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4 Business Ethics and Social Responsibility: Doing Well by Doing Good

Define ethics and explain the concept of universal ethical standards

Describe business ethics and ethical dilemmas

Discuss how ethics relates to both the individual and the organization

Define social responsibility and examine the impact on stakeholder groups

Explain the role of social responsibility in the global arena

Describe how companies evaluate their efforts to be socially responsible

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Ethics

￭ Sets of beliefs about right and wrong, good and bad￭ Challenge - Forming broad

agreement on specific ethical standards People come from diverse

backgrounds

￭ Legal actions can be unethical￭ Not all actions have ethical

implications3©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Exhibit 4.1 - Legal-Ethical Matrix

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Exhibit 4.2 - Universal Ethical Standards

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Source: © 2009 Josephson Institute. Reprinted from the Josephson Institute’s Report Card on the Ethicsbof American Youth Summary with permission.

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Ethics and its Connections

￭ Business ethics: Application of right and wrong, good and bad, in a business setting￭ Ethical dilemma: Decision that

involves a conflict of values

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Ethics and its Connections

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Understanding Social Responsibility

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Exhibit 4.3 - Ethics at Work: How Would You Judge the Actions of These Business

Leaders?

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Key Elements of a Strong Culture

￭ Exhibition of ethical actions at all levels of an organization￭ Accountability for actions

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Code of Ethics

Defines the ethical standards of an organization and gives employees the information they need to make ethical decisions across a range of situations￭In multinational companies:

It lays out unifying values and priorities for divisions that are rooted in different cultures

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Steps to Maintain Code of Ethics

￭ Get executive buy-in and commitment to follow-through￭ Establish expectations for ethical

behavior at all levels of the organization￭ Integrate ethics into mandatory

staff training￭ Ensure that the ethics code is

both global and local in scope12©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Steps to Maintain Code of Ethics

￭ Build and maintain a clear, trusted reporting structure for ethical concerns and violations￭ Establish protection for whistle-

blowers Whistle-blowers: People who report

illegal or unethical behavior

￭ Enforce the code of ethics

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Exhibit 4.4 - The Spectrum of Social Responsibility

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Social Responsibility: Stakeholder Groups

￭ Social responsibility: Obligation of a business to contribute to society￭ Stakeholders: Groups that have a

stake in the performance and actions of an organization

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Responsibility to Employees

￭ Employers must comply with laws that relate to equal opportunity, workplace safety and minimum wage￭ Employers ensure:

Hard work and talent are rewarded Proactive protections are established Programs for on-site day care

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©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Responsibility to Customers

Consumerism: Social movement that focuses on four key consumer rights Right to be safe Right to be informed Right to choose Right to be heard• Planned obsolescence: Deliberately

designing products to fail in order to shorten the time between consumer repurchases

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©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Responsibility to Investors

￭ Sarbanes-Oxley Act: Limits conflict-of-interest issues by restricting the consulting services that accounting firms can provide for the companies they audit

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©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Responsibility to Community

￭ Corporate philanthropy: All business donations to nonprofit groups￭ Cause-related marketing: Partnership

between a business and a nonprofit• Designed to spike sales for the company and

raise money for the nonprofit

￭ Corporate responsibility: Focuses on the actions of the business itself rather than donations of money and time

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Reality TV Video Slide

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www.cengage.com/introbusiness/book_content/9781285187822_kelly/videos/04bobbyg.html

© iStockphoto.com / DNY59

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￭ Use the spectrum of social responsibility to evaluate the actions of the Vancouver, British Columbia company, Clearly Canadian, and adventure capitalist Bobby G, who is an investor in Clearly Canadian.

￭ Is the Nicaraguan clean water project better described as corporate philanthropy or corporate responsibility?

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Web-link: Sustainability - Responsibility Towards Environment

￭ The web-link is outlines Levi Strauss’ commitment to environmental sustainability

http://www.levistrauss.com/sustainability/planet

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Assessing Social Responsibility

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￭ When does a gift become a bribe? ￭ How can corporations monitor

corruption and enforce corporate policies in their foreign branches?￭ What are other ways to gain a

competitive edge in countries where bribes are both accepted and expected?

Assessing Social Responsibility

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￭ Does a living wage mean enough to support an individual or a family?￭ Does “support” mean enough to

subsist day to day or enough to live in modest comfort?￭ Should American businesses ban

child labor in countries where families depend on their children’s wages to survive?

Assessing Social Responsibility

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￭ Social audit : Evaluation of how well a firm is meeting its ethics and social responsibility objectives Steps involved:• Establishing goals• Determining how to evaluate the

achievement of these goals

©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Define ethics and explain the concept of universal ethical standards

Describe business ethics and ethical dilemmas

Discuss how ethics relates to both the individual and the organization

Define social responsibility and examine the impact on stakeholder groups

Explain the role of social responsibility in the global arena

Describe how companies evaluate their efforts to be socially responsible

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