(Chapter 2) Business Ethics & Social Responsibility

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

What is meant by business ethics?

Business ethics is the application of moral standards to business situations.

What are the 4 main ethical concerns?

• Fairness and Honesty • Organizational Relationships • Conflict of Interest • Communications

What are 3 individual factors affecting business ethics?

• Individuals factors • Social factors • Opportunity

What are the four social factors affecting ethics?

• Cultural norms. A person’s behavior in the workplace, to some degree, is determined by cultural norms, and these social factors vary from one culture to another. • Co-workers. The actions and decisions of co-workers constitute another social factor believed to shape a person’s sense of business ethics. • Significant others. The moral values and attitudes of "significant others"—spouses, friends, and relatives, for instance—also can affect an employee’s perception of what is ethical and unethical behavior in the workplace. • Use of the Internet. Even the Internet presents new challenges for firms whose employees enjoy easy access to sites through convenient high-speed connections at work.

6. Describe "Opportunity" as a factor affecting ethics in an organization.

• Presence of opportunity. Opportunity refers to the amount of freedom an organization gives an employee to behave unethically if he or she makes that choice. • Ethical codes. The existence of an ethical code and the importance management places on this code are other determinants of opportunity. • Enforcement. The degree of enforcement of company policies, procedures, and ethical codes is a major force affecting opportunity.

7. What can be (and has been) done to encourage ethical behavior in business?

Government increasing regulations, trade association’s providing ethical guidelines for their members, and companies code ethics for their employees. Also creating an environment in which employees recognize the importance of obeying with these writing codes, these means managers providing a model and encourage of ethical decision making by training employees to make these ethical decisions.

8. What is meant by "social responsibility"?

Social responsibility is the recognition that business activities have an impact on society and the consideration of that impact in business decision-making.

9. Compare the two views of social responsibility (i.e. The Economic Model vs. The Socioeconomic Model)

The economic model of social responsibility holds that society will benefit most when business is left alone to produce and market profitable products that society needs. Socioeconomic model of social responsibility, which places emphasis not only on profits but also on the impact of business decisions on society.

Pros of increased social responsibility

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

Cons of increased social responsibility

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

10. Define Conflict of Interest

Conflict of interest results when a businessperson takes advantage of a situation for his or her own personal interest rather than for the employer’s interest.

11. What is "Consumerism"

all activities undertaken to protect the rights of consumers

12. What are the basic rights of consumers?

• The right of safety • The Right to Be Informed • The Right to Choose • The Right to Be Heard • Right to consumer education The Right to serivce.

13. Caveat emptor

a Latin phrase meaning "let the buyer beware"

14. Franklin D. Roosevelt

became president in 1933, and he instituted program to restore the economy and improve social conditions.

15. John F. Kennedy:

Declared that the consumer was entitled to a new "Bill of Rights", which establishes that consumers have a right to safety, to be informed, to choose, and to be heard.

16. Affirmative Action Programs

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

17. EEOC or Equal Employment Opportunity Commission

a government agency with the power to investigate complaints of employment discrimination and the power to sue firms that practice it

18. EPA or Environmental Protection Agency

Federal agency charged with enforcing laws designed to protect the environment.

The 4 steps to implementing a program of social responsibility:

commitment of top executives, planning, appointment of a director, and social audit.

20. Sarbanes – Oxley Act of 2002

provides sweeping new legal protection for employees who report corporate misconduct

21. Code of Ethics

a guide to acceptable and ethical behavior as defined by the organization

22. 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

23. Social Audit

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

24. NAB or National Alliance of Business

a joint business-government program to train the hard-core unemployed

25. Bribes

payments, gifts, or special favors intended to influence the outcome of a decision

26. Lyndon Johnson:

Founded NBA in 1968 along with Henry Ford II, which is a major national business organization focusing on education and workforce issues

27. Bill Clinton:

Added the sixth right, which is the right to service that entitles consumers to convenience, courtesy, and responsiveness from manufacturers and sellers of consumer products.

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