Business Copyright 2005 Prentice- Hall, Inc. 3-1.

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Conducting Business Conducting Business Ethically and ResponsiblyEthically and Responsibly

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Ethics In The WorkplaceEthics In The WorkplaceSocial ResponsibilitySocial ResponsibilityAreas of Social Areas of Social

ResponsibilityResponsibilityImplementing Social Implementing Social

Responsibility ProgramsResponsibility Programs

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Ethics In Ethics In The WorkplaceThe Workplace

• Beliefs in Right/Wrong & Beliefs in Right/Wrong & Good/Bad ActionsGood/Bad Actions

• Ethical- Conforms Ethical- Conforms To Social NormsTo Social Norms

• Unethical BehaviorUnethical Behavior

• Business EthicsBusiness Ethics

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ess Individual EthicsIndividual Ethics

• Ambiguity/Law/Real WorldAmbiguity/Law/Real World• Sources of Individual Values & Sources of Individual Values &

CodesCodes–ParentsParents–PeersPeers–ExperienceExperience

• Personal PrioritiesPersonal Priorities– Financial GainFinancial Gain– Family/FriendsFamily/Friends

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ess Business EthicsBusiness Ethics

• ManagerialManagerial

• Behavior TowardBehavior Toward–EmployeesEmployees

–OrganizationOrganization

–OthersOthers

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Assessing Assessing Ethical BehaviorEthical Behavior

Smooth?Smooth?

1)1)Clear-Cut Clear-Cut

Facts? Facts?

2)2)Agreed-Agreed-Upon Upon Moral Moral Values?Values?

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UtilityUtility

RightsRights

JusticeJustice

CaringCaring

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Company Practices Company Practices & Business Ethics& Business Ethics

Written Codes- Written Codes- United TechnologiesUnited Technologies >About >About UTC >UTC Commitments UTC >UTC Commitments >Social Responsibility>Social Responsibility

Implement CodesImplement Codes

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Model Of Ethical Model Of Ethical Judgment MakingJudgment Making

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ess Core Principles/ValuesCore Principles/Values

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ess Social ResponsibilitySocial Responsibility

• Business Commitments To Business Commitments To StakeholdersStakeholders

• Stakeholders Affected:Stakeholders Affected:–GroupsGroups– IndividualsIndividuals–OrganizationsOrganizations

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ess StakeholdersStakeholders

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Evolving Social Evolving Social ConsciousnessConsciousness

1930s – 1930s – 1940s1940s

1960s – 1960s – 1970s1970s

1980s – 1980s – 1990s1990s

2000+2000+

John D. RockefellerJohn D. Rockefeller

J. P. MorganJ. P. Morgan

Cornelius VanderbiltCornelius Vanderbilt

Vietnam WarVietnam War

Social ActivismSocial Activism

Laissez-FaireLaissez-Faire

Corporate ScandalsCorporate Scandals

Increased Gov’t Increased Gov’t ControlControl

Tighter StandardsTighter Standards

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ContributionsContributionsBy Source (2003)By Source (2003)

Bequests $22Corporations

$13

Individuals $179

Foundations $26

Source: Giving USA Foundation™- AAFRC Trust for Philanthropy/Giving USA 2004

In $ BillionsIn $ Billions

Total = $241 Total = $241

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Contributions By Contributions By Type Of Recipient (2003)Type Of Recipient (2003)

$7

$5

$12

$13

$21

$24

$19$21

$32

$86

Religion

Education

Health

Human Services

Unallocated

Arts/Humanities

Public Benefit

Environment/Animals

International Affairs

Foundations

Source: Giving USA Foundation™- AAFRC Trust for Philanthropy/Giving USA 2004

In $ BillionsIn $ Billions

Total = $241 Total = $241

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Most Admired Most Admired Companies (2003)Companies (2003)

