Watch your thoughts; they become words.

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• Watch your thoughts they become words.
• Watch your words they become actions.
• Watch your actions they become habits.
• Watch your habits they become character.
• Watch your character it becomes your destiny.
• - Frank Outlaw  

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Welcome to Introduction to Business BUS 002

• Agenda
• January 31, 2008 (Th), February 6, 2008 (Wed)
• TOPIC Ethics Professional Responsibility
• Check-Ins Questions, Comments, Reflections, AhHa
  Moments
• Article
• FTC Warns Mortgage Advertisers and Media That
  Ads May Be Deceptive source Federal Trade
  Commission
• FAA Orders Inspections of All Newer 737s
  source SFGate.com
• Distribute Think Write 1
• Review Sources of American Law Commerce Clause
• Ethics and Professional Responsibility
• Emancipate

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Class Norms

• No Anxiety
• Take care of your of your own needs
• Agenda then emancipate
• Submit assignments on time
• Preserve the dignity of self and others in the
  class
• Have regard for everyones voice

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Learning Objectives

• What is ethics? What is business ethics? Why is
  business ethics important?
• How can business leaders encourage their
  companies to act ethically?
• What duties do professionals owe to those who
  rely on their services?
• What types of ethical issues might arise in the
  context of international business transactions?

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Vocabulary

• Ethics Right or Wrong behavior in society
• Business Ethics What constitutes right or wrong
  behavior in business
• Fiduciary Duty A professional responsibility of
  a duty of trust and loyalty
• Utilitarianism An approach to ethical reasoning
  that evaluates behavior not on the basis of any
  moral values but on the consequences of that
  behavior for those who will be affected by it.
• Moral minimum a businesses minimum behavior to
  be considered legally compliant
• Principle of Rights human beings have a
  fundamental (basic) rights to life, freedom, and
  the pursuit of happiness

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Video ViewTitle Ms. Vogels Lemon

• View video, use Unpacking An Issue to analyze
  the situation in the video.
• In groups of 3 or 4, answer the following
  questions?
• Are Mrs. Vogel's speeches and actions protected
  as "free speech"? Explain.
• Which source of American Law(s) is in question in
  this situation?
• What should Herman do? What legal rights does
  Mrs. Vogel have? How should Herman and Mrs. Vogel
  address their problems?

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Business Ethics

• Ethics Moral principles and values applied to
  social behavior.
• Business Ethics Moral principles and values
  applied to situations that arise in a business
  setting.
• Business Challenge in Ethics Competing demands
  from multiple stakeholders e.g., shareholders,
  employees, retirees, suppliers, creditors,
  customers, the communities in which the business
  operates whose lives are affected by business
  decisions.
• Fiduciary (Trust and Loyalty) Duties.
• (see Time Warner Entertainment Co. v. Six Flags
  over Georgia, LLC (2002) p. 48)

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Setting the Right Ethical Tone

• Importance of Ethical Leadership
• Management Attitudes Managers who are not
  committed to creating and maintaining an ethical
  workplace rarely have one.
• Employees tend to follow what they perceive to be
  managements lead, so managers must model ethical
  behavior for their employees.
• Managers who look the other way because an
  unethical employee is successful risk other
  employees believing that acting unethically is
  the key to success.
• Managers should set realistic goals for their
  employees to reduce the incentive to cheat in
  order to achieve managements goals.

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Setting the Right Ethical Tone

• But How?
• Creating Professional Ethical Codes of
  Conduct, Civility Policies, etc.
• See Proposed AB 1582 Healthy Workplace
• See Peralta Community College District Civility
  Policy
• Clear Communications to Employees.
• See Costco.
• Johnson and Johnson web-based ethical training.
• (see Exxon Valdez case (2004) p. 49).
• Corporate Compliance Programs.
• Periodic checks each month for ethical behavior
• Sarbanes-Oxley Act of 2002 (system where
  employees can confidentially report unethical
  accounting auditing actions)
• Web-based reporting (online reporting systems).
• Training
• Hire outside experts to oversee ethics in a
  company
• Conflicts and Trade-Offs.
• Dilemma Which stakeholders to support? All
  with opposing positions.

