Managing Responsibly

Business and Society—Discussion Guide

Performance Indicator: Explain the role of business in society

Slide 1 THINK ABOUT IT

Business is an integral part of our society and our daily lives.

• In fact, society cannot function without business…and vice versa!

• If businesses had no customers, they would be unable to make money or stay in business.

• And what would you do without businesses?

• You would be unable to purchase the goods and services you want and need.

KEY CONCEPTS

Slide #2 Producers create goods.

• People who make or provide goods and services are producers.

• There are three kinds of producers:

  • Raw-goods producers

    • These producers provide goods in their natural, or raw, states.

    • They include businesses such as farms, mines, fisheries, and lumber companies.

    • Without raw-goods producers, we wouldn’t have cars to drive or a variety of food to eat.

  • Manufacturers

    • Since very few materials are used in their raw states, we rely on manufacturers to change the forms of materials so that they will be useful to consumers.

    • For example, in their raw states, sand and wheat are of little use to consumers.

    • However, when they become finished products (such as glass and cereal), they will be quite useful.

  • Builders

    • Roads, bridges, schools, hospitals, houses, office buildings—we rely on builders to construct them for us.

    • Without these producers, our daily lives would be much different.

Discussion #1: Ask students to imagine a world without businesses. What would it look like?

Slide #3 Trade industries sell goods to others.

• Trade industries are businesses that buy and sell goods to others.

• They don’t modify or change the form of the products.

• Instead, they are responsible for moving goods from producers to consumers or industrial users.

• There are two main divisions of the trade industry:

  • Retailers

    • Traditionally, retailers sell products to ultimate consumers.

    • As consumers, we’re usually more familiar with retailers such as Walmart, Home Depot, and Target.

  • Wholesalers

    • Wholesalers supply the goods that will be sold to retailers or used by businesses in their operations.

    • There are many wholesalers that now do business with ultimate consumers as well as other businesses.

    • Wholesalers such as Sam’s Club and Costco allow ultimate consumers to purchase memberships and shop at their warehouses.

• Trade industries can differ based on a number of factors, including:

  • Size

  • Kinds and variety of products sold

  • Ownership

  • Amount of service provided

  • Prices

  • Existence of a business premises

Slide #4 Service businesses perform intangible activities.

• Service businesses perform intangible activities that satisfy the needs and wants of consumers and industrial users.

• People buy the service that is being provided, not a good.

• Service businesses can be classified in the following manner:

  • Housing

  • Recreation

  • Personal care

  • Medical and other health care

  • Private education

  • Insurance and financial

  • Transportation

  • Communication

Slide #5 Businesses have a social responsibility to society.

• Most businesses recognize that they have a social responsibility, or a duty to contribute to the well-being of society.

• Businesses demonstrate social responsibility in two ways:

  • By maximizing their profits

    • Businesses must offer quality products at competitive prices, meet the needs of consumers, and minimize their costs and expenses.

    • This includes focusing on ways to improve operations so customers get the best products at the best prices.

  • By contributing to public interests

    • These donations create goodwill and foster a positive image of the company, including support of environmental efforts; participation in or sponsorship of workshops or advisory councils; and support of art, education, or research.

Discussion #2: Ask students to discuss whether they believe maximizing profits contributes to the well-being of society. Why or why not?

Slide #6 Businesses are socially responsible to various groups.

• Businesses are socially responsible to the following groups:

  • Product users

    • Every business has the responsibility of producing and/or offering safe, quality products.

    • Businesses can provide these products by conducting research to determine consumer desires, developing those products, and testing their safety.

  • The community

    • Many of the decisions that business owners make affect not only the business but the community in which the business exists.

    • These include decisions about production, employment, taxes, and pollution control, as well as a business’s contributions to educational, cultural, and training programs.

  • Employees

    • To continue to exist, businesses must be socially responsible to their employees.

    • They must provide safe, secure working environments.

    • Many businesses now recognize that they have a social responsibility to the overall well-being of employees.

  • The company itself

    • The business is socially responsible for maximizing its profits so that the company can grow and prosper.

Discussion #3: Ask students to come up with examples of local businesses engaging in social responsibility. How do these efforts benefit product users? The community? Employees? The company itself?

