The Ethical and Social Environment of Management.
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Transcript of The Ethical and Social Environment of Management.
The Ethical and Social Environment of Management
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
2–2
Chapter Learning ObjectivesAfter studying this chapter you should be able to:
1. Discuss the nature of an organization’s environments and identify the components of its general, task, and internal environments.
2. Describe the ethical and social environment of management, including individual ethics, the concept of social responsibility, and how organizations can manage social responsibility.
3. Discuss the international environment of management, including trends in international business, levels of international business activities, and the context of international business.
4. Describe the importance and determinants of an organization’s culture, as well as how organization culture can be managed.
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1–3
FIGURE 1.4 The Systems Perspective of Organizations
Based on interaction with the external
ENVIRONMENT of the system
Remember Systems Theory?
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Owners
Employees
Physical environment
Board of directors
Culture
Competitors
Political-legal
dimension
Technologicaldimension
Economicdimension
Regulators Customers
Strategicpartners
Suppliers
Internal environment
Task environment ExternalenvironmentGeneral environment
The Organization and Its Environments
2–4
The Ethical Environment
Social Responsibility
The International Environment
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Individual Ethics In Organizations
• Ethics– An individual’s personal beliefs regarding what is right
or wrong or good or bad.
• Ethical Behavior– Behavior that is acceptable in the eye of the beholder.– Behavior that conforms to accepted social norms.
• Examples of Unethical Behavior? Or is it?– “Borrowing” office supplies for personal use.– Checking Facebook on company time.
2–5
© 2006 by South-Western, a division of Thomson Learning. All rights reserved. 3-6
Three Domains of Human Action
Amount of
Explicit ControlHigh Low
Domain of Certified Law
(Legal Standard)
Domain of Ethics
(Social Standard)
Domain of Free Choice
(Personal Standard)
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Determinants of Individual Ethics
Individual Ethics
2–7
Family Influences
Values andMorals
ExperiencesPeer
InfluencesSituational
Factors
3-8
Three Levels of Personal Moral Development
SOURCES: Based on L. Kahlberg, “Moral Stages and Moralization: The Cognitive-Developmental Approach, in Moral Development and Behavior: Theory, Research, and Social Issues, ed. T. Lickona (New York: Holt, Rinehart, and Winston, 1976), 31-53; and Jill W. Graham, “Leadership, Moral Development and Citizenship Behavior,” Business Ethics Quarterly 5, no. 1 (January 1995), 43-54.
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Managerial Ethics Employees Organization
• Conflicts of interest• Secrecy and
confidentiality• Honesty
• Hiring and firing• Wages and working
conditions• Privacy and respect
Subject to ethical ambiguities• Advertising and promotions• Ordering and purchasing• Bargaining and negotiation• Financial disclosure• Shipping and solicitation• Other business relationships
Economic Agents• Customers• Competitors• Stockholders• Suppliers• Dealers• Unions
Areas of concern for managerial ethics:
•How the firm treats the employee.
•How the employee treats the firm.
•How the firm treats other economic agents.
•How the firm handles its financial reporting
2–9
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Fostering Ethical Organization Behavior
2–10
Train Employees
Written Code of Ethics
Individual Issues:Behavior, Conscience, Privacy
Top Management Involvement
Managing Ethical Behavior
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Ethics in Organizations
• Managing Ethical Behavior–Begins with top management that:
• Establishes a strong culture and defines what will and will not be acceptable behavior.
• Provides ethical leadership by serving as ethical role models.
–Includes• Training on how to handle ethical dilemmas.• Developing a code of ethics.
2–11
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Emerging Ethical Issues
2–12
Ethical Leadership(Integrity)
Ethics and Information Technology (Privacy)
Corporate Governance(Sarbanes-Oxley Act)
Ethical Issues in Organizations
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
A Guide for Ethical
Decision Making
2–13
© 2006 by South-Western, a division of Thomson Learning. All rights reserved. 3-14
Guidelines for Ethical Decision Making
1. What is the “60 Minutes” test?
2. List three additional practical criteria for use in deciding if your behavior is ethical or unethical.
a. __________________________
b. __________________________
c. __________________________
The Environment of Social Responsibility
Read “Is Fair Trade a Fair Trade-Off”, page 34-36.
1. What is Fair Trade?
2. Are US companies legally required to participate in Fair Trade?
3. What do Fair Trade agreements do to product pricing?
4. Why would a company participate in Fair Trade?
5. Green Mountain Coffee Roasters, "Heart of the Cup"
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Social Responsibility
2–16
The Stakeholders
The General Social Welfare
The Environment
Social Responsibility of Organizations
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Social Responsibility in Organizations
• Social Responsibility–The set of obligations (to behave responsibly) that an
organization has to protect and enhance the social context in which it functions.
• Areas of Social Responsibility–Stakeholders: customers, employees, and investors.–The natural environment: environmentally sensitive
products, recycling, and public safety.–The general social welfare: charitable contributions,
and support for social issues such as child labor and human rights.
2–17
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
2–18
FIGURE 2.2 Arguments for and against Social Responsibility
Arguments for Social Responsibility
Arguments against Social Responsibility
SocialResponsibility
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Approaches to Social Responsibility
2–19
Proactive Stance
Accommodative Stance
Defensive Stance
Obstructionist Stance
Highest Degree of Social Responsibility
Lowest Degree of Social Responsibility
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
How Business and GovernmentInfluence Each Other
2–20
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Managing Social Responsibility
Legal compliance
Ethical compliance
Philanthropic giving
Formal OrganizationalDimensions
Organization leadership and culture
Whistle Blowing
Informal OrganizationalDimensions
2–21
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Managing Social Responsibility:Formal Organizational Dimensions
• Legal Compliance – Extent to which the organization conforms to local,
state, federal, and international laws.
