Chapter 2 M Business and NOTES.pdf - We continue part 1 of your textbook Business in a Changing World with chapter 2 Business Ethics and Social

Chapter 2 M Business and NOTES.pdf - We continue part 1 of...

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We continue part 1 of your textbook, Business in a Changing World, with chapter 2, Business Ethics and Social Responsibility. 1
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We define business ethics as the principles and standards that determine acceptable conduct in business. The acceptability of behavior in business is determined by not only the organization but also stakeholders such as customers, competitors, government regulators, interest groups, and the public, as well as each individual’s personal principles and values. Most unethical activities within organizations are supported by an organizational culture that encourages employees to bend the rules. 2
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Many consumers and social advocates believe that businesses should not only make a profit but also consider the social implications of their activities. We define social responsibility as a business’s obligation to maximize its positive impact and minimize its negative impact on society. Although many people use the terms social responsibility and ethics interchangeably, they do not mean the same thing. Business ethics refer to an individual’s or a work group’s decisions that society evaluates as right or wrong Social responsibility is a broader concept that concerns the impact of the entire business’s activities on society 3
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The government steps in when necessary to pass laws and regulations that encourage businesses to conform to society’s standards, values, and attitudes. The Sarbanes-Oxley Act was enacted after several accounting scandals at well- known firms in the early 2000s shook public confidence. The act criminalized securities fraud and stiffened penalties for corporate fraud. The Dodd-Frank Act was enacted after the most recent recession and was passed to reform the financial industry and offer consumers protection against complex and/or deceptive financial products. Many problems and conflicts in business can be avoided if owners, managers, and employees knew more about business law and the legal system. Business ethics, social responsibility, and laws together act as a compliance system, requiring that businesses and employees act responsibly in society. 4
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Most legal issues arise as choices that society deems unethical, irresponsible, or otherwise unacceptable. However, all actions deemed unethical by society are not necessarily illegal, and, as this table shows, both legal and ethical concerns change over time. This table shows some of the issues of the past and how society’s concerns have changed. Source: Adapted from “Business Ethics Timeline” copyright 2003, Ethics Resource Center (n.d.) , updated 2010 5
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Recognizing ethical issues is the most important step in understanding business ethics. We define an ethical issue as an identifiable problem, situation, or opportunity that requires a person to choose from among several actions that may be evaluated as right or wrong, ethical or unethical. Learning how to choose from alternatives and make a decision requires not only good personal values but also knowledge and competence in the business area of concern.
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