Legal, Regulatory, Political Issues Federal Trade Commission

 federal agency that enforces antitrust laws

and Business Ethics
Government’s Influence on Business
 Laws derived from the U.S. Constitution and
Bill of Rights influence business.
 Laws are enforced through the judicial
system.
 Settles disputes and punishes
criminals
 Corporations have the same legal status as
a person.
 Can sue
 Can be sued
 Can be held liable for debt
The Rationale for Regulation
 Preventing trusts and monopolies from using
their market dominance to negatively
manipulate output, pricing, and quality
 Eliminating unfair competition and anti-
competitive practices
 Supporting environmental initiatives, equality
in the workplace, and product safety
 Protecting consumers and business in e-
commerce activities
Major Laws Affecting Business
The Sherman Anti-Trust Act.
 proposed, and passed, in 1890 by Ohio
Senator John Sherman
 that outlawed trusts—groups of businesses
that collude or merge to form a monopoly in
order to dictate pricing in a particular market
 purpose was to promote economic fairness
and competitiveness and to regulate
interstate commerce.
and protects consumers
 activities include investigating fraud or
false advertising, congressional inquiries,
and pre-merger notification
 handles scams and unfair or predatory
business practices
The Robinson-Patman Act
 federal law intended to prevent price
discrimination
 prevents distributors from charging different
prices to various retailers
 only applies to interstate trade and contains
a specific exemption for "cooperative
associations.“
Lanham Act
 also known as the Trademark Act of 1946
 passed by Congress on July 5, 1946, and
signed into law by President Harry Truman
 governs trademarks, service marks, and
unfair competition.
The Consumer Act Of The Philippines
 legal basis for consumer protection in the
country
 embodies the state policy on the protection
of consumers and establishes standards of
conduct for business and industry in the
country
 aims to protect the “interest of the consumer,
promote his general welfare and establish
standards of conduct for business and
industry”

