Business Ethics & Corporate Social Responsibility

When I do good, I feel good; when I do bad, I feel bad, and that is my religion. Abraham Lincoln

What’s the link? How would you describe Fairtrade? How would you describe Cadbury as a company?

Cadburys & Fair Trade 100 years ago William Cadbury chose beans from Ghana. A year ago we founded the Cadbury Cocoa Partnership. And from Autumn 2009 Cadbury Dairy Milk will be Fairtrade certified. Welcome aboard. What are their motives?

What’s the link?

How would you describe ‘moral behaviour’?

Business Ethics Rules or standards governing the conduct of a business Moral code – what is ‘right’ and what is ‘wrong’? Highly subjective nature

How moral are you?

How high are your morals? Imagine you are at Uni and a friend works behind the Uni bar and they always serve you quickly all the time. Anything wrong with this? After Christmas, s/he is not happy in the job (long hours, seeing everyone else having fun, while their working, and boss getting bossier!) You start to notice that the friend undercharges you. DO YOU SAY ANYTHING? DO YOU MANIPULATE THE SITUATION? Would you offer to get the rounds in for others who pay? Would you always ‘set’ the time so that it’s always ‘this’ friend serving when its your round? To what extent is this morally wrong At what stage does the scenario change from moral to legal concerns? Would you stop your friend from this error? When? Would you tell the boss?

How would you describe ‘ethics’ ?

Who would you put in your top 10 of unethical businesses?

In 2006 there was a survey of UK shoppers to identify the least ethical business…. Who do you think was in the Top 10? Perceived least ethical firms 1. McDonald's 2. Nike 3. Shell 4. Adidas 5. Barclays Bank 6. Coca-Cola 7. BP 8. Camelot 9. American Express 10. Nestle

Covalence Unethical Businesses To complete its ethics index, Covalence compiled both quantitative and qualitative data, spanning seven years, for 581 companies. The data encompass 45 criteria that include labor standards, waste management and human rights records. And because it is a reputation index, the Covalence survey also incorporates media, industry and NGO documents into its evaluation. A Swiss MR firm published their findings 2009 put these businesses in their list of the most unethical global businesses… 1) IBM 2) Intel 3) HSBC Primark Ryanair Gold mine Italian’s PM’s digital company Total oil/gas Tobacco company What benefits do these businesses gain from unethical behaviour?

Morrisons… Ethical or unethical – you decide? Morrisons has been accused of using unethical behaviour by asking customers, while at the till point to sign a survey for an increase in their parking site. However, they do not ask ‘how’ customers get to the store… whether walk, bus, train or in a car!

M&S Plan A What benefits do M&S get from adopting such a strategy?

The Corporation DVD Trailer

Business Ethics Examples: Production of children's toys Coffee industry Baby milk Music industry Multi-national operations McDonalds – food quality, litter Chocolate industry Jewellery – diamonds and gold Chemical industry Watch Dilbert in your own time!

Cheap chickens anyone?

Changes in the Social Environment Why be ethical? Build loyal customer base through USP Attract best workers who want to work for a company with high standards Lower costs through recycling and less waste Motivation across the company Is ethical behaviour simply a form of Public Relations (PR)? Why be ethical? There are a number of reasons for a firm to have an ethical business culture. These range from the profit motive to wanting to ‘do the right thing’. Visit the Institute of Business Ethics to learn more. They even run a student essay competition

Why not be ethical? More expensive to source raw materials More expensive capital goods to cut pollution Training workers to be ethical costs money Losing custom to unethical practices from more ruthless competitors Providing better facilities for staff costs money Higher costs lead to higher prices and lower revenues

“It takes 20 years to build a reputation and five minutes to ruin it.” Warren Buffett Berkshire Hathaway Warren Buffett Berkshire Hathaway

And the ethical based companies…

Corporate Social Responsibility

Corporate social responsibility means Conducting business in an ethical way and in the interests of the wider community Responding positively to emerging societal priorities and expectations A willingness to act ahead of regulatory confrontation Balancing shareholder interests against the interests of the wider community Being a good citizen in the community

Is CSR the same as business ethics? Clearly an overlap Both concern values,objectives and decisions based on something other than the pursuit of profit Socially responsible firms must act ethically The difference: –Ethics concern actions which can be assessed as right or wrong by reference to moral principles –CSR is about the organisation’s obligations to all stakeholders – and not just shareholders

Your Questions…

Quick Questions… Why might a policy of delegation make it more difficult for a business to behave ethically? State two factors that might shape the moral behaviour of a business. Outline the positive effects of an adoption of an ethical policy may have on a business’s workforce.

More detailed Q’s Outline 5 reasons why a business would want to be ethical. What is the difference between a business that operates legally and one that operates ethically. Use real business examples in your answer. Why is ethical behaviour is increasingly important as a competitive weapon. What factors might prevent an ethical business from being highly ethical?

Banks & ethics Is it ethical for banks to give out such large bonuses this year, when last year they made such large losses and had to be rescued by Govt & paid by future increase in taxes!

Red nose???

Essay title Research among schools and businesses points to ‘cultural differences’ as being the key problem in mergers. Discuss why cultural differences are so hard to overcome when bringing two organisations together. (40)

ACTIVITY Chose a business that attracts high profile media attention e.g. Tesco, M&S, Primark, Nike, Gap, Shell Carry out some independent research into its approaches towards its social responsibilities and/or its ethics Produce an article for a business magazine evaluating how they have responded to social and ethical factors BUSS4.4 Social Environment