Chapter 4Social Responsibility of Business and Government

Objectives• Describe social responsibility issues• Identify benefits and costs of social responsibility• Explain the purpose of a code of ethics• Identify the roles and levels of government• Explain government protection activities • Describe types of intellectual property• Explain actions by government to regulate

businesses• Discuss efforts of government to assist businesses• Identify methods used by government to raise

money

Social Responsibility

• Social responsibility: the duty of business to contribute to the well being of a community

• A broadened social responsibility of business calls for more attention to social concern which includes:• Protection of the environment• Minorities and women in the workplace• Employment of the physically challenged and older

workers• A healthy and safe work environment

Environmental Protection

• Conservation: saving scarce natural resources

• Non-renewable resource: natural resource that cannot be replaced when used up• Gas• Oil• Minerals (i.e. copper, iron ore)

• Pollution: occurs when the environment is tainted with the by-products of human actions

Environmental Protection

• Environmental Protection Agency (EPA): monitors and enforces measurable standards set up by the federal government for monitoring air and water quality

Workplace Diversity• The work force of a business should reflect the

range of groups in a community• Removal of employment barriers

• The Americans with Disabilities Act (ADA): federal guideline that buildings must have access for wheelchairs and that people with sight and hearing limitations must be accommodated on the job

• The Age Discrimination in Employment Act: bars employers from using age as a bias for employment decisions such as hiring, promoting, or terminating someone from a job• The law protests all persons 40 and older

Job Safety• Employees should be able to work in an office or

factory free from the risks that could cause accidents• The work environment should:

• Provide full protection from fire and other hazards• Provide information to employees on

how to manage the unexpected• Training on how to work safely and what

to do in case of an emergency• Safety standards are regulated and enforced by

agencies such as OSHA (The Occupational Safety and Health Administration)

Employee Wellness• Workers who have good physical health are

valuable assets• Your general well-being as an employee needs to

be protected

• Clauses (conditions of work) related to employee well-being are often included in labor contracts and company policy manuals

Social Responsibility EvaluationBENEFITS• Common benefits of socially responsible activities

include:

• Expanded justice for groups of a society• Enhanced company image• Reduced need for government

actions• Improved quality of life in a

community and around the world• Increased awareness of social issues

among workers, consumers, and others

Social Responsibility EvaluationCOSTS• There are costs involved when a business takes

socially responsible actions• A business must make a profit to stay open

• Spending on social programs must be at a suitable level so a business can still earn a profit

Business Ethics

• Ethics: principles of morality or rules of conduct

• Business ethics: rules about how businesses and their employees ought to behave

• Code of ethics: a set of rules for guiding the actions of employees or member of an organization.• Address topics such as confidentiality of business

information• Must be worded in terms of acceptable behavior

rather then forbidden action

Business Ethics• Ethical Conduct Guidelines• Greatly determined by top management

• Companies concerned about ethical behavior in their employees have set up educational programs on ethical conduct• They promote honesty and integrity

• When considering the ethics of business situations, you could follow these guidelines:• Is the action legal?• Does the action violate professional or company

standards?• Who is affected by the action and how?

• Conflict of interest: can occur when an action by a company or individual results in an unfair benefit

An example of a non-renewable resource would be:A. Solar energyB. Agricultural productsC. GoldD. A library book

The Americans with Disabilities Act (ADA) requires that a company:

A. Provide training to people with disabilities

B. Find ways to help workers who are physically challenged

C. Hire a certain number of people with special needs

D. Adapt products manufactured for special-needs customers

A code of ethics is designed to:A.Meet government regulationsB.Reduce operating costs of a

companyC.Provide guidelines for proper

behaviorD.Improve employee

productivity

Government Protection Activities

Government in Society

Roles of Government• Providing services for members of society• Protecting citizens, consumers, businesses, and

workers• Regulating utilities and promoting competition• Providing information and support to businesses• Buying goods and services• Hiring public employees• Raising revenue

Levels of Government• The main goal of the federal government is to

oversee the activities that involve two or more states or other countries

• Interstate commerce: business dealings involving companies in more than one state

• Intrastate commerce: refers to business dealings involving companies that do business in only one state

