Undergrad Strategy Chapter 10: Business Ethics

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PepsiCo (Photo credit: Wikipedia)

Congressional Portrait, Congressman Mike Oxley, of Ohio (Photo credit: Wikipedia)

Before the signing ceremony of the Sarbanes-Oxley Act, President George W. Bush meets with Senator Sarbanes, Secretary of Labor Elaine Chao and other dignitaries in the Blue Room of the White House July 30, 2002. (Photo credit: Wikipedia)

English: CSR approaches CSR framework (Photo credit: Wikipedia)

English: Chart depicting the major kinds and interactions of corporate CSR (Corporate Social Responsibility) stewardship functions. (Photo credit: Wikipedia)

Cover scan of the final issue of Tyco World, May 2006 (Photo credit: Wikipedia)

Managers are exposed to different conceptions of ethical behavior and guidelines for socially responsible behavior that impact large multinational corporations.

Domestic and International managers face ethical dilemmas on a daily basis including:. Child labor, human rights, the environment, and plant closings.

• “Ethical Behavior is personal behavior in accordance with guidelines for good conduct or morality. No right or wrong decisions, but alternatives, each of which may be equally valid depending on one’s perspective.”

A firm’s implementation of Corporate Social Responsibility (CSR), goes beyond mere compliance and involves “actions that appear to further some social good, beyond the interests of the firm”.

• “Corporate Social Responsibility is the practice of companies going beyond legal obligations to actively balance commitments to investors, customers, other companies, and communities.”

There are 3 layers of CSR activity:

• (1) company works toward a specific social cause;
• (2) company follows a code of conduct and operates with greater transparency;
• (3) company builds social responsibility into its core operations to create value and build competitive advantage.

Companies pursue “green” initiatives to reduce their carbon footprint and also to reduce operating costs and boost profit margins.

Some of the ethical dilemmas that international managers face include: Bribery and Corruption which leads to the misallocation of resources and damages the integrity of the business relationship.

In 2002, Congress passed the Sarbanes-Oxley Act (SOX), which set more stringent accounting standards and reporting practices for U.S. public company boards and accunting firms.

It was named after sponsors U.S. Senator Paul Sarbanes (D-MD) and U.S. Representative Michael G. Oxley (R-OH). As a result,” top management must individually certify the accuracy of financial information.” SOX increased the independence of the outside auditors who review the accuracy of corporate financial statements. SOX was enacted as a reaction to corporate scandals that affected firms like Enron, Tyco International and WorldCom which cost investors billions of dollars when the companies went bankrupt.

Chapter 10 describes the importance of business ethics, environmental sustainability, and social responsibility in strategic management, including such topics as workplace romance, bribery, pollution abatement, whistleblowing, and philanthropy.

“Issues related to these topics can significantly bolster or derail the best strategic plan, so Chapter 10 explains how these topics can best be managed.”

The Chapter 10 Learning Objectives as provided in the textbook are as follows:

1.   Discuss the ethics of workplace romance.

2.   Explain why concern for wildlife is a strategic issue for firms.

3.   Explain why good ethics is good business in strategic management.

4.   Explain how firms can best ensure that their code of business ethics guides decision making instead of being ignored.

5.   Explain why whistleblowing is important to encourage in a firm.

6.   Discuss the nature and role of corporate sustainability reports.

7.   Discuss specific ways that firms can be good stewards of the natural environment.

8.   Explain ISO14000 and 14001.

9.   Discuss recent trends in bribery law.

*Pay close attention to the ”workplace romance” section

*Table 10-3: “Songbirds and Coral Reefs” serves as a reminder of the overall importance of firms being environmentally friendly and proactive.

Read this: The PepsiCo Code of Conduct/Ethics statement:  http://www.pepsico.com/Company/Global-Code-of-Conduct.html

 Tweet your answer to the following:

List Three Positive Aspects of the PepsiCo Ethics Statement and Three Negative Aspects.

English: Created in Photoshop, based on “Sustainable development” diagram at Cornell Sustainability Campus (Photo credit: Wikipedia)