McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 4-1 NickelsMcHughMcHugh Nickels Cover

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 4-2 Chapter 44 Demonstrating Ethical Behavior and Social Responsibility 4-2

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 4-3 Ethics  More Than Legality  Standards are Fundamental  Stem From Individual

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 4-4 Corporate Scandal Fines CompanyFineReason Arthur Andersen $500,000 Obstruction of Justice Shredding Enron Documents Citigroup$5,000,000 Analyst Issued Misleading Information Merrill Lynch $100,000,000 Conflict of Interest Between Investment Bank & Research Dept. Credit Suisse First Boston $100,000,000 IPO Shares Unfairly Distributed Source: Business Week, Nov. 4, 2002

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 4-5 Ethics Check Questions: ÔIs It Legal? ÔIs It Balanced? ÔHow Will It Make Me Feel About Myself?

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 4-6 Codes of Ethics Compliance- BasedCompliance- Based Integrity- BasedIntegrity- Based

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 4-7 Levels of Corporate Social Responsibility Societal Responsibility Stakeholder Responsibility Profit Responsibility Owners/Stockholders GeneralPublic Customers Employees Suppliers/Distributors EcologicalEnvironment Public Interest Groups Source: Marketing, 5/E by Berkowitz, Kerin, Hartley, and Rudelius.

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 4-8 Most Admired Companies by Industry  ApparelLevi-Strauss  AirlinesSouthwest  Food ServicesMcDonald’s  Food ProductsCampbell’s  BeveragesCoca-Cola  ElectronicsIntel Industry Company Source: Fortune Magazine

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved. 4-9 Merck Johnson & Johnson Pfizer Eli Lilly IBMMicrosoftIntel Bank of America $221.0* Source: The Taft Group * In Millions Corporate Annual Giving

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved Social Audit By CompanyBy Company Outside CompanyOutside Company Socially-Conscious InvestorsSocially-Conscious Investors EnvironmentalistsEnvironmentalists Union OfficialsUnion Officials CustomersCustomers

McGraw-Hill/Irwin Understanding Business, 7/e © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved International Ethics & Responsibility Ethics Not Unique To U.S.- Leaders Accountable Demand for Socially Responsible Behavior Inter-American Convention Against Corruption