This document discusses ethical issues in business including defining business ethics as principles and rules that guide an organization. It notes some past business scandals and discusses approaches to determining what is right and wrong from a societal perspective. Key ethical issues businesses face like environmental impacts are outlined. The social responsibility of businesses to help solve societal problems is examined. The importance of international business and various forms it can take such as imports, exports, and foreign subsidiaries are overviewed. Factors supporting increased global trade like free trade agreements and international organizations are summarized.

1. The Business Environment
Ethical Issues

2. • Standards of moral conduct that
individuals and groups set for themselves
• Defines what’s “right” or “wrong”
• Closely linked to personal values (beliefs
and attitudes)
• Goes beyond state and federal laws

3. Business Ethics
• Business Ethics:
-collection of principles & rules for an
organization
• Codes of Ethics address issues such as…
– Accepting business gifts
– Employee privacy
– Using company property for personal use
– Maintaining confidentiality

4. Business Scandals
• Tyco International – executive theft & prison sentence
• Enron – Accounting fraud
• Firestone Tire - use of child labor
• Deutsche Bank – spying
• Halliburton – overcharging government contracts
• BP – oil pipe breaking in the Gulf

5. What is Right or Wrong?
• Philosophers have debated for centuries
• One approach is to ask…
“What is the value or worth of a specific behavior
for society as a whole?”
• Answer: the best is that which does the
most good for the most people

6. Ethical Issues Facing Business
• Deforestation that endanger species
• Oil drilling off coast destroying natural
beauty
• Quid-pro-Quo agreements
• Discrimination in hiring practices

7. Social Responsibility of Business
• What is a business’s responsibility to help
solve society’s problems?
• Firms are PROFIT-Seekers…but depend on society
for resources, opportunities, and rights
• Stakeholders: all people affected firm’s actions
(Owners, customers, suppliers, employees, creditors, gover
nment and the public)
Enhancing goodwill in the community is now
good business

8. INTERNATIONAL
Environment of Business
Importance - Forms - Theories

9. How many foreign-made
items are you wearing today?
Check your
clothing, backpacks, calculators, pens &
compare with your neighbor

10. International Business
• Business activities that occur between 2 or
more countries
• Since WW2 internat’l trade has flourished
• Mostly traded are goods- services make
up 1/5th of trade

11. Forms of International Business
• Imports:
– buying goods made in foreign
country
• Exports:
– selling products to buyers in
another country

12. Forms of International Business
Exchange Rate
• The value of one country’s currency
expressed in the currency of another
• These are constantly changing
• Example:
– 1 USD = 0.7739 EUR

13. Forms of International Business
• Joint Ventures Abroad
– Firms set up business in foreign country to
by sharing costs/profits with other
companies
• Strategic Alliances are ↑ing
– Firms agree to cooperate on certain aspects
while remaining competitors on other
aspects
– (ex. China’s Sing and Yahoo)

14. Forms of International Business
• Wholly Owned Subsidiary
– Firm sets up business abroad on its own
– More expensive & more risky
• Multi-National Firms
– Owns or controls production or service facilities in
more than 1 country -- Examples include:
• Walmart – U.S.
• Toyota – Japan
• Shell (oil) – Netherlands
• Deutsche Banke – Germany
• AXA Group (insurance) – France

15. Government Policies
• Economists consider Free Trade desirable
for a society
• Tariffs = taxes on foreign goods
– Protect domestic industries (raises price of
foreign goods)
– Raise revenue for Gov’t
• Dumping = export price that is “unfairly low”
• Quotas – limit quantity of imports

16. Factors Supporting Trade
• World Trade Organization (WTO):
– create & enforce rules
– 153 members
• European Union (EU)
– 25 countries
– 11 countries merged currencies into the “euro”

17. Factors Supporting Trade
• NAFTA (North American Free Trade Agreement)
– 1992 Canada, U.S. and Mexico
– Removed tariffs and trade barriers
• IMF (International Monetary Fund) & World
Bank
– Helps less-developed countries pay for imports
– Provides low-cost loans to develop basic industries
and facilities (roads, electric power, etc)
**Advances in Communication &
Transportation
– Internet, faster/cheaper transportation, private
enterprise, and competition have ↑ed trade
opportunities