1. Business Ethics and Social Responsibility Chapter 2

2. LO 2.1 Explain the concepts of business ethics and social responsibility. LO 2.2 Describe the factors that influence business ethics. LO 2.3 Discuss how organizations shape ethical behaviour. Learning Objectives LO 2.4 Describe how businesses’ social responsibility is measured, and summarize the responsibilities of business to the general public, customers, and employees. LO 2.5 Explain why investors and the financial community are concerned with business ethics and social responsibility.

3. Business Ethics Business ethics: standards of conduct and moral values regarding right and wrong actions in the business environment  Often shaped by the organization’s ethical climate; social responsibility; balance between what’s right and what’s profitable  Often no clear-cut choices Concern for Ethical and Societal Issues

4. Sarbanes-Oxley Act and Bill 198 This U.S. act added oversight for the nation’s major companies and a special oversight board to regulate public accounting firms that audit the financial records of these corporations. The provisions of this act apply to Canadian companies trading on U.S. stock exchanges. Similar legislation has been enacted in Canada known as Bill 198 of 2003, which has come to be referred as “C-SOX” or the Canadian version of Sarbanes-Oxley. Concern for Ethical and Societal Issues

5. The Contemporary Ethical Environment High-profile investigations and arrests in headlines. Vast majority of businesses are ethical. New corporate officers charged with deterring wrongdoing and ensuring ethical standards.

6. Engage in traditional corporate philanthropy, which involves giving to worthy causes. Anticipate and manage risks. Identify opportunities to create value by doing the right thing. See how Walmart highlights corporate responsibility on its website.Walmart Business Approach to Ethics and Social Responsibility

7. A firm’s ability to behave ethically depends upon a. the ethical values of the firm’s executives. b. the ethical values of the firm’s employees. c. a climate within the organization that promotes ethical conduct. d. all of the above Test Your Knowledge

8. A firm’s ability to behave ethically depends upon a. the ethical values of the firm’s executives. b. the ethical values of the firm’s employees. c. a climate within the organization that promotes ethical conduct. d. all of the above Answer: D Test Your Knowledge

9. Individuals can make the difference in ethical expectations and behaviour. Putting own interests ahead of the organization Lying to other employees Misrepresenting hours Safety violations Internet abuse Technology is expanding the range and impact of unethical behaviour. Individuals Make a Difference

10. An individual’s stage in moral and ethical development is determined by many factors. Experiences Family Education Culture Religion Company environment Individuals have different styles for deciding moral dilemmas. Development of Individual Ethics

11. On-the-Job Ethical Dilemmas Situation in which a business decision may be influenced by personal gain. Employee’s disclosure of illegal, immoral, or unethical practices in the organization. Telling the truth and adhering to deeply felt ethical principles in business decisions. Businesspeople expect employees to be loyal, but ethical conflicts may arise if the truth about a company is not favourable.

12. How Organizations Shape Ethical Conduct

13. Ethical Awareness Code of Conduct: Formal statement that defines how the organization expects and requires employees to resolve ethical questions. Johnson & Johnson credo Air Canada code of conduct

14. Ethical Education Codes of conduct cannot detail a solution for every ethical situation, so corporations provide training in ethical reasoning.

15. Ethical Action Helping employees recognize and reason through ethical problems and turning them into ethical actions. TI Ethics Quick Test

16. Ethical Leadership Executives must demonstrate ethical behaviour in their actions. use clear, explicit language rather than euphemisms for corrupt behaviour encourage behaviour that generates and fosters ethical values practise moral absolutism, insisting on doing right even if it proves financially costly

17. Acting Responsibly to Satisfy Society Social Responsibility Management’s consideration of profit, consumer satisfaction, and societal well-being of equal value in evaluating the firm’s performance. Contributions to the overall economy, job opportunities, and charitable contributions and service. Organizations measure through social audits. Starbucks reduces environmental impact

18. Business’s Social Responsibilities

19. Responsibilities to the General Public Public Health Issues. What to do about inherently dangerous products such as alcohol, tobacco, vaccines, and steroids. Protecting the Environment. Using resources efficiently, minimizing pollution. Green marketing Sustainability Developing the Quality of the Workforce. Enhancing quality of the overall workforce through education and diversity initiatives. Corporate Philanthropy. Cash contributions, donations of equipment and products, and supporting the volunteer efforts of company employees.

20. What is green marketing? a. A marketing strategy that promotes environmentally safe products and production methods b. A colour-coded market strategy designed to improve employee morale c. A marketing strategy that promotes environmentally questionable products and production methods d. None of the above Test Your Knowledge

21. What is green marketing? a. A marketing strategy that promotes environmentally safe products and production methods b. A colour-coded market strategy designed to improve employee morale c. A marketing strategy that promotes environmentally questionable products and production methods d. None of the above Answer: A Test Your Knowledge

22. Responsibilities to Customers Ability of consumers to express legitimate complaints to the appropriate parties. Ability of consumers to choose the products and services they want. Safe operation of products, avoiding product liability. Avoiding false or misleading advertising and providing effective customer service.

23. Responsibilities to Employees Workplace Safety. Managed mostly at the provincial level by organizations such as the Workplace Safety & Insurance Board in Ontario and the Workers’ Compensation Board of Alberta. Quality-of-Life Issues. Balancing work and family through flexible work schedules, subsidized child care. Canada's Top Family Friendly EmployersCanada's Top Family Friendly Employers Ensuring Equal Opportunity on the Job. Providing equal opportunities to all employees without discrimination regarding age, sexual orientation, physical disabilities, etc.; regulated by the Canadian Human Rights Commission.Canadian Human Rights Commission Sexual Harassment and Sexism. Avoiding unwelcome actions of a sexual nature; equal pay for equal work without regard to gender.

24. Responsibilities to Investors Obligation to make profits for shareholders. Expectation of ethical and moral behaviour. Protection of investors by provincial regulators such as the Ontario Securities Commission and the Alberta Securities Commission.