Clayton Antitrust Act

 passed in 1914, continues to regulate U.S.
business practices today
 Intended to strengthen earlier antitrust
legislation, the act prohibits anticompetitive
mergers, predatory and discriminatory
pricing, and other forms of unethical
corporate behavior
 protects individuals by allowing lawsuits
against companies and upholding the rights
of labor to organize and protest peacefully.
Major Laws Affecting Business
Law Enforcement Agencies
FDA
 responsible for protecting the public health
by ensuring the safety, efficacy, and security
of human and veterinary drugs, biological
products, and medical devices; and by
ensuring the safety of our nation's food
supply, cosmetics, and products that emit
radiation
 responsibility for regulating the
manufacturing, marketing, and distribution of
tobacco products to protect the public health
and to reduce tobacco use by minors
 advancing the public health by helping to
speed innovations that make medical
products more effective, safer, and more
affordable
 ensuring the security of the food supply and
by fostering development of medical
products to respond to deliberate and
naturally emerging public health threats.
DTI
 prime mover of consumer welfare
 committed to protecting the rights and
interests of the consumers.
 committed to developing policies and
programs aimed at sustaining the growth and
development of the Philippine economy.
 overseeing the effective implementation and
enforcement of trade regulation and fair
trade laws
 provides protection to consumers through
consumer education and information
dissemination programs.
SEC
 Created on October 26, 1936 by
Commonwealth Act (CA) 83 also known as
The Securities Act
 regulate the sale and registration of
securities, exchanges, brokers, dealers
and salesmen.
 enacted to encourage investments and more
active public participation in the affairs of
private corporations and enterprises.
 enacted laws gave greater focus on the
Commission’s role to develop and regulate
the corporate and capital market toward
good corporate governance, protection of
investors, widest participation of ownership
and democratization of wealth.
 national government regulatory agency
charged with supervision over the corporate
sector, the capital market participants, and
the securities and investment instruments
market, and the protection of the investing
public.
BUREAU
 August 1, 1904, the BIR was formally
organized and made operational under the
Secretary of Finance
 mandated by law to assess and collect all
national internal revenue taxes, fees and
charges, and to enforce all forfeitures,
penalties and fines connected therewith,
including the execution of judgements in all
cases decided in its favor by the Court of T
ax Appeals and the ordinary courts.
DOLE
 December 8,1933, the Bureau of Labor was
constituted as a Department by virtue of
Republic Act 4121
  national government agency mandated to
formulate policies, implement programs and
projects
 serve as the policy-coordinating arm of the
Executive Branch in the field of labor and
employment
 mandated to promote gainful employment
opportunities and optimize development and
utilization of the country’s manpower
resources
 advance worker’s welfare by providing for
just and humane working conditions and
terms of employment
 maintain industrial peace by promoting
harmonious, equitable and stable
employment relations that assure equal
protection for the rights of all concerned
parties
BASIC CONCEPT BUSINESS ETHICS
Business ethics refers to standards of moral
conduct, behavior and judgement in business.
Business ethics is an area of corporate
responsibility where businesses are legally bound
and socially obligated to conduct business in an
ethical manner.
Ethics adopted by the business should be followed
strictly by each and every person working with the
business.
There should be a reward-punishment system
linked with business ethics for those violating these
ethics and one who properly abide.
Purposes of Business Ethics
The main purpose of business ethics is to help
business and would-be business to determine what
business practices are right and what are wrong.
Another purpose of business ethics is to enable you
to make responsible decisions. Maintaining highly
ethical behavior when running a business can
provide benefits to all your stakeholders.
Scope of Business Ethics
1. Ethics in Compliance
An ethical climate in an organization ensures that
compliance with law is fueled by a desire to abide
by the laws.
Organizations that value high ethics comply with the
laws not only in letter but go beyond what is
stipulated or expected of them.
2. Ethics in Finance
The ethical issues in finance that companies and
employees are confronted with include:
***Related party transactions
Insider trading, securities fraud
manipulation of the financial markets, Executive
compensation, bribery and kickbacks, over billing of
expenses and fake reimbursements
Ethics in Human Resource
 Discrimination issues
 Sexual harassment
 Affirmative Action
 representation of employees and the
democratization of the workplace
 privacy of the employee
 Occupational safety and health
4. Ethics in Marketing
 Pricing: price fixing, price discrimination,
price skimming.
 Anti-competitive practices
 Misleading advertisements
 Content of advertisements.
 Children and marketing
 Black markets, grey markets
5. Ethics in Production
 Defective, addictive and inherently
dangerous products and
 environment include pollution
 Ethical problems arising out of new
technologies
 Product testing ethics
Ethical Issues in Business
 An ethical issue is a problem, situation, or
opportunity requiring an individual, group, or
organization to choose among several
actions that must be evaluated as right or
wrong, ethical or unethical.
 Ethical issues:
o Honesty and fairness
o Conflict of interest
 o Fraud
o Discrimination
o Information technology
Abusive or Intimidating Behavior
 Abusive or intimidating behavior is the most
common ethical problem for employees.
 It can mean anything from physical threats,
false accusations, annoying a coworker,
profanity, insults, yelling, harshness, to
ignoring someone, or being unreasonable.
Actions Associated with Bullies
 Has apologized and pledged to fight against
workplace harassment after settling with the
family of an employee who committed
suicide following repeated abuse by his boss
 28-year-old engineer died by suicide in 2017
after constantly being abused by his boss,
including reportedly being told, "It would be
better if you died.“
 His death was recognized as work-related in
2019 by a regional labor board, according to
local media, and a Toyota spokesperson
confirmed Monday that the firm reached an
out-of-court settlement with the family in April
19, 2021
 Toyota said the supervisor accused of
harassment was "punished" but did not
provide further details.
 Yoshihide Tachino, a lawyer for the man's
family, said Toyota President Akio Toyoda
had visited them to apologize directly.
 Authorities ramped up efforts to tackle
deaths from overwork following the 2015
suicide of a young employee at Japan's
biggest advertising agency Dentsu, who
