BUSN370 Regent University Legal and Ethical Business Issues Assignment

timer Asked: Mar 28th, 2019
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Question Description

Utilizing the concepts from the chapters from this week, post a message identifying and discussing a liability issue or ethical issue you have witnessed or may arise in business. What concerns may arise for the business? What are the legal ramifications of the issue? What if an employee acts in a manner that may raise liability or ethical concerns? How would you handle the issue or try to deter the issue from happening?

Cite a minimum of two (2) scholarly peer reviewed sources (beyond your textbook or the Bible) applying APA guidelines (250-450 word count range).

  1. Liuzzo, A. L., & Hughes, R. C. (2019). Essentials of Business Law (10th ed.). New York, NY: McGraw Hill Education:
    1. Chapter 2, Ethics and the Law;
    2. Chapter 3, Criminal Law;
    3. Chapter 4, Tort Law;
    4. Chapter 34, Products Liability;
    5. Chapter 35, Professionals' Liability;
    6. Chapter 37, Business and the Environment; and
  2. Romans 7:7-25 (Law and Sin).

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Chapter 2 Ethics and the Law ©2019 McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. 2-2 Unethical Behavior in Our World Some multimillion-dollar companies have been involved in acts society deemed unethical and illegal behavior; questionable accounting practices, fraud, deception, insider trading and attempts to influence both politicians and the media. As response to the unethical corporate behavior, Congress passed the Sarbanes-Oxley Act (2002), placing greater accountability on top management to closely monitor financial dealings and corporate disclosures. ©2019 McGraw-Hill Education. Example of Unethical Business Practices Facts: • Entrepreneur Martha Stewart (2004) was investigated for selling several thousand shares of ImClone stock after allegedly receiving and illegally acting on insider information. • Found guilty of a federal crime for lying to federal investigators, Stewart received a 10-month sentence, a $30,000 fine, and 19 months of supervised probation. ©2019 McGraw-Hill Education. 2-3 2-4 Ethics in a Global Marketplace (1) Group and individual values are influenced by religion, tradition, culture and customs. With expansion of businesses in a global marketplace, business professionals face different standards in different countries. ©2019 McGraw-Hill Education. 2-5 Ethics in a Global Marketplace (2) Culture and Subculture influence the development of individual and group values. Culture is of utmost importance. It is the values held those of a nation or an ethnic group. Subculture are the values held by a smaller group —for example, employees of a corporation, or a department within a company—and may differ from those of the larger culture. ©2019 McGraw-Hill Education. 2-6 Ethics, Morals, and Values Ethics - An individual’s beliefs as to what is right and wrong. Morals - Standards and principles society has adopted as a guide for acceptable behavior of individuals within society Values - Beliefs or standards considered worthwhile which establish an individual’s ethics and a society’s morals. ©2019 McGraw-Hill Education. Sources of Group and Individual Values Group and individual values are influenced by religion, traditions and customs. • An individual’s values are significantly influenced by groups to which the person belongs. • Other influences shaping an individual and group values are: • Culture: Values of a nation or ethnic group. • Subculture: Values held by employees of a corporation or a specific department (may be different from those of the larger culture). ©2019 McGraw-Hill Education. 2-7 Relationship between Law and Ethics Legal mandates are placed on individuals or groups by authorities or governments. Ethical considerations are generally derived from within individuals or organizations. Ethical ideas have been the foundation of most legislation enacted by governments. ©2019 McGraw-Hill Education. 2-8 Responses of Business Firms to Ethical Issues (1) Organizations are concerned about possible legal consequences of unethical behavior. Executives may embrace ethical practices due to favorable publicity it gives their firms. Businesses concerned with ethics usually focus on corporate responsibility and development of codes of conduct. ©2019 McGraw-Hill Education. 2-9 Responses of Business Firms to Ethical Issues (2) Corporate Responsibility • Actions taken by corporations are intended to demonstrate their wish to behave responsibly. • Corporate actions reflect a moral and ethical concern with observed social problems. Codes of Ethics • Companies understand the need to be ethical. • Some firms establish a code of ethics, sometimes called a credo or a values statement. • Sarbanes-Oxley requires codes for public firms. ©2019 McGraw-Hill Education. 2-10 Responses of Business Firms to Ethical Issues (3) Many firms expect employees to strictly follow codes; others require employees to sign contracts of adherence to ethics standards. Management should consider relevant stakeholders; those people or groups affected by a firm’s actions or decisions, when establishing codes or making ethical decisions. ©2019 McGraw-Hill Education. 