Business Principles Ch.2

Justice (Ethical Norms)

- Is it consistent with what's fair?

Collusion (Consumerism)

Illegal agreement between two or more companies to commit a wrongful act

Assessing Ethical Behavior

1. Gather the relevant factual information 2. Analyze the facts to determine the most appropriate moral values 3. Make an ethical judgment based on how right or wrong the proposed activity or policy is.

4 Functions of Management

1. Planning - Establish Goals (Never Ending) 2. Organizing - Delegating People & Finding Resources 3. Leading - Influencing/Overseeing staffs behavior 4. Controlling - Monitoring Progress

Consumerism (Consumerism)

- A form of social activism dedicated to protecting the rights of consumers in their dealings with businesses

Ethics (Ethics in the Workplace)

- Beliefs about what is right and wrong or good and bad in actions that affect others

Unfair pricing (Responsibility toward Customers)

- Collusion - two or more firms collaborate on such wrongful acts as price fixing - Price gouging

Which ethical norm considers whether an act is consistent with​ people's responsibilities to each​ other?

Caring

Social activism that focuses on protecting consumers in their dealings with businesses is known as which of the​ following?

Consumerism

What is the BEST way for a company to design its approach to social​ responsibility?

In the same way that they develop any other business strategy (Companies should view social responsibility as a major challenge that requires careful​ planning, decision​ making, consideration, and evaluation.)

A medical school hires a consultant to meet with Congressional staff to advocate federal funding for the medical​ school's research on breast cancer. This is an example of​ _______.

lobbying (Lobbying is the use of persons or groups to formally represent an organization or groups of organizations before political bodies.)

The government can indirectly influence the social responsibility of businesses through​ _______.

tax codes (In​ effect, the government can influence how organizations spend their social responsibility dollars by providing greater or lesser tax incentives. For​ example, Congress can pass tax incentives for companies to become​ "green" by becoming more​ energy-efficient.)

The Elements of Green Marketing

- Production Processes - Product Modification - Carbon Offsets - Packaging Reduction - Sustainability

The Concept of Accountability (Contemporary Social Consciousness)

- The expectation of an expanded role for business in protecting and enhancing the general welfare of society (Locust of Control - If its to be it is up to me. Ex: If your late it's your fault)

Organizational Stakeholders (Social Responsibility)

- Those groups, individuals, and organizations that are directly affected by the practices of an organization and who therefore have a stake in its performance. (Ex. Taxpayers)

A formal analysis of the effectiveness of a​ company's social performance is known as which of the​ following?

A corporate social audit A corporate social audit is a formal and thorough analysis of the effectiveness of the​ firm's social performance.

Major corporate stakeholders include all of the following​ EXCEPT___________.

Competitors

The creation of the Environmental Protection Agency​ (EPA) is an example of what type of​ regulation?

Direct (The creation of a special agency to monitor and control certain aspects of business activity is an example of direct governmental regulation.)

Rights (Ethical Norms)

Does it respect the rights of all individuals involved?

Ethics are based on both social concepts and which of the​ following?

Individual beliefs

What is the relationship between legal compliance and​ ethics?

Legal compliance does not always result in ethical acts. (A company can be in legal compliance but still use unethical practices.)

Blaine is a representative of the NRA​ (National Rifle​ Association). Blaine's goal is to meet members of Congress and to try to influence the way they vote on gun control legislation. Blaine is using which type of influence to address social​ responsibility?

Lobbying (Lobbying is formally representing an organization or group of organizations before political bodies to try and influence the government.)

The Stakeholder Model of Responsibility

Most companies that strive to be responsible to their stakeholders concentrate first and foremost on five main groups: - Customers - Treat customers fairly & honestly - Employees - Treat employees fairly & respect their dignity & basic human needs - Investors - Follow proper account procedures; provide information to shareholders about financial performance - Suppliers - Create mutually beneficial partnership arrangements with suppliers - Local communities & International Communities where they do business - Involvement in programs and charities

Which of the following is an informal dimension for managing social​ responsibility?

Organization leadership and culture (Leadership practices and organizational culture are informal dimensions for managing social responsibility.)

Customer Rights (Responsibility toward Customers)

- Consumerism - social activism dedicated to protecting the rights of consumers in their dealings with businesses

Utility (Ethical Norms)

- Does a particular act optimize the benefits to those who are affected by it? (That is, do all relevant parties receive "fair" benefits?)

What are the Consumer Bill of​ Rights?

The Consumer Bill of Rights grants consumers the right to​ (a) safe​ products, (b) be informed about all aspects of a​ product, (c) be​ heard, (c) choose what they​ buy, (d) be educated about​ prices, and​ (e) courteous service. It does not include the right to fair prices.

