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CHAPTER TWO: ETHICS & SOCIAL RESPOSIBILITY (Consumerism (Right to…
CHAPTER TWO: ETHICS & SOCIAL RESPOSIBILITY
Business Ethics
Business Ethics
= application of moral standards to business situations
Ethics
= study of right & wrong and the morality of the choices individuals make
Ethical issues
Organisational relationships
put the welfare of others & that of the organisation above their own personal welfare
Conflict of interest
when a businessperson takes advantage of a situation for personal gain rather than for the employer's interest
Fairness & Honesty
expected to refrain from knowingly deceiving, misrepresenting, intimidating others
Communications
false, misleading advertising is illegal & unethical
Factors affecting ethical behaviour
Social factors
Cultural norms
Coworkers
Significant others
Use of the internet
Opportunity factors
Presence of opportunity
Ethical codes
Enforcement
Individual factors
Personal values
Personal goals
Individual knowledge of an issue
Encouraging ethical behaviour
Trade associations' role
: ethical guidlines
Individual companies' role
: code of ethics & whistle blowing
Governments role
: legislation & regulations
Social responsibility
Two views
Socioeconomic model
businesses should emphasize not only profits but also the impact of its decisions on society
Corporation is a creation of society & it must act as any responsible citizen would
Firms take pride in their social responsibility obligations
Economic model
Attitude: SR is someone else's problem & the firms primarily responsibility is to make a profit for its shareholders
Society will benefit the most when business is left alone to produce & market profitable products that society needs
business activities have an impact on society & the consideration of that impact in business decision making
Cons
social problems affect society in general - individual businesses shouldn't be expected to solve these problems
social issues are the responsibility of government officials
resources should be used to maximise profit
primarily responsible to stockholders
Pros
business has the technical, financial & managerial resources needed to tackle todays complex social issues
helping solve social issues business can create a more stable environment for long-term profitability
business is part of our society - cannot ignore social issues
prevent increased government interventions - would force businesses to do what they fail to do voluntarily
Consumerism
Right to courteous service
Right to consumer education
Right to be heard
Right to choose
Right to be informed
Right to safety
Implementing a program for SR
Developing a program
Appoint a director
Prepare a social audit
Planning
Secure the commitment of top executives
Funding
Federal gov. - through tax reduction / other incentives
Absorb the cost as an expense
Pass the cost onto consumers - higher prices