MGMT 202 1st Edition Lecture 14 Outline of Last Lecture I. AnnouncementsII. Accountability and Trust in BusinessIII. Cell Tower DilemmaIV. Effects of Trust on ProfitOutline of Current Lecture I. Defining Corporate Social ResponsibilityII. Tylenol CaseIII. Socially Responsible InvestingIV. Triple Bottom LineV. Corporate Responsibility Officer RatingsVI. Ford CaseCurrent LectureCorporate Social Responsibility – attempting to maximize stakeholder value – what’s good for consumers, employees, suppliers, distributors, community, environment (all stakeholders)Four levels: financial, legal, ethical, philanthropicCompanies that are good at these things have better reputations; are able to get top-quality employees who improve the company even moreTylenol case – 1982; several people in Chicago died from taking Tylenol laced with cyanide – turns out the bottles had been tampered with at the store but Tylenol CEO still took responsibility and company developed (within several short months) a tamper-proof bottle and changed from capsules to round caplets; also removed all bottles from stores to make sure no one else was poisoned (VERY expensive)CEO went on TV show “60 Minutes” to announce responsibility and therefore regain trustAmy Domini – noticed investors liked the returns on stocks they were getting but didn’t like some of the things the companies were involved with – people who were concerned with the means, not only the endsSocially Responsible Investing movement – Exclusionary screen – excluded companies that produced things like alcohol, tobacco, pornography, etcQualitative screen – what problems does the company have, how are they resolving them, how do they treat their suppliers and distributors (for example Walmart is known for not treating them well)You have a choice if you want to invest in high-profit companies whose morals/ethics you don’t agree with – not the case 10 years agoDomini’s starfish story – “it will make a difference to this one”Triple bottom line – people, planet, profit – in that order for a reason; can be debated – 30 yearsago almost everyone would have placed profit firstCorporate Responsibility Officer Ratings – top 100 companies chosen every year – categories include financial, philanthropic, governance, employee relations, human rights, climate change, and environmental rankEnvironmental – emissions, disclosures of their impact on the environmentClimate change – concerned with sustainabilityHuman rights – how they deal with suppliers/distributors in other parts of the world – do they line up with the high standards they have when dealing with those in the US? Much less publicity when dealing with people overseasEmployee relations – equal employment opportunity, affirmative action, unionsGovernance – conflicts of interest, diversity (people with different perspectives and experiences bring different things to the table in business settings)Philanthropy – based on percentages and ability to give, rather than simply amount – generosityin perspectiveFinancial – are you able to do all these things AND be profitable?Ford Case – first case involving CSR, Michigan 1919 – Ford sued by top investors because he was going to reduce the cost and not pay dividends; court agreed with what Ford wanted to