Chapter 04 – Maintaining Good Government Relations and Business Ethics
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CHAPTER OUTLINE AND TEACHING NOTES
(4) Do your part by disposing of
b. CONSERVATION means practicing
the most effective use of resources,
while considering society’s current
and future needs.
c. Conservation is also known as the
“green” movement. At the end of
this chapter you will find a handout
d. RECYCLING, which is reprocessing
used items for future use, and RE-
5. Community relations in which small
businesses can participate:
a. Educational and medical assistance
Real World Example 4.6
The founder and CEO of Chick-fil-A offers college scholarships to
employees who have worked for two consecutive years.
B. BUSINESS ETHICS are the standards used
to
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CHAPTER OUTLINE AND TEACHING NOTES
1. Business is expected to deal Ethically.
a. Ethical behavior is expected in deci-
sions concerning such issues as
bribery, industrial theft, collusion,
2. One ethical dilemma facing busi-
nesses today is the problem of the
effect of junk food.
a. The World Health Organization
(WHO) is focusing on the multimil-
lion-dollar junk food market.
Chapter 04 – Maintaining Good Government Relations and Business Ethics
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CHAPTER OUTLINE AND TEACHING NOTES
3. Many companies are embracing busi-
ness ethics to be socially responsible,
while others do it to enhance profits.
5. There are at least three levels of ethical
behavior.
a. The lowest level is obeying the laws
of the land—the very least that can
6. One ethicist provides four guidelines:
a. You can control your attitude.
7. The public expects small business own-
ers and managers to obey the letter and
spirit of the laws.
a. Sometimes it is difficult to act ethi-
Chapter 04 – Maintaining Good Government Relations and Business Ethics
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CHAPTER OUTLINE AND TEACHING NOTES
8. One test of ethical behavior is Rotary In-
ternational’s “The Four-Way Test” of
things we think, say, or do:
A. Is it the truth?
cerned?
9. James Cash Penney formalized his be-
liefs into the “Penny Principles”:
a. To serve the public, as nearly as we
can, to its complete satisfaction.
e. To improve constantly the human
factor in our business.
f. To reward men and women in our
organization through participation in
what the business produces.
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CHAPTER OUTLINE AND TEACHING NOTES
10. Ethical statements and codes of conduct
REAL WORLD EXAMPLE 4.7
A former employee of a builder’s supply/lumber company left
to start his own business, competing against his own customers.
11. A minimum ethical framework includes:
a. Clear standards
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LEARNING OBJECTIVES REVISITED
1. Understand the legal system in which small businesses operate, and explain some basic
business laws affecting them.
● The U.S. legal system is based on three principles.
○Everyone is equal under the law.
2. Discuss the role played by government assistance.
● Government agencies that provide assistance include:
3. Describe some burdensome aspects of government regulation and paperwork.
● Problems caused by regulations include:
○Difficulty in understanding some regulations.
○The amount of paperwork needed to comply.
Chapter 04 – Maintaining Good Government Relations and Business Ethics
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4. Explain how to choose a lawyer.
● The lawyer should be knowledgeable about your type of business.
5. Describe ethical and socially responsible behavior.
● Small businesses are expected to act in an ethical and socially responsible manner in deal-
ing with employees, customers, and the public.
KEY TERMS USED IN THIS CHAPTER
Bankruptcy is a formal legal condition of inability to repay debts.
Business ethics are the standards used to judge the rightness or wrongness of a business’s relations to oth-
ers.
Chapter 11 (of the Bankruptcy Reform Act) provides for reorganizing a bankrupt business, whether the
bankruptcy petition is filed voluntarily or involuntarily.
Chapter 04 – Maintaining Good Government Relations and Business Ethics
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Pollution control is the effort to prevent the contamination or destruction of the natural environment.
Recycling is reprocessing used items for future use.
NOTES FOR DISCUSSION QUESTIONS
1. (a) What is the Uniform Commercial Code? (b) Explain what is included in it.
2. What is a tort?
A tort is a wrongful act by one party, not covered by criminal law, that results in injury to a sec-
3. Distinguish between (a) ordinary, or straight, bankruptcy, and (b) Chapter 11 bankruptcy.
Ordinary, or straight, bankruptcy is declared when a debtor files an application with a court
4. Describe some of the assistance available to small firms from government agencies.
The Small Business Administration provides loans, publications, and information on overseas
marketing; provides assistance for women and minorities; has created a support group to help people de-
Chapter 04 – Maintaining Good Government Relations and Business Ethics
The U.S. Department of Commerce offers assistance through its International Trade Administra-
5. Describe some of the problems involved in handling government regulations and paperwork.
At one time, smaller firms were exempt from many federal regulations. Today these firms tend to
be regulated the same as their larger competitors.
