Chpt 4 intro to business

1. 4
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .

2. 4
Business
Ethics and
Social
Responsibility:
Doing Well By Doing
Good
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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LO1 What is ethics? What are the
universal ethics standards?
LO2 What are business ethics? What is
an ethical dilemma?
LO3 How does ethics relate to the
individual and the organization?
LO4 What is social responsibility and
how does it impact stakeholder
groups?
LO5 What is the role of social
responsibility in the global arena?
LO6 How do companies evaluate their
efforts to be socially responsible?

3. Ethics & Social Responsibility:
A Close Relationship
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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ETHICS
Beliefs about
right and wrong
SOCIAL
RESPONSIBILITY
The obligation of a business
to contribute to society

4. Defining Ethics
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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5. Universal Ethical Standards
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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6. Business Ethics: Not an Oxymoron
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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Ethical Dilemma
Negative consequences
Two unfavorable options
Ethical Lapse
Clear misconduct
Most challenging
business decisions seem
to arise when values are
in conflict.
Business Ethics is the
application of right and
wrong in the workplace.

7. Bad News for Business—Worse
News Tomorrow!
A study of 43,000 high school students revealed:
© DIGITAL VISION/GETTY IMAGES
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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39% believe that a person has to lie or cheat
sometimes in order to succeed.
59% admitted that they cheated on a test at
school within the past 12 months.
72% agree that it’s sometimes OK to hit or threaten
a person who makes me very angry.
18% admitted that they stole something from
a friend within the past 12 months.
28% admitted that they stole something
from a store within the past 12 months.
High school attitudes are a clear predictor of adult behavior.
Source: The Ethics of American Youth. What would Honest Abe say? Josephson Institute Press Release, February 10, 2011, Character Counts website
http://charactercounts.org/programs/reportcard/2010/installment02_report-card_honesty-integrity.html, accessed February 20, 2011

8. Ethics: Multiple Touchpoints
Individuals must make their
own
ethical choices
BUT
The organization can have a
significant influence on
decisions
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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© STOCKBYTE/GETTY IMAGES

9. Ethics and the Individual:
The Power of One
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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Key Principles of Decisions:
1. Do you fully understand each dimension of the problem?
2. Who would benefit? Who would suffer?
3. Are the alternative solutions legal? Are they fair?
4. Does your decision make you comfortable as a “gut feel”
level?
5. Could you defend your decision on the nightly TV news?
6. Have you considered and reconsidered your response to each
question?

10. Ethics and the Organization:
It Takes a Village
• Ethical influence starts at the top, actions matter more than
words.
• The Big Three Automakers went to Washington to request a
$25 billion bailout package in corporate jets
• After the government gave AIG $85 billion to avoid
bankruptcy; the company spent $440,000 on a sales retreat
• Disney CEO hired his friend who was fired for incompetence
after 14 months; the 140 million settlement and his expense
account details caused stockholders to sue
Source: Big Three auto CEOs flew private jets to ask for taxpayer money by Josh Levs, November 19, 2008, CNN website, http://www.cnn.com/2008/US/11/19/autos.ceo.jets/, accessed February 2, 2009.
Lawmakers, Questioning Fed Bailout, Seek AIG `Junket' Refund By Ryan J. Donmoyer - October 9, 2008 Bloomberg website
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aPlPYw6JXIBU&refer=us, accessed February 21, 2011
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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11. How Would you Judge the Actions of these
Business Leaders?
Sherron Watkins, former vice president of Enron reported the accounting
Irregularities that led to the discovery of corporate fraud.
Martha Stewart was convicted of obstructing justice in a $40,000
well timed stock sale.
Whole Foods CEO, John Mackey posted thousands of comments on Yahoo Finance,
hyping his company and attacking Wild Oats, which he was planning to purchase.
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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Stanley O’Neal began as Merrill Lynch began racking up losses
that led to its collapse, he announced his “retirement.”
Sanjay Kumar of Computer Associates was convicted of
massive accounting fraud in 2006.
Pierre Omidyar, the founder of eBay has given away over
$100 million to Tufts University Micro Finance Fund.

