Ethical and Social Issues in Business PDF

# Ethical and Social Issues in Business ## Business Ethics - **Definition**: **Principles, values, and beliefs that define right and wrong decisions and behavior** - **Ethics in business**: **Making decisions in the workplace** - **Elements**: - **Integrity**: Honesty and trustworthiness...

# Ethical and Social Issues in Business ## Business Ethics - **Definition**: **Principles, values, and beliefs that define right and wrong decisions and behavior** - **Ethics in business**: **Making decisions in the workplace** - **Elements**: - **Integrity**: Honesty and trustworthiness - **Fairness**: Treating people fairly and equitably - **Law-abiding**: Compliance with all applicable laws and regulations - **Respect**: Respecting the rights and dignity of others - **Responsibility**: Taking responsibility for actions and decisions ## Ethical Dilemmas - A **situation where it's not clear what's right and wrong** - **Steps to follow when faced with an ethical dilemma:** 1. What is the dilemma? 2. Who is affected by the dilemma? 3. Which factors are important in this decision? 4. What are the alternatives? 5. What is the final decision and how will you implement it? ## Ethical Decision Making - Stages of Moral Development - **Preconventional Level**: Based on what you get in return. - **Conventional Level**: Expectations of others and what you feel you would do. - **Principled Level**: How you view yourself; because you belong to this group, you are this way (following self-chosen ethical principles) ## **Moderators of Ethical Decision Making** - **Individual characteristics**: - **Values**: Convictions of whats right and wrong. - **Ego strength**: How strong your beliefs and commitment is. - **Locus of control**: How you look at yourself, how much you think you can control things around you - **Structural variables**: - **Ethical behavior influenced by**: - **Organization's structural design** - **Goals** - **Performance appraisals** - **Reward allocation** - **Issue intensity**: - **Greatness of harm**: how big the issue is, how many people are harmed - **Consensus of wrong**: how many people agree it's wrong - **Probability of harm**: How likely are people being harmed? - **Immediacy or consequences**: How quick is the impact - **Proximity to victims**: How close you are to people who are affected - **Concentration of effect**: How bad is it? ## Ethics in an International Context - **Consider the culture**: Ensure cultural and social differences are considered. - **Foreign corrupt practices act**: Applies to American companies operating abroad. - **United Nations global contract**: 10 principles, including Human and Labor Rights, Environment, and Anti-Corruption. ## Organizational Culture - **Can be changed** - **Conditions for change**: - **Leadership**: Top managers need to be positive role models. - **Young organization** - **Weak culture** - **How to change organizational culture**: - Set the tone through management behavior. - Create stories, symbols, and rituals to replace current ones. - Help and support employees to adapt new values. - Redesign socialization processes. ## The Difference Between Creativity and Innovation - **Creativity**: Combining ideas uniquely. - **Innovation**: Turning creative outcomes into useful products or methods. ## Stress Management - **Causes of stress**: - **Role conflict**: Unrealistic work expectations - **Role ambiguity**: Unsure of role expectations - **Role overload**: Too much work than amount of time left - **Task demands**: Factors related to an employee’s job - **Role demands**: Relating to pressures placed on an employee - **Interpersonal demands**: Pressures created by other employees ## Social Responsibility - **Social obligation**: A company engages in social actions due to meeting specific economic and legal responsibilities. This involves doing what is required by law. - **Social responsiveness**: Management’s only social responsibility is to maximize profits. This involves being aware of societal pressures and responding when necessary. - **Social responsibility**: A company has obligations beyond its economic and legal obligations to pursue long-term goals toward society. This involves doing what is right for society, even if it is not required by law. - **Views of social responsibility**: - **Classical view**: Businesses should focus on profit maximization and stay out of social issues. - **Socioeconomic view**: Businesses should consider the needs of society and help solve social problems. ## Managing Change - **Why people resist change**: - **Uncertainty** - **Fear of losing position and authority** - **Habit** - **Techniques to reduce change**: - **Education and communication**: Clarify misunderstandings. - **Participation**: Increase involvement and acceptance. - **Facilitation and support**: Help employees adjust. - **Negotiation**: Exchange something of value. - **Manipulation**: Influence covertly. - **Coercion**: Use direct threats or force. ## Managing Disruptive Innovation - **Disruptive innovation**: **Innovations in products, services, or processes that change industry's rules of the game.** - **Why managing disruptive innovation is important**: - **Large, established, profitable organizations are vulnerable since they have the most to lose and are most placed in their current markets and technologies.** - **Opportunity to disrupt established businesses.** - **Stay marketable, keep skills current, value experience and creativity, manage your career actively, take risks early.** ## Managers - **Coordinate and oversee the work of other people so that organizational goals can be accomplished.** - **Nonmanagerial employees**: work directly on a job or task and have no one reporting to them. - **Why managers are important** - **Guide in uncertain times**: Using skills to help organizations address challenges - **Ensure productivity**: Create and coordinate workplace env and work systems - **Better performance**: Connection between employees and supervisors; is key factor in employee loyalty and productivity. ## Global Business - **Types of International Organizations** - **Multi Domestic Corporation**: Units become independent. - **Global Company**: Centralizes management and decisions in home country. - **Transnational**: Exist everywhere; adapts fully; Borderless organization - **Why organizations go global**: - **Global sourcing**: Purchasing labor or materials from around the world, wherever it's cheapest - **Exporting**: Made domestic, sold international - **Importing**: Getting products made abroad, selling it domestically - **Licensing**: Giving organization rights to sell or make your product - **Franchising**: Giving organization rights to your organization name and operating methods - **Strategic Alliance**: Partnership; sharing resources and knowledge in developing a new product - **Joint Venture**: Two partners create an independent organization - **Foreign subsidiary**: Investing in foreign country; setting up a separate, independent office - **Why organizations go global**: - **Global sourcing**: Purchasing labor or materials from around the world, wherever it's cheapest - **Exporting**: Made domestic, sold international - **Importing**: Getting products made abroad, selling it domestically - **Licensing**: Giving organization rights to sell or make your product - **Franchising**: Giving organization rights to your organization name and operating methods - **Strategic Alliance**: Partnership; sharing resources and knowledge in developing a new product - **Joint Venture**: Two partners create an independent organization - **Foreign subsidiary**: Investing in foreign country; setting up a separate, independent office - **Global Challenges**: - **Nationalism**: Loyal policies that glorify country's values - **Parochialism**: Viewing the world only from one's own perspective - **Globalization**: Process where organizations develop influence across international borders. - **Economic Environments**: - Free Market economy - Planned economy - **Inflation**: Prices for products and services are increasing - **National Culture**: - **Values and attitudes shared by individuals from a specific country that shape their behavior and their beliefs about what is important.** - **Based on a society's social traditions, political and economic philosophy, and legal system.** - **National culture has a greater effect on employees than their organization's culture.** - **Attitudes that shape Manager's acceptance or resistance to globalization and style of management**: - **Ethnocentric**: Home country knows best work practices - **Polycentric**: Country knows better than them so do it their way - **Geocentric**: View from world; best practices are from around the world ## Workplace Diversity - **Types of diversity**: - Age - Gender - Race - Religion - **Benefits of diversity**: - **People Management**: Better use of employee talent; increased creativity in team problem-solving; ability to attract and retain employees of diverse backgrounds - **Organizational Performance**: Reduced costs associated with high turnover, absenteeism, and lawsuits; Enhanced problem-solving ability; Improved system flexibility - **Strategic**: Increased understanding of the marketplace, which improves ability to better market to diverse consumers; Potential to improve sales growth and increase market share; Potential source of competitive advantage because of improved innovation efforts; Viewed as moral and ethical; the "right" thing to do - **Challenges of diversity**: - **Old Workers**: Older workers can have trouble adapting to new technologies and ways of working, and they may be perceived as less productive - **Young Workers**: Young workers may lack experience and may be more likely to leave their jobs if they are not satisfied, making it difficult to train and retain them. - **Gender**: Gender inequality can lead to a lack of opportunity for women, and this can result in lower morale and productivity. - **Race**: Race and ethnicity can lead to discrimination and prejudice, which can create a hostile work environment and lead to lower morale and productivity. - **Disabilities**: Individuals with disabilities may face discrimination and lack of opportunities. - **Strategies for managing diversity**: - **Employee Resource Groups**: Voluntary employee led subgroup in organization that shares qualities, interests, or goals. - **Mentoring**: Process where experienced organizational worker gives advice and guidance to Newer workers. - **Diversity Training**: Focus on knowledge, attitudes, and behavior ## Bias that affect Decision Making - **Bias**: Preference toward a particular perspective or ideology. - **Types of bias**: - **Anchoring effect**: Hear one review and are ignorant to new ones. - **Self-serving**: Taking credit for success, blame outside factors for failures. - **Hindsight**: Accidently thinking event could've been predicted once the outcome is known. - **Overconfidence**: Unrealistic views of performance. - **Immediate Gratification**: Avoid immediate costs - **Framing**: Focus on certain parts of a situation and ignore the other parts. - **Selective perception**: Organize and interpret events based on biased perceptions, influencing info they can focus on, problems they identify, and alternatives they develop. - **Representation**: Drawing analogies and see identical situations that don’t exist. ## Cutting-Edge Approaches for Improving Decision Making - **Design thinking**: "Approaching management problems as designers approach design problems" and considering how an object or process might be redesigned. - **Big Data**: Large and complex sets of data. Provides powerful tools to help make decisions. - **AI**: Computers replicating functions of humans. - **Machine Learning**: Method of data analysis; automates analytical model building. - **Deep Learning**: Uses algorithms to create a hierarchical level of artificial neural networks that simulate functions of the human brain. *** This document contains ethical and social issues related to business, including: - What are ethical dilemmas and how to solve them - The differences between social responsibility and responsiveness - How to manage change in an organization - How to manage global businesses - Different types of workplace diversity and their impact on organizations - Types of bias and their impact on decision-making - Current approaches to improving decision-making. ***