session 4 chapter 3
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Corporate Social Responsibility and Business Ethics. Session 4 Chapter 3. Learning Objectives. Understand importance of stakeholder approach Describe a social audit Discuss the effect of Sarbanes-Oxley, 2002 Explain relevance of business management practice - PowerPoint PPT PresentationTRANSCRIPT
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McGraw-Hill/IrwinMcGraw-Hill/IrwinStrategic Management, 10/eStrategic Management, 10/e Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Corporate Social Responsibility and
Business Ethics
Session 4 Session 4 Chapter 3Chapter 3
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Learning Objectives
1. Understand importance of stakeholder approach
2. Describe a social audit
3. Discuss the effect of Sarbanes-Oxley, 2002
4. Explain relevance of business management practice
5. Role of Ethics in strategic management
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Word of the Day
STAKEHOLDER
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Stakeholder Approach
According to Stakeholder Approach:
• strategic managers must recognize the legitimate rights of the firm’s claimants.
• These include outside stakeholders affected by the firm’s actions.
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Perceived Stakeholders
• Customers
• Government
• Stockholders
• Employees
• Society
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3-6Inputs to the Development of
Company Mission
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Types of Social Responsibility
• Economic – the duty of managers, as agents of the company owners, to maximize stockholder wealth
• Legal – the firm’s obligations to comply with the laws that regulate business activities
• Ethical – the company’s notion of right and proper business behavior. (strategic to a degree)
• Discretionary – voluntarily assumed by a business organization. (strategic)
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Sarbanes-Oxley Act of 2002
• CEO and CFO must certify every report containing company’s financial statements
• Specifies duties of registered public accounting firms that conduct audits
• Composition of the audit committee and specific responsibilities
• Rules for attorney conduct• Disclosure periods are stipulated • Stricter penalties for violations
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New Corporate Governance Structure
• Restructuring governance structure in American corporations
• Heightened role of corporate internal auditors
• Auditors now routinely deal directly with top corporate officials
• CEO information provided directly by the company’s chief compliance and chief
accounting officers
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3-10The New Corporate Governance
Structure
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CSR’s Effect on Mission Statement
• The mission statement embodies what company believes
• Managers must identify all stakeholder groups and weigh their relative rights and abilities to affect the firm’s success
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Social Audit
• A social audit is an attempt to measure a company’s actual social performance against its social objectives.
• The social audit may be used for more than simply monitoring and evaluating firm social performance.
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Management Ethics
The Nature of Ethics in Business:
• Belief that managers will behave in an ethical manner is central to CSR
• Ethics – the moral principles that reflect society’s beliefs about the actions of an individual or a group that are right and wrong
• Ethical standards reflect the end product of a process of defining and clarifying the nature and content of human interaction
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Code of Business Ethics
• To help ensure consistence in the application of ethical standards, an increasing number of professional associations and businesses are establishing codes of ethical conduct.
• The following all have ethics codes:– Chemists– Funeral directors– Law Enforcement Agents– Hockey Players– Librarians– Physicians