Corporate Social Responsibility—Discussion Guide

Slide 1 THINK ABOUT IT

Corporate social responsibility (CSR) is a framework that applies ethical principles to a business’s operating procedures.

• In the interconnected, global business setting, a company’s impact on its employees, community, and the environment is more important than ever.

• If a business wants to be successful, the way it gives back to its community matters, and customers are paying attention.

KEY CONCEPTS

Slide #2 Corporate social responsibility is how businesses apply ethics to their impact on society.

• Ethics are the guiding principles, morals, and values that help us determine what is right and wrong.

  • Corporate social responsibility is the means by which businesses apply these ethical concerns to benefit society.

• Corporate social responsibility centers about a business’s obligation to the community of people it affects and society in general.

  • It holds a company accountable to its employees, its stakeholders, and the public, and brings awareness to the impact they have on all parts of society, including the economy and the environment.

• Businesses engage in corporate social responsibility to ensure they are operating in ways that enhance the world around them.

• Contributing to corporate social responsibility can boost morale, improve employee satisfaction, contribute to market differentiation, and enhance brand strategy.

  • If an audience resonates with a company’s social purpose, they will vote accordingly with their wallets.

  • Businesses engage in corporate social responsibility by supporting public development, environmental sustainability, employee well-being, and human rights.

• The goal of corporate social responsibility is to optimize a business’s impact on society while increasing profits to give back to the community even more.

Discussion #1: Ask students to come up with an example of a company that practices corporate social responsibility. How do the company’s efforts benefit the community? The environment? The company itself?

Slide #3 Businesses engage in corporate social responsibility for various reasons.

• Businesses are not isolated financial entities detached from society.

• Today, businesses are accountable to a wide range of stakeholders, whose key areas of concern include employee well-being, community engagement, and environmental protection.

• The following factors encourage businesses to engage in corporate social responsibility:

  • Shrinking role of government

    • Voluntary initiatives are the result of lessened government resources and a growing suspicion of regulations.

  • Demands for disclosure

    • Stakeholders, including employees, investors, suppliers, and customers, are demanding more transparency from businesses.

  • Increased customer interest

    • A company’s ethical conduct impacts purchasing decisions.

  • Growing investor pressure

    • Investors now make decisions based on criteria that include ethical concerns to ensure socially responsible investments.

  • Competitive job markets

    • Employees are looking for more than a steady paycheck and benefits.

    • They are evaluating an employer’s values and principles, too.

  • Supplier relations

    • Some companies are implementing codes of conduct for partnering suppliers to guarantee their reputation remains spotless down all links of their supply chain.

Discussion #2: Ask students to brainstorm reasons why some companies may choose not to engage in corporate social responsibility. Which, if any, of the previous factors would be most convincing in persuading a small business to start engaging in corporate social responsibility?

Slide #4 Companies experience numerous benefits.

• Advantages for the company itself include:

  • Improved financial performance and lower operating costs

  • Enhanced brand image and reputation

  • Increased sales and customer loyalty

  • Greater productivity and quality

  • More ability to attract and retain employees

  • Reduced regulatory oversight

  • Access to capital

  • Workforce diversity

  • Product safety and decreased liability

Slide #5 The community undergoes several benefits.

• Benefits to the community and the general public include:

  • Charitable contributions

  • Employee volunteer programs

  • Corporate involvement in community education, employment, and homelessness programs

  • Product safety and quality

Slide #6 The environment benefits in a few ways.

• Environmental benefits include:

  • Greater material recyclability

  • Better product durability and functionality

  • Greater use of renewable resources

  • Integration of environmental management tools into business plans

Government’s Impact on Business—Discussion Guide

Slide 1 THINK ABOUT IT

When you visit Taco Bell or McDonald’s, you’re likely not thinking about the government.

• Believe it or not, government is closely involved in every bite you enjoy from these restaurants.

• It has rules that make sure the food you eat is handled, prepared, stored, and served safely.

• But regulations like these don’t just apply to restaurants!

• Government plays an important role in our private enterprise system.

• Keep reading to learn more about the relationship between government and business.

KEY CONCEPTS

Slide #2 Government’s role in business has evolved over time.

