1 Lamb, Hair, McDaniel CHAPTER 3 Ethics and Social Responsibility

2 LO 1 Explain the concept of ethical behavior LO 2 Explain ethical behavior in business LO 3 Discuss corporate social responsibility Learning Outcomes

3 Ethical Behavior 3 Explain the concept of ethical behavior LO 1

4 Ethical Behavior 4 Unwritten rules governing interactions sharing resources honoring contracts waiting in line LO 1

5 Ethical Behavior in Business 5 Describe ethical behavior in business LO 2

6 Ethical Behavior in Business Ethics Morals The moral principles or values that generally govern the conduct of an individual. The rules people develop as a result of cultural values and norms. Morals involve “good” and “bad” as well as “deviant” behaviors LO 2

7 Ethical Development Levels Preconventional Morality Conventional Morality Postconventional Morality More Mature More Childlike Based on what will be punished or rewarded Self-centered, calculating, selfish Moves toward the expectations of society Concerned over legality and the opinion of others Concern about how they judge themselves Concern if it is right in the long run LO 2

8 Ethical Decision Making Influential Factors Extent of Problems Top Management Actions Potential Consequences Social Consensus Probability of Harm Time Until Consequences Number Affected LO 2

9 Creating Ethical Guidelines Helps identify acceptable business practices Helps control behavior internally Avoids confusion in decision making Facilitates discussion about right and wrong 9 LO 2

10 Ethical Guidelines and Training Exhibit 3.3 LO 2

11 Corporate Social Responsibility 11 Discuss corporate social responsibility LO 3

12 Sustainability Socially responsible companies will outperform their peers It is in business’s best interest to find ways to attack society’s ills LO 3

13 Discuss Corporate Social Responsibility 13 Ethical Do what is right. Legal Obey the Law. Economic Be profitable. Philanthropic Be a good citizen. LO 3

14 Arguments Against Social Responsibility Businesses should focus on making a profit and leave social and environmental concerns to nonprofits Businesses don’t have the expertise to deal with social issues and doing so may interfere with the primary goals of their firms The expense of social responsibility may damage the country in the global marketplace 14 LO 3

15 Arguments for Social Responsibility The right thing to do Business should police itself to avoid government intervention Small companies can prosper and build shareholder value as they tackle social problems 15 LO 3

16 Cost of Ignoring Social Responsibilities Treating key stakeholders poorly can cost companies significant fines and loss of respect LO 3

17 Green Marketing More prevalent with increase in environmental awareness –Environmentally aware customers pay more for products –Companies must to educate customers of environmental benefits LO 3

18 Environmentally Aware Advertising The Blog Oddee has gathered some of this year’s most creative environmentally aware campaigns: Denver Water Authority’s campaign gets the conservation word out in creative ways: mpaignTrain/ LO 3