regularly logged more than 100 hours of
overtime a month.
Lying
 To be honest is to tell the truth to the best of
your ability. Lying relates to distorting the
truth.
 Three major types of lies:
- Joking without malice, white-lie told in
order not
- to hurt someone’s feelings
- Lying by commission, creating a
perception or
- belief by words that intentionally deceives
- Lying by omission, intentionally not
- informing the receiver of material facts
Skechers
 Shoe company Skechers will fork over $40
million dollars to settle charges with the
Federal Trade Commission
 The brand lied to consumers when it claimed
its Shape-Ups shoes would tone butt and
thigh muscles and encourage weight loss
 company fudged research results when it
told customers that their Resistance Runner
shoes increased "muscle activation" by up to
85% for posture-related muscles and 71%
for glutes
 failed to disclose that Dr. Stephen Gautreau,
a chiropractor who gave the shoes a glowing
review in ads, was not only paid for his
services but married to a Skechers
marketing executive -- a clear conflict of
interest
 Kardashian's steamy ad for the shoe brand
aired during the Superbowl in 2011
 Skechers denies the allegations but chose to
settle these claims.
Conflict of Interest
 A conflict of interest arises when an
individual must choose whether to advance
his or her own personal interests, those of
the organization, or those of some other
group.
 Organizations often prohibit employees from
accepting bribes, personal payments, gifts,
or special favors.
JPMorgan
 reached a $35m deal with shareholders of
the former software “unicorn” Good
Technology, to settle conflict of interest
claims over Good’s $425m sale to
BlackBerry in late 2015
 Good had been valued at over $1bn in the
months before the BlackBerry transaction but
was sold hastily because of a cash crunch
that developed over the summer of 2015
 Some shareholders sued JPMorgan, alleging
it pushed Good into a sale because it wanted
to win future investment banking business
from BlackBerry.
 Common shareholders, mostly employees of
Good, received less than 50 cents per share
after Good stock had been valued at more
than $3 per share weeks earlier
Fraud
 Fraud is any false communication that
deceives, manipulates or conceals facts in
order to create a false impression or damage
others.
 Types of fraud
- Accounting fraud
- Marketing fraud
LEHMAN BROTHERS
 global financial services firm based out of
New York City, New York
 was one of the largest investment banks in
the United States
 2008 financial crisis, it was discovered that
the company had hidden over $50 billion in
loans
 These loans had been disguised as sales
using accounting loopholes
 SEC investigation, the company had sold
toxic assets to banks in the Cayman Islands
on a short-term basis
 It was understood that Lehman Brothers
would buy back these assets
 his gave the impression that the company
had $50 billion more in cash and $50 billion
less in toxic assets
 In the aftermath of the scandal, Lehman
Brothers went bankrupt.
Business Ethics and Ethical Decision Making
 Business ethics refers to standards of moral
conduct, behavior and judgement in
business.
 Business ethics is an area of corporate
responsibility where businesses are legally
bound and socially obligated to conduct
business in an ethical manner.
Basic Concept Business Ethics
It involved making the moral and right decisions
while engaging in such business activities as
manufacturing and selling a product and providing a
service to customers.
It helps maintain better and harmonious relations
with society, customers, employees and concerned
industry sector.
Purposes of Business Ethics
The main purpose of business ethics is to help
business and would-be business to determine
what business practices are right and what are
wrong.
Another purpose of business ethics is to enable you
to make responsible decisions. Maintaining highly
ethical behavior when running a business can
provide benefits to all your stakeholders.
Special Purpose
 To make businessmen realize that they
cannot double standards to the actions of
other people and to their own actions.
 To show businessmen that common
practices which they have thought to be
right because they see other businessmen
doing it, are really wrong.
 To serve as a standard or ideal upon
which business conduct should be
based.
IMPORTANCE AND SIGNIFICANCE OF
BUSINESS ETHICS
1.Positive Prominence
Business is an earning factor which depends on the
approval of the society, their rules, mutual trusts,
and coordination.
A professional writer says- “when an ethical
process is revealed, it puts some kind of confidence
and mutual trusts in a relationship.”
So, that is the reason, business ethics always leads
to positive consequences.
2.Goodwill of the Business and Businessman
Goodwill is an intangible asset that is associated
with the purchase of one company by another.Good
and moral-ethical behavior will enhance the
goodwill of both business and as well as the
businessman. They said if an image of a business
is good in front of the public, it will leads higher.
3. Protection-Both Sides
In business activities, the persons deals with their
customers for the purpose of achieving its sales
volume. They protect them ethically and follow the
procedure of code of conduct.
4. Self-satisfaction
In this business changing environment, a
businessman is focusing on self-satisfaction, free
from eagerness, release tension.
Some businessman tries to improve their inner
satisfaction level to promote good ethics because
ethics is a moral factor by which an individual can
easily identify its good and bad things
5. Encourage others
When a few individuals start following ethics side by
side to profit maximizing, they facilitate, motivate,
others and set perfect examples for them.
They follow the procedure of the code of conduct so
that they can easily understand the basics and
helps to motivate others also.
6. Success, Growth and Development
A perfect or legal business or businessman works
ethically to lead our business development or
success because an ethical work accelerates the
acceptance of opportunities.
7. New Management
In the era of the world economy, new principles of
management are required in new balanced
management.
They focus on to follow the book of code of conduct
so that they can easily understand the aspects of
humanity
Ethical Issues in Business
 An ethical issue is a problem, situation, or
opportunity requiring an individual, group,
or organization to choose among several
actions that must be evaluated as right or
wrong, ethical or unethical.
 Ethical issues:
o Honesty and fairness
o Conflict of interest
o Fraud
o Discrimination
o Information technology
Abusive or Intimidating Behavior
 Abusive or intimidating behavior is the most
common ethical problem for employees.
 It can mean anything from physical threats,
false accusations, annoying a coworker,
profanity, insults, yelling, harshness, to
ignoring someone, or being unreasonable.
  Lying to obtain age-related and other
discounts
 Taking advantage of return policies by
returning
 clothing that has been worn

