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CHAPTER 3CHAPTER 3

The Corporation and The Corporation and Public Policy: Public Policy:

Expanding Expanding ResponsibilitiesResponsibilities

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CHAPTER 3CHAPTER 3

The Corporation and Public The Corporation and Public Policy: Expanding Policy: Expanding

Responsibilities and The Responsibilities and The First Step Towards First Step Towards

SuccsessSuccsess

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CHAPTER 3 ISSUESCHAPTER 3 ISSUES

What is the proper role of business What is the proper role of business in society?in society?

What criticisms can be raised What criticisms can be raised against the corporate community?against the corporate community?

What is corporate social What is corporate social responsibility? responsibility?

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QUESTION #1QUESTION #1

SS hould we “free” hould we “free” business from government business from government

intervention to achieve intervention to achieve greater productivity and greater productivity and

profit?profit?

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QUESTION #2QUESTION #2

Should business play a Should business play a larger role in politics, larger role in politics, education and other education and other

public-sector activities?public-sector activities?

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QUESTION #3QUESTION #3

Should business assume Should business assume greater responsibilities in greater responsibilities in

correcting societal ills?correcting societal ills?

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CORPORATE POWERCORPORATE POWER

Of the globe’s 100 largest Of the globe’s 100 largest economic entities, 51 are economic entities, 51 are corporations; only 49 are corporations; only 49 are

countries.countries.

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CORPORATE POWERCORPORATE POWER

The 300 largest global The 300 largest global corporations hold one-quarter corporations hold one-quarter

of the entire globe’s of the entire globe’s productive assets.productive assets.

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CORPORATE POWERCORPORATE POWER

Top 5 oil companies Top 5 oil companies revenue is almost equal to revenue is almost equal to the economic output of the the economic output of the

entire United Statesentire United States11 Trillion Dollars!!!11 Trillion Dollars!!!

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CORPORATE POWERCORPORATE POWER

72% of Americans say 72% of Americans say business has too much power business has too much power

over too many aspects of over too many aspects of American life.American life.

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SO THE QUESTION ISSO THE QUESTION IS

Who cares?Who cares?

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HAS AMERICA COMMITTED ITS HAS AMERICA COMMITTED ITS SOUL TO CORPORATE VALUES?SOUL TO CORPORATE VALUES?

Business values Business values

VsVs

Traditional humanist valuesTraditional humanist values

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CORPORATE WEALTH AND CORPORATE WEALTH AND POLITICS: LOBBYINGPOLITICS: LOBBYING

The business community The business community spent approximately $2.22 spent approximately $2.22

billionbillion

to influence Congress and to influence Congress and the White House in 2005the White House in 2005

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CORPORATE WEALTH ALSO CORPORATE WEALTH ALSO IMPACTS…IMPACTS…

SchoolsSchools Charitable organizationsCharitable organizations EntertainmentEntertainment ReligionReligion Sports, and Sports, and

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YES, EVENYES, EVEN

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CORPORATE SOCIAL CORPORATE SOCIAL RESPONSIBILITYRESPONSIBILITY

The question today is, should The question today is, should good business decisions good business decisions

include consideration not only include consideration not only of the welfare of the firm but of the welfare of the firm but

of society as a whole?of society as a whole?

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ANDAND

Just what is Just what is

““Corporate Social Corporate Social Responsibility”Responsibility”

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CORPORATE SOCIAL CORPORATE SOCIAL RESPONSIBILITYRESPONSIBILITY

When business assumes a When business assumes a measure of the burden for measure of the burden for

the welfare of the total the welfare of the total society.society.

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CORPORATE SOCIAL CORPORATE SOCIAL RESPONSIBILITY THEORYRESPONSIBILITY THEORY

Decision makers ( and you are Decision makers ( and you are future decision makers) are future decision makers) are

obligated to take actions which obligated to take actions which protect and improve the welfare protect and improve the welfare of society as a whole, along with of society as a whole, along with

your own interests and the your own interests and the interests of your employer.interests of your employer.

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BUTBUT

What about What about shareholder’s interests?shareholder’s interests?

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SOCIAL RESPONSIBILITY SOCIAL RESPONSIBILITY CONTINUUMCONTINUUM

Long term company interestTriple bottom

Line/sustainabilityProfit

maximization

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SOCIAL RESPONSIBILITY SOCIAL RESPONSIBILITY PYRAMIDPYRAMID

Discretionary/Philanthropic Responsibilities

Ethical Responsibilities

Legal Responsibilities

Economic Responsibilities

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RULES OF SOCIAL RULES OF SOCIAL RESPONSIBILITYRESPONSIBILITY

Follow these, and Follow these, and success is guaranteed success is guaranteed

for you and your for you and your company.company.

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PHILANTHROPICPHILANTHROPICRESPONSIBILITIESRESPONSIBILITIES

BE A GOOD CORPORATE CITIZEN.BE A GOOD CORPORATE CITIZEN.

Contribute resources to the Contribute resources to the community and improve the community and improve the

quality of life.quality of life.

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ETHICAL RESPONSIBILITIESETHICAL RESPONSIBILITIES

BE ETHICALBE ETHICAL

You have an obligation to do what You have an obligation to do what is right, just and fair. is right, just and fair.

Avoid harm.Avoid harm.

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LEGAL RESPONSIBILITIESLEGAL RESPONSIBILITIES

OBEY THE LAW!OBEY THE LAW!

Law is society’s codification of right Law is society’s codification of right and wrong.and wrong.

Play by the rules.Play by the rules.

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ECONOMIC RESPONSIBILITIESECONOMIC RESPONSIBILITIES

BE PROFITABLEBE PROFITABLE

Without profits, none of the above Without profits, none of the above is possible. is possible.

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STAKEHOLDERSSTAKEHOLDERS

To be successful today, To be successful today, management must take into management must take into consideration the needs of all consideration the needs of all

stakeholders.stakeholders.

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CORPORATE RESPONSIBILITY CORPORATE RESPONSIBILITY STANDARDSSTANDARDS

Be careful what you read and believe.

Know your source!

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EXPANDING RESPONSIBILITIES?EXPANDING RESPONSIBILITIES?

So, let us ask the So, let us ask the questions again:questions again:

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QUESTION #1QUESTION #1

SS hould we “free” hould we “free” business from government business from government

intervention to achieve intervention to achieve greater productivity and greater productivity and

profit?profit?

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QUESTION #2QUESTION #2

Should business play a Should business play a larger role in politics, larger role in politics, education and other education and other

public-sector activities?public-sector activities?

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QUESTION #3QUESTION #3

Should business assume Should business assume greater responsibilities in greater responsibilities in

correcting societal ills?correcting societal ills?