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Lecture 05
Lecture 05
Business Ethics and the Legal Environment
of Business
© 2007 The McGraw-Hill Companies, Inc., All Rights Reserved.
McGraw-Hill/IrwinIntroduction to Business
Chapter Five
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Chapter 5 Business Ethics and the Legal Environment
of Business
1. Understand the relationship between ethics and the law and appreciate why it is important to behave ethically.
2. Differentiate the claims of the stakeholder groups affected by a company’s actions.
3. Describe four rules to help companies and employees act in ethical ways and identify the four main sources of business ethics.
4. Describe some methods companies can use to strengthen their ethical rules and positions.
5. Appreciate the important ways a nation’s business laws and regulations affect business commerce, occupations and organization.
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Chapter 5 Business Ethics and the Legal Environment
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Ethical Dimension• There is an important ethical dimension in most kinds
of business decision-making • Evaluate the video and the role of
Environmental Responsibility
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Chapter 5 Business Ethics and the Legal Environment
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Ethics• Ethics as a code of conduct presents ethical dilemmas
that may be separate from the legal dimension and presupposes ethical behavior.
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Chapter 5 Business Ethics and the Legal Environment
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Ethics• Ethics are motivation based on right and wrong
and standards governing behavior and condu• Mugging(犯案行為 ) witness and changes in
Ethics over Time (Marijuana-大麻 )
• Evaluate a video of your choice and relate the key issues of Business Ethics
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Chapter 5 Business Ethics and the Legal Environment
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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
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Chapter 5 Business Ethics and the Legal Environment
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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
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Chapter 5 Business Ethics and the Legal Environment
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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
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Chapter 5 Business Ethics and the Legal Environment
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Ethical Principles• Utilitarian（功利主義）• Moral rights• Justice （正義）• Practical rules
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Chapter 5 Business Ethics and the Legal Environment
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Ethical Principles• The utilitarian rule suggests the ethical decision
should produce the greatest good for the greatest number of people
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Chapter 5 Business Ethics and the Legal Environment
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Ethical Principles• The moral rights rule suggests ethical decision should
maintain and protect the fundamental rights and privileges of people
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Chapter 5 Business Ethics and the Legal Environment
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Ethical Principles• The justice rule suggests the ethical decision should
distribute benefits and harm among people in a fair equitable, and impartial manner
• Sometimes ruthlessly (無情的 )
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Chapter 5 Business Ethics and the Legal Environment
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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
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Chapter 5 Business Ethics and the Legal Environment
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Effects of Ethical Behavior• Creates trust • Lowers transaction costs• Increases efficiency and effectiveness• Increases production of trade
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Chapter 5 Business Ethics and the Legal Environment
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• Evaluate the role of the power of small business in the video “Small Biz Power” and relate to business ethics and the legal environment of business
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Chapter 5 Business Ethics and the Legal Environment
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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
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Chapter 5 Business Ethics and the Legal Environment
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Differences in Business Ethics• Determinants between companies and countries:
- Societal - Organizational- Occupational
- Individual
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Chapter 5 Business Ethics and the Legal Environment
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Differences in Business Ethics• Determinants between companies and countries• Especially significant are the ethics of the company’s
top managers
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Chapter 5 Business Ethics and the Legal Environment
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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
• Evaluate RJR’s core value and relate to the four ethical principles
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Chapter 5 Business Ethics and the Legal Environment
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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
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Chapter 5 Business Ethics and the Legal Environment
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Significance of Ethical Behavior• Managers can also create authority relationships and
rules that both promote and punish ethical/unethical behavior
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Chapter 5 Business Ethics and the Legal Environment
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Significance of Ethical Behavior• Whistle-blowing occurs when employees feel
powerless in the organization
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Chapter 5 Business Ethics and the Legal Environment
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Legal Environment• Subdivision of laws governing the business system
and include • Laws affecting business commerce• Laws affecting business occupations• Laws affecting business organization
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Chapter 5 Business Ethics and the Legal Environment
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Legal Environment• 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
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Chapter 5 Business Ethics and the Legal Environment
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Legal Environment• 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
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Chapter 5 Business Ethics and the Legal Environment
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Legal Environment• Property rights are established in the granting
of patents, copyrights, and trademarks
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Chapter 5 Business Ethics and the Legal Environment
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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
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Chapter 5 Business Ethics and the Legal Environment
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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
• You can double your money by folding it in half and returning to your pocket or learn the Rule of 72. Evaluate and relate to your financial success
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Chapter 5 Business Ethics and the Legal Environment
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Ethical Self-Interested Behavior• The spending/saving decisions are the same factors
that result in success or failure in business
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