Business Strategy Chapter 10 Strategy, Ethics, and Social Responsibility

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S 1: Strategy,  Ethics,  and  Social  Responsibility

S 2:Linking  Strategy  to  Ethics and  Social  Responsibility

Key Issues:

—Should there be a link between a company’s efforts to craft and execute a winning strategy and its duties to:

—Conduct activities in an ethical manner?

—Demonstrate socially responsible behavior by

—Being a committed corporate citizen?

—Attending to needs of non-owner stakeholders? 

S 3:What  Is  Business  Ethics?

—Business ethics involves applying general ethical principles and standards to business behavior

—Ethical principles in business are not different from ethical principles in general

—Business actions are judged

—By general ethical standards of society

—Not by a set of rules business people
apply to their own conduct 

S 4:Are  Ethical  Standards  Universal  or  Dependent  on  Local  Norms?

Three schools of thought regarding extent

to which ethical standards can be applied . . .

• Ethical Universalism
• Ethical Relativism
• Integrative Social Contracts Theory

S 5:Concept  of  Ethical  Universalism

—According to the school of ethical universalism . . . 

—Same standards of what is ethical and what is unethical resonate with peoples of most societies regardless of

—Local traditions and

—Cultural norms

—Thus, common ethical standards can be used to judge conduct of personnel at companies operating
in a variety of

—Country markets and

—Cultural circumstances

S 6:Concept  of  Ethical  Relativism

—According to the school of ethical relativism . . .

—Different societies/cultures/countries

—Put more/less emphasis on some values than others

—Have different standards of right and wrong

—Have different social mores and behavioral norms

—What is ethical or unethical

—Must be judged in light of local
customs and social mores and

—Can vary from one country to another 

S 7:Characteristics  of  a  Moral  Manager

—Dedicated to high standards of ethical behavior in

—Own actions

—How the company’s business is to be conducted

—Considers it important to

—Be a steward of ethical behavior

—Demonstrate ethical leadership

—Pursues business success

—Within confines of both letter and spirit of laws

—With a habit of operating well above what laws require

S 8:Characteristics  of  an  Immoral  Manager

—Actively opposes ethical behavior in business

—Willfully ignores ethical principles in making decisions

—Views legal standards as barriers to overcome

—Pursues own self-interests

—Is an example of capitalistic greed

—Ignores interests of others

—Focuses only on bottom line –
making one’s numbers

—Will trample on others to avoid being trampled upon

S 9:What  Are  the  Drivers  of  Unethical Strategies  and  Business  Behavior?

• Large numbers of immoral and amoral business people.

• Overzealous pursuit of  personal gain, wealth, and other selfish interests.
• Heavy pressures on company managers to meet or beat earnings targets.
• Company cultures that place profits and good performance ahead of ethical behavior.

S 10:Approaches  to  Managing  a Company’s  Ethical  Conduct:

Unconcerned or non-issue approach

Damage control approach

Compliance approach

Ethical culture approach

S 11: Four Approaches to Managing Business Ethics:

S 12:Why  Should  Company  Strategies  Be  Ethical?

—An unethical strategy

—Is morally wrong

—Reflects badly on the character of company personnel

—An ethical strategy is

—Good business

—In the best interest of shareholders
S 13:The Business Costs of Ethical Failures:

S 14: Linking  Strategy  to  Ethics  and  Values

—If ethical standards are to have more than a cosmetic role, boards of directors and top executives must work diligently to see they are scrupulously observed in

—Crafting a company’s strategy and

—Conducting every facet of a company’s business

—Two sets of questions must be considered by senior executives when reviewing a new strategic initiative

—Is what we are proposing to do fully compliant with our code of ethical conduct?  Is there anything here that could be considered ethically objectionable?

—Is it apparent this proposed action is in harmony with our core values?  Are any conflicts or concerns evident?

S 15:What  Is  Corporate  Social  Responsibility?

—The notion that corporate executives should balance interests of all stakeholders began to blossom in the 1960s

—Social responsibility as it applies to businesses concerns a company’s duty to

—Operate in an honorable manner

—Provide good working conditions for employees

—Be a good steward of the environment

—Actively work to better quality of life in

—Local communities where it operates and

—Society at large

S 16:What  Is  Socially  Responsible Business  Behavior?

—A company should strive to balance strategic actions

—To benefit shareholders against any possible adverse impacts on other stakeholders

—To be a good corporate citizen

—Socially responsible behaviors include

—Corporate philanthropy

—Actions to earn trust and respect of stakeholders for
a firm’s efforts to improve the general well-being of

—Customers

—Employees

—Local communities

—Society

—Environment

S 17:Fig. 10.2: Categories of Socially Responsible Business  Behavior