Strategic Management Chapter 3

Economic responsibilities

produces good and services of value to society so that the firm may repay its creditors and increase the wealth of its shareholders

Legal responsibilities

defined by governments in laws that management is expected to obey

Ethical responsibilities

follow the generally held beliefs about behavior in a society

Discretionary responsibilities

purely voluntary obligations a corporation assumes

Categorical imperatives

Kant's two principles to guide actions: A person's action is ethical only if that person is willing for that action to be taken by everyone who is in a similar situation, and a person should never treat another human being simply as a means to an end

Code of ethics

a code that specifies how an organization expects its employees to behave while on the job; includes specific statements about types of unethical behavior

What objectives a code of ethics accomplishes

clarifies company expectations of employee conduct in various situations; makes clear the company expects its people to recognize the ethical dimensions in decisions and action

Cultural relativism

based on the belief that morality is relative to a particular culture, society, or community, adherents of cultural relativism argue that people should understand the practices of other societies, but not judge them. This view suggests that not only should one not criticize another culture's norms and customs but also it is acceptable to personally follow these norms and customs

Enterprise strategy

an overarching strategy explicitly articulating the firm's ethical relationship with its stakeholders

Ethics

the consensually accepted standards of behavior for an occupation, trade, or profession

Friedman's Traditional View of Business Responsibility

argues against the concept of social responsibility; primary goal of business is profit maximization not spending shareholder money for general social interests

Individual rights approach

an ethics behavior guideline that proposes that human beings have certain fundamental rights that should be respected in all decisions

Justice approach

an ethical approach that proposes that decisions makers be equitable, fair, and impartial in the distribution of costs and benefits

Preconventional level

concern for self

Conventional level

consideration for society's laws and norms

Principled level

guided by an internal moral code

Laws

a formal code that permits or forbids certain behaviors and may or may not enforce ethics or morality

Levels of moral development

Lawrence Kohlberg proposed three levels of moral development: preconventional, conventional, and principled

Morality

precepts of personal behavior that are based on religious or philosophical grounds

Moral relativism

a theory that proposes that morality is relative to some personal, social, or cultural standard, and that there is no method for deciding whether one decision is better than another

Naive relativism

based on the belief that all moral decisions are deeply personal and that individuals have the right to run their own lives, adherents of moral relativism argue that each person should be allowed to interpret situations and act according to personal moral values. This is not so much a belief as it is an excuse for not having a belief or is a common excuse for not acting when observing others lying or cheating

Primary stakeholders

those who have a direct connection with the corporation and who have sufficient bargaining power to directly affect corporate activities; includes customers, employees, suppliers, shareholders, and creditors

Role relativism

based on the belief that social roles carry with them certain obligations to that role, adherents of role relativism argue that a manager in charge of a work unit must put aside personal beliefs and do instead what the role requires-that is, act in the best interests of the unit. Mindlessly following orders was a common excuse provided by Nazi war criminals after World War II

Secondary stakeholders

have an indirect stake in the corporation but are also affected by corporate activities; includes NGOs, activists, local communities, trade associations, competitors, and governments

Social capital

the goodwill of key stakeholders that can be used for competitive advantage; opens doors in local communities; enhances reputation with consumers

Social group relativism

based upon the belief that morality is simply a matter of following the norms of an individual's peer group, social group relativism argues that a decision is considered legitimate if it is a common practice, regardless of other considerations ("everyone's doing it"). A real danger in embracing this view is that the person may incorrectly believe that a certain action is commonly accepted practice in an industry when it is not

Social responsibility

proposes that a private corporation has responsibilities to society that extend beyond making a profit

Stakeholder analysis

the identification and evaluation of corporate stockholders; usually done in a three-step process

Steps of stakeholder analysis

1. identify primary stakeholders 2. identify secondary stakeholders 3. estimate the effect on each stakeholder group from any particular strategic decision

Stakeholders

an individual or entity that have an interest in the business and affect or are affected by the achievement of the firm's objectives

Utilitarian approach

a theory that proposes that actions and plans should be judged by their consequences

Cavanaugh's question on utility

does it optimize the satisfactions of the stakeholders?

Cavanaugh's question on rights

does it respect the rights of the individuals involved?

Cavanaugh's question on justice

is it consistent with the canons of justice?

Whistleblowers

an individual who reports to authorities incidents of questionable organizational practices