2-11 Responses of Business Firms to Ethical Issues (4) A general list of topics covered in codes: • • • • • • • • • • • Fundamental honesty and adherence to the law Product safety and quality Workplace Health and safety Avoiding conflicts of interest Employment practices Fairness in selling and marketing practices Financial reporting Supplier relationships Pricing, billing, and contracting Trading in securities and using insider information Payments to obtain business ©2019 McGraw-Hill Education. 2-12 Responses of Educational Institutions to Ethical Issues Educational institutions have increased the need to examine ethics by adding internal policies, training courses, workshops, and programs. Typical topics include: • • • • • • Fairness in hiring practices Employment Promotions Ethical issues in multinational business Ethical issues arising from technology Economic justice, environmental ethics, and ecology ©2019 McGraw-Hill Education. 2-13 2-14 Responses of Governments Governments try to protect consumers, the environment and influence business ethical behavior. Governments enact laws, regulations and programs to ensure and encourage ethical behavior. • For example, Federal Sentencing Guidelines provide an incentive for corporations to act more ethically. • Under this mandate, when an employee violates a law a firm may reduce its liability by showing it took action to develop moral guidelines for its employees. ©2019 McGraw-Hill Education. Responses of Trade and Professional Associations Trade associations develop guidelines for ethical business practices. • Example: The direct marketing association (DMA) provides self-regulatory standards for: • • • • • Telephone marketing Sweepstakes Fund-raising Marketing to children Collection and use of marketing data ©2019 McGraw-Hill Education. 2-15 2-16 Ways to Ensure Ethical Practices (1) Sometimes the driving force for reform may be the individual whistleblower. • Whistleblower: A person who reveals to a governmental authority, or news media, confidential information concerning some wrongdoing or conduct he or she regards as unethical and/or illegal. The federal government and many states have laws that protect whistleblowers from retaliation. The usual motivation behind whistleblowing is outrage to a person’s sense of ethics. ©2019 McGraw-Hill Education. Ways to Ensure Ethical Practices (2) Federal government has now enacted laws to encourage whistleblowing by providing financial incentives for doing so. • For example, the Securities and Exchange Commission, in an effort to enhance its reputation, has established a program to reward whistleblowers with a percentage of penalties imposed. ©2019 McGraw-Hill Education. 2-17 Integration of Ethics into Business and Government (1) Business should be conducted in ways that will not harm the consumers or environment. A chief executive officer or board of directors may discontinue ethical practices if they reduce profits or adversely affect the firm. Likewise, firms of high ethics will maintain practices that enhance the firm’s profits. ©2019 McGraw-Hill Education. 2-18 Integration of Ethics into Business and Government (2) Additional government regulation could ensure compliance with ethical standards, but such enforcement proves costly and at times oppressive bureaucracy. Ideally, individuals, industry organizations, and watchdog groups should encourage business and governments to reach mutually agreed ethical practices. ©2019 McGraw-Hill Education. 2-19 Chapter 3 Criminal Law ©2019 McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. 3-2 Crime versus Tort (Civil Law) Crime: Violation of a statute that is an offense against society; the public at large punishable by state or federal government. Tort (Civil Law): A private wrong causing injury to another person’s physical well-being, property, or reputation. Certain acts may be charged separately as a criminal violation and as a tort (civil violation). ©2019 McGraw-Hill Education. 3-3 Crime versus Tort While statutory law determines what constitutes a crime, many laws reflect legal principles derived from longstanding common law. A high degree of uniformity normally exists among states, thus a particular act to be legal in one state and illegal in another is rare. • A current exception is marijuana use: legal in a few states, illegal in others and illegal under federal drug laws. Legislatures attempt to reflect public interest enacting laws making certain acts a crime if there is sufficient public demand. ©2019 McGraw-Hill Education. 3-4 Classification of Crimes (1) Crimes in the U.S. are classified into three general categories according to seriousness of the offense: • Treason • Felony • Misdemeanor ©2019 McGraw-Hill Education. 3-5 Classification of Crimes (2) Treason: Levying war against the United States, or providing aid and comfort to the nation’s enemies. (U.S. Constitution, Art. 3, Sec. 3) Felony: A crime punishable by death or imprisonment in federal or state prison for a term exceeding one year. Misdemeanor: A less serious crime generally punishable by a fine and/or a prison sentence of less than one year. ©2019 McGraw-Hill Education. 