Part 1
Business in a
Global
Environment
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Chapter 2
Business Ethics
and Social
Responsibility
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Chapter Objectives
1. Explain the concepts of business ethics and social
responsibility.
2. Describe the factors that influence business ethics.
3. List the stages in the development of ethical standards.
4. Identify common ethical dilemmas in the workplace.
5. Discuss how organizations shape ethical behavior.
6. Describe how businesses’ social responsibility is
measured.
7. Summarize the responsibilities of business to the
general public, customers, and employees.
8. Explain why investors and the financial community are
concerned with business ethics and social
responsibility.
2-3
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Concern for Ethical and Societal Issues
 Business ethics—standards of business
conduct and moral values.
Constituencies to which businesses are
responsible:
2-4
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
The New Ethical Environment
 High profile investigations and arrests in headlines.
 Yet vast majority of businesses ethical.
 New corporate officers charged with deterring
wrongdoing and ensuring ethical standards.
2-5
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
 Johnson & Johnson’s Credo (Part 1)
2-6
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
 Johnson & Johnson’s Credo (Part 2)
2-7
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
The New Ethical Environment
 Individuals make a
difference
 Development of
individual ethics
Stages of Moral and
Ethical Development
2-8
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
The New Ethical Environment
 Common Business
Ethical Challenges
2-9
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
 On-the-Job Ethical Dilemmas
Conflict of Interest—situation in which a
business decision may be influenced for
personal gain.
Honesty and Integrity—telling the truth
and adhering to deeply felt ethical
principles in business decisions.
2-10
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
 On-the-Job Ethical Dilemmas
Loyalty vs. Truth—businesspeople expect
their employees to be loyal and truthful.
But ethical conflicts may arise.
Whistleblowing—employee’s disclosure
to government authorities or the media of
illegal, immoral, or unethical practices in
the organization.
2-11
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
How Organizations Shape Ethical Conduct
 Structure of an Ethical Environment
2-12
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
 Ethical Awareness
Code of Conduct—a formal statement
that defines how the organization expects
and requires employees to resolve ethical
questions.
 Ethical Reasoning
Codes of conduct cannot detail a solution
for every ethical situation. So corporations
provide training in ethical reasoning.
2-13
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
 Ethical Action
Helping employees recognize and reason
through ethical problems and turning them
into ethical actions.
 Ethical Leadership
Executives must demonstrate ethical
behavior in their actions.
2-14
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Acting Responsibly to Satisfy Society
 Social Responsibility—management’s
acceptance of the obligation to consider
profit, consumer satisfaction, and societal
well-being of equal value in evaluating the
firm’s performance.
Social Audits—formal procedures that
identify and evaluate all company activities
relate to social issues such as
conservation, employment practices,
environmental protection, and philanthropy.
2-15
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Acting Responsibly to Satisfy Society
 Responsibilities
of Business
2-16
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
 Responsibilities to the General Public
2-17
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
 Responsibilities to the General Public
Public Health Issues
Protecting the Environment
Recycling—reprocessing of used
materials for reuse.
Green marketing—marketing strategy
that promotes environmentally safe
products and production methods.
2-18
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
 FTC Guidelines for Environmental Claims in
Green Marketing
2-19
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
 Responsibilities to the General Public
Developing the Quality of the Workforce
Corporate Philanthropy—act of an
organization giving something back to the
communities in which it earns profits.
2-20
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
 Responsibilities to Customers
Consumerism—public demand that a
business consider the wants and needs of its
customers in making decisions.
2-21
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
 Right to Be Safe
Consumers should feel assured that what they
purchase will not harm them in normal use
Product Liability
 Right to Be Informed
Consumers should have enough access to
education and product information to make
responsible buying decisions
2-22
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
 Wacky Warning Labels
2-23
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
 The Right to Choose
To select which goods and services they
want and need to purchase
 The Right to Be Heard
Should be able to express legitimate
complaints to appropriate parties
2-24
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
 Responsibilities to Employees
Workplace Safety.
Quality of Life Issues.
Ensuring Equal Opportunity in the Job.
Age Discrimination.
Sexual Harrassment and Sexism—
inappropriate actions of a sexual nature in
the workplace.
2-25
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
 Rates of Workplace Injuries and Illnesses
2-26
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
 Laws Designed to Ensure Equal Opportunity
2-27
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
 Laws Designed to Ensure Equal Opportunity
2-28
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
 Responsibilities to Investors and the
Financial Community
Fundamental goal of any business is to
make a profit.
Investors and the financial community
demand that businesses behave ethically
as well as legally.
2-29
Copyright © 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.