As you walk through the grocery store and compare the different brands of strawberries to buy, you notice that one brand is organic and the other is not. The one that is organic sells for a higher price. So what's stopping the other brand from advertising themselves as organic and making some extra profit?
Ethics, that's what. This is the third video in Unit 3, Business Law and Ethics. Take a look at this breakdown, which shows you how often this unit comes up on district, state, and international exams for each of the different clusters.
Hello and welcome. This is Lesson 3.3 Business Ethics. Now let's get to work, team. In this video, we'll give a high-level overview of ethics, starting with the Code of Ethics.
Next, we will go into the four aspects of workplace ethics. Then we'll talk about your rights as a consumer before reviewing six different ethics issues in business. And lastly, we'll talk about the cost of unethical behavior, basically why you should try to be an ethical business.
A Code of Ethics is a set of standards adopted by an organization to distinguish between right and wrong. And it typically consists of principles that should be followed, such as integrity and honesty. Members of the organization are expected to apply these principles to their work. As a student, your school has a code of ethics that you must follow at all times.
In the 21st century, customers gravitate towards businesses that share their values, so they'll buy products that are more environmentally friendly or don't use child labor. Ethics are also crucial in the workplace, and there are four different components of workplace ethics. Honesty, integrity, responsibility, and confidentiality. Honesty includes doing all the work that was assigned to you, not wasting company time, keeping accurate records, and respecting company property as well as consumer and employee property.
Integrity refers to treating people fairly and adhering to company rules consistently. Responsibility is when you keep your promises and do all your work. Confidentiality is your ability to keep secret information a secret. For example, telling the public confidential information about a product in development can damage the company.
It'll also probably get you fired. Some companies assume that their employees will act ethically on their own. Others develop a code of conduct to make their expectations clear to their employees. This can be conveyed through handbooks, training sessions, or formal statements. Harker, teachers actually have the code of conduct written on the back of their ID badges.
Now as a consumer, you may be wondering, what are my rights? Lucky for you, President Kennedy listed them in something called the Consumer Bill of Rights in 1962. These include the right to safety, to be informed, to choose, to be heard, to satisfaction of basic needs, to redress, to education, and to a healthy environment. Basically, This is what you as a consumer can expect when you buy goods and services from a business. Despite all these ethical measures, there can still be issues in business. Six of them are more common than others.
These include issues of legality, privacy, promotions, pricing, accounting, and selling. Businesses have a legal responsibility to obey laws at local, state, and federal levels. Most issues of business legality fall into two categories, misrepresentation of products and inappropriate software use. You can actually get penalized with lawsuits, fines, or even jail time for breaking these laws. That first point is called misrepresentation.
Businesses must accurately portray their goods and services without trying to deceive the customer. Remember those organic strawberries from the start of this video? Saying that an inorganic strawberry is organic counts as misrepresentation, so that business can get in trouble.
There are a few organizations responsible for ensuring that products are what they say they are. In general, the Federal Trade Commission, or FDC, is the organization responsible for maintaining the three main standards put forth by the Federal Trade Commission Act. First, an advertisement must be truthful and non-deceptive.
Second, There must be evidence that backs up the claim of an advertisement. Finally, advertisements cannot be unfair, which means that they do not cause harm. Businesses can also get in trouble for software use.
Software is protected by a copyright, which is the right to copy, license, sell, or distribute material. In the United States, any work is copyrighted as long as it's original and has tangible form. For example, if you have an idea for a story, that idea is not copyrighted. But if you type it on a document, now you can get a copyright. In order to use copyrighted material, you need a license, usually by buying one.
Software licenses come with terms of use documentation, which spell out how you can appropriate the information you want to use. use the software, but there are exceptions. You can use copyrighted material without buying a license through something called the fair use doctrine, but it only applies in certain situations like when teaching, news reporting, or editorial commenting.
But of course some people download and use software without paying for it. This is called software piracy and it's illegal. Don't do it. But what counts as piracy is a little fuzzy, in part because there are different types of software licenses.
Most software is for purchase, which means that you must purchase a license to legally use it. Shareware means that the software is available for free during a trial period, and then you have to pay for it to keep using it. Freeware is software you can use without purchasing, like Skype or Adobe Document Reader. Finally, public domain software is free and similar to freeware.
However, freeware has a copyright, while public domain software either doesn't have a copyright or the copyright has expired. Moving on to privacy. Businesses often store consumer information using a technology called Customer Relationship Management, or CRM. And all information stored in a CRM is confidential.
And even though that company might use it for marketing and sales, they can't sell or abuse the information. Now, to maintain privacy standards within a company, businesses encourage their employees to use the internet responsibly and respectfully. This internet etiquette is different at every company, but in general it includes sending personal messages. This is a very common problem with most companies. It's not just about sending messages, but it's about sending Professional emails and not harassing your co-workers.
This gets the cute little name netiquette and it refers to etiquette on the internet. In a business environment, texting is seen as unprofessional, so most people send emails instead. Finally, let's discuss cyberbullying.
This refers to harassing an individual online, such as by sending threatening messages. This causes many problems and both businesses and individuals should stray away from that sort of behavior. Businesses must remain ethical when creating promotions.
False advertising occurs when businesses do not accurately portray their products or services. It's illegal unethical and exactly what Michael Scott did when he pretended to be Willy Wonka and handed out fake discounts to customers. Another issue with promotions is spam.
Spam occurs when companies email people who did not give them permission to email them. This can irritate individuals so companies should only email people who have given them their permission. Businesses must also act ethically when it comes to pricing.
This means no unfair pricing practices such as predatory pricing, price discrimination, and many more that we will be covering in our unit on pricing. Equally important is reporting company finances correctly. Accounting fraud causes shareholders to lose up to billions of dollars, so it is crucial for businesses to report honestly.
A company should sell its products or services ethically in order to succeed. For example, a company cannot pay or accept bribes, high-pressure sell, accept gifts from suppliers in exchange for business, or break business laws because they think they won't get caught. We have talked a lot about the different unethical behaviors in business. But what are the costs? While it's not always jail time for company owners, unethical acts can result in losing the trust of customers.
As a result, sales are lost and the business has a negative image. For example, when British Petroleum spilled oil into the Gulf of Mexico because of careless management, they had to spend millions to clean it up, and they lost many customers. Now that we've gone over all the content, it's time to test your knowledge with a real deck of questions.
Pause the video and try to answer. The answer is D, fishing. As we discussed, phishing occurs when someone tries to steal your information by appearing to look legitimate on email.
And here are the sources we used for this video. Feel free to check them out if you still have any questions. Alright, that pretty much sums up Lesson 3.3 Business Ethics.
Great work team, and we'll see you in the next video.