Unit 2: Business Ethics &

Social Responsibility Mr. Elsesser

Introduction to Business

BILLY MADISON EXPLAINS ETHICS:

BRAINSTORM:What would you do if…“You are in a class taking an exam, you are struggling, your teacher turns her back and the student in front of you has the answer sheet available for you to see,

what do you do?”

Questions to Consider from Brainstorm…

Could your decision become habit forming?Is it legal?Is it the right thing to do?Could I defend my actions?Is it just, balanced and fair?How will I feel about myself?

The Nature of Ethics…When you are guided by ethics, you do not cheat on a test or lie to friends or family.

The American economy is driven by these activities.

ETHICS: moral principles by which people conduct themselves personally, socially, or professionally

The Nature of Ethics…Most businesses are guided by business ethics.

BUSINESS ETHICS: rules based on moral principles about how businesses and employees ought to conduct themselves

Different cultures, businesses, and industries have different ethical standards.

Exploring Business Ethics:

In what ways can businesses have a set of moral principles that they follow?

Displaying Business Ethics

Creating safe

products

Creating

jobs

Fair treatment

of employees

Environmental

protection

Truthful about

financialstatus

Examining Law and Ethics:

EXAMPLE:

In Thailand, it is customary to exchange gifts during a second business meeting.

In China, gift giving is considered a form of bribery and is illegal.

The Law and EthicsIn business, people follow rules as well as a code of ethics.Code of Ethics:

a set of guidelines for maintaining ethics in the workplace

Example: Sweatshops:

Shops or factories where workers are employed for long hours at low wages and under unhealthy conditions. The tragic 1911 fire at the NYC Triangle Shirtwaist Factory caused

change

The Occupational Safety and Health Administration (OSHA) sets and enforces work-related health and safety rules.

Ethics as Good BusinessMany actions make up unethical business practices…

These Include: Lying Offering merchandise known to be substandard Treating customers or employees unfairly

If a business violates government regulations, the owner can be fined or go to jail.

Example: Selling Products in Cuba

If an employee violates a company or professional code, the employee might be fired or lose his or her license.

Example: A Doctor or Lawyer abusing their power

Violations of Ethical CodeViolating ethical codes of conduct can have many unwanted consequences.

These Include:If a business violates government regulations, the owner can be fined or go to jail.

Example: Selling Products in Cuba

If an employee violates a company or professional code, the employee might be fired or lose his or her license.

Example: A Doctor or Lawyer abusing their power

Violations of Ethical CodeMore unwanted consequences.

Unethical business practices can result in bad word of mouth and result in lost sales.

Example: Fair Trade Coffee

Unethical behavior toward employees can lead to legal action or a high rate of employees quitting.Example: Poor Treatment/Unfair Pay/Abuse

Conflicts of InterestMajor ethical questions that are generally not illegal.

Conflict of Interest:A conflict between self-interest and a professional obligation.

Examples:Hiring a friend over somebody more qualifiedAbusing work privileges for personal gain, just because you can.Anything that is NOT ACTING IN THE BEST INTEREST OF THE COMPANY

Ethical Conduct and YOU!BRAINSTORM:

Should students report behavior of other students who are violating the school’s ethical code of conduct?

Should employees report behavior that violates ethics policies?

The National Business Ethics Survey reports… 52% of employees observed at least one type of

misconduct 69% reported their organizations implement ethics training 65% indicated their organization offer ethics advice 55% observed misconduct at work and reported it

Is NOT saying anything really worth it?

Ethical QuestionsWhen you encounter an ethical decision and must choose a course of action ask yourself 3 questions…

1.Is it against the law? Does it violate company or professional policies?

2.Even if everyone is doing it, how would I feel if someone did this to me?

3.Am I sacrificing long-term benefits for short-term gains?

The Ethical Decision-Making Process

Use these steps to solve ethical problems…

1.Identify the ethical dilemma.

2.Discover alternative actions.

3.Decide who might be affected.

4.List the probable effects of the alternatives.

5.Select the best alternative.

Section Review1. What is the difference between personal and business

ethics?1. Personal ethics: moral principles that guide an individual;

business ethics: rules, based on moral principles, used by a business.

2. Describe some of the ways that unethical business practices can affect a business.1. Customers will not patronize the business.2. It is hard to retain employees. If the behavior is illegal,

the business might be fined.

3. What is the relationship between illegal behaviors of business and unethical behaviors of business?1. Generally, illegal behaviors of business are also

considered unethical but there are some unethical behaviors that are not illegal.

BRAINSTORM:What does Social Responsibility mean?

What can a businessor organizationdo to be sociallyResponsible?

Business and Social Responsibility

Social Responsibility:The duty to do what is best for the good of society

The social responsibility of business takes into consideration all that business does or does not do to solve the problems of society.

Business and Social Responsibility

Businesses that follow ethical standards value integrity and honesty in employees.

Ethics are an integral part of their business practices.

Some businesses are concerned about limiting the damage that they do to the environment.

So, how do businesses exhibit social responsibility within their companies?

Who are companies actually being responsible to?

Responsibility

Responsibility toCustomers

Responsibility toEmployees

Responsibility toSociety

Responsibility toCreditors andOwners

Why do you think this is so important?

Responsibility to CustomersBusinesses should offer a good, safe product or service at a reasonable price.

EXAMPLE: The FDA (Food & Drug Admin.) is a gov’t agency that protects consumers from dangerous or falsely advertised products.

Fair competition among businesses is necessary for the marketplace to operate effectively.

When companies conspire to restrict competition, consumers are affected.

Earth-Friendly Products

Many beauty-product companies include mission statements regarding the environment in their advertising and on their labels.

Origins, for one, promises to preserve the earth, animals, and the environment.

Responsibility to Customers

Responsibility to EmployeesBusinesses can show responsibility to employees in various ways:

Providing work experience for people with limited job skillsVolunteerismProviding safe working conditionsEqual treatmentFair pay

Equal Pay Act:Requires men and women be paid equally

American with Disabilities Act:Bans discrimination against people withphysical or mental disability.

Responsibility TO SOCIETY

In 1970, the U.S. government created the Environmental Protection Agency (EPA).

The EPA enforces rules that protect the environment and control pollution.

TO CREDITORS & OWNERS

The government passed the Sarbannes-Oxley Act to mandate truthful reporting.

Sarbannes-Oxley makes the CEO of a business more accountable for the actions of the financial managers of a firm.

Section Review1.How is producing a good or service a way

of being socially responsible?1.Many products and services benefit

society.

2.What is the mission of the Food and Drug Administration?1.The FDA protects the quality and safety

of the food and drugs in the marketplace.

3.What is one of the biggest social issues that businesses face today?1.Environmental responsibility is one of

the biggest issues.