3-6 Crimes in the Business World (1) Crimes, do not always involve force or violence against people or businesses. Business crimes may also occur in the office, over telephone, computer systems or in social occasions and locations where employees may meet. ©2019 McGraw-Hill Education. 3-7 Crimes in the Business World (2) Crimes in the business world include: • Securities Fraud • Arson • Bribery • False pretenses • Forgery • Larceny • Perjury • Embezzlement • Extortion • Consumer and Government Contract Fraud • Tax Evasion or Fraud • Other business-related crimes… ©2019 McGraw-Hill Education. 3-8 White Collar Crime (1) White-Collar Crime is a term used to describe categories of crimes typically financial related that do not involve force or violence by or against businesses. Depending on its seriousness and particular state or federal law, a white-collar crime may be a felony or a misdemeanor. Laws governing white collar crime have expanded at the federal and state level. ©2019 McGraw-Hill Education. 3-9 White Collar Crime (2) RICO -Racketeer Influenced and Corrupt Organizations Act of 1970 - is one of the most successful federal laws used to combat white collar crime. • RICO prohibits organization's employees from engaging in a pattern of racketeering or illegal acts. • Under RICO, it is easier to prosecute corrupt organizations and seize illegally obtained assets. ©2019 McGraw-Hill Education. 3-10 Securities Fraud (1) Securities Fraud occurs when a person or company provides false information to potential investors intended to influence decisions to buy or sell securities. Securities fraud encompasses: • Theft of investor's assets • Stock trading based on non-public information • Wrongful manipulation of financial statements and/or intentional false information. • Sales by unlicensed stock brokers. ©2019 McGraw-Hill Education. 3-11 Securities Fraud (2) A Ponzi scheme is a type of securities fraud in which large gains are promised to investors; but, in reality, newer investments are used to provide returns to earlier investors. Knows also as Pyramid Schemes, these schemes inevitably collapse over time as required returns to earlier investors become too large to cover income from new investors. ©2019 McGraw-Hill Education. 3-12 Arson Arson is a willful or malicious act of causing the burning of property belonging to the owner, another person or business. Most states have laws establishing particular criminal penalties to persons who burn their own property with intent to collect insurance money. Such statutes establish a special category of crime called burning to defraud. Insurance companies and law enforcement have developed sophisticated investigation techniques to combat these illegal practices. ©2019 McGraw-Hill Education. 3-13 Example: Arson Facts: • Filkins, the owner of a clothing manufacturer was losing money so he hired an arsonist to set the building on fire. • The building, inventory, and equipment were insured. • Insurance investigators and fire marshal found evidence of arson. • The insurance company refused to pay for the loss. • Filkins and the arsonist were charged with the crime of arson. ©2019 McGraw-Hill Education. 3-14 Larceny Larceny is a general term including most forms of theft. It may be a felony or misdemeanor based on size. • Classified as petty (small) or grand (large), depending upon the value of the stolen property. Types • Robbery: Taking of property in the possession of another person against that person’s will and under threat of bodily harm. • Burglary: Forcible entry to another person’s premises for the purpose of committing a crime. ©2019 McGraw-Hill Education. 3-15 Bribery Bribery consists of giving or taking money or property of value with intent of influencing someone (usually a public official or business official) to act contrary to performance of his or her duty. Some states have enacted laws that make it a crime to bribe someone other than a public official. Both the giver of the bribe and the receiver may be charged with bribery. Federal law prohibits bribery of foreign officials. ©2019 McGraw-Hill Education. 3-16 False Pretenses False pretenses describe a broad category of crimes involcing activities intended to deceive others by making false claims, or to obtain goods by using false pretenses. • Example: A person who makes false statements to a bank for the purpose of obtaining a loan. Federal and state statutes govern activities considered unlawful false pretenses. ©2019 McGraw-Hill Education. 3-17 Forgery Forgery consists of wrongfully making or altering the writings of another with the intent to defraud. • Example: Falsifying a signature on a check or on the endorsement of a check. The act of signing another person’s name to a credit card charge slip, contract, or, other official documents without permission is also considered forgery. ©2019 McGraw-Hill Education. 3-18 Perjury Perjury consists of intentionally giving false oral or written statements under oath in a judicial proceeding after having sworn to tell the truth. • Example: A person knowingly lies in court while under oath. Often, giving false information on a government form such as a tax return, trademark application and the like is considered perjury. ©2019 McGraw-Hill Education. 