CollusionCollusion GougingGouging

Business Copyright 2005 Prentice- Hall, Inc Advertising Ethics Food Product LabelingFood Product Labeling Misleading Product ClaimsMisleading Product Claims DeceptiveDeceptive Morally ObjectionableMorally Objectionable

Business Copyright 2005 Prentice- Hall, Inc Employer Commitments To Employee Job SkillsJob Skills Respect & CompassionRespect & Compassion –Nondiscrimination –Equal Opportunities –Physically & Socially Safe Workplace

Business Copyright 2005 Prentice- Hall, Inc Responsibility To Investors Improper Financial ManagementImproper Financial Management Check Kiting- Check 21Check Kiting- Check 21 Insider TradingInsider Trading Financial Misrepresentation- GAAPFinancial Misrepresentation- GAAP

Business Copyright 2005 Prentice- Hall, Inc Social Responsibility Approaches/Stances ObstructionistObstructionist DefensiveDefensive AccommodativeAccommodative ProactiveProactive Low Level High Level Obstructionist DefensiveAccommodativeProactive

Business Copyright 2005 Prentice- Hall, Inc Social Responsibility Auditing Success of Program Starts At TopStarts At Top Requires Management SupportRequires Management Support Single Manager In ChargeSingle Manager In Charge Conduct Social AuditsConduct Social Audits