CH-2 Being Ethical and Socially Responsible – Business : Book Guide

CHAPTER 2 Being Ethical and Socially Responsible 2.7 TEXTBOOK ANSWER KEYS 2.7a Return to Inside Business Panera Cares 1. How does Panera Cares fit into the socioeconomic model of social responsibility? Panera Cares is a good example of the socioeconomic model at work because, as the text explains, each of these cafés must be self-supporting and generate a small profit to be invested in other community programs, such as job training. Panera is going beyond its basic economic responsibility to owners and other stakeholders. It is also inviting the public to “do the right thing,” as the CEO says, by contributing more than the cost of each meal so that people with little or no money can enjoy a good meal. 2. What ethical issues are raised by the idea of expecting some people to pay more for a Panera meal so that others can pay less? Students are likely to identify fairness as one ethical issue involved in the Panera Cares “suggested funding” levels. Is it fair to leave the decision about how much to donate up to individuals? Some people who can afford to pay may take advantage of this situation by donating very little or nothing. This unfairly shifts the burden to others who choose to donate the suggested amount or much more. Is it even fair for Panera to expect customers to share the cost when the company could make a philanthropic contribution to cover free meals for people in need? Students may mention other ethical issues, as well. 2.7b Review Questions 1. Why might an individual with high ethical standards act less ethically in business than in his or her personal life? With more and more examples of businesspeople behaving unethically, the cause of unethical behavior is one that psychologists and economists are examining. Pressure from low or declining profits can cause a person with normally high ethical standards to behave less ethically in business. But financial incentives are not the only reason. People make unethical decisions to support colleagues or friends with whom they are doing business. 2. How would an organizational code of ethics help to ensure ethical business behavior? An organizational code of ethics would help a firm establish a guide to acceptable and ethical behavior for employees to follow. It shows the company’s commitment to ethical behavior and sets a standard for all employees in the firm. Often, a company’s code of ethics communicates the method for reporting unethical or illegal actions. 3. How and why did the American business environment change after the Great Depression? The Great Depression and its national consequences showed both the American people and the government that a more centralized control over certain kinds of businesses and business activities would be required in the future to prevent our economy from falling victim to the forces that caused the Depression. 4. What are the major differences between the economic model of social responsibility and the socioeconomic model? The economic model of social responsibility holds that society will benefit most when business is left alone to produce and market profitable goods. The socioeconomic model places emphasis not only on profits but also on the impact of business decisions on society. (See Table 2.3.) 5. What are the arguments for and against increasing the social responsibility of business? The arguments for increasing the social responsibility of business are the following: a. Business cannot ignore social issues because it is a part of our society. b. Business has the technical, financial, and managerial resources that are needed to tackle today’s complex social issues. c. By helping resolve social issues, business can create a more stable environment for long-term profitability. d. Socially responsible decision making by business firms can prevent increased government intervention. The arguments against increasing social responsibility are the following: a. Business managers are primarily responsible to stockholders, so management must be concerned with providing a return on owners’ investments. b. Corporate time, money, and talent should be used to maximize profits, not to solve society’s problems. c. Because social problems affect society in general, business should not be expected to solve these problems. d. Social issues are the responsibility of officials who are elected for that purpose and who are accountable to the voters for their decisions. 6. Describe and give an example of each of the six basic rights of consumers. The right to safety. The products consumers purchase must be safe for their intended use, include thorough and explicit directions for proper use, and have been tested by the manufacturer to ensure product quality and reliability. Consumer safety would be an especially important consideration in the manufacture and sale of a product such as a hedge trimmer. The right to be informed. Consumers should be given complete information about a product, such as ingredients in food or how to take care of a specific garment. Producers should also give information about the potential dangers of using their products, such as a reaction to drugs. The right to choose. Because of competition, consumers can choose the particular product they want among several similar products, such as automobiles or men’s shirts. The right to be heard. Citizens can complain through the Better Business Bureau or can often call a company directly on a toll-free number. The right to consumer education. People are entitled to be fully informed about their rights as consumers. An example would be the disclosure notices provided by banks or credit card companies. The right to service. Consumers have the right to convenience, courtesy, and responsiveness from manufacturers and sellers of consumer products, which is one of the reasons that companies put 800 numbers on their products for customers to contact them. 7. There are more women than men in the United States. Why, then, are women considered a minority with regard to employment? Women are a minority, not because they are fewer in number, but because there are fewer of them employed than men and fewer in positions of true responsibility. Women also fit the definition of a minority because they have been singled out as a group for unfavorable treatment. 