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MIE 201, Chapter 4 Book Notes

by: Jenna Loehrer

MIE 201, Chapter 4 Book Notes MIE 201

Marketplace > North Carolina State University > Management > MIE 201 > MIE 201 Chapter 4 Book Notes
Jenna Loehrer
GPA 3.9

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About this Document

These notes and vocabulary are from Chapter 4 and will be on Exam 1.
Intro to Management
M.K. Ward
Class Notes
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This 7 page Class Notes was uploaded by Jenna Loehrer on Wednesday September 21, 2016. The Class Notes belongs to MIE 201 at North Carolina State University taught by M.K. Ward in Fall 2016. Since its upload, it has received 6 views. For similar materials see Intro to Management in Management at North Carolina State University.


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Date Created: 09/21/16
  Chapter 4 Notes: Business Ethics and Corporate Social Responsibility   Learning Objectives  1. Discuss what it means to practice good business ethics, and highlight three factors  that influence ethical decision making.  a. Three essential components of good business ethics:   i. Competing fairly and honestly  ii. Communicating truthfully  iii. Not causing harm to others  b. Three major influences on ethical decision making:  i. Culture  ii. Knowledge  iii. Organizational behavior  c. When facing ethical dilemma, you can find clarity by starting with universal  standards of justice, concerning rights of everyone involved, being as objective as  possible, not assuming that others think the same way you do, and avoiding  conflicts of interest  d. Key Terms:​ Ethics, insider trading, transparency, code of ethics, whistleblowing,  ethical lapse, ethical dilemma, conflicts of interest  2. Define corporate social responsibility (CSR), and explain the difference between  philanthropy and strategic CSR.  a. Corporate Social Responsibility­ notion that business has obligations to society  beyond pursuits of profits  i. No general agreement over what those responsibilities are or which  elements of society should determine those obligations or benefit from  them  1. Philanthropy:​ donating time, money, or other resources, without  regard for any direct business benefits  2. Strategic CSR:​ contributions that are aligned with the company’s  business needs and strategies  b. Key Terms:​ Corporate Social Responsibility, Philanthropy, Strategic CSR  3. Distinguish among the four perspectives on corporate social responsibility.  a. Minimalist:​ business’s only obligation is to compete to the best of its abilities  without deception or fraud  b. Defensive:​ businesses engage in CSR efforts only in response to social pressure  c. Cynical:​ businesses engage in CSR as a public relations ploy)  d. Proactive:​ businesses contribute to society out of a belief that they have an  obligation to do so  e. Key Terms: ​ Nongovernmental Organizations (NGOs)  4. Discuss the role of business in protecting the natural environment, and define sustainable  development.    Chapter 4 Notes: Business Ethics and Corporate Social Responsibility   a. Many businesses are making an effort to reduce, reuse, and recycle, and  governments are trying market­based approaches such as:   i. Cap and trade:​ encourage businesses to reduce emissions  ii. Sustainable Development:​ meeting the needs of the present without  compromising the ability of future generations to meet their own needs  b. Key Terms:​ Cap and Trade, sustainable development  5. Identify four fundamental consumer rights and the responsibility of business to  respect them.   1. Right to be informed  2. Right to choose  3. Right to be heard  4. Right to safe products  b. Responsibility of business to respect these rights → many specific aspects of  these rights are now embodied in government regulations, but others rely on  business professionals to practice ethical and responsible recision making  c. Key Terms:​ Consumerism, identity theft  6. Explain the responsibilities businesses have toward their employees.  a. CSR has impact on external stakeholders   b. Also applies within company   i. Way employees are treated  1. Affirmative Action programs and regulations to protect the rights  of people with disabilities, and occupational safety and health    ● Ethics in Contemporary Business  ○ What is ethical behavior?  ■ Ethics:​ the principles and standards of moral behavior that are accepted by  society as right and wrong  ■ Competing fairly and and honestly  ■ Communicating truthfully  ■ Being transparent  ● Transparency:​ the degree to which information flows freely within  an organization, among managers and employees, and outward   ■ Not causing harm to others  ● EX: insider trading: company insiders use confidential information  to gain an advantage in stock market trading (harms investors)  ○ Factors influencing ethical behavior  ■ Cultural differences: one culture may accept different practices than  another    Chapter 4 Notes: Business Ethics and Corporate Social Responsibility   ● Managers may need to consider a wide range of issues, including  acceptable working conditions, minimum wage levels, product  safety issues, and environmental protection  ■ Knowledge: the more you know, the better you understand the situation,  the better your chances of making an ethical decision  ■ Organizational behavior  ● Develop programs to improve ethical conduct, typically combining  training, communication, and a code of ethics (defines the values  and principles that should be used to guide decisions)  ● Whistle­blowing:​ expressing concerns internally through formal  reporting mechanisms or externally to the news media or  government regulators   ○ 80% of whistle­blowers in one survey said they were  punished in some way  ○ Ethical decision making  ■ Choose the wrong course ­­­> commit an ​ethical lapse​ (choices were clear  and you made the wrong one)  ■ Ethical dilemma: ​ ​choices aren’t very clear  ● Situation in which you must choose between conflicting but  arguably valid options or even situations which all options are  unpleasant   ■ Points for ethical dilemmas:  ● Frame the situation accurately  ● Identify all parties who might be affected by your decision  ● Be as objective as possible  ● Don’t assume that other people think the way you do  ● Watch out for ​conflicts of interest:​ ​situations in which competing  loyalties can lead to ethical lapses  ● Corporate Social Responsibility:​ ​(CSR) is the notion that business has obligation to  society beyond the pursuit of profits  ○ The relationship between business and society  ■ Consumers in contemporary societies enjoy and expect a wide range of  benefits   ● Require money  ■ Profit­seeking companies are the economic engine that powers modern  society   ■ Much of what we consider when assessing a society’s standard of living  involves goods and services created by profit­seeking companies    Chapter 4 Notes: Business Ethics and Corporate Social Responsibility   ■ Companies cannot hope to operate profitably without the many benefits  provided by a stable, functioning society  ■ Businesses and society clearly need each other  ○ Philanthropy versus strategic CSR   ■ Philanthropy:​ ​donating money, employee time, or other resources to  various causes without regard for any direct business benefits for the  company   ■ Strategic CSR:​ ​social contributions that are directly aligned with a  company’s overall business strategy (company helps itself and society at  the same time)  ● Makes more sense than general philanthropy because: business and  society are mutually dependent, investments that benefit the  company are more likely to be sustained over time, and making  sizable investments in a few strategically focused areas will yield  greater benefits to society  ● Perspectives on corporate social responsibility  ○ Minimalist CSR  ■ Minimalist view:​ ​the only social responsibility of business is to pay taxes  and obey the law  ■ Any business that operates ethically and legally provides society with  beneficial goods and services at fair prices  ■ Should businesses be in the business of making social policy and spending  the public’s money?  ○ Defensive CSR  ■ Many companies receive pressure from activists and ​nongovernmental  organizations (NGOs):​ ​nonprofit groups that provide charitable services or  that promote causes  ■ Company may take positive steps to address an issue only because it was  embarrassed into action by negative publicity  ○ Cynical CSR:​ a company accused of irresponsible behavior promotes itself as  being socially responsible without making substantial improvements in its  business practices   ○ Proactive CSR:​ ​company leaders believe they have responsibilities beyond  making a profit, and they back up their beliefs and proclamations with actions  taken on their own initiative   ■ Benefit corporation:​ ​builds proactive CSR into a company’s very  foundation and legally obligates it to pursue a social/environmental goal         Chapter 4 Notes: Business Ethics and Corporate Social Responsibility   ○ Resolving the CSR dilemma  ■ Eliminate cynical approach because it’s dishonest, therefore unethical  ■ Some say minimalist is related to collectivism  ● Collectivism: ​ suggests socialism/communism   ■ Two­tiered approach to CSR can yield an answer  ● 1) “do no harm” and it is not a matter of choice  ● 2) moving beyond “do no harm”, becomes a matter of choice  ● CSR: the natural environment  ○ Three important points in mind  ■ The creation, delivery, use and disposal of products that society values  virtually always generate pollution and consume natural resources  ■ “Environmental” issues are often as much about human health and safety  as they are about the environment  ■ These issues aren’t simple: they often require trade­offs, occasional  sacrifice, disruptive change, and decision making in the face of uncertainty   ○ Efforts to conserve resources and reduce pollution   ■ Ecology:​ the study of the relationship between organisms and the natural  environment  ■ Cap and trade:​ ​programs try to balance free­market economics with  government intervention   ● Maximum allowable amount of a particular pollutant that a  designated group of companies or industries is allowed to emit  (“the cap”) and then distribute individual emission allowances to  all the companies in that group. If a company lowers its emissions  enough to stay under its limit → “trade” or save allowances   ○ Company exceeds allowances → buy/trade enough to cover  excess emissions  ○ The trend toward sustainability  ■ Sustainability/sustainable development:​ ​development that “meets the  needs of the present without compromising the ability of future  generations to meet their own needs”  ■ Reduce consumption and pollution → can end up saving money for  companies down the road  ■ CEOs now view sustainability as a business opportunity, a viewpoint  firmly in line with the concept of strategic CSR            Chapter 4 Notes: Business Ethics and Corporate Social Responsibility   ● CSR: consumers  ○ Consumerism:​ ​a movement that put pressure on businesses to consider consumer  needs and interests   ■ Promoted many businesses to create consumer affairs departments to  handle customer complaints   ■ Promoted state/local agencies to set up bureaus to offer consumer info and  assistance  ○ The right to buy safe products­ and buy them safely  ■ Goal: to ensure the safety of the products sold within borders  ■ Identity theft:​ ​criminals steal personal info and use it for loans, request  gov documents and tax refunds, medical procedures, and other fraud   ■ Any company that collects personal info has a clear ethical obligation to  keep it safe  ● Number of massive security breaches shows how poorly  companies are meeting this obligation  ○ The right to be informed  ■ Consumers have a right to know what they’re buying, how to use it, if  there are risks, true price of goods/services, and details of purchase  contracts  ■ Social commerce: ​ ​buyers help educate one another  ● Shifts power from sellers → buyers  ● Social media  ○ Right to choose which products to buy   ■ Should the government take measures to make products, like cigarettes,  illegal or should consumers always be allowed to decide for themselves  what to buy?  ○ Right to be heard  ■ Social media gives consumers numerous ways to ask questions  ● Choose businesses that are more tech savvy/embrace new media  environment  ● CSR: Employees  ○ The push for equality in employment  ■ Discrimination:​ ​being relegated to low­paying, menial jobs and prevented  from taking advantage of many opportunities solely on the basis of their  race, gender, disability, or religion  ■ Civil Rights Act of 1964 established ​Equal Employment Opportunity  Commission (EEOC):​ ​regulatory agency that addresses job discrimination   ● Has power to file legal charges against discrimination and force  companies to compensate individuals/groups    Chapter 4 Notes: Business Ethics and Corporate Social Responsibility   ● Civil Rights Act of 1991 amended original act: limited amount of  damage rewards, made it easier to sue, gave right to trial, extended  to overseas employees of US companies  ■ Affirmative action:​ ​encourage organizations to recruit and promote  members of groups whose past economic progress has been hindered  through legal barriers or established practices  ● Usually refers to programs based on race  ● Many Claims:  ○ Double­standard  ○ Crucial to ensure equal opportunities  ■ Americans with Disabilities Act (ADA):​ ​guarantees equal opportunities in  housing, transportation, education, employment, etc. for those with  disabilities   ● Employers required to make accommodations to meet needs of  disabled employees  ○ Occupational safety and health  ■ Occupational Safety and Health Act of 1970:​ ​set mandatory standards for  safety and health and also established the ​Occupational Safety and  Health Administration (OSHA) t ​ o enforce them  ■ Ergonomics:​ ​the study of how people interact with computers and other  machines   ■ Sweatshops:​ ​production facilities that treat workers poorly   ● Nearly 200 schools joined fair labor association to help ensure that  school­logo products are manufactured in an ethical manner   


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