ETHIC AND LEGAL ISSUES IN ESTABLISHING AND OPERATING A BUSINESS

The government plays an integral role in regulating the operations of a business. Since a business
is considered a legal entity, there is a framework in which each business should function. There
are legal and ethical issues involved in the establishment and operations of business entities.
Legal issues inform the way in which business operations need to be conducted and how the
business should be formally established. This will be directly related by government regulations
and laws.
Ethical issues refer to the moral responsibility of the entrepreneur to ‘do the right thing’
towards internal and external stakeholders. These include the customers, suppliers, local and
national government, the local community as well as future generations (in terms of how the
company respects the environment).
Legal and ethical issues include:
● Misleading advertising
● Business registration acquisition of licences and permits
● Disposal of waste
● Filing of tax returns
● Remunerating employees for services offered
● Adhering to Money Laundering Act
● Adhering to Building and Town Planning Act
● Noise pollution
● Protection of the environment
● Copyright infringement
● Product safety and labelling
● Animal welfare
Consequences of Unethical and illegal practices
Legal and ethical issues Consequences of illegal practice

Misleading advertising Loss of customer loyalty, lawsuits

Improper business registration
Failure to obtain business licence and permits
Improper disposal of waste
Withholding of taxes
Filing fraudulent tax returns
Failure to compensate employees
adequately/fairly
Failure to adhere to Building and Town
Planning Act
Failure to adhere to Money Laundering Act
Environmental pollution
Noise pollution
Denied financial assistance from financiers
and business can be closed by government
agencies
Business can be closed due to its illegal
operations
Governments can charge fines for breaching
laws; business can be closed if citizens are at
risk form improper disposal of waste
Government can charge fines for breaching
laws; businesses can be shut down by
government; imprisonment
Government can charge fines for breaching
laws; businesses can be shut down by
government; imprisonment
Government can charge large fines for
non-compliance
Employees and community members can file
lawsuits against the company and its
reputation can be jeopardized; building can be
demolished
Government can charge fines for breaching
environment laws
Government can charge fines for breaching
the law

Legal and Ethical Principles that Must be Adopted in Establishment and Operation of a
Business
(i) The adoption of organizational Code of Ethics. The development and enforcement of
this document within an enterprise should mean that a company develops a strong
corporate culture, which encourages legal and ethical corporate behavior.
(ii) The adoption of policies on environmental issues – such as disposal of corporate
waste
(iii) The adoption of policies based on the handling of employees’ personal information,
and corporate information. This may help guard against fraud and the leakage of
confidential corporate data and information
Code of ethics – an organisation’s overall principles that guide its decisions and actions in
relation to internal or external issues. It provides a general understanding of the ethical or moral
responsibilities that the owners and governing bodies are expected to meet.
Code of Conduct - an internal document that is the practical application of the code of ethics. It
is in effect a set of rules and guidelines that describe how people within the organization are
expected to behave.
Code of practice – is a set of written rules which explain how people working in a particular
profession should behave as they carry out their work. This is intended to reflect good practice
that is generally recognized by the whole profession.

Careers in Business
There is a fundamental difference between a job and a career. A job may be described as a
regular economic activity an individual engages in in exchange for monetary compensation. A
career, however, is an area of occupational specialization you develop over time with years of
experience.
As a business student, a variety of career options may be available to you. Below are some
examples you may consider.
❖ Software Developer
❖ Web Planner
❖ Web Designer
❖ Resource Personnel
❖ Communication Officer
❖ Educator
❖ Strategic Planner
❖ Compliance Officer
❖ Advertising and Public Relations
❖ Entrepreneur

PLEASE NOTE

(Assignment – For each career option above, write one sentence to identify the
responsibility of the discipline). 10 marks

Due – Monday, November 30, 2020