Chapter 2 Being Ethical and Socially Responsible
Air pollution
Carbon dioxide emissions in the upper atmosphere are contributing to global warming. Carbon monoxide and hydrocarbons emitted by motor vehicles and smoke and other pollutants emitted by manufacturing plants can be partially eliminated through pollution-control devices. Weather and geography can contribute to air pollution.
Credit Card Liability Act (1970)
Card holder liability limited to $50 per card; unsolicited cards stopped
Within an organization
Code of ethics A written guide to acceptable and ethical behavior as defined by an organization; it outlines policies, standards, and punishments for violations Organizational environment Management direction Employee training Ethics officer
Consumer Bill of Rights
Consumer Bill of Rights Right to Safety Right to be Informed Right to Choose Right to be Heard Right to Consumer Education Right to Service
Fair Credit Billing Act (1974)
Consumer can challenge billing errors
_____ is all activities undertaken to protect the rights of consumers.
Consumerism
Fair Credit Reporting Act (1971)
Consumers can get credit reports and correct errors
Credit Card Accountability, Responsibility, and Disclosure Act (2009)
Provided the most sweeping changes in credit card protections since the Truth in Lending Act of 1968
Socioeconomic Emphasis
Quality of life Conservation of natural resources Market-based decisions with some community controls Balance of economic return and social return Firm's and community's interests Active government
What are ethics?
moral principles that govern a person's or group's behavior.
Before the 1930's, most government involvement in day-to-day business was aimed at
protection of free trade
Sarbanes-Oxley Act of 2002
provides sweeping new legal protection for employees who report corporate misconduct
What is the problem with each of the following types of pollution: Water Air Land noise
water: This occurs as a result of release of harmful chemicals into the water bodies such as industrial sludge, domestic waste, untreated human waste and the list continues. Rivers are polluted and this has significantly reduced the number of fishing grounds that we used to rely on for fish. air: This is a unique form of pollution that results from release of harmful gases into the atmospheres. The main sources of these gases include vehicles, industries and power plants. They cause green house effect that is responsible for global warming and formation of acid rainfall. Land: This is caused by release of harmful materials into the land. This waste includes domestic waste, municipal waste and non-biodegradable materials such as plastics. These materials make the land unsuitable for various economic activities such as agriculture. Noise: s the disturbing or excessive noise that may harm the activity or balance of human or animal life. The source of most outdoor noise worldwide is mainly caused by machines and transportation systems, motor vehicles, aircraft, and trains.[3][4] Outdoor noise is summarized by the word environmental noise. Poor urban planning may give rise to noise pollution, since side-by-side industrial and residential buildings can result in noise pollution in the residential areas.
hard-core unemployed
workers with little education or vocational training and a long history of unemployment
American Recovery and Reinvestment Act (2009)
$7.22 billion to EPA to protect/ promote "green" jobs, healthier environment
Guidelines for Making Ethical Decisions Step: 1
1. Listen and learn. Recognize the problem or opportunity; be sure you understand others.
Fairness and honesty
Business people are expected to refrain from knowingly deceiving, misrepresenting, or intimidating others. (could you tell your grandma?)
Guidelines for Making Ethical Decisions Step: 2
2. Identify the ethical issues. Examine how others are affected by the situation; understand the viewpoint of those involved in the decision or its consequences.
Guidelines for Making Ethical Decisions Step: 3
3. Create and analyze options. Put aside strong feelings; come up with alternatives; assess which options offer the best results.
Guidelines for Making Ethical Decisions Step: 4
4. Identify the best option from your point of view. Consider and test it against criteria such as respect, understanding, caring, fairness, honesty, and openness.
Guidelines for Making Ethical Decisions Step: 5
5. Explain your decision and resolve any differences that arise. May involve arbitration or additional proposals.
Organizational relationships
A businessperson should put the welfare of others and that of the organization above his or her own personal welfare.
Socioeconomic model
Business should be concerned with the impact of its decisions on society. Firms take pride in their social responsibility obligations. It is in the best interest of firms to take the initiative in social responsibility matters. Society will demand changes if a corporation is not a responsible member of society. Provides protection against legal action from special-interest groups.
Employment Practices
A number of anti-discrimination laws were passed in the 1960s and 1970s but abuses still exist.
