Bus Law Chapter 4

Outcome-based Ethics

Focuses on the impacts of a decision on social/key stockholders

Foreign Corrupt Practices Act (FCPA)

Prohibits U.S. businesspersons from bribing the foreign officials to secure beneficial contracts

What are ethics and private codes of ethics?

Rules that a company makes and that is enforced by the company Example: termination an employee who does not follow the rules of a company

What is the best argument to the shareholders that paying the workers while the plant is under construction is the correct decision?

That long-term profit maximization would be benefitted by this move.

What would be Phil's best rational in stating the $250,000 payment is not illegal?

That this kind of payment is not illegal in Germany.

What is 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

Resolving Conflicts

Whichever right is stronger in a particular circumstance, takes authority

Long-Run Profit Maximization

Will cause profits to suffer because of lawsuits, large settlements, and bad publicity

To maximize profits and indicate good corporate citizenship, businesses should evaluate a decision's

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

How can the internet ruin reputations?

A corporation/business can suffer damage to its reputations or loss of profits through negative publicity

Ethical Uncertainty

Ethics can be hard for corporate officers to understand because it is always changing without any formal process. Therefore, ethics is less certain than the law

What are the accounting requirements of the Foreign Corrupt Practices Act (FCPA)?

Every company is required to have a detailed record that "accurately and fairly" reflects their financial activities

Conflicting Rights

When someone disagrees on which rights are the most important

What 2 major categories are for the study of ethics?

1. duty-based ethics 2. outcome-based ethics

What are the 2 things that a cost-benefit analysis requires?

1. figuring out who will be affected by the action in question 2. a choice among different actions that produces maximum societal utility (positive net benefits of individuals)

What are the 5 steps involved in a systematic approach?

1. inquiry 2. discussion 3. decision 4. justification 5. evaluation

Cost-Benefit Analysis

A decision-making technique that involves the negative and positive effects of alternative actions on these individuals

Stakeholders

A group of people who are affected by a corporation's decisions This includes employees, customers, creditors, suppliers, and the community

Attitude of Top Management

A manager's attitude sets the ethical tone of a firm

Patrick, the human resources manager at Acme Company, must decide how to cut personnel costs. This decision will harm employees who are laid off or fired. Patrick must balance the interests of employees who have been loyal to the firm for a long time against the interests of

Acme's shareholders.

Principle of rights

Also known as "rights theory," is a principle that people have certain fundamental rights Example: life, freedom, and pursuit of happiness

What is the problem with the utilitarian approach?

An action that is good to most people may not seem the most ethical

What are the rules for the use of social media to discuss work-related issues?

An employee should not use social media to make statements that would damage the company, harm another person's reputation, or violate the company's rules

What is the corporate aspects of corporate social responsibility (CSR)?

Any socially responsible activity will benefit a corporation

Ethical Reasoning

Application of morals and ethics to a situation

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.

Bernard is the owner and manager of a small auto-parts store. He thinks that talking about business ethics with employees takes time that would be better spent paying attention to customers. He also does not believe that he has a right to tell other people how they should behave. Is Bernard likely to create an ethical workplace with this way of thinking? Why or why not?

Bernard is unlikely to create an ethical workplace, because the attitude of top management influences employee ethics.

What are the penalties for violations of the Foreign Corrupt practices Act (FCPA)?

Businesses who violate this act may be fined up to $2 million Individual officers or directors who violate this act may be fined up to $100,000 and may be imprisoned for up to 5 years

Why is there prohibition against the bribery of foreign officials?

Businesspersons are not allowed to bribe the foreign government officials to provide business opportunities

Regan owns and manages The Coffee Shoppe. She likes to experiment with different management styles and life philosophies. She recently studied Kantian ethics and asks her employees to begin following Kant's categorical imperative at work. This means that the employees should

Consider their actions in light of the consequences if everyone in society acted the same way.

What is the social aspects of corporate social responsibility (CSR)?

Corporations have to show that they are promoting goals that society seems interested in and are trying to solve social problems

Utilitarianism

Developed by Jeremy Bentham and modified by John Stuart Mill Ethically correct behavior that is related to consequences of an action on those who will be affected by it

Categorical Imperative

Developed by philosopher Immanuel Kant Where people should valuate an action as if everyone acted the same way in the same situation

When the CEO of the company decides that he wants to pay the workers while the plant is closed, because "it is the right thing to do" regardless of the consequences, what ethical philosophy is he likely using?

Duty-based ethics

True or False: Managers who set unrealistic production or sales goals decrease the probability that employees will act unethically.

False

Robert was employed as a sales representative by the United States Steel Corporation. It had a "whistleblowing" policy and procedure by which employees could make complaints about company policies and products. Robert, who was not a safety expert, believed that one of the company's products had not been adequately tested and posed a serious danger. In accordance with company policy, Robert notified his supervisor of his concerns. The product was successfully tested and marketed and caused no harm. Robert had

Fulfilled his ethical obligations as a salesperson because he followed company policy concerning unsafe products.

