Fourth Edition

PART 1 . . . . . . . . . . . . . . . . . . . . . . . .
Understanding the Contemporary
Business Environment

Copyright ©2003 Prentice Hall, Inc.

Business Essentials
Chapter 3

CONDUCTING BUSINESS ETHICALLY

“THE MORE I HELP OTHERS TO
SUCCEED, THE MORE I SUCCEED.”
RAY KROC, FOUNDER, MCDONALD’S
KEY TOPICS
 Individual codes of ethics and the importance of
ethics in the workplace
 Key terms
 Social responsibility in U.S. business
 Environmental issues and stakeholder relationships
 Approaches and implementation
 Implications for small business
WHAT IS ETHICAL BEHAVIOR?

Ethics: Right and wrong,

good and bad, in actions
that affect others

Ethical Behavior:
Conforming to generally
accepted ethical norms
ETHICAL CONSIDERATIONS

Regarding a particular act…

Utility: Does it optimize what is best for those who
are affected by it?
Rights: Does it respect the rights of the individuals
involved?
Justice: Is it consistent with what we regard as
fair?
Caring: Is it consistent with people’s
responsibilities to each other?
COMPANY PRACTICES AND
BUSINESS ETHICS

Best Approach: Open, Honest, Responsive!

The Coca Cola Scare Case

The Tylenol Scare Case

HOW MUCH PRIVACY DOES YOUR EMPLOYER
OWE YOU?

 Email
 Internet

 Cellular Phones
FORMALIZING THE COMMITMENT TO ETHICS

Adopting Written Codes

Instituting Ethics Programs

PRINCIPLES, ETHICS, AND CORPORATE
POLICY
Core Principles &
Organizational
Values
SOCIAL RESPONSIBILITY: BALANCING
COMMITMENTS TO STAKEHOLDERS
Stakeholders: Groups, individuals, and organizations that
are directly affected by the practices of an organization

Employees Investors

Customers CORPORATION Suppliers

Local
Communities
THE EVOLUTION OF
SOCIAL RESPONSIBILITY

 Contemporary Social
Consciousness
 Era of Social Activism
 The Great Depression
 Entrepreneurial Era
RESPONSIBILITY TOWARD THE ENVIRONMENT

 Air pollution
 Water pollution

 Land pollution
 Toxicwaste
 Recycling
RESPONSIBILITY TOWARD CUSTOMERS

Consumer Rights

Unfair Pricing

Ethics in Advertising
RESPONSIBILITY TOWARD EMPLOYEES

Legal & Social

Commitments Whistle-blowers
RESPONSIBILITY TOWARD INVESTORS

 Improper financial
management

 Check kiting

 Insider trading

 Misrepresentation
of finances
APPROACHES TO SOCIAL RESPONSIBILITY

Level of Social Responsibility

Lowest Highest

Obstructionist Defensive Accommodative Proactive

Stance Stance Stance Stance

Actively Seeks
Actively Avoids Does Legal Responds to
Opportunities to
Responsibility Minimum Requests
Contribute
MANAGING SOCIAL RESPONSIBILITY PROGRAMS

Social Responsibility

Social Audit

Appointment of Director

Strategic Planning

Top-Management Support
 ETHICS, SOCIAL RESPONSIBILITY, AND
THE SMALL BUSINESS

Do small businesses
face different issues
with regard to ethics
and social
responsibility?
CHAPTER REVIEW

 Discuss how individuals develop their personal codes of

ethics.
 Explain why ethics matter in the workplace.
 Distinguish social responsibility from ethics.
 Show how social responsibility applies to environmental
issues and to relationships with customers, employees,
and investors.
 Identify four approaches to social responsibility.
 Describe the four steps a firm must take to implement a
social responsibility program.
 Explain how social responsibly and ethics affect small
business.