12. Creating and Maintaining and
Ethical Organization
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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Role of Top
Management
the tone from the top
must be reinforced
by behavior
Organizational
Culture
strongest variable on
ethical conduct

13. Bringing Code of Ethics to Life
Code of Ethics is a
written document
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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providing
direction for
employees to
make ethical
decisions.
1. Executive Buy-in
2. Clear expectations
3. Integrated approach
4. Global and local
5. Whistleblower support
6. Reporting and Enforcement
© Brian A Jackson / Shutterstock.com

14. Defining Social Responsibility
Core stakeholder groups include
employees, customers, investors, and
community.
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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Social Responsibility is the obligation of a
business to contribute to society.

15. The Stakeholder Approach
CUSTOMERS
Value, Honesty and Communication
Fair Stewardship and Full Disclosure
Business and the Greater Good
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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EMPLOYEES
INVESTORS
COMMUNITY
ENVIRONMENT
Creating Jobs that Work
Sustainable Development

16. The Spectrum of Social Responsibility
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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17. Stakeholders
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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Stakeholders are any groups that have a stake
or a personal interest in the performance and
actions of an organization.

18. • Meet Legal Standards
• Workplace Safety
• Minimum Wage/Overtime
Requirements
• Protection from Sexual Harassment
• Provide Work/Life Balance
 Family and Medical Leave
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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Responsibility to Employees:
Creating Jobs that Work
© Purestock/ Jupiterimages

19. How Would You Judge the
Actions of These Firms?
1. Clorox introduced a line of “99% natural cleaning” products called
Green Works. The Sierra Club endorsed the product line. Clorox
makes annual contributions to the Sierra Club
2. Tyson has been accused of unfair business practices and unsavory
labor/environmental practices. In 2009, the farmer gave 11% of its
profits to charity.
3. As obesity among kids grows, Kraft Foods pledged to stop
advertising unhealthy yet profitable foods to young children.
4. After receiving $45 billion in taxpayer bailout funds, Bank of America
sponsored a five-day carnival-like event outside the 2009 Super
Bowl.
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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© The Studio Dog/Photodisc/Getty Images

20.  The Right to Be Safe
 The Right to Be Informed
 The Right to Choose
 The Right to be Heard
Planned Obsolescence –
Deliberately designing products to fail in order to shorten
the time between consumer repurchases
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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Responsibility to Customers: Value,
Honesty, and Communication
Consumerism: a social
movement suggests that
consumer rights should
be the starting point.
President Kennedy
defined these rights.

21. Amazon: Who Owns the Books
• In 2009, Amazon remotely and abruptly
deleted digital editions of books from
customers’ Kindle devices
• Customers were furious at the privacy
violation
• Amazon refunded the purchases and issued
an apology
• Amazon recovered; the Kindle remains
Amazon’s best selling product and sales of
digital books has hit 48%
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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© David Robertson / Alamy
The year in technology industry apologies By Bob Brown, Network World, 12/01/2009, Network World website http://www.networkworld.com/slideshows/2009/120109-apologies.html#slide2, accessed February 22, 2011; Amazon Erases Orwell
Books From Kindle by Brad Stone July 17, 2009, New York Times website, http://www.nytimes.com/2009/07/18/technology/companies/18amazon.html, accessed February 22, 2011; The Customer Is Always Right by Daniel Lyons, December 21,
2009, NewsWeek website, http://www.newsweek.com/2009/12/20/the-customer-is-always-right.html, accessed February 22, 2011.

22. Apple Angst
• Apple introduced the iPhone on June 9th,
2007 to rave reviews despite $599 price
tag
• Apple dropped the price to $200 to
increase customers
• Customers were livid!
• Steve Jobs (former Apple CEO) apologized
and gave customers $100 store credit
Source: http://www.apple.com/hotnews/openiphoneletter/, accessed February 3, 2009; Apple’s customer satisfaction up despite struggling industry by Jeff Smykil, August 19, 2008, Ars Technica website,
http://arstechnica.com/apple/news/2008/08/apples-customer-satisfaction-up-despite-struggling-industry.ars, accessed February 3, 2009.
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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23. • Legal Requirements
Sarbanes-Oxley
• Responsible use of
Corporate Dollars
Honesty
• Is Optimism or Pessimism
Socially Responsible?
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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Responsibility to Investors: Fair
Stewardship and Full Disclosure

