Business Ethics Chapter 1-5

Whacking

*W*ireless *hacking*

Three Elements of a Hostile Work Environment

1) Conduct was unwelcome 2) Conduct was severe, pervasive, and regarded by the claimant as so hostile or offensive as to alter his or her conditions of employment. 3) Conduct was such that a *reasonable person* would find it hostile or offensive. Decisive issue is that the conduct interfered with the claimant's *work performance.*

Three Elements of Fairness

1) Equality 2) Reciprocity 3) Optimization

Dual Relationship

A *personal, loving, and or sexual relationship* with someone with whom you *share professional responsibilities.*

Duplicity

A consumer *staging an accident* in a grocery store and then seeking damages against the store for its lack of attention to safety.

Guile

A person who is *crafty or understands right/wrong* behavior but uses *tricks to obtain an unfair advantage*.

Ethical Dilemma

A problem, situation, or opportunity that requires an individual to choose among several actions that have *negative consequences.*

Ethical Issue

A problem, situation, or opportunity that requires an individual, group, or organization to *choose among several actions that must be evaluated as right or wrong*, ethical or unethical.

Weasel Words

Ambiguous statements or weak claims from which viewers must *infer* a message.

Reciprocity

An interchange of *giving and receiving* in social relationships. Occurs when an action that has an effect upon another is returned with an action that has an *approximately equal effect.*

Passive Bribery

An offense committed by the official who *receives* the bribe.

Insider

Any *officer, director, or owner* of *10 percent or more* of a class of a company's securities.

Fraud

Any purposeful communication that *deceives, manipulates, or conceals facts* in order to *harm others.*

Sexual Harassment

Any repeated, unwanted behavior of a *sexual nature* perpetrated upon one individual by another. May be *verbal, visual, written, or physical* and can occur between people of different genders or those of the same gender. Includes *unwanted sexual approaches (touching, feeling, groping), and/or repeated unpleasant, degrading, or sexist remarks)*

System Hacking

Assumes the attacker already has *access* to a low-level, *privileged-user* account.

Integrity

Being *whole, sound, and in an unimpaired* condition. Relates to *all* business activities. Relates to product quality, open communication, transparency, and relationships. Uncompromising adherence to a set of values.

This is a leading self-regulatory body that provides directions for managing customer disputes and reviews advertising cases.​

Better Business Bureau

Labeling Issues

Changing a label to *change customer perception about a product.* Ex. Monster Energy Drink changed label to *beverage* instead of *supplement*.

_____ law defines the rights and duties of individuals and organizations (including businesses).

Civil

Public health and safety and support of local organizations are issues most relevant to which stakeholder group?

Community

Which of the following is a major ethical concern among corporate boards of directors?

Compensation

The _____ is an independent agency within the Federal Reserve System that "regulate[s] the offering and provision of consumer financial products or services under the Federal consumer financial laws."

Consumer Financial Protection Bureau

The _____ was established after the latest financial crisis, in response to a situation that caused many consumers to lose their homes.

Consumer Financial Protection Bureau

______________ are central to an organization and provide directions for action.

Core values

_____ is an organizational factor that gives a company specific characteristics. Over time, stakeholders begin to see the company as like a living organism with a mind and will of its own.

Corporate culture

Commission Lying

Creating a perception or belief by words that intentionally deceive the receiver of the message Creating *noise (technical jargon*) that the receiver does not understand

The _____ was called "a sweeping overhaul of the financial regulatory system...on a scale not seen since the reforms that followed the Great Depression."

Dodd-Frank Wall Street Reform and Consumer Protection Act

Minimizing the use of energy and reducing emissions and waste are issues of importance to which stakeholder?

Environmental groups

Puffery

Exaggerated advertising, blustering, and boasting upon which no reasonable buyer would rely and is *not* actionable under the Lanham Act.