• The role of government in business in the United States has changed and evolved since the country was born.

• Initially, government’s role included protecting business property, enforcing business contracts, settling business disagreements, and setting and
  collecting taxes.

• As the country grew and business expanded, its role in business was forced to grow as well.

• Government’s role now includes not only passing laws that affect business but also enforcing those laws.

• Some of the reasons why this new role was necessary include:

  • Growth and expansion

  • Industrialization

  • Attitude changes

  • Environmental concerns

  • Government in business

  • Changes in technology

• All of these developments have changed government’s original role in business greatly.

• Government today has become not only a referee, a protector, and a tax collector, but also a producer, a spender, and a regulator.

Discussion #1: Ask students to discuss how industrialization transformed government’s role in business. How have working conditions and environmental interests changed as a result?

Slide #3 The government is involved in business for several purposes.

• In the private enterprise economy of the United States, government and business have different goals.

• A business must make a profit, while government must protect the rights of individuals and businesses and provide a stable environment.

• Whether government is intervening in the business world or regulating it, government involvement in business has specific purposes:

  • To provide public goods

  • To improve public welfare

  • To improve public health

  • To stabilize the economy

  • To protect specific businesses

  • To conserve the environment

  • To protect consumers and investors

  • To protect competition

  • To regulate workplace conditions

  • To protect business property

Discussion #2: Ask students to discuss the scope of government’s role in business. Is government too involved in regulating business? Or should it become more involved? In which areas, and how?

Slide #3 Government regulates business with laws and agencies.

• Government passes laws to regulate business activities.

• In some cases, the laws establish permanent regulatory agencies that are responsible for enforcing the regulatory laws.

• Let’s look at a few of the laws and agencies that currently regulate business activities:

• Regulatory laws

  • These laws prohibit certain activities, control what businesses can do, and require businesses to meet government standards.

  • Since business is always changing, old laws are revised, and new laws are created.

  • Current regulatory laws include those that control monopolies, set safety standards, and protect the rights of workers and consumers.

• Regulatory agencies

  • These agencies are often called watchdog agencies, and some have the authority to impose fines or other types of punishment on businesses that violate the law.

  • Current regulatory agencies include the Federal Trade Commission, Food and Drug Administration, and Occupational Safety and Health Administration.

• Licensing

  • This is the process of issuing a permit allowing an individual or a business to function in the marketplace.

  • To obtain a license, the business or individual must meet government requirements.

  • Licensing allows government to control who operates certain businesses and the way in which they are operated.

• Wage/Price controls

  • The government occasionally regulates businesses by using wage and price controls to set ceilings on wages and prices.

  • The government tells businesses the maximum amounts they can pay workers and/or charge for their products.

Discussion #3: Ask students to discuss the value of regulatory agencies. What are some examples of laws or policies these agencies have enforced?

Slide #5 Government finances regulation with taxes and borrowing.

• Government has two main sources of revenue to pay the costs of regulation: collecting taxes and borrowing.

• Government receives money from businesses and individuals in the form of different kinds of taxes.

• When this is not sufficient, the government borrows money.

• Government collects several kinds of taxes from businesses.

  • When prices go up, wages and profits usually go up, too.

  • This means more tax money paid to government.

  • When prices go down, wages and profits generally decline.

  • This means less tax money to support government expenses.

• Government can borrow money from other countries or from the private sector, the part of the economy owned and controlled by individuals or businesses.

  • Usually, government borrows money by issuing bonds.

  • When people purchase government bonds, they lend their money to a government for a stated period of time.

  • Government promises to repay the amount borrowed at the end of that time and to pay that bondholder a specified rate of interest for use of the money.

Business Ethics—Discussion Guide

Performance Indicator: Explain the nature of business ethics

Slide 1 THINK ABOUT IT

Businesses face ethical dilemmas all the time.

• The right course of action is sometimes unclear.

• Sometimes, what seems ethical may conflict with a business’s top priority—making money.

• That’s why understanding business ethics is an important task for owners, managers, and employees alike.

KEY CONCEPTS

Slide #2 Business ethics is different from the law.

• Business ethics are the basic principles that govern a business’s actions.

• A business’s code of ethics determines whether a certain action is acceptable for that business, especially if the consequences of that action might have a negative impact on employees, customers, or the community.

