Topic12 Legal And Ethical Aspect Of Business: Universiti Kuala Lumpur

Universiti KualaLumpur Lumpur Universiti Kuala

Topic12 Legal and ethical aspect of business

Copyright © 2006 Mohd Hisham. All rights Reserved.

Chapter Outline

1. 2. 3. 4.

Ethics in the Workplace Social Responsibility Areas of Social Responsibility Implementing Social Responsibility Programs

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What Is Ethics? Beliefs about what is right and wrong or good and bad in actions that affect others

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Ethics in the Workplace 1. Ethical behavior is behavior conforming to generally accepted social norms concerning beneficial and harmful actions 2. Unethical behavior is behavior that does not conform to generally accepted social norms concerning beneficial and harmful actions

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What Is Business Ethics? Ethical or unethical behaviors by a manager or employer of an organization

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Business and Managerial Ethics

Managerial ethics are standards of behavior that guide individual managers in their work. Three broad categories:

a. Behavior toward Employees b. Behavior toward the Organization c. Behavior toward Other Economic Agents

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Steps in Making Ethical Judgments

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Expanded Model of Ethical Judgment Making

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Company Practices and Business Ethics

1. Adopting Written Codes a. Many companies have written codes that formally announce their intent to do business in an ethical manner. 2. Instituting Ethics Programs a. Ethical responses can be learned through experience.

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Core Principles and Organizational Values

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What Is Social Responsibility?

The attempt of a business to balance its commitments to groups and individuals in its environment, including customers, other businesses, employees, investors and local communities

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What Are Organizational Stakeholders? Those groups, individuals and organizations that are directly affected by the practices of an organization and who therefore have a stake in its performance

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Major Corporate Stakeholders

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Areas of Social Responsibility

1. Responsibility Toward the Environment 2. Responsibility Toward Customers

3. Responsibility Toward Employees 4. Responsibility Toward Investors

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Responsibility Toward the Environment

Controlling pollution—the injection of harmful substances into the environment—is a significant challenge to contemporary business.

a. Air Pollution b. Water Pollution c. Land Pollution i. Toxic Waste Disposal ii. Recycling

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C02 Emissions, Past and Future

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What Is Consumerism? Form of social activism dedicated to protecting the rights of consumers in their dealings with businesses

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Basic Consumer Rights

1. 2.

3. 4. 5. 6.

Consumers have a right to safe products. Consumers have a right to be informed about all relevant aspects of a product. Consumers have a right to be heard. Consumers have a right to choose what they buy. Consumers have a right to be educated about purchases. Consumers have a right to courteous service.

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Unfair Pricing

1.

Collusion occurs when two or more firms agree to collaborate on such wrongful acts as price fixing

2.

Price gouging is a response to increased demand with overly steep price increases

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Ethics in Advertising 1. Food product labeling

2. Misleading product claims 3. Deceptive advertising 4. Morally objectionable advertising

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Legal and Social Commitments

1. Businesses cannot practice illegal discrimination against people in any facet of the employment relationship. 2. Businesses should provide employees with equal opportunities for reward and advancement without regard to race, sex or other irrelevant factors. 3. Businesses should strive to ensure that the workplace is physically and socially safe.

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What Is a Whistle-Blower? Employee who detects and tries to put an end to a company’s unethical, illegal or socially irresponsible actions by publicizing them

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Responsibility Toward Investors

1. Improper Financial Management

a. Check Kiting b. Insider Trading c. Misrepresentation of Finances

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Implementing Social Responsibility Programs

1. Critics of socially responsible business oppose any business activity that threatens profits.

2. Proponents of socially responsible business believe that corporations are citizens and should help to improve the lives of fellow citizens.

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Approaches to Social Responsibility

1. Obstructionist stance involves the firm doing as little as possible and may involve attempts to deny or cover up violations 2. Defensive stance involves the firm meeting only minimum legal requirements in its commitments to groups and individuals in its social environment

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Approaches to Social Responsibility

1. Accommodative stance involves the firm, if specifically asked to do so, exceeding legal minimums in its commitments to groups and individuals in its social environment 2. Proactive stance involves the firm actively seeking opportunities to contribute to the well being of groups and individuals in the firm’s social environment

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Spectrum of Approaches to Social Responsibility

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Top 15 Corporate Foundations

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Establishing a Social Responsibility Program

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Topic 12 End of Lecture

Copyright © 2006 Mohd Hisham. All rights Reserved.