The Business Environment

Ethical Issues

• 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

– 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?

What do you deem as “right” or “wrong”?

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

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

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

Ethical Issues Facing Business

• Deforestation that endanger species• Oil drilling off coast destroying natural

beauty• Quid-pro-Quo agreements • Discrimination in hiring practices

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,

government and the public)

Enhancing goodwill in the community is now good business

INTERNATIONALEnvironment of

BusinessImportance - Forms - Theories

How many foreign-made items are you wearing today?

Check your clothing, backpacks, calculators,

pens & compare with your neighbor

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

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

Forms of International Business

• Imports: – buying goods made in foreign

country

• Exports: – selling products to buyers in

another country

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

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)

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

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

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”

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