ETHICAL AND LEGAL ISSUES IN THE ESTABLISHMENT

AND OPERATION OF A BUSINESS

• Set out guiding principles intended to ensure a business and its employees
act with honesty and integrity
 Corporate Responsibility or Corporate Social Responsibility

• These are practices and policies undertaken by corporations that are intended to have a positive
influence on the world. Businesses have economic, financial, political, ethical, social and legal
responsibilities – these is often referred to as Corporate Responsibility or Corporate Social
Responsibility.
 Corporate Responsibility or Corporate Social Responsibility: some are
ethical and legal issues
I. Economic issues or responsibilities
* striving towards ensuring the business is profitable and contributes to a global and sustainable
economy.
* providing employment
• *exporting goods and services to earn foreign exchange

I. Financial issues or responsibilities

• Managing monies and assets in a way that is productive and creates a reasonable financial return to owner or investor
•pay a fair wage to employee
•Pay taxes and National Insurance contributions
I. Social issues or responsibilities
* To act and make decisions that are in the best interest of society
* To protect and adhere to policies on environmental issues
* develop the culture
* use profits to develop community (Sports, nation building etc.)
•
I. Political issues or responsibilities
* To act in accordance with laws or obligations of government
* To operate along democratic principles of equality and fair play
* To assist in setting policies by giving feedback and making suggestions
•
I. Ethical issues or responsibilities
* To conduct business with stakeholders or firms who are honest
* treat employees and customers in a manner that fits the ‘code of ethics’
* Ensure confidentiality in handling personal information
•
•Legal issues or responsibilities
* ensure the business is a bonafide (real or genuine) firm or establishment
* ensure the firm adheres to policies and regulations
* ensure capital is legally obtained legally and not tainted with illegal operations.
* Adoption of an organization code of ethics
•
CONSEQUENCES OF UNETHICAL PRACTICES
• Withholding of taxes – cheating the government of revenue needed for development, pay fines, close
business, affects business reputation

•
• Improper or unethical disposal of waste – leads to pollution (eyesores), affects reputation of business
• Misleading advertisement – unfair and fraudulent practice on the population. Publishing or circulating an
advert with false information.
• Money Laundering – distortions in the national economy (give a misleading impression of the
state of the country).

• Unfair Treatment of Customers – loss of business (closure, damaged reputations etc.)