demonstrating ethical behavior and social responsibility
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Demonstrating Ethical Behavior and Social ResponsibilityTRANSCRIPT
4-1McGraw-Hill/IrwinUnderstanding Business, 7/e
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Nickels Nickels
McHughMcHugh
McHughMcHugh
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4-2McGraw-Hill/IrwinUnderstanding Business, 7/e
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ChapterChapter
4444Demonstrating Demonstrating
Ethical Ethical Behavior and Behavior and
Social Social ResponsibilityResponsibility
Demonstrating Demonstrating Ethical Ethical
Behavior and Behavior and Social Social
ResponsibilityResponsibility
4-2
4-3McGraw-Hill/IrwinUnderstanding Business, 7/e
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EthicsEthicsMore Than LegalityMore Than Legality
Standards are Standards are
Fundamental Fundamental
Stem From IndividualStem From Individual
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SEC Investigations (2002)SEC Investigations (2002)AccountingAccounting
Arthur AndersenArthur AndersenDeloitte & ToucheDeloitte & ToucheErnst & YoungErnst & YoungKPMGKPMGPriceWaterhouse PriceWaterhouse CoopersCoopers
EnergyEnergyCMS EnergyCMS EnergyDynergyDynergyEnronEnronHalliburtonHalliburtonReliant ResourcesReliant Resources
SoftwareSoftwareComputer AssociatesComputer AssociatesNetwork AssociatesNetwork Associates
TelecomTelecomGlobal CrossingGlobal CrossingLucent TechnologiesLucent TechnologiesQwest CommunicationsQwest CommunicationsWorldComWorldCom
Wall StreetWall StreetCredit Suisse First BostonCredit Suisse First BostonHedge FundsHedge FundsCapital MarketsCapital MarketsMerrill LynchMerrill Lynch
Source: Business Week, June 10, 2002
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Corporate Scandal FinesCorporate Scandal FinesCompanyCompany FineFine ReasonReason
Arthur AndersenArthur Andersen $500,000$500,000Obstruction of Justice Obstruction of Justice
Shredding Enron Shredding Enron DocumentsDocuments
CitigroupCitigroup $5,000,000$5,000,000Analyst Issued Analyst Issued
Misleading InformationMisleading Information
Merrill LynchMerrill Lynch $100,000,000$100,000,000
Conflict of Interest Conflict of Interest Between Investment Between Investment
Bank & Research Dept.Bank & Research Dept.
Credit SuisseCredit Suisse
First BostonFirst Boston $100,000,000$100,000,000IPO Shares Unfairly IPO Shares Unfairly
DistributedDistributed
Source: Business Week, Nov. 4, 2002
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How Much DoHow Much Do Americans Trust Corporations?Americans Trust Corporations?
All CorporationsAll Corporations
Fair AmountFair Amount 41%41%
Only A LittleOnly A Little 35%35%
Not At AllNot At All 13%13%
A Great DealA Great Deal 10%10%
No OpinionNo Opinion 1% 1%
Your EmployerYour Employer
A LotA Lot 50%50%
Only Somewhat 39%Only Somewhat 39%
Not At AllNot At All 8% 8%
No OpinionNo Opinion 3% 3%
Source: USA Today/CNN/Gallup Poll, Jan. 25-27, 2002
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Why People VolunteerWhy People Volunteer
Percent of RespondentsPercent of Respondents
Total is more than 100%- respondents could give more than one reason.Total is more than 100%- respondents could give more than one reason.
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Ethics of MBA StudentsEthics of MBA StudentsPercent of MBA Students Who Would:Percent of MBA Students Who Would:
Buy Stock on Inside InformationBuy Stock on Inside Information 52%52%
Reveal Corp. Secrets to Spouse/FamilyReveal Corp. Secrets to Spouse/Family 50%50%
Let a Gift Sway Purchasing DecisionLet a Gift Sway Purchasing Decision 26%26%
Pay Someone Off to Close aPay Someone Off to Close a Business DealBusiness Deal 13%13%
Source: USA Today
4-9McGraw-Hill/IrwinUnderstanding Business, 7/e
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Ethics Check Questions:Ethics Check Questions:
Is It Legal?Is It Legal?
Is It Balanced?Is It Balanced?
How Will It Make Me Feel About How Will It Make Me Feel About Myself?Myself?
