FHF

McGraw-Hill/Irwin

part 1

Ferrell Hirt Ferrell

A CHANGING WORLD EIGHTH EDITION

Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

FHF part 1

Business in a Changing World

CHAPTER 1 The Dynamics of Business and Economics CHAPTER 2 Business Ethics and Social Responsibility CHAPTER 3 Business in a Borderless World

Business Ethics

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An identifiable problem, situation, or opportunity that requires a person to choose from among several actions that may be evaluated as right or wrong, ethical or unethical

]

FHF 2-3

Social Responsibility

Business’s obligation is to maximize its positive impact and minimize its negative impact on society FHF 2-4

Laws and Regulations

   Laws and regulations encourage businesses to conform to society’s basic standards, values, and attitudes.

Sarbanes-Oxley Act, 2002 Troubled Assets Relief Program FHF 2-5

The Role of Ethics in Business Growing concerns about legal and ethical issues in business      Antitrust violations Accounting fraud Cybercrimes Unfair competitive practices Tax fraud FHF 2-6

Ethical Issues

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An identifiable problem, situation, or opportunity that requires a person to choose from among several actions that may be evaluated as right or wrong, ethical or unethical

]

FHF 2-7

Ethical Issues

 • Involve all organizational activities For profit businesses • • Non-profits Government  • Schools and universities Learning to recognize and resolve ethical issues are important in maintaining an ethical business climate FHF 2-8

Ethical Conduct Helps To:

   Build Trust Promote confidence Validate relationships FHF 2-9

How to Judge the Ethics of a Situation    Examine the situation from your stakeholders’ position, including customers and competitors People often need years of experience to accurately recognize and react to ethical situations Ethical situations vary by culture FHF 2-10

Unethical Behavior in Business       Misuse of company resources Abusive & intimidating behavior Conflict of interest Fairness & honesty Communications Business relationships FHF 2-11

Sources of Unethical Behavior

Misuse of Company Resources

 The most commonly observed misconduct     Time theft Use of personal email and social networking sites at work is a growing problem Stealing office supplies Unauthorized use of equipment and software FHF 2-12

Sources of Unethical Behavior

Abusive and Intimidating Behavior / Bullying

FHF 2-13

Sources of Unethical Behavior in Organizations

Conflict of interest

  Advance personal interest over others’ interests Benefit self at the expense of the company Bribes represent a conflict of interest because they benefit an individual at the expense of an organization or society FHF 2-14

Fairness & Honesty

Are at the heart of business ethics     How employees use resources No deceit, coercion, or misrepresentations Fair competition Disclosure of potential harm caused by products FHF 2-15

Ethical Concerns in Communications      False/misleading advertising Deceptive personal selling tactics Truthfulness in product safety and quality Unsubstantiated claims Product labeling FHF 2-16

Ethical Concerns in Business Relationships Relationships with customers, suppliers and co-workers  Ethical behavior within a business is important   Keeping company secrets Meeting obligations and responsibilities  Avoiding undue pressure  Managers’ responsibility to create ethical work environment and provide a positive example FHF 2-17

Plagiarism

    The act of taking someone else’s work and presenting it as your own without mentioning the source  A major problem in schools and business Students copying others’ work A manager taking credit for a subordinate’s work Employees copying reports and passing the work off as their own FHF 2-18

Ethical Decisions in an Organization are Influenced by Three Key Factors FHF 2-19

Code of Ethics

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Formalized rules and standards that describe what a company expects of its employees

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FHF 2-20

Whistleblowing

Occurs when an employee exposes an employer’s wrongdoing to outsiders  • • Many companies have internal reporting mechanisms in place Avoid legal action Negative publicity  Whistleblowers often treated negatively and have a difficult time finding other work FHF 2-21

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Economic Legal Ethical Voluntary Four Dimensions to Social Responsibility FHF 2-22

The Pyramid of Social Responsibility FHF 2-23

Corporate Citizenship

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The extent to which businesses meet the legal, ethical, economic, and voluntary responsibilities placed on them by their stakeholders

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FHF 2-24

Stakeholder Relationships:

Shareholders

    Primarily concerned with profit or ROI Financial community at large Proper accounting procedures Protecting owner’s rights and investments FHF 2-25

Stakeholder Relationships:

Employees

    Provide a safe workplace Adequate compensation Listen to grievances Fair treatment FHF 2-26

Stakeholder Relationships:

Consumers

Consumerism

 Activities that independent individuals, groups and organizations undertake to protect their rights as consumers  Critical issue is business’s responsibility to customers to provide satisfying, safe products and to protect their rights as consumers.

FHF 2-27

Kennedy’s Consumer Bill of Rights     The right to safety The right to be informed The right to choose The right to be heard FHF 2-28

Stakeholder Relationships: The Environment & Sustainability Issues

Sustainability

means conducting activities with the long-term well-being of the natural environment in mind.

 Involves interaction between     Nature Individuals Organizations Business strategies FHF 2-29

Stakeholder Relationships: The Environment & Sustainability Issues    • • • Pollution Land Water Air Waste disposal • Future of energy Alternative energy Copyright 2009 Utopian Empire Creativeworks | Biomass Energy Plant in Cadillac Michigan FHF 2-30

Response to Environmental Issues     Many companies have a President of Environmental Affairs Position Most Fortune 500 companies have in place:    Written environmental policy Recycling programs Waste-reduction initiatives Environmental consciousness can save money through reducing waste • Greenwashing, or creating a positive association with environmental issues for an unsuitable product, service or practice Is a growing problem FHF 2-31

Stakeholder Relationships:

The Community

General community and global welfare 

The Avon Foundation

 Breast Cancer Awareness Crusade 

Target’s Take Charge of Education

program  1% of Target Red Card purchases donated to educational causes Hardcore unemployed • National Alliance of Business funds training to help hard-core unemployed to find work and gain self-sufficiency • Enhanced self-esteem; help people become productive members of society FHF 2-32