Conflict of Interest

Exists when an individual must choose whether to advance his or her *own interests, those of the organization, or those of some other group.* To avoid ______, employees must be able to *separate their private interests from their business dealings.*

Cause-related marketing is the synergistic and mutually beneficial use of an organization's core competencies and resources to deal with key stakeholders so as to bring about organizational and societal benefits. ​

False

Ethics and social responsibility can be used interchangeably.​

False

Government regulators are a secondary stakeholder. ​

False

Sarbanes-Oxley is considered to be the most sweeping financial overhaul of the regulatory system since the Great Depression. ​

False

The final step in implementing a stakeholder perspective is identifying stakeholders.​

False

​Morals are enduring beliefs and ideals that are socially enforced.

False

Passed by Congress in 1991, the _____ created incentives for organizations to develop and implement ethical compliance programs.

Federal Sentencing Guidelines for Organizations

The _____ focus(es) on firms taking action to prevent and detect business misconduct in cooperation with government regulation.

Federal Sentencing Guidelines for Organizations

Password Guessing

Finding out a *personal thing* about someone and using that information to *guess a password.*

Dumpster Diving

Going through someone's *garbage* in an attempt to find *personal information* or acquire *trade secrets.

_____ have been found to decrease unethical practices and increase positive work behavior.

Good personal values

_____ is the first sign that an unethical decision has occurred.

Guilt

Which of the following would not be considered a negative reinforcement of employee behavior?

Ignoring the behavior

_____________ is/are important in establishing a foundation for normative values.

Institutions

Omission Lying

Intentionally *not* informing others of any differences, problems, safety warnings, or negative issues relating to the product or company that significantly affect awareness, intention, or behavior.

Intellectual Property Rights

Involve the *legal protection of intellectual property* such as music, books, and movies.

Accounting Fraud

Involves a corporation's *financial reports*, in which companies provide important information on which investors and other base decisions involving millions of dollars. The documents contain *inaccurate information*

Collusion

Involves an employee who *assists the customer* with fraud.

Remote Hacking

Involves attempting to *remotely penetrate a system* across the Internet. Begins with *no* special privileges and tries to obtain a *higher* level of administrative access.

Affirmative Action Programs

Involves efforts to *recruit, hire, train, and promote qualified individuals* from groups that have *traditionally been discriminated against on the basis of race.*

Why do critics argue that high compensation for boards of directors is a bad thing?

It could cause conflicts of interest between the directors and the organization.

Legal Insider Trading

Legally buying and selling stocks in an insider's own company, but not all the time. Insiders are required to report their insider transactions within *two business days* of the date the transaction occurred. Insiders are prevented from buying and selling their company stock within a *six-month period*

Facilitation Payments

Made to obtain or retain business or other improper advantages *do NOT constitute bribery payments* for U.S. companies in some situations.

Misuse of Company Time and Resources

Major form of *observed misconduct* in organizations Using company software or other resources for *personal business*

Shareholders provide resources to an organization that are critical to long term success. Which of the following does the book suggest that suppliers offer?

Material resources and/or intangible knowledge

Privacy Issues

Monitoring of employees' use of available technology and consumer privacy.

_____ involves subordinates simply following the directives of a superior without question. It demonstrates the influence that significant others can exert in the workplace.

Obedience to authority

Consumer Fraud

Occurs when *consumers attempt to deceive business* for their own gain. Ex. *Shoplifting*, Price tag switching, item switching, lying to obtain age-related and other discounts, etc. *Intentional deception to derive an unfair economic advantage* by an individual or group over an organization.

Hacking

One of the *top three* methods for *obtaining trade secrets.*

Equal Employment Opportunity Commission (EEOC)

Organization that handles charges of discrimination, especially in regards to *hiring, employment terms, promotion, or privileges of employment* as they relate to the definition of discrimination. More than 99,000 charges of discrimination were filed in 2012. Also handles *sexual harassment* charges

What will happen to a firm found to be in violation if the company had proactively tried to prevent misconduct from occurring?

Penalties or fines may be reduced.

Abusive Behavior (Intimidating Behavior)

Physical threats, false accusations, being annoying, profanity, insults, yelling, harshness, ignoring someone, unreasonableness, etc.

Discrimination

Race, color, religion, sex, marital status, sexual orientation, public assistance status, disability, age, national origin, or veteran status

Which of the following is the first step in the ethical decision making process?

