Business Ethics

1. Business Ethics

2. Unethical Business Practices • Lying • Offering substandard merchandise • Unfair treatment of customers or employees • Violation of ethical practices lead to: • Fines • Jail Time • License Revoked • Termination of employment • Sometimes unethical actions affect businesses indirectly

3. Examples: • Auto-body paint shop • charge top prices but use cheep paint • customers may complain – eventually may lose business and be forced to close. • Small film distribution Company • Hire graduate of business school • Fully train them to run your company • Work them hard and treat poorly • They leave and get hired by competitor • You invested money to train your competition • Q – Any Examples you can think of?

4. Conflict of Interest • Conflict between personal interest and professional obligation • When making business decisions, employees have an ethical obligation to act in the best interest of the company • Manager hires his sister who is not qualified to do the job • This might help the sister’s family, but create problems with other employees. • Q – Any other examples you can share?

5. Social Responsibility • The duty to do what is best for the good of society. • Business Ethics focus on what is good and bad, correct or incorrect. • Businesses that follow ethical standards value integrity and honesty in employees. • Social Responsibility takes into account all that business does or does not do to solve problems of society.

6. Q – How could a business demonstrate social responsibility by participating in an event like this community concert?

7. Society vs. Environment • Some believe businesses that produce goods to benefit society are fulfilling their social responsibility • Others are concerned about limiting the damage done to the environment. • L.A. Times with 1 million plus subscribers uses recyclable paper and soy-based ink. • Honda and Toyota offer eco-cars, which reduce air pollution. • Q – What are some other ways businesses can fulfill its social responsibilities?

8. Responsibility to Customers • Provide a good, safe, product or service at a reasonable price. • Some companies use unfair competition • The market economy relies on market forces to allocate goods, services, and other resources and determine prices. • Some companies use unethical tactics to eliminate competition. • They may conspire with other companies to control the market for a product.

9. Unfair Competition • When companies restrict competition, consumers are affected. • Fewer choices • Might have to pay more • Quality will not be required. • When a company doesn’t have to compete for its business, productivity decreases. • They may not be ready when new markets open up and they aren’t prepared for the change.

10. Responsibility to Employees • Some businesses provide work experience to people with limited job skills. • Purpose of such programs are to develop skills and confidence necessary for success. • Businesses need to provide safe working conditions, equal treatment and fair pay. • Over the years, the government has passed laws to protect workers from: • child labor abuses • rights of workers to organize • Q – Can you think of others?

11. Responsibility to Creditors/Owners • Around the turn of the century, many major corporations kept inaccurate records showing that the firms had higher profits than were reported to others. • Such behaviors are harmful to creditors (those who loan money) and shareholders (those who own but don’t work in the business) • (Discussion) – Why do you think false reporting is harmful?