Copyright © 2003 by South-Western. All Rights Reserved. CHAPTER TWO ACHIEVING BUSINESS SUCCESS BY DEMONSTRATING ETHICAL BEHAVIOR AND SOCIAL RESPONSIBILITY Text by Profs. Gene Boone & David Kurtz Multimedia Presentation by Prof. Milton Pressley The University of New Orleans

Copyright © 2003 by South-Western. All Rights Reserved. Explain the concepts of business ethics and social responsibility Explain the concepts of business ethics and social responsibility Describe the factors that influence business ethics Describe the factors that influence business ethics List the stages in the development of ethical standards List the stages in the development of ethical standards Identify common ethical dilemmas in the workplace Identify common ethical dilemmas in the workplace Discuss how organizations shape ethical behavior Discuss how organizations shape ethical behavior LEARNING GOALS

Copyright © 2003 by South-Western. All Rights Reserved. Relate the ways government regulation affects business ethics and social responsibility Relate the ways government regulation affects business ethics and social responsibility Describe how businesses’ social responsibility is measured Describe how businesses’ social responsibility is measured Summarize the responsibilities of business to the general public, customers, and employees Summarize the responsibilities of business to the general public, customers, and employees Explain why investors and the financial community are concerned with business ethics and social responsibility Explain why investors and the financial community are concerned with business ethics and social responsibility LEARNING GOALS

Copyright © 2003 by South-Western. All Rights Reserved. CONCERN FOR ETHICAL AND SOCIETAL ISSUES Business ethics: standards of business conduct and moral values Business ethics: standards of business conduct and moral values

Copyright © 2003 by South-Western. All Rights Reserved. Figure 2.1: Forces Shaping Business Ethics and Social Responsibility

Copyright © 2003 by South-Western. All Rights Reserved. INDIVIDUAL BUSINESS ETHICS Development of Individual Ethics Development of Individual Ethics Figure 2.2: Stages of Moral and Ethical Development

Copyright © 2003 by South-Western. All Rights Reserved. Figure 2.3: Common Business Ethical Challenges On-the-Job Ethical Dilemmas

Copyright © 2003 by South-Western. All Rights Reserved. On-the-Job Ethical Dilemmas Conflict of interest: situation in which a business decision may be influenced by the potential for personal gain Conflict of interest: situation in which a business decision may be influenced by the potential for personal gain Honesty and Integrity Honesty and Integrity Honest employee tells the truth Honest employee tells the truth Employee with integrity adheres to deeply felt ethical principals in business situations Employee with integrity adheres to deeply felt ethical principals in business situations © PhotoDisc

Copyright © 2003 by South-Western. All Rights Reserved. On-the-Job Ethical Dilemmas Loyalty Versus Truth Loyalty Versus Truth Unfavorable Truth can cause ethical conflict Unfavorable Truth can cause ethical conflict If so, employees may have to decide between loyalty and truthfulness If so, employees may have to decide between loyalty and truthfulness Whistle-Blowing: employee’s disclosure to the media or government authorities of illegal, immoral, or unethical practices of the organization Whistle-Blowing: employee’s disclosure to the media or government authorities of illegal, immoral, or unethical practices of the organization

Copyright © 2003 by South-Western. All Rights Reserved. HOW ORGANIZATIONS SHAPE ETHICAL CONDUCT Figure 2.4: Structure of an Ethical Environment

Copyright © 2003 by South-Western. All Rights Reserved. HOW ORGANIZATIONS SHAPE ETHICAL CONDUCT Ethical Awareness Ethical Awareness Code of Conduct: formal statement that defines how the organization expects and requires employees to resolve ethical questions Code of Conduct: formal statement that defines how the organization expects and requires employees to resolve ethical questions Ethical Reasoning Ethical Reasoning Sorting through several options to arrive at suitable decision Sorting through several options to arrive at suitable decision © PhotoDisc

Copyright © 2003 by South-Western. All Rights Reserved. HOW ORGANIZATIONS SHAPE ETHICAL CONDUCT Ethical Action Ethical Action Providing structures and approaches that allow decisions to be turned into ethical actions Providing structures and approaches that allow decisions to be turned into ethical actions Ethical Leadership Ethical Leadership Ethical behavior demonstrated by executives – especially in extreme or emergency situations Ethical behavior demonstrated by executives – especially in extreme or emergency situations © PhotoDisc

Copyright © 2003 by South-Western. All Rights Reserved. CONTROLLING BUSINESS BEHAVIOR THROUGH GOVERNMENT REGULATION Not all companies voluntarily behave ethically and responsibly Not all companies voluntarily behave ethically and responsibly © PhotoDisc

