Maintaining Good Government Relations and Business Ethics

CHAPTER 4

Maintaining Good Government relations and business ethics

Understanding the legal Environment

·  All law affecting small businesses are based on the federal or state constitution.

·  The making, administrating and interpreting of laws are separated into three distinct branches of government: legislative, executive and judicial.

Some basic Laws Affecting Small business

The uniform commercial code

Because laws affecting business vary greatly; the massive efforts have been made to draft a set of uniform mode statutes to govern business and commercial transaction in all 50 states consisting of nine parts.

1.  General provision

2.  Sales

3.  Commercial paper

4.  Bank deposit and collections

5.  Letters of credit

6.  Bulk transfer

7.  Document of title

8.  Investment securities

9.  Secured transaction

Torts الأضرار

·  A tort is a wrongful act by one party, not covered by criminal law that result in injury to a second party’s person, property or reputation for which the first party is liable.

·  Tort law provide a means by which society compensate those who have suffered an injury as a result of wrongful actin by other.

·  Law dealing with torts provide for the performance of duties and compensation for the physical, mental or economics injuries resulting from faulty products or actions of others.

Bankruptcy

·  Bankruptcy is a formal legal condition of inability to repay debts. People or businesses can petition the courts to be relieved of this financial obligation.

·  There are two type of bankruptcy:

o  Ordinary bankruptcy occurs when a debtor files an application with a court claiming that debts exceed assets and asks to be declared bankrupt.

o  Involuntary bankruptcy occurs when one or more creditors file the bankruptcy petition against the debtor.

·  Chapter 11 provides for reorganizing a bankrupt business whether the bankruptcy petition is filed voluntarily or involuntarily.

The firm can continue to operate while its debts are being repaid.

Government helps for small businesses

1.  Small business administration (SBA)

·  SBA provides many types of direct and guaranteed loans for small firms.

·  SBA provides help through publication such as its series of management Aid, local workshops, small business development center and small business institutes.

·  SBA sponsors SCORE is made up of volunteer members who specialize in helping people develop their business idea.

·  SCORE like to answer the important and details questions you might have about setting up a business

·  SBA helps is by encouraging small business owner to try to perform more effectively by making notational award for the small business persons of the year. Which been announced in White House by USA president.

2.  Small business development centers (SBDCs)

·  It is delivered up to date counseling, training and technical assistance in all aspects of small business management.

·  Services include assistance with financial, marketing, production, and engineering and feasibility studies.

·  SBDCs are funded in part by the SBA. They are over 1100 location to meet small business needs.

·  SBDCs operate in every state with 63 lead centers. These lead centers are the basis for the network of local centers housed in colleges, economic development corporation and universities.

3.  U.S. Department of Commerce

·  U.S. department of commerce offers assistance through its international Trade Administration (ITA), U.S. and foreign commercial service agency (USFCSA), and minority business development agency (MBDA), Department’s Census Bureau.

4.  Other government agencies

·  Other agencies helping small business is U.S. Department of Agriculture which provide assistance through:

·  Cooperative Extension Service

·  Federal Land Bank Association

·  Production Credit Association

·  Farmers Home Administration

Government Regulations & Paperwork

Dealing with regulatory agencies

·  Regulator agency is more flexible and sensitive to the needs of society than congress can be.

·  Less time is needed to develop and issue new regulation.

Some benefits of government regulation

·  No profit mechanism is to measure the government regulation outweigh تفوق the cost.

·  Both cost and benefits are hard to determine, estimate must be made.

·  Some regulation is truly cost-effective.

·  When the regulations are imposed on one industry they often generate opportunities for other small business.

Problems with Government Regulation

·  Difficulty Understanding some of regulations.

·  Enormous Amount of Paperwork which need to comply with government regulation and in maintaining record need to satisfy the regulators.

·  Difficulty/Cost Of Compliance

·  Discourages Firms from Hiring by federal laws and regulations.

***How owners can cope with government regulations

1.  Learn as much as you can about the law if it is possible that law can help you.

2.  Challenge harmful laws by joining organization such as National small business association.

3.  Become involved in the legal political system to elect official of your choosing who will help you to change the law.

4.  Find a better legal environment even leave to another city.

5.  Lean to live with the laws and regulations

Dealing with government regulators

The guidelines are created to ensure professional conduction in different areas which include ethics, technical knowledge, competence and compliance.

Choosing and using lawyer

·  One of the first things to start or operate small business is to retain a competent lawyer.

·  Lawyer has several role:

·  Education

·  Knowledge of the law

·  Ability to see the big picture

·  Considering alternatives.

·  Choosing the lawyer

A.  Where to look:

There are numbers of ways to find a lawyer to help you with problem

1.  Personal referral from someone whose opinion you value such as your minister or banker.

2.  The Martindale Hubbel law directory which include professional biographies of most of the lawyers

3.  Lawyer referral and information services

4.  Advertising which lawyer can advertise certain information in newspapers

B.  What to look:

1.  Appropriate experience with your type of small business

2.  Compatibility between layer and clients

3.  Availability in any time

4.  Cost and fees. Lawyer time is expensive.

·  Maintaining relationship with lawyer:

Lawyers usually have three basic ways of charging their services:

·  A flat fee charged for specific assignment

·  Contingency fee

·  Hourly fee based on type of activities

Socially and ethically responsible behavior

·  Social responsibility

Social responsibility is a business’s obligation to follow desirable courses of action in terms of society’s values and objective.

Usually take the form of:

1.  Consumerism:

·  “consumer is always right”

·  The movement to protect the valid interest of consumers is major force in small business today.

Consumerism is the organized effort of independent, government and business group to protect consumers from undesirable effect of poorly designed and procured products.

Example: the child protection and toy safety act to set safety standard requiring label on unsafe product.

2.  Employee relations:

·  An employee relation involves a concern for employee rights such as employment, training, development, promotions, health and safety.

·  Also include sexual harassment, family leave, care for children.

·  Business owner should consider the ethical aspects.

3.  Environmental protection

·  Environmental protection is trying to maintain a healthy balance between people and their environment.

·  Take two forms:

1.  Pollution control is trying to prevent the contamination of destruction of the natural environment.

2.  Conservation means practicing the most effective use of resources while considering society current’s and future needs. Conservation is recycling.

4. Community Relations:

There are areas of social responsibility in which small firms participate:

·  Education and medical assistance

·  Urban development and renewal

·  The arts, culture and recreation

·  Business ethics

·  Business Ethics are the standards used to judge the rightness or wrongness of a business’s relations to others.

·  Small business people are needs to deal ethically with customers, employees, competitors and others.

·  Many large and small business companies are embracing business ethics to be socially responsible while other do it to enhance profits.

·  There are three levels of ethical behavior:

1.  Lowest level is obeying the laws of the land.

2.  Governed by any codes of ethics issued by group to which they belong.

3.  The individual’s personal ethics. The person own belief system that tells him what to do.

·  Personal Ethics Points

1.  Control Your Attitude by setting and review goals.

2.  Control Your Associations by listening to ethical winners

3.  Control Your Discipline

4.  Work On Yourself

·  “Four Way Test” Of ethical behavior:

1)  Is it the Truth?

2)  Is it fair to all?

3)  Will it Build Goodwill?

4)  Will it Beneficial to All?

·  We must understand that ethics statement and code of conduct are like the white lies either side of the road. They give us freedom and indicate boundaries.

·  People make mistakes but when it is a mistake in judgment the cost can stagger ارباك a small business.

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