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| the people whose interests are affected by an organization's activities; consists of two types (internal and external) |
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| consist of employees, owners, and the board of directors, if any |
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| internal stakeholders that are considered the most important resource |
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| consist of all those who can claim it as their legal property |
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| members elected by the stockholders to see that the company is being run according to their interests |
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| people or groups in the organization’s external environment that are affected by it; consists of two types (the task environment and the general environment/macroenvironment) |
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| consists of 11 groups that present you with daily tasks to handle |
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| those who pay to use an organization’s goods or services; task environment |
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| people or organizations that compete for customers or resources; task environment |
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| a person or an organization that provides supplies- that is, raw materials, services, equipment, labor, or energy- to other organizations; task environment |
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| a person or an organization that helps another organization sell its goods and services to customers; task environment |
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| describes the relationship of two organizations that join forces to achieve advantages neither can perform as well alone; task environment |
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| (labor) unions and associations; task environment |
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| Local communities/clawbacks |
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| rescinding the tax breaks when firms don’t deliver promised jobs; task environment |
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| banks, savings and loans, and credit unions; task environment |
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| regulatory agencies that establish ground rules under which organizations may operate; task environment |
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| groups whose members try to influence specific issues; task environment |
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| print, radio, TV, internet; task environment |
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| General environment/macroenvironment |
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| an external environment that includes six forces |
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| consists of the general economic conditions and trends- unemployment, inflation, interest rates, economic growth- that may affect an organization’s performance; general environment |
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| new developments in methods for transforming resources into goods or services; general environment |
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| influences and trends originating in a country’s, society’s, or a culture’s human relationships and values that may affect an organization; general environment |
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| influences on an organization arising from changes in the characteristics of a population, such as age, gender, or ethnic origin; general environment |
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| changes in the way politics shape laws and laws shape the opportunities for and threats to an organization; general environment |
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| changes in the economic, political, legal, and technological global system that may affect an organization; general environment |
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| a situation in which you have to decide whether to pursue a course of action that may benefit you or your organization, but that is unethical or even illegal |
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| the standards of right and wrong that influence behavior |
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| the relatively permanent and deeply held underlying beliefs and attitudes that help determine a person’s behavior |
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| the pattern of values within an organization; stresses cohesion and solidarity in employee relationships |
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| Four approaches to deciding ethical dilemmas |
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1) utilitarian approach
2) individual approach
3) moral-rights approach
4) justice approach |
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| guided by what will result in the greatest good for the greatest number of people (financial performance); difficulty: things are lost in the long run, like workforce moral |
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| guided by what will result in the individual’s best long-term interests, which ultimately are in everyone’s self-interest; flaw: one person’s short-term self-gain may not be good for everyone in the long term |
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| guided by respect for fundamental rights of human beings; difficulty: when rights are in conflict, such as employer and employee rights |
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| guided by respect for impartial standards of fairness and equity; difficulty: fairness is an ambiguous term |
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| the illegal trading of a company’s stock by people using confidential company information |
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| using cash from newer investors to pay off older ones |
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| Sarbanes-Oxley Act of 2002 (SarbOx or SOX) |
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| established requirements for proper financial record keeping for public companies and penalties of as much as 25 years in prison for noncompliance; administered by the SEC |
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theory on how people learn ethics
Level 1: preconventional
Level 2: conventional
Level 3: postconventional |
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| follows rules: People tend to be obedient to authority to avoid unpleasant consequences. Managers tend to be coercive and expectant of obedient employees |
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| follows expectations of others: People are conformist, generally adhere to expectations of others. Managers lead by encouragement and cooperation (group oriented) |
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| guided by internal values: managers are independent souls who follow their own values and standards, focusing on the needs of their employees and trying to lead by empowering them. One fifth of American managers reach this level |
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| How organizations can promote ethics (4 ways) |
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1) create a strong ethical climate
2) screen prospective employees
3) institute ethics codes and training programs
4) reward ethical behavior |
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| represents employees’ perceptions about the extent to which work environments support ethical behavior |
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| consists of a formal written set of ethical standards guiding an organization’s actions |
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| an employee who reports organizational misconduct to the public |
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| a manager’s duty to take actions that will benefit the interests of society as well as of the organization (ex. sustainability and philanthropy); businesses create problems (i.e. environmental pollution) and should help solve them |
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| Corporate social responsibility (CSR) |
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| the notion that corporations are expected to go above and beyond following the law and making a profit |
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| Sarbanes-Oxley Act requirements |
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1) requires a company’s CEO and CFO to personally certify the organization’s financial reports
2) prohibits them from taking personal loans or lines of credit
3) requires the company to have established procedures and guidelines for audit committees |
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| Friedman's view on social responsibility |
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| “the social responsibility of business is to make profits” (a company will become distracted and fail to provide goods and services if it doesn’t solely focus on maximizing profits) |
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| created the Global Corporate Social Responsibility Pyramid |
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| Global Corporate Social Responsibility Pyramid |
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responsibilities of an organization in the global economy should take the following priorities (from top to bottom):
1) philanthropic responsibility
2) ethical responsibility
3) legal responsibility
4) economic responsibility |
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| Philanthropic responisbility |
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| be a good global corporate citizen; part of the Global Corporate Social Responsibility Pyramid |
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| be ethical in its practices; part of the Global Corporate Social Responsibility Pyramid |
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| obey the law; part of the Global Corporate Social Responsibility Pyramid |
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| make a profit; part of the Global Corporate Social Responsibility Pyramid |
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| Sustainability and its benefits (3) |
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meeting humanity's needs without harming future generations
1) insurance companies offer lower rates
2) better ventilation from natural lighting and ecofriendly carpet result in fewer sick days and rise in productivity
3) save water and electricity use |
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| Philanthropy and payoffs (8) |
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Definition
making charitable donations to benefit humankind; effects:
1) customers
2) employees' work effort
3) job applications and employee retention
4) sales growth
5) company efficiency
6) company revenue
7) stock price
8) profits |
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| the system of a governing a company so that the interests of corporate owners and other stakeholders are protected |
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| Need for independent directors |
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| separating directors in their authority from the CEO to feel less pressure from stockholders and others concerning accounting and stronger financial reporting systems |
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trust comes from asking:
1) how likely the people you’re dealing with are to serve your interests
2) how much they have demonstrated concern for others
3) how well they delivered on their promises
4) how much they try to keep their work
5) how effectively they communicate these skills |
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| shared set of expectations and norms that influence how members of a group behave; mix of rituals, values, and traditions that defines a group |
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| Creation of organizational culture (6) |
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Definition
1) Company founder-vision (establishes norms and values)
2) Selections (who is chosen as new-hires)
3) Managers (values and norms)
4) Organizational socialization (process by which new employees learn norms and values of company)
5) Stories and heroes (traditions and customer service)
6) Rites of passage and enhancement (formal events that recognize significant events) |
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| Importance of organizational culture (2) |
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1) organization (one way that companies have managerial control over employees)
2) employees (happier and more successful working for a culture you fit in) |
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| How to change organizational culture |
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It can be done, but it's a slow, costly process
1) "scorched Earth" approach (completely start over)
2) power of conformity (changing what people perceive as the norm)
3) "walk not talk" (managers have to exhibit the behavior consistently) |
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