6. Explain the five ways in which small firms can cope with regulations.
Small firms can:
(1) Learn as much as possible about the law, especially if it can help them.
7. (a) Describe the characteristics you should look for in a lawyer. (b) How would you find such a
lawyer? (c) How are lawyers compensated for their services?
(a) Before deciding on a lawyer, you should make sure that he or she has appropriate experi-
ence for your type of business, you are comfortable with his or her style, he or she has time
Chapter 04 – Maintaining Good Government Relations and Business Ethics
8. (a) What is social responsibility? (b) Why is it important to small firms?
Social responsibility is a business’s obligation to set policies, make decisions, and follow courses
9. (a) What are business ethics? (b) Why are they so important? (c) Quote Rotary International’s
“Four-Way Test.”
Business ethics are the standards used to judge the rightness or wrongness of a business’s rela-
NOTES FOR CASE QUESTIONS
CASE 4.1: “Hanna-me–downs’
1. Evaluate Gun Denhart’s observation that her company’s program of donating used clothes to
needy children originated from the profit motive rather than considerations of social responsibil-
ity.
Denhart realized that the high price of her products would turn off buyers who did not believe
2. Do you think the company can continue the “Hannadown” program if it pursues its plan to ex-
pand its retail operations in Japan? Why or why not?
This is a good example of a business expansion that must be carefully investigated. Do Japanese
3. Would you say the company is following responsible business practices? Why or why not?
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CASE 4.2: What to Do?
1. What would be Matt’s appropriate action?
This is a terrible dilemma for Matt. He has been put in the position of choosing whether to honor
2. Should Matt have been privy to such information?
Absolutely not. The district manager violated an unwritten code of ethics by discussing personnel
3. What responsibility does Matt have to Bob?
This, again, goes to the question of personal versus professional ethics. Many would feel that
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BONUS EXERCISES
4.1 Other Teaching Ideas
A. Ask students talk to their family lawyer, or a friend of theirs in the legal profession, to get his or
her ideas on the best ways to choose a lawyer. Also, the students can talk to the local bar associa-
tion about the fee structure in their area. In addition, you might want to find out from the bar as-
sociation the names of any lawyers who specialize in handling small business clients.
B. Have students contact the owners of their model companies to find what they consider their most
4.2 Discussion Starter: Ethical Dilemmas
Below are several situations that present ethical questions in a business. Use Handout 4-A Ethi-
cal Dilemmas on the following page with this exercise. Have students discuss each situation: (a) from the
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HANDOUT 4-A
Ethical Dilemmas
Discuss each situation: (a) from the strictly legal viewpoint, (b) from a moral and ethical view-
point, and (c) from the point of view of what is best in the long run for the company. Be sure to consider
both short- and long-range consequences. Also look at each situation from the perspective of all groups
concerned: customers, stockholders, employees, government, and community.
A. A disgruntled employee of your major competitor mails top-secret information or new product
samples to you. Do you begin to do a dance on your desktop or do you immediately mail the in-
formation back to your competitor? What would you do?
(1) Throw the plans or secrets away.
B. You are the general manager of a regional chemical company. In the course of producing your
bulk chemicals, large amounts of particles and smoke are emitted through your plant’s smoke-
C. You are a general manager in a cosmetics firm. The results of a study show that your major brand
could cause skin cancer. What do you do?
D. You have the opportunity to offer a job to a friend who really needs it. Although you believe that
the friend could perform adequately, there are more qualified applicants. What would you do?
Chapter 04 – Maintaining Good Government Relations and Business Ethics
Handout 4-B
Setting Up A Green Business
If you set up your office in an environmentally friendly manner, you can assist the environmental Pro-
tection Agency in their battle against Climate Change, reduce your carbon footprint, and make your
business a safer, healthier place to be.
Some suggestions:
1. Furnish your office with used equipment and repaint with VOC paint (chemicals evaporate from
this paint as it dries
5. Buy supplies that are environmentally friendly:
a. a.. wood pencils, instead of plastic
6. Recycle:
a. The U.S. Government recycles electronics.
b. Pet Smart and Staples recycle ink cartridges.
For more Information, sources for the above include: