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STRATEGIC MANAGEMENT & BUSINESS POLICY13THEDITION
THOMAS L. WHEELEN J. DAVID HUNGER
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Responsibilities of a Business Firm
Social Responsibility:proposes that a privatecorporation has responsibilities to society that extendbeyond making a profit
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Responsibilities of a Business Firm
Friedmans traditional view of a business firm: Argues against the concept of social
responsibility
Primary goal of business is profit maximization not
spending shareholder money for the general socialinterest
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Responsibilities of a Business Firm
Carrolls four responsibilities of business: (in order
of priority) Economic
Legal
Ethical
Discretionary
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Carrolls four responsibilities of business:
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Responsibilities of a Business Firm
The ability to enter local andinternational markets
Enhanced reputation
Competitive advantage
Cost savings
The ability to charge premiumprices
Improved relationships withsuppliers and distributors
The ability to attract bettertalent
Goodwill in the eyes of publicofficials
Access to capital
Social capitalrefers to the goodwill of key stakeholdersand provides a company with:
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Responsibilities of a Business Firm
Characteristics of Sustainability
Environmental
Economic
Social
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Corporate Stakeholders
Stakeholders have an interest in the business and affect
or are affected by the achievement of the firmsobjectives
Enterprise strategy- articulates the firms ethicalrelationship with its stakeholders
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Stakeholder Analysis- the identification of corporatestakeholders in 3 steps:
1. Primary stakeholdershave a direct connection with
the corporation and have sufficient bargaining powerto directly affect corporate activities
2. Secondary stakeholdershave an indirect stake inthe corporation but are also affected by corporate
activities3. Estimate the effect on each stakeholder from a
particular strategic decision
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Reasons for Unethical Behavior
Unaware that behavior is questionable
Lack of standards of conduct Different cultural norms and values
Behavior-based or relationship-based governancesystems
Different values between business people andstakeholders
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Moral Relativismclaims that morality is relative to somepersonal, social, or cultural standard and that there isnot a method for deciding whether one decision is
better than another
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Types of Moral Relativism include:
Nave relativism
Role relativism
Social group relativism
Cultural relativism
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Kohlbergs Levels of Moral Development
Preconventional level: concern for ones self
Conventional level: considerations for societys lawsand norms
Principled level: guided by an internal code of ethics
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Encouraging Ethical Behavior
Code of Ethics-specifies how an organization
expects its employees to behave while on the job
Whistleblowers- employees who report illegal orunethical behavior on the part of others
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Key Terms in Ethical Behavior
Ethics-the consensually accepted standards of behaviorfor an occupation, trade, or profession
Morality-the precepts of personal behavior based onreligious or philosophical grounds
Law is the formal codes that permit or forbid certainbehaviors and may or may not enforce ethics ormorality
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Approaches to Ethical Behavior
Utilitarian- actions are judged by consequences
Individual rights- fundamental rights should berespected
Justice- decisions must be equitable, fair and impartial inthe distribution of costs and benefits to individuals orgroups
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Approaches to Ethical Behavior
Cavanaghs questions to solve ethical problems:
1. Utility- does it optimize the satisfactions of thestakeholders?
2. Rights- Does it respect the rights of the individuals
involved3. Justice- Is it consistent with the canons of justice?
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Approaches to Ethical Behavior
Kants categorical imperatives:
1. Actions are ethical only if the person is willing for thesame action to be taken by everyone who is in asimilar situation
2. Never treat another person simply as a means butalways as an end
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1. What is the relationship between corporategovernance and social responsibility?
2. What is your opinion of GAP Internationals having
a code of conduct for its suppliers? What wouldMilton Friedman say? Contrast his view with ArchieCarrolls view.
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3. Does a company have to act selflessly to be consideredsocially responsible? For example, when building a newplant, a corporation voluntarily invested in additionalequipment that enabled it to reduce its pollution emissionsbeyond any current laws. Knowing that it would be veryexpensive for its competitors to do the same, the firmlobbied the government to make pollution regulationsmore restrictive on the entire industry.Is this company socially responsible? Were its managers
acting ethically?
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4. Are the people living in a relationship-based governancesystem likely to be unethical in business dealings?
5. Given that people rarely use a companys code of ethicsto guide their decision making, what good are the codes?
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PowerPoint created by:
Ronald Heimler
Dowling College- MBA
Georgetown University- BS Business
Administration Adjunct Professor- LIM College, NY
Adjunct Professor- Long IslandUniversity, NY
Lecturer- California State PolytechnicUniversity, Pomona, CA
President- Walter Heimler, Inc.
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All rights reserved. No part of this publication may be reproduced,stored in a retrieval system, or transmitted, in any form or by any
means, electronic, mechanical, photocopying, recording, or otherwise,without the prior written permission of the publisher. Printed in the
United States of America.
Copyright 2012 Pearson Education, Inc.publishing as Prentice Hall