Personal Misconduct in the Workplace

Lying
 To be honest is to tell the truth to the best of
your ability. Lying relates to distorting the
truth.
 Three major types of lies:
- Joking without malice, white-lie told in
order not to hurt someone’s feelings
- Lying by commission, creating a
perception or belief by words that
The Ethical Decision Making Process
intentionally deceives
 Factors that influence the ethical
- Lying by omission, intentionally not
decision-making process include:
informing the receiver of material facts
- Individual factors
- Organizational relationships
Conflict of Interest - Opportunity
 A conflict of interest arises when an  The strongest factor influencing employee
individual must choose whether to advance behavior is organizational relationships.
his or her own personal interests, those of - Role of peers and coworkers in impacting
the organization, or those of some other workplace behavior
group.
 Organizations often prohibit employees from
accepting bribes, personal Moral Philosophies
payments, gifts, or special favors.  Consequentialism
- A decision is right or acceptable if it helps
Fraud achieve the desired results
 Fraud is any false communication that
deceives, manipulates or conceals facts in
 Egoism
order to create a false impression or damage
- Maximizing one’s own self-interest
others.
 Types of fraud
 Utilitarianism
- Accounting fraud
- Greatest good for the greatest number of
- Marketing fraud
people
Consumer Fraud
 Consumer fraud occurs when consumers
 Ethical formalism
attempt to deceive businesses for their - Focuses on the rights of the individual
own gain. It involves intentional deception to
derive an unfair economic advantage by an  Justice theory
individual or group over an organization. - Evaluations of fairness
 For example
- Shoplifting
- Price-tag switching
Stages of Moral Development
 People progress through the previous six
stages.
 Cognitive moral development should be
viewed as a continuum.
 People’s moral beliefs and behavior change
as they gain education and experience.
 There are universal values by which people
in the highest level of moral development
abide.

Social Needs that Motivate Ethical/Unethical

Behavior
 Need for achievement
- Preference for goals that are well defined
and moderately challenging
 Need for affiliation
- Inclination to work with others in the
organization rather than alone
 Need for power
- Desire to influence and control others