BA 101 1st Edition Lecture 16Outline of Last Lecture1. Break Even and Net Present Value Review2. Business LawOutline of Current Lecture I. Due Dates and Upcoming MidtermII. Ethics and Business Behavior Current LectureI. Due Dates and Midterm 2: The foundation final project is four rounds of foundation, worth fifty points. Full details next class. Midterm #2: Thursday March 12th, bring pencils, student id, and a calculator. It is the same format as midterm #1. Foundation: Round seven is due March 3rd, 11:59 pm, and round eight is due March 5th, 11:59 pm. Quiz: Quiz six is due before class March 12thII. Ethics and Business Behavior:Philosophical Approaches:- The Friedman Doctrine (Milton Friedman), states that the only social responsibility of business is to increase profits as long as the company stays within the law and the rules of the game without deception or fraud- Utilitarian approach states that the consequences of actions are used to determine the moral good of the action. For example, the justification for the U.S. to drop atom bombs on Japan was that it would save more lives in the end, so it was a morally good choice- Kantian Ethics (Immanuel Kant) states that the moral worth of an action is determined by one’s motive, not the outcome or consequences of the action. Forexample, when the U.S. D.E.A sold guns to Mexican cartels, thinking they could trace them, Kantian Ethics would say that it was a morally good choice even though they could not trace the guns, and it ended up doing a lot of harmThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.- Rights Theory which recognizes that human beings have fundamental rights and privileges, and seeks to establish a minimum level of morally acceptable behavior. i.e. The U.N.- Justice Theories focus on the attainment of a just distribution of economic goods and services that is to be considered fair and equitable, unless the unfair distribution of goods and/or services would benefit the community as a whole more than an equal distributionThree Levels of Ethical Standards in Business:One: it is not about the lawTwo: Organizational policies and proceduresThree: The moral stances that employees take when faces with decisions not governed by formal rulesAs Managers your choices, your decisions, and your behavior all give definition to the world youlive in. As a manager you shape the organization and the world that your employees inhabit through:- Employment agreement- Structure of the job (tasks)- Interpersonal relationshipsThe Roots of Unethical Behavior: What would motivate managers to behave in an unethical way?- Personal ethics code. Has a profound influence on one’s behavior as a businessperson- Not realizing that they are behaving unethically- Organization’s culture. If it de-emphasizes ethics and considers primarily economic consequences when making decisions- Unrealistic performance goals, which can encourage and legitimize unethical behavior- Unethical leadership, which encourages and tolerates behavior that is ethically suspectThe Sarbanes-Oxley Act of 2002: Establishes new or enhanced standards for all U.S. public companies, boards, management, and public accounting firms. It is also known as: The Public Company Accounting Reform, Investor Protection Act of 2002, Sox, and Sarbox.Business Ethics: are the accepted principles of right or wrong governing the conduct of businesspeople. Ethical dilemmas occur when:- There is no agreement over what the accepted principles are- None of the available alternatives seem ethically acceptableMany accepted principles have been codified into law:- Tort laws- Contract laws- Intellectual property laws- Antitrust laws- Security lawsEthical Issues:- Self-dealing: when managers profit or pay for personal items with corporate monies- Information manipulation: when individuals distort or hide info to enhance their personal situation- Anticompetitive behavior: actions aimed at harming actual or potential competitors - Opportunistic exploitation: of the other players in the value chain- Substandard working conditions: underinvest in working conditions or pay below the market wages- Environmental degradation: Directly or indirectly take actions that result in environmental harm- Corruption: companies pay bribes to gain access to lucrative business contractsBehaving Ethically:- Hire and promote people with a well-grounded sense of personal ethics - Build an organizational culture that places high value on ethical behavior- Make sure leaders both talk the talk and walk the walk- Put decision making processes in place that require people to consider the ethical dimensions of their decisions- Use ethics officers (this is rare and not proven to work)Externalities Definition: a consequences of an economic activity that is experienced by an uninvolved third party. They can be positive or negative. A negative example would be a factorythat pollutes the surrounding area, leading to poor health in the area. A positive example could be the effect of a well-educated labor force on the productivity of a