lecture notes ch. 5

lecture notes ch. 5 - Chapter 5 Title:BusLawSeal.eps...

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Chapter 5 Ethics and Business Decision Making C HAPTER O UTLINE I. Business Ethics Ethics is the study of what constitutes right and wrong behavior. Ethics focuses on morality  and the derivation and application of moral principles. A.WHAT IS BUSINESS ETHICS? Business ethics focuses on what constitutes ethical behavior in the world of business.  Business ethics is  not  a separate kind of ethics.
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B.WHY IS BUSINESS ETHICS IMPORTANT? An understanding of business ethics is important to the long-run viability of a business,  the well being of its officers and directors, and the welfare of its employees. C. C OMMON R EASONS W HY E THICAL P ROBLEMS O CCUR The common thread among ethical problems that occur in business is a desire  to  increase sales, or to avoid decreasing them, which can enhance a business’s profitability  and market value. In most situations, however, unethical conduct is ultimately more  costly. 1. Short-Run Profit Maximization In the short run, unethical behavior may cause profits to increase. In the long run,  however,   such   behavior   may   lead   to   costly   lawsuits,   settlements   and   other  payments, and bad publicity, undercutting profits. ✩★✩ Answer to Video Question Ltr. A ✩★✩ According to the instructor in the video, what is the primary reason why businesses act ethically? The instructor in the video says that businesses can and do act  ethically because “good, ethical behavior is the best long-term strategy for a company.” 2. Determining Society’s Rules—The Role of Corporate Influence In   attempting   to   obtain   favorable   regulations,   corporate   lobbying,   which   may  include “open” job promises to regulators, may also contribute to bad business  ethics. D. T HE I MPORTANCE OF E THICAL L EADERSHIP Management   must   set   and   apply   ethical   standards   to   which   they   are   committed.  Employees will likely follow their example. Ethical conduct can be furthered by not  tolerating unethical behavior, setting realistic employee goals, and periodic employee  review.
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C ASE S YNOPSIS Case 5.1:   Baum v. Blue Moon Ventures LLC The Baums run an asset recovery business. In one case, they recruited clients by misrepresenting  the facts and pretending to be licensed to practice law in Texas. They filed “gratuitous, malicious”  pleadings, lied to the court, and otherwise abused the judicial process. The court imposed sanctions,  including an injunction to prohibit the Baums from filing claims related to the same case in any Texas  state court without the permission of a certain federal judge. Later, the Baums injected themselves into  a bankruptcy case in which they engaged in similar tactics. The injunction was expanded to include 
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This note was uploaded on 09/05/2011 for the course LAW 3000 taught by Professor Ms.zarac.sette during the Spring '11 term at Hawaii Pacific.

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lecture notes ch. 5 - Chapter 5 Title:BusLawSeal.eps...

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