1. Copyright © 2005 Pearson Education Canada Inc. ﴀ Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 2-1 Chapter 2 Business Ethics and Social Responsibility

2. Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 2-2 Copyright © 2005 Pearson Education Canada Inc. Learning Objectives After reading this chapter you should have knowledge of: 1. Business ethics and the pressures toward acting ethically 2. Different approaches to making ethical decisions 3. The basis of unethical behaviour

3. Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 2-3 Copyright © 2005 Pearson Education Canada Inc. Learning Objectives cont. 4. Top management’s role in shaping an organization’s stance toward social responsibility and ethics 5. Different responsibilities of business 6. organizational stakeholders and their influence in firm behaviour

4. Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 2-4 Copyright © 2005 Pearson Education Canada Inc. Business Ethics Beliefs concerning acceptable business conduct  Strongly influenced by the values and morals contained in the business environment

5. Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 2-5 Copyright © 2005 Pearson Education Canada Inc. Key Terms Ethics  The consensually accepted standards of behaviour for an occupation, trade, or profession Morality  The precepts of personal behaviour based on religious or philosophical grounds Law  Formal codes that permit of forbid certain behaviours

6. Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 2-6 Copyright © 2005 Pearson Education Canada Inc. Approached to Ethical Behaviour Utilitarian  Actions and plans judged by consequences Individual Rights  People have fundamental rights to be respected in all decisions Justice  Distribution of costs and benefits to be equitable, fair, and impartial

7. Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 2-7 Copyright © 2005 Pearson Education Canada Inc. Business Ethics Code of Ethics  Specifies how an organization expects its employees to behave while on the job

8. Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 2-8 Copyright © 2005 Pearson Education Canada Inc. Business Ethics Culture of Ethics  An ethical culture is necessary to create the expectation of ethical behaviour among workers, and promote the active discouragement of unethical behaviour

9. Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 2-9 Copyright © 2005 Pearson Education Canada Inc. Social Responsibility Moral Relativism  Morality is relative to some personal, social or cultural standard and that there is no method for deciding whether one decision is better than another.

10. Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 2-10 Copyright © 2005 Pearson Education Canada Inc. Responsibilities of Top Management Involve getting things accomplished through and with others in order to meet organizational objectives Primary Responsibilities:  Provide Executive leadership and a strategic vision  Manage the strategic planning process

11. Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 2-11 Copyright © 2005 Pearson Education Canada Inc. Executive Leadership The directing of activities toward the accomplishment of organizational objectives Sets the tone for the entire organization

12. Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 2-12 Copyright © 2005 Pearson Education Canada Inc. Social Responsibility Key question for strategic decision makers:  “Should strategic decision makers be responsible only to shareholders or do they have broader responsibilities?”

13. Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 2-13 Copyright © 2005 Pearson Education Canada Inc. Social Responsibility Friedman’s Traditional View  “There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits…”

14. Concepts in Strategic Management, Canadian Edition Wheelen, Hunger, Wicks 2-14 Copyright © 2005 Pearson Education Canada Inc. Social Responsibility Carroll’s Four Responsibilities  Economic  Legal  Ethical  Discretionary