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Regulated industry: Industry in which competition is either limited or eliminated, and government monitoring substitutes for market control Regulation of Competition © PhotoDisc CONTROLLING BUSINESS BEHAVIOR THROUGH GOVERNMENT REGULATION

Copyright © 2003 by South-Western. All Rights Reserved. Many laws enacted during past 40 years Federal and states regulate businesses and practices Regulation of Competition Consumer Protection © PhotoDisc CONTROLLING BUSINESS BEHAVIOR THROUGH GOVERNMENT REGULATION

Copyright © 2003 by South-Western. All Rights Reserved. Deregulation: regulatory trend toward elimination of legal restraints on competition Has created considerable controversy Latest industry undergoing deregulation is the electric utility industry Regulation of Competition Consumer Protection Deregulation © PhotoDisc CONTROLLING BUSINESS BEHAVIOR THROUGH GOVERNMENT REGULATION

Copyright © 2003 by South-Western. All Rights Reserved. Internet remains a frontier for regulation Regulation of Web-based business is difficult since the Internet is a borderless market Regulation will require global cooperation Children’s On-line Privacy Protection Act attempts to protect the privacy of children Regulation of Competition Consumer Protection Deregulation Government Regulation of Cyberspace © PhotoDisc CONTROLLING BUSINESS BEHAVIOR THROUGH GOVERNMENT REGULATION

Copyright © 2003 by South-Western. All Rights Reserved. ACTING RESPONSIBLY TO SATISFY SOCIETY Social Responsibility: management’s acceptance of the obligation to consider profit, consumer satisfaction, and societal well-being of equal value in evaluating the firm’s performance Social Responsibility: management’s acceptance of the obligation to consider profit, consumer satisfaction, and societal well-being of equal value in evaluating the firm’s performance © PhotoDisc

Copyright © 2003 by South-Western. All Rights Reserved. Figure 2.5 Anheuser-Busch: Encouraging Responsible Sales of Alcoholic Beverages

Copyright © 2003 by South-Western. All Rights Reserved. ACTING RESPONSIBLY TO SATISFY SOCIETY Social Audits: formal procedures that identify and evaluate all company activities relate to social issues such as conservation, employment practices, environmental protection, and philanthropy Social Audits: formal procedures that identify and evaluate all company activities relate to social issues such as conservation, employment practices, environmental protection, and philanthropy © PhotoDisc

Copyright © 2003 by South-Western. All Rights Reserved. ACTING RESPONSIBLY TO SATISFY SOCIETY Figure 2.6 Responsibilities of Business

Copyright © 2003 by South-Western. All Rights Reserved. ACTING RESPONSIBLY TO SATISFY SOCIETY Responsibilities to the General Public © PhotoDisc Corporate philanthropy: corporate support of charitable and social causes and organizations that work toward the greater public good Corporate philanthropy: corporate support of charitable and social causes and organizations that work toward the greater public good Corporations giving back to the communities in which they earn profits Corporations giving back to the communities in which they earn profits

Copyright © 2003 by South-Western. All Rights Reserved. Figure 2.7 Business Responsibilities to the General Public

Copyright © 2003 by South-Western. All Rights Reserved. © PhotoDisc ACTING RESPONSIBLY TO SATISFY SOCIETY Public Health Issues Public Health Issues One of the most complex issues facing business One of the most complex issues facing business What should businesses do about products that are inherently dangerous What should businesses do about products that are inherently dangerous Tobacco Tobacco Alcohol Alcohol Handguns Handguns Responsibilities to the General Public © PhotoDisc

Copyright © 2003 by South-Western. All Rights Reserved. ACTING RESPONSIBLY TO SATISFY SOCIETY Protecting the Environment Protecting the Environment Minimizing pollution and other environmental damage is an important economic, legal, and social issue Minimizing pollution and other environmental damage is an important economic, legal, and social issue Recycling: reprocessing of used materials for reuse Recycling: reprocessing of used materials for reuse Responsibilities to the General Public © PhotoDisc

Copyright © 2003 by South-Western. All Rights Reserved. Figure 2.8 FTC Guidelines for Environmental Claims in Green Marketing

Copyright © 2003 by South-Western. All Rights Reserved. ACTING RESPONSIBLY TO SATISFY SOCIETY Developing the Quality of the Workforce: Developing the Quality of the Workforce: Country’s true wealth lies in its people Country’s true wealth lies in its people Educated, skilled workforce provides the intellectual know-how required to compete globally Educated, skilled workforce provides the intellectual know-how required to compete globally U.S. firms must assume more responsibility for enhancing workforce quality U.S. firms must assume more responsibility for enhancing workforce quality Responsibilities to the General Public © PhotoDisc

