Chapter 2: Ethics and Social Responsibility in Business

What are the arguments for the socioeconomic model?

1. Because business is a part of our society, it cannot ignore social issues. 2. Business has the technical, financial, and managerial resources needed to tackle today's complex social issues. 3. By helping resolve social issues, business can create a more stable environment for long-term profitability. 4. Socially responsible decision making by firms can prevent increased government intervention, which would force business to do what they fail to do voluntarily.

What are the arguments for the economic model?

1. Business managers are responsible primarily to stockholders, so management must be concerned with providing a return on owner's investments. 2. Corporate time, money, and talent should be used to maximize profits, not to solve society's problems. 3. Social problems affect society in general, so individual businesses should not be expected to solve these problems. 4. Social issues are the responsibility of government officials who are elected for that purpose and who are accountable to the voters for their decisions.

What are the four steps to making a social responsibility program?

1. Commitment of Top Executives 2. Planning 3. Appointment of a Director 4. The Social Audit

What are some fundamental issues pursued by the consumer movement:

1. Environment protection 2. Product performance and safety 3. Information disclosure

What are the guidelines for making ethical decisions?

1. Listen and learn 2. Identify the ethical issues 3. Create and analyze options 4. Identify the best option from your point of view 5. Explain your decision and any differences that arise

What are two problems with the affirmative action program?

1. Quotas 2. Not all businesspeople are in favor of the program

What are the six basic rights of consumers?

1. The Right To Safety 2. The Right To Be Informed 3. The Right To Choose 4. The Right To Be Heard 5. The Right To Consumer Education 6. The Right To Courteous Service

What is caveat emptor?

A Latin term meaning "let the buyer beware" ("what you see is what you get," if it is not what you are expecting too bad)

What ethical issue arising in organizational relationships?

A businessperson may be tempted to place their welfare over others and their organization's welfare.

Who guides ethical conduct provides employees someone to consult if they are not sure of the right thing to do.

A chief ethics (or compliance) officer

What is a social audit?

A comprehensive report of what an organization has done and is doing with regard to social issues that affect it.

What is the Equal Employment Opportunity Commission (EEOC)?

A government agency with the power to investigate complaints of employment discrimination and sure firms that practice it.

What influences individual factors?

A person's values A decision maker with a greater amount of knowledge regarding a situation may take steps to avoid ethical problems, whereas a less-informed person may take action unknowingly that could lead to ethical problems.

What is the Affirmative Action Program?

A plan designed to increase the number of minority employees at all levels within an organization.

Who are minorities?

A racial, religious, political, national, or other group regarded as different from a large group of which it is a part and that is often singled out for unfavorable treatment.

What is a code of ethics?

A written guide to acceptable and ethical behavior as defined by an organization; it outlines uniform policies, standards, and punishments for violations.

What is corporate citizenship?

Adopting a strategic approach to fulfilling economic, ethical, environmental, and social responsibilities.

What type of business communication sometimes presents ethical questions?

Advertising

What is consumerism?

All the activities undertaken to protect the rights of consumers

Learning Objective (2-7)

Analyze how present employment practice are being used to counteract past abuses

How did businesses operate in the first quarter of the 20th century?

Businesses were free to operate as they chose

How can the government encourage ethical behavior in business?

By enacting more stringent regulations

How can companies avoid sexual harassment and abusive behavior?

By having formal policies that define and prohibit unacceptable abusive conduct, creating an antibullying organization culture that models good behavior and sends a strong message that improper conduct will be punished, and possibly provide additional training to employees.

What is recycling?

Converting used materials into new products or components for new products in order to prevent their unnecessary disposal.

What social factors influence a employees' ethical behavior?

Cultural norms, actions and decisions of co-workers, values and attitudes of "significant others," and use of the internet.

Learning Objective (2-5)

Describe how current views on the social responsibility of business have evolved

Learning Objective (2-8)

Describe the major types of pollution, their causes, and their cures

Learning Objective (2-3)

Discuss the factors that affect the level of ethical behavior in organizations

Learning Objective (2-6)

Discuss the factors that led to the consumer movement and list some of its results

When did the government get involved to fix monopolistic abuses of big business and provide various social services for individuals?

During the Great Depression when Franklin D. Roosevelt was president

What are the two views on social responsibility?

Economic model of social responsibility and Socioeconomic model of social responsibility

What is the most common federal offense committed by organizations?

Environmental crime

What do trade associations often provide to their members?

Ethical guidelines

Learning Objective (2-4)

Explain how ethical decision making can be encouraged

What is the economic model of social responsibility?

Holds society will benefit most when business is left alone to produce and market profitable products that society needs.

What are some of the possible consequences for ethic violators?

Humiliation, going to prison, paying large fines, losing their jobs, losing their families, and paying expensive legal fees.

