part
1
Ferrell Hirt Ferrell
A CHANGING WORLD
EIGHTH EDITION
FHF
McGraw-Hill/Irwin
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
part
Business in a
Changing World
1
CHAPTER 1 The Dynamics of Business and Economics
CHAPTER 2 Business Ethics and Social Responsibility
CHAPTER 3 Business in a Borderless World
FHF
Business Ethics
[
An identifiable problem, situation, or opportunity
that requires a person to choose from among
several actions that may be evaluated as right or
wrong, ethical or unethical
]
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Social Responsibility
Business’s obligation is to maximize its positive
impact and minimize its negative impact on society
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Laws and Regulations
 Laws and regulations encourage businesses to
conform to society’s basic standards, values, and
attitudes.
 Sarbanes-Oxley Act, 2002
 Troubled Assets Relief Program
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The Role of Ethics in
Business
Growing concerns about legal and ethical
issues in business





Antitrust violations
Accounting fraud
Cybercrimes
Unfair competitive practices
Tax fraud
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Ethical Issues
[
An identifiable problem, situation, or opportunity
that requires a person to choose from among
several actions that may be evaluated as right or
wrong, ethical or unethical
]
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Ethical Issues
 Involve all organizational activities
•
For profit businesses
•
Non-profits
•
Government
•
Schools and universities
 Learning to recognize and resolve ethical issues are
important in maintaining an ethical business climate
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Ethical Conduct Helps To:
 Build Trust
 Promote confidence
 Validate relationships
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How to Judge the Ethics
of a Situation
 Examine the situation from your stakeholders’
position, including customers and competitors
 People often need years of experience to
accurately recognize and react to ethical situations
 Ethical situations vary by culture
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Unethical Behavior in
Business






Misuse of company resources
Abusive & intimidating behavior
Conflict of interest
Fairness & honesty
Communications
Business relationships
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Sources of Unethical
Behavior
Misuse of Company Resources

The most commonly observed misconduct


Time theft


Stealing office supplies
Use of personal email and social networking sites at work is a
growing problem
Unauthorized use of equipment and software
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Sources of Unethical
Behavior
Abusive and Intimidating Behavior / Bullying
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Sources of Unethical Behavior
in Organizations
Conflict of interest


Advance personal interest over others’ interests
Benefit self at the expense of the company
Bribes represent a conflict of interest because they benefit an individual at
the expense of an organization or society
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Fairness & Honesty
Are at the heart of business ethics




How employees use resources
No deceit, coercion, or misrepresentations
Fair competition
Disclosure of potential harm caused by products
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Ethical Concerns in
Communications





False/misleading advertising
Deceptive personal selling tactics
Truthfulness in product safety and quality
Unsubstantiated claims
Product labeling
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Ethical Concerns in
Business Relationships
Relationships with customers, suppliers and
co-workers


Ethical behavior within a business is important


Keeping company secrets

Avoiding undue pressure
Meeting obligations and responsibilities
Managers’ responsibility to create ethical work environment and
provide a positive example
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Plagiarism
 The act of taking someone else’s work and
presenting it as your own without mentioning
the source
 A major problem in schools and business
 Students copying others’ work
 A manager taking credit for a subordinate’s work
 Employees copying reports and passing the work off as
their own
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Ethical Decisions in an Organization are
Influenced by Three Key Factors
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Code of Ethics
[
Formalized rules and standards
that describe what a company
expects of its employees
]
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Whistleblowing
Occurs when an employee exposes an employer’s
wrongdoing to outsiders


Many companies have internal reporting mechanisms in place
•
Avoid legal action
•
Negative publicity
Whistleblowers often treated negatively and have a difficult time finding
other work
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Four Dimensions to
Social Responsibility
1. Economic
2. Legal
3. Ethical
4. Voluntary
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The Pyramid of
Social Responsibility
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Corporate Citizenship
[
The extent to which businesses meet the
legal, ethical, economic, and voluntary
responsibilities placed on them by
their stakeholders
]
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Stakeholder Relationships:
Shareholders




Primarily concerned with profit or ROI
Financial community at large
Proper accounting procedures
Protecting owner’s rights and investments
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Stakeholder Relationships:
Employees




Provide a safe workplace
Adequate compensation
Listen to grievances
Fair treatment
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Stakeholder Relationships:
Consumers
Consumerism
 Activities that independent individuals, groups and
organizations undertake to protect their rights as consumers
 Critical issue is business’s responsibility to customers to provide
satisfying, safe products and to protect their rights as consumers.
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Kennedy’s Consumer
Bill of Rights




The right to safety
The right to be informed
The right to choose
The right to be heard
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Stakeholder Relationships:
The Environment & Sustainability Issues
Sustainability means conducting activities
with the long-term well-being of the natural
environment in mind.

Involves interaction between




Nature
Individuals
Organizations
Business strategies
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Stakeholder Relationships:
The Environment & Sustainability Issues
 Pollution
• Land
• Water
• Air
 Waste disposal
 Future of energy
• Alternative energy
Copyright 2009 Utopian Empire Creativeworks | Biomass Energy Plant in Cadillac Michigan
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Response to
Environmental Issues
 Many companies have a President of Environmental
Affairs Position
 Most Fortune 500 companies have in place:
 Written environmental policy
 Recycling programs
 Waste-reduction initiatives
 Environmental consciousness can save money through reducing waste
 Greenwashing, or creating a positive association with environmental
issues for an unsuitable product, service or practice
•
Is a growing problem
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Stakeholder Relationships:
The Community
General community and global welfare
 The Avon Foundation
 Breast Cancer Awareness Crusade
 Target’s Take Charge of Education program
 1% of Target Red Card purchases donated to educational causes
Hardcore unemployed
•
•
National Alliance of Business funds training to help hard-core
unemployed to find work and gain self-sufficiency
Enhanced self-esteem; help people become productive members of
society
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