8. What is the goal of affirmative action programs? How is this goal achieved? The goal of affirmative action programs is to increase the number of minority employees at all levels within an organization. The Equal Employment Opportunity Commission (EEOC) was created by Congress to investigate complaints of discrimination and to sue firms that practice discrimination in employment. 9. What is the primary function of the Equal Employment Opportunity Commission? The primary function of the EEOC is to investigate complaints of discrimination in employment. 10. How do businesses contribute to each of the four forms of pollution? How can they avoid polluting the environment? Businesses contribute to water pollution by dumping wastes into the water; to air pollution by admitting hazardous chemicals into the air from motor vehicles and smokestacks; to land pollution by burying harmful wastes and chemicals; and to noise pollution by allowing excessive noise caused by traffic, aircraft, and machinery. Water pollution can be reduced by building larger and more efficient sewage treatment plants and removing sulfur emissions, a cause of acid rain. Pollution control devices on vehicles and smokestacks help reduce air pollution. The EPA has been working to clean up the land. Suits against companies that dump could help fund the cleanup operation. Noise levels can be reduced by isolating the source of noise away from the population and by modifying machinery and equipment to reduce noise levels. 11. Our environment can be cleaned up and kept clean. Why haven’t we simply done so? The environment hasn’t been cleaned up and kept clean because of the costs involved and the problems associated with deciding who will pay for the cleanup. 12. Describe the steps involved in developing a social responsibility program within a large corporation. The steps are as follows: a. Commitment of top executives. Top executives should develop a policy statement that outlines key areas of concern. b. Planning. Managers should form a plan that deals with each of the issues described in the policy statement. c. Appointment of a director. A top-level executive should be appointed to direct the organization’s activities in implementing the policy. d. The social audit. The social audit is a comprehensive report of what an organization has done, and is doing, with regard to social issues that affect it. 2.7c Discussion Questions 1. When a company acts in an ethically questionable manner, what types of problems are caused for the organization and its customers? When an organization engages in ethically questionable behavior, it hurts the integrity of the organization and damages the company’s image held by customers and potential customers. Customers lose trust in this type of organization and sometimes seek other sellers. An organization sometimes has to spend considerable resources to rebuild relationships with customers when the firm’s integrity is questioned. 2. How can an employee take an ethical stand regarding a business decision when his or her superior already has taken a different position? By whistle-blowing, the employee can inform the press or government officials of his or her firm’s unethical practices. (You may want to discuss the repercussions of whistle-blowing with students.) 3. Overall, would it be more profitable for a business to follow the economic model or the socioeconomic model of social responsibility? In the short run, the economic model would be more profitable because the focus is on profits, not on social responsibility. The socioeconomic model would be more profitable in the long run. It is a proactive stance for companies and one that many firms are embracing. Consumers have come to expect this of companies with which they do business. Money spent on acts of social responsibility would be considered business expenses. 4. Why should business take on the task of training the hard-core unemployed? This task is another aspect of social responsibility. When these people receive training, they become more employable. As a result, they can earn a wage and then return it to business through their spending for consumer goods. Overall, such training programs improve the economy, which in turn helps the firms that sponsor the programs. 5. To what extent should the blame for vehicular air pollution be shared by manufacturers, consumers, and government? Manufacturers should help in producing and/or using pollution control devices for cars and trucks. Consumers should buy and use products that limit air pollution. The government should set guidelines for the production and use of such products. 6. Why is there so much government regulation involving social responsibility issues? Should there be less? There is so much government regulation because unethical businesses continue to ignore their social responsibility. There should not be less government regulation until businesses are ready to police themselves. 