What is philanthropic​ giving?

The giving of funds or gifts to worthy causes (Voluntarily donating to charities and other worthy causes is considered philanthropic giving.)

Brandon is the CEO of Terrible​ Tires, Inc., and he resents government interference with his business. Brandon directs his managers and accountants to do exactly what is legally​ required, but nothing more. Brandon and Terrible​ Tires, Inc. take which stance toward social​ responsibility?

Defensive stance (A company that takes a defensive stance does everything that is legally required but nothing more)

Magnificent​ Manufacturing, Inc. designed a program to reduce the amount of chemical waste that the company produces. This is an example of social responsibility to which major group of corporate​ stakeholders?

Local and international communities (Examples of social responsibility toward communities are contributing to local programs and minimizing the​ company's negative impact on the community.)

Which is an example of how the government indirectly regulates​ businesses?

Tax codes (The government can influence how organizations spend their social responsibility dollars by providing greater or lesser tax incentives.)

Which of the following is the BEST description of a corporate social​ audit?

A formal assessment of a​ company's performance on social responsibility objectives (Like a traditional financial​ audit, a corporate social audit is an analysis of what a company is doing in terms of the​ environment, ethics, and its overall social responsibility.)

A company that meets all of its legal and ethical​ requirements, and even exceeds them in some​ areas, takes which stance toward social​ responsibility?

Accommodative stance (An accommodative stance means the company meets and in some cases exceeds its legal and ethical requirements.)

Unethical Behavior (Ethics in the Workplace)

Behavior that conforms to individual beliefs and social norms about what is defined as wrong and bad

Ethical Behavior (Ethics in the Workplace)

Behavior that conforms to individual beliefs and social norms about what's right and good

Tyler is hoping to secure a contract for his company that would expand operations to Mexico. Tyler knows that the​ decision-maker for the Mexican company expects to receive​ "gifts" from the company that is awarded the contract. Tyler is facing a dilemma in which type of managerial​ ethics?

Behavior toward other economic agents (Behavior toward other economic agents includes relationships with​ customers, competitors,​ stockholders, suppliers,​ dealers, and unions.)

When do most people begin to form their ethical​ standards?

Children (We begin to form ethical standards as​ children, in response to our perceptions of the behavior of our parents and other adults.)

The owners of the rival gas stations in a small town meet secretly and agree that they will charge consumers the same price on gasoline so that they can maximize profits. This is an example of​ _______.

Collusion (Collusion occurs when two or more firms collaborate on such wrongful acts as price fixing. Collusion is illegal because it eliminates market competition and forces buyers to pay more than they normally would if competing firms tried to undercut each other.)

How is consumerism connected to​ advertising?

Consumerism protects consumers from unethical business​ practices, including unethical advertising. (Consumerism is social activism dedicated to protecting the rights of consumers in their dealings with​ businesses, including ethical issues in advertising​ (such as false​ advertising).)

Abels Enterprises fully observes its legal requirements in doing business but considers profits a more important role than social​ responsibility, so it does nothing more than follow the​ "letter of the​ law." Which of the following BEST describes this​ company's approach to social​ responsibility?

Defensive stance (Organizations that take a defensive stance will do everything that is legally​ required, including admitting to mistakes and taking corrective​ actions, but nothing more. Their focus is on profit​ generation, not social responsibility.)

Those​ individuals, groups or organizations directly affected by the practices of an organization are referred to as its​ ________.

Stakeholders (Stakeholders include​ employees, investors, local​ communities, suppliers, and customers.)

Mean Manufacturing has been cited for not filing the proper paperwork and for polluting beyond the acceptable regulatory limits.​ Jim, the plant manager of Mean​ Manufacturing, is looking for ways to fix the paperwork so that it will look like less pollution is emitted and the company will not receive any further fines. Jim has taken which stance toward social​ responsibility?

Obstructionist stance (The obstructionist stance is to do as little as possible to solve social or environmental​ problems, has little regard for ethical​ conduct, and goes to great lengths to deny or cover up wrongdoing.)

A corporation matches employee donations to charities and rewards employee volunteer efforts by compensating employees for up to 50 hours per year of community service. Which organizational dimension of managing social responsibility does this​ demonstrate?

Philanthropic giving (Philanthropic giving is the awarding of funding or gifts to charities and other worthy causes. Other formal organizational dimensions that can help manage social responsibility include legal compliance and ethical compliance.)

The ethical norm of​ _______ examines whether an act optimizes the benefits to those who are affected by it.

utility

Employees who report their company for engaging in​ illegal, unethical, or socially irresponsible practices are known as which of the​ following?

