March 25, 2015

Chapter 2

Business Ethics
Business Ethics- Principles and standards that determine acceptable
conduct in business.
Acceptable Behavior is determined by:
The organization
The individuals personal principles
Customers and interest groups
Competitors
Government regulators
In business, trust is the glue that holds the customer relationship
together.
The recent global financial crisis took a toll on consumer trust of
financial services companies.

Social Responsibility
Social Responsibility- A businesss obligation to maximize its positive
and minimize its negative impact on society.
Ethics refer to an individuals or work groups decisions.
Social responsibility is the impact of the entire organizations activities
on society.
Social responsibility and ethics are not the same

Laws and Regulations

Sarbanes-Oxley Act:
Criminalized securities fraud and stiffened penalties for corporate
fraud.
Enacted after the accounting scandals in the early 2000s.
Dodd-Frank Act:
Passed to reform the financial industry and offer consumers
protection against complex and/or deceptive financial products.
Enacted after the most recent recession.

The Role of Ethics in Business

Growing concerns about legal and ethical issues in business strengthen
the publics perceptions that ethical standards and the level of trust in
business need to be raised.
Learning to recognize and resolve ethical issues is a key step in
evaluating ethical decisions.
Recent Legal And Ethical Issues
Subprime loans and foreclosures
Accounting fraud
Cybercrimes
Deceptive advertising
Unfair competitive practices
March 30, 2015

Michael Lewis The Big Short

Repeal of the Glass Steagell Act in 1999
Ending the separation between commercial and investment banking
New products were developed
Dist. Obligations
Subprime Mortgages/ARMs
Adjustable rate mortgages
Collateralized debt Obligations/ Derivatives
Mortgage bonds were created for the first time
Tranches/ With huge product base
AIG/ American International Group

Credit Default Swap

Short the System
Insurance
Bank of America
Goldman Sacks
Morgan Stanley
Country Wide Mortgage

Credit Default SWAPS

Regulators did not do their jobs
Triple A (AAA) to BHFT/ High Frequency Traders

Recognizing Ethical Issues (Chapter 2)

Ethical Issue- An identifiable problem, situation, or opportunity that
requires a person to choose from among several actions that may be
evaluated as right or wrong, ethical or unethical.

Many issues seem straightforward but in reality are very complex

One of the principal causes of unethical behavior is overly
aggressive financial or business objectives

Examples:
Retired NFL player Tiki Barber was one of 2,000 players who sued
the NFL for knowledge about head injuries.
The ethical issue here is whether the NFL hid information that
linked head injuries to subsequent damages such as memory
loss, permanent head trauma and dementia.

Conflict of
Misuse of
Interest
Company Exists when a Misuse of
company
Time
person must
Resources
Estimated choose
to
whether to
Company
policies
cost advance their own
help prevent
hundreds of
interests or those
resource
abuse
billions a
of others
year in lost
Bribery is a form of
productivity.
conflict of inters
April 1, 2015

Bribery Payments, gifts, or

special favors intended to
influence the outcome of a
decision.

Fairness and Honesty

Many people felt Toyota was not honest with consumers about its
vehicles accelerator problem a problem leading to a massive recall
and a public-relations nightmare.
A later investigation by the National Highway Traffic Safety
Administration blamed most of the crashes on driver error.

Making Decisions about Ethical Issues

It can be difficult to recognize specific ethical issues and people often
need years of experience to accurately recognize and react to ethical
issues.

Improving Ethical Behavior in Business

Three factors that influence business
+Individual Standards
+Managers and Coworkers Influence
+Opportunity: Codes and Compliance Requirements
=Ethical/ Unethical Choices in Business
Employees must have established ethics policies if employees are to
determine what conduct is acceptable
Code of Ethics- Formalized rules and standards that describe what a
company expects of its employees
Whistleblowing- The act of an employee exposing an employers
wrongdoing to outsiders, such as the media or government regulatory
agencies

The Nature of Social Responsibility

Corporate Citizenship- The extent to which businesses meet the legal,
ethical, economic, and voluntary responsibilities placed on them by
their stakeholders.