RankRank CompanyCompany RankRank CompanyCompany

11 Wal-MartWal-Mart 66 BerkshireBerkshireHathawayHathaway

22 General General ElectricElectric 77 Proctor & Proctor &

GambleGamble

33 MicrosoftMicrosoft 88 IBMIBM

44 Dell ComputerDell Computer 99 Coca-ColaCoca-Cola

55 Johnson & Johnson & JohnsonJohnson 1010 FedExFedEx

Source: Fortune

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ess Top Donations (2003)Top Donations (2003)

DonorDonor SourceSource AmountAmount(In $ Millions)(In $ Millions)

RecipientRecipient

Joan B. Joan B. KrocKroc McDonald’sMcDonald’s $1,910.0$1,910.0

10 10 OrganizationsOrganizations

Michael & Michael & Susan DellSusan Dell Dell ComputerDell Computer $673.7$673.7

Michael & Susan Michael & Susan Dell FoundationDell Foundation

Eli & Eli & Edythe Edythe BroadBroad

AIG Retirement AIG Retirement

ServicesServices$409$409

Broad Broad Foundation & Foundation &

Broad Art Broad Art FoundationFoundation

John A. John A. JacksonJackson

Retired Oil & Retired Oil & Gas Exec.Gas Exec. $247$247

Univ. of Texas Univ. of Texas at Austinat Austin

Frank & Frank & Jane Jane

BattenBatten

Retired CEORetired CEOLandmark Landmark

CommunicationsCommunications$141.2$141.2

8 8 OrganizationsOrganizations

Source: “The 2003 Slate 60: Top Donations”, complied by the Chronicle of Philanthropy, Feb. 16, 2004.

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SocialSocialResponsibility - EnvironmentResponsibility - Environment

• PollutionPollution–AirAir

–WaterWater

• Toxic WasteToxic Waste

• RecyclingRecycling

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Air Pollution-Air Pollution-Then, Now, & FutureThen, Now, & Future

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ess Consumer RightsConsumer Rights

• Safe ProductsSafe Products• Informed About Informed About

ProductProduct• To Be HeardTo Be Heard• Choose What To BuyChoose What To Buy• To Be EducatedTo Be Educated• Courteous ServiceCourteous Service

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• CollusionCollusion

• GougingGouging

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ess Advertising EthicsAdvertising Ethics

• Food Product LabelingFood Product Labeling

• Misleading Product Misleading Product ClaimsClaims

• DeceptiveDeceptive

• Morally ObjectionableMorally Objectionable

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Employer Commitments Employer Commitments To EmployeeTo Employee

• Job SkillsJob Skills

• Respect & CompassionRespect & Compassion–NondiscriminationNondiscrimination–Equal OpportunitiesEqual Opportunities–Physically & Socially Safe Physically & Socially Safe

WorkplaceWorkplace

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ess WhistleblowersWhistleblowers

• False Claims False Claims Act (1863)Act (1863)

• Qui Tam Qui Tam Provisions = Provisions = 15-30% Reward For 15-30% Reward For Government RecoveryGovernment Recovery

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ResponsibilityResponsibilityTo InvestorsTo Investors

• Improper Financial Improper Financial ManagementManagement

• Check Kiting- Check 21Check Kiting- Check 21

• Insider TradingInsider Trading

• Financial Misrepresentation- Financial Misrepresentation- GAAPGAAP

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Social Responsibility Social Responsibility Approaches/StancesApproaches/Stances

• ObstructionistObstructionist

• DefensiveDefensive

• AccommodativeAccommodative

• ProactiveProactive

Low LevelLow Level High High LevelLevel

ObstructioniObstructionistst

DefensiveDefensive AccommodatiAccommodativeve

ProactiveProactive

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Social Responsibility Auditing Social Responsibility Auditing Success of ProgramSuccess of Program

• Starts At TopStarts At Top

• Requires Requires Management SupportManagement Support

• Single Manager In ChargeSingle Manager In Charge

• Conduct Social AuditsConduct Social Audits