BUSN 4 Business Ethics & Social Responsibility: Doing Well by Doing Good ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1

BUSN 4 ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Business Ethics and Social Responsibility: Doing Well by Doing Good What is ethics? Business ethics? What are the universal ethical standards? What is an ethical dilemma? How does ethics relate to the individual and the organization? What is social responsibility and its impact on stakeholders? What is the role of social responsibility in the global arena? How do companies evaluate their efforts to be socially responsible? 2

BUSN 4 Business Ethics & Social Responsibility: Doing Well by Doing Good ©2011 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 & Social Responsibility: A Close Relationship 3 ETHICS Beliefs about right and wrong SOCIAL RESPONSIBILITY The obligation of a business to contribute to society

BUSN 4 Business Ethics & Social Responsibility: Doing Well by Doing Good ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Defining Ethics: Murkier Than You’d Think 4

BUSN 4 Business Ethics & Social Responsibility: Doing Well by Doing Good ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Universal Ethical Standards 5 Developed by Character Counts, a nonpartisan organization of educators, community leaders, and ethicists. Source: The Six Pillars of Character, Josephson Institute website, accessed February 2, 2009http://josephsoninstitute.org/MED/MED-2sixpillars.html

BUSN 4 Business Ethics & Social Responsibility: Doing Well by Doing Good ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Business Ethics: Not an Oxymoron 6 Ethical Dilemma Negative Consequences Two unfavorable options Ethical Lapse Clear misconduct most challenging business decisions seem to arise when values are in conflict Business Ethics – the application of right and wrong in the workplace.

BUSN 4 Business Ethics & Social Responsibility: Doing Well by Doing Good ©2011 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: Multiple Touchpoints Individuals must make their own ethical choices BUT The organization can have a significant influence on decisions 7

BUSN 4 Business Ethics & Social Responsibility: Doing Well by Doing Good ©2011 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 the Individual: The Power of One 8 Framework for Ethical Decisions: 1.Do you understand the dimensions of the problem? 2.Who would benefit? Who would suffer? 3.Are the alternative solutions legal? Are they fair? 4.Does your decision make you comfortable? 5.Could you defend your decision on the nightly news?

BUSN 4 Business Ethics & Social Responsibility: Doing Well by Doing Good ©2011 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 the Organization: It Takes a Village Ethical influence starts at the top. Actions matter more than words. The appearance of shaky ethics can be deeply damaging “CEOs in particular must communicate their personal commitment to high ethical standards and consistently drive the message down to employees through their actions.” 9

BUSN 4 Business Ethics & Social Responsibility: Doing Well by Doing Good ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Creating and Maintaining and Ethical Organization 10 Organizational Culture Role of Top Management Code of Ethics 1.Executive Buy-in 2.Clear expectations 3.Integrated approach 4.Global and local 5.Whistleblower support 6.Reporting and Enforcement

BUSN 4 Business Ethics & Social Responsibility: Doing Well by Doing Good ©2011 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 at Work: How would you judge the actions of these business leaders? 11 Stanley O’Neal began as Merrill Lynch began racking up losses that led to its collapse, he announced his “retirement.” Sanjay Kumar of Computer Associates was convicted of massive accounting fraud in Martha Stewart was convicted of obstructing justice in a $40,000 well timed stock sale. Sherron Watkins, former vice president of Enron reported the accounting Irregularities that led to the discovery of corporate fraud. Pierre Omidyar, the founder of eBay has given away over $100 million to Tufts University Micro Finance Fund. Whole Foods CEO, John Mackey posted thousands of comments on Yahoo Finance, hyping his company and attacking Wild Oats, which he was planning to purchase.

BUSN 4 Business Ethics & Social Responsibility: Doing Well by Doing Good ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Capitalism with a Conscience The gains in wealth, healthcare, education, and technology have not been evenly spread Half of the world’s population lives on less than $2.00 per day 94% of the world’s earnings go to 40% of the people Bill Gates has called for a new approach to economics: creative capitalism Nobel Peace prize winner Muhammad Yunus recognizes the power of business to solve societal issues 12

BUSN 4 Business Ethics & Social Responsibility: Doing Well by Doing Good ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Defining Social Responsibility: Making the World a Better Place Nearly 80% of Americans consider corporate citizenship when making investment and purchasing decisions. 13 Social Responsibility is the obligation of a business to contribute to society.