Involves action and measurement of how deeply the firm

embraces the corporate citizenship philosophy
Then follows through by implementing citizenship initiatives

Social Responsibility Issues

The companys responsibilities to owners and stock holders
Maintain proper
accounting procedures

Providing Investors
with all relevant
information

Protecting owners
rights and investments

Companys responsibilities to employees

Provide equal
Keep them
Listen to their
opportunities for informed of
grievances and
all employees
what is
treat them fairly
happening in
the company
Companys responsibility to consumers
Provide them with satisfying, safe
Respect their rights as consumers
products
Provide a safe
workplace and
pay them
adequately

John

F. Kennedys 1962 Consumer Bill of Rights

The right to safety
The rights to be informed
The right to choose
The right to be heard

Consumerism- The activities individuals, groups and organizations

undertake to protect their right as consumer

Write letters
Lobby government agencies
Make public service announcements
Boycott irresponsible companies

Sustainability- Conducting activities in a way that allows for the longterm well being of the natural environment, including all biological
entities.
Involves the assessment and improvement of business strategies,
economic sectors, work practices, technologies and lifestyles so they
maintain the health of the natural environment.

STUDY
1. Definition of Business ethics
2. Effect of culture on ethics
3. What is false about Business ethics
4. Role of trust in Business Relationships
5. Sarbanes Oxley Act
6. Recent unethical issues. READ CHAPTER 2
7. What is false about Ethics
8. Go over Conflict of Interest
9. Understand concept of Plagiarism
10/11. Fairness and honesty in business
12. Concept of Ethics
13. Social Responsibility
14. Corporation and their relations to social
responsibility
15. Definition of social responsibility in ethics

April 6, 2015
Chapter 3

Role of International Business

International Business- The buying, selling and trading of goods and
services across national boundaries.
Most of the worlds population and two-thirds of its total
purchasing power are outside the U.S.
Global marketing requires balancing global brands with the
needs of local customers.
Absolute Advantage- A monopoly that exists when a country is the only
source of an item, the only producer of an item, or the most efficient
producer of an item
Comparative Advantage- The basis of most international trade, when a
country specializes in products that it can supply more efficiently or at
a lower cost that it can produce other items
Outsourcing- The transferring of manufacturing or other tasks such as
data processing to countries where labor and supplies are less
expensive
Exporting- The sale of goods and services to foreign markets
(2011 U.S. exports= $2.1 trillion+)
Importing- The purchase of goods and services from foreign markets
(2011 U.S. imports= $2.6 trillion+)
Balance of Trade- The difference in value between what a nation
exports and its imports
Trade Deficit- A nations negative balance of trade, which exists when
that country imports more products than it exports
Balance of Payments- The difference between the flow of money into
and out of a country

Completely free trade seldom exists, due to:

Economic barriers
Ethical, legal and political barriers
Social and cultural barriers
Technological barriers

Economic Barriers
Infrastructure- The physical facilities supporting a countrys economic
activities, such as railroads, highways, ports, airfields, utilities, and
power plants, schools, hospitals, communication systems and
commercial distribution systems
Exchange Rate- The ratio at which one nations currency can be
exchanged for another nations currency
Exchange rates vary daily and affect the cost of imports and
exports
A government may intentionally alter the value of its currency
through fiscal policy

Tariffs and Trade Restrictions

Import Tariff- A tax levied by a nation on goods imported into the
country
Fixed tariff is a specific amount of money levied on each unit of
product brought into the country
Ad valorem tariff is based on the value of the item
Exchange Controls- Regulations that restrict the amount of currency
that can be bought or sold
Quota- Restriction on the number of units of a particular product can
be imported into a country
Embargo- A prohibition on trade for a particular product
Dumping- The act of a country or business selling products at less than
what it costs to produce them

Political Barriers

Political considerations affect international business daily

Seldom in writing & change rapidly
Political unrest may create a hostile or even dangerous
environment for foreign business
Cartel- A group of firms or nations that agrees to act as a monopoly
and not compete with each other, in order to generate a competitive
advantage in world markets. (OPEC is an example of a cartel)

Trade Agreements and Organizations

General Agreement on Tariffs and Trade (GATT)- Trade agreement
signed by 23 nations in 1947, provided a forum for tariff negotiations
and a place where international trade problems could be discussed and
resolved
World Trade Organization (WTO)- International organization dealing
with the rules of trade between nations, evolved from GATT
North American Free Trade Agreement (NAFTA)- Agreement that
eliminates most tariffs and trade restrictions on agricultural and
manufactured products to encourage trade among Canada, the U.S
and Mexico
Effective
January 1,
1994

Easier to
invest in
Mexico and
Canada

NAFTA
Protects
intellectual
property

Expands
trade by
requiring
equal
treatment

Simplifies
country-oforigin rules

World Bank- An organization established by industrialized nations in

1946 to loan money to undeveloped and developing countries
International Monetary Fund- Organizations established in 1947 to
promote trade among member nations by eliminating trade barriers
and fostering financial cooperation
Franchising- A form of licensing in which a company the franchiser
agrees to provide a franchise a name, a logo, methods of operation,
advertising, products and other elements associated with a franchisers
business, in return for a financial commitment and the agreement to
conduct business in accord with the franchisers standard of operation.

