Chapter

6
Ethical, Social and Legal
Responsibilities of
Management
 The Importance of Ethics

Ethics
A set of moral principles or values that govern
behavior.

Code of ethics
A document that outlines the principles of
conduct to be used in making decisions within
the organization.

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 Content of Ethical Codes

Honesty.
Adherence to the law.
Product safety and quality.
Health and safety in the workplace.
Conflicts of interest.
Employment practices.
Selling and marketing practices.
Financial reporting. 2
 Content of Ethical Codes
(contd)

Pricing, billing, and contracting.

Trading in securities / using confidential information.
Acquiring and using information about competitors.
Security.
Payments to obtain business.
Political activities.
Protection of the environment.

3
 Behaving Ethically -
Honesty
Employee theft
Embezzlement of money, supplies or inventory from employers.
Accepting bribes from people desiring to conduct business with the
company.
Submission of false expense accounts.

Lying about hours worked

Honest employees report the correct number of work hours clocked
while working from home
They do not pretend to be sick, to stay home when they should be
at work.

Falsifying records
Can cause grave damage to a companys reputation. 4
Ethical Problems in the
Business World

5
 Ethical Standards and
Culture
Corporate gift giving
The culture differs around the world.

Intellectual property
Refers to ownership of ideas; gives creators of
the intellectual property the exclusive right to
market and sell their work.
Cracking down on piracy and counterfeiting in the
software industry etc.

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 Social Responsibility
The obligation that individuals or businesses have
to help solve social problems.

7
 Social Audit Steps
Social Audit: A method used by management to
evaluate the success or lack of success of
programs designed to improve the social
performance of the organization.

8
 Business Laws
Regulations are rules that government agencies
issue to implement laws. Government affairs
managers are often hired by companies.

Areas of law that affect business operations:

Corporate law
Tax law
Intellectual property
Consumer law
Commercial law
Licensing and Zoning law
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