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49056155-Strategic-Mgmt-ch03 - Chapter 3 Corporate Social...

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Chapter 3 Corporate Social Responsibility and Business Ethics 0Chapter Summary People in an organization set the legal, ethical, and moral tones in the workplace. Just as individuals try to shape their neighborhoods, schools, political and social organizations, and religious institutions, employees need to help determine the major issues of corporate social responsibility and business ethics. Strategic decisions involve trade-offs. We pursue one goal while subordinating another. Individual employees must work to achieve the outcomes that they want. By choosing proper behaviors, employees help to build an organization that can be respected and economically viable in the long run. Often, the concern is expressed that business activities tend to be illegal or unethical and individuals’ failure to follow that pattern will leave them at a competitive disadvantage. The reality is that business conduct is, as a rule, honorable and honest. Rare, highly publicized criminal acts in business settings mask this reality. This chapter studies corporate social responsibility. It attempts to understand it and learn how our businesses can use their resources to make positive impacts on society. The chapter also looks at business ethics to gain an appreciation for the importance of maintaining and promoting social values in the workplace. 0Learning Objectives 1. Understand the importance of the stakeholder approach to social responsibility. 2. Explain the continuum of social responsibility and the effect of various options on company profitability. 3. Describe a social audit and explain its importance. 4. Discuss the effect of the Sarbanes-Oxley Act of 2002 on the ethical conduct of business. 5. Compare the advantages of collaborative social initiatives with alternative approaches to CSR. 6. Explain the five principles of collaborative social initiatives. 7. Compare the merits of different approaches to business ethics. 8. Explain the relevance of business ethics to strategic management practice. 0Lecture Outline I0. The Stakeholder Approach to Social Responsibility A0. In defining or redefining the company mission, strategic managers must recognize the legitimate rights of the firm’s claimants. These include outside stakeholders affected by the firm’s actions. 37
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10. According to a survey of 2,361 directors in 291 of the largest southeastern U.S. companies, a0) Directors perceived the existence of distinct stakeholder groups b0) Directors have high stakeholder orientations c0) Directors view some stakeholders differently, depending on their occupation (CEO or non-CEO) and type (inside or outside) 2. The study also found that perceived stakeholders were, in order of their importance: a) Customers and government b) Stockholders c) Employees d) Society 3. When a firm attempts to incorporate the interests of these groups into its mission statement, broad generalizations are insufficient. The firm should take these steps: a) Identification of stakeholders (1) The left-hand column of Exhibit 3.1, A Stakeholder View of Company Responsibility
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49056155-Strategic-Mgmt-ch03 - Chapter 3 Corporate Social...

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