Legal and Ethical Issues Chapter 6 Page 123

Legal and Ethical Issues Section 6.1 Objectives 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 regulations on business

Legal and Ethical Issues The stability of a government, of its structure, and of its legal system is always a key part of a business’s environmental scan. The government plays the roles of: Provider of services Customer Regulator Enforcer of free enterprise Monitor of the economy

Legal and Ethical Issues In the U.S. each of the three branches of government limits the power of the other two to prevent any branch from becoming too powerful. All three divisions affect business. They are: Executive Legislative Judicial

Legal and Ethical Issues In the U.S., most laws are designed to protect the individual’s: Safety Health Welfare AKA: Regulation

Legal and Ethical Issues The government must spend a lot of money to carry out its responsibility to ensure the safety and general welfare of people within the U.S. The Department of Homeland Security spends money on: Border protection Disaster recovery Airport security

Legal and Ethical Issues At the state and local levels, government agencies are involved with consumer protection by: Issuing licenses to people who sell services (hairstylists, electricians, etc.) Requiring zoning laws for building homes, businesses, or farms Maintaining health standards for restaurants and other food-handling businesses

Legal and Ethical Issues The Food and Drug Administration regulates the labeling and safety of food, drugs, and cosmetics sold in the U.S. The FDA also approves new products and reviews products already on the market.

Legal and Ethical Issues The Consumer Product Safety Commission (CPSC) oversees the safety of products such as: Toys Electronics Household furniture

Legal and Ethical Issues Established under the Consumer Product Safety Act of 1972 This commission can recall dangerous or hazardous products. Its prime concern is the safety of children Does NOT regulate: Food, Drugs, Cosmetics, Medical Devices, A.T.F., motor vehicles, boats, aircraft, and fixed amusement park rides!!

Legal and Ethical Issues Use the Internet to find three examples of unsafe products Summarize the story and describe the resolution, if any Explain how you would have handled the situation

Legal and Ethical Issues The Equal Employment Opportunity Commission (EEOC) is responsible for the fair and equitable treatment of employees with regard to: Hiring Firing Promotions The Occupational Safety and Health Administration (OSHA) provides guidelines for workplace safety and enforces those regulations.

Legal and Ethical Issues The Securities and Exchange Commission (SEC) regulates the sale of securities (stocks and bonds). It monitors and investigates any corporate actions that affect stock values to protect both the investors and the companies. The Environmental Protection Agency (EPA) protects human health and the environment. It oversees: Reducing air and water pollution Hazardous waste disposal Recycling

Legal and Ethical Issues Environmental laws cover such problem areas as: Acid rain Asbestos Lead poisoning Mercury Mold Ozone depletion Pesticides Littering

Legal and Ethical Issues The Federal Trade Commission (FTC) enforces the principles of a free enterprise system and protects consumers from unfair or deceptive business practice. It has three bureaus: The Bureau of Consumer Protection The Bureau of Competition The Bureau of Economics

Legal and Ethical Issues The Bureau of Consumer Protection has six specialized divisions: Advertising Enforcement Financial Marketing International Planning and information

Legal and Ethical Issues The Bureau of Competition prevents anti-competitive mergers and business practices. Distribution also falls under the FTC’s jurisdiction The Bureau of Economics studies the impact of its actions on consumers

Legal and Ethical Issues Of the Regulatory Agencies we have discussed, please select three of them and find a current event that the agency is involved with Provide the link and summarize the story

Legal and Ethical Issues Section 6.2 Objectives Provide examples of business’s social responsibilities Explain the concept of business ethics Apply guidelines for ethical behavior

Legal and Ethical Issues Social responsibility and ethics have become important business topics as trust has deteriorated Negative effect on consumer confidence and the image of a company Some businesses believe their role in society includes actions affecting: The workplace The marketplace Their communities The environment

Legal and Ethical Issues Many business try to accommodate employee needs by creating a user-friendly workplace environment. Flextime allows workers to choose their work hours from pre-determined options. Telecommuting involves working at home, usually on a computer. Completed jobs are transmitted electronically Extended family leave On-site child care Health care benefits Time off with pay

Legal and Ethical Issues Socially responsible companies cooperate with the government and consumer groups to provide important information to consumers. Through its advertising, the Almond Board of California informs consumers about the health benefits of almonds. The Ad Council is a nonprofit organization that helps produce public service advertising (PSA)campaigns for government agencies and other qualifying groups.