BUSN 4 Business Ethics & Social Responsibility: Doing Well by Doing Good ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Spectrum of Social Responsibility 14

BUSN 4 Business Ethics & Social Responsibility: Doing Well by Doing Good ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Social Responsibility at Work: How would you judge the actions of these firms? 1.Clorox introduced a line of “99% natural cleaning” products called Green Works. The Sierra Club endorsed the product line. Clorox makes annual contributions to the Sierra Club 2.Tapping the potential of their fans, MTV has drawn millions of young people to the polls for the 2008 presidential election 3.As obesity among kids grows, Kraft Foods pledged to stop advertising unhealthy yet profitable foods 4.After receiving $45 billion in taxpayer bailout funds, Bank of America sponsored a five-day carnival-like event outside the 2009 Super Bowl. 15

BUSN 4 Business Ethics & Social Responsibility: Doing Well by Doing Good ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Stakeholder Approach: Responsibility to Whom? 16 Stakeholders are any groups that have a stake or a personal interest in the performance and actions of an organization. Stakeholders are any groups that have a stake or a personal interest in the performance and actions of an organization.

BUSN 4 Business Ethics & Social Responsibility: Doing Well by Doing Good ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Stakeholder Approach: Responsibility to Whom? 17 EMPLOYEES INVESTORS COMMUNITY ENVIRONMENT CUSTOMERS Creating Jobs that Work Sustainable Development Value, Honesty and Communication Fair Stewardship and Full Disclosure Business and the Greater Good

BUSN 4 Business Ethics & Social Responsibility: Doing Well by Doing Good ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Meet Legal Standards Workplace Safety Minimum Wage/Overtime Requirements Value Employees Provide Work/Life Balance Responsibility to Employees: Creating Jobs that Work 18

BUSN 4 Business Ethics & Social Responsibility: Doing Well by Doing Good ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CONSUMERISM: The Right to Be Safe The Right to Be Informed The Right to Choose The Right to be Heard Responsibility to Customers: Value, Honesty and Communication Planned Obsolescence – Deliberately designing products to fail in order to shorten the time between consumer repurchases 19

BUSN 4 Business Ethics & Social Responsibility: Doing Well by Doing Good ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Apple Angst Apple introduced the iPhone on June 9, 2007 to rave reviews despite $599 price tag Apple dropped the price to $200 to increase customers Customers were livid! CEO, Steve Jobs apologized and gave customers $100 store credit 20

BUSN 4 Business Ethics & Social Responsibility: Doing Well by Doing Good ©2011 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: Fair Stewardship and Full Disclosure Legal Requirements Sarbanes-Oxley Responsible use of Corporate Dollars Honesty Is Optimism or Pessimism Socially Responsible? 21

BUSN 4 Business Ethics & Social Responsibility: Doing Well by Doing Good ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Corporate Philanthropy - business donations to nonprofit groups, including both money and time Corporate Responsibility - actions of the business rather than donations of money and time Cause-related Marketing – partnerships between businesses and nonprofit organizations, designed to spike sales for the company and raise money for the nonprofit Responsibility to Community: Business and the Greater Good 22

BUSN 4 Business Ethics & Social Responsibility: Doing Well by Doing Good ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Sustainable Development Beyond federal, state and local laws: doing business to meet the needs of this generation without harming the ability of future generations Carbon Footprint Amount of harmful greenhouse gases a firm emits Green Marketing Marketing environmental products and practices for competitive advantage Responsibility to the Environment: Sustainable Development 23

BUSN 4 Business Ethics & Social Responsibility: Doing Well by Doing Good ©2011 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 Social Responsibility in the Global Arena: A House of Mirrors? Corruption is part of the culture in many countries Bribes or Gifts Labor issues in host countries can be complicated Living Wage Child Labor 24

BUSN 4 Business Ethics & Social Responsibility: Doing Well by Doing Good ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Monitoring Ethics and Social Responsibility: Who is Minding the Store? 25 SOCIAL AUDIT A systematic evaluation of how well a firm is meeting its ethics and social responsibility objectives.

BUSN 4 ©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Looking Back What is ethics? Business ethics? What are the universal ethical standards? What is an ethical dilemma? How does ethics relate to the individual and the organization? What is social responsibility and its impact on stakeholders? What is the role of social responsibility in the global arena? How do companies evaluate their efforts to be socially responsible? 26