Intro to Business quiz 4

personal empathy—

"identification with and understanding of another's situation, feelings, and motives"—is another strong predictor of ethical leadership. ex: business leaders who scored highest on empathy also exhibited the highest levels of ethical leadership.

code of ethics

A formal, written document that defines the ethical standards of an organization and gives employees the information they need to make ethical decisions across a range of situations.

social audit

A systematic evaluation of how well a firm is meeting its ethics and social responsibility goals.

The Right to Be Safe:

Businesses are legally responsible for injuries and damages caused by their products—even if they have no reason to suspect that their products might cause harm. This makes it easy for consumers to file suits. In some cases, the drive to avert lawsuits has led to absurdities such as the warning on some coffee cups: "Caution! Hot coffee is hot!" (No kidding...)

__________ wouldn't be possible if companies didn't offer bribes,

Corruption

the key principles of most decision guides are very similar:

Do you fully understand each dimension of the problem? Who would benefit? Who would suffer? Are the alternative solutions legal? Are they fair? Does your decision make you comfortable at a "gut feel" level? Could you defend your decision on the nightly TV news? Have you considered and reconsidered your responses to each question?*

universal ethical standards

Ethical norms that apply to all people across a broad spectrum of situations.

The Right to Choose:

Freedom of choice is a fundamental element of the capitalist U.S. economy. Our economic system works largely because consumers freely choose to purchase the products that best meet their needs. As businesses compete, consumer value increases. Socially responsible firms support consumer choice by following the laws that prevent anticompetitive behavior such as predatory pricing, collusion, and monopolies.

To bring a code of ethics to life, experts advocate a forceful, integrated approach to ethics that virtually always includes the following steps:

Get executive buy-in and commitment to follow through. Top managers need to communicate—even overcommunicate—about the importance of ethics. But talking works only when it's backed up by action: senior management must give priority to keeping promises and leading by example. Establish expectations for ethical behavior at all levels of the organization, from the CEO to the nighttime cleaning crew. Be sure that outside parties such as suppliers, distributors, and customers understand the standards. Integrate ethics into mandatory staff training. From new-employee orientation to ongoing training, ethics must play a role. Additional, more specialized training helps employees who face more temptation (e.g., purchasing agents, overseas sales reps). Ensure that your ethics code is both global and local in scope. Employees in every country should understand both the general principles and the specific applications. Be sure to translate it into as many languages as necessary. Build and maintain a clear, trusted reporting structure for ethical concerns and violations. The structure should allow employees to seek anonymous guidance for ethical concerns and to report ethics violations anonymously. Establish protection for whistle-blowers , people who report illegal or unethical behavior. Be sure that no retaliation occurs, in compliance with both ethics and the Sarbanes-Oxley Act (see discussion later in the chapter). Some have even suggested that whistle-blowers should receive a portion of the penalties levied against firms that violate the law. Enforce the code of ethics. When people violate ethical norms, companies must respond immediately and—whenever appropriate—publicly to retain employee trust. Without enforcement, the code of ethics becomes meaningless.

Describe how companies evaluate their efforts to be socially responsible.

Many companies—even some entire industries—monitor themselves. The process typically involves establishing objectives for ethics and social responsibility and then measuring achievement of those objectives on a systematic, periodic basis. Other groups play watchdog roles as well. Key players include activist customers, investors, unions, environmentalists, and community groups.

Explain the role of social responsibility in the global arena.

Social responsibility becomes more complex in the global arena, largely due to differences in the legal and cultural environments. Bribery and corruption are key issues, along with concern for human rights and environmental standards.

The Right to Be Heard:

Socially responsible companies make it easy for consumers to express legitimate complaints. They also develop highly trained customer service people to respond to complaints. In fact, smart businesses view customer complaints as an opportunity to create better products and stronger relationships. Statistics suggest that 1 in 50 dissatisfied customers takes the time to complain. The other 49 quietly switch brands. By soliciting feedback, you're not only being responsible but also building your business.*

The Right to Be Informed:

The law requires firms in a range of industries—from mutual funds, to groceries, to pharmaceuticals—to provide the public with extensive information. The Food and Drug Administration, for instance, mandates that most grocery foods feature a very specific "Nutrition Facts" label. Beyond legal requirements, many firms use the Web to provide a wealth of extra information about their products. KFC, for example, offers an interactive Nutrition Calculator that works with all of its menu items (and it's fun to use, too).

Consumerism —

a widely accepted social movement—suggests that consumer rights should be the starting point.

Stakeholders

are any groups that have a stake—or a personal interest—in the performance and actions of an organization.

Planned obsolescence —

deliberately designing products to fail in order to shorten the time between consumer repurchases—represents a clear violation of social responsibility.

According to the ERC, key elements of a strong culture include

displays of ethics-related actions at all levels of an organization and accountability for actions.

sustainable development :

doing business to meet the needs of this generation without harming the ability of future generations to meet their needs.

The most socially responsible companies

establish codes of conduct for their vendors, setting clear policies for human rights, wages, safety, and environmental impact.

A growing number of companies use _______ ________ to promote their businesses. This means marketing environmental products and practices to gain a competitive edge.

green marketing

Corporate philanthropy

includes all business donations to nonprofit groups, including both money and products.

business ethics

is the application of right and wrong, good and bad in a business setting.

Social responsibility

is the obligation of a business to contribute to society.

The 2002 Sarbanes-Oxley Act

limits conflict-of-interest issues by restricting the consulting services that accounting firms can provide for the companies they audit.

Ethics

refers to sets of beliefs about right and wrong, good and bad; business ethics involve the application of these issues in the workplace.

Carbon footprint

refers to the amount of harmful greenhouse gases that a firm emits throughout its operations, both directly and indirectly. The ultimate goal is to become carbon neutral—either to emit zero harmful gases or to counteract the impact of emissions by removing a comparable amount from the atmosphere through projects such as planting trees.

Corporate responsibility

relates closely to philanthropy but focuses on the actions of the business itself rather than donations of money and time.

in the context of responsibility to all stakeholders, which may mean trading ........profits for .......... success.

short-term;long-term

But since the legal system is far from perfect, in rare instances your actions can be illegal, yet _____ ________

still ethical

Ethics Resource Center (ERC)

suggests that organizational culture has more influence than any other variable on the ethical conduct of individual employees.

Enlightened organizations identify key stakeholders for their business and consider stakeholder priorities in their decision making. The goal is .......

to balance their needs and priorities as effectively as possible, with an eye toward building their business over the long term.

The primary responsibility of business to investors is clearly to make money—

to create an ongoing stream of profits.

a sincere apology can definitely restore a company's reputation, which can .....

ultimately lead to greater profits.

____________code is worthless if it doesn't reflect living principles. An _________ code of ethics flows directly from ethical corporate values and leads directly to ongoing communication, training, and action.

written; effective