Demonstrating
Ethical Behavior and
Social Responsibility
Other Teaching Tools 4.3
Video Notes 4.4
Brief Chapter Outline and Learning Goals 4.5
Lecture Outline and Lecture Notes 4.7
Career and Study Skills Notes 4.22
Career Development: Knowledge is the Key to Performance 4.22
study skills: The Need to Succeed 4.31
Lecture Links 4.32
lecture link 4-1 Merck and Ethics (Part I) 4.32
lecture link 4-2 Saving Lives with the LifeStraw 4.33
LectURE LINK 4-3 Wal-Mart to the Rescue 4.33
LectURE LINK 4-4 Off-Label Drug Prescriptions 4.34
LectURE LINK 4-5 Pension Plans Under Attack 4.35
LectURE LINK 4-6 Blending Activism and Enterprise 4.35
LectURE LINK 4-7 E-Cycling 4.36
Bonus Internet Exercises 4.37
Bonus INternet Exercise 4-1 Exploring Community Service 4.37
Bonus INternet Exercise 4-2 Researching Codes of Ethics 4.38
Bonus INternet Exercise 4-3 Balancing Profitability and Social 4.39
Responsibility
Bonus INternet Exercise 4-4 Social Responsibility Successes and 4.41
Failures
Critical Thinking Exercises 4.42
critical thinking exercise 4-1 Ethical Dilemmas 4.42
Critical thinking Exercise 4-2 Ethics in the Workplace 4.46
Bonus Cases 4.48
Bonus case 4-1 Got a Deadline? Click Here 4.48
Bonus case 4-2 Is It Time for a NYSE Code of Ethics? 4.50
Bonus case 4-3 Raven Biotechnologies: If It Isn’t Ethical, It Isn’t 4.52
Right (Video Case)
Bonus case 4-4 Merck and Ethics (Part II) 4.54
Bonus case 4-5 Harry Kraemer’s Moment of Truth 4.56
Bonus case 4-6 A Glance into the Future: Your Computer Knows 4.58
Bonus case 4-7 Gap’s Evolving View of Ethics 4.60
Other Teaching Tools
For a description of each of these valuable teaching tools, please see the Preface in this manual.
Student Learning Tools
Student Online Learning Center (OLC) www.mhhe.com/diasbusiness
Student Study Guide
Spanish Translation Glossary (OLC)
Spanish Translation Quizzes (OLC)
Instructor Teaching Tools
Annotated Instructor’s Resource Manual
IRCD (Instructor’s Resource Manual, Test Bank, PowerPoints, EZtest)
Asset Map
Online Learning Center (OLC) www.mhhe.com/diasbusiness
PageOut
PowerPoint Presentations (on IRCD and OLC)
Test Bank
Business Videos on DVD
Enhanced Cartridge option
Spanish Translation Glossary (OLC)
video NOTES
Twenty videos are available, geared to individual chapter topics. The teaching notes for these videos are also included in the Video Notes section of this Instructor’s Resource Manual, beginning on page V.1.
Video 4: “Raven Biotechnologies: If It Isn’t Ethical, It Isn’t Right”
Raven Laboratories is a biotechnology company founded by Jennie Mather. This video shows how Raven attempts to develop biotechnological drugs without compromising ethics.
(Bonus Case 4-3, “Raven Biotechnologies: If It Isn’t Ethical, It Isn’t Right,” on page 4.52 of this manual relates to this video.)
BRIEF CHAPTER OUTLINE AND LEARNING GOALS
CHAPTER 4
Demonstrating Ethical Behavior and Social Responsibility
I. Ethics in Business
II. Ethics Defined
Learning objective 1
Define ethics.
III. Personal Ethics
Learning objective 2
Understand the approaches and the process of making an ethical decision.
IV. Corporate Ethics
Learning objective 3
Distinguish between compliance-based and integrity-based ethics codes, and list the five steps in setting up a corporate ethics code.
A. Sarbanes-Oxley
V. Corporate Social Responsibility
Learning objective 4
Describe the indicators of corporate social responsibility.
A. Corporate Philanthropy
B. Corporate Responsibility
C. Corporate Policy
VI. Responsibility to Stakeholders
Learning objective 5
Examine corporate responsibility to various stakeholders.
A. Customers
B. Investors
C. Employees
D. Society and the Environment
VII. Measuring Social Responsibility
Learning objective 6
Describe how social responsibility can be measured
VIII. Ethics and Social Responsibility Globally
Learning objective 7
Discuss ethics and social responsibility on a global level
IX. SUMMARY
LECTURE OUTLINE AND LECTURE NOTES
CHAPTER OPENING PROFILE
WomenVenture (Text pages 108-109)
The opening chapter profile features Tené Wells, president of WomenVenture, a nonprofit organization that was founded on social responsibility and continued to thrive based on it. The goal of the organization is to teach women of all ages and levels of education and income how to thrive economically. Tené is herself a graduate of one of the organization’s programs. She came to WomenVenture to get help creating a resume for a better job. After a 20-year career at Honeywell and Medtronic, she became president of the group that helped launch her.