24. Responsibility to the Community: Business
Cause-related Marketing –
partnerships between businesses
and nonprofit organizations,
designed to spike sales for the
company and raise money
for the nonprofit
Corporate Philanthropy -
business donations to
nonprofit groups, including
both money and time.
Corporate
Responsibility -
actions of the business rather
than donations of money and
time
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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and the Greater Good
© The Studio Dog/Photodisc/Getty Images

25. Greenwashing
• Greenwashing is when an organization spends time/money
claiming to be “green” through marketing
• An energy company advertises “green” technology they’re
working on —but the technology is only a small part of a
“not-so green” business.
• A hotel chain calls itself “green” because it asks guests to
sleep on the same sheets and reuse towels but does very
little to save water and energy
• Can “doing good” be unethical?
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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© The Studio Dog/Photodisc/Getty Images
Source: http://www.greenwashingindex.com/what.php, accessed August 4, 2011.

26. Responsibility to the Environment
Sustainable Development
Doing business to meet the needs of this
generation without harming the ability
of future generations
Carbon Footprint
Amount of harmful greenhouse gases a
firm emits
Green Marketing
Marketing environmental products and
practices for competitive advantage
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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27. Corporations Tracking Emissions
• The goal is for companies to become carbon neutral;
emit zero gasses or to counteract impact of
emissions
• Dell Inc. became carbon neutral in 2008
• Corporations track three types of emissions:
 Scope 1: direct emissions from operations
 Scope 2: emissions from electricity, heat and steam
 Scope 3: outside the company boundary that it has some
control
Source: U.S. Corporations Size Up Their Carbon Footprints by Rachel King, June 1, 2009, Bloomberg Businessweek, Businessweek website, 27
http://www.businessweek.com/technology/content/jun2009/tc2009061_692661.htm, accessed February 24, 2011
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .

28. Ethics and Social Responsibility in the
Global Arena: A House of Mirrors?
Corruption is part of the culture in
many countries
 Bribes or Gifts
Labor issues in host countries can be
complicated
 Living Wage
 Child Labor
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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29. Going Green: It’s Not Just Governments
• Bank of America reduced paper use by 32% from 2000 TO 2005 despite 24%
customer growth.
• Arrowhead bottled water introduced smaller “Eco Shape” bottles that helped
save 245 million pounds of plastic resin.
• DuPont reduced greenhouse gas emissions during the 1990s by 63%.
• TelsaMotors is developing environmentally friendly sports cars with virtually no
emissions
• Hewlett-Packard owns gigantic e-waste recycling plants that reclaim steel, plastic
and toxic chemicals.
Sources: BusinessPundit, “25 Big Companies That Are Going Green,” July 29, 2008, <http://www.businesspundit.com/25-big-companies-that-are-going-green/>,(accessed May 17,
2010); CNNMoney, “Ten Green Giants,” <http://money.cnn.com/galleries/2007/fortune/0703/gallery.green_giants.fortune/8.html> (accessed May 17, 2010) Arrowhead website,
http://www.arrowheadwater.com/KnowH2O/Be-Green.aspx, accessed February 25, 2011.
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
© Jamey Ekins / Shutterstock.com

30. A Loaf of Bread and a Packet of Shampoo?
C.K.Prahalad believes companies
could add to the global economy by
providing small luxuries to those at
“the bottom of the pyramid”
Critics suggest that the strategy is exploitation of the
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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“aspirational poor”
What do you think?
© imagebroker / Alamy

31. Ethics and Social Responsibility:
Who is Minding the Store?
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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SOCIAL AUDIT
A systematic evaluation of
how well a firm is meeting its
ethics and social
responsibility objectives

32. 4
Looking Back
• What is ethics? What are the universal ethics standards?
• What are business ethics? What is an ethical dilemma?
• How does ethics relate to the individual and the organization?
• What is social responsibility and how does it impact stakeholder groups?
• What is the role of social responsibility in the global arena?
• How do companies evaluate their efforts to be socially responsible?
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
© 2 0 1 3 C e n g a g e L e a r n i n g . A l l R i g h t s R e s e r v e d . M a y n o t b e s c a n n e d , c o p i e d o r d u p l i c a t e d , o r
p o s t e d t o a p u b l i c l y a c c e s s i b l e w e b s i t e , i n w h o l e o r i n p a r t .
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