BUS 101, Ch.2 Notes
BUS 101, Ch.2 Notes BUS 101
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This 10 page Class Notes was uploaded by Alicia Notetaker on Thursday August 25, 2016. The Class Notes belongs to BUS 101 at Tri-County Technical College taught by clinton williams in Fall 2016. Since its upload, it has received 33 views. For similar materials see introduction to business in Business at Tri-County Technical College.
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Date Created: 08/25/16
Ch.2 Being Ethical & Socially Responsible 1-1 Business Ethics Defined Ethics- The study of right and wrong and of the morality of the choices individuals make. Business Ethics- The application of moral standards to business situations. Some court cases have caused business ethics to become public. Ex.) The former president at Houston’s Riverside Hospital submitted false information to Medicare. They claimed that he had the hospital bill Medicare for $158 million. 2-2 Ethical Issues Business people face ethical issues every day. Although some come less frequent than others, and some are harder to handle than others. Examples of Ethical Issues Fairness & Honesty -Although there are rules that must be followed, business people are expected to follow the moral rules as well. -The consequences of failing to do so can be very bad, as far as prison. Organizational Relationships -Relationships among co-workers can cause ethical problems, unethical behavior; this includes taking credit for others, ideas for work, not meeting ones commitments in a mutual agreement, and pressuring others to behave unethically. - One issue of fairness and honesty consists of plagiarism. -When this occurs everyone suffers, including the investors. -Investors have the right to expect that all actions by a firm contribute toward a return on their investment. -There are 2 issues that raise flags for investors. 1.) When the head of a business is bringing in a lot of money while the business as a whole has a great amount of debt for the year. 2.) When the CEO (head of the company) sits on the board of directors- it is supposed to be the other way around. The CEO can’t review himself. Conflict of Interest -When a business person takes advantage of a situation for his/her own personal interest, rather than for the employer’s interest. -An employee with divided loyalties. - Ex.) if you are working at Coke, and dating someone from Pepsi, you are unable to share information about coke to them -Consumers have the right to know that their investment advisor may be recommending certain funds over others in order to receive extra compensation, regardless of whether those funds or most suitable. - Other examples can be bribes in order to get what is wanted. Ex.) Walmart gave millions to Mexican areas in order to get Walmart’s throughout the area quicker. Communications -Being cautious of statements used in advertising. All things must be true and not misleading. 2-3 Factors Affecting Ethical Behavior Examples of what can make a good worker, have bad ethical behavior Individual Factors -How much an individual knows about an issue (When a person knows less, it is possible that they could get themselves in a situation while trying to figure something else) Social Factors -Cultural norms, actions and decisions of co-workers, moral values and attitudes of “significant others”, and the use of internet. -Cultural norms can vary greatly. Mainly with different countries. - Actions and decisions of co-workers can cause others to do things that they shouldn’t, just because others do. -Family and friend’s values can shape how you act. Opportunity Factors -Opportunity- refers to the amount of freedom an organization affords an employee to behave unethically if he or she makes that choice. 2-4 Encouraging Ethical Behavior Government’s Role in Encouraging Ethics: -The government can encourage ethical behavior by enacting better regulations. - Ex.) Sarbanes-Oxley Act of 2002- Provides sweeping new legal protection for those who report corporate misconduct. Trade Associations’ Role in Encouraging Ethics: - Trade associations are in the position to put pressure on members to stop engaging in questionable business practices that may harm all firms in the industry. Individual Companies’ Role in Encouraging Ethics: -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. -Managers must ALSO provide direction by creating communication, modeling and encouraging ethical decision making, and train employees to make ethical decisions. -Many companies have assigned an ethics officer to keep things in line. - People can also take a controversial step -Whistle Blowing- informing the press or government officials about unethical practices within one’s organization. -Whistle blowing can be a risky business which sometimes even results in job loss. The Sarbanes-Oxley Act of 2002 protects whistle blowers. They are often backed up by the Whistleblower Protection Act of 1989. Social Responsibility: -Social Responsibility- The recognition that business activities have an impact on society and the consideration of that impact in business decision making. -Ex.) companies helping out by providing food and laundry services after a disaster. -Corporate Citizenship- Adopting a strategic approach to fulfilling economic, ethical, environmental, and social responsibilities. 