Social Responsibility Lesson 3

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What do you think? Think about some things a business can do to be socially responsible.  Computer industry (Dell, Apple, HP)  Grocery Industry  Fast Food  Automotive  Newspaper & Magazine

Business and Social Responsibility  Social responsibility is the duty to do what is best for the good of society.  Businesses that follow ethical standards value integrity and honesty in employees.  Integrity – possessing firm moral principles and values.  Mixed reactions on social responsibility.  Some feel that just producing beneficial products is enough  Others think they need to do more

Responsibility to Customers  Customers are a business’s first responsibility.  Business should offer a good, safe product at a reasonable price. Question: How is producing a good or service a way of being socially responsible?  FTC protects consumers from falsely advertised products  Some companies do not act responsibly in the marketplace.  Especially with fair competition

Responsibility to Customers  Fair competition is necessary for the marketplace to operate effectively.  Major component of market economy.  Market economy relies on market forces to allocate goods, services, and other resources to determine prices.  Some businesses use unethical tactics to eliminate the competition.  Most common way is to conspire with other businesses to control the market for a product.  They control supply and the price.

Responsibility to Customers  When competition is restricted, it affects customers.  Fewer choices  Price they pay  Restricting competition can backfire  Productivity is decreased during this time  New market opens, business may be unprepared  Movie industry example Question: What do you think is the mission of the Food and Drug Administration?

Responsibility to Employees  Some provide work experience for those with limited job skills.  Helps them develop skills  Increase confidence levels  Businesses help through volunteerism.  May allow employees to take a paid day off to work on a community project.

Responsibility to Employees  Businesses have the responsibility to provide safe working conditions, equal treatment and fair pay for employees.  Equal Pay Act (1964) – men and women be paid the same wages for doing equal work.  Americans with Disabilities Act – bans discrimination against people with physical or mental disability.  Effect of treating workers unfairly  Low morale  Poor production  High turnover rate

Responsibility to Society  Biggest social issue is environmental responsibility.  Environmental Protection Agency (EPA)  Created in 1970  Enforces rules that protect the environment and control pollution

Responsibility to Creditors and Owners  Inaccurate accounting records (late 1990s and early 21 st century)  Records showed higher profits than reported  Example of being unethical and unlawful  Harmful to creditors (those who loan money  Harmful to shareholders (those who are owners but do not work in the business)  Legislation passed - Sarbanes-Oxley Act  Mandates truthful reporting  Makes CEO more accountable for actions of financial managers of the business

Starbucks

Sarbanes Oxley Act