Chapter 10

Business Ethics/ Social Responsibility/

Environmental Sustainability

Strategic Management:
Concepts & Cases
13th Edition
Fred David

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Business Ethics

Social Responsibility

Environmental Sustainability

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Business Ethics

 Principles of conduct within

organizations that guide decision
making and behavior

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Business Ethics

 Code of Business Ethics

 A document that provides behavioral
guidelines that cover daily activities
and decisions within the organization

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Ethics Culture

 Ethics training should include:

 A message from the CEO
 Development and discussion of codes
of ethics
 Procedures for discussing and

reporting unethical behavior

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Ethics Culture

 To align ethical and strategic decision

making:
 Incorporate ethical considerations into long-
term planning
 Incorporate ethical considerations into
performance appraisals
 Encourage whistle-blowing
 Monitor department and corporate
performance regarding ethical issues
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Business Ethics

Social Responsibility

Environmental Sustainability

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Social Responsibility

 Actions an organization takes beyond

what is legally required to protect or
enhance the well-being of living things

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Social Policy

 Concerns what responsibilities the firm has to

its employees, consumers, environmentalists,
minorities, communities, shareholders, and
other groups

 Should be considered during each stage of

strategy formulation, implementation, and
evaluation

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Business Ethics

Social Responsibility

Environmental Sustainability

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Environmental Sustainability

 The extent that an organization’s

operations and actions protect, mend,
and preserve rather than harm or
destroy the natural environment

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Environmental Sustainability

 Strategies of companies are scrutinized

and evaluated from a natural
environment perspective

 Employees, consumers, governments,

and society are resentful of firms that
harm rather than protect the natural
environment
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Sustainability Report

 Reveals how a firm’s operation impact

the natural environment
 These reports are not required, but are
a good business practice

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Managing Environmental Affairs in
the Firm
 Managers must formulate strategies that preserve
and conserve natural resources and control pollution
 Environmental strategies could include
 Developing or acquiring green businesses

 Divesting or altering environment-damaging

businesses
 Striving to become a low-cost producer through

waste minimization and energy conservation

 Pursuing a differentiation strategy through green
product features
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Reasons Why Firms Should “Be
Green”
 Consumer demand
 Public opinion
 Environmental advocacy groups
 Federal and state environmental regulations
 Lenders
 Consumers, suppliers, distributors, and
investors
 Liability suits and fines
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ISO 14000/14001 Certification

 International Organization for

Standardization (ISO)
 A network of standards institutes of 147
countries
 Largest developer of sustainability
standards in the world
 Compliance is voluntary

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ISO 14000/14001 Certification

 ISO 14000 - a series of voluntary standards

in the environmental field
 ISO 14001 – a set of standards included
within ISO 14000
 Adopted by thousands of firms worldwide to
certify that they are conducting business in
an environmentally friendly manner
 Results in an environmental management

system (EMS)
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