Fair Debt Collection Practices Act (1977)
Abusive collection practices by third parties outlawed
What is the major source of human emissions of air pollution in the upper atmosphere?
Aircraft
What is the CON of Social Responsibility
Businesses are primarily responsible to shareholders. Corporate time, money and talent should be used to create profit. Individual businesses can't be expected to solve problems affecting society in general. Social issues are the problem of government officials elected for that purpose.
What is the PRO of Social Responsibility
As a part of society, business can't ignore social problems. Business has the means to tackle social problems. Addressing social problems can create a more stable environment. Socially-responsible decision making prevents government intervention.
Telephone Consumer Protection Act (1991)
Automated dialing and prerecorded-voice calling prohibited
Clean Air Amendment (1970)
Automotive, aircraft, and factory emission standards
Citizens have a right to demonstrate against unfair rate increases and safety violations as well as other issues. In doing so, they exercise their right to
Be heard
Business Ethics
Business Ethics is the application of moral standards to business situations. (Right and wrong)
Communications
Business communications that are false, misleading, or deceptive are both illegal and unethical.
supporters of increased social responsibility would most likely say that the goal of a firm is to
Create value and benefits for owners, employees, and society
Federal trade commission act (1914)
Created the federal trade commissions to investigate illegal trade praftices
Consumer Credit Reporting Reform Act (1997)
Credit issuers are responsible for accurate credit data
Social factors
Cultural norms Coworkers Significant others Use of the Internet
Affirmative Action Programs
Designed to increase the number of minority employees at all levels of an organization. Written plans are required for employers with federal contracts of more than $50,000 per year. Problems arise from the use of quotas and charges of reverse discrimination.
Do Not Call Implementation Act (2003)
Directed the FCC and FTC to apply consistent rules on telemarketing
Amendments to Equal Credit Opportunity Act (1976, 1994)
Discrimination prohibited when granting credit
Kefauver-Harris Drug Amendments (1962)
Drug testing and labeling for both generic and trade names
Clayton antitrust act (1914)
Eliminated many forms of price discrimination that gave large businesses a competitive advantage over smaller firms
What types of things do businesses monitor?
Employee monitoring is the act of monitoring employee activity. Organizations engage in employee monitoring to track performance, avoid legal liability, protect trade secrets, and address other security concerns.
Dorothy worked at a meat packing plant during the 1920s. What would she have been most surprised to see happening at the plant?
Employees earning vacation time
Resource Recovery Act (1970)
Enlarged solid-waste disposal program; EPA enforcement
Safeguarding the environment requires
Environmental legislation Voluntary compliance EPA enforcement actions
Equal Credit Opportunity Act (1974)
Equal credit opportunities for males/females and single/married people
National Environmental Policy Act (1970)
Established EPA to enforce federal environmental laws
Consumer Product Safety Commission Act (1972)
Established an abbreviated procedure for registering certain generic drugs
Pure food and drug act (1906)
Established limited supervision of interstate sale of food and drugs
The study of the morality of choices made by people is known as
Ethics
Noise pollution
Excessive noise can do physical harm. Noise levels can be reduced by isolating the source of the noise or modifying machinery and equipment. Noise Control Act of 1972 established noise emission standards for aircraft, railroads, and interstate motor carriers.
Oil Pollution Act (1990)
Expanded oil spill prevention and response activities; established the Oil Spill Liability Trust Fund
Nutrition Labeling and Education Act (1990)
FDA review of food labeling and packaging
Resource Conservation and Recovery Act (1984)
Federal regulation of potentially dangerous solid-waste disposal
Truth in Lending Act (1968)
Finance charge disclosure in both dollars and annual percentage rates
Interstate commerce act (1887)
First federal act to regulate business practices;provided regulation of railroads and shipping rates
External to a specific organization
Governmental legislation and regulations Trade association guidelines
Who Should Pay for a Clean Environment?
Governments and businesses spend billions annually to reduce pollution. Much of the money required is supposed to come from already depressed industries. A few firms have discovered it is cheaper to pay a fine than to install equipment for pollution control. Many business leaders say tax money should be used because business is not the only source of pollution. Environmentalists say the cost is an expense of doing business. Consumers will probably pay a large part of the costs—either as taxes or in the form of higher prices.
