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Chapter 6. The Stability of a government and its policies shape the political climate of a country. Government actions have a great impact on business.

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Presentation on theme: "Chapter 6. The Stability of a government and its policies shape the political climate of a country. Government actions have a great impact on business."— Presentation transcript:

1 Chapter 6

2 The Stability of a government and its policies shape the political climate of a country. Government actions have a great impact on business and its operations. Thus, it is important to understand how government functions and how it affects business.

3 The Stability of a government, its structure and legal system is always part of many business analysis. The government plays roles of provider of services, customer, regulator, enforcer of free enterprise and monitor of economy.

4 In the United States, each of the three branches of government- Executive, Legislative and Judicial – limits the power of the other two. Which prevents any one branch from becoming too powerful.

5 Executive Branch Includes various different administrations such as the Office of the President and Departments of Commerce, Interior and Defense. Each admin. Has different initiatives and issues that impact business due to economic times and political agendas Legislative Branch Is also known as Congress. It is made up of the Senate and the House of Representatives. Members of Congress debate and vote on laws and regulations. Judicial Branch Interprets, applies and administers the laws of the United States. It consists of a network of courts at all levels of government. When the legislative/executive branches enact laws which negatively affect businesses, those businesses may appeal to the Judicial Branch of Government.

6 The government spends a lot of money to ensure the safety and general welfare of people in the United States. To keep the country safe, The Department of Homeland spends a lot of money on border protection, disaster relief and on other measures such as airport security.

7 In the United States most laws are designed to protect the safety, health and welfare of individuals. At the federal, state, and local levels; these laws are carried out by government agencies. The government acts as a regulator to protect consumers, employees, investors and the environment and this affects the businesses.

8 At the state and local levels, government agencies are involved with consumer protection. People who perform certain services, such as hairstylists, must be licensed. Local zoning laws about where homes, businesses and farms can be located protect real estate investments and quality of life for residents. Health departments inspect restaurants and other food-handling businesses to protect consumers.

9 Companies must comply with minimum wage standards and other laws and regulations established by state and federal governments. There are also laws set in place to protect employees who report illegal activities by their employers. Is responsible for the fair and equitable treatment of employees with regard to hiring, firing and promotions. Equal Employment Opportunity Commission (EEOC) Sets guidelines for workplace safety and environmental concerns, and enforces those regulations. Occupational Safety and Health Administration (OSHA)

10 Securities and Exchange Commission (SEC) Regulates the sale of securities(stocks & bonds) It is responsible for licensing brokerage firms and financial advisors. It also investigates any dealings among corporations such as mergers, that affect the value of stocks. Investors Environment Protection Agency (EPA) Protects human health and environment. Its responsibilities include monitoring and reducing air and water pollution, as well as overseeing hazardous waste disposal and recycling. Environment

11 The FEDERAL TRADE COMMISSION has the responsibility of enforcing the principles of free enterprise system and protecting consumers from unfair or deceptive business practices. Consumer Protection Responsible for enforcing consumer protection laws and trade regulation rules. It investigates individual companies and nationwide operations and initiates lawsuits against those who violate these laws. Competition The FTCs antitrust responsibilities involve prevention of anti-competitive mergers and business practices. Economics Studies the impact of its actions on consumers and reports its findings to Congress, executive branch and the public. It covers antitrust, consumer protection and regulation.

12 To ensure economic stability of the United States, the government monitors our economy and controls our monetary supply through the Federal Reserve System. When the FED thinks that the economy is moving too fast or too slowly, it reacts to correct the problem.

13 The role of SMALL BUSINESS ADMINISTRATION (SBA) is to support business and encourage our free enterprise system. They provide counseling and educational materials to prospective business owners and also support through unconventional loan guarantees.

14 Foreign governments may not provide the legal protection or framework necessary to ensure business operations function in a safe and secure manner. Therefore, it is important to analyze the US governments role in promoting free enterprise principles in the context of International Business.

15 Social responsibility and ethics have become important business topics as trust has deteriorated due to corporate scandals. Corporate scandals and unethical behavior have a very negative effect on consumer confidence and the image of a company. It is important to see the role of a business in society not only as a provider of goods and services but also as an integral part of the society at large.