​Whistle-blowers (Whistle-blowing is the disclosure by an employee of illegal or unethical conduct by others in the organization.​ Ideally, an employee who discovers that a business has been engaging in​ illegal, unethical, or socially irresponsible practices should be able to report the problem to​ higher-level management and feel confident that managers will stop the questionable practices.​ However, if no one in the organization will take​ action, the employee may inform a regulatory agency or the media and become what is known as a​ whistle-blower, an employee who discovers and tries to put an end to a​ company's unethical,​ illegal, or socially irresponsible actions by publicizing them.)

Responsibility toward Employees

- Provide opportunities to balance work and life pressures and preferences - Help employees maintain job skills - Treat terminated or laid-off employees with respect and compassion (A company that provides its employees with equal opportunities without regard to race, sex, or other irrelevant factors is meeting both its legal and its social responsibilities)

Business Ethics (Ethics in the Workplace)

- Refers to ethical or unethical behaviors by employees in the context of their jobs

Social responsibility

- Refers to the overall way in which a business attempts to balance its commitments to relevant groups and individuals in its social environment. (Example: Advertising to support people, not for profit such as Little league, basketball for kids.)

Following proper accounting procedures is one way a company is socially responsible to which major group of corporate​ stakeholders?

Investors (Being socially responsible to​ investors' means following proper accounting​ procedures, providing appropriate information to shareholders about financial​ performance, and managing the organization to protect shareholder rights and investments.)

Caring (Ethical Norms)

Is it consistent with people's responsibilities to each other?

Bill​ Gates, founder of​ Microsoft, has built the Gates Foundation to fund and support​ charitable, not-for-profit and philanthropic endeavors. Any person who wishes to work for Microsoft or the Gates Foundation should be comfortable with which stance toward social​ responsibility?

Proactive stance (Companies with a proactive stance on social responsibility believe they have an obligation to improve the general social welfare and seek opportunities to contribute.)

The way a business balances its commitments to relevant groups and individuals in its environment is known as​ ________.

Social Responsibility

2 of the most common approaches to formalizing top management commitment to ethical business practices (Company Practices and Business Ethics)

- Adopting written codes - Formally announce their intent to do business in an ethical manner. - Instituting ethics programs

Responsibility toward the Environment

- Air pollution - Result of several factors (Ex. Carbon monoxide emitted by cars contributes to air pollution & chemical produced by plants) - Water pollution - Becomes polluted by chemical & wast dumping. - Land pollution - Toxic waste disposal - Recycling (Take care of Profit, People, & Planet)

Managerial Ethics (Business and Managerial Ethics)

- Standards of behavior that guide individual managers in their work (Behavior toward employees, organization, and economic Agents)

Because of a recent​ hurricane, the demand for bottled water has drastically increased. Shady​ Supermarkets, Inc. is scrambling to keep up with the demand. Management has decided they should triple the price of the new product since so many people seem to want to purchase it. What is the management of Shady​ Supermarkets, Inc.​ practicing?

Price gouging (Price gouging occurs when a company responds to increased demand with overly steep​ (and often​ unwarranted) price increases.)

What is considered​ "ethical" behavior and​ "unethical" behavior is​ _______.

based on both individual beliefs and social concepts

Consumer Bill of Rights (President John F. Kennedy)

1. The right to safety: to be protected against the marketing of products and services that are hazardous to health or to life. 2. The right to be informed: to be protected against fraudulent, deceitful, or grossly misleading information, advertising, labeling, or other practices, and to be given the facts needed to make informed choices. 3. The right to choose: to have available a variety of products and services at competitive prices. 4. The right to be heard: to be assured that consumer interests will receive full and sympathetic consideration in making government policy, both through the laws passed by legislatures and through regulations passed by administrative bodies. 5. The right to education: to have access to programs and information that help consumers make better marketplace decisions. 6. The right to redress: to work with established mechanisms to have problems corrected and to receive compensation for poor service or for products which do not function properly.

​Leah's company has been consistently ranked one of the best places to work in the​ region, and it contributes a generous share of its profits each year to the arts and charitable endeavors in the community. Which of the following BEST describes this​ company's approach to social​ responsibility?

Proactive stance (Firms with the highest degree of social responsibility exhibit the proactive​ stance; they actively seek opportunities to contribute to the​ well-being of groups and individuals in its social environment.)

The overall way in which a business balances its commitments to​ customers, employees,​ investors, or other stakeholders is known as​ _______.

Social Responsibility (Social responsibility addresses the overall way in which a business attempts to balance its conflicting commitments to relevant groups and individuals in its social environment. These groups include​ employees, investors, local​ communities, suppliers, and customers.)