Intro to Business, Ethics

Business 40Week 2Carole K. Meagher26 January, 2005

Agenda

Roll call, introductions, project ideas Video – “Burton Snowboard” Chapter 1 Discussion Article analysis – Kraft Advertising Chapter 4 Discussion Project ideas? Week 3 Lead-in

To watch out for…

Think about the environment (p. 13) that Burton Snowboard works within

1. Economic and legal

2. Technological

3. Social

4. Competitive Some of the answers may not be obvious

in the video, so think about them…

Burton Snowboard

Economic and legal Technological Social Competitive

Business & Entrepreneurship Business Profit Entrepreneur Match Risk With Profit

Revenue Loss

Standard of Living/Quality of Life

Stakeholders Nonprofit Organizations

Objectives of Business

SurvivalSurvival

GrowthGrowthSocial Social

ResponsibilityResponsibilityProfitProfit

Creating Wealth:Factors of Production

LandLand

LaborLabor

CapitalCapital

EntrepreneurshipEntrepreneurship

KnowledgeKnowledge

Business Environment

Global Business

Social

Competitive

Technology

Economic & Legal

Economic & Legal Environment

Freedom of ownership Contract laws Tradable currency Elimination of corruption Minimum taxes and regulation

Technological Environment Information technology Databases Bar codes The Internet

Competitive Environment Customer service Stakeholder recognition Employee service Concern for environment

Social Environment

Diversity Demographic changes Family changes

Social Environment

Diversity/Multicultural

Aging/Graying of America

Two-Income Families

Telecommuting

Single-Parent Families

U.S. Household Size

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

Number of Persons

1900 1940 1980 2000Source: Census Bureau

Buying Power of Diverse Groups

WomenWomen $3,700 Billion $3,700 Billion

Hispanic AmericansHispanic Americans 550 Billion 550 Billion

African AmericansAfrican Americans 500 Billion 500 Billion

Gay Men & LesbiansGay Men & Lesbians 450 Billion 450 Billion

Asian AmericansAsian Americans 254 Billion 254 Billion

Native AmericansNative Americans 35 Billion 35 Billion

Sources: National Organization on Disability Employability; U.S. Pan Asian American Chamber of Commerce; DiversityInc.com; U.S. Census Bureau

U.S. Ethnic Composition

0%

10%

20%

30%

40%

50%

60%

70%

80%

White Hispanic AfricanAmerican

Amer.Indian

Asian Other

1990

2000

Source: Census Bureau

21st Century Diversity Issues

RaceRace

GenderGender

EthnicityEthnicity

DisabilityDisability

AgeAge

LanguageLanguage

ReligionReligion

Sexual Sexual OrientationOrientation

Source: U.S. Equal Employment Opportunity Commission

The Aging of America

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

1900 1920 1940 1960 1980 2000

Me

dia

n A

ge

Source: Census Bureau

% U.S. Population by Age

0%

10%

20%

30%

40%

50%

60%

70%

80%

1920 1940 1960 1980 2000

Under 15

15-64

65+

Source: Census Bureau

Older Americans Working

55-5960-64

65+

0%10%

20%

30%

40%

50%

60%

70%

80%

Female

Male

Source: USA Today

Growth of Dual-Income Households

Source: USA Today1950

2000

63%

20% 21%

37%

0%

10%

20%

30%

40%

50%

60%

70%

Single-EarnerMarried Couples

Dual-EarnerMarried Couples

Women In The Workforce

0% 10% 20% 30% 40% 50%

Labor Force

Mgmt./Prof.

Officers

B.O.D.

Top Earners

CEOs

Source: CNNMoney, 3/3/03.

Wives Outearn Husbands

All Couples* 30.7%

Two-Income Couples 24.1%

*3% Involve Salaries $75,000+

Source: CNNMoney, 3/3/03.

Where Americans Live

0%

10%

20%

30%

40%

50%

60%

70%

1920 1940 1960 1980 2000

Central Cities

Suburbs

Rural

Source: Census Bureau

Global Environment

Quality Productivity War & Terrorism Global Changes

The Economic Cost of Disaster/War

Source: Business 2.0 , November 2002.

Loss of property Loss of life Energy diverted to…

Rebuilding Stress management Political/power management issues

Evolution of American Business

Agricultural/Manufacturing

Service Industries

Future???

