Business Law CH 2

Cost-benefit ananlysis

A decision-making technique that involves weighing the costs of a given action against the benefits of that action

Ethical reasoning

A reasoning process in which an individual links his or her moral convictions or ethical standards to the particular situation at hand

Business process pragmatism

A systemic approach to making ethical business decisions : Inquiry, Discussion, Decision, Justification, Evaluation

Utilitarianism

An approach to ethical reasoning in which an action is evaluated in terms of its consequences for those whom it will affect. A "good" action is one that results in the greatest good for the greatest number of people

Categorical imperative

An ethical guideline developed by Immanuel Kant under which an action is evaluated in terms of what would happen if everybody else in the same situation, or category, acted the same way

Duty-based ethics

An ethical philosophy rooted in the idea that every person has certain duties to others, including both humans and the planet. Those duties may be derived from religious principles or from other philosophical reasoning

Outcome-based ethics

An ethical philosophy that focuses on the impacts of a decision on society or on key stakeholders

Why is it important to monitor the employment practices of foreign suppliers?

Because many corporate watch groups will discover and publicize the unethical behavior of your company's foreign suppliers.

What constitutes right or wrong behavior and the application of moral principles in a business context

Business ethics

Individuals should evaluate their actions in light of consequences that would follow if all similarly situated people or entities acted in the same way. This is called the ...

Categorical imperative

The Sarbanes-Oxley Act

Companies must have confidential systems in place so employee can report potential unethical behavior

One view of duty based ethics focuses on the Principle of Rights. What are 4 groups whose rights can be most affected by business decisions?

Consumers Suppliers Owners (Shareholders) Employees

Investors dissatisfied with profit-maximization theory look beyond profits to consider the triple bottom line. The 3 aspects of this concept are...

Corporate profits Impact of profits on people Impact of profits on planet

Corporate Social Responsibility

Corporations should be held responsible for their duty to society Not required by law Companies are judged on their social impact Being socially responsible can increase profits via publicity and goodwill

Weight the pros and cons of an action. The side with more pros should be followed

Cost-Benefit anaysis

A ... analysis involves assessing the negative and positive effects of alternative actions

Cost-benefit analysis

Reasoning that businesses have a duty of care to others

Duty-based

Every person has certain duties to others, including humans and the planet ... ethics is rooted in this principle.

Duty-based ethics

The application of morals and ethics to a situation is usually called ethical ...

Ethical reasoning

application of morals and ethics to a given situation

Ethical reasoning

Moral principles and values applied to social behavior

Ethics

Corporate social responsibility is typically imposed on corporations by state laws

False

Triple bottom line

Focuses on a corporation's PROFITS, its IMPACT ON PEOPLE, and its IMPACT ON THE PLANET

Business ethics

Focuses on what constitutes right or wrong behavior in the business world and on how businesspersons apply moral and ethical principles to situations that arise in workplace

Since the late 1970s, the ... has prohibited US businesspersons from bribing foreign officials to secure beneficial contracts.

Foreign Corrupt Practices Act

Upper management wants to fire Gary because he is nonproductive. Using the utilitarian approach to business ethics, management would probably NOT consider...

Gary's fundamental rights

Stakeholders

Groups, other than the company's shareholders, that are affected by corporate decisions. Stakeholders include: Employees, customers, creditors, suppliers, and the community in which the corporation operates

Which of the following philosophers is most associated with duty-based principles for moral behavior?

Immanuel Kent

5 steps in systematic approach to implementing ethical concerns in business

Inquiry Discussion Decision Justification Evaluation

Under a utilitarian model of ethics, and action is morally correct, or "right",when...

It produces the greatest amount of good for the greatest number or creates the least amount of harm for the fewest people

Business ethics are consistent only with ... profit maximization

Long-run profit maximization

Compliance with the law is sometimes called the..

Moral minimum

The ... has ruled that employees cannot be fired for having online discussions about common workplace issues

National Labor Relations Board

Marshall owns and operates a construction firm. He uses inexpensive and low-grade building products and accepts inferior carpentry work from his subcontractors. Nevertheless Marshall complies with all the city building codes as well as all state and federal laws. Has he fulfilled all of his ethical obligations?

No, because legal compliance is regarded as the moral minimum

Lisa owns and manages a small auto-parts store. She hesitates to discuss business ethics with her employees because she wants them to spend more time with the customers and she also doesn't think she should tell them how to behave. Is Lisa going to create and ethical workplace?

No, because the attitude of top management influences employee ethics.

Reasoning that the strongest duty is to the company's stakeholders

Outcome-based

Short-term profit maximization

Overemphasis on short-term profit maximization can lead to poor ethical decision making

Foreign Corrupt Practices Act

Prohibits bribing foreign officials to obtain contracts

Duty-Based Ethics

Religious principles Principle of rights

Short v. long-run profit maximiation

Short-run: A company might decide to sell a defective product to increase profits Long-run: When cost of lawsuits and bad publicity is considered, unethical conduct is more costly

Outcome-based ethics looks at the impact of decisions on key ...

Stakeholders

Ethics

Study of what constitutes right or wrong behavior

The act that requires companies to set up confidential systems so that "red flags" can be raised about suspected illegal and unethical business practices

The Sarbanes-Oxley Act

Principle of rights

The belief that human beings have certain fundamental rights. Whether an action or decision is ethical depends on how it affects the rights of various groups, such as owners, employees, consumers, suppliers, the community and society

The upper-level management of Nationwide Sales Corporation want to fire Andy because he is a nonproductive employee. Using a utilitarian approach to business ethics, management would probably consider ...

The costs and benefits of retaining a nonproductive employee

Corporate Social Responsibility (CSR)

The idea that corporations can and should act ethically and be accountable to society for their actions

when making decisions, a business should evaluate...

The legal implications of each decision The public relations impact The safety risks for consumers and employees The financial implications

The importance of ethics in making making business decisions

The legal implications of the decision The public relations impact The safety risks to employees and the public The financial implications

Moral minimum

The minimum degree of ethical behavior expected of a business firm, which is usually defined as compliance with the law

Corporate Social Responsibility combines a commitment to good corporate citizenship with a commitment to improving society and minimizing environmental impact

True

Religious ethical principles can both unify employees and investors or lead to difficult problems

True

The application of the principle of rights, or rights theory, often involve conflicting rights

True

Under the Foreign Corrupt Practices Act, some payments to minor foreign government officials are allowed to accelerate the performance of administrative services.

True

... is a philosophical theory developed by two British philosophers, Bentham and Mill

Utilitarianism

Best course of action is the one that promotes the greatest good for the greatest number of people

Utilitarianism

Outcome-Based Ethics: Utilitarianism

Utilitarianism Cost-benefit analysis

Olivia makes a statement on her Twitter account that casts a negative light on her employer. Her manager fired her for violating her company's social media policy. Olivia claims that federal law prohibits her from being fired. Does she have a valid argument?

YES, because federal labor law protects employee's right to engage in "concerted activities"

When a company is involved in a dispute and ethics are at issue, it is best if the company can show that it...

acted in good faith

Most companies enact internal ... to set consistent standards

ethical codes

an action is morally correct when it creates the greatest amount of good for the ...

fewest people ???

Long-run profit maximization

only a long-run profit maximization is consistent with business ethics

A major premise of the ... approach to ethics is "the greatest good for the greatest number"

utilitarian

Whenever an action affects the majority adversely, it is morally ...

wrong

You have to decide how to reduce labor costs by firing some of your workers, who will certainly be harmed. you must balance the interest of employees who have been loyal to the firm for a long time against the interest of ...

your firm's shareholders