Chapter 10Business Ethics/ Social Responsibility/ Environmental Sustainability

Strategic Management: Concepts & Cases13th EditionFred David

Business Ethics

Social Responsibility

Environmental Sustainability

Business EthicsPrinciples of conduct within organizations that guide decision making and behavior

Business EthicsCode of Business EthicsA document that provides behavioral guidelines that cover daily activities and decisions within the organization

Ethics CultureEthics training should include:A message from the CEODevelopment and discussion of codes of ethicsProcedures for discussing and reporting unethical behavior

Ethics CultureTo align ethical and strategic decision making:Incorporate ethical considerations into long-term planningIncorporate ethical considerations into performance appraisalsEncourage whistle-blowing Monitor department and corporate performance regarding ethical issues

BribesA gift bestowed to influence a recipients conductIllegal in many countries, acceptable in others

Business Ethics

Social Responsibility

Environmental Sustainability

Social ResponsibilityActions an organization takes beyond what is legally required to protect or enhance the well-being of living things

Social PolicyConcerns what responsibilities the firm has to its employees, consumers, environmentalists, minorities, communities, shareholders, and other groups

Should be considered during each stage of strategy formulation, implementation, and evaluation

Social Policies on RetirementWorker shortages in countries around the world are leading to changes in retirement and immigration policies

Business Ethics

Social Responsibility

Environmental Sustainability

Environmental SustainabilityThe extent that an organizations operations and actions protect, mend, and preserve rather than harm or destroy the natural environment

Environmental SustainabilityStrategies of companies are scrutinized and evaluated from a natural environment perspective

Employees, consumers, governments, and society are resentful of firms that harm rather than protect the natural environment

Sustainability ReportReveals how a firms operation impact the natural environmentThese reports are not required, but are a good business practice

Lack of Standards ChangingMaking a claim that a product or process is green is becoming more difficult as standards are put into place

Obama RegulationsNew clean technology business start upsSolarWindBiofuelsInsulation

Managing Environmental Affairs in the FirmManagers must formulate strategies that preserve and conserve natural resources and control pollutionEnvironmental strategies could include Developing or acquiring green businessesDivesting or altering environment-damaging businessesStriving to become a low-cost producer through waste minimization and energy conservationPursuing a differentiation strategy through green product features

Students and Environmental TrainingCompanies prefer to hire graduates with training in environmental issues

Reasons Why Firms Should Be GreenConsumer demandPublic opinionEnvironmental advocacy groupsFederal and state environmental regulationsLendersConsumers, suppliers, distributors, and investorsLiability suits and fines

Be Proactive, Not ReactiveProactive do more than the bare minimumReactive changing only when forced to by the law or consumer pressure

ISO 14000/14001 CertificationInternational Organization for Standardization (ISO)A network of standards institutes of 147 countriesLargest developer of sustainability standards in the worldCompliance is voluntary

ISO 14000/14001 CertificationISO 14000 - a series of voluntary standards in the environmental fieldISO 14001 a set of standards included within ISO 14000 Adopted by thousands of firms worldwide to certify that they are conducting business in an environmentally friendly mannerResults in an environmental management system (EMS)

Electric Car NetworksGovernment funding for manufacturingRecharging stations being installed in many citiesExtensive research and development within the auto industryCompanies are replacing gasoline powered vehicles with hybrid electric-natural gas vehicles

March 2009 Copenhagen MeetingScientists warned that global warming is worse than expectedCompanies and governments encouraged to vigorously implement strategies to cut greenhouse gasesKyoto Protocal expires in 2012Results of March 2009 Copenhagen Meeting are expected to replace the Kyoto Protocal

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