• It’s important to understand business ethics and business law are not the same.

  • Think of them as overlapping circles—where they overlap, there are actions that are both legal and ethical.

  • There are also legal actions that are not ethical, and sometimes there may be ethical actions that aren’t legal.

• There are a few differences between ethics and law that are worth noting.

  • First, while ethics are often unwritten rules, the law, by definition, must
    be published.

  • Second, the consequences for breaching your ethics and breaking the law may be different.

  • Depending on the circumstances, this could mean the difference between disappointing customers and spending time in jail.

Discussion #1: Ask students to brainstorm examples of legal actions that are not ethical, and vice versa.

Slide #3 Businesses have social responsibilities and obligations to stakeholders.

• Businesses should practice good ethics because they have social responsibilities and obligations to stakeholders.

• Accepting responsibility for their decisions means that businesses are accountable for their actions.

• In a free enterprise system, anyone is free to start a business and pursue its success.

• However, along with this privilege comes social responsibility, which has four pillars:

  • Economic responsibility

    • A business is responsible for making money and for contributing to the national and local economies.

  • Legal responsibility

    • A business is responsible for operating within the confines of federal, state, and local laws.

  • Ethical responsibility

    • A business is responsible for conducting itself with integrity, for respecting the rights of others, and for playing fair.

  • Philanthropic responsibility

    • A business is responsible for contributing to society in an altruistic (charitable) manner.

• Businesses must also fulfill obligations to their stakeholders:

  • Investors

    • Businesses must use investors’ money wisely and provide returns
      on investments.

  • Employees

    • Businesses are responsible for providing employees with jobs and clean, safe working environments that are free of discrimination and harassment.

  • Customers

    • Businesses are responsible for meeting customers’ needs with quality goods.

  • Community members

    • Businesses are responsible for paying taxes to support the community’s schools, hospitals, etc., and for doing their part to protect the environment.

Discussion #2: Ask students to discuss who is responsible for monitoring a business’s ethics. Outside organizations? Management? Human resources? Each individual employee? To what degree?

Slide #4 Businesses behave unethically for a few reasons.

• Even though behaving ethically is the right thing to do and often contributes to a company’s success, some businesses still choose to act unethically for a few reasons:

• The action is not illegal.

• The action is acceptable within the industry.

• The action is acceptable in a foreign culture.

• The action benefits the company.

• The action is committed by unethical employees.

• A current example of a business becoming an ethical failure is the downfall of Texas-based energy company Enron.

  • The entire company went belly-up due to the unethical accounting practices of key upper managers.

  • This doesn’t mean that everyone who worked at Enron had poor ethics—
    but unfortunately, those who did created disastrous results for everyone else.

Discussion #3: Ask students to brainstorm current examples of unethical business scandals. What could have prevented these situations? What consequences are the businesses experiencing as a result of unethical behavior?

Slide #5 Unethical behavior has negative consequences.

• There are various potential consequences of unethical behavior:

  • Negative public image

    • Unethical actions can damage a company’s reputation irreversibly.

  • Decreased customer loyalty and retention

    • A business with a negative public image will most likely lose customers, and retaining loyal customers costs less than recruiting new ones.

  • Exposure to lawsuits

    • When a company behaves unethically, it opens itself up to civil lawsuits and criminal prosecution.

  • Potential jail time

    • Unethical business practices can result in time behind bars.

  • Increased opportunities for the competition to beat you

    • If one company engages in unethical practices, other companies will be in a better position to recruit loyal customers.

  • Increased internal problems

    • Not only does an unethical environment encourage fraudulent behavior among employees, studies show that it also decreases productivity levels.

  • Increased financial risk

    • Businesses expose themselves to lost productivity, fines, employee turnover, decreased sales, lowered stock prices, decreased company value, and bankruptcy.

Discussion #4: Ask students to consider their own ethical framework. Which elements can be transferred to business ethics? Which components cannot or should not?

Managerial Ethics—Discussion Guide

Slide 1 THINK ABOUT IT

Doing the right thing matters, both in life and in business.

• Managerial ethics is the set of moral values and principles that guide workplace behavior.

