5-1 Visit UMT online at © UMT 2004 MGT100Version: Visit UMT online at INTRODUCTION TO BUSINESS University of Management and Technology 1901 N. Fort Myer Drive Arlington, VA USA Phone: (703) Fax: (703) Website:

5-2 Visit UMT online at © UMT 2004 MGT100Version: Visit UMT online at CHAPTER 5: Conducting Business Ethically and Responsibly Griffin, R. W. & Ebert, R. J. Business (7th ed.) © 2004 Prentice Hall.

5-3 Visit UMT online at © UMT 2004 MGT100 Visit UMT online at Version: Visit UMT online at Chapter Outline Ethics in the Workplace Social Responsibility Areas of Social Responsibility Implementing Social Responsibility Programs

5-4 Visit UMT online at © UMT 2004 MGT100 Visit UMT online at Version: Visit UMT online at What Is Ethics? Beliefs about what is right and wrong or good and bad in actions that affect others

5-5 Visit UMT online at © UMT 2004 MGT100 Visit UMT online at Version: Visit UMT online at Ethics in the Workplace Ethical behavior is behavior conforming to generally accepted social norms concerning beneficial and harmful actions Unethical behavior is behavior that does not conform to generally accepted social norms concerning beneficial and harmful actions

5-6 Visit UMT online at © UMT 2004 MGT100 Visit UMT online at Version: Visit UMT online at What Is Business Ethics? Ethical or unethical behaviors by a manager or employer of an organization

5-7 Visit UMT online at © UMT 2004 MGT100 Visit UMT online at Version: Visit UMT online at Business and Managerial Ethics Managerial ethics are standards of behavior that guide individual managers in their work. Three broad categories: Behavior toward Employees Behavior toward the Organization Behavior toward Other Economic Agents

5-8 Visit UMT online at © UMT 2004 MGT100 Visit UMT online at Version: Visit UMT online at Steps in Making Ethical Judgments

Expanded Model of Ethical Judgment Making

5-10 Visit UMT online at © UMT 2004 MGT100 Visit UMT online at Version: Visit UMT online at Company Practices and Business Ethics Adopting Written Codes Many companies have written codes that formally announce their intent to do business in an ethical manner. Instituting Ethics Programs Ethical responses can be learned through experience.

5-11 Visit UMT online at © UMT 2004 MGT100 Visit UMT online at Version: Visit UMT online at Core Principles and Organizational Values

5-12 Visit UMT online at © UMT 2004 MGT100 Visit UMT online at Version: Visit UMT online at What Is Social Responsibility? The attempt of a business to balance its commitments to groups and individuals in its environment, including customers, other businesses, employees, investors and local communities

5-13 Visit UMT online at © UMT 2004 MGT100 Visit UMT online at Version: Visit UMT online at What Are Organizational Stakeholders? Those groups, individuals and organizations that are directly affected by the practices of an organization and who therefore have a stake in its performance

5-14 Visit UMT online at © UMT 2004 MGT100 Visit UMT online at Version: Visit UMT online at Major Corporate Stakeholders

5-15 Visit UMT online at © UMT 2004 MGT100 Visit UMT online at Version: Visit UMT online at Areas of Social Responsibility Responsibility Toward the Environment Responsibility Toward Customers Responsibility Toward Employees Responsibility Toward Investors

5-16 Visit UMT online at © UMT 2004 MGT100 Visit UMT online at Version: Visit UMT online at Responsibility Toward the Environment Controlling pollution—the injection of harmful substances into the environment—is a significant challenge to contemporary business. Air Pollution Water Pollution Land Pollution Toxic Waste Disposal Recycling

5-17 Visit UMT online at © UMT 2004 MGT100 Visit UMT online at Version: Visit UMT online at C02 Emissions, Past and Future

5-18 Visit UMT online at © UMT 2004 MGT100 Visit UMT online at Version: Visit UMT online at What Is Consumerism? Form of social activism dedicated to protecting the rights of consumers in their dealings with businesses

5-19 Visit UMT online at © UMT 2004 MGT100 Visit UMT online at Version: Visit UMT online at Basic Consumer Rights 1.Consumers have a right to safe products. 2.Consumers have a right to be informed about all relevant aspects of a product. 3.Consumers have a right to be heard. 4.Consumers have a right to choose what they buy. 5.Consumers have a right to be educated about purchases. 6.Consumers have a right to courteous service.

5-20 Visit UMT online at © UMT 2004 MGT100 Visit UMT online at Version: Visit UMT online at Unfair Pricing Collusion occurs when two or more firms agree to collaborate on such wrongful acts as price fixing Price gouging is a response to increased demand with overly steep price increases

5-21 Visit UMT online at © UMT 2004 MGT100 Visit UMT online at Version: Visit UMT online at Ethics in Advertising Food product labeling Misleading product claims Deceptive advertising Morally objectionable advertising

5-22 Visit UMT online at © UMT 2004 MGT100 Visit UMT online at Version: Visit UMT online at Legal and Social Commitments Businesses cannot practice illegal discrimination against people in any facet of the employment relationship. Businesses should provide employees with equal opportunities for reward and advancement without regard to race, sex or other irrelevant factors. Businesses should strive to ensure that the workplace is physically and socially safe.

5-23 Visit UMT online at © UMT 2004 MGT100 Visit UMT online at Version: Visit UMT online at What Is a Whistle-Blower? Employee who detects and tries to put an end to a company’s unethical, illegal or socially irresponsible actions by publicizing them

5-24 Visit UMT online at © UMT 2004 MGT100 Visit UMT online at Version: Visit UMT online at Responsibility Toward Investors Improper Financial Management Check Kiting Insider Trading Misrepresentation of Finances

5-25 Visit UMT online at © UMT 2004 MGT100 Visit UMT online at Version: Visit UMT online at Implementing Social Responsibility Programs Critics of socially responsible business oppose any business activity that threatens profits. Proponents of socially responsible business believe that corporations are citizens and should help to improve the lives of fellow citizens.

5-26 Visit UMT online at © UMT 2004 MGT100 Visit UMT online at Version: Visit UMT online at Approaches to Social Responsibility Obstructionist stance involves the firm doing as little as possible and may involve attempts to deny or cover up violations Defensive stance involves the firm meeting only minimum legal requirements in its commitments to groups and individuals in its social environment

5-27 Visit UMT online at © UMT 2004 MGT100 Visit UMT online at Version: Visit UMT online at Approaches to Social Responsibility Accommodative stance involves the firm, if specifically asked to do so, exceeding legal minimums in its commitments to groups and individuals in its social environment Proactive stance involves the firm actively seeking opportunities to contribute to the well being of groups and individuals in the firm’s social environment

5-28 Visit UMT online at © UMT 2004 MGT100 Visit UMT online at Version: Visit UMT online at Spectrum of Approaches to Social Responsibility

5-29 Visit UMT online at © UMT 2004 MGT100 Visit UMT online at Version: Visit UMT online at Top 15 Corporate Foundations

5-30 Visit UMT online at © UMT 2004 MGT100 Visit UMT online at Version: Visit UMT online at Establishing a Social Responsibility Program