• Local governments include county boards and city or town councils• They provide services needed for an orderly society

(i.e. police and fire protection)

Government Protection ActivitiesWorker Protection• Government inspection and regulation of work

areas help reduce the number of job-related accidents

• More government regulations result from the need to protect the basic human rights of workers

Government Protection ActivitiesContract Enforcement• Contract: an agreement to exchange goods or

services for something of value, usually money• May be written or unwritten

Government Protection ActivitiesContract Basics• Valid, enforceable contracts must contain:

Agreement An offer must be made, and an acceptance must occur

Competent Parties

Those entering into the contract must be of legal age and must be mentally competent

Consideration Something of measurable value must be exchanged by the parties

Legality The contract must be for a product or service that may be legally sold: also, no fraud or deception exists in the agreement

Protection of Intellectual Property• Intellectual property: purely intangible

with no physical characteristics—a person cannot touch it• Includes patents, copyrights, and trademarks

• Patent: gives the inventor the sole right to make, use, or sell the item for 17 years

• Copyright: protects the creative work of authors, composers, and artists—lasts for the life of the person receiving the copyright and extends for 50 years after the person’s death

• Trademarks: a word, letter, or symbol linked with a specific company or product

International trade with other countries is the responsibility of state and local governments.

TrueFalse

An oral contract can be legally binding.

TrueFalse

Fire and police protection is the main responsibility of:

A.Local governmentB.State governmentC.Federal governmentD.All levels of government

A ____ would protect the composer’s musical score.

A.PatentB.TrademarkC.CopyrightD.Contract

Government Regulation and

Assistance

Regulatory Activities

• Business activity in the US is structured as a private enterprise or free market system.• Price and output decisions are made

not by the government, but by businesses and consumers acting under varying economic conditions.

• Government does get involved in some areas of business activities• regulate utilities• prevent unfair business practices

Regulatory Activities

REGULATION OF UTILITIESPublic utility: an organization that supplies a service or product vital to all people• telephone services• water services• electricity

Regulatory Activities

PREVENT UNFAIR BUSINESS PRACTICESMonopoly: exists when a business has control of the market for a product or service

Anititurst Laws: prevent other unfair business practices such as false advertising, deceptive pricing, and misleading labeling of products. **These laws were also created to promote fairness and competition and to avoid monopolies.

Government Assists BusinessGovernment helps businesses by collecting and reporting valuable information.• helps with planning

Agencies that provide information• The Bureaus of Labor Statistics• The Department of Agriculture• The Department of Commerce

• Small Business Association (SBA): assistance from the federal government that helps new business owners obtain loans to help them get started

Government Assists BusinessGOVERNMENT BUYS GOODS AND SERVICES

• Total federal, state, and local government purchases of goods and services make up about 20% of all the goods and services produced in the US

• Many businesses depend on government contracts for their survival

Government Assist BusinessGOVERNMENT EMPLOYS WORKERS• Single largest employer in the US economy

Includes:Police officersFirefightersSanitation workersAdministrative assistantsLawyersTeachersMeat inspectorsAccountants

Government Raises Money• Government income is called revenue

Earned through :• taxes and borrowing• Fines for traffic violations• Fees and licenses (business and driver’s)• Fishing and hunting privileges

Government Raises MoneyTaxes• Policies are created to pay for the services a

government provides• Levied on earnings, value of property, and the

sale price of goods and services• Earnings as an individual are subject to an income

tax largest source of revenue for the federal

government

• Real estate property tax: major source of revenue for local governments and is based on the value of land and buildings

Government Raises MoneyTaxes•Sales tax: a state or local tax on goods and

services that is collected by the seller• Paying taxes is a duty of citizens and businesses

Borrowing• Government borrows money by selling bonds• Banks, insurance companies, and other financial

institutions help finance governments by purchasing bonds in large numbers

• Bonds issued by the US government are backed by the “full faith and credit” of the federal government and are considered less risky than all other debt

Antitrust laws are designed toA.Reduce utility ratesB.Lower taxesC.Create more jobsD.Maintain competition

A(n) ____ tax is a common source of revenue for state and local governments.A.SalesB.GiftC.ImportD.Unemployment

A monopoly is never a benefit to consumers.

•True•False