Ethics and Social Responsibility Lamb, Hair, McDaniel Chapter 3 Ethics and Social Responsibility CHAPTER 3 Ethics and Social Responsibility © Quayside/Shutterstock.com

Chapter 3 Ethics and Social Responsibility Ethical Behavior The moral principles or values that generally govern the conduct of an individual or a group. Example: There is no law for “cutting in line.” Cutting in line would anger most other people. LO1 2

Ethical Behavior in Business Chapter 3 Ethics and Social Responsibility Ethical Behavior in Business Ethics Morals The moral principles or values that generally govern the conduct of an individual. The rules people develop as a result of cultural values and norms. Morals involve “good” and “bad” as well as “deviant” behaviors LO2

Ethical Development Levels Chapter 3 Ethics and Social Responsibility Ethical Development Levels Preconventional Morality Conventional Postconventional More Mature Childlike 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 LO2 4

Dell: An Ethics Case Beyond the Book Chapter 3 Ethics and Social Responsibility Dell: An Ethics Case Documents from a lawsuit revealed that Dell shipped over 11.8 million faulty computers between 2003 and 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 at times used faulty components to fix broken computers. Dell took a $300 million charge to fix the computers, but only in response to stakeholder demands. What level of ethical development is Dell operating? Beyond the Book 5

Ethical Decision Making Chapter 3 Ethics and Social Responsibility Ethical Decision Making Influential Factors Extent of Problems Top Management Actions Potential Consequences Social Consensus Probability of Harm Time Until Consequences Number Affected LO2 6

Chapter 3 Social Responsibility, Ethics, and the Marketing Environment Biz Flix Jaws LO2

Creating Ethical Guidelines Chapter 3 Ethics and Social Responsibility Creating Ethical Guidelines A Code of Ethics: Helps identify acceptable business practices Helps control behavior internally Avoids confusion in decision making Facilitates discussion about right and wrong © iStockphoto.com/Steve Cady LO2 8

Ethics in Other Countries Chapter 3 Ethics and Social Responsibility 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. LO2 9

Chapter 3 Ethics and Social Responsibility Sustainability Socially responsible companies will outperform their peers. It is in business’s best interest to find ways to attack society’s ills. LO3

Pyramid of Corporate Social Responsibility Chapter 3 Ethics and Social Responsibility Exhibit 3.1 Pyramid of Corporate Social Responsibility LO3 11

Arguments Against Social Responsibility Chapter 3 Ethics and Social Responsibility Arguments Against Social Responsibility Businesses should focus on making a profit and leave social and environmental concerns to nonprofits. Milton Friedman argued that the free market, and not companies, should decide what is best for the world—socially responsible companies are using shareholders’ money to further their own agendas. LO3 12

Growth of Social Responsibility Chapter 3 Ethics and Social Responsibility Growth of Social Responsibility According to a recent study, the percentage of firms that consider social responsibility factors when making business decisions: Brazil 62% 54% Canada Australia 52% 47% United States India 38% 35% China Mexico 26% LO3 13

Cost of Ignoring Social Responsibilities Chapter 3 Ethics and Social Responsibility Cost of Ignoring Social Responsibilities Some surveys indicate that consumers would be willing to pay more for a socially responsible company’s product. Making false claims about social responsibility can be especially costly. LO3

Chapter 3 Ethics and Social Responsibility 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 LO3

Chapter 3 Social Responsibility, Ethics, and the Marketing Environment OPINION QUESTION Jane Barksdale has designed a line of clothing targeted toward Hispanic Americans. The items are sold only by catalog and on the Internet. She thinks that she can increase sales by claiming in ads that the firm is owned by a Hispanic American and all the employees are Hispanic Americans. She is not Hispanic American nor are most of the employees. She needs a high level of sales to pay her bank loan and remain in business. Should she claim that she is Hispanic American? LO2

Assignment Case Vermont Teddy Bear Case Get in groups of 5-7 students Chapter 3 Social Responsibility, Ethics, and the Marketing Environment Assignment Vermont Teddy Bear Case Get in groups of 5-7 students Answer the questions associated with the case Case