Learning Objective (2-9)

Identify the steps a business must take to implement a program of social responsibility

Learning Objective (2-2)

Identify the types of ethical concerns that arise in the business world

What are the major forces of consumerism?

Individual consumer advocates and organizations, consumer education programs, and consumer laws.

What are the factors that affect the level of ethical behavior in an organization?

Individual factors, social factors, and opportunity.

What is whistle-blowing?

Informing the press or government officials about unethical practices within an organization

In what business relationships could ethical issues arise?

Investors, customers, employees, creditors, suppliers, or competitors

What is plagiarism?

Knowingly taking some else's words, ideas, or other original material without acknowledging the source

Who must provide direction by fostering communication, actively modeling and encouraging ethical decision making, and training employees to make ethical decisions in a company?

Managers

What is the socioeconomic model of social responsibility?

Places emphasis not only on profits but also on the impact of business decisions on society.

Who started the Bill of Rights for Consumers?

President John F. Kennedy

What are some of the most effective ways that companies can reduce their impact on the environment?

Reducing waste from operations and other activities, recycle, use "greener" forms of power.

How does the Workplace Bullying Institute (WBI) define bullying in the workplace?

Repeated work sabotage; verbal abuse; and/or abusive conduct that is threatening, humiliating or intimating.

What is bullying when it takes on sexual overtones?

Sexual harassment

What may happen when there is a strong consensus regarding a particular unethical action?

Society may demand laws to be created to outlaw it.

What is the Sarbanes-Oxley Act of 2002?

Sweeping new legal protection for those who report corporate misconduct.

What are some examples of unethical behavior in coworker relationships?

Taking credit for others' ideas work, not meeting one's commitments in a mutual agreement, and pressuring others to behave unethically.

Who are the EPA and what do they do?

The Environmental Projection Agency A federal agency charged with enforcing laws designed to protect the environment.

How did Congress try to fix the problem of not every businessperson liking the affirmative action action?

The Equal Employment Opportunity Commission (EEOC)

Who investigates firms that claim they are green marketers but do not provide evidence that has significant environmental benefit and does not mislead consumers?

The Federal Trade Commission

What right in the Bill of Rights for Consumers was about someone will listen and take appropriate action when customers complain?

The Right To Be Heard

What right in the Bill of Rights for Consumers was about consumers must have access to complete information about a product before they buy it?

The Right To Be Informed

What right in the Bill of Rights for Consumers was about consumers must have a choice of products, offered by different manufactures and sellers, to satisfy a particular need?

The Right To Choose

What right in the Bill of Rights for Consumers was about entitling people to be fully informed about their rights as consumers?

The Right To Consumer Education

What right in the Bill of Rights for Consumers was about entitling consumers to convenience, courtesy, and responsiveness from manufacturers and sellers of consumer products

The Right To Service

What right in the Bill of Rights for Consumers was about the products consumer's purchase must be safe for their intended use, must include through and explicit directions for proper use, and must be tested by the manufacturer to ensure product quality and reliability?

The Right to Safety

What is opportunity?

The amount of freedom an organization affords an employee to behave unethically if he or she makes that choice.

What is business ethics?

The application of moral standards to business situations

What is pollution?

The contamination of water, air, or land through the actions of people in an industrialized society.

Who also deals with corporate responsibility, conflicts of interest, and corporate accountability?

The law

What is the goal of the affirmative action program?

The plan is to make sure that minorities have the same presentation within an organization in approximately the same proportion of the surrounding community.

What is green marketing?

The process of creating, making, delivering, and promoting products that are environmentally safe.

What is social responsibility?

The recognition that business activities have an impact on society and the consideration of that impact in business decision-making

What is ethics?

The study of right and wrong and of the morality of choices individuals make.

What can happen when an employee is rewarded for fails to suffer any kind of consequence after having behaved unethically?

They could do it more in the future.

What does a effective social responsibility program take?

Time, money, and organization

Businesspeople are expected to obey all laws and regulations and what else?

To refrain from knowingly deceiving, misrepresenting, and intimidating others

Is it true that positive associations for brands help them stand out in the competitive market when firms put in the effort to help society?

True

Learning Objective (2-1)

Understand what is meant by business ethics

How does the EEOC define sexual harassment?

Unwelcome sexual advances, requests for sexual favors, and other verbal or physical harassment of a physical nature.

When does conflict of interest occur?

When a businessperson takes advantage of a situation for his or her personal interest rather than the employers. (Examples: An employee with divided loyalties, such as a manager dating a subordinate, an employee with a close relative who works for a competitor, a purchasing manager who chooses to do business with another firm in which he is an investor, or a firm that advises clients without informing them that it has a relationship with some of the products it recommends.)

Who are the hard-core unemployed?

Workers with little education or vocational training and a long history of unemployment.

Many people believe that businesses have a basic responsibility to contribute to the general well being of the public, especially with ______________________________________________________________________________________________.

ensuring that their products do not harm anyone.