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Chapter 4 Business Ethics andSocial Responsibility

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Introduction to Business, Business Ethics and Social Responsibility

Why It’s ImportantWhy It’s Important

Understanding business ethics and social responsibility informs you of your rights as a consumer, an employee, and a citizen.

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Key WordsKey Wordsethics business ethicssweatshopsOccupational Safety and Health Administration (OSHA) code of ethicssocial responsibilityconflict of interestFood and Drug Administration (FDA)Equal Pay Act

Environmental Protection Agency (EPA)

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What Is Ethics? What Is Ethics?

Ethics is the set of moral principles by which people conduct themselves personally, socially, or professionally.

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What Is What Is BusinessBusiness Ethics? Ethics?

Business ethics is a set of guidelines about how a business should conduct itself.

In general, for any business to be successful, it must operate legally, ethically, and humanely.

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Ethics is the set of principles by which you conduct yourself in society.

How often do you help the environment? What do you do?

Source: The NPD Group

Figure4.1 ENVIRONMENTALLY FRIENDLY

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Legal Responsibility - OSHA Legal Responsibility - OSHA The Occupational Safety and Health Administration (OSHA) is a division of the Department of Labor that sets and enforces work-related health and safety rules.

Example: Prevention of sweatshops (factories that pay workers poorly, are unsafe, and treat workers badly).

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Legal Responsibility Legal Responsibility Other independent agencies protect consumers, monitor broadcast communications, and address discrimination in the workplace.

A code of ethics is a set of guidelines for maintaining ethics in the workplace. Most businesses police themselves by distributing codes of ethics.

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Ethics as Good Business Ethics as Good Business Unethical business practices can affect your business indirectly.

Example: profit loss from one unhappy customer - missed repeat business

Treating employees unethically can also backfire.

Example: mistreating employees leads to a high turnover rate - increased costs for hiring and training new employees

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Important Ethical Questions Important Ethical Questions When considering a questionable course of action, ask yourself: 1. Is it against the law? Does it violate company or

professional policies? 2. What if everyone did this? How would I feel if

someone did this to me?3. Am I sacrificing long-term benefits for short-term

gains?

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Graphic OrganizerImportant Ethical QuestionsImportant Ethical Questions

Graphic OrganizerGraphic Organizer

Does it violate the law or policies?Does it violate the law or policies?

ETHICAL DECISIONETHICAL DECISION

Would this sacrifice long-term benefits for short-Would this sacrifice long-term benefits for short-term gain?term gain?

What if everyone did this, but it’s bad?What if everyone did this, but it’s bad?

UNETHICALUNETHICAL

NO

NO

NO

YES

YES

YES

MAY BE UNETHICALMAY BE UNETHICAL

UNETHICALUNETHICAL

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Social Responsibility Terms Social Responsibility Terms

Social responsibility is the duty to do what is best for the good of society.

A conflict of interest is when a business is tempted to put profits before social welfare.

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Social Responsibilities of Businesses Social Responsibilities of Businesses

• Provide safe products (customers)

• Create jobs (employees)

• Protect the environment (society)

• Contribute to the standard of living in society

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Responsibility to Customers Responsibility to Customers Fair competition between businesses is healthy for the marketplace, but some companies don’t always play reasonably.

Unethical examples: eliminating competitors, or conspiring with other companies to control the market for a product

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Responsibility to Customers - LawsResponsibility to Customers - Laws

The Food and Drug Administration (FDA), a government agency, protects consumers from dangerous or falsely advertised products.

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Figure4.2 OVER-THE-COUNTER MEDICINE LABEL

The FDA governs advertising and labeling of over-the-counter medicines.

Analyze why the FDA officials might feel that regulation of advertising and packaging labels is necessary.

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Responsibility to Employees Responsibility to Employees

Businesses are expected to provide employees with safe working conditions, equal treatment, and fair pay.

It’s in a company’s best interest to treat its workers fairly otherwise low morale, poor productivity, and a high turnover rate are its troubles.

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Responsibility to Employees - Laws Responsibility to Employees - Laws

The Americans with Disabilities Act bans discrimination against persons with physical or mental disability.

The Equal Pay Act (passed in 1964) requires that men and women be paid the same wages for doing equal work.

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Responsibility to Society Responsibility to Society

Many businesses plan for their social responsibilities just like planning for production and sale of their products.

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Responsibility to Society - LawsResponsibility to Society - Laws

In 1970, the U.S. government created the Environmental Protection Agency (EPA), a federal agency that enforces rules that protect the environment and control pollution.

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What are social issues you’re interested in pursuing?

How are businesses involved?