Ethics— the moral standards that a society accepts as right vs. wrong.Honesty, Integrity, Courageous, respect for others, responsibility, Self-SacrificeRestoring trust in free market system:Send wrong doers to jail.Sarbanes Oxley ActWhistleblowersWhistleblowers— Should not get any kind of retaliation from the employer. If they can report any wrongdoing by their company, they receive reward from the government.Compliance Based Ethics Code— Businesses have created written guidelines and they expect their employees to comply with them strictly otherwise they face consequences.Integrity Based Ethics Code— Businesses create a culture that is very supportive of each other. Employees watch everyone’s actions and have shared accountability.Basic rights of consumers— Right to safety, right to be informed, right to choose, right to be heard.Insider Trading— When someone gets a hold of an inside information that hasn’t been made public and uses that to further their fortunes is insider trading and is illegal.Greenwashing— when a business boasts about being green but in reality it hardly makes an impact.Social audit— evaluation of a business from all the angles to know if the business has adopted good practice and incorporates CSR and does have good environmental policiesFive types of Social Audit Watchdogs:Socially conscious investorsSocially conscious research organizationsEnvironmentalistsUnion officialsCustomersMangers must communicate the organization’s vision on ethical behaviorOrganizations must have a code of ethicsPolicies have to be enforced regarding ethical offencesEthical responsibility must be taught to all employees.Discussions of ethics must be included in the decision-making process.Accountability must be taken seriously at all levels in the organizationOrganizations must act fast when a crisis occursEmployees must know they have to defend and maintain the company’s reputation.Corporate Philanthropy— when business contribute money for the social cause and for other good deeds.MicrosoftCorporate Social Initiatives— an enhanced form of corporate philanthropy. Here businesses donate either their products or services instead of money.Corporate Responsibility— Responsibility can come in any direction, anything they are doing good for the society.Corporate Policy— When a business takes a position on a certain issue that they think is important for the society.Acquisition— when one company purchases another company. Usually purchasing a distressed company.Domestic Corporation— Where it is doing business in the state it was chartered.Foreign Corporation— when it does business in a state it was not chartered in.Alien Corporation— when a corporation is doing business in a foreign country.Limited Liability Company (LLC) — you are given limited liability, and your assets are protected. No restrictions in how many owners you have in your business. First came out in Wyoming in 1976.Leveraged Buyout (LBO)— when a business purchases other business by borrowing lots of money.Franchise agreement— Franchisees can own their business, but they have to run the business set by the franchisers.Advantages for Franchisees:Well recognized nameLot of assistance in managing and marketing the businessFinancial assistance is also available.Less failure rate.Disadvantages for FranchiseesLimitations imposed by franchisersPay royalty (franchising fees) every month.Requires huge investment.Coattail affectCooperatives— business that is owned and managed by people who either use this product, or have certain interest in it such as producers, consumers, employees, etc.Sole Proprietorship— When a business is owned by a single owner.Most businesses are owned this way.Advantages:Be your own boss and make all the decisions.Don’t have to share the profitsVery easy to start and easy to end.You get to leave a legacy behindPay based on their personal income. Avoid paying high corporate taxes.Disadvantages:Unlimited Liability— when you own your business, you also own all your debts.Lack of expertise.Limited financial resourceslimited growth opportunities.It can be overwhelming.General Partner – Rules — Uniform Partnership Act defines General Partner as: Someone who is actively involved in managing the business, has equal ownership rights, shares profits and losses equally.Advantages of Partnership:Shared RiskMore expertise availableMore financial resourcesTaxes are paid based on their personal incomeDisadvantages of Partnership:Unlimited liabilityConflict of interestCan be difficult to terminateShared profitsLimited Partnership— They play a limited role. They are not involved in business decisions. They share the profit 50/50 but not the loss. The limited partner only losses the money that they invest.Partnership— Two or more partners can join to become full owners of the business.Corporation— a legal entity that has an authority to act. Its liabilities are separate from the owners.Debts or obligations do not belong to the owner.Most money is made by the corporationsMaster Limited Partnership— is like a partnership in certain aspects but it has lot of advantages of a corporation.It can issue stocks in the stock market.It does not have to pay high corporate taxes.Advantages:Limited LiabilityOwners don’t have to be an expertAccess to more financial resourcesSize- they are able to get better skilled employeesPerpetual lifeDisadvantages:Double TaxationRequires lots of paperwork to get chartered. Has to be chartered at the state level. (Domestic Corporation)Owners could have conflict with the board of directors.Size- Can be inflexible.It costs more to set up as a corporationAdvantages:Limited LiabilityDon’t have to pay high corporate taxes.Disadvantages:Limited financial sources.Restrictions in ownership.Merger— when two or more companies join to become one.Vertical Merger— companies are at different stages of the making of the product.Horizontal Merger— two companies compete prior to merger, and compete at the same level. (airline mergers)Traits of EntrepreneursThey are doing all of the homework to minimize risk of failing business.Self disciplined.Self nurturing— believing in your ideas and capable of leading.THEY ARE NOT POWER HUNGRYThey are action oriented.Risk tolerantHighly energeticEntrepreneurial Team— group of people who possess entrepreneurial traits and are capable of starting and finishing a project with new ideas.Micropreneurs—