Chapter 4

Business Ethics and

Social Responsibility pp. 52-65
Chapter 4
Learning Objectives
After completing this chapter, you’ll be
able to:
1. Define ethics and business ethics.
2. Give reasons why ethical behavior is
good for business.
3. List the steps for dealing with an ethical
dilemma

Introduction to Business, Business Ethics and Social Responsibility

Chapter 4
WHAT IS ETHICS?
• Ethics is the set of moral principles
by which people conduct themselves
in society - personally, socially, or
professionally.
Example: stealing, cheating, lying 
reflects one’s integrity
Introduction to Business, Business Ethics and Social Responsibility
Chapter 4
WHAT IS ETHICS?
• Business ethics is a set of laws
about how a business should conduct
itself.

• To be successful - any business

must operate legally and humanely.

Introduction to Business, Business Ethics and Social Responsibility

Chapter 4
LEGAL RESPONSIBILITY
• Sweatshops are factories that pay
workers poorly, are unhealthy, and
treat workers badly.

• Sweatshops led to the creation of…

Introduction to Business, Business Ethics and Social Responsibility

Chapter 4
LEGAL RESPONSIBILITY
…The Occupational Safety and
Health Administration (OSHA)

• OSHA is a division of the

Department of Labor that sets and
enforces work-related health and
safety rules.
Introduction to Business, Business Ethics and Social Responsibility
Chapter 4
LEGAL RESPONSIBILITY
• Other independent agencies protect
consumers, monitor broadcast
communications, and address
discrimination in the workplace

Introduction to Business, Business Ethics and Social Responsibility

Chapter 4
LEGAL RESPONSIBILITY
• Most businesses police themselves
by distributing codes of ethics.
• A code of ethics is a set of strict
guidelines for maintaining ethics in the
workplace.

Introduction to Business, Business Ethics and Social Responsibility

Chapter 4
ETHICS AS GOOD BUSINESS
• Unethical business practices can
affect your business indirectly – come
back and haunt you
• Violating gov regulations or code
of ethics can lead to being fired,
losing licenses, jail time
Introduction to Business, Business Ethics and Social Responsibility
Chapter 4
ETHICS AS GOOD BUSINESS
• Amount made in profits from one
unhappy customer can = a lot more
lost in business because of missed
repeat business or bad word-of-mouth
Example: Worst place to eat in town?
Why?
Introduction to Business, Business Ethics and Social Responsibility
Chapter 4
ETHICAL DECISION MAKING
• Business works best when
there is mutual trust between
the buyer and the seller.
Mutual SELLER
BUYER Trust

Introduction to Business, Business Ethics and Social Responsibility

Chapter 4
ETHICS AS GOOD BUSINESS
• Treating employees unethically can
also backfire
• Mistreating employees leads to a
high turnover rate. This increases the
cost of hiring and training new
employees.
Introduction to Business, Business Ethics and Social Responsibility
Chapter 4
ETHICAL DECISION MAKING

Ethical Decision Making =

more business activity and

more efficient productions of
goods and services!

Introduction to Business, Business Ethics and Social Responsibility

Chapter 4
MAKING ETHICAL DECISIONS
Steps if you find yourself in an ethical
dilemma or situations:
1. Identify the ethical dilemma
2. Discover alternative actions
3. Decide who might be affected
4. List the probable effects of the
alternatives
5. Select the best alternative
Introduction to Business, Business Ethics and Social Responsibility
Chapter
IMPORTANT
4
Graphic Organizer
ETHICAL QUESTIONS
Does it violate the law or policies? YES UNETHICAL
NO

What if everyone did this, but it’s bad? YES UNETHICAL

NO

Would this sacrifice long-term YES

MAY BE
benefits for short-term gain? UNETHICAL
NO

ETHICAL DECISION

Introduction to Business, Business Ethics and Social Responsibility

Chapter 4
• HOMEWORK

– Rd. Pgs. 59-63

– Questions 1-3 on Pg. 63

Introduction to Business, Business Ethics and Social Responsibility

Chapter 4
IMPORTANT ETHICAL QUESITIONS
Example: Downloading music on
KAZAA or MyNapster? How is this
“fair” to the artists? How do they make
money and keep making albums?

Introduction to Business, Business Ethics and Social Responsibility

Chapter 4
Learning Objectives
After completing this chapter, you’ll be
able to:
1. Define social responsibility.
2. Describe the social responsibilities
businesses have to society.

