BUSINESS ETHICS AND SOCIAL RESPONSIBILITY Business Principles A

BUSINESS ETHICS AND SOCIAL RESPONSIBILITY Business Principles A Chapter 4 Mrs. Sorrell

Who Benefits from Business? ■ Businesses are active and involved in a responsible and fair way in the lives of individual employees and their communities.

What is Ethics? ■ Def: the set of moral principles by which people conduct themselves personally, socially, or professionally. – Don’t cheat on a test – Don’t steal clothing in the store – Recycle to take care of the environment – Personal honor and integrity ■ Business ethics: set of laws about how a business should conduct itself – Businesses must operate legally and humanely

Legal Responsibility ■ Sweatshops—factories that have unsafe working conditions – treat workers badly – pay poorly ■ US Government set up independent agencies to protect society – OSHA—Occupational Safety and Health Administration ■ Set and enforce work-related health and safety rules – Consumer Protection Agency – Federal Communications Commission

Code of Ethics ■ Most businesses police themselves by distributing codes of ethics ■ Def: set of strict guidelines for maintaining ethics in the workplace ■ Doctors, lawyers, journalists, and teachers have their own code of ethics – Covers everything from employee behavior to environmental safety ■ Individual companies usually have their own codes as well

Ethics as Good Business ■ Unethical practices in business – Lying – Offering substandard merchandise – Treating customers unfairly ■ Violating government regulations can create fines or jail time ■ Violating company code of ethics can lead to being fired or losing your license ■ Customers are quick to spread the word if they have been wronged by a business ■ Most businesses rely on repeat customers and word-of-mouth to get new customers ■ Treating employees unethically can also backfire

Important Ethical Questions ■ Considering a questionable course of action? – Is it against the law? Does it violate company or professional policies? – What if everyone did this? How would I feel if someone did this to me? – Am I sacrificing long-term benefits for short-term gains? ■ Business works best when there is mutual trust between buyers and sellers.

Making Decisions on Ethical Issues ■ Identify the ethical dilemma ■ Discover alternative actions ■ Decide who might be affected ■ List the probable effects of the alternatives ■ Select the best alternative

Social Responsibility ■ Def: the duty to do what is best for the good of society – The goal of business is to make a profit – Businesses must consider what they do to solve problems of society – Businesses must offer goods and services that other people want – Businesses must provide good service to their customers ■ Businesses are under ethical obligation to: – Provide safe products – Create jobs – Protect the environment – Contribute to the overall standard of living in society ■ Conflict of interest—def. Temptation to put profits before social welfare ■ Consumer and employee theft costs businesses billions of dollars each year

Responsibility to Customers ■ Customers are the first responsibility of businesses ■ FDA—Food and Drug Administration – Government agency that protects consumers from dangerous or falsely advertised products ■ Fair competition between businesses is healthy for the marketplace, but some companies don’t always play reasonably. – Unethical means to eliminate competition – Conspire with other companies to control the market for a product – This cause less choice in what we can buy and how much we pay

Responsibility to Employees ■ Provide employees with safe working conditions ■ Equal treatment ■ Fair pay ■ Note: just 100 year ago, , workers had few rights ■ Government has passed laws to protect workers from a range of issues – Child labor abuses – Rights of workers to organize ■ Equal Pay Act (1964) – Requires that men and women be paid the same wages for doing equal work ■ American Disabilities Act – Bans discrimination against persons with physical or mental disability

Responsibility to Society ■ During the 19 th and 20 th centuries, many businesses polluted and destructed the environment in order to profit ■ The tradeoff for a higher standard of living only benefited a few ■ In the mid 20 th century, the tradeoff became a concern for many ■ Environmental Protection Agency (EPA) – Enforces rules that protect the environment and control pollution