• Effective, ethical leadership involves employing management teams that apply a company’s code of ethics in daily life and lead by example to directly influence the ethical principles of all employees within the organization.

KEY CONCEPTS

Slide #2 Managerial ethics are imperative to a business’s success.

• Managerial ethics is the set of moral principles that guides employees’ behavior in an organization.

• These principles directly influence employee ethics, morale, and productivity.

• Every company should have a code of ethics that applies to all employees across the board, from top to bottom.

• This ethics policy should clearly state expectations for behavior and the ramifications for violating the code of conduct.

• The way in which management applies the code of ethics to themselves and all staff plays a significant role in how a business interacts with the world.

• A business’s principles, morals, and reputation matter, which falls back on effective, ethical leadership.

• It is management’s responsibility to implement a positive workplace culture, set an example through their actions, encourage ethical behaviors from the entire organization, and clearly communicate that commitment to all employees and stakeholders.

Slide #3 Management faces ethical issues every day.

• Management strives to balance two ethical goals: maximizing profits for shareholders and contributing to society.

• Consider the push to “go green.”

  • Some processes for green manufacturing are expensive to implement, which lowers the business’s profits and decreases the funds it can invest back in the community.

  • Even though going green can be considered ethically good, its overall impact could negatively affect profits.

• Creating win-win situations in terms of economics and ethical success requires a concerted effort from management.

• Managerial ethics often involves making decisions between right and right, where two alternatives are similar but the cost, tangible or intangible, of one choice may be greater than the cost of the other.

• Some ethical issues for businesses include the giving and receiving of gifts, and conflicts of interest.

  • These concerns can be alleviated with clear communication and consistent implementation of the organization’s official policies.

• Other ethical issues include tax avoidance, the widening gap between a business’s highest and lowest paid employees, and exploitative labor.

Discussion #1: Ask students to brainstorm additional ethical issues businesses can experience.

Slide #4 Managers’ ethics create far-reaching effects.

• Managerial ethics are essential because employees follow what an organization’s leaders do.

• When a company’s leaders ignore their ethics policies, it reverberates through the entire company.

  • As a result, some employees may feel their efforts to do the right thing are not valued or they may not act ethically, which can then reduce morale, increase turnover, and decrease customer loyalty.

• When management actually lives out moral values from the corporate code of conduct, there is a domino effect in the organization.

  • This type of ethical leadership communicates respect, builds trust in the workplace, emphasizes the business’s high expectations of its employees, and motivates more ethical behavior throughout the entire organization.

• When companies embrace high standards of ethical leadership, they commonly experience high morale and productivity, and lower levels of employee turnover.

Discussion #2: Ask students to discuss the importance of ethical management. What skills does an ethical manager possess?

Slide #5 There are several factors to consider when developing a code of ethics.

• To implement a managerial code of ethics, a company first must define the ethics and beliefs it holds valuable.

• The business should open communication to determine what values its employees find most significant.

  • There are numerous ethical approaches a company can adopt, including:

    • Utilitarianism

      • The best action is the one that benefits the majority.

    • Individualism

      • A decision’s morality depends on the way in which it benefits individuals.

    • Care ethics

      • An ethical decision should give special consideration to the most vulnerable.

    • Justice

      • Moral decisions must be fair and just.

• Once the company selects a framework, it can use that lens as criteria for evaluating ethical decisions and adjust as necessary to align with the organization’s values.

  • The goal is to create a well-defined understanding of the business’s ethical structure, which in turn helps employees determine the most ethical path of action in any situation.

  • Managers should aim to foster ethically courageous corporate cultures in which employees are encouraged to identify and address ethical concerns in an individual’s, team’s, or organization’s patterns.

• When creating a code of ethics, businesses aim to combine their legal and moral obligations.

  • Legal factors contain the rules and regulations for the company, and center on human resource areas like creating safe work environments with fair pay where employees are free from harassment.

  • Moral elements can include paternity leave, providing compensation above minimum wage, or creating a profit-sharing plan based on the company’s performance.

  • Other components of managerial ethics policies include benefits packages, community contributions, and charitable giving.

Discussion #3: Ask students to create their own code of managerial conduct. What elements would they include? Is there a particular ethical framework that resonates with them?