1. Copyright by Paradigm Publishing, Inc. INTRODUCTION TO BUSINESS CHAPTER 2 Business Ethics and Social Responsibility

2. The Elevator “Pitch” Covering your bases  Management  Marketing  Accounting/Financing  The “Pitch”

3. Sustainability www.pdx.edu/sustainability Sustainability means meeting the economic, social, and environmental needs of the present without compromising the similar needs of future generations.

4. Ethical Question You were in a hurry and stopped by Seattle’s Best for a coffee and muffin to eat for breakfast. You waited in line ten minutes. When you got your order you handed the clerk $10. You left, and it was not until a block away that you noticed the cashier gave you back change for $20. Do you – A. Go back and give the $10 back immediately B. Plan on doing it later, or the next day C. Keep the money How do “ethic’s” and corporate responsibility overlap?

5. Copyright by Paradigm Publishing, Inc. Outline - Responsibilities of Firms To their customers. To their employees. To their stockholders. To their creditors. To the environment. To their communities.

6. Copyright by Paradigm Publishing, Inc. Responsibility to Customers Responsible Production Practices Social responsibility: a firm’s recognition of how its business decisions can affect society. Responsible Sales Practices How Firms Ensure Responsibility toward Customers Business responsibilities: a set of obligations and duties regarding product quality and treatment of customers, employees, and owners that a firm should fulfill when conducting business.

7. Copyright by Paradigm Publishing, Inc. Responsibility to Customers

8. Copyright by Paradigm Publishing, Inc. Responsibility to Customers 1. Establish a Code of Responsibilities 2. Monitor Complaints 3. Obtain and Utilize Customer Feedback

9. Copyright by Paradigm Publishing, Inc. Responsibility to Customers Role of Consumerism Consumerism: The collective demand by consumers that businesses satisfy their needs. Role of the Government Regulation of product safety Regulation of advertising Regulation of industry competition Monopoly: A firm that is the sole provider of goods or services.

10. Copyright by Paradigm Publishing, Inc. Responsibility to Employees Employee Safety Protected Classes Proper Treatment by Other Employees Starbucks has established a code of conduct for its employees. Diversity Prevention of Sexual Harassment Sexual Harassment: Unwelcome comments or actions of a sexual nature.

11. Copyright by Paradigm Publishing, Inc. Responsibility to Employees Proportion of Women and Minorities in Various Occupations

12. Copyright by Paradigm Publishing, Inc. Responsibility to Employees How Firms Ensure Their Responsibility Code of Responsibility Grievance Policy Job Satisfaction Conflict with Employee Responsibility How the Government Ensures Responsibility to Employees

13. Copyright by Paradigm Publishing, Inc. Responsibility to Stockholders How Firms Ensure Responsibility to Stockholders Align compensation with firm value Conflict of interests How the Government Ensures Responsibility Sarbanes-Oxley Act

14. Responsibility to Stockholders Enron CEO Ken Lay is led away in handcuffs by FBI agents after Enron was charged with providing misleading information to its investors. Copyright by Paradigm Publishing, Inc.

15. Responsibility to Stockholders How Stockholders Ensure Responsibility Shareholder activism Institutional investors Conflict with excessive executive compensation

16. Business executives are commonly required to meet with representatives of financial institutions that provided funding to the business. They are frequently asked to explain why their business performance was weaker than expected. Copyright by Paradigm Publishing, Inc.

17. Copyright 2010 by Paradigm Publishing, Inc. Responsibility to Creditors How Some Firms Violate Their Responsibility Firms mislead creditors when they provide misleading financial information.

18. Copyright by Paradigm Publishing, Inc. Responsibility to the Environment Air Pollution Firms reduced air pollution by refining their production processes. Government guidelines reduced air pollution. Land Pollution Conflict with Environment Responsibility Firms incur expenses when they reduce pollution, which could reduce profits for the owners.

19. Firms like the paper factory shown here are supposed to meet various emission standards so that they do not cause air pollution. They need to be monitored by the Environmental Protection Agency to ensure that they meet the standards. Copyright by Paradigm Publishing, Inc.

20. Responsibility to the Community Serving the Community and Stockholders Maximizing social responsibility may conflict with the goal of maximizing a firm’s profits for its owners. Firms seek a compromise in which they invest in the community in ways that may ultimately increase their reputation and, therefore, sales.

21. Conflict Among Responsibilities CommunitiesEmployees Environment Stockholders Creditors Customers

22. Activity Not much RANGE for this Manager Answer the three questions at the end of the case List the Stakeholder groups – Employees, Owners, Customers, Government, Community