Chapter 2

Conducting Business Ethically and Responsibly

PowerPoint Presentation by Charlie Cook Copyright 2005 Prentice Hall, Inc. All rights reserved.

The more I help others to succeed, the more I succeed.

Ray Kroc, Founder, McDonalds

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Key Topics
Individual codes of ethics and the importance of ethics in the workplace Key terms
Social responsibility in U.S. business

Environmental issues and stakeholder relationships

Approaches and implementation

Implications for small business

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What Is Ethical Behavior?

Ethics
Right and wrong, good and bad, in actions that affect others

Ethical Behavior
Conforming to generally accepted ethical norms

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Steps in Making Ethical Judgments

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Figure 21 25

Ethical Considerations
Regarding a particular act
Utility: Does it optimize what is best for those who are affected by it? Rights: Does it respect the rights of the individuals involved? Justice: Is it consistent with what we regard as fair? Caring: Is it consistent with peoples responsibilities to each other?

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Expanded Model of Ethical Judgment Making

Data Gathering

Gather the facts concerning the act or policy

Is the act or policy acceptable according to the four ethical norms? Utility: Does it optimize the satisfaction of all constituencies? Rights: Does it respect the rights and duties of the individuals involved? Justice: Is it consistent with the canons of justice? Caring: Is it consistent with the responsibility to care?

Analysis

No on all
criteria

No on one or
two criteria Is there any reason for overriding one or two of the ethical norms? Is one ethical norm more important than the others? Is there any reason why a person may have been forced into committing an act or following a policy?

Yes on all
criteria

No

Yes

Judgment

The act or policy is not ethical.

The act or policy is ethical.

Figure 22 27

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Company Practices and Business Ethics

Best Approach: Open, Honest, Responsive!

The Coca Cola Scare Case

The Tylenol Scare Case

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Core Principles and Organizational Values

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Figure 23 29

How Much Privacy Does Your Employer Owe You?

Email Internet Cellular Phones

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Formalizing the Commitment to Ethics

Adopting Written Codes

Instituting Ethics Programs

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Social Responsibility: Balancing Commitments to Stakeholders

Stakeholders
Groups, individuals, and organizations that are directly affected by the practices of an organization
Employees Customers Investors Suppliers

CORPORATION
Local Communities

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Major Corporate Stakeholders

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Figure 24 213

Responsibility Toward the Environment

Air pollution Water pollution Land pollution
Toxic waste Recycling

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CO2 Emissions, Past and Future

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Figure 25 215

Responsibility Toward Customers Consumer Rights

Unfair Pricing

Ethics in Advertising

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Responsibility Toward Employees

Legal and Social Commitments

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Whistle-blowers
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Responsibility Toward Investors

Improper financial management Check kiting Insider trading

Misrepresentation of finances

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Approaches to Social Responsibility

Level of Social Responsibility
Lowest Highest

Obstructionist Stance

Defensive Stance

Accommodative Stance

Proactive Stance

Actively Avoids Responsibility

Does Legal Minimum

Responds to Requests

Actively Seeks Opportunities to Contribute

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Fifteen Largest Corporate Foundations

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Table 21 220

Establishing a Social Responsibility Program

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Figure 27 221

Ethics, Social Responsibility, and the Small Business

Do small businesses face different issues with regard to ethics and social responsibility?

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Chapter Review
Discuss how individuals develop their personal codes of ethics.

Explain why ethics matter in the workplace.

Distinguish social responsibility from ethics. Show how social responsibility applies to environmental issues and to relationships with customers, employees, and investors. Identify four approaches to social responsibility. Describe the four steps a firm must take to implement a social responsibility program.

Explain how social responsibly and ethics affect small business.

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