2eIM-LN-Chapter9 - Section 6 C hapter Lecture Notes for...

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413 Section 6 Lecture Notes for Chapter 9 Chapter 9 Ethical Business Strategies, Corporate Social Responsibility, and Environmental Sustainability Chapter Summary Chapter nine focuses on examining what link, if any, there should be between a company’s efforts to craft and execute a winning strategy and its duties to (1) conduct its activities in an ethical manner; (2) demonstrate socially responsible behavior by being committed corporate citizens; and (3) limit its strategic initiatives to those that meet the needs of consumers without depleting resources needed by future generations. Lecture Outline I. Business Ethics and the Tasks of Crafting and Executing Strategy 1. Business ethics is the application of general ethical principles and standards to business behavior. 2. Ethical principles in business are not materially different from ethical principles in general. 3. Business ethics does not involve a special set of ethical standards applicable only to business business situations Core Concept Business ethics concerns the application of general ethical principles and standards to the actions and decisions of companies and the conduct of company personnel. A. Drivers of Unethical Strategies and Business Behavior 1. Apart from “the business of business is business, not ethics” kind of thinking apparent in recent high-profi le business scandals, three other main drivers of unethical business behavior also stand out: Faulty oversight by top management and the board of directors that implicitly allows the overzealous pursuit of personal gain, wealth, and other self-interests. Heavy pressures on company managers to meet or beat performance targets. A company culture that puts profi tability and good business performance ahead of ethical behavior. 413
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Section 6 Instructor’s Manual for Essentials of Strategic Management 414 2. Overzealous Pursuit of Personal Gain, Wealth and Self-Interest: A general disregard for business ethics can prompt all kinds of unethical strategic maneuvers and behaviors at companies. This, combined with people who are obsessed with wealth accumulation, greed, power, status, and other self interests often push ethical principles aside to achieve their goals. The CEO of Tyco, Int’l, conspired with the company’s CFO to steal more than $170 million from the company. 3. Heavy pressures on Company Managers to Meet or Beat Earnings Targets: Performance expectations of Wall Street Analysts and investors may create enormous pressure on management to do whatever it takes to sustain the company’s reputation for delivering good fi nancial reports. Company executives often feel pressured to hit fi nancial performance targets because their compensation depends on company’s performance. 4.
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This note was uploaded on 10/28/2011 for the course BUSINESS 205 taught by Professor Lewis during the Spring '11 term at AIB College of Business.

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2eIM-LN-Chapter9 - Section 6 C hapter Lecture Notes for...

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