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Chapter 2 Lecture & Textbook Notes for Legal Regulatory and Environment of Business

by: Katie Mulliken

Chapter 2 Lecture & Textbook Notes for Legal Regulatory and Environment of Business LEGl

Marketplace > University of Georgia > Legal Environment Of Business > LEGl > Chapter 2 Lecture Textbook Notes for Legal Regulatory and Environment of Business
Katie Mulliken
GPA 3.91

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Chapter 2 in-class Lecture & Textbook outlined Notes for Legal Regulatory and Environment of Business
Legal and Regulatory Environment of Business
David Gunton
Study Guide
Legal, business
50 ?




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This 4 page Study Guide was uploaded by Katie Mulliken on Monday September 12, 2016. The Study Guide belongs to LEGl at University of Georgia taught by David Gunton in Fall 2016. Since its upload, it has received 7 views. For similar materials see Legal and Regulatory Environment of Business in Legal Environment Of Business at University of Georgia.

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Date Created: 09/12/16
Legal Chapter 2: Role of Ethics in Decision­Making (pg. 26­39; 40­46; 50­57) Morals  vs.  Ethics  vs.  Laws Morals  – the collection of values that guides human behavior   Sharing of moral values promotes social cooperation & controls society at large  Involves what’s right & what’s wrong  Personal,  Subjective,  &  Internally Based Ethics  – principles if right conduct (system of justifying moral decisions)   Goes deeper than just recognizing right/wrong but attempts to understand the rationale of why  A systematic statement of right/wrong  Communal,  Objective  &  Externally Based The Good  – those moral goals & objectives we choose to pursue;  it defines who we are  The Good is the end result of an ethical examination  Law – bare minimum standards for society that may or may not reflect morals or ethics Ethics  &  The Law Similarities:  Both concern right/wrong & consist of rules to guide conduct and foster social cooperation  Society’s ethical values become law through legislation/ court decisions & obedience to law is ethical Differences:  Unlike Ethics, the Legal system is an institution of the state that’s enforced   The difference in motivation:  Desire to be good (ethical, moral)   VS.  the fear of the bad (law)  Laws may or may not represent the expression of moral beliefs or ethical systems Examples:  Murder is immoral & illegal.  Not stopping at a red light is not totally immoral, but is illegal  A defense attorney representing an accused murdered she believes to be guily o Morally wrong (or problematic)  Ethically obligated Legal  A doctor whose terminally ill patient requests to be euthanized o If doc believes in it; morally right Ethically wrong Illegal (mostly) 2 Systems of Ethics Consequentialism  if you flip the switch:  context reveals better if 1 vs. 5 people dying Formalist   if you don’t flip the switch:  murder is wrong, if you flip the switch your actively killing Formalism “Affirms an absolute morality”  Each act is itself right or wrong, always and in every situation  Lying is wrong.  There are no justifications for it, no matter what context  A ‘duty’ based view of ethics (duties not to lie, to keep promises, to keep confidences, etc.)  Focus:  worth of the individual, individual rights  Individual rights shouldn’t be infringed, even for the sake of society bc rights have intrinsic value  Immanuel Kant: to be ethical is to act with good intent consistently  “Categorical Imperative”  o You have duty to act in ways you believe everyone should act; Consistency! (means > end) o Never act in a certain way unless you are willing for everyone else to act in the same way o Similar to “The Golden Rule”   Social Contract Theory, John Rawls  How to construct a just society given the many inequalities of wealth, knowledge & social status  Theory based on contract (agreement), not duty   Everyone must have certain basic rights: liberty, freedom of association, security, etc.   “Veil of Self­Ignorance” means to think ethically you must lose assumptions     Formalist because it emphasizes individual rights and self­worth  Those inequalities must be results of merit, not unfair advantage, & equal opportunity for all o AKA: as long as everyone has same rights & opportunities, inequality must be accepted  Consequentialism   Focus on the moral consequences of actions rather than the morality of actions themselves  Lying itself isn’t unethical, the consequences of lying or resulting harm/ loss of trust is unethical  Focus:  Common good.  If actions increase the common good or help society, they’re ethical  Context is the basis (ends > means)   Most business ethics reflect consequentialism (primary goal is profit, so ends justifies means) Utilitarianism  Judges actions by usefulness, whether they serve to increase the common good.   Modern economic theory reflects Utilitarianism   Necessary to consider alternative actions; after all reasonable actions are considered, then you can  know whether a particular action has the greatest utility Protestant Ethic – the absolute moral values of the Protestant ethic declined.  Hard work and  rational planning become justified by the consequentialist results they produce Society’s ethical values frequently become law, & that legal regulation can reflect society’s ethical values Visa­versa;  Legal regulation can influence society’s views of ethics (anti­discriminatory laws) 5 Ethical Themes in Business Law 1. Respect for the Liberty & Rights of Others o Declaration of Independence, “self­evident truths…unalienable rights..” o Property rights, equal employment opportunity, freedom of expression, due process 2. Must act in Good Faith o Be honest;  mean what you say, say what you mean o Uniform commercial sale code: “honest in intent” & “honesty in fact”  (ex: shady fine print) o Bad faith is dishonesty in intent (ex:  shady/tricky fine print) 3. Exercise Due Care (Due Diligence) o Take reasonable actions to avoid bad outcomes or harm to others;  Law of Torts o Promotes common good, society’s expectations of how fair/reasonable actions are o Negligence Law; if someone’s carelessness causes injury, they can be sued for negligence o Corporate Compliance; (white­collar crime) to determine a penalty for illegal business acts,  evaluates if an ‘effective program to prevent and detect violations of law’ are in place 4. Honoring Confidentiality  o Professional­client relationship (can’t be persecuted for illegal actions if your confiding) o Insider trading;  illegal for administrators to buy & sell corporate stock pre­known info o Employee separation agreements (worker leaves job w/ contract not to use inside info) 5. Avoiding Conflicts of Interest o Divided loyalties; “serving 2 masters”  trying to work for another competing interest o Professional­client relationship o Judges or administrators making decisions involving companies in which they own stock o If not avoid, then disclose and mitigate Obstacles to Ethical Behavior 1) Emphasis on Profit o Legal & cultural pressures on business to prioritize profits above all else o Sometimes such a strong emphasis on profit can conflict with ethical responsibility o Decentralization o Overemphasis on profit can easily lead to manager taking legal shortcuts; especially  since home offices and local offices/plants do not always communicate well o Quarterly reporting 2) Effect of the Group o Diminished Individual Responsibility within an organization (with individual profit)  o Hierarchies and Redundant Systems o Social Pressure ~ to overlook unethical behaviors ‘just following orders’ 3) Effect by Non­Control Owners o Division of Ownership in Corporations (shareholders vs. managers)  o Managers may think Short­Term o They control vast resources that they do not own, so easy to infringe on property o Risk­taking in Partnerships vs. Publicly­owned Corporations Steps to Control Obstacles 1) Involvement of Top Management  2) Openness in Communication (promotes trust in business decision­making) 3) Consideration of All Stakeholders  o Stakeholders are put at risk when the company acts, so must be considered  o Consequentialist Ethic Stakeholder Theory meaning ethical corporate behavior depends on  managers who recognize and take into account the various stakeholders interest / impacts


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