The Legal and Ethical Environment of Business - Research Paper Example

?The Legal and Ethical Environment of Business Discuss public/private law and the legal environment of business.  Businesses do not operate in isolation. Interaction with legal, ethical and moral issues is inevitable for businesses. There are certain laws, which affect every business, big and small. Some of the most prominent laws include: Anti-trust laws Environmental laws Consumer protection laws Laws protecting the general interest of public The purpose of passing these laws is to prevent the immoral, illegal and unethical practices related to the business dealings (Business Ethics and the Legal Environment of Business, n.d.). 2. Compare the American legal system to the international legal environment of business.  We live in a global economy where goods are manufactured in one country and are packed in other country. In search of cheap labor, raw material and talent, businesses have expanded themselves and have crossed the physical boundaries. The legal of system of every country is different from other. Different countries possess different legal systems however some countries share same legal system for instance countries like Australia, United States and India uses common law systems. In a civil law system, legal system and laws are based upon different and unique circumstances. Some countries legal systems and ideologies are based upon religion for instance Saudi Arabia, Middle East, Pakistan and Iran etc. These nations follow the systems of Koran and Sunnah. Some countries have civil legal system where judges do not have much flexibility and authority to apply law such as Germany, Russia and France. It is highly essential to interpret the legal system and law while doing business international and its affect on commercial activities (Hiray, 2007). 3. Recognize the principal legal and ethical issues facing managers Managers have to face number of issues in their day-to-day dealings. Most of them are related to ethical and legalities. Some principle ethical and legal issues faced by managers are: Ethical Issues Identifying and resolving the dilemmas of ethical situations Maintaining high standards of ethics while conducting business transactions Providing uniform treatment to all the workers in the work environment Keeping the rights, obligations and concern for environment, stakeholders, employees and company Taking decisions after considering the ethical consequences Legal Issues Safeguarding the private and confidential information of the company in accordance with the law Complying with the domestic and international laws while doing business dealings Accepting accountability for the actions and judgments of individual Apart from above mentioned principles, some other ethical and legal issues are related to fraud, marketing tactics and discrimination. 4. Argue the importance of ethics and social responsibility in the business world.  The importance of ethical and social responsibility in any business is that ignoring these important aspects can cause loss of huge time and money to any business. The unquestionable and unethical social practices can be devastating for any size of business. Nowadays, the impact of business decisions on environment has become more important than ever before. Consumers and watchdogs do not leave a single chance to suspect and call out a business, which is mistreating the natural resources and causing devastating effects on environment. Good social and ethical practices are keys to any company’s success. Therefore, nowadays, along with the objective of making profits, the companies are also trying to make an objective of being environmental friendly. The idea that philanthropic efforts are unfavorable to the success and profitability of any business has become obsolete option. 5. Apply ethical frameworks to business situations.  In case of any ethical dilemma, the best way to resolve the issues is to apply ethical framework to that situations. The most widely known ethical framework is mentioned below. Recognizing the Ethical Dilemma Gathering Facts and Information Examining Alternative Actions Taking Decision Checking your gut Evaluate the outcome This step-by-step guide can be helpful in almost every situation. Firstly, it is essential to determine what the ethical issue is. Then, relevant information must be gathered to back up the proposed decision. Alternate actions must also be evaluated and then the decision should be taken. One must also check their gut feeling as it will not deceive in any case. The consequence would then best determine the correctness of the decision (Santa Clara University, n.d.). 6. Explore various types of philosophical reasoning and moral theories. Some of the most common ethical/ moral theories are: The Virtue Approach; acts that are consistent with one’s virtues The Common Good Approach; actions must contribute to the good of life The Fairness or Justice Approach; all ideas must be treated equally The Rights Approach; acts which respects other’s moral rights The Utilitarian Approach; maximum good for maximum number of people Each of the above-mentioned ethical approach is for specific situation and not a single of them can be fit to every situation. Despite of that, different approaches often lead to similar outcomes (Santa Clara University, n.d.). 