1. Ch. 24: Social and Ethical Responsibility

2. Social Responsibility  What is Social Responsibility?  More than running your enterprise responsibility every day  Companies should contribute to the welfare of society and not be devoted solely to profits  Contract with Society  Make safe products, treat customers and employees well, & Run Honestly

3. Social Responsibility  What is Social Responsibility?  More than just Philanthropy  Making charitable donations to improve human welfare  Responsibility to Customers  No Misleading (Quality, Performance, Safety)  Free Market Protects Consumers  Truth in Lending Act - Inform  The Fair Credit Billing Act – Complaints  Customer Service = Competitive Advantage

4. Social Responsibility  What is Social Responsibility?  Responsibility to the Environment  Demonstrate to customers that they are environmentally responsible  Environmental Protection Agency (EPA - 1970)  Independent Federal Agency – Coordinate programs and enforce regulations aimed at reducing pollution and protecting the environment  Business and the Environment  May mean higher costs, but the company can also charge higher prices

5. Contributing to the Community  What is Social Responsibility?  Employer– Happy Employees = Productive  Offer Flex Time  Health Care  Assistance to Physically Challenged  Employees  Honest  Trustworthy  Integrity

6. What Does it Mean to be Ethical  Ethics  Guidelines for human behavior  The Moral code by which people live and conduct business  Help people determine how to act where moral issues are involved  Understanding your Values  6 Basic Values  Trustworthiness, Respect, Responsibility, Fairness, Caring, and Citizen

7. What Does it Mean to be Ethical  Business Ethics  Study of Behavior and Morals in Business Situations  Begin at the Top  Bosses/Owners who act unethically cannot expect employees to act ethically  Difference in Ethics  Not everyone has high ethical standards  Develop Clear Policies for what IS and what IS NOT Accepted

8. Developing Code of Ethics  Code of Ethics  Ethical Behavioral Guidelines that govern day to day activities or a profession or organization  Helps to defend the company against criminal action  Company does not condone actions of employees  Written or Unwritten  Typically grow from unwritten to written  As # of employees grow, so to does misunderstandings - YUMATSU

9. Developing Code of Ethics  Code of Ethics – 4 Steps  1. Brainstorm Ethical Dilemmas  Problems the company might face due to the type of business  2. Discuss Potential Solutions  Suggestions on how to handle situations  Understand different cultures and values  3. Write Set of General Guidelines  Range of Acceptable ways to deal with situations  4. Improve Your Code

10. Special Problems for Entrepreneurs  Conflict of Interest  Clash between a person’s private interest and his/her responsibilities in a position of trust  Desperate Measures  Live by one’s code of ethics no matter how difficult that might be  Cultural Differences  Understand the ethical expectations of the country’s culture  What is permitted by Law

11. Special Problems for Entrepreneurs  Bribes  Payments to secure special services – ILLEGAL in US  Patent or Copyright Infringement  Long Term Vs Short Term  Acting unethically may create short term profits but long term problems  Integrity and Reputation will keep customers coming back