16 Many companies recognize their employees needs outside the workplace and try to accommodate them. In doing so, they create a user-friendly workplace environment. Contd. Flextime Allows workers to choose their work hours Telecommunicating Involves working at home, usually on a computer. Completed jobs are transmitted by or mail-in disk. Extended Family Leave Some companies offer employees family leave without pay beyond the time required by the Family and Medical Leave Act.

17 Contd. On-Site Child Care Is a benefit that has grown in popularity with the increase in two-income families. Healthcare Benefits With rising health costs, health care insurance paid for by employers is a major employee benefit. Time Off With Pay Time Off with pay includes vacations, sick days, and personal days.

18 Consumers are the focal point of a company that follows the marketing concept. Such businesses are concerned about consumers perceptions of a company, as well as issues that impact consumers. Providing Information Socially responsible companies cooperate with the government and consumer groups to provide important information to consumers. Employing Self- Censorship In the broadcast industry, standards are established by the FCC. Beyond those regulations, network executives establish their own policies for self-regulation. Responding To Consumer Concerns Socially responsible companies look for ways to respond to consumers concerns.

19 Consumers are the focal point of a company that follows the marketing concept. Such businesses are concerned about consumers perceptions of a company, as well as issues that impact consumers. Large Companies Many large companies have guidelines and initiatives that clearly define how they see their role in supporting community causes. International Business The United Nations has a Division of Economic and Social Affairs. An outgrowth of that division is the World Business Council For Sustainable Development. (WBCSD) which is a coalition of International companies.

20 Socially responsible companies are concerned about our environment and have programs about our environment and have programs to work toward saving the earth for future generations. Two major issues involve: Cleaner Fuels Alternatives to traditional transportation fuels od gasoline and diesel fuel are currently being developed. Some Vehicle fuels, because of physical or chemical properties, create less pollution than do todays gasoline. Green Marketing Consumer concern over the environment is increasing, and marketers are paying attention. The growing importance of ecological issues has brought about green marketing.

21 A major aspect of social responsibility is business ethics. Ethics are guidelines for good behavior. Ethical behavior is based on knowing the difference between right and wrong and doing what is right.

22 Consumerism involves the relationship of marketing to those customers who buy a companys goods or service. Consumerism is the social effect to protect consumer rights by putting legal, moral and economic pressure on business.

23 Consumerism and corporate scandals have prompted businesses to address the many ethical issues and topics that involve marketing in general, as well as specific functions and activities.

24 Ethical companies are proactive. They join organizations that help to create an ethical business environment. The Better Business Bureau (BBB), is one of the oldest non- profit organizations to be set self-regulation among businesses. To be a member of the BBB, a business must agree to follow the highest regulation of business ethics and self-regulation and have proven record of marketplace honesty and integrity. Another comprehensive guide for marketing ethics is the Code of Ethics adopted by the American Marketing Association (AMA). Ethical companies subscribe to the AMAs Code of Ethics which is a guideline for ethical professional conduct. The code addresses honesty and fairness, rights and duties in all areas of marketing and organized relationships.

25 Ethical issues can always rise when doing business. Price Gouging Is not covered in the AMAs Code of Ethics; however it is a major concern in the pharmaceutical industry, as well as when a natural disaster creates a need for products such as bottled water or flashlights. Privacy Management of marketing information involves issues of privacy. Industries that maintain customer databases containing your personal information have the responsibility to keep your information private. Research Product research ad marketing research must report findings honestly by disclosing the facts involved in the research design and results.

26 Bribes Selling practices that come under scrutiny because of ethical issues often involve bribes. High-pressure selling tactics and failure to follow through on promises made to close a sale are examples of unethical selling practices. One of the reasons for this unethical behavior can be under pressure to meet sales quotas established by high- level management.

27 Management ultimately makes the decisions about major ethical issues that confront a business. From the top level right on down to the supervisory level, managers must take responsibility for establishing and creating role model for ethical practices within a firm. Proper Accounting and Reporting The Sarbanes-Oxley Act of 2002, was passed in response to the corporate scandals that involves misuse of company funds and unethical corporate governance. Whistle Blowing Provisions from the Sarbanes- Oaxley Act, as well as many other laws involving management and personnel issues, include whistle- blowing protection. Whistle Blowing involves reporting illegal action of ones employer.

28 Companies with an interest in ethical business behavior have or are developing guidelines to help employees make ethical decisions. It is important to remember that people make the decisions, and so business ethics are closely related to personal ethics.


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