Legal & Ethical Issues – Chapter 6 The Main Idea In a free enterprise system, the government plays a role in safeguarding its own principles and providing for the health, general welfare, and safety of its citizens. Objectives Explain the role of government in a free enterprise system Identify federal regulatory agencies and laws that protect consumers, workers, investors, and the environment Provide examples of the impact of government on business

Protecting Consumers Federal Agencies that protect consumers Food and Drug Administration (FDA) – regulates the labeling and safety of food, drugs, and cosmetics sold in the U.S. They approve new products and reviews products already on the market Consumer Product Safety Commission (CPSC) – Oversees the safety of products such as toys, electronics, and household furniture. It enforces the Federal Hazardous Substances Act, the Flammable Fabrics Act, the Poison Prevention Package Act, and the Refrigerator Safety Act. The safety of children is their prime concern. Protecting Workers Federal Agencies that protect employees: Equal Employment Opportunity Commission (EEOC) – responsible for the fair and equitable treatment of employees with regard to hiring, firing, and promotions. It enforces: – The Civil Rights Act – The Equal Pay Act of 1963 – The Age Discrimination in Employment Act of 1967 – The American with Disability Act

Protecting Workers (cont) Occupational Safety and Health Administration (OSHA) – Profides guidelines for workplace safety and enforces guidelines for workplace safety and eforces those regulations. For example, construction workers must wear hard hats. It enforces: – The Family and Medical Leave Act (FMLA) of 1963 requires employers that qualify to grant eligible employees up to a total of 12 work weeks of unpaid leave during any 12-month period. Protecting Investors Federal Agencies that protect investors: Securities and Exchange Commission (SEC) – Regulates the sale of securities (stocks and bonds). – It is responsible for licensing brokerage firms and financial advisers – It also investigates any dealings among corporations such as mergers that affect the value of stocks.

Protecting the Environment Federal Agencies that protect the environment: The Environment Protection Agency (EPA) – Established in 1970 to protect human health and our environment. – It is responsible for monitoring and reducing air and water pollution and overseeing hazardous waste disposal and recycling – It also investigates any dealings among corporations such as mergers that affect the value of stocks. Enforcer of the Free Enterprise System The Federal Trade Commission (FTC) - has the responsibility of enforcing the principles of a free enterprise system and protecting consumers from unfair or deceptive business practices. – The FTC runs three bureaus: the Bureau of Consumer Protection; the Bureau of Competition; and the Bureau of Economics.

Enforcer of the Free Enterprise System (cont) FTC’s antitrust responsibilities involve prevention of anti-competitive mergers and business practices. Some acts include: – Federal Trade Commission Act = prohibits unfair methods of competition – Sherman Antitrust Act = outlaws all contracts and agreements that would limit trade and competition in interstate commerce Other Acts: – Clayton Antitrust Act = reduced loopholes in the Sherman Antitrust Act and covered mergers and acquisitions – Hart-Scott Rodino Amendment = requires companies to notify antitrust agencies before planning a merger. – Robinson-Patman Act = prohibits price discrimination.

The Main Idea Socially responsible businesses see their role extending into community issues. Civic-minded companies are concerned with their workers, customers, communities, and the environment. Business ethics are part of social responsibility and play a role in decisions made by businesses that affect the same stakeholders. Objectives Provide examples of business’s social responsibilities Explain the concept of business ethics Apply guidelines for ethical behavior

Key Terms Allows workers to choose their work hours. Early start/early finish, late start/finish or 4 day work week. Flextime Involves working at home, usually on a computer. Jobs are transmitted via the internet. Provides flexibility with childcare for parents. For businesses, it reduces office space. Telecommuting A non-profit organization that helps produce public service advertising campaigns for government agencies. Ad Council Companies make an effort to produce and promote environmentally safe products. Helps companies build consumer loyalty. Green Marketing

Key Terms (cont.) Guidelines for good behavior. Ethical behavior is based on knowing the difference between right and wrong – and doing what is right. Ethics Established in 1912, is one of the oldest nonprofit organizations to set up self-regulation among businesses. To be a part of the BBB, a business must “agree to follow the highest principles of business ethics and voluntary self-regulation, and have a proven record of marketplace honesty and integrity.” Better Business Bureau Pricing products unreasonably high when the need is great or when consumers do not have other choices. Price Gouging Involves reporting an illegal action of one’s employer. If you discovered that financial records were being altered in order to cover up extravagant personal purchases made by the top executives, would you report it? Whistle-blowing

In the Workplace Many businesses recognize their employees' needs outside the workplace and try to accommodate them by providing: Flextime (Flexible hours/days) Telecommuting (Working from home) Extended Family Leave On-site child care Health Care Benefits Time Off With Pay (Paid Vacation or Personal days) Business Ethics Ethics are guidelines for good behavior. Ethical behavior is truthful and fair and takes into account the well-being of everyone. Ethics & Consumerism – Consumerism is the societal effort to protect consumer rights by putting legal, moral, and economic pressure on business. – President JFK Consumer Bill of Rights dominated the beginning of this period.

Business Ethics Ethics in Marketing Ethical principles are important in business because they reflect the management of the company and the trust between a company and its stakeholders. Self-Regulation BBB (Better Business Bureau) – by joining the BBB, companies agree to follow the highest principles of business ethics AMA (American Marketing Association) – By joining the AMA follows the code of ethics which is a guideline for ethical professional conduct.