Chapter 3 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1 Lamb, Hair, McDaniel...

Chapter 3 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1

Lamb, Hair, McDaniel

CHAPTER 3

Ethics and Social Responsibility

2011-2012

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LO 1 Explain the concept of ethical behavior

LO 2 Describe ethical behavior in business

LO 3 Discuss corporate social responsibility

Learning OutcomesLearning Outcomes


The Concept of Ethical Behavior

Explain the concept of ethical behavior

LO1


Ethical Behavior

The moral principles or values that generally govern the conduct of an individual or a group.

Example:

• There is no law for “cutting in line.”

• Cutting in line would anger most other people.

LO1


Ethical Behavior in Business

Describe ethical behavior

in business

LO2


Ethical Behavior in Business

EthicsEthics

MoralsMorals

The moral principles or

values that generally govern

the conduct of an individual.

The rules people develop as a result of cultural values and norms.

Morals involve “good” and “bad” as well as “deviant” behaviorsLO2


Ethical Development Levels

Pre-conventionalMorality

ConventionalMorality

Post-conventionalMorality

MoreMature

MoreChildlike

• Based on what will be punished or rewarded

• Self-centered, calculating, selfish

• Moves toward the expectations of society

• Concerned over legality and the opinion of others

• Concern about how they judge themselves

• Concern if it is right in the long run

LO2


Dell: An Ethics Case

• Documents from a lawsuit revealed that Dell shipped over 11.8 million faulty computers between 2003 and 2005.

• An internal investigation revealed extensive problems, but Dell tried to cover up the problem, telling its sales team not to mention bring it up.

• Dell at times used faulty components to fix broken computers.

• Dell took a $300 million charge to fix the computers, but only in response to stakeholder demands.

What level of ethical development is Dell operating at?

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Ethical Decision Making

Influential Factors

Extent of Problems

Top Management Actions

Potential Consequences

Social Consensus

Probability of Harm

Time UntilConsequences

Number Affected

LO2


Creating Ethical GuidelinesA Code of Ethics:

• Helps identify acceptable business practices

• Helps control behavior internally

• Avoids confusion in decision making

• Facilitates discussion about right and wrong

LO2

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Ethics in Other Countries

• Prohibits U.S. corporations from making illegal payments to foreign officials.

• Has been criticized for putting U.S. businesses at a disadvantage.

• Has encouraged some countries to implement their own anti-bribery laws.

LO2

Foreign Corrupt Practices Act (FCPA)


Corporate SocialResponsibility

Discuss corporate social responsibility

LO3


Sustainability

• Socially responsible companies will outperform their peers.

• It is in business’s best interest to find ways to attack society’s ills.

LO3


LO3

Exhibit 3.1Exhibit 3.1Pyramid of Corporate Social Pyramid of Corporate Social

ResponsibilityResponsibility


Arguments AgainstSocial Responsibility

• Businesses should focus on making a profit and leave social and environmental concerns to nonprofits.

• Milton Friedman argued that the free market, and not companies, should decide what is best for the world—socially responsible companies are using shareholders’ money to further their own agendas.

LO3


Growth of Social Responsibility

• According to a recent study, the percentage of firms that consider social responsibility factors when making business decisions:

LO3

Brazil 62%

54%Canada

Australia 52%

47%United States

India 38%

35%China

Mexico 26%


Cost of Ignoring Social Responsibilities

• Some surveys indicate that consumers would be willing to pay more for a socially responsible company’s product.

• Making false claims about social responsibility can be especially costly.

LO3


Green Marketing

• The development and marketing of products designed to minimize negative effects on the environment or improve the environment.– Environmentally aware customers pay

more for products– Companies must try to educate

customers of environmental benefits

LO3


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BookChapter 3 Videos

Method – Social Responsibility, Ethics, and the Marketing

Environment

Does method have a societal marketing orientation, or is it just a market-oriented company that integrates a number of environmental practices into its operation? Explain

http://www.cengage.com/marketing/book_content/1439039429_lamb/company_clips/ch03.html

Chapter 3 Copyright ©2012 by Cengage Learning Inc. All rights reserved 1 Lamb, Hair, McDaniel...

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