CH 4 Business Ethics and

Social Responsibility

Why is understanding business ethics and social responsibility important to you as a business

person, consumer, and citizen?

Ch 4 Targets• Define social responsibility issues.• Explain business ethics.• Explain the legal responsibility of

business ethics.• Give reasons why ethical behavior is good

for business.• List some important ethical questions.• Explain how ethics is related to the

consumer, employee, and society.

What is Ethics?

Ethics Set of moral principles by which people conduct

themselves personally, socially, or professionally.

Business ethics Set of laws about how a business should conduct itself.

Legal Responsibility Social Responsibility

Responsibility to Customers Responsibility to Employees

Graphic OrganizerImportant Ethical QuestionsDoes it violate the law or policies?

ETHICAL DECISION

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

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

UNETHICAL

NO

NO

NO

YES

YES

YES

MAY BE UNETHICAL

UNETHICAL

Ethics as Good Business

Affect your business indirectly Repeat customers High employee turnover

Affect your business directly Fines

Legal Responsibility

How do business make sure that their employees follow the laws?

Code of Ethics Set of strict guidelines for maintaining ethics in

the workplace.

Social Responsibility

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

The ethical obligations of a business are to: Provide safe products Create jobs Protect the environment Contribute to the standard of living in society• Conflict of Interest

• Business is tempted to put profits before social welfare

Responsibility to the Employees

Businesses have a social responsibility to create jobs. Safe Working Conditions Equal Treatment Fair Pay

Responsibility to the Employees (Legal)

Sweatshops Factories that pay workers poorly, are unhealthy, and treat

workers badly Occupational Safety and Health Administration

(OSHA) Division of the Department of Labor that sets and enforces work-related health and safety rules

Equal Pay Act Requires that men and women be paid the same wages for

doing equal work. Americans with Disabilities Act

Bans discrimination against persons with physical or mental disability.

Social Responsibility: To Customers

• Food and Drug Administration (FDA)• Government agency• Protects consumers from dangerous or falsely

advertised products• The FDA governs advertising and labeling of over-the-

counter medicines• Consumer Product Safety Commission (CPSC)

• Government agency• Protects consumer from dangerous consumer goods• Oversees recalls involving • Recalls.gov

Social Responsibility: To Society

Environmental Protection Agency (EPA), 1970 Federal agency that enforces rules that protect

the environment and control pollution.

Ch 4 Target Review• Explain business ethics.

• Set of laws about how a business should conduct itself• Explain the legal responsibility of business

ethics.• Business are responsible for the safety of employees

• Give reasons why ethical behavior is good for business.

• Most business rely on repeat customers• Employees are loyal• New customers

Ch 4 Target Review• List some important ethical questions.

• Is this against the law?• What if everyone did this?• Am I sacrificing long term benefits for short

term gains?• Define social responsibility.

• Duty to do what is best for the society• Explain how ethics is related to the

consumer, employee, and society.• Consumer – protection from dangerous or

falsely advertised products• Employee – create jobs with equal treatment• Society – environmental protection

Activity

Create a code of ethics to include in your business plan. Page 79 Guidelines for writing a code of ethics Be sure to include all 7 parts in your code (note it

does not mean make a list) Look at other codes of ethics for ideas

Student handbook is a ‘code of ethics’ Reviewed every year Includes how it will be enforced