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Business 100 Chapter 5 Business Ethics and the Legal Environment of Business Ethical Environment of Business Ethics - A set of moral principles or values (may change over time) Ethical Dilemma – the problem that people experience when they must decide whether or not they should act in a way that benefits someone else even if it harms others and is not in their own self interest. Stockholders have ownership in a business and their goal is to maximize profits (i.e., people who own the businesses stock) Stakeholders are influenced by a business (i.e., employees, customers, suppliers, community as a whole) Rules for ethical decision making 1. The Utilitarian Rule – an ethical decision should produce the greatest good for the greatest number of people 2. The Moral Rights Rule – an ethical decision should protect the fundamental or inalienable rights (life and safety, freedom, privacy, free speech) of people affected by it. 3. The Justice Rule – an ethical decision should distribute benefit and harm among people and groups in fair and impartial ways 4. The Practical Rule – an ethical decision that a manager has no hesitation about communicating to society because the typical person would find it acceptable Sources of Business Ethics 1. Societal Ethics – standards that govern how members of a society should deal with one another in matters involving fairness, justice, poverty, and the rights of individuals. Comes forth as a result of the society’s laws, customs, and practices (ingrained in the moral fabric of a society). Societal ethics vary among societies i. Germany, Japan, Sweden, and Switzerland have been identified as some of the most ethical countries with strong values about social order and protecting the welfare of all people. ii. In general, the poorer the country is, the more likely employees are to be treated with little regard. 2. Occupational Ethics – standards that govern how members of a profession conduct themselves when performing work-related activities. (i.e., Lawyers should act in the best interest of their clients rather than choosing the route that will pay the most) 3. Individual Ethics – personal standards and values that determine how people should act towards others when their own self interests are at stake. 4. Organizational Ethics – the values and beliefs that guide an organization’s behavior toward its stakeholders Whistleblower – a stakeholder (usually an employee) who reveals an organization’s misdeeds to the public Legal Environment of Business Laws affecting business commerce (see handout for additional information) 1. Antitrust Laws – curb power of big business and make it illegal for companies to conspire with one another to limit supply and keep process high a. Rockefeller formed a monopoly with Standard Oil company b. The Securities and Exchange Commission (SEC) charged with overseeing corporate behavior and business commerce 2. Consumer Safety and Protection Laws 3. Environmental Protection Laws – govern how companies treat the natural environment. 4. Employee Relations Laws