1. Chapter 1 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1 Lamb, Hair, McDaniel CHAPTER 3 Ethics and Social Responsibility 2012-2013 © Quayside/Shutterstock.com 1 © 2013 by Cengage Learning Inc. All Rights Reserved.

2. 4 Learning Outcomes 12 3 Explain the concept of ethical behavior Describe ethical behavior in business Discuss corporate social responsibility Explain cause-related marketing 2 © 2013 by Cengage Learning Inc. All Rights Reserved.

3. The Concept of Ethical Behavior Explain the concept of ethical behavior 1 3 © 2013 by Cengage Learning Inc. All Rights Reserved.

4. Ethical Behavior The moral principles or values that generally govern the conduct of an individual or a group. Example: There is no law for “cutting in line.” Cutting in line would anger most other people. 1 4 © 2013 by Cengage Learning Inc. All Rights Reserved.

5. Describe ethical behavior in business 5 © 2013 by Cengage Learning Inc. All Rights Reserved. 2 Ethical Behavior in Business

6. Ethics Morals The moral principles or values that generally govern the conduct of an individual. The rules people develop as a result of cultural values and norms. Morals involve “good” and “bad” as well as “deviant” behaviors 6 © 2013 by Cengage Learning Inc. All Rights Reserved. 2

7. Ethical Development Levels Preconventional Morality Conventional Morality Postconventional Morality More Mature More Childlike Based on what will be punished or rewarded Self-centered, calculating, selfish Moves toward the expectations of society Concerned over legality and the opinion of others Concern about how they judge themselves Concern if it is right in the long run 7 © 2013 by Cengage Learning Inc. All Rights Reserved. 2

8. Dell: An Ethics Case Documents from a lawsuit revealed that Dell shipped over 11.8 million faulty computers between 2003 and 2005. An internal investigation revealed extensive problems, but Dell tried to cover up the problem, telling its sales team not to mention bring it up. Dell at times used faulty components to fix broken computers. Dell took a $300 million charge to fix the computers, but only in response to stakeholder demands. At what level of ethical development is Dell operating? 8 © 2013 by Cengage Learning Inc. All Rights Reserved.

9. Ethical Decision Making Influential Factors Extent of Problems Top Management Actions Potential Consequences Social Consensus Probability of Harm Time Until Consequences Number Affected 9 © 2013 by Cengage Learning Inc. All Rights Reserved. 2

10. Creating Ethical Guidelines A Code of Ethics: Helps identify acceptable business practices Helps control behavior internally Avoids confusion in decision making Facilitates discussion about right and wrong © iStockphoto.com/Steve Cady 10 © 2013 by Cengage Learning Inc. All Rights Reserved. 2

11. Ethics in Other Countries Prohibits U.S. corporations from making illegal payments to foreign officials. Has been criticized for putting U.S. businesses at a disadvantage. Has encouraged some countries to implement their own anti-bribery laws. Foreign Corrupt Practices Act (FCPA) 11 © 2013 by Cengage Learning Inc. All Rights Reserved. 2

12. Corporate Social Responsibility Discuss corporate social responsibility 12 © 2013 by Cengage Learning Inc. All Rights Reserved. 3

13. Corporate Social Responsibility Pros It is the right thing to do Businesses have the resources to devote to fixing social problems Prevents government regulation and potential fines It can be profitable Cons Takes focus away from making profits Business executives spend shareholder money on environmental initiatives © 2013 by Cengage Learning Inc. All Rights Reserved. 13 3

14. Sustainability Socially responsible companies will outperform their peers. It is in business’s best interest to find ways to attack society’s ills. 14 © 2013 by Cengage Learning Inc. All Rights Reserved. 3

15. Exhibit 3.1 Pyramid of Corporate Social Responsibility 15 © 2013 by Cengage Learning Inc. All Rights Reserved.

16. Growth of Social Responsibility According to a recent study, the percentage of firms that consider social responsibility factors when making business decisions: Brazil 62% 54% Canada Australia 52% 47% United States India 38% 35% China Mexico 26% 16 © 2013 by Cengage Learning Inc. All Rights Reserved. 3

17. Green Marketing The development and marketing of products designed to minimize negative effects on the environment or improve the environment. –Environmentally aware customers pay more for products –Companies must try to educate customers of environmental benefits 17 © 2013 by Cengage Learning Inc. All Rights Reserved. 3

18. 18 Cause-Related Marketing Explain cause-related marketing 4

19. Cause-Related Marketing For-profit and non-profit organizations cooperate to generate funds.  generates about $7 billion annually  Too many causes cause customer cause fatigue © 2013 by Cengage Learning Inc. All Rights Reserved. 19 4

20. Chapter 3 Videos Method – Social Responsibility, Ethics, and the Marketing Environment Does method have a societal marketing orientation, or is it just a market-oriented company that integrates a number of environmental practices into its operation? Explain http://www.cengage.com/marketing/book_c ontent/1439039429_lamb/company_clips/ch 03.html 20 © 2013 by Cengage Learning Inc. All Rights Reserved.