CHAPTER 9 : ETHICS,CORPORATE SOCIAL RESPONSIBILITY,ENVIRONMENTAL SUSTAINABILITY,AND STRATEGY

Learning Objectives :

1 . Understand how the standards of ethical behavior in business are no different from the ethical standards and norms of the larger society and culture in which a company operates . 

2 . Recognize conditions that can give rise to unethical business strategies and behavior.

3 . Gain an understanding of the costs of business ethics failures .

4 . Learn the concepts of corporate social responsibilities and environmental sustainability and how companies balance these duties with economic responsibilities to shareholders.

BUSINESS ETHICS 

CONCERNS STANDARDS OF RIGHT AND WRONG AND THE APPLICATION OF ETHICAL PRINCIPLES TO THE ACTIONS AND DECISIONS OF BUSINESS ORGANIZATIONS AND THE CONDUCT OF THEIR PERSONNEL,BUSINESS ETHICS ARE NOT MATERIALLY DIFFERENT FROM ETHICAL PRINCIPLES IN GENERAL . 

THREE SCHOOLS OF THOUGHT

SCHOOL OF ETHICAL UNIVERSALISM :

common understandings across multiple cultures and countries about what constitutes right and wrong behaviors give rise to universal ethical standards that apply to members of all societies,all companies,and all businesspeople.

SCHOOL OF ETHICAL RELATIVISM : 

different societal cultures and customs have divergent values and standards if right and wrong.thus,what is ethical or unethical must be judged in the light of local customs and social mores and can vary from one culture or nation to another.

INTEGRATED SOCIAL CONTRACTS THEORY:

universal ethical principles based on the collective views of multiple cultures and societies combine to form a "social contract" that all individuals in all situations have a duty to observe.

THREE OTHER FACTORS CONTRIBUTE TO UNETHICAL BUSINESS BEHAVIOR :

1) Faulty oversight that enables the unscrupulous pursuit of personal gain

2) Heavy pressures on company managers to meet or beat short-term earnings targets

3) A company culture that puts profitability and good business performance ahead of ethical behavior.

the effect of the failures in business ethics :

1) Visible costs,such as fines,penalties,and lower stock prices

2)Internal administrative costs such as legal costs and costs of taking corrective action

3)Intangible costs, such as customer defections and damage to the company's reputation

SELF-DEALING : 

occurs when managers take advantage of their position to further their own private interests rather than those of the firm .

SHORT-TERMISM : 

the tendency for managers to focus excessively on short-term performance objectives at the expense of longer-term strategic objectives.it as negative implications for the likelihood of ethical lapses as well as company performance in the longer run .

CORPORATE SOCIAL RESPONSIBILITY (CSR) :

 refers to a company’s duty to operate in an honorable manner,provide good working conditions for employees,encourage workforce diversity,be a good steward of the environment , and actively work to better the quality of life in the local communities where it operates and in society at large.

SUSTAINABLE BUSINESS PRACTICES : 

are those that meet the needs of the present without compromising the ability to meet the needs of the future.