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Copyright by Paradigm Publishing, Inc. INTRODUCTION TO BUSINESS CHAPTER 2 Business Ethics and Social...
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Copyright by Paradigm Publishing, Inc.
INTRODUCTION TO BUSINESS
CHAPTER 2
Business Ethics and Social Responsibility
The Elevator “Pitch” Covering your bases
ManagementMarketingAccounting/FinancingThe “Pitch”
Sustainability
www.pdx.edu/sustainability
Sustainability means meeting the economic, social, and environmental needs of the present without compromising the similar needs of future generations.
Ethical Question
You were in a hurry and stopped by Seattle’s Best for a coffee and muffin to eat for breakfast. You waited in line ten minutes. When you got your order you handed the clerk $10. You left, and it was not until a block away that you noticed the cashier gave you back change for $20.
Do you – A. Go back and give the $10 back immediately B. Plan on doing it later, or the next day C. Keep the money
How do “ethic’s” and corporate responsibility overlap?
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Outline - Responsibilities of Firms
To their customers. To their employees. To their stockholders. To their creditors. To the environment. To their communities.
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Responsibility to Customers
Responsible Production Practices Social responsibility: a firm’s recognition of how its
business decisions can affect society. Responsible Sales Practices How Firms Ensure Responsibility toward Customers
Business responsibilities: a set of obligations and duties regarding product quality and treatment of customers, employees, and owners that a firm should fulfill when conducting business.
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Responsibility to Customers
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Responsibility to Customers
1. Establish a Code of Responsibilities
2. Monitor Complaints
3. Obtain and Utilize Customer Feedback
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Responsibility to Customers
Role of Consumerism Consumerism: The collective demand by
consumers that businesses satisfy their needs. Role of the Government
Regulation of product safety Regulation of advertising Regulation of industry competition
Monopoly: A firm that is the sole provider of goods or services.
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Responsibility to Employees
Employee Safety Protected Classes Proper Treatment by Other Employees
Starbucks has established a code of conduct for its employees.
Diversity Prevention of Sexual Harassment
Sexual Harassment: Unwelcome comments or actions of a sexual nature.
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Responsibility to EmployeesProportion of Women and Minorities in Various Occupations
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Responsibility to Employees
How Firms Ensure Their Responsibility Code of Responsibility Grievance Policy Job Satisfaction
Conflict with Employee Responsibility How the Government Ensures Responsibility
to Employees
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Responsibility to Stockholders
How Firms Ensure Responsibility to Stockholders Align compensation with firm value Conflict of interests
How the Government Ensures Responsibility Sarbanes-Oxley Act
Responsibility to Stockholders
Enron CEO Ken Lay is led away in handcuffs by FBI agents after Enron was charged with providing misleading information to its investors.
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Responsibility to Stockholders
How Stockholders Ensure Responsibility Shareholder activism Institutional investors Conflict with excessive executive
compensation
Business executives are commonly required to meet with representatives of financial institutions that provided funding to the business. They are frequently asked to explain why their business performance was weaker than expected.
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Responsibility to Creditors
How Some Firms Violate Their Responsibility Firms mislead creditors when they provide
misleading financial information.
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Responsibility to the Environment
Air Pollution Firms reduced air pollution by refining their
production processes. Government guidelines reduced air pollution.
Land Pollution Conflict with Environment Responsibility
Firms incur expenses when they reduce pollution, which could reduce profits for the owners.
Firms like the paper factory shown here are supposed to meet various emission standards so that they do not cause air pollution. They need to be monitored by the Environmental Protection Agency to ensure that they meet the standards.
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Responsibility to the Community
Serving the Community and Stockholders Maximizing social responsibility may conflict
with the goal of maximizing a firm’s profits for its owners. Firms seek a compromise in which they invest in the community in ways that may ultimately increase their reputation and, therefore, sales.
Conflict Among Responsibilities
Communities Employees
Environment Stockholders
Creditors
Customers
Activity
Not much RANGE for this Manager Answer the three questions at the
end of the case List the Stakeholder groups –
Employees, Owners, Customers, Government, Community
