Assignment

Ethical Decision Making

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Free market theory provides a systematic view of the proper protocol

of business in society. In general, the free market theory tells us that

business managers have one overriding responsibility: to maximize

the profits of the business. Whether a sole proprietorship, partnership,

small business, or a large corporation, this responsibility is constrained

by avoiding fraud, coercion, and engaging in lawful behavior.

Ethics is a major consideration in examining the actions of managers

and the functioning of business organizations. An ethically minded business focuses on:

1. Integrity: focusing on the character of the individuals involved

in the decision or action

2. Consequences: focusing on good and bad decisions. And,

3. Duties, obligations, and principles: focusing on fairness, justice, and respect for individuals and property.

There are six steps to ethical decision making that businesses can

follow:

1. Gather the facts: ask if there are any legal issues, corporate

rules, or regulations to consider.

2. Define the ethical issues, such as lying to customers, job

discrimination, accepting bribes or kickbacks, overstating the

capability of a product/service, and using corporate resources

for personal gain.

3. Identify the affected parties.

4. Identify the consequences—whether good or bad.

5. Identify the obligations to consumers and the business

environment. And finally, 6. Use creative thinking for potential solutions.

Small Business and Entrepreneurship

A small business is independently owned and managed and does not

dominate its market. Small businesses are crucial to the economy

because they create new jobs, foster entrepreneurship and innovation,

and supply goods and services needed by larger businesses. Several types of businesses include:

 Sole proprietorships: which consist of one person doing

business. While they offer freedom, privacy, and tax benefits,

Ethical Decision Making

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they can be hindered by limited access to talent and capital,

and lack of continuity.

 Partnerships: which are proprietorships with multiple owners.

They typically have easier access to talent and capital.

 Corporations: which are independent legal entities that offer

continuity, significant opportunities for raising money, and

limited liability for the owners. And,

 Franchising: in which a parent company supplies financial,

managerial, and marketing expertise to the franchisee, who

buys the right to sell the franchiser’s product.

One of the first choices an entrepreneur must make is whether to buy

an existing business or to start a business from scratch. A successful

existing business has working relationships with other businesses, and

has proven its ability to generate profit. While brand new businesses

are more risky, they allow their owners to plan and work with a clean

slate. Most entrepreneurs rely heavily on their own resources for

financing, but may also receive financial aid from lending institutions,

venture capital firms, or the Small Business Administration.