3-19 Embezzlement Embezzlement is the wrongful taking of money or other property entrusted to a person as a part of his or her employment. • Example: A computer programmer at a bank programs a computer so that interest earned on a depositor's account would be split; a portion diverted into a deposit into his personal account. ©2019 McGraw-Hill Education. 3-20 Extortion Extortion is the act of taking or demanding money or other property from someone by using force, threats of force, personal humiliation or economic harm. The difference between extortion and bribery is that in bribery both parties are willing participants, whereas in extortion, one person is willing and the other person is unwilling. ©2019 McGraw-Hill Education. 3-21 Other Business-Related Crimes The number of crimes involving businesses has grown with researchers suggesting there are now as many as 4,500 federal crimes in the U.S. Code. As business practices and technology change, new types of bad acts arise for which Congress and states increasingly enact laws carrying criminal penalties and forfeiture of illegal benefits. Some examples are: • Credit card fraud: Using stolen or counterfeit credit cards. • Identity theft: Stealing someone else’s identity to get credit cards or loans. • Environment: Discharging waste into waterways. ©2019 McGraw-Hill Education. 3-22 Criminal Penalties in Business Businesses convicted of crimes typically pay large fines, incur court injunctions, legal and other costs. Some laws allow Responsible Corporate Officers to be charged, convicted and jailed. In extreme cases (RICO) the business or its property may be seized by government authority. ©2019 McGraw-Hill Education. Chapter 4 Tort Law ©2019 McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education. The Nature of Torts Tort: A violation of the rights of an individual or business that has been damaged either intentionally or by negligence. • Law of torts does not deal with duties from contract but is concerned only with violation of private rights. Common torts include: • • • • • Defamation Assault or Battery Nuisance Conversion Negligence ©2019 McGraw-Hill Education. 4-2 Defamation Defamation: The harming of a person’s reputation and good name by communication of a false statement to 3d parties. • For an act to be considered defamatory, it is necessary to show the statement was made in such a way that others hear or read it. • Example: Writing an article that contains defamatory statements about someone in a newspaper. Defamation has been separated into two torts: • Libel • Slander ©2019 McGraw-Hill Education. 4-3 Libel and Slander Libel: Spreading of damaging statements in written form, including pictures, cartoons, and effigies (likenesses). • Defamation on radio, television, and Web sites is also considered libel. Slander: Spreading of damaging words or ideas about a person, directly or indirectly, in all other forms not considered libel. • The most common form of slander is spoken words. • Slander also can be committed by means of gestures and actions. ©2019 McGraw-Hill Education. 4-4 Characteristics of Libel While several libel cases involve defamatory statements published in books, media, and Web sites, the possibility of libel also exists in business e-mails, memos, and letters. • The libel need not be direct. Subtle suggestion or implication is enough to bring about legal charges. Example: In the case of a missing laptop computer, a manager might write an e-mail to his team asking them to check with Joe Anderson, who was known to “borrow” things. (Implication equals Joe is a thief) ©2019 McGraw-Hill Education. 4-5 Characteristics of Slander Slander describes almost all defamation that cannot be classified as libel. • It includes spoken words, gestures, actions, and even omissions. • Most cases of slander involve thoughtless statements that reflect badly on another person’s good name and reputation. • Anyone hearing a slanderous statement may be called upon later to testify to having heard it. • Slander does not require direct defamatory statement. Gestures and actions may be as damaging. ©2019 McGraw-Hill Education. 4-6 Trade Libel The tort of trade libel is similar to traditional defamation but deals with an individual’s title to property, or quality of product or service. • Example: A manager sends an e-mail to his suppliers claiming his competitor is having trouble with finances and is planning on filing bankruptcy. Humor and Slander • A quick apology migh ...
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Tutor Answer

School: Duke University




Business Ethics
Student’s Name
Institutional Affiliation


Ethical issues in business

An ethical issue is a problem that arises when employees fail to conduct themselves
according to the moral principles of the organization. I have experienced many ethical issues
arising in businesses. Among the ethical issues I have experienced is fraudulent accounting
practices. It is essential for a company to maintain accurate accounts of money circulation.
However, you may find other employees acting contrary to this principle (Liuzzo & Hughes,
2007). Some of the unethical accounting practices that are p...

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