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Ethical Decision Ethical Decision Resolved Through:Resolved Through:
• Religious TeachingsReligious Teachings
• Individual RightsIndividual Rights
• LegislationLegislation
• Court DecisionsCourt Decisions
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Factors InfluencingFactors Influencing Managerial EthicsManagerial Ethics
IndividualIndividual OrganizationalOrganizational EnvironmentalEnvironmental
ValuesValuesWork Work BackgroundBackground
Family StatusFamily Status
PersonalityPersonality
Top Level Mgmt. Top Level Mgmt. PhilosophyPhilosophy
The Firm’s The Firm’s Reward SystemReward System
Job DimensionsJob Dimensions
CompetitionCompetition
Economic Economic
ConditionsConditions
Social/Cultural Social/Cultural
InstitutionsInstitutions
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Codes of EthicsCodes of Ethics
• Compliance-Compliance-BasedBased
• Integrity-Integrity-BasedBased
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Steps to ImproveSteps to Improve U.S. Business EthicsU.S. Business Ethics
1.1.Top Top ManagementManagement
2.2.EmployeesEmployees
3.3.ManagersManagers
4.4.Ethics OfficeEthics Office
5.5.OutsidersOutsiders
6.6.EnforcementEnforcement
4-14McGraw-Hill/IrwinUnderstanding Business, 7/e
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Levels of CorporateLevels of CorporateSocial ResponsibilitySocial Responsibility
Societal ResponsibilitySocietal Responsibility
Stakeholder ResponsibilityStakeholder Responsibility
Profit ResponsibilityProfit Responsibility
Owners/StockholdersOwners/StockholdersGeneralGeneral
PublicPublic
CustomersCustomers
EmployeesEmployees
Suppliers/DistributorsSuppliers/Distributors
EcologicalEcological
EnvironmentEnvironment
Public Interest GroupsPublic Interest GroupsSource: Source: MarketingMarketing, 5/E by Berkowitz, Kerin, Hartley, and Rudelius., 5/E by Berkowitz, Kerin, Hartley, and Rudelius.
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$9$10
$120
$12
Individuals
Foundations
Bequests
Corporations
Contributions to CharityContributions to Charity(In Billions of Dollars)(In Billions of Dollars)
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New PhilanthropyNew Philanthropy
Source: Source: Business WeekBusiness Week, Dec. 2, 2002, Dec. 2, 2002
DonorDonorEstimated Total Estimated Total
Given (in Given (in MillionsMillions
CausesCauses
Bill GatesBill Gates $25.6$25.6 Health &Health &
EducationEducation
Gordon MooreGordon Moore $6.6$6.6 Conservation & Conservation & EducationEducation
James StowersJames Stowers $1.5$1.5 Biomedical ResearchBiomedical Research
Eli BroadEli Broad $1.045$1.045 Education & ArtsEducation & Arts
Walton FamilyWalton Family $.75$.75 EducationEducation
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Most AdmiredMost Admired Companies by IndustryCompanies by Industry
ApparelApparel Levi-StraussLevi-StraussAirlinesAirlines SouthwestSouthwestFood ServicesFood Services McDonald’sMcDonald’sFood ProductsFood Products Campbell’sCampbell’sBeveragesBeverages Coca-ColaCoca-ColaElectronicsElectronics IntelIntel
Industry Company
Source: Fortune Magazine
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• MerckMerck
• Johnson & JohnsonJohnson & Johnson
• PfizerPfizer
• Eli LillyEli Lilly
• IBMIBM
• MicrosoftMicrosoft
• IntelIntel
• Bank of AmericaBank of America
$221.0* $221.0*
176.2176.2
123.9123.9
121.4121.4
116.1116.1
104.7104.7
101.0101.0
91.591.5Source: The Taft Group
* In Millions* In Millions
Corporate Annual GivingCorporate Annual Giving
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Where CharitableWhere Charitable Contributions Go (2001)Contributions Go (2001)
$20.7
$18.4
$31.8
$12.1
$11.8
$6.4
$4.1
$81.0Religious Charity
Education
Human Serv.
Health
Art/Culture
Umbrella Charities
Environ./Animals
Int'L Affairs
In Billion $In Billion $
Source: BusinessWeek. Dec. 2, 2002
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Social AuditSocial Audit
• By CompanyBy Company
• Outside CompanyOutside Company• Socially-Conscious Socially-Conscious
InvestorsInvestors
• EnvironmentalistsEnvironmentalists
• Union OfficialsUnion Officials
• CustomersCustomers
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International EthicsInternational Ethics & Responsibility& Responsibility
Ethics Ethics NotNot Unique To U.S.- Unique To U.S.- Leaders AccountableLeaders Accountable
Demand for Socially Demand for Socially Responsible BehaviorResponsible Behavior
Inter-American Convention Inter-American Convention Against CorruptionAgainst Corruption
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Most Admired GlobalMost Admired Global Companies (Outside of U.S.)Companies (Outside of U.S.)1)1) NokiaNokia FinlandFinland2)2) Toyota MotorToyota Motor JapanJapan3)3) SonySony JapanJapan4)4) Nestle’Nestle’ SwitzerlandSwitzerland5)5) Honda MotorHonda Motor JapanJapan6)6) BPBP BritainBritain7)7) Singapore AirlinesSingapore Airlines SingaporeSingapore8)8) L’OrealL’Oreal FranceFrance9)9) Royal Dutch/ShellRoyal Dutch/Shell Britain & NetherlandsBritain & Netherlands10)10)CanonCanon JapanJapan
Source: Fortune, March 4, 2002