DSST Business Ethics and Society

• An attempt to apply moral principles to business operations
• the study of morality

a person's character, their beliefs, their behaviors and can dictate how they act or respond in different situations.

• Social
• Economical
• Legal

the way people interact with one another

deal with business and money related issues

deals with the action of lawyers

a study of the extent to which an action can be viewed as necessary for businesses to thrive, and when it becomes unethical

• Enron was a gas company
• used bad accounting practices
• hid the company's debt by SPEs (special-purpose entities)

• in 1990s Dennis Kozlowski -> CEO
• SEC launched investigation on company
• CEO used company money to pay for personal purchases
• stole around 75 million
• with CFO moved money from company account into personal acounts

• declared bankruptcy
• internal audit -> wrongly reported expenses
• showed false debt infomtation

2002

tighened laws enforcing accounting and auditing practices to help restore stakeholder confidence in securities markets

came under investigation for insider trading

• many products produced in asian factories with
• low wages
• dangerous working conditions
• suffered from protests and complaints
• accepted responsibility
• improved work conditions

theory which claims that a person's happiness or pleasure is the only ultimate good.

the belief that people should act only in their best interests.

the theory that ethics is subject to society.

any type of moral theory which determines the morality of an action based on the result or consequences that it produces.

• consequences of action -> good; action = moral
• consequences of action -> bad; action = immoral

John Stuart Mill

• a social theory that associates an actions morality to its positive and negative consequences
• ex: if the benefits exceed the cost then the action is moral.

• Act
• Rule

considers all the possible actiuons that can be taken and deciding which would be most favorable for all involved

• considers actions independently of situation, determines whether it is moral as a genral rule
• based on which will reuslt in the greastes good for socitey, which is most acceptable

based on the idea of duty

Immanuel Kant

• sole indicator of morality is a persons motivation for doing and action
• the only TRULY good motive is good will- acting our of a sense of duty

• a regualation which prevents lenders from exploiting those that they lend money to.
•  requires that ceratin information be disclosed when a person is applying for a loan or credit
• helps person to more easily compare different options

• People will act according to what they believe is moral
•  they decide this as they grow and develop and interact with one another

• Lawrence Kohlberg,
• psychologist
• 6 stages
• 3 levels

• a person is motivated by avoidance of punishment
• lowest stage
• ex: a business acting appropriately -> the consequences of breaking the law

• a person is motivated through seeking rewards
• ex: company donates to charity -> tax write off

• a person is motivated b how they believe thier actions will be percieved,also how it benefits/ hurts others
• ex: a business chooses to dispose of nuclear waste properly -> they worry about the negative impact on customers and the environment

• a person is motivated by the demands of authority figures
• ex: a company would would dispose of the nuclear waste properly -> it is the law

• a person is motivated by an obligation to society
• ex: using the previous examples- the company feels obligated to society to ensure that no one is harmed by the nuclear waste they generate

• a person believes in adherence to universal principles
• ruled by conscience
• few people if any achieve this degree of moral development

• level 1- pre-conventional morality - stages 1 & 2
• level 2- conventional morality- stages 3 & 4
• level 3- post conventional- stages 5 & 6

where there is one owner of a business

• multiple owners
• ran the same way as a proprietorship

• does not have a single owner
• has many shareholders
• led by board of directors

• appointing people to oversee daily operations of the business
• has legal responsibility for the actions of the company
• hiring managers and important corporate officers

the expectations and standards which are embodied in a business based on collective concernsa of owners, employees, suppliers, and the community of that business

• the consideration of large companies about the well-being of society when they make business decisions.
•  requires companies to consider people & the environment along with their own profit.

• Economic
• legal
• ethical
• philanthropic

• most basic and fundamental level of responsibility of a company
• attempts to maximize profits and do the best it can as a business financially

to know and abide by government regulations

• cover everything from employee issues to issues of international trade
• e.g.: privacy, wages

legal and economical

whether a business follows acceptable standards of behavior

NAFTA and WTO are working to develop universal ethical standards

• employee commitment
• contributes to investor loyalty
• contributes to customer satisfaction

• the way the company "gives back" to the community it operates in
•  essentially entirely unregulated
• helps develop a repuatation

placing the good of others above yourself

• the idea that people should treat others the way they themselves want to be treated
• e.g.: the golden rule

• a person who literally owns a part of a corporation
• e.g.: has purchased stocks, or shares of a company

• affected by decisions made by the company
• e.g.: shareholder, managers, other employees, customers of company

voluntary practices and mandated boundaries

the ethical practices of a business that are not required, but the business chooses to engage in them

Includes all laws, rules, regulations and requirements imposed from external sources

