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. What do you deem as
“right” or “wrong”?
– Cheating on an exam or assignment if you don‟t get caught?
– Taking things from work? Food, pens, etc
– Using your neighbor‟s wireless internet or cable without
paying?
– Pirating music/movies/games from the Internet?
– Asking for a „water‟ cup at a fast food restaurant and filling it
with pop?
– Taking a handful of mints as you leave the restaurant?
– Giving others your Netflix subscription log in?
– Lying about your age or your kids age?

4. 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

5. 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

6. 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

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

8. 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

9. INTERNATIONAL
Environment of Business
Importance - Forms - Theories

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

11. 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

12. Top 10 Countries US Trades With
1. CANADA
2. CHINA
3. MEXICO
4. JAPAN
5. GERMANY
6. UK
7. SOUTH KOREA
8. TAIWAN
9. FRANCE
10. MALAYSIA

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

14. 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

15. 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)

16. 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

17. 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
• Trading Bloc- group of 2 or more countries who agree
to move all restrictions b/w them on the sale of Gs and Ss

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

19. Factors Supporting Trade
• NAFTA (North American Free Trade Agreement)
– 1992 Canada, U.S. and Mexico
– Removed tariffs and trade barriers
– *World‟s largest TRADING BLOC
• 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