1. Unit 6 Ethical and Social Responsibility of Businesses

2. Definition of Ethics A set of moral principles or values that govern behavior. Both managers and employees make ethical decisions every day – Ethics help businesses determine how to behave. – Ethics reflect a company’s beliefs about with actions are appropriate and fair among people.

3. Team work In teams of two discuss the definition of ethics and brainstorm a list of personal ethics to share with the class. Have you ever witnessed unethical behavior (cheating or stealing, for example) at your school or workplace? If so, how did you respond? How ethical are you? Paper

4. Code of Ethics Definition This is a written document that outlines the principles of conduct to be used in making decisions within the organization

5. Content of Ethical Codes Areas they cover – Honesty – Adherence to the law – Product safety and quality – Health and safety in the workplace – Conflict of Interest – Selling and marketing practices – Financial reporting – Pricing, billing, and contracting – Insider trading – Security – Protection of the environment

6. Opinion Does establishing a code of ethics prevent unethical behavior?

7. Role of Ethics in Management What should managers do if they are aware of unethical practices in their businesses? Should they blow the whistle and risk their jobs? – Whistle blowing is revealing dishonest or dangerous employer practices. – Example: Illegal dumping of toxic waste, selling defective vehicles, misuse of workers’ pension Should they quit and allow unethical practices to continue? Should they ignore the practice?

8. Implementing Teamwork In groups of two, students are responsible for researching and reporting on three unethical business practices. – Dupont Chemicals and Love Canal

9. Behaving Honestly SARBANES-OXLEY ACT OF 2002 – Put into law after the Enron Scandal of 2001 Employee theft Lying about hours worked Falsifying records

10. Dealing with Ethical Dilemmas Ethical dilemmas are situations in which the ethical course of action is not clear. – Your boss informs you confidentially that one of your friends is going to be fired. Your friend is about to buy a house. Should you warn your friend that he about to be fired, even though you promised your boss that you would not? – Your colleague has been violating your company’s code of ethics by accepting expensive gifts from a sales person who does business with your company. Should you notify your supervisor? – One of your employees has been having serious personal problems, and you have tried to be understanding. However, your entire staff is suffering because of poor performance by this key team member. What should you do?

11. Laws Relating to Ethics in Business Laws have been enacted that directly relate to the issue of ethics in business. They apply to competitive behavior, consumer protection, product safety, and environmental protection The Federal Government does regulate companies.

12. Laws Relating to Consumer Protection 1.Food and Drugs. Federal Food, Drug, and Cosmetic Act bans the sale of improperly labeling, false guarantees and unhealthy foods, drugs, and cosmetics. 2.Consumer Products. Minimum product safety standards on consumer goods. 3.Truth in Lending Act. Creditors are required to let consumers know how much they are paying in finance changes and interests.

13. Laws Relating to Ethics in Business 4.The Sherman Act. Makes monopolies illegal. 5.The Clayton Act. Makes it illegal to charge different prices to different wholesale customers. Also bans practice of requiring a customer to purchase a second good. 6.The Wheeler-Lea Act. Bans unfair or deceptive acts or practices, including false advertising. – Businesses must inform consumers of positive negative consequences of using their products.

14. Environmental Protection The National Environmental Policy Act of 1969. Created the EPA to protect human health and safeguard the air, water, and land. The Clean Air Act of 1970. Regulates air emissions. The Toxic Substances Control Act of 1976. Track industrial chemicals currently produced in or imported into the US. The Clean Water Act of 1977. Set standards on the type and quantity of pollutants that industries can put into bodies of water.

15. Ethical Standards and Culture Differ around the world. This means that business practices that are acceptable in one country may be considered unethical in others. Corporate Gift Giving. Intellectual Property refers to ownership of ideas, such as inventions, books, and movies. – Patents, trademarks, and copyright laws. – Enforcing the laws is difficult, especially in the software industry.

16. Students will write an editorial on the importance of protecting intellectual property, including a discussion of the creators’ exclusive rights to market and sell their work.

17. Closing Finish this statement... – Ethics are important because....

18. Social Responsibility of Businesses

19. Social Responsibility Definition. Obligation that individuals or businesses have to help solve social problems. Team motivation – In groups of two identify as many of America’s social problems as possible. Examples: poverty and pollutions. – Why should businesses be concerned and how does it impact workers..

20. Changing Views of Social Responsibility Social Responsibility is the obligation people or businesses have to help solve social problems. Business’s role and views on social responsibility have changed. They have a greater sense of its importance – Profit Maximization. – Trusteeship Management. This philosophy recognized that owners of businesses had obligations to do more than just earn profits. They had obligations to their employees, their customers, and their creditors.

21. Measuring Social Responsibility 1.Social audit. Review of a business’s social responsiveness. 2.Philanthropy and Volunteerism. – Contributing time and money to charitable, cultural, and civic organizations. – Efforts to improve human welfare. 3.Grant employees paid time off to participate in charitable activities.

22. Changing Views of Social Responsibility Social Involvement Corporations should have an obligation to all of the people affected by their actions, known as Stakeholders. How have they demonstrated their commitment to social change? – More diverse workforce – Workshops

23. Environmental Awareness Limiting damage their operations cause to the environment. – Regulating dumping of toxic waste – Using only biodegradable products and refillable containers. Sensitivity to Diversity and Quality of Work Life – Workforce diversity, hiring, promoting diverse groups. – Flexible work hours, on-site day care, free medical, etc.

24. In Closing... Select a selected social issue such as discrimination, equal pay, AIDS, drugs, and alcoholism to groups of 2 students. State how the social problems assigned affects business and what business have done to deal with the issue.