2.7d Comments on Video Case 2.1 Suggestions for using this video case are provided in the Pride/Hughes/Kapoor Video Guide. Scholfield Honda—Going Green with Honda 1. How would you rate Scholfield Honda’s sense of social responsibility? Does the dealership meet all the criteria for a socially responsible company? Scholfield Honda’s sense of social responsibility is open to discussion. On the one hand, it can be argued that by adding the Civic GX to its line and its gift to Greensburg, Kansas, the dealership was being socially responsible. On the other hand, it could be argued that the dealership’s actions were minimal and its motive was simply to promote the dealership by associating itself with a popular environmental issue. Whatever its motives, Scholfield’s actions appear to meet the criteria to be considered a socially responsible company. 2. What is Scholfield Honda’s primary ethical responsibility in situations where a proposed green initiative is cost-prohibitive or even detrimental to the company’s bottom line? Scholfield Honda’s primary ethical responsibility is to provide a fair return to its investors. If a green initiative is cost-prohibitive or detrimental to the bottom line, it should be avoided or alternative green plans should be pursued that are not detrimental to the company. 3. Should the government regulate companies’ claims that their products are green? Should official classifications for environmental friendliness be defined? In some product categories such as automobiles, the government already regulates green standards and claims that particular products are green. However, in most cases, consumers are the best judge of which products meet their green standards. If products don’t meet consumer standards, they simply won’t purchase them. Official classifications for environmental friendliness already exist in areas such as auto emissions, airplane noise, and asbestos usage, to name a few. Again, for most product categories, it would appear that consumers are better at defining environmental friendliness than the government is. 2.7e Comments on Case 2.2 Unilever’s Plan for Green and Clean Growth 1. Every year, Unilever posts on its web site and distributes to the media a report detailing its progress toward the 2020 sustainability goals. Why would the public be interested in such a report? One reason that customers, suppliers, employees, and others would be interested in Unilever’s sustainability reports is that they want to know what kind of company they’re doing business with. Many customers are concerned about the environment. By demonstrating its ongoing commitment to sustainability, Unilever shows that it is doing its part to save the planet and gives customers another reason to remain loyal. Employees who hold similar views would be interested in finding out what their employer is doing. Competitors may also be taking a close look to see how they might differentiate themselves by taking action in other areas of social responsibility. 2. Is Unilever applying the economic or the socioeconomic model of social responsibility? How do you know? Based on the CEO’s comments about “advocating a business model that gives to the environment and society,” Unilever appears to be closer to the socioeconomic model of social responsibility. The company is focused on profitability through sustainability, as the case indicates. Programs that save energy and water not only help the environment, but they also save Unilever money and therefore help its profitability. The Cool Farm Tool is available without charge to suppliers and other companies. This is another way Unilever is helping society as a whole to live greener. 3. Do you agree with Unilever’s approach of promoting its Lifebuoy soap brand in programs to teach consumers about hand-washing? Explain your answer. Students who agree with Unilever promoting Lifebuoy in hand-washing lessons may say that the socioeconomic model emphasizes profits as well as social responsibility. By linking the Lifebuoy brand to programs that keep people healthy and safe, Unilever is making a business decision that benefits shareholders and enables the company to do the right thing for society at large. Lifebuoy soap isn’t required for hand-washing—any brand will do, and people are free to choose what they wish. Students who disagree may say that Unilever shouldn’t put its brand into the program because any soap can be used to clean hands, not just Lifebuoy. If Unilever wants to educate people about hand-washing as part of its social responsibility, it can do that without turning the program into a commercial for its brand. 2.7f Building Skills for Career Success 1. Social Media Exercise In 2010, Pepsi decided to develop a new social media–based project, called Pepsi Refresh Project, aimed at Millennials and allowing consumers to post ideas for improving their communities. This replaced the $20 million they spent on Super Bowl advertising. The project received more than 57 million votes. However, the general consensus was this was not a successful program for Pepsi. Using the Internet for research, answer the following questions: 1. Why do you think the Pepsi Refresh Project was not as successful as the company hoped? Although the project was a success on the social media side, that success did not translate into sales. Pepsi lost market share, possibly because the money designated for advertising was put into this social media campaign. 2. Do you think this is a good example of corporate social responsibility (CSR)? Why or why not? The idea of distributing $20 million in $5,000 to $250,000 increments for projects that are determined to be “worthy” is a good example of social responsibility; however, the way this project was structured turned out to be filled with technical issues and privacy problems. Pepsi’s plan is to engage its customers by having them vote for their favorite project. Money was given to the projects that received the most votes. It is a different model than previously used and didn’t engage stakeholders at the level of other CSR models. 