Business Ethics and Social Responsibility

Ethical Considerations in Business

• Ethics encompasses beliefs regarding right and wrong; legal actions aren’t always ethical.
• Social responsibility involves a company’s obligation to positively contribute to society.
• Sustainable development aims to fulfill current needs while preserving resources for future generations.
• The Foreign Corrupt Practices Act prohibits US companies from giving bribes since 1977.

Responsibilities Toward Customers and Communities

• Socially responsible organizations must deliver value through quality products at fair prices.
• Consumerism emphasizes businesses' duty to provide superior products at reasonable costs.
• Corporate philanthropy includes financial and product donations to nonprofits.
• A social audit begins with defining clear goals.

Business Structures and Ownership

• Franchising limitations include strict adherence to franchisor protocols with minimal flexibility.
• A sole proprietorship is owned and managed by one individual, offering ease of formation.
• Corporations are separate legal entities from their owners, providing limited liability for shareholders.
• Partnerships are voluntary co-ownership agreements between two or more individuals for profit.

Mergers, Ownership, and Business Dynamics

• Horizontal mergers may be pursued to enhance size and market power.
• Board of directors are elected by shareholders to represent their interests.
• General partnerships face challenges with difficulty in withdrawing and shared liabilities.
• Limited liability companies (LLCs) often incur annual franchise taxes in many states.

Entrepreneurial Challenges and Opportunities

• Small businesses often manage lower overhead costs, allowing competitiveness against larger firms.
• Entrepreneurs driven by vision create innovative solutions and products.
• Many individuals pursue entrepreneurship primarily for higher financial gains.
• The Small Business Administration (SBA) aids entrepreneurs by guaranteeing loans through local lenders.

Funding and Economic Dynamics

• Securing commercial loans is difficult for new small businesses due to lack of track records.
• Starting a new business from scratch avoids issues from previous owners’ mistakes.
• Trade surplus occurs when a country’s exports exceed its imports; countertrade accommodates customers lacking hard currency.
• Foreign outsourcing poses quality control risks as a significant drawback.

International Trade and Economics

• China and India report higher GDP growth rates compared to many other countries.
• A balance of payments deficit indicates more money is exiting than entering a country.
• The World Trade Organization (WTO) facilitates trade by reducing barriers and resolving disputes.
• Joint ventures involve the sharing of resources for mutual benefit.

Economic Concepts and Business Cycle

• Macroeconomics addresses broader economic issues, while microeconomics focuses on individual businesses.
• The debt ceiling represents the cap on government borrowing set by Congress.
• A budget surplus occurs when tax revenues exceed government spending.
• The Federal Reserve (FED) provides banking services for commercial banks.

Market Structures and Employment

• M1 money supply comprises all circulating currency, checking accounts, and travelers’ checks.
• Oligopoly markets typically engage in non-price competition to maintain market stability.
• Frictional unemployment arises from individuals voluntarily leaving jobs.
• The business cycle consists of two key phases: expansion and contraction.