• Ethical Compliance– Extent to which members of the organization follow
basic ethical/legal standards of behavior.
• Philanthropic Giving– Awarding of funds or gifts to charities or other social
programs.
2–22
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Managing Social Responsibility:Informal Organizational Dimensions
• Organizational Leadership and Culture–Leadership practices and the culture of the
organization define the social responsibility stance an organization and its members will adopt.
• Whistle Blowing–The organizational response to the disclosure by an
employee of illegal or unethical conduct on the part of others within the organization is indicative of the organization’s stance on social responsibility.
2–23
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
The International Environment of Management
2–24
2–25
What are the patterns or trends that emerge from this list?
Sourcehttp://money.cnn.com/magazines/fortune/global500/2013/full_list/
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Who are most PROFITABLE global firms?
2–26
1.Exxon Mobil2.Apple3.Gazprom4.Industrial and Commercial Bank of China5.China Construction Bank6.Volkswagen7.Royal Dutch Shell8.Chevron9.Agricultural Bank of China10.Bank of China
http://money.cnn.com/gallery/magazines/fortune/2013/07/08/global-500-most-profitable.fortune/index.html
Source:
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Trends in International Business
• Economic Recovery–Europe and Asia have rebuilt their economic systems
devastated in WWII.
• Decreasing Isolation from Foreign Competition–U.S. markets are open to overseas competitors.
• Increasing Globalization of World Markets–Volume of international trade has increased more than
3,000% from 1960 to 2010.–Larger percentages of U.S. firms’ profits are now
earned in international markets.
2–27
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
International Business Activity
Types of International
Business Activity
Importing
Exporting
Licensing
Direct Investment Alliances and Joint Ventures
2–28
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Levels of International Business Activity
• Exporting– Making a product in the firm’s domestic market and
selling it in another country.• Importing
– Bringing a good, service, or capital into a home country from abroad.
• Licensing– Allowing a foreign company to manufacture or market
the products and use a firm’s brand name, trademark, technology, patent, copyright, or other assets in exchange for a royalty based on sales.
2–29
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Levels of International Business… (cont’d)
• Strategic Alliance and Joint Ventures– Firms jointly cooperate for mutual gain, by sharing
costs and/or sharing ownership of a new enterprise.
• Direct Investment– Occurs when a firm headquartered in one country
builds or purchases operating facilities or subsidiaries in a foreign country.
– Maquiladoras• Light-assembly plants in northern Mexico which are
given special tax breaks by the Mexican government.
2–30
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
2–31
Table 2.1 Advantages and Disadvantages of Different Approachesto Internationalization
Approach to Internationalization Advantages Disadvantages
Importing or Exporting
1. Small cash outlay 2. Little risk 3. No adaptation necessary
1. Tariffs and taxes 2. High transportation costs 3. Government restrictions
Licensing 1. Increased profitability 2. Extended profitability
1. Inflexibility2. Competition
Strategic Alliances or Joint Ventures
1. Quick market entry2. Access to materials and
technology
Shared ownership(limits control and profits)
Direct Investment
1. Enhanced control 2. Existing infrastructure
1. Complexity2. Greater economic and
political risk3. Greater uncertainty
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Forms of International Business Activity
2–32
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
The Context of International Management
2–33
International Management Functions
Political/Legal Environment
Government stability
Incentives for international trade
Controls on international trade
Economic communities
EconomicEnvironment
Economic system
Natural resources
Infrastructure
CulturalEnvironment
Values, symbols, beliefs, and language
Individual differences across cultures
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
The Cultural Environment
• Language–The Japanese word “hai” can mean either “yes” or “I
understand.”–General Motors’ brand name “Nova” pronounced as
“no va” in Spanish means “doesn’t go.”
• The Meaning of Colors–Green is popular in Muslim countries, yet it signifies
death in other countries.–Pink is associated with feminine characteristics in the
U.S.; yellow is the most feminine color in other countries.
2–34
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Controls on International Trade
• Key Concepts–Tariffs are taxes collected on goods shipped across
national boundaries.
–Quotas are limits placed on the number or value of goods that can be traded as exports or imports.
–Export restraint agreements are voluntary limits on the volume or value of goods exported to, or imported from, another country.
2–35
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
The Structure of the Global Economy
• Economic Communities–Sets of countries that engage in high levels
of trade with each other through the elimination of trade barriers such as quotas and tariffs.• European Union (EU)• North American Free Trade Agreement (NAFTA)• Latin American Integration Association• Caribbean Common Market
2–36
2–37
2–38
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
The Role of the GATT and the WTO
• General Agreement on Trade and Tariffs (GATT)– A trade agreement that promoted international trade
by lowering trading barriers and tariffs.
• World Trade Organization (WTO)– Encourages adoption of nondiscriminatory and
predictable trade policies.– Seeks to reduce trade barriers through multilateral
negotiations.– Attempts to resolve trade disputes through impartial
procedures
2–39
Other Environments of Management
1. Why does the Ethical environment matter to organizations and managers?
2. Why do Social Responsibility issues matter to organizations and managers?
3. What does the International Environment matter to organizations and managers?
4. Why do YOU need to be aware of these issues?