3. How does this CSR example for Pepsi compare with that of its main rival Coca-Cola (see http://www.thecoca-colacompany.com/citizenship/index.html)? Coca-Cola’s responsibility to the environment, community, and employeesis is clearly stated on its Web site. Its commitment to sustainability is also stated in several places on the Web site. On the other hand, Pepsi’s level of responsibility is not as clearly seen nor stated. 2. Journaling for Success Assume that you are an accountant at ABC Corporation, where you question the company’s accounting practices. What legal and managerial changes would you suggest to prevent the use of accounting tricks to manipulate corporate earnings? Student answers may include the following: a. I would recommend immediate implementation of an ethics code spelling out which accounting practices are acceptable and which are not. b. I would suggest a policy that requires all accounting methods, whether internal or conducted by external auditors, to be vetted against Sarbanes-Oxley rules. c. I would recommend that the company hire someone at the corporate vice presidential level with direct responsibility for Sarbanes-Oxley enforcement. He or she should report directly to the board of directors. d. Anyone found to be in direct violation of the Sarbanes-Oxley Act should immediately be terminated. e. The company should institute a method by which employees can report ethical lapses without fear of reprisal. An anonymous hotline is one possible example. 1. Assume that your manager refuses to incorporate any of your suggestions. Would you blow the whistle? Why or why not? Student responses to this question will vary. Some may say that they will get another job first, and then anonymously report their previous employer. Others will feel that the risks associated with whistle-blowing are too great, and some will take the idealistic route of avoiding an Enron situation. 2. Suppose that you blow the whistle and get fired. Which law might protect your rights, and how would you proceed to protect yourself? The law that protects whistle-blowers is the Sarbanes-Oxley Act of 2002. Any executive who retaliates against a whistle-blower can be held criminally liable and imprisoned for up to 10 years. Some students will indicate that the first move they would make would be to hire a lawyer experienced in dealing with whistle-blowing situations. They may suggest that going to the media would help. In actuality, however, it might be better for their future employment prospects if they settle out of court. Some companies might be leery of someone who invites media attention. 3. Developing Critical-Thinking Skills The answers will vary from students of different ethnic backgrounds, social status, workplace experiences, and ages. Some students will feel very strongly about what they believe to be right and wrong and how they would conduct themselves in the workplace. Other students will endure the stress associated with working on projects they feel are morally wrong just to keep their job. Two important points in this exercise are (1) to get students to discuss why they believe certain things are either right or wrong and (2) for all students to understand other people’s positions regardless of whether or not they agree. As the world becomes the workplace, more Americans will be faced with examining their positions on what they believe to be right and wrong and/or finding employment with a company that fits within their ethical and moral beliefs. Business ethics begins at the top of an organization. It creates the corporate culture. Strong leadership is needed to raise the level of ethics and morality. Leadership must set an example and encourage everyone in the organization to exercise integrity. 4. Building Team Skills Assign several students the responsibility of finding a code of ethics from a business firm. Before class, prepare copies for everyone in the class. In class, have each group work with a different code of ethics in completing the exercise. Ask a member of each group to report the results before the class. 5. Researching Different Careers Who is to say what is right and what is wrong? This question is debated every day in the newspapers and courtrooms across the country. Things that influence our values include religious teachings, parental guidance, television, cultural traditions and values, peers’ values and behaviors, major events in the world, and social acceptance of behavior over time. Each student’s code of ethics will be a little different. It should include (1) the student’s responsibilities to life, work, friends, family, etc. (How will the student treat others?) and (2) the student’s expectations from life, work, friends, family, etc. (How does the student expect to be treated by others?). 2.8 QUIZZES I AND II Quiz I True-False Questions Select the correct answer. 1. T F Social responsibility is the recognition that business activities have an impact on society and the consideration of that impact in business decisions. 2. T F The economic model of social responsibility places emphasis not only on profits but also on the impact of business decisions on society. 3. T F Consumerism consists of all those activities that are undertaken to protect the rights of consumers in their dealings with business. 4. T F Six basic rights of consumers are the right to safety, the right to be informed, the right to choose, the right to be heard, the right to consumer education, and the right to service. 5. T F Whistle-blowing is an attempt by business to stop employees from exposing their unethical business behavior. Multiple-Choice Questions Circle the letter before the most accurate answer. 