Lecture 1:Sustainability & Ethics More than just a public relations statement…

Global Business Management

Global Business Management

Outline of the Seminar

Seminar Session #1• Professor Intro• Take Attendance & Class Intros• Sustainability & Ethics Intro• UN Development Goals

About Your ProfessorExperience• CEO & Founder, AiMarket • 19+ years in Value Chain Management• Adjunct Professor @ USF• Instructor @ UC Berkeley Extension

Education• BS in Business Administration: Finance @ SJSU• MBA - University of San Francisco

(Marketing & Management)• MA in Philosophical Theology @ University of Nottingham• Doctoral Student in Ethics & Social Theory @ GTU

Hobbies• Spending time with my 3 kids, • Travel &Watching movies w/ My Wife,• Reading, Philosophical Theology, Gardening• Business Ethics, Machine Ethics, Computers • And my startup…

Payson E. Johnston Feel Free to Connect

https://www.linkedin.com/in/payson

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Youtube

• https://www.youtube.com/watch?v=_g0-yeKaOfU

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Learning Objectives of this Seminar1. Be able to identify ways that embedded sustainability can improve value chain

conditions and what are the ethical implications that should be addressed.2. Understand the basics of business ethics and sustainability terminology3. Gain the skills to analyze issues plus make business manager decisions that are

ethical and sustainable and contribute to improving the world in which we live and do business.

4. Utilize the concepts of business ethics to address “gray areas” in the marketplace via a logical and fact-based way that ensures a sustainable business.

1. Be able to identify ways that embedded sustainability can improve value chain conditions and what are the ethical implications that should be addressed.

Global Business Management

2 - Understand the basics of business ethics and sustainability terminology

Global Business Management

3. Gain the skills to analyze issues plus make business manager decisions that are ethical and sustainable and contribute to improving the world in which we live and do business.

Global Business Management

4. Utilize the concepts of business ethics to address “gray areas” in the marketplace via a logical and fact-based way that ensures a sustainable business.

The Value Chain

Source: Dr. Sweta Thota

Or Business (B2B)

MCGRAW-HILL/IRWIN - COPYRIGHT © 2008 BY THE MCGRAW-HILL COMPANIES, INC. ALL RIGHTS RESERVED.

Global Distribution

Value Chain Management

Channel Management

Distribution Channels

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The 3 Dimensions of Value

1. Financial2. Tangible Solution3. End Benefits

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Quotes from Friedman’s Article - 1970

The discussions of the

"social responsibilities of

business" are notable for

their analytical looseness

and lack of rigor.

What does it mean to say that

"business" has responsibilities?

Only people can have

responsibilities. A corporation is

an artificial person and in this

sense may have artificial

responsibilities, but "business" as

a whole cannot be said to have

responsibilities, even in this vague

sense.

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What do think?

Does Social Responsibility Belong in Business?

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What’s Wrong….

An Industrial Workers of the World poster (1911).

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Global Business ManagementA Demonstration against Foxconn

Global Business ManagementBangladesh…

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Conflict Minerals

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Worker Disputes

•Moving part of the manufacturing operations to India…

•The workers want severance packages

•“China Labour Bulletin said it recorded 201 cases of labor disputes, including strikes, in China in the first four months of the year”

http://online.wsj.com/article/SB10001424127887323998604578565491218131384.html#printMode

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QUESTIONS: 1. Why is the co-founder of Specialty Medical Supplies being held in his office by employees?2. What approach is Mr.

Starnes using to try to negotiate with his employees in China? 3. How is the culture in China contributing to the situation at Specialty Medical Supplies? How is the Chinese culture different from the culture in the U.S.?

4. What obligation does the company have for the employees?

5. What do you think is causing the transition to India?

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“The other” needs to be considered

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Culture & the Hierarchy of Need – a Motivational Theory

5. Cognitive Needs – Knowledge, Meaning, etc.

6. Aesthetic Needs – Appreciation and search for beauty, balance, and form, etc.

We all try to fulfill these needs…

Be Needs

Basic Needs

8. Transcendence Needs – Helping others to achieve self actualization

http://www.simplypsychology.org/maslow.html

1940s

Updated in 1970s

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Triple Bottom Line“Companies have traditionally honored a single bottom line: profit.

Concern only for profit, however,ignores the impact that businesses have on the environment, community,

and human rights.

Thetriple bottom line asks

that businesses look at their ecological and social impact in addition to their

economic performance.

Sustainability Indexes, used by many investors, are used to measure a

company’s triple bottom line.”AMNESTY INTERNATIONAL USA HUMAN RIGHTS EDUCATION PROGRAM

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What do think?

Does Social Responsibility Belong in Business?

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Social Responsibility

Just the Tip of the Iceberg

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Creating Shared ValueThe concept of shared value can be defined as policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates. Shared value creation focuses on identifying and expanding the connections between societal and economic progress.

The concept rests on the premise that both economic and social progress must be addressed using value principles. Value is defined as benefits relative to costs, not just benefits alone. Value creation is an idea that has long been recognized in business, where profit is revenues earned from customers minus the costs incurred. However, businesses have rarely approached societal issues from a value perspective but have treated them as peripheral matters. This has obscured the connections between economic and social concerns.

