Costs of government regulation include direct, indirect and induced cost.

Benefits of regulation are businesses treat employees more fairly and provide them with safer working environments. Consumers are able to purchase safer products and receive more information about them. Citizens in all walks of life have cleaner air to breathe and cleaner water in lakes and rivers.

Direct costs are the costs of administering the regulatory agencies.

Indirect costs are forms, reports, and questionnaires that businesses must complete to satisfy the requirements of the regulatory agencies. These costs get passed on to the consumer in the form of higher prices.

Induced costs are those cost that happen when company resources are used to meet government requirements such costs include 1.) Innovation may be affected 2.) New investments in plant and equipment may be affected. 3.) Small business may be adversely affected

• Controlling natural monopolies: natural monopoly exists in a market where the economics of scale are so great that the largest firm has the lowest costs and thus is able to drive out its competitors.
• Controlling negative externalities: negative externalities (or spillovers) that result when the manufacture or use of a product gives rise to unplanned or unintended side effects on others. Examples include air pollution, water pollution, and improper disposal of toxic wastes.
• Achieving social goals: to correct problems that might be viewed as negative externalities by particular groups such as unfair treatment of minorities. Other important social goals include keeping people informed and preservation of national security.

Arguments for industrial policy:

• declining or threatened competitiveness of the United States in world markets
• the use of industrial policy by other world governments and that the United States already has an industrial policy, but it is the haphazard result of unplanned taxes, tariffs, regulatory policy, and research and development policies.

Arguments against industrial policy:

• reduces market efficiency- they shouldn’t have the government pay them to not grow products
• promotes political decisions- people can argue over industrial policy because they want their state to get the big grant to do research for example.

• Lobbying - The Chamber of Commerce of the US
• PACs - National Automobile Dealers Association
• Coalition Building - Colalition for Security and Copetitiveness
• Political Strategy - Intel or Microsoft 

• Umbrella Organization: represents broad groups such as chamber of commerce of the US.
• Trade Associations: represents midrange groups such as National automobile dealers association.
• Company-Level Lobbying: represents narrow/specific groups such as Law firms, PACs, Public affairs specialists.

• Get access to legislators.
• Monitor legislation.
• Establish communication channels with regulatory bodies.
• Protect firms against surprise legislation.
• Draft legislation, slick ad campaigns, direct-mail campaigns.
• Provide issue papers on anticipated effects of legislative activity.
• Communicate sentiments of client on key issues. 
• Influence outcome of legislation.
• Assist companies in coalition building around issues.
• Help members of congress get reelected.
• Organize grassroots efforts.

• For PACs: Businesses see PACs as a positive and constructive way to participate in the political process. 
• Against PACs: PACs expected something in return other than good government and this can lead to differing treatment for those who give and those who cannot, such as the poor.

The four basic consumer rights:

Right to safety – concerned with the fact that many products are dangerous.

Right to be information - consumers right is to know what a product really is, how it is to be used, and what cautions must be exercised in using it.
Right to choose - refers to the assurance that competition is working effectively.

Right to be heard - was proposed because of the belief of many consumers that they could not effectively communicate to business their desires and especially their grievances.

• Immoral management - Customers are viewed as opportunities to be exploited for personal or organizational gain.
• Amoral management - Management does not think through the ethical consequences of its decisions and actions.
• Moral management – Customers are viewed as equal partners in transactions.

For Advertising

• Increases standard of living
• Increases consumer satisfaction
• Efficient means of distributing information
• Effective and relatively inexpensive

Against Advertising

• Wasteful and inefficient
• Standard of living would be higher if we could be freed from the negative influences of advertising
• Raises the prices of products and services
• Circulates superfluous information
• Produce no net consumer benefit

• Comparative Advertising: refers to the practice of directly comparing a firm’s product with the product of a competitor (e.g., Coke vs. Pepsi).
• Use of Sex in Advertising: sexual reference and innuendos in advertising.
• Advertising of Alcoholic Beverages: advertising of alcohol including liquor on radio and television.

