Business Ethics & Corporate Social Responsibility
When I do good, I feel good; when I do bad, I feel bad, and that is my religion. • Abraham Lincoln
What’s the link? How would you describe Fairtrade? How would you describe Cadbury as a company?
Cadburys & Fair Trade • 100 years ago William Cadbury chose beans from Ghana. A year ago we founded the Cadbury Cocoa Partnership. And from Autumn 2009 Cadbury Dairy Milk will be Fairtrade certified. Welcome aboard. What are their motives?
Business Ethics • Rules or standards governing the conduct of a business • Moral code – what is ‘right’ and what is ‘wrong’? • Highly subjective nature
How high are your morals? • Imagine you are at Uni and a friend works behind the Uni bar and they always serve you quickly all the time. • Anything wrong with this? • After Christmas, s/he is not happy in the job (long hours, seeing everyone else having fun, while their working, and boss getting bossier!) You start to notice that the friend undercharges you. • DO YOU SAY ANYTHING? • DO YOU MANIPULATE THE SITUATION? • Would you offer to get the rounds in for others who pay? • Would you always ‘set’ the time so that it’s always ‘this’ friend serving when its your round? • To what extent is this morally wrong • At what stage does the scenario change from moral to legal concerns? • Would you stop your friend from this error? When? Would you tell the boss? Remember that this is fraud and stealing!
Who would you put in your top 10 of unethical businesses? Use your whiteboards!
In 2006 there was a survey of UK shoppers to identify the least ethical business…. • Who do you think was in the Top 10? • Perceived least ethical firms • 1. McDonald's • 2. Nike • 3. Shell • 4. Adidas • 5. Barclays Bank • 6. Coca-Cola • 7. BP • 8. Camelot • 9. American Express • 10. Nestle
To complete its ethics index, Covalence compiled both quantitative and qualitative data, spanning seven years, for 581 companies. The data encompass 45 criteria that include labor standards, waste management and human rights records. And because it is a reputation index, the Covalence survey also incorporates media, industry and NGO documents into its evaluation. A Swiss MR firm published their findings 2009 put these businesses in their list of the most unethical global businesses… 1) IBM 2) Intel 3) HSBC Primark Ryanair Gold mine Italian’s PM’s digital company Total oil/gas Tobacco company Covalence Unethical Businesses 2009. What benefits do these businesses gain from unethical behaviour?
Morrisons… • Ethical or unethical – you decide? • Morrisons has been accused of using unethical behaviour by asking customers, while at the till point to sign a survey for an increase in their parking site. • However, they do not ask ‘how’ customers get to the store… whether walk, bus, train or in a car!
M&S Plan A What benefits do M&S get from adopting such a strategy?
The Corporation DVD CORPORATION TRAILER Then back to chapters and watch chapters: 1 = the birth – just the B& W quick start then back to chapter 6 = the pathology of commerce – link back to last lesson and Top 10 unethical businesses
Business Ethics • Examples: • Production of children's toys • Coffee industry • Baby milk • Music industry • Multi-national operations • McDonalds – food quality, litter • Chocolate industry • Jewellery – diamonds and gold • Chemical industry Watch Dilbert in your own time!
Changes in the Social Environment Why be ethical? Build loyal customer base through USP Attract best workers who want to work for a company with high standards Lower costs through recycling and less waste Motivation across the company Is ethical behaviour simply a form of Public Relations (PR)? Why be ethical? There are a number of reasons for a firm to have an ethical business culture. These range from the profit motive to wanting to ‘do the right thing’. Visit the Institute of Business Ethics to learn more. They even run a student essay competition
Why not be ethical? • More expensive to source raw materials • More expensive capital goods to cut pollution • Training workers to be ethical costs money • Losing custom to unethical practices from more ruthless competitors • Providing better facilities for staff costs money • Higher costs lead to higher prices and lower revenues
Warren Buffett Berkshire Hathaway “It takes 20 years to build a reputation and five minutes to ruin it.”
Corporate social responsibility means Conducting business in an ethical way and in the interests of the wider community Responding positively to emerging societal priorities and expectations A willingness to act ahead of regulatory confrontation Balancing shareholder interests against the interests of the wider community Being a good citizen in the community
Is CSR the same as business ethics? Clearly an overlap Both concern values ,objectives and decisions based on something other than the pursuit of profit Socially responsible firms must act ethically The difference: Ethics concern actions which can be assessed as right or wrong by reference to moral principles CSR is about the organisation’s obligations to all stakeholders – and not just shareholders
Quick Questions… • Why might a policy of delegation make it more difficult for a business to behave ethically? • State two factors that might shape the moral behaviour of a business. • Outline the positive effects of an adoption of an ethical policy may have on a business’s workforce.
More detailed Q’s • Outline 5 reasons why a business would want to be ethical. • What is the difference between a business that operates legally and one that operates ethically. Use real business examples in your answer. • Why is ethical behaviour is increasingly important as a competitive weapon. • What factors might prevent an ethical business from being highly ethical?
Banks & ethics • Is it ethical for banks to give out such large bonuses this year, when last year they made such large losses and had to be rescued by Govt & paid by future increase in taxes!
Homework • Textbook • P315 • Case Study Walmart – do all Q’s • You have 2 hwks to do this – due in 1 week!
Further reading • http://news.bbc.co.uk/1/hi/scotland/7155825.stm • Alcohol cheaper than water • Chicken welfare & celebrity endorsements • http://www.thepoultrysite.com/poultrynews/13736/celebrity-chefs-campaign-for-chicken-welfare
http://www.guardian.co.uk/ethicalbusiness Ethical Articles
http://www.guardian.co.uk/environment/fair-trade Fairtrade Articles
More links • http://www.mallenbaker.net/csr/CSRfiles/Links.html
Essay title • Research among schools and businesses points to ‘cultural differences’ as being the key problem in mergers. • Discuss why cultural differences are so hard to overcome when bringing two organisations together. (40)
Future essay ideas & exam skills
Possible answers include: • A clear start by explaining ‘business culture’ and then ‘cultural differences’, eg culture is ‘the way we do things round here’, i.e. the attitudes and behaviours that are the norm among staff; cultural differences are therefore the contrasting behavioural norms between two different employers, e.g. one staff room is a buzz of conversation and debate; another is underused and/or a place of negativity • By its nature culture has built up over many years or even generations; it is very difficult for people to ‘snap out of it’, especially if they still have many former colleagues by their side • Staff from the two sides of a merger are naturally wary of each other; unless there is a credible promise of ‘no redundancies’, people will be worried about who’s in and who’s on the way out; therefore there is every reason to build a barrier between ‘them and us’
ACTIVITY BUSS4.4 Social Environment Chose a business that attracts high profile media attention e.g. Tesco, M&S, Primark, Nike, Gap, Shell Carry out some independent research into its approaches towards its social responsibilities and/or its ethics Produce an article for a business magazine evaluating how they have responded to social and ethical factors