Strategic Alliance
-A partnership formed to create
competitive advantage on a
worldwide basis
-Used when competition is fierce
and costs are high
-Becoming predominant in the
automobile and computer
industries

Direct Investment
-The ownership of overseas
facilities
-For companies who want more
control and are willing to invest
considerable resources
-May involve new facilities or the
purchase of an existing operation

STUDY
1. Define International Business
2. Define Exporting
3. Company involve in global business. Are they importing or exporting
4. Favorable Balance of Trade
5. What is a trade deficit?
6. Concept of Balance of Payments
7. Example of someone involved in international travel. What happens
on US economy?
8. Trade deficit
9. Review balance or trade and balance of payments
10/11. Understand Absolute advantage and comparative advantage
12. Concept of devaluating currency
13. Concept of fixed tariff, ad valorem tariff, and protective tariff
14. Concept of Quota and embargo
15. NAFTA

April 13, 2015

Chapter 6

The Importance of Management

Management- a process designed to achieve an organizations
objectives by using its resources effectively and efficiently in a
changing environment
Managers- Those individuals in organizations who make decisions
about the use of resources and who are concerned with planning,
organizing, staffing, directing and controlling the organizations
activities to reach its objectives
Planning- Is the process of determining the organizations objectives
and deciding how to accomplish them; the first function of
management

Mission is the
statement of an
organizations
fundamental
purpose and basic
philosophy

Planning
Goals are
Objectives are
Plans
the results
measurable
specify
the
statements on
what should
company
common issues such be done, by
wants to
as profit,
whom,
achieve
competitive
where,
advantage,
when and
efficiency and
how
growth

Strategic Plans- Establish long-range objectives and overall strategy or

course of action by which a firm fulfills its mission
Tactical Plans- Short-range plans designed to implement the activities
and objectives specified in the strategic plan

Operational Plans- Very short-term plans, specify actions individuals,

work groups, or departments must accomplish to achieve the tactical
plan and ultimately strategic plan
Crisis Management or Contingency Planning- An element in planning
that deals with potential disasters
Organizing- The structuring of resources and activities to accomplish
objectives in an efficient and effective manner
Review plans and determine what is necessary to implement
them
Divide work into small units and assign to specific individuals,
groups or departments
Organizing is continuous because change is inevitable
Organizing is important for several reasons
Helps create synergy where the effect of the whole system
equals more than that of its parts
Establishes lines of authority
Improves communication
Helps avoid duplication of resources
Improves competitiveness by speeding up decision making
Staffing- Hiring of people to carry out the work of the organization
Managers duties include
Recruiting
Determining what skills are needed for specific jobs
Motivating and training employees
Determining pay and benefits
Preparing employees for higher-level jobs
Downsizing- The elimination of a significant number of employees from
an organization

Production, sales and technical positions can be outsourced to

countries with lower labor costs
Downsizing has helped companies reduce costs quickly
However, this involves loss of jobs and lowered morale for
remaining employees
An effective manager will promote optimism and positive
thinking while minimizing criticism

Directing- Motivating and leading employees to achieve organizational

objectives
Tell employees what to do and when to do it using deadlines,
then encourage them to do their work
Directing also involves determining and administering rewards
and recognition
Managers may motivate by providing incentives but recognition
and appreciation are often the best motivators
Controlling- The process of evaluating and correcting activities to keep
the organization on course
Control involves five activities
Measuring performance
Comparing performance with standards or objectives
Identifying deviations from the standards
Investigating the causes of deviations
Taking corrective action when necessary
Leadership- The ability to influence employees to work toward
organizational goals

Study
1. What are the functions on managers?
2. Definition of management
3. Go over functions?
4. Forecasting
5. Different types of plans
6,7,8. Planning, organizing, controlling, directing
9. Functions of management
10. First line decision, middle or senior managers
11. How top managers spend there time (look at book chart)
12. How middle managers spend there time
13. what does a Marketing manager do
14. Analytical skills differences with creativity
15. democratic autocratic or free reign