1. Ethics and Social Responsibility
Lamb, Hair, McDaniel
Chapter 3 Ethics and Social Responsibility
CHAPTER 3
Ethics and Social Responsibility
If you have ever resented a line-cutter, then you understand ethics and have applied ethical standards in life.
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2. Learning Outcomes LO 1 Explain the concept of ethical behavior
Chapter 3 Ethics and Social Responsibility
Learning Outcomes
LO 1 Explain the concept of ethical behavior
LO 2 Describe ethical behavior in business
LO 3 Discuss corporate social responsibility 2

3. The Concept of Ethical Behavior
Chapter 3 Ethics and Social Responsibility
The Concept of Ethical Behavior
Explain the concept
of ethical behavior
LO1 3

4. Chapter 3 Ethics and Social Responsibility
Ethical Behavior
The moral principles or values that generally govern the conduct of an individual or a group.
Example:
There is no law for “cutting in line.”
Cutting in line would anger most other people.
Notes:
Ethical questions range from practical, narrowly defined issues, such as a businessperson’s obligation to be honest with his customers, to broader socials and philosophical questions, such as whether a company is responsible for preserving the environment and protecting employee rights.
LO1 4

5. Ethical Behavior in Business
Chapter 3 Ethics and Social Responsibility
Ethical Behavior in Business
Describe
ethical behavior
in business
LO2 5

6. Ethical Behavior in Business
Chapter 3 Ethics and Social Responsibility
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.
Notes:
Morals can be considered a foundation of ethical behavior.
Ethical values are situation specific and time oriented.
One approach to developing a personal set of ethics is to examine the consequences of a particular act. A second approach stresses the importance of rules. Another approach emphasizes the development of moral character within individuals.
Discussion Questions:
Ask students to think up a situation based around a particular action, and answer the following questions. Who is helped or hurt? How long do the consequences last? What actions produce the greatest good for the greatest number of people?
Morals involve “good” and “bad” as well as “deviant” behaviors
LO2

7. Ethical Development Levels
Chapter 3 Ethics and Social Responsibility
Ethical Development Levels
Pre-conventional
Morality
Conventional
Post-conventional
More
Mature
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
Notes:
Ethical development can be thought of as having three levels.
LO2 7

8. Dell: An Ethics Case Beyond the Book
Chapter 3 Ethics and Social Responsibility
Dell: An Ethics Case
Documents from a lawsuit revealed that Dell shipped over 11.8 million faulty computers between 2003 and 2005.
An internal investigation revealed extensive problems, but Dell tried to cover up the problem, telling its sales team not to mention bring it up.
Dell at times used faulty components to fix broken computers.
Dell took a $300 million charge to fix the computers, but only in response to stakeholder demands.
What level of ethical development is Dell operating at?
Beyond the Book 8

9. Ethical Decision Making
Chapter 3 Ethics and Social Responsibility
Ethical Decision Making
Influential Factors
Extent of Problems
Top Management Actions
Potential Consequences
Social Consensus
Probability of Harm
Time Until
Consequences
Number Affected
Notes:
There is no cut-and-dried formula for making ethical decisions, but these factors influence ethical decision making and judgments.
LO2 9

10. Creating Ethical Guidelines
Chapter 3 Ethics and Social Responsibility
Creating Ethical Guidelines
A Code of Ethics:
Helps identify acceptable business practices
Helps control behavior internally
Avoids confusion in decision making
Facilitates discussion about right and wrong
© iStockphoto.com/Steve Cady
Notes:
Businesses must be careful not to make their code of ethics to vague or too detailed.
LO2 10

11. Ethics in Other Countries
Chapter 3 Ethics and Social Responsibility
Ethics in Other Countries
Foreign Corrupt Practices Act (FCPA)
Prohibits U.S. corporations from making illegal payments to foreign officials.
Has been criticized for putting U.S. businesses at a disadvantage.
Has encouraged some countries to implement their own anti-bribery laws.
Notes:
In order to maintain ethical practices overseas, companies must comply with the Foreign Corrupt Practices Act (FCPA).
Foreign U.S. ethical standards on to foreign cultures has been said to put U.S. corporations at a disadvantage by not allowing them to participate in foreign cultural norms (such as giving gifts).
However, the pressure to work with U.S. corporations and avoid law suits has encouraged some countries to implement anti-bribery laws.
LO2 11

12. Corporate Social Responsibility
Chapter 3 Ethics and Social Responsibility
Corporate Social Responsibility
Discuss corporate
social responsibility
LO3 12

13. Chapter 3 Ethics and Social Responsibility
Sustainability
Socially responsible companies will outperform their peers.
It is in business’s best interest to find ways to attack society’s ills.
Notes:
Corporate social responsibility (CSR) is a business’s concern for society’s welfare.
LO3

14. Pyramid of Corporate Social Responsibility
Chapter 3 Ethics and Social Responsibility
Exhibit 3.1
Pyramid of Corporate Social Responsibility
The components of CSR are:
Economic: Profit is the foundation on which all other responsibilities rest.
Legal responsibilities: Law is society’s codification of right and wrong; play by the rules of the game.
Ethical responsibilities: Do what is right, just, and fair; avoid harm.
Philanthropic responsibilities: Contribute resources to the community; improve the quality of life.
These components are distinct but together constitute the whole. However, if the company doesn’t make a profit, the other three responsibilities are moot.
Discussion/Team Activity:
Research companies that are America’s most admired companies:
Apple
Google
Wal-Mart
Amazon.com
Coca-Cola
Berkshire Hathaway
Goldman Sachs
Procter & Gamble
LO3 14

15. Arguments Against Social Responsibility
Chapter 3 Ethics and Social Responsibility
Arguments Against Social Responsibility
Businesses should focus on making a profit and leave social and environmental concerns to nonprofits.
Milton Friedman argued that the free market, and not companies, should decide what is best for the world—socially responsible companies are using shareholders’ money to further their own agendas.
LO3 15

16. Growth of Social Responsibility
Chapter 3 Ethics and Social Responsibility
Growth of Social Responsibility
According to a recent study, the percentage of firms that consider social responsibility factors when making business decisions:
Brazil
62%
54%
Canada
Australia
52%
47%
United States
India
38%
35%
China
Mexico
26%
Notes:
Another survey pointed out that 47 percent of American firms simply was not adequate. Seventy-five percent felt that U.S. companies needed to do more in the area of social responsibility.
LO3 16

17. Cost of Ignoring Social Responsibilities
Chapter 3 Ethics and Social Responsibility
Cost of Ignoring Social Responsibilities
Some surveys indicate that consumers would be willing to pay more for a socially responsible company’s product.
Making false claims about social responsibility can be especially costly.
LO3

18. Chapter 3 Ethics and Social Responsibility
Green Marketing
The development and marketing of products designed to minimize negative effects on the environment or improve the environment.
Environmentally aware customers pay more for products
Companies must try to educate customers of environmental benefits
Discussion Questions/Team Activities:
Have students come up with examples of products using green marketing, then have them research the legitimacy of those claims.
LO3

19. Method – Social Responsibility, Ethics, and the Marketing Environment
Chapter 3 Ethics and Social Responsibility
Chapter 3 Videos
Method – Social Responsibility, Ethics, and the Marketing Environment
Does method have a societal marketing orientation, or is it just a market-oriented company that integrates a number of environmental practices into its operation? Explain
Beyond the Book 19