CHAPTER AND IN REVIEW 4 SOCIAL RESPONSIBILITY

LO1 LO1 Define ethics and explain the concept of universal ethical ethics standards. A set of beliefs about right and wrong, good and bad. Ethics is a set of beliefs about right Universal Ethical Standards universal ethical standards and wrong, good and bad. Who you Ethical norms that apply to all people across are as a human being, your family, a broad spectrum of situations. and your culture all play a role in shap- Antarctica ing your ethical standards. The laws Asia of each country usually set minimum Europe ethical standards, but truly ethical stan- dards typically reach beyond minimum

legal requirements. Despite some sig- Trustworthiness, respect, responsibility, nificant cultural and legal differences, fairness, caring, people around the globe tend to agree citizenship Africa

on core values, which can serve as North a starting point for universal ethical America standards across a wide range of situa- Australia tions: trustworthiness, respect, respon- South sibility, fairness, caring, and citizenship. America

LO2 LO2 Describe and ethical dilemmas. business ethics The application of right and wrong, good and Business ethics is the application of right and wrong, good and bad in a business setting. bad in a business setting. Ethical dilemmas arise when you face business decisions that throw your values into con- ethical dilemma flict. These are decisions that force you to choose among less-than-ideal options because A decision that involves a conflict of values; whatever choice you make will have some significant negative consequences. every potential course of action has some significant neg ative consequences. Ethical Dilemma

LO3 LO3 Discuss how ethics relates to both the individual and the code of ethics organization. A formal, written document that defines the ethical standards of an organization and Ethical choices begin with ethical individuals. To help people make good choices, experts gives employees the information they need have developed frameworks for reaching ethical decisions. While the specifics vary, the to make ethical decisions across a range of core principles of most decision guides are similar: situations. • Do you fully understand each dimension of the problem? whistleblowers

© Cengage Learning. All rights reserved. No distribution allowed without express authorization. • Who would benefit? Who would suffer? Employees who report their employer’s • Are the alternative solutions legal? Are they fair? illegal or unethical behavior to either the • Does your decision make you comfortable at a “gut feel” level? authorities or the media. • Could you defend your decision on the nightly TV news? • Have you considered and reconsidered your responses to each question? While each person is responsible for his or her own actions, the organization can also have a dramatic influence on the conduct of individual employees. An ethical culture— which includes ethical leadership from top executives, and at every level of the organization—has an outsized impact on individual conduct. But formal ethics programs also play a crucial role. A written code of ethics—a document that lays out the values and priorities of the organization—is the cornerstone of a formal ethics program. Other key elements include ethics training and a clear enforcement policy for ethical violations.

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LO4 LO4 Define social responsibility and examine the impact on social responsibility groups The obligation of a business to contribute to society. Social responsibility is the obligation of a business to contribute to society. Enlightened stakeholders companies carefully consider the priorities of all stakeholders—groups who have an Any groups that have a stake—or a personal interest in their actions and performance—as they make key decisions. Core stakeholder interest—in the per formance and actions of groups for most are listed below, along with key obligations. an organization. • Employees: Treat employees with dignity, respect, and fairness. Ensure that hard work and talent pay off. Help workers balance emerging work– A social movement that focuses on four key priorities. consumer rights: (1) the right to be safe, • Customers: Provide quality products at a fair price. Ensure that customers are (2) the right to be informed, (3) the right to safe and informed. Support consumer choice and consumer dialogue. choose, and (4) the right to be heard. • Investors: Create an ongoing stream of profits. Manage investor dollars accord- planned obsolescence ing to the highest legal and ethical standards. Support full disclosure. The strategy of deliber ately designing prod- • Community: Support nonprofit groups that improve the community and fit with ucts to fail in order to shorten the time your company. Minimize the negative environmental impact of your business. between purchases. Sarbanes-Oxley Act of 2002 Federal legislation passed in 2002 that sets The Spectrum of Social Responsibility higher ethical standards for public corpora- tions and accounting firms. Key provisions limit conflict-of-interest issues and require financial officers and CEOs to certify the LESS MORE Responsible No Responsive Proactive Responsible validity of their finan cial statements. Contribution Contributions Contributions

corporate philanthropy Some businesses do not Some businesses choose to Some businesses choose to All business donations to nonprofit groups, recognize an obligation to respond on a case-by-case integrate social responsibility society and do only what’s basis to market requests for into their strategic plans, including money, products, and employee legally required. contributions. contributing as part of their time. business goals. cause-related marketing Marketing partner ships between businesses and non profit organizations, designed to spike sales for the compa ny and raise money for the nonprofit. LO5 Explain the role of social responsibility in the global arena corporate responsibility Business contributions to the community Social responsibility becomes Social Responsibility Issues more complex in the global arena through the actions of the business itself in the Global Arena rather than donations of money and time. due largely to differences in the sustainable development legal and cultural environments.

C Doing business to meet the needs of the Bribery and corruption are key D u if l ry f tu e e b current generation, without harming the abil- re ra i issues, along with concern for n l r c B e ity of future generations to meet their needs. human rights and environmental s carbon footprint standards. Refers to the amount of harmful green house gases that a firm emits throughout its opera- Legal Cor tions, both directly and indirectly. Differences ruption Developing and promoting environmen tally l ta H sound products and practices to gain a com- n u e s m m d a petitive edge. n r n o a R ir d v n ig n a h t t E S s © Cengage Learning. All rights reserved. No distribution allowed without express authorization.

LO6 Describe how companies evaluate their efforts to be socially LO6 responsible social Many companies—even some entire A systematic of how well a firm industries—monitor themselves. The process is meeting its ethics and social responsi bility goals. typically involves establishing objectives for ethics and social responsibility and then measuring achievement of those objectives on a systematic, periodic basis. Other groups WATCHDOG GROUPS

play watchdog roles as well. Key players •Activist Customers include activist customers, investors, unions, •Investors environmentalists, and community groups. •Unions •Environmentalists •Community Groups

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