Legal and Ethical Issues In the broadcast industry, standards for acceptable material are established by the Federal Communications Commission (FCC). Network executives can also establish their own policies for self-regulation. Socially responsible companies also look for ways to respond to consumers’ concerns. This ad from McDonald’s shows the company’s efforts to promote its commitment to offering healthier menu options.

Legal and Ethical Issues Local businesses try to support community efforts by funding teams or helping with food or toy drives. Large companies have guidelines and initiatives that clearly define how they see their role in supporting community causes. Ethics are guidelines for good behavior. Ethical behavior is based on knowing the difference between right and wrong and doing what is right.

Legal and Ethical Issues Create and design an Original PSA See the assignment on my Teacher Page

Legal and Ethical Issues Consumerism is the effort to protect consumer rights by putting legal, moral, and economic pressure on businesses. President John F. Kennedy’s Consumer Bill of Rights states four basic rights: 1.) To be informed and protected against fraud, deceit, and misleading statements, and to be educated in the wise use of financial resources 2.) To be protected from unsafe products

Legal and Ethical Issues 3.) To have a choice of goods and services 4.) To have a voice in product and marketing decisions made by government and business

Legal and Ethical Issues Ethical principles are important in business because they reflect the management of a company and the trust between a company and its stakeholders. The Better Business Bureau (BBB) is one of the oldest nonprofit organizations to set up self-regulation among businesses. It has a strict Code of Advertising that defines what is acceptable with regard to truth in advertising.

Legal and Ethical Issues Marketing to Children Out of fast food, dangerous sports, and video games rated "'M' for mature," choose the product or activity you feel most strongly should not be marketed to children. Activity Using the Internet, find at least one example where that very product or activity is, in fact, targeted toward that audience. Note the details of how the product is marketed. If possible, print out the example.

Legal and Ethical Issues The American Marketing Association’s (AMA) Code of Ethics is a guideline for ethical professional conduct. It addresses: Honesty Fairness Rights/duties in marketing Organizational relationships Price gouging is pricing products unreasonably high when the need is great or when consumers don’t have other choices.

Legal and Ethical Issues Management of marketing information involves issues of privacy. Industries have to keep customer databases private and cannot share information unless the consumers give their direct permission. Selling practices that come under scrutiny because of ethical issues often involve: Bribes Kickbacks Favors High-pressure tactics used to close a sale

Legal and Ethical Issues From the top level of authority down, managers must take responsibility for establishing and creating a role model for ethical practices within a firm. Accounting and proper reporting of corporations’ financial situations are addressed by the Sarbanes-Oxley Act of 2002 (11 parts) Whistle-blowing involves reporting an illegal action by one’s employer

Legal and Ethical Issues Companies with an interest in ethical business behavior should follow a decision-making process that includes the following: Get the facts Identify all parties concerned Think of all your alternatives

Legal and Ethical Issues Evaluate the alternatives by asking the following four questions: Is it lawful? Does it go against company policy? How does it affect those involved? Will it build a good company reputation?

Legal and Ethical Issues Group 1- What is “Pink Slime?” Group 2- “Pink Slime” is harmful and is not fit for human consumption Group 3- “Pink Slime” is necessary to provide meat-based products to the consumer base Group 4- What are Pig Gestation Crates? Group 5- Pig Gestation Crates are inhumane and not needed by business Group 6- Pig Gestation Crates are needed and ensure safety and order in large-scale meat production