chapter 04 - social responsibility & business ethics
TRANSCRIPT
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Chapter Four:
Social Responsibility &Business Ethics
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Social Responsibility
The awareness that business activities have an impact on
society and the consideration of that impact by firms in decisionmaking.
Business
ctivities
Environment
Employees
Consumers
Investor
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Responsibility to Consumers
Four Rights of Consumer-
The Right to SafetyRight to products that are safe to possess anduse. To ensure safety of goods, manufacturers should test them andprovide buyers with explicit directions for use.
The Right to be InformedRight to receive information availableabout a product before they purchase it. For example - Ingredients,
instructions for use, manufacturing date, expiry date.
The Right to ChooseRight to choose and make purchases from avariety of products at competitive prices. Also the right to expect qualityservice at a fair price.
The Right to be HeardRight to have their (consumers) opinionsconsidered in the formation of government policies and in business firmsdecisions that affect them.
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Responsibility to Employees
Employees hold certain expectations ofbusiness firms.
They expect safe working conditions, faircompensation, equal opportunities (regardless of age,race, gender, religion or national origin) and adequatebenefits (Health insurance, vacation etc).
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Responsibility to Environment
Pollutioncontamination of air, water and land
Water pollutioncaused by dumping of chemicals, sewageand garbage into rivers etc and by using pesticides andfertilizers etc.
Land pollutionresults from strip mining of coal andminerals, forest fires, garbage disposal and dumping ofindustrial wastes including chemicals and medical supplies suchas used hypodermic needles.
Land pollution often results in water pollution because toxicwastes drain into water supplies.
Recycling reusing materials such as paper, plastic, glass andaluminum to make other products.
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Responsibility to Environment
Air PollutionCaused by carbon monoxide andhydrocarbons that come from motor vehicles and bysmoke and other pollutants from manufacturing plants(emission standards for automobiles, factories, catalyticconverters are there to help control air pollution).
**Ozone layerShields the planet from the suns deadlyultraviolet rays. This is being destroyed with a globalwarming trend as a result (major cause isChlorofluorocarbons (CFCs) that are used to cool
refrigerators and air conditioners).**Acid rainWhen sulphur dioxide is pumped into the air
(often by manufacturing and power plants burning highsulphur coal) and mixes with air, rain with a high acid
content is created.
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Responsibility to Investors
Business firms have responsibility to the people who investmoney in them.
**Proper Management of Fund
**Access to Information
**Executive compensation
There are problems such as mishandling of investors funds,insider trading(the practice of buying and selling stock on thebasis of information gained through positions or contacts with
inside parties that is not available to other investors or thegeneral public)
Excessive compensation of executives.
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Business Ethics
EthicsThe principles of behavior that distinguish betweenright and wrong.
Business EthicsThe evaluation of business activities andbehavior as right or wrong.
Ethical standards in business are based on commonly acceptedprinciples or behavior established by the expectations ofsociety, the firm, the industry and an individuals personal
values.A violation of ethics makes trust and goodwill difficult to
maintain.
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Factors Influencing Ethical Behavior
The Business Environment
Business managers are challenged to meet salesquotas, cut costs, increase efficiency or overtake
competitors (survive by deception or cheating).
Conflict of interest (offer special favors or gifts, bribes)damages the organization in the long run.
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Factors Influencing Ethical Behavior
The Organization
Individuals learn from ethical and unethical behaviorsby interacting with others in the organization.
By rewarding for ethical conduct and punishingunethical behavior may help the organization to
promote ethical behavior among the employees.
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Factors Influencing Ethical Behavior
The Individual
A persons own moral philosophy influences his or her
ethical behavior
Moral philosophythe set of principles (learned fromfamily, school, co-workers, friends) that dictateacceptable behavior.
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Developing Moral Philosophy
Individuals can follow two approaches:
1. Humanistic Philosophy
A set of moral principles focusing on individual rightsand values
Individuals & organizations adopting this philosophy
would honor their moral duties to customers and
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Developing Moral Philosophy
2. Utilitarian Philosophy
A set of moral principles focusing on the greatest good
for the largest number of people
CNG case in Bangladesh
Vaccine Tests on Children
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Encouraging Ethical Behavior
Many organizations take positive steps to encourageethical behavior. (Ethics training programs etc.)
A basic way for an organization to encourage ethicalbehavior is to establish a code of ethics (a statementspelling out exactly what an organization considersethical behavior)
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Encouraging Ethical Behavior
Whistle Blowerare employees who inform superiors,the media or a government regulatory agency aboutunethical behavior within an organization (they often
risk great professional and personal danger byreporting the unethical behavior of others)
Efforts to encourage ethical behavior will be effective
only with the support of top-level management.