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CHAPTER 1 BUSINESS ETHICS, THE CHANGING ENVIRONMENT, AND STAKEHOLDER MANAGEMENT TOPICS COVERED 1.1 Business Ethics and the Changing Environment 1.2 What is Business Ethics? Why Does It Matter? 1.3 Levels of Business Ethics 1.4 Five Myths about Business Ethics 1.5 Why Use Ethical Reasoning in Business? 1.6 Can Business Ethics be Taught and Trained? 1.7 Plan of the Book LECTURE OUTLINE 1.1 Business Ethics and the Changing Environment Businesses and governments operate in changing technological, legal, economic, social, and political environments with competing stakeholders and power claims. Stakeholders are individuals, companies, groups, and nations that cause and respond to external issues, opportunities, and threats. Disruptive technologies, increased working hours, increased personal and professional stress create pressure on stakeholders. Examples include: Enron, Adelphia, and others; excessive CEO pay and poor corporate performance; new regulation (eg., Sarbanes- Oxley Act of 2002); and increased outsourcing. A. Seeing the “Big Picture” 1. Thomas Friedman has written a vivid account of the accelerating trend toward globalization in The Lexus and the Olive Tree . B. Environmental Forces and Stakeholders 1. Organizations are embedded in and interact with multiple changing local, national, and international environments. 2. The economic environment continues to evolve into a more global context of trade, markets, and resource flows. 1
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Chapter 1: Business Ethics, the Changing Environment, and Stakeholder Management 3. Technologically , the advent of electronic communication and the Internet is changing economies, industries, companies, jobs, and the way business is conducted. 4. Politically , the fall of communist regimes and the rise of global terrorism are also changing trading and business partners. 5. Governmental and regulatory laws and procedures also are changing. 6. Legal questions and issues affect all of the environmental dimensions and every stakeholder. 7. Demographically , the workforce has become more diverse. C. Stakeholder Management Approach 1. The stakeholder management approach is a way of understanding the ethical effects of environmental forces and groups on specific issues that affect real- time stakeholders and their welfare. 2. Begins by enabling win-win strategies based on: a. identifying and prioritizing issues, threats, or opportunities. b. mapping who the stakeholders are. c. identifying their stakes, interests, and power sources. d. showing who the members of coalitions are or may become. e. showing what each stakeholder’s ethics are (and should be). f. developing collaborative strategies and dialogue from a “higher ground” perspective to move plans and interactions to the desired closure for all parties. 1.2
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