259766951-mgm4137-1328501852.pptx

SOCIAL RESPONSIBILITY AND BUSINESS

4TH EDITION

FERRELL • THORNE • FERRELL

CHAPTER 1

Social Responsibility Framework 

Social Responsibility Defined • Social responsibility  – The  –  The adoption by a business of a strategic focus for fulfilling the economic, legal, ethical and  philanthropic responsibilities expected of it by its stakeholders

• Businesses should look beyond their selfinterests and recognize that they belong to a larger group that expects responsible  participation.

What do you believe organizations should be responsible for accomplishing?

Social Responsibility Defined • Applies to all types of businesses  – Small businesses  – Large businesses  – Sole proprietorships  – Multinational corporations

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Social Responsibility Defined

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• Fulfills societal expectations  – Provides a return on investment for owners  – Obeys the law and regulatory agencies  – Acts in a just, fair, and correct manner  – Promotes human welfare and good will

Pyramid of Social Responsibility

Social Responsibility Defined

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• Economic  – Maintain profitability

• Legal  – Abide by legal and regulatory influence

• Ethical  – Ensure just and fair behavior in the workplace

• Philanthropic  – Promote human welfare and goodwill

SOCIAL RESPONSIBILITY AND BUSINESS

4TH EDITION

FERRELL • THORNE • FERRELL

CHAPTER 2

Strategic Management of Stakeholder Relationships

Stakeholders • Those constituents who have a stake in, or claim on, some aspect of a company’s  products, operations, markets, industry, and outcomes • Companies that operate with a stakeholder orientation recognize that business and society are interpenetrating systems, in that each affects and is affected by the other.

Primary Stakeholders • Groups fundamental to a company’s operation and survival  –  Customers  –  Employees  –  Shareholders  –  Investors  –  Suppliers  –  Government  –  Community • Balancing the needs and perspectives of primary stakeholders is a strategic imperative.

Secondary Stakeholders • Groups that may influence and/or be affected by the company,  but are not engaged in economic exchanges with the firm:  –  Media  –  Special interest groups  –  General public • These groups are not fundamental to an organization’s daily survival. • They can place significant pressure on a business and therefore, cannot be ignored.

Development of  Stakeholder Relationships • Relationships are founded on principles of:  –  Trust  –  Commitment  –  Communication • They are also associated with a degree of:  –  Time  –  Interaction  –  Shared expectations • Companies are searching for ways to develop long-term and collaborative relationships with their customers and business  partners.

Social Capital • An asset, which resides in relationships, that is characterized by mutual goals and trust • Facilitates smooth internal and external transactions and processes

The Reactive-DefensiveAccommodative-Proactive Scale

SOCIAL RESPONSIBILITY AND BUSINESS

4TH EDITION

FERRELL • THORNE • FERRELL

CHAPTER 3

Corporate Governance

Corporate Governance • Corporate governance is the formal system of oversight, accountability, and control for organizational decisions and resources. • Major issues:  –  Shareholder rights  –  Executive compensation  –  Organizational ethics programs  –  Board composition and structure  –  Auditing, control and risk management  –  CEO selection and executive succession plans

Models of Corporate Governance • Shareholder model  – Maximizes wealth for investors and owners  – Develops and improves the formal system of  performance accountability between management and the firm’s shareholders  – Makes decisions based on what is ultimately best for investors  – Focuses on aligning investor and management interests

Models of Corporate Governance (cont.)

• Stakeholder model  – Considers the interests of employees, suppliers, government agencies, communities, and other groups with which the firm interacts  – Assumes a collaborative and relational approach to business  – Focuses on continuous improvement, accountability, and engagement with internal and external constituents

Issues in Corporate Governance Systems • Boards of directors  – Independence  – Quality and experience  – Performance

• Shareholders and investors  – Shareholder activism  – Social investing  – Investor confidence

Issues in Corporate Governance Systems (cont.) • Internal control and risk management  – Internal and external audits  – Control systems  – Risk management

• Financial misconduct • Executive compensation

SOCIAL RESPONSIBILITY AND BUSINESS

4TH EDITION

FERRELL • THORNE • FERRELL

CHAPTER 4

Legal, Regulatory, and Political Issues

Government’s Influence on Business • Laws are enforced through the judicial system.  –  Settles disputes and punishes criminals

• Corporations have the same legal status as a person.  –  Can sue  –  Can be sued  –  Can be held liable for debt

The Rationale for Regulation • Preventing trusts and monopolies from using their market dominance to negatively manipulate output, pricing, and quality • Eliminating unfair competition and anticompetitive practices • Supporting environmental initiatives, equality in the workplace, and product safety • Protecting consumers and business in ecommerce activities

Global Regulation • Import barriers  –  Tariffs and quotas  –  Minimum price levels  –  Port-of-entry taxes • Product quality, safety, distribution, sales, and regulation

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•  North American Free Trade Agreement (NAFTA)  –  Eliminates virtually all tariffs on goods produced and traded  between the U.S., Canada, and Mexico • European Union (EU)  –  Promotes free trade between member nations

Benefits of Regulation • Greater equality in the workplace • Safer workplaces • Resources for disadvantaged societal members • Safer products • More information about products • Greater product variety • Cleaner air and water  • Preservation of wildlife

Deregulation • Removal of all regulatory authority • Belief that less government intervention allows  business markets to work more effectively • Many industries have been deregulated.  –  Trucking  –  Airlines  –  Telecommunications  –  Electric utilities

• Critics of deregulation cite higher   prices and poorer service/quality.

Corporate Approaches to Influencing Government • Lobbying  –  Process of persuading public and/or government officials to favor a particular position in decision making  –  Takes place directly or through trade organizations

• Political Action Committees  –  Organizations that solicit donations from individuals and then contribute to candidates running for political office

• Campaign Contributions  –  Corporate donations

Seven Steps to Effective Compliance and Ethics Program • Establish a code of ethics. • Appoint a high-level compliance manager, usually an ethics officer. • Take care in delegation of authority. • Institute a training program and communication system. • Monitor and audit for misconduct. • Enforce and discipline. • Revise program as needed.

SOCIAL RESPONSIBILITY AND BUSINESS

4TH EDITION

FERRELL • THORNE • FERRELL

CHAPTER 5

Business Ethics and Ethical Decision Making

Ethical Issues in Business • An ethical issue is a problem, situation, or opportunity requiring an individual, group, or organization to choose among several actions that must be evaluated as right or wrong, ethical or unethical. • Ethical issues: • Honesty and fairness • Conflict of interest • Fraud • Discrimination • Information technology

Personal Misconduct in the Workplace

Moral Philosophies • Consequentialism  –  A decision is right or acceptable if it helps achieve the desired results

• Egoism  – Maximizing one’s own self -interest

• Utilitarianism  –  Greatest good for the greatest number of people

• Ethical formalism  –  Focuses on the rights of the individual

• Justice theory  –  Evaluations of fairness

Kohlberg’s Model • People progress through the previous six stages. • Cognitive moral development should be viewed as a continuum. • People’s moral beliefs and behavior change as they gain education and experience. • There are universal values by which  people in the highest level of moral development abide.

Social Needs that Motivate Ethical/Unethical Behavior  •  Need for achievement  – Preference for goals that are well defined and moderately challenging

•  Need for affiliation  – Inclination to work with others in the organization rather than alone

•  Need for power   – Desire to influence and control others

Creating an Ethical Climate • Top managers, employees, and stakeholders must support the philosophy that all organizations have responsibilities that extend  beyond legal and economic obligations. • Members of the organization must be willing to share their values about workplace ethics.