Chapter 6 Flashcards
What is corporate social responsibility
The duty of a company’s management to work in the best interest of the society it relies on for its resources. Work to advance the welfare of society and to act as good global citizens
Forms of corporate social responsibility
- making charitable donations
- treating employees ethically
- being environmentally conscious
- ensuring safe working environments
- sponsoring local sports teams
- creating/ promoting diverse workplace
Benefits of corporate social responsibility
- marketing tool
- dissuades government from implementing regulations that could interfere w/ business
- helps companies attract/ retain excellent employees
Negatives of corporate social responsibility
- costs money, detracts from profit
- uses employees time and energy
- can distract customers from problems a company creates
- may act ethically in one country but not in another
Stakeholders analysis
- used to determine which groups interests are most important when a company is faced with an ethical dilemma
Primary stakeholders
Directly affect the company and its profitability
Secondary stakeholders
Have an impact on the company but do not directly influence its success or contribute to profitability
Business ethics
A set of rules/ guidelines that management/individuals follow when making decisions facing their company
Guidelines used when making decisions
- Domestic and international law
- The company’s code of ethics and corporate governance
- The personal values of the individual making the decision
Test of disclosure: (to solve ethical dilemmas)
- Am I being honest?
- Is my choice fair to the company’s stakeholders?
- Will my choice enhance the reputation of the company?
4, how would we feel if everyone knew about the decision we made?
2 methods of thinking about ethics issues in a global context
- Ethical imperialism
2. Cultural relativism
Ethical imperialism
A view of culture based on the idea that there are certain universal truths or values that are standard across all cultures. If something is wrong in one country it is wrong in all countries
Cultural relativism
A view of culture based on the idea that a cultures different values should be respected as the ethics of mine culture is not better than those of another
Ethical issues in international business arise in
- environmental issues
- sweatshops
- corporate corruption
- dumping
- poverty
Environment issues
- sustainable development (the ability to meet human consumption while maintaining the environment)
- many companies responsible for pollution and resource depletion
- companies and government resist environmental plan that will impede economic growth
Sweatshop
Factories in underdeveloped and developing countries in which employees woke in unsafe environments, are treated unfairly, and have no chance to address those issues
Why do sweatshops exist? (3)
- Global competitiveness
- Corporate greed
- Consumer expectations of low prices
Corporate corruption
The involvement in illegal activity, such as bribery and fraud to further ones business interests
Dumping
Selling products in a foreign country below the cost of production or below the price in the home country
Predatory dumping
An anti- competitive business practise in which foreign companies price their products below market value to increase sales and force domestic competition out of business then raise their prices
Poverty
Over one quarter of the worlds population lives in intense poverty. Accompanied by hunger, lack of shelter, education and medical care, high rates of disease
Microcredit
- the granting of very small loans to spur entrepreneurship (one way poverty is being addressed)
- mainly granted to women who use the loans to start small businesses and use their earnings to support their families
NGOs
- non government organizations
- non profit
- composed mostly of volunteers
- predominantly funded through charitable contributions
- may centre on trade, education, youth improving, the environment, human rights or other issue