Introduction to Business, Business Ethics and Social Responsibility

Chapter 4
SOCIAL RESPONSIBILITY
Social responsibility is the duty to do
what is best for the good of society.
• Provide safe products
• Create jobs
• Protect the environment (recycling)
• Contribute to the standard of living in
society
Introduction to Business, Business Ethics and Social Responsibility
Chapter 4
SOCIAL RESPONSIBILITY
A conflict of interest is when a
business is tempted to put profits
before social welfare
Example: Dumping waste in the middle of
nowhere to save on disposal costs, putting
oil or other waste in a river so it will just
“wash away”
Introduction to Business, Business Ethics and Social Responsibility
Chapter 4
RESPONSIBILITY TO CUSTOMERS
• Business’s first responsibility is to the
customers.

• The Food and Drug Administration

(FDA), a government agency, protects
consumers from dangerous or falsely
advertised products.
Introduction to Business, Business Ethics and Social Responsibility
Chapter 4
OVER-THE-COUNTER MEDICINE LABEL

The FDA governs

advertising and
labeling of OTC
medicines.

Why does the

FDA feel that
regulation of
advertising and
packaging labels
is necessary?
Introduction to Business, Business Ethics and Social Responsibility
Chapter 4
CASE STUDY
1982 Johnson & Johnson
• poisoned Tylenol bottles popping up
• recalled all bottles, cost - $100 million
• made “tamper proof bottles”
• Today = best selling pain medicine

Introduction to Business, Business Ethics and Social Responsibility

Chapter 4
RESPONSIBILITY TO CUSTOMERS
• Fair competition = healthy for the
marketplace
• Some companies use unethical
means to eliminate competition
Example  conspire with other
companies to control the market for a
product
Introduction to Business, Business Ethics and Social Responsibility
Chapter 4
RESPONSIBILITY TO EMPLOYEES
• Businesses have a social
responsibility to create jobs
• They are expected to provide
employees with safe working
conditions, equal treatment, and fair
pay
Introduction to Business, Business Ethics and Social Responsibility
Chapter 4
RESPONSIBILITY TO EMPLOYEES
• Equal Pay Act (passed in 1964)
requires that men and women be paid
the same wages for doing equal work

• Americans with Disabilities Act

bans discrimination against persons
with physical/mental disability
Introduction to Business, Business Ethics and Social Responsibility
Chapter 4
RESPONSIBILITY TO EMPLOYEES
• It’s in a company’s best interest to
treat its workers fairly otherwise…
• low morale
• poor productivity
• high turnover rate
…will result

Introduction to Business, Business Ethics and Social Responsibility

Chapter 4
RESPONSIBILITY TO SOCIETY
• Businesses also have
responsibilities to society as a whole

• Many businesses plan for their

social responsibilities just like planning
for production or sale of their products

Introduction to Business, Business Ethics and Social Responsibility

Chapter 4
RESPONSIBILITY TO SOCIETY
• Environmental Protection Agency
(EPA, created 1970 by U.S. Gov) is a
federal agency that enforces rules that
protect the environment and control
pollution

Introduction to Business, Business Ethics and Social Responsibility

Chapter 4
RESPONSIBILITY TO SOCIETY
• Environmentally friendly things to do:
• Use biodegradable materials
• recycle, use recycled products
• soy based ink
• Eco-cars
• Better PUBLIC RELATIONS by
being environmentally aware
Introduction to Business, Business Ethics and Social Responsibility
Chapter 4
RESPONSIBILITY TO
CREDITORS & OWNERS
• Many companies have kept inaccurate
accounting records
• This effects both creditors and
stockholders
•Sarbanes-Oxley Act holds CEO
accountable

Introduction to Business, Business Ethics and Social Responsibility

Chapter 4
• HOMEWORK

• Key Points Review

– Questions 2-5.

Introduction to Business, Business Ethics and Social Responsibility

Chapter 4
Things you do personally to be Environmentally Friendly

How often do
you help the
environment?
What do you
do?

Source: The NPD Group

Introduction to Business, Business Ethics and Social Responsibility

Chapter 4
QUESTIONS?
• QUIZ NEXT CLASS – 20 pts (18 ?’s)
• T/F, Multiple Choice, Matching
• 1 Short Answer Question
• NOT Scantron, can use pen

Introduction to Business, Business Ethics and Social Responsibility

End of Chapter 4
Business Ethics and Social Responsibility