Making

MakingEthical
EthicalDecisions
Decisions
and
andManaging
ManagingaaSocially
Socially
Responsible
ResponsibleBusiness
Business
Chapter
3
THE
THEFUTURE
FUTUREOF
OFBUSINESS
BUSINESS
Gitman
Gitman&&McDaniel
McDaniel
55ththEdition
Edition

Prepared
Preparedby
by
Chapter 3

Deborah Baker
Deborah Baker
Texas
Texas ChristianUniversity
Christian University
 Learning Goals

1 What philosophies and concepts shape personal

ethical standards?
2 How can organizations encourage ethical business
behavior?
3 What is social responsibility?
4 How do businesses meet their social responsibilities
to various stakeholders?
5 What are the global and domestic trends in ethics
and social responsibility?
Chapter 3

Copyright 2005 by South-Western, a division of 2

 Learning Goals

Appendix:

6 How does the legal system govern business

transactions and settle business disputes?
7 What are the required elements of a valid contract;
and what are the key types of business law?
8 What are the most common taxes paid by
businesses?
Chapter 3

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 1 Learning Goal 1

What philosophies and concepts

shape personal ethical standards?
Chapter 3

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 Ethics

AAset
set ofof moral
moral standards
standards
for
for judging
judging whether
whether
Ethics
Ethics something
something is is
right
right or
or wrong.
wrong.
Chapter 3

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 1 Individual Business Ethics

Utilitarianism
Utilitarianism

Factors
Factors Individual
Individual Rights
Rights
Influencing
Influencing
Individual
Individual
Business
Business Justice
Justice
Ethics
Ethics
Recognizing
Recognizing Unethical
Unethical
Business
Business Activities
Activities
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 1 Recognizing Unethical Business Activities
1.
1. Taking
Taking things
things that
that dont
dont belong
belong to
to you.
you.
2.
2. Saying
Saying things
things you
you know
know are
are not
not true.
true.
3.
3. Giving
Giving or
or allowing
allowing false
false impressions.
impressions.
4.
4. Buying
Buying influence
influence or
or engaging
engaging in
in aa conflict
conflict of
of interest.
interest.
5.
5. Hiding
Hiding or
or divulging
divulging information.
information.
6.
6. Taking
Taking unfair
unfair advantage.
advantage.
7.
7. Committing
Committing improper
improper personal
personal behavior.
behavior.
8.
8. Abusing
Abusing another
another person.
person.
9.
9. Permitting
Permitting organizational
organizational abuse.
abuse.
10.
10. Violating
Violating rules.
rules.
Chapter 3

11.
11. Condoning
Condoning unethical
unethical actions.
actions.
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 2 Learning Goal 2

How can organizations

encourage ethical
business behavior?
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 2 HOW ORGANIZATIONS INFLUENCE ETHICAL CONDUCT

Lead
Lead by
by Example
Example

Offer
Offer Ethics
Ethics Training
Training Programs
Programs

Establish
Establish aa Formal
Formal Code
Code of
of Ethics
Ethics
Chapter 3

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 3 Learning Goal 3

What is social
responsibility?
Chapter 3

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 3 SOCIAL RESPONSIBILITY

Philanthropic

Ethical

Legal

Economic
Chapter 3

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 3 Understanding Social Responsibility

Legality Responsibility
Chapter 3

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 3 Understanding Social Responsibility

Responsible Irresponsible

Follows laws, and Follows laws, but

Legal

benefits society harms society

Benefits society, Harms society,

Illegal

but breaks laws and breaks laws

Chapter 3

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 4 Learning Goal 4

How do businesses meet

their social responsibilities
to various stakeholders?
Chapter 3

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 4 RESPONSIBILITIES TO STAKEHOLDERS

Employees
Employees

Responsibilities Customers
Customers
Responsibilities
of
of aa
Business
Business General
General Public
Public

Investors
Investors
Chapter 3

Copyright 2005 by South-Western, a division of 15

 5 Learning Goal 5

What
What are
are the
the global
global and
and
domestic
domestic trends
trends in
in ethics
ethics
and
and social
social responsibility?
responsibility?
Chapter 3

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 5 TRENDS IN ETHICS & SOCIAL RESPONSIBILITY

Strategic
Strategic giving
giving in
in corporate
corporate philanthropy
philanthropy

A
A new
new social
social contract
contract between
between
employer
employer and
and employee
employee