6. One factor that influences ethical decision making is the __________ factor. a. business b. consumer c. marketing d. opportunity e. internal 7. A plan designed to increase the number of minority employees at all levels within an organization is called a. the hard-core unemployed. b. an affirmative action program. c. the Equal Employment Opportunity Commission. d. the socioeconomic initiative. e. the right to work. 8. Initiating a social responsibility program takes a. the commitment of top executives. b. the commitment of middle managers. c. the commitment of employees. d. no commitment. e. the commitment of competitors. 9. Funding for a program of social responsibility can come from a. the employees in the corporation. b. volunteer efforts of the American public. c. corporations that absorb the costs as a business expense. d. governmental sources. e. environmental groups. 10. A guide to acceptable and ethical behavior is known as a. a code of ethics. b. business ethics. c. a social audit. d. consumerism. e. an ethical behavior guide. Quiz II True-False Questions Select the correct answer. 1. T F A policy of considering only nonminority applicants for job openings is called reverse discrimination. 2. T F Today, few firms are either purely economic or purely socioeconomic in their outlook. 3. T F Working conditions in the early twentieth century were not much different from those that exist today, except for the more advanced technology involved. 4. T F Government intervention into business increased after the Great Depression of the 1930s. 5. T F An argument for increased social responsibility is the fact that, because business managers are primarily responsible to business owners, they must be concerned with providing a return on the owners’ investments. Multiple-Choice Questions Circle the letter before the most accurate answer. 6. A group of people who have been singled out for unfavorable treatment on the basis of race, religion, politics, or national origin is called a. an affirmative action group. b. the hard-core unemployed. c. a minority. d. the economically disadvantaged. e. a majority. 7. Pollution in our country is made up of a. air pollution. b. land pollution. c. noise pollution. d. water pollution. e. all of the above. 8. A government agency with the power to investigate complaints of discrimination and to sue firms that practice discrimination is the a. National Alliance of Business. b. Equal Employment Opportunity Commission. c. NAACP. d. Federal Trade Commission. e. Interstate Commerce Commission. 9. Acid rain causes __________ pollution. a. air b. noise c. water d. land e. practically no 10. An employee’s decision to inform the press or government officials of his or her firm’s unethical practices is referred to as a. whistle-blowing. b. the corporate code of ethics. c. business ethics. d. the grapevine. e. tattling. 2.9 Answer Key for Quizzes i AND II Quiz I True-False Multiple-Choice 1. T 6. d 2. F 7. b 3. T 8. a 4. T 9. c 5. F 10. a Quiz II True-False Multiple-Choice 1. F 6. c 2. T 7. e 3. F 8. b 4. T 9. c 5. F 10. a 2.10 CLASSROOM EXERCISES 2.10a Homework Activities • Article Report. Have students bring in an article that shows an example of a company or executive that has operated in a particularly ethical or socially responsible way or a particularly unethical way. You may further ask them to locate the company’s code of ethics (if it has one). • Corporate Code of Conduct. Ask students to use the Internet to research several actual corporate codes of conduct and make a list of similarities and differences. This can be followed up with an in-class group activity where students compare their research and determine what common themes and ideas are likely to be reflected in most corporate codes of ethics. • Social Responsibility to Which Groups? Have students choose a corporation with whose products they are familiar. Nike and Coca-Cola might be examples. The homework assignment is to write a one-page paper prioritizing constituencies to whom they have social responsibility. A typical progression might include stockholders, employees, the city of Atlanta (for Coca-Cola), etc. 2.10b Classroom Activities • “To Take or Not to Take the Gift” Exercise. Have students consider the scenario in the “To Take or Not to Take the Gift” handout. The objective is to help students identify ethical issues and understand the importance of codes of ethics. This is best done as an individual exercise, although it would be useful to follow with a group discussion afterward. Instructor notes follow the exercise. • “To Surf or Not to Surf” Exercise. This exercise can be used in a number of places in this chapter. It relates best to Learning Objectives 3 and 4, however. Instruct students to form groups of three or four. They will need approximately 20 minutes to develop an Internet usage policy for Pupster Dog Fashions, a fictional company. Upon completion, each group should share their usage policy with the class. If desire and time permit, you may instruct them to go to the Web and benchmark similar policies for other companies. One example you will find on the Web includes advice from Microsoft about planning Web access policy (http://technet.microsoft.com/en-us/library/cc995204.aspx). This exercise may also be used as a homework project if desired. A sample policy for Pupster is provided. • Puffery Exercise. Have students form groups of three to five. Using the Puffery quiz as a handout, ask them to evaluate the advertising statements on the quiz as to whether (a) they are puffery or a real claim and (b) whether or not they are deceptive. This exercise helps reinforce the consumer right of being informed. The handout gives the student the information they need to make their judgments. Puffery is sometimes a matter of opinion rather than firm law, so this exercise should stimulate significant discussion. Once they have the handouts, the exercise should take approximately 10 to 15 minutes. Sample answers are provided. • Sustainability Exercise. This exercise can be done totally as an in-class activity or assigned as homework. The students are asked to think about sustainability and how it fits into their individual lives. The information on the provided link can be given to students ahead of time. As they review the list, they may be surprised at how many of these practices they already follow. If desired, the list could also form the basis for journal activity throughout the semester. If done entirely in class, the activity should take approximately 20 minutes prior to discussion. 