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The Managers

Changing
Work
Environment &
Ethical
Responsibilities
Doing the Right
Thing

Chapter 3
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Major Questions You Should Be Able


to Answer
3.1 Is profit the only important goal of a
business?
3.2 Who are the stakeholders important to
me inside the organization?
3.3 Who are stakeholders important to me
outside
the organization?
3.4 What does the successful manager need
to know about ethics and values?
3.5 Is being socially responsible really
necessary?
3-2

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for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded,
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The Triple Bottom Line:


People, Planet, & Profit
Triple bottom
line
representing
People, Planet,
and Profit (the 3
Ps)
measures an
organizations
social,
environmental,
and financial
performance

Social audit
a systematic
assessment of a
companys
performance in
implementing
socially
responsible
programs
often based on
predefined goals

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3-3

The Community of Stakeholders


Inside the Organization

Stakeholders
the people whose interests are affected
by an organizations activities
Internal, external

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The Organizations
Environment
Figure 3.1

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Internal Stakeholders
Internal
stakeholders
consist of
employees,
owners, and the
board of directors

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3-6

Internal Stakeholders
Owners
consist of all
those who can
claim the
organization as
their legal
property

Board of
directors
members elected
by the
stockholders to
see that the
company is being
run according o
their interests

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distributed, or posted on a website, in whole or part.

3-7

Question?
Two drug companies agree to work
together to pool their research and
development funds to develop a
new drug for arthritis. In doing so,
these two organizations have:

A. Formed a union
B. Formed a strategic alliance
C. Analyzed their internal environment
D. Influenced the mass media
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for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded,
distributed, or posted on a website, in whole or part.

3-8

The Community of Stakeholders


Outside the Organization

External stakeholders
people or groups in the organizations
external environment that are affected
by it
Task, general environment

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distributed, or posted on a website, in whole or part.

3-9

The Task Environment


Customers
those who pay to use an organizations
goods or services

Competitors
people or organizations that compete for
customers or services

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The Task Environment


Supplier
A person or
organization that
provides raw
materials,
services,
equipment, labor
or energy to
other
organizations
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Example: Amazon.com and the


Customer Experience

Jeff Bezos, founder and CEO of


Amazon.com is obsessed with
customer service
Believes that companys success is
driven by the customer experience
In 2013 the companys revenue
grew to $74.5B

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The Task Environment


Distributor
a person or organization that helps
another organization sell its goods and
services to customers

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The Task Environment


Strategic allies
describes the relationship of two
organizations who join forces to achieve
advantages neither can perform as well
alone

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The Task Environment


Clawbacks
Rescinding the tax breaks when firms
dont deliver promised jobs

Crowdfunding
raising money for a project or venture
by obtaining many small amounts of
money from many people (the crowd)

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The Task Environment


Government regulators
regulatory agencies that establish
ground rules under which organizations
may operate

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The Task Environment


Special interest groups
groups whose members try to influence
specific issues

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The Task Environment


Employee Organizations: Unions &
Associations
Local Communities
Financial Institutions
Mass Media

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Example: Managing the Media:


Whats the Best Practice for
Handling Product Recalls?
The gold standard in brand crisis
management is the path followed by
health products company Johnson &
Johnson in 1982, after several consumers
died from taking tainted Tylenol pills.
Communicate clearly with the public
about a crisis, cooperate with government
officials, swiftly begin its own investigation
of a problem, and, if necessary, quickly
institute a product recall.
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19

Question
ChemTech International is being picketed by
a group of people who live by their
biggest plant. The group is concerned
about ChemTechs disposal of waste
products into nearby waterways. In this
instance, ChemTech is dealing with the
_____ part of its _______ environment.

A. special-interest groups; task


B. local communities; task
C. sociocultural; general
D. sociocultural; task

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The General Environment


Economic forces
consist of the general economic
conditions and trends unemployment,
inflation, interest rates, economic
growth that may affect an
organizations performance

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The General Environment


Technological
forces
new
developments in
methods for
transforming
resources into
goods and
services

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The General Environment


Sociocultural forces
Influences and trends originating in a
countrys, a societys, or a cultures
human relationships and values that
may affect an organization

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The General Environment


Demographic forces
influences on an organization arising
from changes in the characteristics of a
population, such as age, gender, or
ethnic origin

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The General Environment


Political-Legal forces
changes in the way politics shape laws
and laws shape the opportunities for
and threats to an organization

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The General Environment


International forces
changes in the economic, political, legal,
and technological global system that
may affect an organization

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The Ethical Responsibilities Required


of You as a Manager

Ethical dilemma
situation in which you have to decide
whether to pursue a course of action
that may benefit you or your
organization but that is unethical
or even illegal

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Defining Ethics & Values


Ethics
standards of right and wrong that
influence behavior

Values
relatively permanent and deeply held
underlying beliefs and attitudes that
help determine a persons behavior

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Values
Organizations may have two value
systems that conflict:
1. The value system stressing financial
performance versus
2. the value system stressing cohesion
and solidarity in employee
relationships

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Question
The Environmental Protection Agency (EPA)
administers environmental standards in
the U.S. EPA represents the __________
part of organizations' __________.
A. local communities; task environment
B. financial institutions; internal
environment
C. government regulators; task environment
D. special interest groups; external
environment
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Four Approaches to Deciding Ethical


Dilemmas
Utilitarian
guided by what
will result in the
greatest good for
the greatest
number of people

Individual
guided by what
will result in the
individuals best
long term
interest, which
ultimately are in
everyones selfinterest

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for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded,
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Four Approaches to Deciding Ethical


Dilemmas
Moral-rights
guided by
respect for the
fundamental
rights of human
beings

Justice
guided by
respect for
impartial
standards of
fairness and
equity

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Question
Pat, a manager at State University, is
deciding how to set up a procedure
for registering on-line that gives
students fair access to courses. Pat
is engaged in the ________ approach.

A. utilitarian
B. individual
C. moral-rights
D. justice
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The SarbanesOxley Reform


Act
Sarbanes-Oxley of 2002
Often shortened to SarbOx or SOX,
established requirements for proper
financial record keeping for public
companies
and penalties of as much
as 25 years in prison for
noncompliance

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How Do People Learn Ethics?


Kohlbergs Theories

Level 1, preconventional follows


rules
Level 2, conventional follows
expectations of others
Level 3, postconventional guided
by internal values

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How Organizations Can


Promote Ethics
1. Creating of a strong ethical climate
2. Screening prospective employees
3. Instituting ethics codes and training
programs
4. Rewarding ethical behavior:
Protecting whistle-blowers

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Rewarding Ethical Behavior:


Protecting Whistle-Blowers

Whistle-blower
an employee, or even an outside
consultant, who reports organizational
misconduct to the public, such as health
and safety matters, waste, corruption, or
overcharging of customers

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The Social Responsibilities Required


of You as a Manager

Social responsibility
managers duty to take actions that will
benefit the interests of society as well as
of the organization

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The Social Responsibilities Required


of You as a Manager

Corporate social responsibility


notion that corporations are expected to
go above and beyond following the law
and making a profit

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Carrolls Global Corporate Social


Responsibility Pyramid
Figure 3.2

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Another Type of Social


Responsibility: Philanthropy,
Not Dying Rich
Philanthropy
making
charitable
donations to
benefit
humankind

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Corporate Governance
Corporate governance
the system of governing a company so
that the interests of corporate owners
and other stakeholders are protected.

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The Need for Independent Directors

More attention is being paid to


strengthening corporate governance
so that directors are clearly
separated in their authority from the
CEO

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