• Advertising should be neither deceptive nor unfair, as these terms are applied under Federal Trade Commission Act, to the children to whom it is directed.
• Advertising should not stimulate children’s unreasonable expectations about product quality or performance.
• Products and content inappropriate for children should not be advertised to them.
• Advertisers should avoid stereotyping and appeals to prejudice, and are encouraged to incorporate minority and other groups in advertisements and to present positive role models whenever possible.

1. To maintain free and fair competition in the economy. 
2. To protect consumer from unfair or misleading practices.

Divisions:

• Advertising Practices
• Credit Practices
• Enforcement

Performance: refers to the product’s primary operating characteristics. An example from an automobile would include its handling, steering, and comfort.

Features: are the bells and whistles of the products that supplement their basic functioning.

Reliability: reflects the probability of a product malfunctioning or failing.

Conformance: is the extent to which the product or service meets established courtesy, competence and ease of repair.

Durability: measures the product life.

Serviceability: Speed, courtesy, competence, ease of repair.
Aesthetics: Subjective, how the product looks, feels, tastes.
Perceived Quality: Subjective inference that the consumer makes on the basis of a variety of tangible and intangible product characteristics.

• Contractual theory: focuses on the contract between the firm and the customer, firms have the responsibility to inform the customer of the nature of the product and avoid misrepresentation.
• Due care theory: focuses on the relative vulnerability of the customer in any way, who has less information and expertise than the firm, and the ethical responsibility that places on the firm.
• The social costs view: extends beyond contractual theory and due care theory to suggest that, if a product cause’s harm, the firm should pay the costs of any injury, even if the firm had met the terms of the contract, exercised all due care, taken all reasonable precautions.

• Caveat Emptor also known as “let the buyer beware”, the basic idea of this concept was the buyer had as much knowledge of what she or he wanted as the seller and, in any event, the marketplace would punish any violators.
• Caveat Vendor also known as “let the seller beware”, it is a counter to caveat emptor and suggests that sellers can also be deceived in a market transaction. This forces the seller to take responsibility for the product and discourages sellers from selling products of unreasonable quality.

• Build safety into product design.
• Do product safety testing for all foreseeable hazards.
• Educate consumers about product safety.
• Report product safety defects promptly.
• Track and address your products safety performance.
• Fully investigate product safety.
• Report product safety defects promptly.
• If a defect occurs, promptly offer a comprehensive recall plan.
• Work with the Consumer Product Safety Council (CSPC) to make sure your recall is effective.
• Learn from mistakes – yours and others.

• Strict liability holds that anyone in the value chain of a product is liable for harm caused to the user if the product as sold was unreasonably dangerous because of its defective condition. For ex. Dept of Transportation holds warehouses relied on information provided by the customer when documenting the shipment.
• Absolute liability holds strict liability for failure to warn of a product hazard, even if the hazard was scientifically unknowable at the time of manufacture and sale. For ex. a drug producer might put a drug on the market (with government approval) thinking that it is safe based on current knowledge.
• Market share liability is a situation in which delayed reactions to such products appears year’s later after consumption of, or exposure to, the product. For ex. a group of women with birth defects claimed that the defects had been cause by a drug, which their mothers had taken while pregnant years later.

Total quality management means that all of the functions of the business are blended into a holistic, integrated philosophy built around the concepts of quality, teamwork, productivity, and customer understanding and satisfaction.

• Environment – Broadly, anything that is external to an entity. For humans, the environment can include external living, working, and playing spaces and natural resources, as well as internal physical, mental, and emotional states.
• Carrying Capacity – The volume of an intensity of use by organisms that can be sustained in a particular place and at a particular time without degrading the environment’s future suitability for that use.A resource’s carrying capacity has limits that need to be respected for continued use. 
• Ecosystem – All living and nonliving substances present in a particular place, often interacting with others.
• Entropy - A measure of disorder of energy, indicating its unavailability for recycling for the same use. Energy tends to breakdown into lower quality with each use. For instance, a kilowatt of electricity, once it is produced and consumed, can never be used as electricity again and, if stored, will allow far less than 1 kilowatt to be consumed.

