Watch your thoughts; they become words. Watch your words; they become actions.

1. Watch your thoughts; they become words. Watch your words; they become actions. Watch your actions; they become habits. Watch your habits; they become character. Watch your character; it becomes your destiny. - Frank Outlaw

2. Welcome to Introduction to Business BUS 002 Agenda – January 31, 2008 (Th), February 6, 2008 (Wed) TOPIC: Ethics & Professional Responsibility • Check-Ins: Questions, Comments, Reflections, AhHa Moments • Article – • “FTC Warns Mortgage Advertisers and Media That Ads May Be Deceptive” source: Federal Trade Commission • “FAA Orders Inspections of All Newer 737s” source: SFGate.com • Distribute Think & Write 1 • Review Sources of American Law; Commerce Clause • Ethics and Professional Responsibility • Emancipate

3. Class Norms • No Anxiety • Take care of your of your own needs • Agenda then emancipate • Submit assignments on time • Preserve the dignity of self and others in the class • Have regard for everyone’s voice

4. Learning Objectives • What is ethics? What is business ethics? Why is business ethics important? • How can business leaders encourage their companies to act ethically? • What duties do professionals owe to those who rely on their services? • What types of ethical issues might arise in the context of international business transactions?

5. Vocabulary • Ethics = Right or Wrong behavior in society • Business Ethics = What constitutes right or wrong behavior in business • Fiduciary Duty = A professional responsibility of a duty of trust and loyalty • Utilitarianism = An approach to ethical reasoning that evaluates behavior not on the basis of any moral values but on the consequences of that behavior for those who will be affected by it. • Moral minimum = a businesses minimum behavior to be considered legally compliant • Principle of Rights = human beings have a fundamental (basic) rights to life, freedom, and the pursuit of happiness

6. Video ViewTitle: Ms. Vogel’s Lemon • View video, use “Unpacking An Issue” to analyze the situation in the video. • In groups of 3 or 4, answer the following questions? • Are Mrs. Vogel's speeches and actions protected as "free speech"? Explain. • Which source of American Law(s) is in question in this situation? • What should Herman do? What legal rights does Mrs. Vogel have? How should Herman and Mrs. Vogel address their problems?

7. Business Ethics • Ethics: Moral principles and values applied to social behavior. • Business Ethics: Moral principles and values applied to situations that arise in a business setting. • Business Challenge in Ethics – Competing demands from multiple stakeholders – e.g., shareholders, employees, retirees, suppliers, creditors, customers, the communities in which the business operates – whose lives are affected by business decisions. • Fiduciary (Trust and Loyalty) Duties. • (see Time Warner Entertainment Co. v. Six Flags over Georgia, LLC (2002) p. 48)

8. Setting the Right Ethical Tone Importance of Ethical Leadership • Management Attitudes: Managers who are not committed to creating and maintaining an ethical workplace rarely have one. • Employees tend to follow what they perceive to be management’s lead, so managers must model ethical behavior for their employees. • Managers who “look the other way” because an unethical employee is successful riskother employees believing that acting unethically is the key to success. • Managers should set realistic goals for their employees to reduce the incentive to “cheat” in order to achieve management’s goals.

9. Setting the Right Ethical Tone But How? • Creating Professional & Ethical Codes of Conduct, Civility Policies, etc. • See Proposed AB 1582 – Healthy Workplace • See Peralta Community College District Civility Policy • Clear Communications to Employees. • See Costco. • Johnson and Johnson: web-based ethical training. • (see Exxon Valdez case (2004) p. 49). • Corporate Compliance Programs. • Periodic checks each month for ethical behavior • Sarbanes-Oxley Act of 2002 (system where employees can confidentially report unethical accounting & auditing actions) • Web-based reporting (online reporting systems). • Training • Hire outside experts to oversee ethics in a company • Conflicts and Trade-Offs. • Dilemma – Which stakeholders to support? All with opposing positions.

10. What do you think? In groups of three(3), reflect and respond to the following two questions… • How is influential is ethics to business? • On a scale of 1-10, how would you rate ethics in terms of focus for business? Why the rating?

11. Business Ethics and the Law • Relationship between ethics and law. • Historically, a law was supposedly always ethical (or morally correct). (For example, Christian Ten Commandments) • Today, obeying laws does not mean an action is ethical. • An action may be legal but unethical or immoral. (For example, lying to your family member is not illegal, but it’s considered morally/ethically wrong)

12. Technological Developments • Internet has given rise to new court cases heard before the judicial system. • A company’s actions come under quick scrutiny with the power of email and the internet. • Blakey v.Continental Airlines, Inc. (2000). • When a corporation embarks on a course of business deemed “unethical” by a special interest group, the news will spread around the world in a matter of minutes.

13. Ethical Decision-Making • How do you decide what’s ethical? • Ethical Reasoning = The process you take to make an ethical decision • Duty Based Ethics = derived from religious and philosophical principles. • See examples 2.7, 2.8 p. 57 • Outcome-Based Ethics = act based upon what is good for the greatest number. • How will the action affect people. • A cost-benefit analysis must be performed to determine the effects of competing alternatives on the persons affected • Utilitarianism (The most usefulness).

14. Religious Ethical Standards • The rightness or wrongness of an action is usually judged according to its conformity to an absolute rule that commands a particular form of behavior. • The motive of the action is irrelevant in judging the rightness or the wrongness of the action. • These rules often involve an element of compassion. • Immanuel Kant = German philosopher (1800s) • The rightness or wrongness of an action is judged by estimating the consequences that would follow if everyone in a society performed the act under consideration.

15. Principle of Rights • The belief in fundamental rights is a deeply embedded feature of Western culture. • How ethical an action is is judged by how the consequences of the action will affect the rights of others.

16. Business Ethics and the Law • Relationship between business ethics and law. • We know from Article 1 Section 8 of the U.S. Constitution that business is regulated by the government (Commerce Clause). • Ignorance of the law (statute or regulation) will not excuse a business owner or manager from liability • For example, Federal Trade Commission (Administrative Agency) regulates deceptive advertising. There are federal and state laws against such advertising.

17. Professional Responsibility • Professional = Those with knowledge or skills in a specific area; expected to deliver services competently • Accountant’s Duty of Care. • Audit. • Standard of Care/GAAP/GAAS. • Violations of GAAP and GAAS. • Attorney’s Duty of Care. • Liability for Malpractice. • Statutory Duties of Accountants. • Duty under Securities Laws. • Potential Criminal Liability of Accountants.

18. Professional Responsibility • Defying the Rules: the EnronCase. • Accounting Issues. • Off the Books Transactions. • Self-Dealing. • Corporate Culture. • Sarbanes-Oxley Act of 2002. • Public Company Accounting Oversight Board. • Applicability to Public Accounting Firms. • Auditor Independence.

19. What do you think? • What kind of business person are you in terms of ethics? • Duty-based or Outcome-based • Read example 2.10 p.58, what would you do?

20. Business Ethics on a Global Level • Global company is faced with a variety of cultures, traditions and religions in the different nations it serves. • What may be ethical practices in the United States, may not be in another country? • Example: Drinking alcohol forbidden for religious reasons in another country • Monitoring Foreign Employment Practices. • Example: Foreign manufacturer exploiting workers, low wage, long hours, no breaks • Foreign Corrupt Practices Act (1977). • Prohibits U.S. businessperson from bribing foreign officials

21. Reflection • How might today’s content impact my practice in business? • What implications might today’s content have on the local, state, national, and global communities? • What have I learned about law and business that will influence my practice?