Training programs for the hard-core unemployed
Hard-core unemployed Workers with little education or vocational training and a long history of unemployment National Alliance of Business (NAB) A joint business-government program to train the hard-core unemployed
Land pollution
How do we restore damaged or contaminated land and how do we protect unpolluted land from future damage? Technology produces chemical and radioactive waste. Shortage of landfill space for waste disposal and incinerators produce toxic ash. Other causes of land pollution include strip-mining, nonselective cutting of forests, development of agriculture land for housing and industry. The EPA has been criticized for its handling of the $1.6 billion Superfund created in 1980 by Congress.
Factors affecting ethical behavior
Individual Factors, Social Factors, Opportunity
Individual factors
Individual knowledge of an issue Personal values Personal goals
Whistle-blowing
Informing the press or government officials about unethical practices within one's organization you are free to hire whoever you choose. SD can fire you for no reason LAME-O
Conflict of interest
Issues arise when a businessperson takes advantage of a situation for personal gain rather than for the employer's interest.
Meal inspection act (1906)
Provided for limited supervision of interstate sale of meat and meat products
Fair Packaging and Labeling Act (1966)
Labels on products sold across states must include net wt, ingredients, and mfg name/address
Magnuson-Moss Warranty-Federal Trade Commission Act (1975)
Minimum standards for written consumer warranties for products over $15
As far as business is concerned, six of the most important federal laws passed between 1887 and 1914 supported?
More competition
Clean Air Act Amendments (1990)
Motor vehicles must be equipped with onboard systems to control about 90% of refueling vapors
Clean Air Act Amendment (1987)
National air-quality standard for ozone
Clean Air Act Amendment (1977)
New deadlines for cleaning up polluted areas; review of existing air quality standards
Ranee is a business person who works for a successful and admired Fortune 500 company. About how often is Ranee likely to encounter ethical issues in the workplace?
On a daily basis
Economic model
Originated in the 18th century. Society will benefit most when business is left alone to produce and market profitable products that society needs. Company's primary responsibility is to make a profit for its shareholders. Social responsibility is the problem of government, environmental groups, and charities. greed; it is easier to dump toxic waste than to take care of it, but its wrong.
Children's Online Privacy Protection Act (2000)
Parents control info collected from kids; commercial websites protect child info
Funding the program
Pass program costs on to consumers as higher prices. Absorb the program costs as a business expense. Seek tax reductions or other incentives.
Employers monitor:
Phone calls E-mail Internet usage Computer activities Movements in the building
Residents around Lake Gunter have been warned not to drink their water because it contains some unknown chemical containment that could be harmful. What is this called?
Pollution
When people in an industrialized society contaminate the environment, the action is called
Pollution
Opportunity
Presence of opportunity Ethical codes Enforcement
The Great Depression and Beyond
Pressure mounted for the government to help with the economy and social conditions. Franklin D. Roosevelt instituted economic and social programs like the Works Progress Administration and the Civilian Conservation Corps.
Sherman antitrust act (1890)
Prevented monopolies or mergers where competition was endangered
Primary emphasis in the economic model of social responsibility is on
Production
Economic Model Emphasis
Production Exploitation of natural resources Internal, market-based decisions Economic return Firm's or manager's interest Minor role for government
Food Quality Protection Act (1996)
Required a new safety standard (reasonable certainty of no harm) for all pesticides used on foods
Developing a program of social responsibility
Secure the commitment of top executives. Plan the program. Appoint top-level executive as director to implement the plan. Prepare a social audit-- A comprehensive report of what the organization has done and is doing with regard to social issues that affect it.
Travis is in charge of writing a report for his company that talks about the quality and safety of his company's products, business practices, involvement in the community, human resources, and efforts to reduce pollution. This is called a(n)
Social Audit
Social Responsibility
Social Responsibility - The recognition that business activities have an impact on society and the consideration of that impact in business decision making Social responsibility costs money but is also good business. How socially responsible a firm acts may affect the decisions of customers to do or continue to do business with the firm. (If coke was dumping sewage would you still buy coke?)