Lecture outline lecture notes /I. Ethics in Business
A. Recent scandals at WorldCom, Tyco, and ImClone have focused attention on the subject of ethics.
1. What can be done to restore trust in the free-market system?
2. Those that have broken the law need to be punished accordingly.
3. Also helpful: New laws making accounting records more transparent and more laws making businesspeople more accountable.
B. The American public has deep concerns about the honesty of businesspeople.
C. Congress has passed new laws intended to make business more responsive to ethical concerns. / PowerPoint 4-1
Chapter Title
(Refers to text page 108)
PowerPoint 4-2
Learning Objectives
(Refers to text page 109)
critical thinking
exercise 4-1
Ethical Dilemmas
This exercise presents ten examples of ethical dilemmas for students to evaluate. (See complete exercise on page 4.42 of this manual.)
II. Ethics Defined
Learning objective 1
Define ethics. (Text page 110)
A. ETHICS refers to the standards of moral behavior; that is, behavior that is accepted by society as right vs. wrong.
1. Many Americans have few moral absolutes and make decisions situationally.
2. However, a general agreement exists in society as to what is right and wrong.
3. Religion and culture are usually our sources of ethics, but these two factors vary among people.
B. Even in today’s diverse culture, there are still common standards of ethical behavior.
1. Integrity, respect for human life, self-control, honesty, courage, and self-sacrifice are right.
2. Cheating, cowardice, and cruelty are wrong.
3. All major religions support a version of the golden rule.
C. Ethics is not the same thing as the law.
1. An action for which you could be fined or imprisoned is illegal.
2. Usually something that is illegal is also unethical, but something unethical doesn’t have to be illegal.
3. Ethical standards are “right-vs.-wrong” behavior according to society.
4. Determining the right ethical course can be difficult. / PowerPoint 4-3
Ethics Defined (Refers to text pages 110-113)
TEXT REFERENCE
Real World Business Apps
(Box in text on page 111)
Marge Green is a human resource assistant at a medium-size insurance company. Her boss has just asked her to develop an ethics standards program for the company. She begins by doing some basic research on ethics, including concepts covered in this chapter.
critical thinking
exercise 4-2
Ethics in the Workplace
This exercise presents four situations involving workplace ethics. Student are asked to identify their immediate reaction. (See complete exercise on page 4.46 of this manual.)
TEXT REFERENCE
Ethical Challenge: Ethical Culture Crash
(Box in text on pages 112-113)
Motorola proudly proclaims that it is dedicated to “uncompromising integrity.” However, when operating in other countries, cultural norms are often very different.
III. Personal Ethics
Learning objective 2
Understand the approaches and the process of making an ethical decision. (Text pages 113-115)
A. Personal ethics are what guide us in making the right decision.
B. There are five main approaches to making an ethical decision:
1. the utilitarian approach;
2. the rights approach;
3. the fairness or justice approach;
4. the common good approach;
5. the virtue approach.
C. The Center for Applied Ethics has developed another framework involving eight principles:
1. concern for the well-being of others;
2. respect for the autonomy of others;
3. trustworthiness and honesty;
4. willing compliance with the law (with the exception of civil disobedience);
5. basic justice; being fair;
6. refusing to take unfair advantage;
7. benevolence; doing good;
8. preventing harm to others and the world around us.
D. A five-step process to ethical decision making can be used on a day-to-day basis.
1. Recognize an ethical issue.
2. Get the facts.
3. Evaluate alternative actions.
4. Act on your decision.
5. Reflect on your decision.
E. Corporations and their officers must also make ethical decisions on a daily basis. / PowerPoint 4-4
Personal Ethics (Refers to text pages 113-114)
TEXT FIGURE 4.1
Five Sources of Ethical (Box in text on page 114)
Bonus Case 4-1
Got a Deadline? Click Here
With the advent of the World Wide Web, plagiarism has become as easy as “point and click.” (See complete case, discussion questions, and suggested answers on page 4.48 of this manual.)
bonus internet
exercise 4-1
Exploring Community
Service
This exercise encourages students to use the Internet to explore opportunities for community service. (See complete exercise on page 4.37 of this manual.)
