Chapter 04 - Social Responsibility & Business Ethics

8/10/2019 Chapter 04 - Social Responsibility & Business Ethics

1/16

Chapter Four:

Social Responsibility &Business Ethics


2/16

Social Responsibility

The awareness that business activities have an impact on

society and the consideration of that impact by firms in decisionmaking.

Business

ctivities

Environment

Employees

Consumers

Investor


3/16


4/16

Responsibility to Consumers

Four Rights of Consumer-

The Right to SafetyRight to products that are safe to possess anduse. To ensure safety of goods, manufacturers should test them andprovide buyers with explicit directions for use.

The Right to be InformedRight to receive information availableabout a product before they purchase it. For example - Ingredients,

instructions for use, manufacturing date, expiry date.

The Right to ChooseRight to choose and make purchases from avariety of products at competitive prices. Also the right to expect qualityservice at a fair price.

The Right to be HeardRight to have their (consumers) opinionsconsidered in the formation of government policies and in business firmsdecisions that affect them.


5/16

Responsibility to Employees

Employees hold certain expectations ofbusiness firms.

They expect safe working conditions, faircompensation, equal opportunities (regardless of age,race, gender, religion or national origin) and adequatebenefits (Health insurance, vacation etc).


6/16

Responsibility to Environment

Pollutioncontamination of air, water and land

Water pollutioncaused by dumping of chemicals, sewageand garbage into rivers etc and by using pesticides andfertilizers etc.

Land pollutionresults from strip mining of coal andminerals, forest fires, garbage disposal and dumping ofindustrial wastes including chemicals and medical supplies suchas used hypodermic needles.

Land pollution often results in water pollution because toxicwastes drain into water supplies.

Recycling reusing materials such as paper, plastic, glass andaluminum to make other products.


7/16

Responsibility to Environment

Air PollutionCaused by carbon monoxide andhydrocarbons that come from motor vehicles and bysmoke and other pollutants from manufacturing plants(emission standards for automobiles, factories, catalyticconverters are there to help control air pollution).

**Ozone layerShields the planet from the suns deadlyultraviolet rays. This is being destroyed with a globalwarming trend as a result (major cause isChlorofluorocarbons (CFCs) that are used to cool

refrigerators and air conditioners).**Acid rainWhen sulphur dioxide is pumped into the air

(often by manufacturing and power plants burning highsulphur coal) and mixes with air, rain with a high acid

content is created.


8/16

Responsibility to Investors

Business firms have responsibility to the people who investmoney in them.

**Proper Management of Fund

**Access to Information

**Executive compensation

There are problems such as mishandling of investors funds,insider trading(the practice of buying and selling stock on thebasis of information gained through positions or contacts with

inside parties that is not available to other investors or thegeneral public)

Excessive compensation of executives.


9/16

Business Ethics

EthicsThe principles of behavior that distinguish betweenright and wrong.

Business EthicsThe evaluation of business activities andbehavior as right or wrong.

Ethical standards in business are based on commonly acceptedprinciples or behavior established by the expectations ofsociety, the firm, the industry and an individuals personal

values.A violation of ethics makes trust and goodwill difficult to

maintain.


10/16

Factors Influencing Ethical Behavior

The Business Environment

Business managers are challenged to meet salesquotas, cut costs, increase efficiency or overtake

competitors (survive by deception or cheating).

Conflict of interest (offer special favors or gifts, bribes)damages the organization in the long run.


11/16


The Organization

Individuals learn from ethical and unethical behaviorsby interacting with others in the organization.

By rewarding for ethical conduct and punishingunethical behavior may help the organization to

promote ethical behavior among the employees.


12/16


The Individual

A persons own moral philosophy influences his or her

ethical behavior

Moral philosophythe set of principles (learned fromfamily, school, co-workers, friends) that dictateacceptable behavior.


13/16

Developing Moral Philosophy

Individuals can follow two approaches:

1. Humanistic Philosophy

A set of moral principles focusing on individual rightsand values

Individuals & organizations adopting this philosophy

would honor their moral duties to customers and


14/16

Developing Moral Philosophy

2. Utilitarian Philosophy

A set of moral principles focusing on the greatest good

for the largest number of people

CNG case in Bangladesh

Vaccine Tests on Children


15/16

Encouraging Ethical Behavior

Many organizations take positive steps to encourageethical behavior. (Ethics training programs etc.)

A basic way for an organization to encourage ethicalbehavior is to establish a code of ethics (a statementspelling out exactly what an organization considersethical behavior)


16/16

Encouraging Ethical Behavior

Whistle Blowerare employees who inform superiors,the media or a government regulatory agency aboutunethical behavior within an organization (they often

risk great professional and personal danger byreporting the unethical behavior of others)

Efforts to encourage ethical behavior will be effective

only with the support of top-level management.

Chapter 04 - Social Responsibility & Business Ethics

Documents

Transcript of Chapter 04 - Social Responsibility & Business Ethics