7. The legal regulations of conducting business overseas It has become an increasingly international exercise to conduct business overseas. Globalization has lead U.S to conduct more business with foreign companies and to operate in foreign jurisdictions. As a result, it is also essential to take into account the domestic as well as internal laws while acknowledging how to structure international transactions. Moreover, it is essential to gain the basic understanding about the laws that are governing international business dealings. It is important to be considerate about the compliance with domestic bribery laws, foreign government investigations, FCPA violations, penalties and loss of goodwill. Other than FCPA, U.S has formulated laws for state, municipal and federal level. Therefore, depending upon the size of the company, the company can go along in accordance with these laws (Public Counsel Law Center , n.d.). 8. The Ethical Conduct Code of Apple Inc. for Employees and Vendors Every company has to establish Ethical Code of Conduct to comply with the ethical requirements and obligations. Apple Inc. has also established ethical code of conduct as well as ethic training programs in order to train managers for tasks such as record keeping, recruitment of foreign workers, tracking of working hours, documenting business practices, verification of workers ID and general managerial responsibilities. For vendors, Apple Inc conducts yearly audits, which includes interviews with contract workers and employees about the management practices of suppliers. A close record of supplier’s management practices is kept. The company also inspects the records of suppliers, interviews the senior managers and reviews the documentations. The company is very stringent about its ethical guidelines. Any violations of ethical principles lead to the immediate termination of the relationship of the respective supplier (Apple Inc. , n.d.). 9. Distinguish between right and wrong in business dealings when the action is legal. In business transactions, the confusing mix of legal/ illegal, ethical/ unethical circumstances often put managers in dilemma. Too often, they are confronted with the predicament of determining right from wrong. Managers who are most exposed to this dilemma are credit managers who compromise ethical values and are faced with the situations of violating laws. In such case, managers need to go along with the legalistic requirements. Abiding the laws can save them from great risk of being trapped in a dilemma of wrong, unethical or illegal situations. If any action is legalized in a particular country, then depending upon the sensitivity of the situation, managers need to go in accordance with that even though it is ethical or not. If there is high risk of loss in following the legal action, only then it must not be followed (Canons of Business Credit Ethics, 1999). 10. Identify the issues surrounding the motivation behind unethical or illegal business operations. The only issue that motivates businesses to do unethical and illegal act is wealth maximization. The primary objective of every business is to earn maximum amount of profits. For the sake of doing so, most of the businesses go beyond the boundaries of legal and ethical standards. This provides only temporary profits and revenues to those businesses because as soon as consumers are acquainted with the misdeeds and unethical behavior of companies, they boycott the company by reducing the usage of their products. In past, many companies have faced severe losses and decline in sales by violating the ethical standards and guidelines. Therefore, nowadays, companies confer equal priority to the ethical and legal concerns as they give to the aim of maximizing profit. References Apple Inc. . (n.d.). Fostering and Enforcing Ethical Practices. Retrieved from Supplier Responsibility: http://www.apple.com/supplierresponsibility/code-of-conduct/ethics.html Business Ethics and the Legal Environment of Business. (n.d.). Business Ethics and the Legal Environment of Business. Retrieved from http://highered.mcgraw-hill.com/sites/dl/free/0073524565/324445/jon24565_ch05.pdf Canons of Business Credit Ethics. (1999). Ethics and Laws Affecting Business to Business Creditors. Retrieved from Credit Research Foundation: http://www.crfonline.org/orc/cro/cro-14.html Hiray, J. (2007, August 17). International business and legal system. Retrieved from All about Business and Management: http://businessmanagement.wordpress.com/2007/08/17/international-business-and-legal-system/ Public Counsel Law Center . (n.d.). CONDUCTING BUSINESS ABROAD. Retrieved from http://www.publiccounsel.org/tools/publications/files/international.pdf Santa Clara University. (n.d.). A Framework for Thinking Ethically. Retrieved from http://www.scu.edu/ethics/practicing/decision/framework.html Read More