• Threshold – The point at which a particular phenomenon, previously suppressed, suddenly begins to be active. For instance, when a population’s carrying capacity threshold is exceeded, the population tends to decrease or even crash as a result of increased morbidity and mortality.
• Pollution – The existence of material or energy that has gone through a transformation process and perceived as unwanted or devalued in a particular place at a particular time. 
• Irreversibility – The ability of humans and nature to restore environmental conditions to a previous state within relevant time frames.
• Cycle – The continuous looplike movement of water, air, and various nutrients, such as nitrogen, phosphorous, and sulfur, through the environment. Such cycles can be impaired in performing their evolutionary roles, such as purification and sustenance, by excessive human-caused pollution and depletion.

• Deforestation: clearance of naturally occurring forests by logging and burning.
• Overgrazing: occurs when plants are exposed to intensive grazing for extended periods of time, or without sufficient recovery periods.
• Urban Sprawl: the unplanned, uncontrolled spreading of urban development into areas adjoining the edge of a city.
• Soil Sealing: loss of soil resources due to the covering of land for housing, roads or other construction work.

• National Environment Policy Act (NEPA)
• Environmental Protection Agency (EPA)
• Air Quality Legislation
• Water Quality Legislation
• Land Related Legislation
• Endangered Species Protection

Global Reporting Initiative: International Government Responses that outlines the principles and indicators that organizations can use to measure and report their economic, environmental, and social performance.

CERES Principles:

• Sustainable Use of Natural Resources: We will make sustainable use of renewable natural resources, such as water, soils, and forests. We will conserve nonrenewable natural resources through efficient use and careful planning.
• Reduction and Disposal of Waste: We will reduce and where possible eliminate waste, through source reduction and recycling. All waste will be handled and disposed of through safe and responsible methods.
• Energy Conservation: We will conserve energy and improve the energy efficiency of our internal operations and of the goods and services we sell. We will make every effort to use environmentally safe and sustainable energy sources.
• Risk Reduction: We will strive to minimize the environmental, health, and safety risks to our employees and the communities in which we operate through safe technologies, facilities, and operating procedures, and by being prepared for emergencies.

• Structure: environmental representative on board, environmental executive positions, environmental quality circles.
• Staff: environmental recruitment, environmental bonuses and environmental involvement
• Style: earth day leadership, recycling classes/contests, environmental bulletin board/library
• Skills: waste minimization, life cycle usage, ecology/integration

• Step One: Knowing the community in which the company resides.
• Step Two: Knowing the company resources and competencies.
• Step Three: Selecting projects that match the community stakeholders’ needs with company resources.
• Step Four: Monitor projects to ensure they are being executed according to plans and on schedule.

• Community Partnerships: occurs when a for-profit business enters into a cooperative arrangement with a nonprofit organization for their mutual advantage.
• Strategic Philanthropy: is an approach by which corporate giving and other philanthropic endeavors of a firm are design in a way that best fits with the firm’s overall mission, goals, or objectives.
• Cause-Related Marketing: is the direct link of a business’s product or service to a specified charity. Each time a consumer uses the service or buys the product, a donation is given to the charity by the business.
• Cause Branding: represents a long-term commitment than cause marketing. It also relates more directly to the firm’s line of business and the target audience.

• Diversification: find other revenue streams to help the company cope with the slim margins of manufacturing.
• New Ownership: After a careful study has been made, it may be concluded that finding new ownership for the plant or business is the only feasible alternative. Two basic options exist at this point: (1) find a new owner or (2) explore the possibility of employee ownership.
• Employee Ownership: The idea of selling a plan to the employees as a way of avoiding a closedown is appealing at first glance. Most of these arrangements are the result of last-ditch efforts to stay in business. In numerous cases, employees have had to take significant wage and benefit reductions to make the business profitable.