Creating Shared Value – HBR – Jan 2011by Michael E. Porter and Mark R. Kramer

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History is the Judge

History has shown how some actions that were long accepted or at least condoned in the business community were eventually condemned as morally dubious.

Examples include…..

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Pollution of the Air and Water

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Plant Relocation Purely for Economic Gain

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Large Political Contributions and Lobbying Directed at People of Political Influence

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Ethics

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Major Sources of Ethical Values in Business

McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, Inc. All rights reserved

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Morality and the LawLaw is the public’s agency for translating morality into explicit social guidelines and practices and for stipulating punishments for offenses.

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A related problem…“…involves the belief that a person found guilty under law is therefore morally guilty. Such judgments are not necessarily correct, as they depend on either the intention of the agents or the moral acceptability of the law on which the judgment has been reached.”

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Morality and Ethical Theory

Morality Concerned with social

practices defining right from wrong

These words refer to attempts to introduce clarity, substance, and precision of argument into the

domain of morality

Ethical Theory & Moral Philosophy:

Reflection on the nature and justification of right actions

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Morality and Ethical TheoryMorality

What a person ought to do to conform to society’s

norms of behavior

Ethical Theory Concerns the

philosophical reasons for and against aspects of the

morality stipulated by society

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“If something is legal it is not necessarily moral; if something is illegal, it is not necessarily immoral.

To discharge one’s legal responsibilities is not necessarily to discharge one’s moral responsibilities”

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The branches of philosophy (orange)

and their links with allied fields (yellow)

Adapted from http://www.daviddarling.info/encyclopedia/P/philosophy.html

Axiology - the study of the nature, types, and criteria of values and of value judgments especially in ethic

Applied Ethics

BioMedical Ethics

Business Ethics

ComputerEthics

Environmental Ethics

Social Ethics

Normative Ethical Theories

RightsApproach

Individualism Approach

JusticeApproach

UtilitarianismApproach

Egalitarian Economic freedom Libertarian

Individuals

Matter

How much do

individuals matter?

Community matters

Virtue Ethics

Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved

Adapted from McGraw-Hill/Irwin

BioMedical

Ethics

Business Ethics

Computer

Ethics

Environmen

tal Ethics

Social Ethics

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What Ethical Theory?

• Small – Group Discussion: What ethical theory would you apply to business and why?

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Applied EthicsInfluences CSR

Applied Ethics

BioMedical

Ethics

Business Ethics

Computer

Ethics

Environmental

Ethics

Social Ethics

Corporate Social

ResponsibilitySustainability

Management Theory

Marketing & Finance

Supply Chain Management

Social Implications

Ethical Theory

Social Entrepreneurship

Value Chain Management

BusinessPractice

Business Ethics & Social Responsibility

Social responsibility– business’s obligation to maximize its positive impact and minimize its negative impact on society

2-50McGraw-Hill/IrwinCopyright © 2009 by the McGraw-Hill Companies, Inc. All rights reserved.

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Pyramid of Social Responsibility

2-51McGraw-Hill/IrwinCopyright © 2009 by the McGraw-Hill Companies, Inc. All rights reserved.

Nature of Social Responsibility

Arguments For and Against Social Responsibility

2-52McGraw-Hill/IrwinCopyright © 2009 by the McGraw-Hill Companies, Inc. All rights reserved.

Organizational StakeholdersOwners Employees

Governments

Customers

Community

CompetitorsSocial Activist

Groups

Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved

McGraw-Hill/Irwin

The Original UN Development Goals

On September 25th, countries will have the opportunity to adopt a set of global goals to end poverty, protect the planet, and ensure prosperity for all as part of a new sustainable development agenda. Each goal has specific targets to be achieved over the next 15 years.

UN Development Goals

•https://youtu.be/ntRnq_U13Eo

http://www.un.org/sustainabledevelopment/sustainable-development-goals/

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What do think?

What role does modern business have in developing these UN Development Goals?

Which UN goals should business be responsible for?

Relating logistics management and supply chain management to supplier networks and marketing channels

Source: Dr. Sweta Thota

Or Business (B2B)

MCGRAW-HILL/IRWIN - COPYRIGHT © 2008 BY THE MCGRAW-HILL COMPANIES, INC. ALL RIGHTS RESERVED.

Global Distribution

Value Chain Management

Channel Management

Distribution Channels

Global Business Management

How does this Apply to Value Chain Mgmt?

• The channel is were the actions is at…production, marketing, and financial

• CSR is critical in these functions

4. Be able to identify ways that embedded sustainability can improve value chain conditions and what are the ethical implications that should be addressed.

Global Business Management

2 - Understand the basics of business ethics and sustainability terminology

Global Business Management

3. Gain the skills to analyze issues plus make business manager decisions that are ethical and sustainable and contribute to improving the world in which we live and do business.

Global Business Management

4. Utilize the concepts of business ethics to address “gray areas” in the marketplace via a logical and fact-based way that ensures a sustainable business.

Global Business Management

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