Ch.3 & 4 Flashcards
Steps to incorporate stakeholders:
- Identificationof stakeholders
- Understandingstakeholders’ specific claims vis-à-vis the firm
- Reconciliationof these claims and assignment of priorities
- Coordinationof the claims with other elements of the company mission
Types of social responsibility:
- Economic
- Legal
- Ethical
- Discretionary
- Corporate social responsibility (CSR)
•Economic–
the duty of managers, as agents of the company owners, to maximize stockholder wealth
Legal–
the firm’s obligations to comply with the laws that regulate business activities
Ethical–
the company’s notion of right and proper business behavior.
Discretionary–
voluntarily assumed by a business organization.
•Corporate social responsibility (CSR), is the idea that
business has a duty to serve society in general as well as the financial interests of stockholders.
CSR and Profitability:
•The dynamic between CSR and success (profit) is complex. They are not mutually exclusive, and they are not prerequisites of each other.
Sarbanes-Oxley Act of 2002:
Law that revised and strengthened auditing and accounting standards.
A social audit is an attempt to
measure a company’s actual social performance against its social objectives.
Five Principles of Successful CSIs:
- Identify a Long-Term Durable Mission
- Contribute “What We Do”*
* This is the most important principle - Contribute Specialized Services to a Large-Scale Undertaking
- Weigh Government’s Influence
- Assemble and Value the Total Package of Benefits
Ethics–
the moral principles that reflect society’s beliefs about the actions of an individual or a group that are right and wrong
Approaches to Questions of Ethics:
- Utilitarian Approach: Judging the appropriateness of a particular action based on a goal to provide the greatest good for the greatest number of people.
- Moral Rights Approach: Judging the appropriateness of a particular action based on a goal to maintain the fundamental rights and privileges of individuals and groups.
- Social Justice Approach: Judging the appropriateness of a particular action based on equity, fairness, and impartiality in the distribution of rewards and costs among individuals and groups.
Utilitarian Approach:
Judging the appropriateness of a particular action based on a goal to provide the greatest good for the greatest number of people.
Moral Rights Approach:
Judging the appropriateness of a particular action based on a goal to maintain the fundamental rights and privileges of individuals and groups.
Social Justice Approach:
Judging the appropriateness of a particular action based on equity, fairness, and impartiality in the distribution of rewards and costs among individuals and groups.
Five principles related to Social Justice Approach
Liberty Principle Difference Principle Distributive-Justice Principle Fairness Principle Natural-Duty Principle
External Environment:
The factors beyond the control of the firm that influence its choice of direction and action, organizational structure, and internal processes.
External Environment comprised of:
- Remote environment:
- Industry environment
- Operating environment
•Remote environment:
Economic, social, political, technological, and ecological factors that originate beyond, and usually irrespective of, any single firm’s operating situation.
Six Economic Factors:
- Prime interest rates
- Inflation rates
- Trends in the growth of the gross national product
- Unemployment rates
- Globalization of the economy
- Outsourcing
Social Factors Present in the external environment:
Beliefs & Values
Attitudes & Opinions
Lifestyles
Social factors present in external environment are Developed from (Six of them)
Cultural conditioning Ecological conditioning Demographic makeup Religion Education Ethnic conditionin
Political Factors: Political constraints on firms: Six of them
- Fair-trade Decisions
- Antitrust Laws
- Tax Programs
- Minimum Wage Legislation
- Pollution and Pricing Policies
- Administrative jawboning