Rise of Information & Communication Technology

Globalization

Doing Business 24/7

Educated Consumers

Aging Workforce

Increasing Diversity

Pyramid vs. Web

Trends in Business

Source: Keying In- Newsletter of the National Business Education Association, March 2003

Self-Directed, Empowered

Employees

Communication Skills

Decision-Making Skills

Teamwork

Leadership

Continual Learning

Skill Level Required

Level 1Level 1 Level 2Level 2 Level 3Level 3 Level 4Level 4 Level 5Level 5 Level 6Level 6

Source: Source: Hudson Institute as reported in Arnold Packer, “Retooling the American Worker,” Washington Post Hudson Institute as reported in Arnold Packer, “Retooling the American Worker,” Washington Post

Average Skill Average Skill Level: 3.6Level: 3.6

2%2%

58%58%

40%40%

Current Skill Level

Level 1Level 1 Level 2Level 2 Level 3Level 3 Level 4Level 4 Level 5Level 5 Level 6Level 6

Average Skill Average Skill Level: 2.6Level: 2.6

6.8%6.8%

70.5%70.5%

6.6%6.6%

16.1%

Article analysis & break…

Kraft limits advertising… See pp 104-105

Discuss the legal implications of Kraft’s action described in the article

Discuss the balance/fairness issues of Kraft’s action described in the article

Discuss how your group feels about advertising junk food to kids and Kraft’s action. There are no right or wrong answers, just share thoughts and ideas.

A continuum…

Legal

Ethical

Responsible“Good Citizen”

Agent of positive change

Categories of Business Law

BusinessBusiness

LawLaw

BankruptcyBankruptcy

LawLaw

TortTort

LawLaw ContractContract

LawLaw

SalesSales

LawLawLaw ofLaw of

AgencyAgency

PropertyProperty

LawLaw

Tort Law

Wrongful Act Causing Injury Compensation

Negligence

Product Liability- Strict Liability

Cost of U.S. Tort System

In $ BillionsIn $ Billions

Source: Forbes, Dec. 23, 2002

Intellectual Property

Patent - Rights to Invention Copyright - Rights to Literary Work and

Art Work (including sound, visual, and performing arts)

Trademark - Protects Name, Symbol or Design (identifies goods or services of a seller)

Types of Patents Design Patents

©Utility Patents

™ Plant PatentsSource: Source: EntrepreneurEntrepreneur Magazine Magazine

0

500

1,000

1,500

2,000

2,500

3,000

3,500

IBM Canon Micron NEC Hitachi

Patents Awarded in the U.S. (2002)

Source: USA Today

School Invention

U. of CaliforniaNew almond tree named “Winters” to help pollination

M.I.T. Method to track motion of body

CaltechGolf putter with “raised center of gravity

U. of Texas New compound to grow human hair

Johns HopkinsThermal-control apparatus for body armor

Unusual U.S. Patents Awarded to Universities

Source: Forbes, March 31, 2003

Origin of U.S. Patents Granted (2000)

Source: USA Today

IBM Average Patents Per Week

0

10

20

30

40

50

60

70

1993 1994 1995 1996 1997 1998 1999 2000 2001

Source: World Features Syndicate

International Patents Awarded (2002)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

IBM Canon Micron NEC HitachiSource: USA Today

$ Uniform Commercial Code$ Warranties

Express Implied Full Limited

$Negotiable Instruments

Sales Law

Contract Law Contract Legally Binding

Offer Acceptance Consideration Competence Legal Proper Form

Breach Consequences

Specific Performance

Payment of Damages

Discharge of Obligation

Business Law/Legislation Sherman Antitrust Act Clayton Act FTC Act Robinson-Patman Act Consumer Protection Tax Bankruptcy

Chapter 7 Chapter 11 Chapter 13

Deregulation

Ethics

More Than Legality

Standards are

Fundamental

Stem From Individual

Ethical Decisions are Personal

Religious, Moral, Cultural Teachings Individual Rights and Responsibilities Legislation

Statutory Law Court Decisions

Common Law

Factors Influencing Managerial Ethics

IndividualIndividual OrganizationalOrganizational EnvironmentalEnvironmental

ValuesValuesWork Work BackgroundBackground

Family StatusFamily Status

PersonalityPersonality

Top Level Mgmt. Top Level Mgmt. PhilosophyPhilosophy

The Firm’s The Firm’s Reward SystemReward System

Job DimensionsJob Dimensions

CompetitionCompetition

Economic Economic

ConditionsConditions

Social/Cultural Social/Cultural

InstitutionsInstitutions

SEC Investigations (2002)