Recognizing that an ethical issue exists

Which represented a far-reaching change to organizational control and accounting systems, making securities fraud a criminal offense?

Sarbanes-Oxley Act.

Which of the following is not an individual factor that affects business ethics?

Significant others

_____ institutions include religion, education, and individuals such as the family unit.

Social

The ethical decision making process in business includes all of the following

Society's view of the decision

Shoulder Surfing

Someone simply *looks over* an employee's shoulder while he or she types in a password.

Age Discrimination in Employment Act

Specifically outlaws hiring practices that discriminate against people *40 years of age or older*, as well as those that require employees to *retire before the age of 70.* Prohibits employers with *20 or more employees* from making employment decisions, including decisions regarding the *termination of employment*, on the *basis of age* or as a result of policies requiring retirement after the age of *40.*

Which of the following is not considered a significant other group in the workplace?

Spouses

Which of the following industries tends to generate a high level of trust from consumers and stakeholders?

Technology

Social Engineering

The *tricking* of individuals into revealing their passwords or other valuable corporate information. Tactics include casual conversations with relatives of company executives and sending e-mails claiming to be a system administrator.

The _____ regulates tobacco, dietary supplements, vaccines, veterinary drugs, medical devices, cosmetics, products that give off radiation, and biological products.

The Food and Drug Administration

Illegal Insider Trading

The buying or selling of stocks by insiders who *possess information* that is *not yet public.*

Corporate Intelligence (CI)

The collection and analysis of information on markets, technologies, customers, and competitors, as well as socioeconomic and external political trends. Involves an in-depth discovery of information from corporate records, court documents, regulatory filings, and press releases, as well as any other *background information* on a company or its executives.

_________________ is the idea that because people live in a community, social rules should benefit the community.

The common good

Equality

The distribution of benefits and resources.

Financial Misconduct

The failure to understand and manage *ethical risks,* or to take *appropriate responsibility* for a decision to utilize *risky and complex financial instruments*.

Which of the following groups is not a group that receives special legal protections?

The highly educated

Implied Falsity

The message has a tendency to *mislead, confuse, or deceive* the public.

Active Bribery

The person who promises or gives the bribe *commits the offense.*

Bribery

The practice of offering something (often money) in order to gain an illicit advantage from someone in authority.

Marketing Fraud

The process of *dishonestly creating, distributing, promoting, and pricing products.* *Destroys customer trust* in a company.

Fairness

The quality of being *just, equitable, and impartial.* Overlaps with the concepts of *justice, equity, equality, and morality.*

Unethical Dual Relationship

The relationship could potentially cause a *direct or indirect conflict of interest* or a risk of *impairment to professional judgment.*

Optimization

The trade-off between *equity (equality) and efficiency (maximum productivity).*

Why is the public more tolerant of consumer misconduct than business misconduct?

There are big differences in wealth and success between businesses and consumers.

Which of the following statements is true about business ethics?

There is no conflict between profits and business ethics.

For people who begin the value shift that leads to unethical decisions, which of the following is not a usual justification to reduce and eliminate guilt?

This is in keeping with my personal morals and the code of conduct, so it is okay.

In 2005 the Supreme Court ruled that the federal sentencing guidelines were not mandatory but should serve only as recommendations judges should use in their decisions.​

True

Many consumers are willing to pay more money for socially responsible products.

True

Social responsibility rests on a stakeholder orientation. ​

True

The board of directors' fiduciary duty to a company means they have assumed a position of trust and confidence that entails certain responsibilities. ​

True

​Every organization has the potential for unethical behavior, even if it is not a business.

True

_____ is essential in building long-term relationships between businesses and consumers.

Trust

Honesty

Truthfulness or trustworthiness. Ren - one who has humanity. Yi - what we should do according to our relationships with others li - virtue of good manners or respect Zhi - whether a person knows what to say and what to do as it relates to the honesty concept.

