Conducting Business Ethically and Responsibly

Chapter 4

Sr.Chapter Chapter HeadingNo.No.

1. 3 Understanding the Global context of business (031012)2. 4 Conducting Business Ethically and Responsibly (250212)3. 6 Organizing the Business Enterprise4. 7 Understanding Entrepreneurship and Small Business5. 8 Managing Human Resources6. 9 Understanding Employee Motivating, Satisfying and

Leadership7. 11 Understanding Marketing Processes and Consumer

Behavior8. 16 Managing Quality and Productivity9. 17 Managing Information Systems and Communication

Technology10. 19 Understanding Money and Banking11. 20 Intermediate Term and Lease Financing

Course Outline

3

Marks Distribution

50 Terminal Examination20 Mid Term Examination15 Quizzes15 Final Assignment

ETHICS IN THE WORKPLACE Assessing ethical behavior Company practices and Business Ethics

SOCIAL RESPONSIBILITY The Stakeholder Model of Responsibility

AREAS OF SOCIAL RESPONSIBILITY Responsibility Towards the Environment Responsibility Towards Customers Responsibility Towards Employees Responsibility Towards Investors

IMPLEMENTING SOCIAL RESPONSIBILITY PROGRAMS

approaches to social responsibility Managing Social Responsibility programs Social responsibility and the Small business

TOC

Ethics in the Workplace

© 2009 Pearson Education, Inc.

EthicsBeliefs about

right and wrong and actions that

reflect beliefs

Social Responsibilit

yObligation of a

business to contribute to

society

Definitions• Business

• A business (also known as enterprise or firm) is an organization engaged in the trade of goods, services, or both to consumers. Businesses may be privately owned, not-for-profit or state-owned.

• Ethics:• Beliefs about what is right and wrong or good and bad in

actions that affect others• Or• Ethics are moral principles by which people conduct

themselves personally, socially, and professionally

Definitions• Personal ethics:

• moral principles that guide an individual• Business ethics:

• rules, based on moral principles, used by a business/ manager/ employer.

• Ethical Behavior• Behavior conforming to generally accepted social norms

concerning beneficial and harmful actions

• Unethical Behavior• Behavior that does not conform to generally accepted

social norms concerning beneficial and harmful actions

Definitions• whistleblower

• (an informant who exposes wrongdoing within an organization in the hope of stopping it) "the law gives little protection to whistleblowers who feel the public has a right to know what is going on";

Assessing Ethical Behavior

• Ethical Norms and the Issues They Entail

– Utility: Does a particular act optimize the benefits to those who are affected by it? Do all relevant parties receive “fair” benefits?

– Rights: Does the act respect the rights of all individuals involved?

– Justice: Is the act consistent with what’s fair?

– Caring: Is the act consistent with people’s responsibilities to each other?

Assessing Ethical Behavior

Classifying Business Decisions

Ethical

Unethical

Illegal

Legal

Unethical and Illegal

Ethical and Legal

Unethical but Legal

Ethical but

Illegal

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ETHICS

Company Practices and Business Ethics

• Encouraging Ethical Behavior Involves:– Adopting written codes of conduct and

establishing clear ethical positions for the conduct of business

– Having top management demonstrate its support of ethical standards

– Instituting programs to provide periodic ethics training

– Establishing ethical hotlines for reporting and discussing unethical behavior and activities

© 2009 Pearson Education, Inc.

Factors That Cause WorkersTo Act Unethically

Pressure to meet sales, budget or profit goals

Lack of recognition Personal financial

worries Balancing work & family Poor communication

Top Five Unethical/IllegalBehaviors of Workers

Cut corners in quality control

Covered up incidents Abused or lied about sick

days Lied to or deceived

customers Put inappropriate pressure

on others

Fostering Ethical Behavior

Leadership Codes of Conduct

Compliance-based Integrity-Based

Social Audits Whistle Blowing

Factors Influencing Managerial Ethics

Individual Organizational Environmental

ValuesWork

Background

Family Status

Personality

Top Level Mgmt. Philosophy

The Firm’s Reward System

Job Dimensions

Competition

Economic Conditions

Social/Cultural Institutions

Business Mission Statement

Why? What? How?