Civil and criminal

• enforced by government agencies, and is typically passed to prohibit actions such as fraud or theft
• e.g.: police
• violators of ciminal law are subject to punishment such as fines, jail, or prison sentences

• deals with a person, organization or business' rights and responsibilities
•  never involves government agencies prosecuting a person for breaking a law

• laws regulating competition
• protecting consumers
• ensuring equality and safety

laws designed to prevent monopolies from forming which were hamrful to the economy as a whole

a place where goods and services are bought and sold.

a conglomerate of all different markets

when a single person or business is the only supplier of a particular product

A. Wheeler-Lea Act

D. Lanham Act

B. Trademark  Counterfeiting Act

C. Clayton Act

• Pure Food and Drug Act
• passed in 1906

• enforcing consumer protection laws
• regualtling any economic issue that affects the average citizen

protects consumers from unfair business practices by regulating advertising and marketing

Children's Online Privacy Protection Act

prevents companies from obtaining personal information from children under 13 without their parents consent

D. Federal Hazardous substances Labeling Act

C. Toy Safety Act

C. Nutritional Labeling and Education Act

• A person may not be discriminates against based on their race, color, religion, gender, or nationality.
• a business cannot refuse to hire someone or do business with someone based on any of those factors

programs which seek to reduce or reverse the effects of discrimnation

came as a result to the widespread past discrimination against women

Ensures that jobs typically held by women that involve the same levels of work and risk as other jobs, receive the same level of pay.

D. Equal Pay Act

C. Age Discrimination in Employment Act

D. Preganacy Discrimination Act

Designed to ensure that people with disabilities recieve the same opportunites for work as people without disabilities.

applies to all government agencies, labor unions & private employers with more than 15 employees

ADA do not have preference

• ensure that business employ proper safety methods and maintain safe working conditions.
• Protects agains workplace hazard

ensure that environmental laws are followed

B. Clean Air Act

B. Endangered Species Act

C. Federal Water Pollution Act

A. Oil Protection Act

• a regulatory agency-> reports to the Dept of Health & Human Services
• Responsible for ensuring public health and safety
• monitors products which come into conatact with people;ensures taht they are safe, sanitarry and properly labeled
• make sure that businesses dont cut corners with potentially dangerous products
• e.g.: food, drugs, vaccines, cosmetics, radioactive products

• the study of designing more comfortably or easily used equipment
• to make workers more productive

management of employees which includes : hiring, training, preventing employees from quitting, attracting employees, reatining employees

1920s

a wage that is suffienct to allow education, good health, and eventually retirement

requires that employers give at least 60 days advanced warning to employees before a plant closure or mass layoff

Agreement  between two or more groups to keep information private

• have time specifications, are not indefinate
• have to state purpose of agreement

• a person who comes forward with information exposing wrongdoing by or within a company.
• e.g.: anything illegal or unethical

Protects employees of the federal government who expose incidences of waste of funds, abuse, of authority, violations of laws or any other issue from any action being taken against them

encourages employees to expose efforts by a company to avoid paying federal taxes, providing false information to the federal government, conspiring to do either of those things or other acts which involve fraud toward the federal government

• 1. company must have a system of internal auditing through which an employee can file complaints
• 2. create legal responsibilty for lawyers to inform on clients who violate SEC regulations
• 3. prohibits any from of retailiation by employers to employees who legally inform about ethics violations to the proper sources and provide the whistleblowers with compensation for legal fees.
• 4. allows for violators of any of the other elements can be charged under criminal law

• an issue of personal belief and ethics
• occurs on the basis of demographics
•  e.g.: race, gender, religion, marital status, ethinicity

• based demographics
• creating a situation which favors certain types of people to an unreasonable extent in hiring
• firing practices
• discriminating against a group of customers

unintentional discrimination or statistical discrimination

disproportionate number of workers that fall into a certain category, but not done so deliberately.

Equal Employment Opportunity Commission (EEOC)

• 1. must be strong, and demonstrable, reason for initiating the program
• 2. program should only apply to qualified candidates
• 3. cannot be permanently and rigidly defined

• any repeated unwanted behavior of a sexual nature
• e.g.: physical actions, words, images, and written material

created when an action is unwanted, severe, ans it has an effect on a person's ability to work

when a person feels that their employment status is dependent on responding to unwelcome sexual advances

legal entities with the ability to bargain  on behalf of workers to improve working conditions

• operate on the basis of collective bargaining
• all workers act as one in neogotiating with management
• deal with issues ranging from workplace safety to wages etc

• outlines actions that are not allowed by management in an attempt to protect the rights of employees to form a union
• describes any practice that would interefere with a workers ability to create or operate within a union
• e.g.:discriminating against employees that belong to unions, refusing to bargain with unions

any deliberate attempt to decieve, manipulate, or conceal facts.

