Lamb, Hair, McDaniel
2012-2013
CHAPTER 3
© 2013 by Cengage Learning Inc. All Rights
Chapter 1
Copyright ©2012 by CengageReserved.
Learning Inc. All rights reserved
11
© Quayside/Shutterstock.com
Ethics and Social Responsibility
Learning Outcomes
1
Explain the concept of ethical behavior
2
Describe ethical behavior in business
3
Discuss corporate social responsibility-CSR
Explain cause-related marketing-CRM
4
2
Values, Morals and Ethics
Values
•Personal/Family
•Right and Wrong/Should and Shouldn’t
Morals
•Social/Society
•Good and Bad
http://changingminds.org/explanatio
Ethics
ns/values/values_morals_ethics.htm
•Professional/Business
•Formal system/set of rules adopted by a group of people
3
The Concept of
Ethical Behavior
Explain the concept
of ethical behavior
1
4
Ethical Behavior
The moral principles or values that generally
govern the conduct of an individual or a group.
• There is no law for “cutting in line.”
(Cutting in line would anger most people)
• Is it legal?
• Is it ethical?
5
1
Ethical Behavior in Business
Describe
ethical behavior
in business
2
6
Ethical Behavior
in Business
Morals
The rules people develop as
a result of cultural values
and norms.
Ethics
The moral principles or
values that generally govern
the conduct of an individual
Morals: involve “good” and “bad”
Ethics: standards or codes of behaviors
7
2
Ethical Behavior in Business ?
Fast Food Nation
http://www.youtube.com/watch?v=zc_z623Wsro
2
8
Ethical Development Levels
More
Childlike Preconventional
Morality
Conventional
Morality
More Postconventional
Morality
Mature
9
• Based on what will be
punished or rewarded
• Self-centered, calculating,
selfish
• Moves toward the
expectations of society
• Concerned over legality
and the opinion of others
• Concern about how they
judge themselves
• Concern if it is right in
the long run
2
Dell: An Ethics Case
• Documents from a lawsuit revealed that Dell shipped
over 11.8 million faulty computers from 2003 - 2005.
• An internal investigation revealed extensive problems,
but Dell tried to cover up the problem, telling its sales
team not to mention bring it up.
• Dell used faulty components to fix broken computers.
• Dell took a $300 million charge to fix the computers, but
only in response to stakeholder demands.
At what level of ethical development
did Dell operate?
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Ethical Decision Making
Influential Factors
Extent of Problems
Probability of Harm
Top Management
Actions
Time Until
Consequences
Potential Consequences
Number Affected
Social Consensus
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2
Creating Ethical Guidelines
A Code of Ethics:
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© iStockphoto.com/Steve Cady
• Helps identify acceptable
business practices
• Helps control behavior
internally
• Avoids confusion in
decision making
• Facilitates discussion
about right and wrong
2
Ethics in Other Countries
Foreign Corrupt Practices Act (FCPA)
• Prohibits U.S. corporations from making
illegal payments to foreign officials.
• Has been criticized for putting U.S.
businesses at a disadvantage.
• Has encouraged some countries to
implement their own anti-bribery laws.
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2
Corporate Social Responsibility
Discuss corporate
social responsibility
3
14
Corporate Social
Responsibility
Pros
• It is the right thing to do
• Businesses have the
resources to devote to
fixing social problems
• Prevents government
regulation and
potential fines
• It can be profitable
Cons
• Takes focus away from
making profits
• Business executives
spend shareholder
money on environmental
initiatives
• Do companies know
what is best for the
world? (Milton Friedman)
3
15
Sustainability
• Socially responsible
companies will
outperform their peers.
• It is in business’s best
interest to find ways to
attack society’s ills.
http://www.youtube.com/watch?v=lE0NLvW79SU
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3
Exhibit 3.1
Pyramid of
Corporate Social
Responsibility
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Growth of Social Responsibility
According to a recent study, (IBM Global Survey)
the percentage of firms that consider social
responsibility factors when making business
decisions are as follows:
Brazil
Canada
Australia
United States
India
China
Mexico
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62%
54%
52%
47%
38%
35%
26%
3
Green Marketing
“The development and marketing of products
designed to minimize negative effects on the
environment or improve the environment”
– Environmentally aware customers pay
more for products
– Companies must try to educate
customers of environmental benefits
– Implications of Pricewaterhouse study
(raw materials depleted in 25 years)
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3
Cause-Related Marketing
Explain cause-related
marketing
4
20
TOMS: One for One
• TOMS was founded on a simple
premise: With every product you
purchase, TOMS will help a
person in need. One for One™.
Using the purchasing power of
individuals to benefit the greater
good is what we're all about.
• Visit www.TOMS.com to learn more...
http://www.youtube.com/user/tomsshoes?feature=results_main
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Cause-Related Marketing
For-profit and non-profit organizations
cooperate to generate funds.
• Generates about $7 billion annually
• Too many causes cause customer
cause fatigue
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4