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Telenor Pakistan

19

Proctor & Gamble

20

Uni-lever Pakistan

SOCIAL RESPONSIBILITY

Three Levels of Social Responsibility

Societal Responsibility

Stakeholder Responsibility

Profit Responsibility

Owners/Stockholders

General

PublicCustomers Employees

Suppliers/Distributors

Ecological

Environment

Public Interest Groups

Source: Marketing, 5/E by Berkowitz, Kerin, Hartley, and Rudelius.

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RESPONSIBILITY TO……EMPLOYEES

INVESTORS

COMMUNITY

ENVIRONMENT

CUSTOMERS

Creating Jobs that Work

Sustainable Development

Value, Honesty and Communication

Fair Stewardship and Full Disclosure

Business and the Greater Good

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RESPONSIBILITY TO EMPLOYEES: CREATING JOBS THAT WORK

A. Meet Legal StandardsB. Workplace SafetyC. Minimum Wage/Overtime

RequirementsD. Value EmployeesE. Provide Work/Life Balance

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RESPONSIBILITY TO CUSTOMERS

CONSUMERISM:

• The Right to Be Safe

• The Right to Be Informed

• The Right to Choose

• The Right to be Heard

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ROTTEN APPLE?

Planned Obsolescence – Deliberately designing products

to fail in order to shorten the time between consumer

repurchases

APPLE COMPUTERS:

• iPods had irreplaceable battery.

• Batteries died after 18 months.

• Customers were encouraged to purchase new iPods

• Two customers posted high profile protest movies online.

• APPLE announced replacement program.

RESPONSIBILITY TO INVESTORS

A. Legal RequirementsB. Responsible use of

Corporate DollarsA. Honesty

C. Is Optimism or Pessimism Socially Responsible?

FAIR STEWARDSHIP AND FULL DISCLOSURE

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RESPONSIBILITY TO COMMUNITY

Corporate Philanthropy - business donations to

nonprofit groups, including both money and time.

Corporate Responsibility

The actions of the business rather than

donations of money and time.

Cause-related Marketing – partnerships between businesses

and nonprofit organizations, designed to spike sales for the

company and raise money for the nonprofit.

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RESPONSIBILITY TO ENVIRONMENT

Green Marketing – marketing environmental products and practices

to gain a competitive edge.

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RESPONSIBILITY TO ENVIRONMENT

A. Responsibility to environment is a part of responsibility to community

B. Reducing the amount of trash is more important than recycling

C. Although consumers support green marketing, they may not be willing to sacrifice quality

Implementing Social Responsibility (SR) Programs

• Arguments Against SR– The cost of SR threatens profits.– Business has too much control over which SR

issues would be addressed and how SR issues would be addressed.

– Business lacks expertise in SR matters.

• Arguments for SR– SR should take priority over profits.– Corporations as citizens should help others.– Corporations have the resources to help.– Corporations should solve problems they create.

Approaches to Social Responsibility

Obstructionist stance: A company does as little as possible for SR and may

involve attempts to deny or cover up violations Defensive Stance:

A company meets only minimum legal requirements in its commitments to groups and individuals for SR

Accommodative stance A company, if specially asked to do so, exceeds legal

minimums to groups and individuals in its social environment

Proactive stance A company actively seeks opportunities to contribute to

the well-being of groups and individuals in its social responsibility

FIGURE 2.4: Spectrum of Approaches to Corporate Social Responsibility

Managing Social Responsibility Programs

1. Social responsibility must start at the top and be considered as a factor in strategic planning.

2. A committee of top managers must develop a plan detailing the level of management support.

3. One executive must be put in charge of the firm’s agenda.

4. The organization must conduct occasional social audits—systematic analyses of its success in using funds earmarked for its social responsibility goals.

Social Responsibility and the Small Business

• Large Business versus Small Business Responses to Ethical Issues

– Differences are primarily differences of scale

– More issues are questions of individual ethics

• Ethics and social responsibility are decisions faced by all managers in all organizations, regardless of rank or size

Corporate Annual GivingMerckJohnson & JohnsonPfizerEli LillyIBMMicrosoftIntelBank of America

$221.0*

176.2

123.9

121.4

116.1

104.7

101.0

91.5

Source: The Taft Group * In Millions