2.10c Exercise Handouts Follow on Next Pages “TO TAKE OR NOT TO TAKE THE GIFT” You are the distribution manager for a major consumer products firm. Your company is about to release a very large shipment of products. As manager, you must choose among several transportation companies that are competing for your business. Sales representatives from railroad and trucking companies often make calls to your office. Your decision will mean the loss or gain of millions of dollars of revenue for these companies. 1. Which of the following gifts would you be willing to accept from sales representatives of the transportation companies? • Pen and pencil set (with the company’s logo) • Five-year supply of scratch pads (with logo) • Dinner for four at an exclusive restaurant • Season tickets to a professional football game • Fruits and nuts delivered to you each Christmas • Three-day, all-expense-paid golfing vacation • $500 in cash • Bag of groceries delivered to your home each week • Lavish trip to the Cayman Islands 2. What role would top management, superiors, and peers play in your decision on accepting these gifts? 3. If you had the chance to take some of the gifts on the list without anyone knowing, would you? 4. Would a code of ethics or an ethical corporate culture help you in making your decision? “To Take or Not to Take the Gift” Instructor Notes Question 1. You might ask students which of the listed gifts “crosses the line” with regard to their perception of what is ethical. Students might change their minds about acceptable gifts if asked, “What if everyone did it?” A distribution manager who accepts a gift of any magnitude may make a decision that is not necessarily in the best interest of the company (e.g., selecting a higher-cost trucking company because it provides box seats to ball games). Question 2. You might ask students if they know of instances in their own jobs where organizational relationships have had a negative or positive effect on ethical decision making. For instance, how does seeing a boss file inaccurate expense reports (to cover unauthorized expenditures) affect others in the firm? How might people react when peers take supplies or merchandise home? Question 3. The role of opportunity may determine whether a person will behave ethically. You might also want to ask, “What if I gave an exam and left the classroom for the hour—would you be more likely to cheat?” Opportunity may be a better predictor of unethical activities than personal values. Question 4. An effective code of ethics should let employees know both what is expected of them and the punishment for violating the rules. For instance, a firm may have a policy against accepting any gifts valued over $25. The penalty for accepting anything over that amount may be dismissal. However, simply having a policy or code will be ineffective if top management and superiors do not support and enforce it. “TO SURF OR NOT TO SURF” A recent survey by America Online and Salary.com found that the average worker admits to wasting 2.09 hours per eight-hour workday and that 44.7 percent of those surveyed reported Internet surfing as their No. 1 distraction
at work. Most reasonable persons would agree that some use of the Internet for personal reasons is acceptable as long as it does not interfere with overall work performance. Clearly, it is up to the employer to determine what type of computer and Internet use is acceptable and to educate its employees as to those guidelines and restrictions. “Pupster Dog Fashions” is both a retail and an online operation, employing four in-store sales persons, eight customer-service and order-processing employees, a retail manager, an online manager, and two people in packing and shipping. Pupster’s hours are 10 a.m. to 6 p.m. Monday through Saturday for the retail store, and 8 a.m. to 8 p.m. for the online operation. All employees work a standard eight-hour day with an hour for lunch and two 15-minute breaks. In your groups, develop a policy and set of guidelines for computer/Internet usage for the Pupster Dog Fashions company. You have 20 minutes. Be as specific as possible in developing your guidelines. Your policy should contain the following elements: • Statement of Policy (guiding principles) • Specific Guidelines • Monitoring Policy • Penalties for Violations “To Surf or Not to Surf” Instructor Notes These guidelines can be covered verbally or handed out to the students before they begin. Statement of Policy: This should be a general set of guiding principles and attitudes that lead to specific guidelines. On one extreme, some may feel that all paid time and equipment should be used for work-related matters only. On the other, some may feel that as long as the work gets done, the employees of Pupster should be allowed to use the Internet whenever they choose. Specific Guidelines: The guidelines should specifically outline the policy. For example, they