• Go off shore for the right reasons: Make certain that you have made every effort to increase efficiency and competitiveness at home. Consider the possible backlash and make sure operations are smooth before departure. Making a broken process overseas won’t fix it.
• Choose your model carefully: The decision of whether to set up your own subsidiary or contract the work out is important. Both options have pros and cons that will have different impacts on different firms.
• Be prepared to invest time and effort: Setting up relationships with offshore partners and designing the transition are time-consuming processes. Careful preparation will increase the odds of a successful program.
• Treat your partners as equals: Involve the offshore partners in planning and preparation. Make them feel they are part of the team and let them know that their contributions are valued.

Conventional Capitalism

• Economic progress can best occur in free-market systems of production and distribution where reinvested profits make labor and capital increasingly productive.
• Growth in total output (GDP) maximizes human well-being.
• Concerns for a healthy environment are important but must be balanced against the requirements of economic growth, if a high standard of living is to be maintained.

Natural Capitalism

• Future economic progress can best take place in democratic, market-based systems of production and distribution in which all forms of capital are fully valued, including human, manufactured, financial, and natural capital.
• Human welfare is best served by improving the quality and flow of desired services delivered, rather than by merely increasing the total dollar flow.
• The environment is not a minor factor of production but rather is “an envelope containing, provisioning, and sustaining the entire economy.”

• Service and flow economy: this calls for fundamental change in the relationship between producer and customer, a shift from an economy of goods and purchases to one of service and flow.
  of toxicity.
• Investing in Natural Capital: This works toward reversing worldwide planetary destruction through reinvestments in sustaining, restoring, and expanding stocks of natural capital, so that the biosphere can produce more abundant ecosystem services and natural resources.

• Statutory Rights: Rights provided by law.
• Collective Bargaining: Union contracts provide workers with rights established through collective bargaining. Examples are seniority, preferences, job security mechanism, and grievance procedures.
• Enterprise Rights: Employer promises such as the right to have one’s job clearly defined.

• Moral Management: Employees are a human resource that must be treated with dignity and respect. Employee’s rights to due process, privacy, freedom of speech, and safety are maximally considered in all decisions.
• Amoral Management: Employees are treated as the law requires. Attempts to motivate focus on increasing productivity rather than satisfying employees’ growing maturity needs.
• Immoral Management: Employees are viewed as a factor of production to be used, exploited and manipulated for gain of individual manager or company. No concern is shown for employees’ needs/rights/expectations. Short-term focus.

Public Policy Exception: protects employees from being fired because they refuse to commit crimes or because they try to take advantage of privileges to which they are entitled by law.

Good Faith Policy: suggest that employers may run the risk of losing lawsuits to former employees if they fail to show that employees had every reasonable opportunity to improve their performance before termination.

• The whistle-blower
• The act or complaint of concern
• The party to whom the complaint or report is made
• The organization against which the complaint is made

The traditional view holds that the employee owes loyalty, obedience and confidentiality to the corporate employer. Emerging view holds that the employee has a duty to not only the employer but also to the public and to her or his own conscious. Whistle-blowing, then, becomes a viable option for the employee should management not be responsive to expressed concerns.

• False Claims Act: an American federal law which allows people, whether affiliated with the government or not, to file actions against federal contractors claiming fraud against the government. The act of filing such actions is informally called "whistle-blowing". Persons filing under the Act stand to receive a portion (usually about 15-25 percent) of any recovered damages.
• Sarbanes-Oxley Act: Title VIII consists of seven sections and it also referred to as the “Corporate and Criminal Fraud Act of 2002.” It describes specific criminal penalties for fraud by manipulation, destruction or alteration of financial records or other interference with investigations, while providing certain protections for whistle-blowers.

• Stakeholders: 
• Sustainability: 
• Corporate Social Responsibility: 
• Ethicals: