Chapter 10
Business Ethics/ Social Responsibility/
Environmental Sustainability
Strategic Management:
Concepts & Cases
13th Edition
Fred David
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Business Ethics
Social Responsibility
Environmental Sustainability
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Business Ethics
Principles of conduct within
organizations that guide decision
making and behavior
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Business Ethics
Code of Business Ethics
A document that provides behavioral
guidelines that cover daily activities
and decisions within the organization
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Ethics Culture
Ethics training should include:
A message from the CEO
Development and discussion of codes
of ethics
Procedures for discussing and
reporting unethical behavior
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Ethics Culture
To align ethical and strategic decision
making:
Incorporate ethical considerations into long-
term planning
Incorporate ethical considerations into
performance appraisals
Encourage whistle-blowing
Monitor department and corporate
performance regarding ethical issues
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Business Ethics
Social Responsibility
Environmental Sustainability
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Social Responsibility
Actions an organization takes beyond
what is legally required to protect or
enhance the well-being of living things
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Social Policy
Concerns what responsibilities the firm has to
its employees, consumers, environmentalists,
minorities, communities, shareholders, and
other groups
Should be considered during each stage of
strategy formulation, implementation, and
evaluation
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Business Ethics
Social Responsibility
Environmental Sustainability
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Environmental Sustainability
The extent that an organization’s
operations and actions protect, mend,
and preserve rather than harm or
destroy the natural environment
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Environmental Sustainability
Strategies of companies are scrutinized
and evaluated from a natural
environment perspective
Employees, consumers, governments,
and society are resentful of firms that
harm rather than protect the natural
environment
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Sustainability Report
Reveals how a firm’s operation impact
the natural environment
These reports are not required, but are
a good business practice
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Managing Environmental Affairs in
the Firm
Managers must formulate strategies that preserve
and conserve natural resources and control pollution
Environmental strategies could include
Developing or acquiring green businesses
Divesting or altering environment-damaging
businesses
Striving to become a low-cost producer through
waste minimization and energy conservation
Pursuing a differentiation strategy through green
product features
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Reasons Why Firms Should “Be
Green”
Consumer demand
Public opinion
Environmental advocacy groups
Federal and state environmental regulations
Lenders
Consumers, suppliers, distributors, and
investors
Liability suits and fines
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ISO 14000/14001 Certification
International Organization for
Standardization (ISO)
A network of standards institutes of 147
countries
Largest developer of sustainability
standards in the world
Compliance is voluntary
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ISO 14000/14001 Certification
ISO 14000 - a series of voluntary standards
in the environmental field
ISO 14001 – a set of standards included
within ISO 14000
Adopted by thousands of firms worldwide to
certify that they are conducting business in
an environmentally friendly manner
Results in an environmental management
system (EMS)
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