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What do you think?

• In groups of three(3), reflect and respond to
  the following two questions
• How is influential is ethics to business?
• On a scale of 1-10, how would you rate ethics in
  terms of focus for business? Why the rating?

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Business Ethics and the Law

• Relationship between ethics and law.
• Historically, a law was supposedly always ethical
  (or morally correct). (For example, Christian Ten
  Commandments)
• Today, obeying laws does not mean an action is
  ethical.
• An action may be legal but unethical or immoral.
  (For example, lying to your family member is not
  illegal, but its considered morally/ethically
  wrong)

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Technological Developments

• Internet has given rise to new court cases heard
  before the judicial system.
• A companys actions come under quick scrutiny
  with the power of email and the internet.
• Blakey v.Continental Airlines, Inc. (2000).
• When a corporation embarks on a course of
  business deemed unethical by a special interest
  group, the news will spread around the world in a
  matter of minutes.

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Ethical Decision-Making

• How do you decide whats ethical?
• Ethical Reasoning The process you take to make
  an ethical decision
• Duty Based Ethics derived from religious and
  philosophical principles.
• See examples 2.7, 2.8 p. 57
• Outcome-Based Ethics act based upon what is
  good for the greatest number.
• How will the action affect people.
• A cost-benefit analysis must be performed to
  determine the effects of competing alternatives
  on the persons affected
• Utilitarianism (The most usefulness).

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Religious Ethical Standards

• The rightness or wrongness of an action is
  usually judged according to its conformity to an
  absolute rule that commands a particular form of
  behavior.
• The motive of the action is irrelevant in judging
  the rightness or the wrongness of the action.
• These rules often involve an element of
  compassion.
• Immanuel Kant German philosopher (1800s)
• The rightness or wrongness of an action is judged
  by estimating the consequences that would follow
  if everyone in a society performed the act under
  consideration.

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Principle of Rights

• The belief in fundamental rights is a deeply
  embedded feature of Western culture.
• How ethical an action is is judged by how the
  consequences of the action will affect the rights
  of others.

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Business Ethics and the Law

• Relationship between business ethics and law.
• We know from Article 1 Section 8 of the U.S.
  Constitution that business is regulated by the
  government (Commerce Clause).
• Ignorance of the law (statute or regulation) will
  not excuse a business owner or manager from
  liability
• For example, Federal Trade Commission
  (Administrative Agency) regulates deceptive
  advertising. There are federal and state laws
  against such advertising.

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Professional Responsibility

• Professional Those with knowledge or skills in
  a specific area expected to deliver services
  competently
• Accountants Duty of Care.
• Audit.
• Standard of Care/GAAP/GAAS.
• Violations of GAAP and GAAS.
• Attorneys Duty of Care.
• Liability for Malpractice.
• Statutory Duties of Accountants.
• Duty under Securities Laws.
• Potential Criminal Liability of Accountants.

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Professional Responsibility

• Defying the Rules the Enron Case.
• Accounting Issues.
• Off the Books Transactions.
• Self-Dealing.
• Corporate Culture.
• Sarbanes-Oxley Act of 2002.
• Public Company Accounting Oversight Board.
• Applicability to Public Accounting Firms.
• Auditor Independence.

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What do you think?

• What kind of business person are you in terms of
  ethics?
• Duty-based or Outcome-based
• Read example 2.10 p.58, what would you do?

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Business Ethics on a Global Level

• Global company is faced with a variety of
  cultures, traditions and religions in the
  different nations it serves.
• What may be ethical practices in the United
  States, may not be in another country?
• Example Drinking alcohol forbidden for
  religious reasons in another country
• Monitoring Foreign Employment Practices.
• Example Foreign manufacturer exploiting
  workers, low wage, long hours, no breaks
• Foreign Corrupt Practices Act (1977).
• Prohibits U.S. businessperson from bribing
  foreign officials

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Reflection

• How might todays content impact my practice in
  business?
• What implications might todays content have on
  the local, state, national, and global
  communities?
• What have I learned about law and business that
  will influence my practice?