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Legal and Ethical Communication: Description & Importance

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  • 0:35 Disclaimers
  • 1:08 Disclosures
  • 1:42 Marketing Communications
  • 2:16 Reporting
  • 2:40 Internal Communications
  • 3:23 Ethical Communications
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Lesson Transcript
Instructor: Jennifer Lombardo
Legal and ethical communication is essential to companies to ensure truthful, accurate and morally-correct decision making. Companies need to give consideration to how they communicate and remain lawful in their day-to-day business activities.

Legal Communication

Georgia Baked Chicken is a franchise restaurant chain that has a flourishing business on the East Coast. In order for the company to continue to grow westward, they need to implement better legal and ethical communication guidelines within their company. Legal communications are concerned with employees having the understanding to not violate ethics, standards and laws pertaining to business communications. The five areas of legal communication that Georgia Baked Chicken needs to be concerned with are disclaimers, disclosures, marketing communications, reporting and internal communications.

Disclaimers

The first type of legal communication that Georgia Baked Chicken needs to establish is concerning disclaimers, or written documents that will protect the restaurant chain from potentially harmful litigation in the event of misuse or misunderstanding by customers. For example, Georgia Baked Chicken sells hot apple cider that is famously popular. Each hot apple cider cup has a disclaimer that warns that the cider could burn, and it says 'Caution, Contents Might Be Very Hot.' This is to protect the company from people suing if any cider spills.

Disclosures

Georgia Baked Chicken also needs to make sure that they are honest with their business practices through disclosures. These usually deal with conflicts of interest, research claims or revealing business proprietary relationships. Georgia Baked Chicken has hired a famous race car driver (Screachin' Steve) to appear in their commercial touting how much he loves their food. In fine print, the restaurant had to disclose that they pay him $1 million dollars a year to be their spokesperson. Georgia Baked Chicken spends over $10 million dollars a year on their marketing communications with consumers.

Marketing Communications

According to federal regulations, Georgia Baked Chicken has to provide professional marketing communications, or fair, accurate and non-deceptive marketing and advertising when communicating to their customers and clients. Product claims must be fact-based. For example, Georgia Baked Chicken spent a year developing a healthy menu option that included a lunch sandwich that was low in calories. The restaurant paid a lab to analyze the sandwich so that they could advertise that it was less than 400 calories. Companies cannot make claims that are unsubstantiated.

Reporting

Every publicly-traded company, like Georgia Baked Chicken, needs to provide detailed financial reporting, which are standardized reports that summarize a company's financial position at a specific point in time. It is important for the communication to be accurate, fair and legal to ensure that lawsuits or fines are avoided. Georgia Baked Chicken has a top-rated CPA firm that handles their financial obligations.

Internal Communications

Finally, Georgia Baked Chicken needs to ensure that they have an excellent way to conduct internal communications. This type of communications are with a company's outside stakeholders, state agencies and employees. It is important to communicate directions, plans, changes and statuses of any policies to everyone of value to the company. Last year, the restaurant had a re-organization and had to close low-performing stores. This had to be communicated across the company and more delicately to those affected by the layoff. A detailed plan was provided explaining why the layoff was needed and most employees were transferred to other stores. The few that were not offered transfers were given a substantial layoff package.

Ethical Communications

Georgia Baked Chicken also needs to be concerned with establishing a moral agency, or an ability to choose the best ethical path within their growing restaurant chain. Ethical communications, or truthful, accurate and respectful actions, are a pillar of how a business maintains integrity. Georgia Baked Chicken's philosophy is based on three key elements of ethical understanding: goals, means and outcomes.

The first element focuses on goals, or what the restaurant wants the end result to be. In regards to the before mentioned layoff, Georgia Baked Chicken wanted the end result to remain profitable and attractive to investors.

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