Growth
Growth of of global
global ethics
ethics and
and
social
social responsibility
responsibility
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 5 Trends in Global Ethics

Responsibilities
Responsibilities of
of aa
Multinational
Multinational Corporation
Corporation

Respect local practices and customs

Ensure harmony between staff and
host population
Provide management leadership
Develop local managers who will be a
credit to the community
Implement ethical guidelines within the
organization in the host country
Chapter 3

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 6 APPENDIX: Learning Goal 6

How
How does
does the
the legal
legal system
system
govern
govern business
business transactions
transactions
and
and settle
settle business
business disputes?
disputes?
Chapter 3

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 6 The Legal and Tax Environment

The
Therules
rulesgoverning
governing aa
societys
societysconduct
conduct that
thatare
are
Laws
Laws created
createdand
andenforced
enforcedbyby
aacontrolling
controllingauthority
authority
Chapter 3

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 6 The Main Sources of Law
Common
Common Law
Law Statutory
Statutory Law
Law

Evolved out of Written law, enacted

judicial decisions by legislatures

Case law Administrative law is

passed by boards,
commissions, and
agencies
Chapter 3

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 6 The Court System
Trial
Trial Courts
Courts

Appellate
Appellate Courts
Courts

The
The Supreme
Supreme Court
Court

Administrative
Administrative Agencies
Agencies

Nonjudicial
Nonjudicial methods
methods

Arbitration
Arbitration Mediation
Mediation
Chapter 3

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 7 APPENDIX: Learning Goal 7

What
What are
are the
the required
required elements
elements
of
of aa valid
valid contract;
contract; and
and what
what are
are
the
the key
key types
types ofof business
business law?
law?
Chapter 3

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 7 Elements of a Valid Contract

Mutual
Mutual assent
assent

Capacity
Capacity

Consideration
Consideration

Legal
Legal purpose
purpose

Legal
Legal form
form
Chapter 3

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 7 Breach of Contract
Remedies
Remedies for
for
Breach
Breach of
of Contract
Contract

Payment
Payment of
of
Damages
Damages

Specific
Specific Performance
Performance of
of the
the Contract
Contract

Restitution
Restitution
Chapter 3

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 7 Warranties

Specific
Specific statements
statements of of fact
fact
Express
Express or
or promises
promises about
about aa product
product
Warranties
Warranties by
by the
the seller.
seller.

Neither
Neither written
written nor
nor oral.
oral.
Implied
Implied These
These guarantees
guarantees are
are imposed
imposed onon
Warranties
Warranties sales
sales transactions
transactions by
by statute
statute or
or
court
court decision.
decision.
Chapter 3

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 7 Patents, Copyrights, Trademarks

Gives
Gives an
an inventor
inventor the
the exclusive
exclusive right
right
Patent
Patent to
to manufacture,
manufacture, use,
use, and
and sell
sell an
an
invention
invention for
for 17
17 years.
years.

An
An exclusive
exclusive right
right to
to use,
use, produce,
produce,
Copyright
Copyright and
and sell
sell creations,
creations, such
such as
as books,
books,
articles,
articles, movies,
movies, works
works ofof art.
art.

AA design,
design, name,
name, oror other
other distinctive
distinctive
Trademark
Trademark mark
mark used
used by by aa manufacturer
manufacturer to to
identify
identify its
its goods.
goods.
Chapter 3

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 7 Key Consumer Protection Laws
Federal crime to defraud
Mail Fraud Act
consumers through mail

Pure Food & Drug Act Created the FDA

Consumer Product Created the Consumer

Safety Act Product Safety Commission
Requires health hazard
Cigarette Labeling Act
labels on cigarettes
Limits advertising shown
Childrens Television Act
during childrens TV shows
Americans
Americans with
with Protects
Protects the
the rights
rights of
of people
people
Disabilities
Disabilities Act
Act with
with disabilities
disabilities
Chapter 3

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 8 APPENDIX: Learning Goal 8

What
What are
are the
the most
most common
common taxes
taxes
paid
paid by
by businesses?
businesses?
Chapter 3

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 8 Taxation of Business

Income
Income Taxes
Taxes

Property
Property Taxes
Taxes

Payroll
Payroll Taxes
Taxes

Sales
Sales Taxes
Taxes

Excise
Excise Taxes
Taxes
Chapter 3

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