2. Business Ethics and the Legal Environment of Business
Chapter Five
Business Ethics and the Legal Environment of Business
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McGraw-Hill/Irwin
Introduction to Business

3. Chapter 5 Business Ethics and the Legal Environment of Business
Understand the relationship between ethics and the law and appreciate why it is important to behave ethically.
Differentiate the claims of the stakeholder groups affected by a company’s actions.
Describe four rules to help companies and their employees act in ethical ways and identify the four main sources of business ethics.
Describe some methods companies can use to strengthen their ethical rules and positions.
Appreciate the important ways a nation’s business laws and regulations affect business commerce, occupations and organization.

4. Chapter 5 Business Ethics and the Legal Environment of Business
Ethical Dimension
There is an important ethical dimension in most kinds of business decision-making

5. Chapter 5 Business Ethics and the Legal Environment of Business
Ethics as a code of conduct presents ethical dilemmas that may be separate from the legal dimension and presupposes ethical behavior

6. Chapter 5 Business Ethics and the Legal Environment of Business
Ethics are motivation based on right and wrong and standards governing behavior and conduct

7. Chapter 5 Business Ethics and the Legal Environment of Business
Ethical beliefs/dilemma
May lead to the development of laws it may also question existing laws and justify illegal behavior
Digital piracy and/or downloading of copyrighted music and software is an example of this ethical dilemma

8. Chapter 5 Business Ethics and the Legal Environment of Business
Scope and Significance of Ethics
Stakeholders, including employees, managers, customers, suppliers, distributors, and community, society, and nation state. have a stake and a claim and can directly benefit or be harmed by its actions, and the business ethics of a company are important to them

9. Chapter 5 Business Ethics and the Legal Environment of Business
Scope and Significance of Ethics
When making business decisions managers must take the claims of all stakeholders into consideration and use four ethical rules or principles to analyze the affects of their business decisions

10. Chapter 5 Business Ethics and the Legal Environment of Business
Ethical Principles
Utilitarian
Moral rights
Justice
Practical rules

11. Chapter 5 Business Ethics and the Legal Environment of Business
Ethical Principles
The utilitarian rule suggests the ethical decision should produce the greatest good for the greatest number of people

12. Chapter 5 Business Ethics and the Legal Environment of Business
Ethical Principles
The moral rights rule suggests ethical decision should maintain and protect the fundamental rights and privileges of people

13. Chapter 5 Business Ethics and the Legal Environment of Business
Ethical Principles
The justice rule suggests the ethical decision should distribute benefits and harm among people in a fair equitable, and impartial manner

14. Chapter 5 Business Ethics and the Legal Environment of Business
Ethical Principles
The practical rules suggests the ethical decision should be one that a manager has no hesitation to communicate to people outside the company because the typical person in a society would think the decision is acceptable

15. Chapter 5 Business Ethics and the Legal Environment of Business
Effects of Ethical Behavior
Creates trust
Lowers transaction costs
Increases efficiency and effectiveness
Increases production of trade

16. Chapter 5 Business Ethics and the Legal Environment of Business
Effects of Ethical Behavior
Increases company profitability
Increases national standard of living, well being, and prosperity
unethical behavior is vice versa (no pun intended) or negates these effects

17. Chapter 5 Business Ethics and the Legal Environment of Business
Differences in Business Ethics
Determinants between companies and countries:
Societal
Organizational
Occupational
Individual

18. Chapter 5 Business Ethics and the Legal Environment of Business
Differences in Business Ethics
Determinants between companies and countries
Especially significant are the ethics of the company’s top managers

19. Chapter 5 Business Ethics and the Legal Environment of Business
Significance of Ethical Behavior
The company’s reputation is part of their goodwill and can enhance its profitability
Ethical behavior improves the quality of life and can reduce crime, poverty and unemployment rates and increase literacy rates

20. Chapter 5 Business Ethics and the Legal Environment of Business
Significance of Ethical Behavior
An organization can encourage its member to act ethically with incentives for ethical behavior and disincentives to punish those who behave unethically

21. Chapter 5 Business Ethics and the Legal Environment of Business
Significance of Ethical Behavior
Managers can also create authority relationships and rules that both promote and punish ethical/unethical behavior

22. Chapter 5 Business Ethics and the Legal Environment of Business
Significance of Ethical Behavior
Whistle- blowing occurs when employees feel powerless in the organization

23. Chapter 5 Business Ethics and the Legal Environment of Business
Subdivision of laws governing the business system and include:
Laws affecting business commerce
Laws affecting business occupations
Laws affecting business organization

24. Chapter 5 Business Ethics and the Legal Environment of Business
Additional classes of laws include
Practices related to business occupations
Regulation of occupational qualifications, promotion of employee health and safety, and business diversity
All laws help business protect its valuable resources

25. Chapter 5 Business Ethics and the Legal Environment of Business
Additional classes of laws include
Laws relevant to a company’s form of business organization and
Incorporation laws and bankruptcy laws
All laws help business protect its valuable resources

26. Chapter 5 Business Ethics and the Legal Environment of Business
Property rights are established in the granting of patents, copyrights, and trademarks

27. Chapter 5 Business Ethics and the Legal Environment of Business
Ethical Self-Interested Behavior
Managing money and personal finances is a complex and difficult activity but it can be one of the most rewarding
If you focus on determining the value of products and how they will provide you with utility now and in the future

28. Chapter 5 Business Ethics and the Legal Environment of Business
Ethical Self-Interested Behavior
Financial success ultimately derives from hard work, some luck and the ability to look ahead and think about the future consequences of the spending and saving decisions made in the present

29. Chapter 5 Business Ethics and the Legal Environment of Business
Ethical Self-Interested Behavior
The spending/saving decisions are are the same factors that result in success or failure in business