Ted is the owner and chief executive officer of a business. He recently began an advertising campaign to promote a new product that is regulated by state law. The law is somewhat unclear. Before launching the campaign, he researched the relevant law and consulted with his attorney in an effort to comply with the law. Nevertheless, the attorney general of his state has filed a lawsuit against him for deceptive advertising. Ted's best defense is that

He acted in good faith

Jeff believes in the principle of rights theory and uses it to make ethical decisions for his business. He must decide whether to expand his business into Asia. Several key employees do not want the business to expand overseas and have threatened to quit if Jeff makes this move. Under the principle of rights theory, he will make this decision by considering

How the expansion will affect the rights of his employees, his consumers, and the community into which he wishes to expand.

Duty-based Ethics

Idea that everybody has certain duties to others Example: both humans and the planet

Religious Ethical Principles

In the business world, its a way to motivate employees but it may have problems because their are different religious views/background

What does image is everything mean?

It shows the impact that the business has on the environment, customers, suppliers, employees, and the global economy

Profit Maximization

Leads to the most efficient allocation of scarce resources

Under state law, a manufacturer must design a dangerous product so as to avoid harm to people who are using the product as intended or in an unintended but foreseeable way. Bennett, a six-year-old, placed a Bic cigarette lighter under his shirt and lit the lighter. His shirt caught on fire, causing him severe burns. His mother sued Bic, contending it was liable because the lighter was a dangerous product and Bennett's use of the lighter was unintended but foreseeable. The court is most likely to find that Bic was

Liable, because it was foreseeable that a child would have access to and try to use a lighter.

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 an ethical workplace? Why or why not?

Lisa is unlikely to create an ethical workplace because the attitude of top management influences employee ethics.

Business Ethics

Looks at decisions and decides whether they're right or wrong

What is the importance of ethical leadership?

Management must set and aply the same ethical standards to themselves and their company's employees

Moral Minimum

Minimum degree of ethical behavior expected of a business firm

Behavior of Owners and Managers

Misbehavior from owners and managers may have a negative effect for themselves and their business

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.

Is bribery by foreign companies allowed?

Payments to foreign companies are allowed unless the payment is passed on to a foreign government in violation of the Foreign Corrupt Practices Act (FCPA)

What does people are not a means to an end mean?

People are being treated equally to objects and are being denied their basic humanity

Kantian Ethical principles

People are different from other physical objects and are gifted with moral integrity and the capacity to conduct their affairs rationally

Bribery is acceptable in certain foreign countries. Indeed, U.S. Development, Inc., has found that the only way it can ensure delivery on certain contracts in these countries is to bribe the officials. This is

Permitted by U.S. law if the payment is made to a minor official to speed up administrative procedures.

The upper-level management of Nationwide Sales Corporation wants 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.

Even though Phil claims that making the $250,000 payment is perfectly legal, what law dealing with bribery by US companies of foreign officials might Dale be afraid he would be in violation of if the payment is made?

The Foreign Corrupt Practices Act.

In deciding whether to make the payment, Phil states that he does not want to fall below the moral minimum in the decision. What is usually considered to be the moral minimum in an ethical decision?

The law.

What would be a stakeholder in Phil's decision of whether to make the payment to the Germans?

The shareholders of Phil's company. The workers at Phil's company. The German government.

Under corporate social responsibility theory, to who(m) does the chairman and CEO of the company owe an ethical duty?

The workers, the community and the shareholders.

What do you do when making ethical business decisions?

Thinking beyond things that are easily measured, such as profits

Why is studying business ethics important?

To know what to say to the public and have a positive attitude that way a corporation can maximize profits

Assume that the payment is legal. Phil might not want to make the payment anyway, because he is afraid that it will have a negative impact on the corporation's profits, people and the planet in general. Phil is worried about the corporation's:

Triple bottom line.

True or False: Since the late 1970s, the Foreign Corrupt Practices Act has prohibited U.S. businesspersons from bribing foreign officials to secure beneficial contracts.

True

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

True

Monitoring the employment practices of foreign suppliers

U.S. businesses only deal with certain suppliers or monitor their suppliers' workplaces to make sure the employees aren't being mistreated

Sanderson worked in a travel service office and had access to the reservation systems of several airlines. Sanderson accessed the system and replaced the names of passengers with fictitious names. She also enrolled the fake names in the airlines' frequent-flyer programs. Her husband set up mailboxes under those names for the delivery of free airline tickets "earned" under the frequent-flyer programs. Real passengers were not harmed by and did not complain of the deception. The Sanderson's' behavior was

Unethical and illegal, because their actions constituted theft from the airlines.

Corporate Social Responsibility (CSR)

it's the combination between a commitment to good citizenship and making ethical decisions, improving society, and minimizing environmental impact