Literally False

Two subcategories: *Tests prove* (establishment claims) - when the advertisement *cites* a study or test *Bald assertions* (nonestablishment claims) - when the advertisement makes a claim that *cannot be substantiated*

Phone Eavesdropping

Using a digital recording device to monitor and record a fax line.

Organizations that have ethics programs based on a _____ orientation are found to make a greater contribution than those based simply on compliance, or obeying laws and regulations.

Values

How do violations of the law usually start?

When businesspeople stretch the limits of ethical standards

Values have all the following characteristics except

Widely accepted

More than a compliance program, business ethics is becoming

a management issue to achieve competitive advantage.

The degree to which a firm understands and addresses stakeholder demands can be referred to as

a stakeholder orientation.

Stakeholders' power over businesses stems from their

ability to withdraw or withhold resources.

Ethical culture is defined as

acceptable behavior as defined by the company and industry.

Corporate social responsibility is

an organization's obligation to maximize its positive effects and minimize its negative effects on stakeholders.

Laws and regulations change over time; however, in the United States the thrust of most business legislation can be summed up as

any practice is permitted that does not substantially reduce competition and harm consumers or society.

Business ethics is a part of decision making

at all levels of work and management.

Cause related marketing can affect consumer _____, if consumers are sympathetic to the cause and the brand and cause are seen as a good fit.

buying patterns

By prohibiting accounting firms from providing both auditing and consulting services to the same corporate clients without permission, the Sarbanes-Oxley Act is attempting to eliminate

conflicts of interest.

A stakeholder orientation can be viewed as a(n)

continuum.

The _____ can be defined as a set of values, norms, and artifacts, including ways of solving problems shared by members of an organization.

corporate culture

Most organizations with strong ethical climates usually focus on the core value of placing _____ interests first.

customers'

An ethical organizational culture creates an environment in which to structure behavior that is then evaluated by stakeholders. The key elements of an organizational culture include all of the following except

employee compensation

Values are

enduring beliefs and ideals that are socially enforced.

Employees' perceptions of their firm as having an ethical climate leads to

enhanced outcomes.

Companies that _____ will most likely be found in violation of pro-competitive legislation.

establish monopolies

Familiarizing employees with company values and training them to recognize common ethical scenarios helps them generate

ethical awareness

People who believe in _____ go with the flow because they feel the events in their lives are uncontrollable.

external locus of control

Board members being linked to more than one company is an example of

interlocking directorate.

Employees who believe they control the events in their lives by their own effort and skill have a(n)

internal locus of control.

The relationship between business ethics and age

is complex, although experience helps older employees make ethical decisions.

Some, especially those in business, complain that the Sarbanes-Oxley Act and similar legislation

is excessively complex and financially burdensome.

Investors are concerned about business ethics because they know that misconduct can

lower stock value and prices.

Employees who view their organizational culture as ethical are more likely to

make personal sacrifices for the organization.

The purpose of a stakeholder orientation is to

maximize positive outcomes that meet stakeholder needs.

Following the ethical directives of a superior relates to

obedience to authority.

According to the ethical decision-making framework, the absence of punishment provides a(n) _____ for unethical behavior.

opportunity

Multiple elements work on individuals to affect their behavior. While an individual may intend to do the right thing, _____ can alter this intent.

organizational or social forces

A stakeholder group that is absolutely necessary for a firm's survival is defined as

primary.

Title VII of the Civil Rights Act of 1964

prohibits discrimination on the basis of race, color, sex, religion, or national origin.

Studies have shown that _____ within the organization have more impact on a worker's decisions on a daily basis than any other factor.

significant others

The ________________ desires to find a solution to a social problem rather than to simply earn profits.

social entrepreneur

Principles are

specific and pervasive boundaries for behavior that are universal and absolute.

Those who have a claim in some aspect of a firm's products, operations, markets, industry, and outcomes are known as

stakeholders.

When unethical acts are discovered in a firm, in most instances

there was knowing cooperation or complicity from within the company.

What is the last step in the ethical decision-making process? ​

​Individuals' intentions and what action they are going to take

What happens when society deems a particular business action as wrong or unethical? ​

​Legislation usually follows.