Exaggeration, or making claims that are not reasonable and misleading customers

when an advertisment is technically true on a literal basis, but by  nature has the tendency to mislead or confuse customers.

when and advertisement is not true in nature

• product
• place
• promotion
• price

• when a company charges different amounts for a different product situation
•  e.g.: charging who urgently needs a product and different price than someone else who is buying the product

a practice of providing goods at lower prices than competitors in order to drive competitors out of business

when a company sells a large number of products at a price below the fair value

when consumers or customers work to decieve businesses for their own gain

• information which a company keeps confedential
• believed to give company a competitive advantage
• e.g.: trade secrets, budgets, profit margins,secret formulas, recipes

• can only be obtained for information which a person or business can prove is new ans non-obvious
• must have actually invented something

protects the proprietart information of written materials

• words or names that can be identified with specific companies and products
• e.g.: logos, symbols & brand names

the ethical and legal way of gathering information

strategic and tactical

information gathering that has its purpose in the long run success of the business

used to help the company make short term decisions

• the unethical and illegal side of information gathering
• by obtaining proprietary information in an unethical way
• e.g.: hacking, social engineering

the process of breaking into computers or networks

term used to describe going through the trash of a company whose information you are after, in an attempt to gather information

• people hacking
• using people to try and learn infromation about target company
• e.g.: shoulder surfing, whacking, phone eavesdropping

when a person has multiple interests and they influence each other

when a person is a part of ( or benefits from) both ends of a deal

when a person has multiple jobs and their interests conflict between them

when a broker owns securities and spreads rumors about them to make the price go up, then sells before prices go back down

• occurs when a person legally trades stock within their company
• can only buy and sell within a six month period

when an insider gains information about the company which is not available to the public and uses that information when buying stock

when a person or business sends out a large amounts of email

a piece of code which is used to disrupt computer function

• software that is usedon the site to track user information for personalization
• can track customer and employee activity

• a person has the right to know and access any files that the federal government is keeping on them
• prevents government agencies from sharing information that they have with other agencies
• can only be shared with the individual whose information it is 

• allows the FBI to search the email, phone records, and financial records of citizens
• can even search homes and offices of citizens without their knowledge.

• World Trade Organization (WTO)
• North American Free Trade Agreement (NAFTA)
• European Union (EU)

International Monetary Fund

the World Bank

• agreement between Canada, Mexico, and the US
• to lower trading barriers
• dealing with trade dispute between the countries

• deals with trade on a global level
• eliminate barriers to trade
• help developing countries in trade matters
• supervise international trade
• settle trade disputes among member countries

• swiss organization
• works to create awareness in businesses around the globe and teach tools and strategies to maintain a minimum ethical standard

• created to stop the circulation of conflict diamonds
• e.g.: blood diamonds, war diamonds
• states that rough diamond (uncut) must be shipped in tamper proof containers and be certified

• an unconscious method of judgement
• a person's perceptions of the world emerge from their past experiences and their values

• promoting equal opportunity for all races
• promoting respect for human rights
• respect of intellectual property
• refusing to accept bribes
• ensuring employee safety

• focuses on protecting the environment
• abolishing child labor
• permitting unions to form

• an amendment to the United Nations Framework Convention on Climate Change (UNFCC)
• agreement aims to reduce the collective worldwide greenhouse gas emissions by 5.2 %

United States and Australia

• a company that is publicy traded
• e.g.: a person could buy or sell stocks
• has a strong presence in multiple countries
• has potential to influence worldwide policy

• makes it illegal for any U.S. citizen to bribe a foreign offical
• makes it illegal for anyone (citizen or not) on U.S. soil to further such payment
• does allow grease payments

• when a person pays a low level offical to make something happen faster than it normally would
• involve relativly small amounts of money
• attempting to make others do their job faster

• an attempt to influence someone to make a decision that they wouldnt normally make.
• can be a from or promotion, tips, special consideration, stock options, any form of property

a global organization which works to expose and reduce incidences of human rights violations.

• 1. communication between management and employee is critical
• e.g.: open  and clear lines of communication
• 2. encourages managers to be informed about issues that are specific to the region in which they are operating
• e.g.: all cultures are different and
• 3. companies need to meet the minimum legal requirements as far as human rights go
• e.g.: best practices

• when a company moves part of their business to another location
• e.g.: another country, or in country with another company, usually for decreasing price,

allows foreign citizens to bring a citizen of the U.S. to trial in the U.S.

a system of accountability, oversight, and control within the company