might include: • Whether or not employees are allowed to browse the Web for personal use • When they can do so • Whether employees are allowed to play games on the computer and when • What Web activity must be avoided such as:  downloading offensive content  threatening behavior or e-mails  illegal activities Monitoring Policy: The monitoring policy should clearly spell out how much privacy employees can expect and how Web use will be monitored. Penalties for Violations: This section should clearly delineate what action will be taken if the guidelines are violated. For example, playing solitaire at the wrong time might elicit a warning, while sending a threatening e-mail might be cause for dismissal. Sample: Pupster Computer and Internet Usage Policy Statement of Policy: Pupster provides and maintains computer and electronic communications systems and Internet access. As a condition of providing these systems, the company places certain restrictions on
their usage. Specific Guidelines: The use of computer systems and Internet access is restricted to the conduct of company business during working hours. Working hours are defined as all time for which the employee is being paid. They do not include time prior to the start or end of the business day. • Retail Store: 10 a.m. to 6 p.m. Monday through Saturday • Online Operations: 8 a.m. to 8 p.m. Monday through Saturday Employees are allowed to use the computer for personal use during lunch and other official breaks with the exceptions noted below. Pupster computers and Internet access are not to be used for the following: • Commercial use—Any form of commercial use of the Internet is prohibited. • Copyright violations—Any use of the Internet that violates copyright laws is prohibited. • Solicitation—The purchase or sale of personal items through advertising on the Internet
is prohibited. • Harassment—The use of the Internet to harass employees, vendors, customers, and others
is prohibited. • Confidential information—The release of confidential information regarding Pupster business is prohibited. • The accessing, viewing, downloading, or any other method for retrieving offensive entertainment on pornographic sites is prohibited. Monitoring Policy: All systems, equipment, and data remain at all times the property of the company. Accordingly, all messages and files created, sent, received, or stored within such systems remain the property of the company. The company reserves the right to retrieve and review any message or file composed, sent, received, or stored. Penalties for Violations: Violations of this policy will result in discipline up to and including termination. PUFFERY EXERCISE The Federal Trade Commission (FTC) regulates claims made by advertisers. For example, if a pizza company claims it always delivers hot pizza in 30 minutes, it must be prepared to substantiate that claim with documentation. On the other hand, there is “puffery,” exaggerated claims that reasonable people do not believe to be real product qualities and which by their very nature are incapable of being proven true or false. Puffery, according to the FTC, therefore cannot be deceptive. Everyone knows that Wonder Bread is not a wonder, and that Folgers in your cup is probably not the best thing about waking up! In your groups, decide if the following advertising statements are real claims or puffery, using the reasonable person rule. Also, indicate whether or not you believe deception could occur. Be prepared to defend your point of view. Charmin Toilet Tissue claims to be “the original soft and comfy clean.” Puffery? Yes No Deceptive? Yes No Apple’s iPod Web site claims that “the world’s best music player keeps
getting better.” Puffery? Yes No Deceptive? Yes No Quaker Life Vanilla Yogurt Crunch says “The great taste of yogurt just made Life a little sweeter.” Puffery? Yes No Deceptive? Yes No JCPenney’s ad for its Web site jcp.com says “It’s all inside.” Puffery? Yes No Deceptive? Yes No Hyundai says that “If greatness is a destination, we’re on the road to it.” Puffery? Yes No Deceptive? Yes No Puffery Exercise Answers By its very nature, puffery is ambiguous and arguable. With product parity in the marketplace, advertisers try to create an illusion of superiority. Charmin Toilet Tissue claims to be “the original soft and comfy clean.” Puffery? Yes No Deceptive? Yes No Strictly speaking, Charmin probably was not the original toilet tissue used by folks. So to that extent it is deceptive. This falls under the “so what” claim category. OK, it may be the original—but, so what? How does that help the consumer? Apple’s iPod Web site claims that “the world’s best music player keeps getting better.” Puffery? Yes No Deceptive? Yes No Better and best are the bread and butter of the puffery-generating ad writers. Best, in particular, certainly cannot be proven. And is it getting better? Who knows? In that sense, it is certainly deceptive. Quaker Life Vanilla Yogurt Crunch says “The great taste of yogurt just made Life a
little sweeter.” Puffery? Yes No Deceptive? Yes No What’s great taste? To whom? Who cares? JCPenney’s ad for its Web site jcp.com says “It’s all inside.” Puffery? Yes No Deceptive? Yes No What is “it”? One thing we know for sure is that whatever it is, it isn’t all inside. And inside where? Hyundai says that “If greatness is a destination, we’re on the road to it.” Puffery? Yes No Deceptive? Yes No This one is arguable. It clearly implies that the product is being improved. But . . . what is greatness? How do we know if we get there? As long as improvements are made to the car, strictly speaking, it is not deceptive. Sustainability Exercise Sustainability is defined as: Living and working in ways that do not jeopardize our current and future social, environmental, and economic resources. Your instructor has provided you with a list of 100 Ways You Can Improve the Environment (http://livepaths.brinkster.net/livepaths/library/100ways.pdf). Your instructor will divide you into groups. Instructions for this activity are: 1. Read the list of 100 sustainable activities. Mark those in which you currently engage (5 minutes). 