Copyright © 2003 by South-Western. All Rights Reserved. Figure 2.9 Wemedia.com and HotJobs.com: Partnering to Encourage Hiring People with Disabilities

Copyright © 2003 by South-Western. All Rights Reserved. ACTING RESPONSIBLY TO SATISFY SOCIETY Corporate Philanthropy: act of an organization giving something back to the communities in which it earns profits Corporate Philanthropy: act of an organization giving something back to the communities in which it earns profits Responsibilities to the General Public © PhotoDisc

Copyright © 2003 by South-Western. All Rights Reserved. ACTING RESPONSIBLY TO SATISFY SOCIETY Business have a social and ethical responsibility to treat customers fairly and to not harm them Business have a social and ethical responsibility to treat customers fairly and to not harm them Consumerism: public demand that a business consider the wants and needs of its customers in making decisions Consumerism: public demand that a business consider the wants and needs of its customers in making decisions Responsibilities to the General Public Responsibilities to Customers

Copyright © 2003 by South-Western. All Rights Reserved. Figure 2.10: Consumer Rights* *These frequently quoted consumer rights were first stated by President John F. Kennedy in 1962

Copyright © 2003 by South-Western. All Rights Reserved. ACTING RESPONSIBLY TO SATISFY SOCIETY Right to Be Safe Right to Be Safe Consumers should feel assured that what they purchase will not harm them in normal use Consumers should feel assured that what they purchase will not harm them in normal use Right to Be Informed Right to Be Informed Consumers should have enough access to education and product information to make responsible buying decisions Consumers should have enough access to education and product information to make responsible buying decisions Responsibilities to the General Public Responsibilities to Customers

Copyright © 2003 by South-Western. All Rights Reserved. Figure 2.11: Wacky Warning Labels* *Product liability lawsuits have caused firms to become more careful about including warnings on products including a few who may have gone overboard, as demonstrated by these actual product warning labels

Copyright © 2003 by South-Western. All Rights Reserved. ACTING RESPONSIBLY TO SATISFY SOCIETY The Right to Choose The Right to Choose To select which goods and services they want and need to purchase To select which goods and services they want and need to purchase The Right to Be Heard The Right to Be Heard Should be able to express legitimate complaints to appropriate parties Should be able to express legitimate complaints to appropriate parties Responsibilities to the General Public Responsibilities to Customers

Copyright © 2003 by South-Western. All Rights Reserved. ACTING RESPONSIBLY TO SATISFY SOCIETY Responsibilities to Employees Responsibilities to Employees Workplace Safety is much improved over the last century Workplace Safety is much improved over the last century However, much remains to be done However, much remains to be done Responsibilities to the General Public Responsibilities to Customers Responsibilities to Employees

Copyright © 2003 by South-Western. All Rights Reserved. Figure 2.12 Rates of Workplace Injuries and Illnesses

Copyright © 2003 by South-Western. All Rights Reserved. ACTING RESPONSIBLY TO SATISFY SOCIETY Quality of Life Issues Quality of Life Issues Balancing work and family responsibilities Balancing work and family responsibilities Ensuring Equal Opportunity on the Job Ensuring Equal Opportunity on the Job Challenges of an increasingly diverse workforce Challenges of an increasingly diverse workforce Responsibilities to the General Public Responsibilities to Customers Responsibilities to Employees

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ACTING RESPONSIBLY TO SATISFY SOCIETY Sexual Harassment and Sexism Sexual Harassment and Sexism Sexual Harassment: inappropriate actions of a sexual nature in the workplace Sexual Harassment: inappropriate actions of a sexual nature in the workplace Sexism: discrimination against members of either sex Sexism: discrimination against members of either sex Responsibilities to the General Public Responsibilities to Customers Responsibilities to Employees

Copyright © 2003 by South-Western. All Rights Reserved. ACTING RESPONSIBLY TO SATISFY SOCIETY Fundamental Goal of any business is to make a profit Fundamental Goal of any business is to make a profit But,business must behave ethically as well as legally But,business must behave ethically as well as legally Responsibilities to the General Public Responsibilities to Customers Responsibilities to Employees Investors & the Financial Community © PhotoDisc

Copyright © 2003 by South-Western. All Rights Reserved. WHAT’S AHEAD Discussion of the broad economic issues influencing businesses around the globe that pose both challenges and opportunities Discussion of the broad economic issues influencing businesses around the globe that pose both challenges and opportunities Supply and demand Supply and demand Unemployment Unemployment Inflation Inflation Government monetary policies Government monetary policies © PhotoDisc