AccountingArthur AndersenDeloitte & ToucheErnst & YoungKPMGPriceWaterhouse Coopers

EnergyCMS EnergyDynergyEnronHalliburtonReliant Resources

SoftwareComputer AssociatesNetwork Associates

TelecomGlobal CrossingLucent TechnologiesQwest CommunicationsWorldCom

Wall StreetCredit Suisse First BostonHedge FundsCapital MarketsMerrill Lynch

Source: Business Week, June 10, 2002

Corporate Scandal FinesCompany Fine Reason

Arthur Andersen $500,000

Obstruction of Justice Shredding Enron

Documents

Citigroup $5,000,000Analyst Issued Misleading

Information

Merrill Lynch $100,000,000

Conflict of Interest Between Investment Bank

& Research Dept.

Credit Suisse

First Boston $100,000,000IPO Shares Unfairly

Distributed

Source: Business Week, Nov. 4, 2002

How Much Do Americans Trust Corporations?

All Corporations

A Great Deal 10%

Fair Amount 41%

Only A Little 35%

Not At All 13%

No Opinion 1%

Your Employer

A Lot 50%

Only Somewhat 39%

Not At All 8%

No Opinion 3%

Source: USA Today/CNN/Gallup Poll, Jan. 25-27, 2002

Ethics Check Questions:

Is It Legal?

Is It Balanced?

How Will It Make Me Feel About Myself?

Source: Source: MarketingMarketing, 5/E by Berkowitz, Kerin, Hartley, and Rudelius., 5/E by Berkowitz, Kerin, Hartley, and Rudelius.

Societal ResponsibilitySocietal Responsibility

Stakeholder ResponsibilityStakeholder Responsibility

Profit ResponsibilityProfit Responsibility

Owners/StockholdersOwners/StockholdersGeneralGeneral

PublicPublic

CustomersCustomers

EmployeesEmployees

Suppliers/DistributorsSuppliers/Distributors

EcologicalEcological

EnvironmentEnvironment

Public Interest GroupsPublic Interest Groups

Societal ResponsibilitySocietal Responsibility

Stakeholder ResponsibilityStakeholder Responsibility

Profit ResponsibilityProfit Responsibility

Owners/StockholdersOwners/StockholdersGeneralGeneral

PublicPublic

CustomersCustomers

EmployeesEmployees

Suppliers/DistributorsSuppliers/Distributors

EcologicalEcological

EnvironmentEnvironment

Public Interest GroupsPublic Interest Groups

Corporate Citizenship…Corporate Citizenship…

$9$10

$120

$12

Individuals

Foundations

Bequests

Corporations

Contributions to Charity(In Billions of Dollars)

Source: Source: Business WeekBusiness Week, Dec. 2, 2002, Dec. 2, 2002

DonorEstimated Total

Given (in Millions Causes

Bill Gates $25.6 Health &

Education

Gordon Moore $6.6 Conservation & Education

James Stowers $1.5 Biomedical Research

Eli Broad $1.045 Education & Arts

Walton Family $.75 Education

New PhilanthropyNew Philanthropy

Merck Johnson & Johnson Pfizer Eli Lilly IBM Microsoft Intel Bank of America

$221.0*

176.2

123.9

121.4

116.1

104.7

101.0

91.5

Source: The Taft Group* In Millions* In Millions

Corporate Annual Giving

Where Charitable Contributions Go (2001)

$20.7$18.4

$31.8

$12.1$11.8

$6.4$4.1

$81.0

In Billion $In Billion $

Source: BusinessWeek. Dec. 2, 2002

Why People VolunteerPercent of RespondentsPercent of Respondents

Total is more than 100%- respondents could give more than one reason.

Corporate Volunteer Days

International Ethics & Responsibility

Ethics Not Unique To U.S.- Leaders Accountable

Demand for Socially Responsible Behavior

Inter-American Convention Against Corruption

Social Audit

By Company Outside Company

Socially-Conscious Investors Environmentalists Union Officials Customers

In Conclusion…

LegalEthical

Responsible“Good Citizen”

Agent of positive change

It’s a continuum…

Week 3 Lead-in Chapters 2 and 3 – Global Economics

Find an article talking about the Key Economic Indicators on pages 53-54. How are they interpreted? Do different people have different ideas about if they imply good or bad news?

There are lots of articles about global trade right now. Find an article and compare their comments to the text. Any differences in perspective?

Or, whatever you want, just be thoughtful and “buzzword compliant”

Before you leave next week… Group roster with project idea!