2. PowerPoint Presentation by Charlie Cook Copyright © 2005 Prentice Hall, Inc. All rights reserved. Chapter 2 Conducting Business Ethically and Responsibly

3. Copyright © 2005 Prentice Hall, Inc. All rights reserved.2–2 “The more I help others to succeed, the more I succeed.” — Ray Kroc, Founder, McDonald’s

4. Copyright © 2005 Prentice Hall, Inc. All rights reserved.2–3 Key Topics Individual codes of ethics and the importance of ethics in the workplace Key terms  Social responsibility in U.S. business  Environmental issues and stakeholder relationships  Approaches and implementation  Implications for small business

5. Copyright © 2005 Prentice Hall, Inc. All rights reserved.2–4 What Is Ethical Behavior? Ethics  Right and wrong, good and bad, in actions that affect others Ethical Behavior  Conforming to generally accepted ethical norms

6. Copyright © 2005 Prentice Hall, Inc. All rights reserved.2–5 Ethical Considerations Regarding a particular act…  Utility: Does it optimize what is best for those who are affected by it?  Rights: Does it respect the rights of the individuals involved?  Justice: Is it consistent with what we regard as fair?  Caring: Is it consistent with people’s responsibilities to each other?

7. Copyright © 2005 Prentice Hall, Inc. All rights reserved.2–6 Expanded Model of Ethical Judgment Making Figure 2–2 Gather the facts concerning the act or policy Is the act or policy acceptable according to the four ethical norms? Utility: Does it optimize the satisfaction of all constituencies? Utility: Does it optimize the satisfaction of all constituencies? Rights: Does it respect the rights and duties of the individuals involved? Rights: Does it respect the rights and duties of the individuals involved? Justice: Is it consistent with the canons of justice? Justice: Is it consistent with the canons of justice? Caring: Is it consistent with the responsibility to care? Caring: Is it consistent with the responsibility to care? Is there any reason for overriding one or two of the ethical norms? Is one ethical norm more important than the others? Is there any reason why a person may have been forced into committing an act or following a policy? No on all criteria No on one or two criteria Yes on all criteria The act or policy is not ethical. The act or policy is ethical. No Yes Data Gathering Analysis Judgment

8. Copyright © 2005 Prentice Hall, Inc. All rights reserved.2–7 The Coca Cola Scare Case Company Practices and Business Ethics Best Approach: Open, Honest, Responsive! The Tylenol Scare Case

9. Copyright © 2005 Prentice Hall, Inc. All rights reserved.2–8 How Much Privacy Does Your Employer Owe You? Email Internet Cellular Phones

10. Copyright © 2005 Prentice Hall, Inc. All rights reserved.2–9 Formalizing the Commitment to Ethics Adopting Written Codes Instituting Ethics Programs

11. Copyright © 2005 Prentice Hall, Inc. All rights reserved.2–10 Social Responsibility: Balancing Commitments to Stakeholders Stakeholders  Groups, individuals, and organizations that are directly affected by the practices of an organization EmployeesInvestors Local Communities CustomersSuppliers CORPORATION

12. Copyright © 2005 Prentice Hall, Inc. All rights reserved.2–11 Responsibility Toward the Environment Air pollution Water pollution Land pollution  Toxic waste  Recycling

13. Copyright © 2005 Prentice Hall, Inc. All rights reserved.2–12 Responsibility Toward Customers Consumer Rights Unfair Pricing Ethics in Advertising

14. Copyright © 2005 Prentice Hall, Inc. All rights reserved.2–13 Responsibility Toward Employees Legal and Social Commitments Whistle-blowers

15. Copyright © 2005 Prentice Hall, Inc. All rights reserved.2–14 Responsibility Toward Investors Improper financial management Check kiting Insider trading Misrepresentation of finances

16. Copyright © 2005 Prentice Hall, Inc. All rights reserved.2–15 Level of Social Responsibility Approaches to Social Responsibility DefensiveStance ObstructionistStance AccommodativeStance ProactiveStance Lowest Highest Actively Avoids Responsibility Does Legal Minimum Responds to Requests Actively Seeks Opportunities to Contribute

17. Copyright © 2005 Prentice Hall, Inc. All rights reserved.2–16 Ethics, Social Responsibility, and the Small Business Do small businesses face different issues with regard to ethics and social responsibility?

18. Copyright © 2005 Prentice Hall, Inc. All rights reserved.2–17 Chapter Review Discuss how individuals develop their personal codes of ethics. Explain why ethics matter in the workplace. Distinguish social responsibility from ethics. Show how social responsibility applies to environmental issues and to relationships with customers, employees, and investors. Identify four approaches to social responsibility. Describe the four steps a firm must take to implement a social responsibility program. Explain how social responsibly and ethics affect small business.