part 1 FHF Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

part CHAPTER 3 Business in a Borderless World CHAPTER 2 Business Ethics and Social Responsibility 1 CHAPTER 1 The Dynamics of Business and Economics FHF

Business Ethics ] [ An identifiable problem, situation, or opportunity that requires a person to choose from among several actions that may be evaluated as right or wrong, ethical or unethical 2-3

Social Responsibility FHF Business’s obligation is to maximize its positive impact and minimize its negative impact on society 2-4

Laws and Regulations FHF  Laws and regulations encourage businesses to conform to society’s basic standards, values, and attitudes.  Sarbanes-Oxley Act, 2002  Troubled Assets Relief Program 2-5

The Role of Ethics in Business Business FHF Growing concerns about legal and ethical issues in business  Antitrust violations  Accounting fraud  Cybercrimes  Unfair competitive practices  Tax fraud 2-6

FHF Ethical Issues ] [ An identifiable problem, situation, or opportunity that requires a person to choose from among several actions that may be evaluated as right or wrong, ethical or unethical 2-7

Ethical Issues FHF  Involve all organizational activities For profit businesses Non-profits Government Schools and universities  Learning to recognize and resolve ethical issues are important in maintaining an ethical business climate 2-8

Ethical Conduct Helps To: FHF  Build Trust  Promote confidence  Validate relationships 2-9

FHF  Examine the situation from your stakeholders’ position, including customers and competitors  People often need years of experience to accurately recognize and react to ethical situations  Ethical situations vary by culture How to Judge the Ethics of a Situation 2-10

Unethical Behavior in Business Business FHF  Misuse of company resources  Abusive & intimidating behavior  Conflict of interest  Fairness & honesty  Communications  Business relationships 2-11

Sources of Unethical Behavior Behavior FHF Misuse of Company Resources  The most commonly observed misconduct Time theft Use of personal and social networking sites at work is a growing problem Stealing office supplies Unauthorized use of equipment and software 2-12

Sources of Unethical Behavior Behavior FHF Abusive and Intimidating Behavior / Bullying 2-13

Sources of Unethical Behavior in Organizations FHF Conflict of interest  Advance personal interest over others’ interests  Benefit self at the expense of the company Bribes represent a conflict of interest because they benefit an individual at the expense of an organization or society 2-14

Fairness & Honesty FHF Are at the heart of business ethics  How employees use resources  No deceit, coercion, or misrepresentations  Fair competition  Disclosure of potential harm caused by products 2-15

Ethical Concerns in Communications FHF  False/misleading advertising  Deceptive personal selling tactics  Truthfulness in product safety and quality  Unsubstantiated claims  Product labeling 2-16

Ethical Concerns in Business Relationships FHF Relationships with customers, suppliers and co-workers  Ethical behavior within a business is important Keeping company secrets Meeting obligations and responsibilities Avoiding undue pressure  Managers’ responsibility to create ethical work environment and provide a positive example 2-17

PlagiarismPlagiarism FHF  The act of taking someone else’s work and presenting it as your own without mentioning the source  A major problem in schools and business  Students copying others’ work  A manager taking credit for a subordinate’s work  Employees copying reports and passing the work off as their own 2-18

FHF Ethical Decisions in an Organization are Influenced by Three Key Factors 2-19

FHF Code of Ethics ] [ Formalized rules and standards that describe what a company expects of its employees 2-20

WhistleblowingWhistleblowing FHF Occurs when an employee exposes an employer’s wrongdoing to outsiders  Many companies have internal reporting mechanisms in place Avoid legal action Negative publicity  Whistleblowers often treated negatively and have a difficult time finding other work 2-21

Four Dimensions to Social Responsibility FHF 1. Economic 2. Legal 3. Ethical 4. Voluntary 2-22

The Pyramid of Social Responsibility FHF 2-23

FHF Corporate Citizenship ] [ The extent to which businesses meet the legal, ethical, economic, and voluntary responsibilities placed on them by their stakeholders 2-24

Stakeholder Relationships: Shareholders FHF  Primarily concerned with profit or ROI  Financial community at large  Proper accounting procedures  Protecting owner’s rights and investments 2-25

Stakeholder Relationships: Employees FHF  Provide a safe workplace  Adequate compensation  Listen to grievances  Fair treatment 2-26

Stakeholder Relationships: Consumers FHF Consumerism  Activities that independent individuals, groups and organizations undertake to protect their rights as consumers  Critical issue is business’s responsibility to customers to provide satisfying, safe products and to protect their rights as consumers. 2-27

Kennedy’s Consumer Bill of Rights Kennedy’s Consumer Bill of Rights FHF  The right to safety  The right to be informed  The right to choose  The right to be heard 2-28

Stakeholder Relationships: The Environment & Sustainability Issues FHF Sustainability means conducting activities with the long-term well-being of the natural environment in mind.  Involves interaction between Nature Individuals Organizations Business strategies 2-29

FHF  Pollution Land Water Air  Waste disposal  Future of energy Alternative energy Stakeholder Relationships: The Environment & Sustainability Issues 2-30 Copyright 2009 Utopian Empire Creativeworks | Biomass Energy Plant in Cadillac Michigan

Response to Environmental Issues FHF  Many companies have a President of Environmental Affairs Position  Most Fortune 500 companies have in place: Written environmental policy Recycling programs Waste-reduction initiatives  Environmental consciousness can save money through reducing waste  Greenwashing, or creating a positive association with environmental issues for an unsuitable product, service or practice Is a growing problem 2-31

Stakeholder Relationships: The Community FHF General community and global welfare  The Avon Foundation The Avon Foundation  Breast Cancer Awareness Crusade  Target’s Take Charge of Education program Target’s Take Charge of Education  1% of Target Red Card purchases donated to educational causes Hardcore unemployed National Alliance of Business funds training to help hard-core unemployed to find work and gain self-sufficiency Enhanced self-esteem; help people become productive members of society 2-32