Legal, Ethical, Social Obligations of a business

Chapter 14

Regulations that promote competition• Sherman Act – Makes it illegal for

competitors to get together and set prices on the products or services for sell• Gas prices

• Clayton Act – It is illegal for business to require a customer to purchase one good in order to be able to purchase another good• Purchase computer to get software

Regulations that promote competition (cont.)

• Robinson-Patman Act – makes it illegal to charge different pries to different groups of non-retail consumers• Modern Vending selling to stores

• Wheeler-Lea Act – bans unfair or deceptive actions or practices by businesses• Drug companies and side effects

Government Agencies that protect Competition

• Justice Department – Antitrust Division of the U.S. Justice Department – takes legal action against businesses it believes are trying to have a monopoly

• Federal Trade Commission – administers most of the laws dealing with fair competition

Better Business Bureau

• Report information on business reliability

• Alert the public to fraud against consumers and businesses

• Act as intermediary between businesses and consumers when there is a complaint

Laws that protect businesses• Patent – gives inventor sole right to produce,

use, and sell an invention.• Good for 20 years

• Copyright – legal right to exclusive publication, production, sale, or distribution of a literary or artistic work• Good for 70 years

• Trademark – name, symbol, or special market that can only be used by certain businesses• Band-Aid ™

Laws that Protect Consumers

• Federal Food, Drug, and Cosmetic Act – bans sale of unsafe food, drugs, cosmetics, improper labels, etc.• The Federal Food and Drug

Administration enforces this law

Consumer Product Safety Act –safety for products other than food and drugs (recalls)

Laws that Protect Consumers

• Licenses – varies by state and local governments to operate a business• Beauty salon• Restaurant• Health and fitness center

• May have regular inspections

Laws that protect consumers (cont.)

• Zoning laws – local governments establish zoning laws that control what type of buildings can be built• Commercial• Residential

Regulations that protect employees

• Workplace Discrimination –Bans against discrimination against race, age, color, national origin, religion, or gender (Equal Employment Opportunity Commission regulates this)

Workplace discrimination(cont.)

• Americans with Disabilities Act – bans discrimination against people with disabilities• Businesses with more than 15

employees to accomodate the needs of employees with disabilities

• All businesses open to public must accommodate to allow access to all people

Safe working conditions

• Occupational Safety and Health Act – requires employers to maintain safe working environment for employees.• Enforced by Occupational Safety and

Health Administration (OSHA)

Workplace laws

• Family Medical Leave Act – requires businesses with more than 50 employees to provide up to 3 months of unpaid leave if serious health condition o f immediate family member• Maternity or paternal leave• Must be employed for 1 year

Wages

• Fair Labor Standards Act – maximum number of hours an employee can work

• Hours for children under 16• National minimum wage

Ethics in business

•Ethics is the study of right and wrong•Code of ethics – is the level of ethical behavior

Why have an ethical workplace?• You should want to do the right thing.• You want to serve as a role model• It gains the trust of customers• Employees are more likely to act

ethically• Acting ethically reduces the risk of

getting sued

Ethics (cont.)

• As a business you should have a written code of ethics

• Also you should have established company policies and procedures

Responsibilities to customers• Treat all customers with respect• Be honest• Avoid exaggerating the merits of

your products or services• Inform customers of potential

dangers of products• Handle all disputes fairly

Responsibilities to customers• Treat all customers with respect• Be honest• Avoid exaggerating the merits of

your products or services• Inform customers of possible

dangers of products you sell• Handle all disputes fairly

Responsibilities to suppliers

• Treat all suppliers with respect