Universiti KualaLumpur

Universiti Kuala Lumpur

Topic12
Legal and ethical aspect of business

Copyright © 2006 Mohd Hisham. All rights Reserved.

 Chapter Outline

1. Ethics in the Workplace

2. Social Responsibility
3. Areas of Social Responsibility
4. Implementing Social Responsibility
Programs

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What Is Ethics?
Beliefs about what is right and wrong or good and bad in
actions that affect others

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Ethics in the Workplace

1. Ethical behavior is behavior conforming to generally

accepted social norms concerning beneficial and
harmful actions
2. Unethical behavior is behavior that does not conform
to generally accepted social norms concerning
beneficial and harmful actions

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What Is Business Ethics?

Ethical or unethical behaviors by a manager or employer of

an organization

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Business and Managerial Ethics

Managerial ethics are standards of behavior that

guide individual managers in their work. Three broad
categories:
a. Behavior toward Employees
b. Behavior toward the Organization
c. Behavior toward Other Economic Agents

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Steps in Making Ethical Judgments

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Expanded Model of Ethical Judgment Making

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Company Practices and Business Ethics

1. Adopting Written Codes

a. Many companies have written codes
that formally announce their intent to do
business in an ethical manner.
2. Instituting Ethics Programs
a. Ethical responses can be
learned through experience.

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Core Principles and Organizational Values

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What Is Social Responsibility?

The attempt of a business to balance its commitments

to groups and individuals in its environment, including
customers, other businesses, employees, investors
and local communities

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What Are Organizational Stakeholders?

Those groups, individuals and organizations that are directly

affected by the practices of an organization and who
therefore have a stake in its performance

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Major Corporate Stakeholders

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Areas of Social Responsibility

1. Responsibility Toward the Environment

2. Responsibility Toward Customers
3. Responsibility Toward Employees
4. Responsibility Toward Investors

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Responsibility Toward the Environment

Controlling pollution—the injection of harmful

substances into the environment—is a significant
challenge to contemporary business.
a. Air Pollution
b. Water Pollution
c. Land Pollution
i. Toxic Waste Disposal
ii. Recycling

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C02 Emissions, Past and Future

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What Is Consumerism?

Form of social activism dedicated to protecting the rights of

consumers in their dealings with businesses

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Basic Consumer Rights

1. Consumers have a right to safe products.

2. Consumers have a right to be informed
about all relevant aspects of a product.
3. Consumers have a right to be heard.
4. Consumers have a right to choose what they
buy.
5. Consumers have a right to be educated
about purchases.
6. Consumers have a right to courteous
service.

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Unfair Pricing

1. Collusion occurs when two or more

firms agree to collaborate on such
wrongful acts as price fixing
2. Price gouging is a response to
increased demand with overly steep
price increases

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Ethics in Advertising

1. Food product labeling

2. Misleading product claims
3. Deceptive advertising
4. Morally objectionable advertising

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Legal and Social Commitments

1. Businesses cannot practice illegal discrimination

against people in any facet of the employment
relationship.
2. Businesses should provide employees with equal
opportunities for reward and advancement without
regard to race, sex or other irrelevant factors.
3. Businesses should strive to ensure that the workplace
is physically and socially safe.

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What Is a Whistle-Blower?

Employee who detects and tries to put an end to a

company’s unethical, illegal or socially irresponsible actions
by publicizing them

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Responsibility Toward Investors

1. Improper Financial Management

a. Check Kiting
b. Insider Trading
c. Misrepresentation of Finances

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Implementing Social Responsibility Programs

1. Critics of socially responsible business oppose any

business activity that threatens profits.
2. Proponents of socially responsible business believe that
corporations are citizens and should help to improve the
lives of fellow citizens.

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Approaches to Social Responsibility

1. Obstructionist stance involves the firm doing

as little as possible and may involve attempts
to deny or cover up violations
2. Defensive stance involves the firm meeting
only minimum legal requirements in its
commitments to groups and individuals in its
social environment

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Approaches to Social Responsibility

1. Accommodative stance involves the firm, if

specifically asked to do so, exceeding legal
minimums in its commitments to groups and
individuals in its social environment
2. Proactive stance involves the firm actively
seeking opportunities to contribute to the well
being of groups and individuals in the firm’s
social environment

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Spectrum of Approaches to Social Responsibility

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Top 15 Corporate Foundations

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Establishing a Social Responsibility Program

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 Universiti KualaLumpur
Universiti Kuala Lumpur

Topic 12
End of Lecture

Copyright © 2006 Mohd Hisham. All rights Reserved.