PowerPoint 4-5
Personal Ethics (Refers to text pages 113-115)
PowerPoint 4-6
Personal Ethics (Refers to text page 115)
IV. Corporate Ethics
Learning objective 3
Distinguish between compliance-based and integrity-based ethics codes, and list the five steps in setting up a corporate ethics code. (Text pages 116-118)
A. Most companies have a formal code of ethics by which employees must abide.
1. Eighty-nine percent of corporations have written codes of ethics—90% of large companies do.
2. Although ethics codes vary greatly, they can be classified into two major categories: compliancebased and integritybased.
a. COMPLIANCEBASED ETHICS CODES prevent unlawful behavior by increasing control and by penalizing wrongdoers.
b. INTEGRITYBASED ETHICS CODES define the organization’s guiding values and create an environment that supports ethically sound behavior; it stresses a shared accountability among employees.
3. A five-step process can help improve America’s business ethics.
a. Top management must adopt and unconditionally support an explicit code of conduct.
b. Employees must understand that expectations for ethical behavior begin at the top and all employees are expected to act ethically.
c. Managers and others must be trained to consider the ethical implications of all business decisions.
d. Outsiders such as suppliers, subcontractors, distributors, and customers must be told about the ethics program.
e. The ethics code must be enforced.
i. If rules are broken, consequences should follow quickly.
ii. Enforcement shows employees that the code is serious and cannot be broken.
iii. Phone lines should be established so that employees who don’t want to be seen with an ethics officer can ask about ethical matters anonymously.
B. Sarbanes-Oxley
1. SARBANES-OXLEY ACT (SOX) is legislation passed in 2002 that set up new standards for ethical codes of conduct within organizations.
2. The law was passed in response to the ethical scandals of the early 2000s.
3. The Act has several components:
a. Whistleblowers, people who report illegal or unethical behavior, received greater protection.
b. It set forth new penalties for boards of directors, accounting firms, and management.
c. CEOs actually have to sign off on the financials.
d. The Act founded a new public agency that oversees, regulates, and inspects accounting firms.
4. Sarbanes-Oxley affects people in all areas of the business.
a. Certain paperwork must be kept for specific time periods.
5. Some think Sarbanes-Oxley is flawed.
a. SOX only applies to companies that are publicly traded.
b. Private companies are not held to the same standards.
c. It also takes considerable time and money to implement the Act’s provisions.
6. The law is one of the most far-reaching laws of its kind.
SELF Check Questions (Text page 118)
1. Define ethics.
2. What makes ethical decision making challenging?
3. What was the most recent ethical decision you had to make? After you reflected on your decision, did you feel it was the right one? Why or why not?
4. Do you think compliance-based ethics or integrity-based ethics are best used in a small company? Why?
5. What is a whistleblower? / PowerPoint 4-7
Corporate Ethics (Refers to text pages 116-118)
bonus internet
exercise 4-2
Researching Codes of
Ethics
Most companies publish codes of ethics to provide ethical guidelines for employees. This Internet exercise directs students to research these codes of ethics on the Internet. (See complete exercise on page 4.38 of this manual.)
TEXT FIGURE 4.2
Strategies for Ethics Management (Box in text on page 116)
Bonus Case 4-2
Is It Time for a NYSE Code of Ethics?
Doctors have a code of ethics. Advertisers have a code of ethics. Is it time for the NYSE to enact a code of ethics? (See complete case, discussion questions, and suggested answers on page 4.50 of this manual.)
Bonus Case 4-3
Raven Biotechnology: If It Isn’t Ethical, It Isn’t Right (Video Case)
This bonus case ties in with the video available for use with this chapter. Raven Biotechnologies develops innovating treatment for serious cancer illnesses, integrating ethics into every business decision. (See complete case, discussion questions, and suggested answers on page 4.52 of this manual.)
V. Corporate Social Responsibility defined
Learning objective 4
Describe the indicators of corporate social responsibility. (Text pages 118-121)
A. CORPORATE SOCIAL RESPONSIBILITY (CSR) is the level of concern a business has for the welfare of society.
1. Corporations need to be good citizens as well.
2. Three determinants are used to judge the social performance of a company.
B. Corporate Philanthropy
1. CORPORATE PHILANTHROPY is an indicator of social responsibility that includes charitable donations.
2. Strategic philanthropy involves companies making long-term commitments to one cause.
3. Many small businesses also participate in corporate philanthropy.
C. Corporate Responsibility
1. CORPORATE RESPONSIBILITY is an indicator of social responsibility that includes the actions the company takes that could affect others.
2. It includes everything from hiring minorities to making safe products to providing a safe work environment.
3. Green Mountain Coffee Roasters is an example of a company that behaves responsibly.
D. Corporate Policy
1. CORPORATE POLICY refers to the position a firm takes on social and political issues.
2. Many people get a one-sided view of the impact that companies have on society.
3. Few people see the positive impacts, such as:
a. Many companies have a commitment to volunteerism, such as Xerox’s Social Service Leave program
b. Hewlett-Packard has a program called Digital Village which sets up technology for developing communities.
4. Two-thirds of MBA students surveyed said that they would take a lower salary to work for a socially responsible company.