Ethics and Social Responsibility Chapter 4
Learning Objectives • Explain why ethics are important in business • Describe a code of ethics • Discuss Ethical Dilemmas • Describe Laws that deal with ethical issues • Explain the change in corporations’ views of social responsibility • Describe the ways in which businesses demonstrate their social responsibility.
Nike • See page 83 • Read the paragraph • Why might it be challenging for a manager to balance the needs of the company and the needs of a worker? • Imagine you are the Vice President of Social Responsibility at your workplace or school. What changes would you make in order to prevent unfair practices?
Ethics • Get into groups of 2 and make a list of personal ethics. • Share Ideas
Ethics in Business Ethics: are a set of moral principles or values that govern behavior.
Importance of Ethics • Everyone has Personal Ethics • Helps decide in different situations • Businesses need ethics in order to know how to behave…also • Business Ethics reflect companies beliefs • What Actions are appropriate? • How to be fair among people?
Codes of Ethicsa document that outlines the principles of conduct to be used in making decision within an organization. Areas they cover: • Honesty • Adherence to the law • Product Safety and quality • Health and safety in the workplace • Conflicts of Interest • Employment Practices • Selling and marketing practices • Financial reporting • Pricing, billing, and contracting • Trading in securities/using confidential information • Acquiring and using information about competitors • Security • Payments to obtain business • Political activities • Protections of the environment
Behaving Ethically One bad decision can make or break a company!
Behaving Honestly • Many situations the ethical course of action is clear cut • Employee Theft • Embezzle Money • Steal supplies • Take Bribes • Submit false expense reports • Don’t lie about the hours • Never falsify documents
Sarbanes-Oxley Act of 2002 • 2001- Enron Corporation • World’s largest traders in gas, electricity, etc • Collapsed in a scandal • Declared bankruptcy • Crimes • Deceiving investors • Inflating profits • Hiding debts • Arthur Anderson convicted of Obstructing Justice • WorldCom • Improperly booked over 7 billion in profits • President Bush signed • Contains important rules affecting the reporting and corporate governance of public companies and their directors and officers • Major provisions • Periodic Reports filed with SEC • Prohibits most loans to directors in beneficial ownership within 2 days after a transaction has been executed
Solving Ethical Dilemmas • Have you defined the problem accurately? • How would you define the problem if you stood on the other side of the fence? • Whom could your decision or action injure? Can you discuss the problem with the affected parties before you make your decision? • Are you confident that your position will be as valid over a long period of time as it seems now? • Could you disclose without qualm your decision or actions to your boss, your CEO, the board of directors, your family, and society as a whole?
Assignment • You are going to get into groups of 4 or 5 and look at the Ethical Dilemma. • As a group you are going to look at the dilemma and answer the questions on the prior slide. • As a group you are going to come to group decision as how you would handle this. • Then you are explain to the class what you situation is and how you would handle it • When you are done in your group • Write in your Journal • Today’s Date • Would you have done things differently as an individual.
Here are your Groups Group 1 Group 2 • Aubrey Anselmo • Linh Dang • Chandler Fish • Josh Gray • Taylor Carper • Ashley Davis • Terry Forward • Ashley Kleine
Here are your Groups Group 3 Group 4 • Ryan Morey • Jamie Reynolds • Karlye Staggs • Kyle Reeser • Kelly Yaklin • Kyle Thick • Matt Richardson • Kendyl Staggs • Katie Thiel
Laws Relating to Ethics in Business • Competitive Behavior • Consumer Protection • Environmental Protection
Competitive Behavior • All Companies operating in U.S. must abide by these laws • The Sherman Act • Illegal to monopolize trade • Able to compete fairly • The Clayton Act • 1914 • Illegal to charge different prices to different wholesale customers • Example: Manufacturer of Steel cannot charge one price to GM and another to Ford • Bans requiring a customer to purchase a second good • Hardware cannot charge for software • The Wheeler-LEA Act • 1938 • Deceptive Acts or practices • False Advertising • Label consequences • Example: Cigarette Boxes
Consumer Protection • Food and Drugs • Federal Food, Drug and Cosmetic Act • Bans sale of impure, improperly labeled, falsely guaranteed, and unhealthful foods, drugs, and cosmetics • Enforced by Food and Drug Administration (FDA) • Consumer Products • Consumer Product Safety Commission (CPSC) • Establishes minimum safety standards • Can force manufacturers to recall items • Examples? • Loans • Series of Laws/ Truth in Lending Act • Makes Creditors inform customers up front what the fees and interest will be. • Equal Credit Opportunity Act • Cannot discriminate
Environmental Protection • 1960’s • The National Environmental Policy Act of 1969 • Key Piece • Created Environmental Protection Agency (EPA) • Protect Human health and safeguard the air, water and land • Clean Air Act of 1970 • Regulates air emissions • The Toxic Substances Control Act of 1976 • Track Industrial Chemicals produced or imported in US • The Clean Water Act • Set standards on the type and quantity of pollutants that industries put in water
Ethical Standards and Culture • Standards of ethics differ around the world • Here it might be ethical in U.S. but not in another country • As a business manager that works internationally needs to have an understanding of ethics in different cultures
Ethical Standards and Culture Corporate Gift Giving Intellectual Property • Corporate Gift Giving • Differ around the world • Some Cultures Gifts are expected and if you don’t bring one it is an insult • Japan • United States government officials cannot accept gifts from businesses • Refers to ownership of Property • Inventions • Books • Movies • Computer Programs • Creators have exclusive right to market and sell their work. • Patents • Trademark • Copywright • Very important to businesses • Especially in Software- hard to track
Social Responsibility • Changing Views of Social Responsibility • Measuring Social Responsibility
Changing Views of Social Responsibility Social Responsibility: the obligation that individuals or businesses have to help solve social Problems • Profit Maximization • During 19th and early 20th Century • Trusteeship Management • 1920’s and 1930’s • Recognized that owners of businesses had obligations to do more than just earn profits • Obligations to: Employees, Customers, and their creditors • Social Involvement • 1960’s • Businesses should use their influence and financial resources to address Social Problems • Diversity is one big thing companies got involved in.
Measuring Social Responsibility Social Audit: a review of a business’s social responsiveness. • Philanthropy and Volunteerism • Contributing time and money to charitable, cultural, and civic organizations • Improve human Welfare • Environmental Awareness • Sensitivity to Diversity and Quality of Work Life
End of Section Assignment Management Careers in Focus Journal Write • Add Property Management to your Management Career PowerPoint • Use the same requirements that you have used in the past. • Page 93 • In looking at the laws that we talked about in Chapter 4 which ones do you think will be impacted the most in the next 20 years. • Write your answer in your journal under Today’s date