Ethical Bases for Laws  BCS-LEB-1: The student summarizes the ethical responsibilities of business owners.  BCS-LEB-2: The student summarizes the effects of diverse cultures and customs on business.  BCS-LEB-3: The student determines ethical issues directly related to government regulations.

Ethics and the Law  An ethical decision is 1) reasonable and 2) impartial.  Ethical decisions are reasoned out typically by referring to an established authority that provides consistency. The law is such an authority. Religious texts are also an authority.  The Bible says “Thou shall not lie” so believers view it as wrong / unethical to lie.

Impartiality Making decisions that treat everyone the same

Business Ethics  Ethics are often not considered in business decisions to increase profit maximization. Moving factories and/or skilled jobs overseas to save money instead of creating U.S. jobs

Ethics Determining what is a right or wrong action in a reasoned, impartial manner

Why are they important?  Ethics are good for the individual and society.  They apply to human life in many ways To affirm our human dignity Promote the well-being and happiness of the individual Serve the common good Define our rights and obligations

Ethical Judgment  Ethical judgment promotes: Trustworthiness Respect Responsibility Fairness

Unethical Business Practices  Procedures used by a firm or business that do not conform to the standards of society.  Examples of unethical business practices are: Toxic waste dumping deteriorates the environment, the water supply, and has a direct effect on the public Over-treating patients to boost income Insider Trading

 The illegal buying or selling of securities on the basis of information that is unavailable to the public.  An example is the purchase by a director of shares or his or her firm’s stock just before the release of surprisingly good earnings information.

Results of Unethical Businesses  Jail  Fine  High Bail  Lose right to run your business

Responsibilities  To be honest  To be fair  To represent your company well  Good quality work

Two Basic Forms of Ethical Reasoning  Consequences Based 1.Looks for alternative ways to alter the current situation 2.Attempts to forecast the consequences of the alternatives 3.Select the alternative that generates the greatest good.  Fundamental Ethical Rule Based The acts themselves are judged as right or wrong The standard for judging comes from a recognized authority or human reasoning

Consequence-Based Reasoning Ethics that evaluate the results of an action

Fundamental Ethical Rules Ethical decisions evaluate the act and not its consequences

Ethics Reflected in Laws  Armed with the Constitution, the government ensures federal law making provides: 1.The greatest good for the greatest number of people. 2.Protection of minorities from the majority’s wrong doing (Bill of Rights)  Unethical, lawbreaking often occurs when individuals do not respect &/or obey even minor laws  They assess the risk of being punished against the benefits of obeying the law They lack personal integrity.

Ethics Reflected in Laws Cont’d  People who care passionately about human rights are sometimes compelled to violate unjust laws that conflict with ethical reasoning. They engage in civil disobedience.  MLK, Jr. used public yet, non violent civil disobedience to get minority groups human rights when: Political methods didn’t change the unjust law Personal/ Self interests weren’t promoted Violators were willingly to accept the punishment

The Good Standard for judging right and wrong

Scofflaw A person who does not respect the law

Integrity Doing what is right even under pressure to act otherwise

Civil Disobedience Open, peaceful conduct in violation of an alleged unjust law

Civil Rights Personal, human rights recognized and guaranteed by our consitution

Moral Rights Legitimate claims on other people, which flow from each person’s status as a human being

Business and Social Responsibility  The duty to do what is best for the good of society  Businesses have a responsibility to do good for Their Customers Their Employees Society Creditors and Owners

Responsibility to Customers  Businesses should offer a good, safe product or service at a reasonable price.  The Food and Drug Administration (FDA) is a federal government agency that protects consumers from dangerous or falsely advertised products. Example: mass product recall

Responsibility to Employees 1.Some businesses provide work experience for people to develop the skills & confidence levels. For example, bad working conditions, like a sweatshop, are unethical and illegal. 1.Volunteerism - Some companies allow employees to take one or more paid days off during the year to work on community projects. 2.Businesses must provide employees with safe conditions, equal treatment, and fair pay.

 The Occupational Safety and Health Administration (OSHA) is a division of the U.S. Department of Labor that sets and enforces work- related health and safety rules.  The Equal Pay Act requires that men and women be paid the same wages for doing equal work.  The Americans with Disabilities Act bans discrimination against people with physical and mental disability. Responsibility to Employees (cont.)

Responsibility to Society  One of the biggest social issues facing business today is environmental responsibility.  The U.S. government created the Environmental Protection Agency (EPA) which enforces rules that protect the environment and control pollution.

Responsibility to Creditors and Owners  Major corporations kept inaccurate accounting records that showed lower profits than they actually make.  Such behaviors are harmful to creditors (those who loan money) and outside shareholders (those who are owners but do not work in the business).  The Sarbanes-Oxley Act mandates truthful reporting and makes the CEO more accountable for the actions of the financial managers of a firm.