2. Compare your list of activities to your classmates’ lists. See if there are any common activities (5 minutes). 3. Now, as a group, choose five additional activities on the list of 100 you believe you all could implement. Discuss why and how those activities would fit into your lives. Be as specific as possible as to why some activities might be easier to implement than others (10–15 minutes). 4. Choose a spokesperson to share both your list of current activities and the five new activities you will implement. Sustainability Exercise Instructor Notes This activity can be easily adapted to your specific needs. For example, you could give students the link to the 100 Ways You Can Improve the Environment list or print it out and assign the individual part of the activity (Step 1) as homework. You could also use the list as a contest, with total points awarded based on current student activity. You could assign it as a longer-term project of self-evaluation, with students keeping a journal of sustainable activities. Chapter 2 Video Case: Scholfield Honda—Going Green with Honda Running Time: 6:29 Chapter 2 introduces the topics of ethics and social responsibility. Ethics is the study of right and wrong and of the morality of choices. Business ethics is the application of moral standards to business situations. In a socially responsible business, management realizes that its activities have an impact on society and considers that impact in the decision-making process. Concepts Illustrated in the Video • Alternative Fuels • Change within the Business Environment • Economies of Scale • Environmental Movement • Green Vehicles • Life-Cycle Cost • Infrastructure Video Case Summary Since the early 1970s, Honda has been producing the low-emissions, fuel-efficient Civic model, and the company has never strayed from its roots. Today’s Honda line includes alternative fuel vehicles such as the popular Honda Civic Hybrid and the natural-gas-powered Civic GX. Honda is also developing the Honda FCX Clarity, a hydrogen fuel cell car that uses hydrogen and oxygen to create electricity. In the American Midwest, alternative energy vehicles are growing in popularity. Lee Lindquist, an alternative fuels specialist at Scholfield Honda in Wichita, Kansas, proposed the Civic GX for use at his dealership. Although management was open to clever ways to promote the dealership, owner Roger Scholfield was skeptical of the idea initially. Nevertheless, he agreed to offer the car to his fleet and corporate customers. Over time, the decision proved to be the right business move for Scholfield Honda, as fate offered another opportunity for the company to go green. Critical-Thinking Questions Using information from the case and the video, answer the following questions: 1. How would you rate Scholfield Honda’s sense of social responsibility? Does the dealership meet all the criteria for a socially responsible company? Two contrasting models define the range of management attitudes toward social responsibility. According to the economic model, a firm exists to produce quality goods and services, earn a reasonable profit, and provide jobs. According to the socioeconomic model, companies have a responsibility not only to stockholders but also to customers, employees, suppliers, and the general public. It can be argued that Scholfield Honda practices either of these models, or a combination of both. For example, Lee Lindquist may have had the socioeconomic model in mind when he approached his boss about selling natural gas vehicles. However, it is possible that Roger Scholfield was more concerned with economics when he ultimately agreed to sell the natural-gas-fueled vehicles. 2. What is Scholfield Honda’s primary ethical responsibility in situations where a proposed green initiative is cost-prohibitive or even detrimental to the company’s bottom line? It is important for managers at Scholfield Honda to understand that some green initiatives have costs and benefits that may not be easily transferred to a balance sheet. For example, introducing the Civic GX may have had high costs initially, with relatively low earnings expected in the short term. However, the company learned that promotion of its new product resulted in greater exposure for the company through positive word of mouth. 3. Should the government regulate companies’ claims that their products are green? Should official classifications for environmental friendliness be defined? The Federal Trade Commission enforces advertising guidelines to ensure that firms do not make misleading environmental claims. Yet, consumers may believe a company is not doing enough to make its products green or, at the other extreme, is in some way exaggerating, or greenwashing, its environmental claims. To earn and retain the trust of their customers, companies must be as transparent as possible about their products and processes. Chapter 2 Lecture Launcher: Greenwashing? VIDEO SUMMARY Caleb gets an up-close-and-personal look at greenwashing when a producer tries to pass off its products to Urban Farmz as certified organic when really they’re not. “That kind of bull is going to ruin us,” says Caleb, who is disgusted by the producer’s lack of honesty. “Too many big corporations are using terms like green and natural to scam the public,” he claims. “Corporate responsibility is real. You can’t just say you’re something you’re not.” Or can you? Solution Manual for Business William M. Pride, Robert J. Hughes, Jack R. Kapoor 9781133595854, 9780538478083, 9781285095158, 9781285555485, 9781133936671, 9781305037083