Water Pollution Control Act Amendment (1972)
Standards for cleaning navigable waters; elimination of harmful waste disposal by 1985
Noise Control Act (1972)
Standards for major sources of noise; EPA advises FAA on standards for planes
Motor Vehicle Safety Act (1966)
Standards for safer cars
Water Quality Improvement Act (1970)
Strengthened water regulations; provided for large fines
The manager of a successful local restaurant believes his responsibilities are to provide delicious meals and excellent service, provide jobs, comply with laws and the IRS, and earn a respectable profit on the restaurant. These are the manager's only concerns. What concept does this indicate?
The economic model of social responsibility
Lisa buys a new pillow and rips off the manufacture's tag. She then reads the tag and is amused at it warning that, under penalty of law, the tag should not be removed and the pillow could cause suffocation. What consumer right is the manufacturer guarding against?
The right to be informed
What are six basic rights of consumers?
The right to choose. ... The right to safety. ... The right to be informed. ... The right to be heard and the right to voice. ... The right to redress or remedy. ... The right to environmental health. ... The right to service. ... The right to consumer education.
Cigarette Labeling Act (1965)
Warning labels on packages and ads
Federal Hazardous Substances Labeling Act (1960)
Warning labels on toxic household chemicals
The American Apparel Manufacturers Association exerts pressure on its members to comply with the ethical standards of the industry and provides information and benefits for textile companies. This company is an example of
Trade Assoication
Water pollution
Water quality has improved in recent years, but high levels of toxic pollutants are still found in some waters. Pollutants threaten the health of both people and wildlife. Cleanup is complicated and costly because of runoff and toxic contamination. Acid rain from sulfur emissions of industrial smokestacks is contributing to the deterioration of coastal waters, lakes, and marine life.
Early 1900s: Caveat Emptor - "Buyer Beware"
What you see is what you get, and if it's not what you expected, too bad. Most people believed that competition and the marketplace would correct abuses. The government became involved only in cases of obvious abuse.
informing the press or government officials about unethical practices within one's organization.
Whistle Blowing
What is an employee who calls attention to a company unlawful activity called?
Whistle-blower
caveat emptor
a Latin phrase meaning "let the buyer beware"
Give an example of a "conflict of interest" while working for an employer?
a company or individual is invested in two or more people, companies or combination of the two that compete with each other or are at odds with each other.
social audit
a comprehensive report of what an organization has done and is doing with regard to social issues that affect it
A larger computer manufacturer forbids its executives and mangers from serving as directors or officers for Intel Corporation or any other corporations from which it might purchase component parts. The company is trying to prevent
a conflict of interest
Equal Employment Opportunity Commission (EEOC)
a government agency with the power to investigate complaints of employment discrimination and the power to sue firms that practice it
code of ethics
a guide to acceptable and ethical behavior as defined by the organization
affirmative action program
a plan designed to increase the number of minority employees at all levels within an organization
minority
a racial, religious, political, national, or other group regarded as different from the larger group of which it is a part and that is often singled out for unfavorable treatment pollution the contamination of water, air, or land through the actions of people in an industrialized society
What is a conflict of interest?
a situation in which the concerns or aims of two different parties are incompatible.
Sarbanes-Oxley Act of 2002
adopted tough new provisions to deter and punish corporate and accounting fraud and corruption.
consumerism
all activities undertaken to protect the rights of consumers
What is the "green" approach to saving our earth?
earth day, recycling
whistle-blowing
informing the press or government officials about unethical practices within one's organization
What is social responsibility?
is an ethical framework which suggests that an entity, be it an organization or individual, has an obligation to act for the benefit of society at large.
Equal Employment Opportunity Commission (EEOC)
is the federal agency empowered to investigate complaints of employment discrimination and to sue firms that practice it
business ethics
the application of moral standards to business situations
socioeconomic model of social responsibility
the concept that business should emphasize not only profits but also the impact of its decisions on society
What is "insider trading"?
the illegal practice of trading on the stock exchange to one's own advantage through having access to confidential information.
social responsibility
the recognition that business activities have an impact on society and the consideration of that impact in business decision making
ethics
the study of right and wrong and of the morality of the choices individuals make
economic model of social responsibility
the view that society will benefit most when business is left alone to produce and market profitable products that society needs