2-5 The Evolution of Social Responsibility in Business Social responsibility in business is much higher today than it was in past decades. Historical Evolution of Business Social Responsibility: -Businesses used to be able to run under their own rules with little regulations. -Consumers were normally subject to Caveat Emptor- A Latin phrase meaning “let the buyer beware” (what you see is what you get) -Most of the laws passed were leaned more towards encouraging competition and not correcting abuses. -After the stock market crashed (the great depression), the Government got more involved. Two Views of Social Responsibility: -1.) 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. (JUST earn a profit by manufacturing products) -2.) Socioeconomic Model of Social Responsibility-The concept that business should emphasize NOT ONLY profits but also the impact of its decisions on society - Most choose socioeconomic for 3 reasons. 1.) Business is dominated by the corporate form of ownership, and the corporation is a creation of society. If the corp. does bad, society will demand changes. 2.) Firms have started to take pride in their social responsibility records. 3.) Many businesspeople believe that it is best to take initiative in this area. The Pros and Cons of Social Responsibility: Pros of the Socioeconomic model -Business is a part of our society, it can’t 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 the Socioeconomic model -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. Most firms are somewhere in the middle of the two, but leaning toward socioeconomic. 2-6 Public Responsibilities of Business Consumerism: -Consumerism- all activities undertaken to protect the rights of consumers. -The Basic Rights of Consumers: 1.) The Right to Safety (Products must be safe for their intended use and tested by the producer to ensure product quality and safety) 2.) The Right to Be Informed (Customers must be well educated about everything that they buy before and after purchase) 3.) The Right to Choose (Consumers must have the choice of a product. There should be more than one supplier. The government encourages competition which brings down the prices for the consumer) 4.) The Right to Be Heard (Someone will listen if there is a complaint or suggestion to be made) 5.) Additional Consumer Rights. 1.) Right to Consumer Education (allows people to be fully informed about their rights as consumers) 2.) Right to Service (entitles consumers to convenience, courtesy, and responsiveness from manufactures and sellers of consumer products) -Major Consumerism Forces: The major forces in consumerism are individual consumer advocates and organizations, consumer education programs, and consumer laws. Public Health: -People believe that businesses should contribute to the wellbeing of the public by ensuring that their products do not harm anyone. - Many businesses have tried to create a safer/ healthier environment with things such as obesity, smoking, heart disease, alcohol use, and using phones while driving. 2-7 Employment Practices Although everyone should have an equal opportunity at a job, it has been denied to many minorities. Affirmative Action Programs: -affirmative action program- a plan designed to increase the number of minority employees at all levels within an organization. - Two Problems. 1.) Quotas have already been made 2.) Not all businesspeople are in favor of affirmative action programs, but can still “play the game” without changing anything. -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. (fixes #2) Training Programs for the Hard-Core Unemployed: -Hard-core unemployed- workers with little education or vocational training and a long history of unemployment. - Firms come together to help train the unemployed Programs to Reduce Sexual Harassment and Abusive Behavior: -Bullying and sexual harassment is a big problem in the work area and can often lead to low self-esteem and high turnover. - Managers need to provide programs to help prevent these things from occurring. 2-8 Environmental Concerns Businesses are a big part of the waste in our world. Pollution: -As populations grow, we must get better with handling pollution at its source. Effects of Environmental Legislation: -When firms are aware of a pollution problem, many respond quickly. Others will say that the environmental standards are too strict. Business Response to Environmental Concerns: -Many firms will recycle products. -They also donate leftover food to local food pantry’s -They try to be resourceful with the electricity; using better lightbulbs, and solar powered lights. -Green Marketing- The process of creating, making, delivering, and promoting products that are environmentally safe. 2-9 Implementing a Program of Social Responsibility 4 steps to implementing a program Commitment of Top Executives -Top managers should develop a policy statement that outlines key areas of concern. (this acts as a guide) Planning -Managers should be appointed to plan the program. If necessary, they can hire help. It should deal with the issues described in #1. Appointment of a Director -a top level executive should be appointed to implement the organizations plan. The Social Audit -Social Audit- a comprehensive report of what an organization has done and is doing with regard to social issues that affect it. -should reveal positive and negative aspects of the program.