Management Chapter 5
what is an ethical dilemma
arises in a situation concerning right or wrong when values are in conflict.
what is a powerful advantage of a franchise
management help is provided by the owners
what is whistle-blowing
Employee disclosure of illegal, unethical, or illegitimate practices on the employer's part
what does entrepreneurship do to innovation
Entrepreneurship and small business are a primary source of disruptive innovation
what questions can managers ask to solve a ethical dilemma
1. What's in it for me? 2. What decision would lead to the greatest good for the greatest number? 3. What rules, policies, or social norms apply? 4. What are my obligations to others? 5. What will be the long-term impact for myself and important stakeholders?
what are the entrepreneurial personality characteristics
1. autonomy 2. entrepreneurial sacrifice 3. high energy 4. need to achieve 5. self-confidence 6. locus of control
three categories for human behavior
1. codified law (legal standard) 2. Ethics (Social Standard) 3. Free Choice (personal standard)
what are the three types of justices that managers are concerned with
1. distributive justice 2. procedural justice 3. compensatory justice
what are the four sections of social responsibility
1. economic 2. legal 3. ethical 4. discretionary responsibilities
what are the steps to start an online business
1. find a market niche 2. create a professional web site 3. choose a domain name 4. know when to pivot 5. use social media
five categories of small business owners
1. idealist 2. optimizers 3. sustainer 4. hard workers 5. juggler
why do managers and organizations engage in unethical behavior
1. personal ego 2. pressures to increase profits 3. appear successful
what are the two types of codes of ethics
1. principle based statement 2. policy based statement
what are the option for creating a domain name
1. using the company name 2. creating a domain name that describes your product or service 3. choosing a domain name that does not have a specific meaning and allows for expanding
what are the five approaches that are relevant to managers
1. utilitarian approach 2. individualism approach 3. moral-rights approach 4. justice approach 5. practical approach.
who came up with the utilitarian approach
19th century philosophers Jeremy Bentham and John Stuart
characteristics of a successful business plan
Demonstrate a clear, compelling vision that creates an air of excitement. ● Provide clear and realistic financial projections. ● Profile potential customers and the target market. ● Include detailed information about the industry and competitors. ● Provide evidence of an effective entrepreneurial management team. ● Pay attention to good formatting and clear writing. ● Keep the plan short—no more than 50 pages. ● Highlight critical risks that may threaten business success. ● Spell out the sources and uses of start-up funds and operating funds. ● Capture the reader's interest with a killer summary.
what is job creation
Jobs created by small businesses give the United States an economic vitality that no other country can claim.
definition of plant
Measures environmental performance.
definition of profit
Measures financial performance
definition of people
Measures social performance— treatment of employees, fair labor practices.
who is considered a primary stakeholder
Shareholders, employees, customers, and suppliers are considered primary stakeholders, without whom the organization could not survive.
what are the drawbacks of a sole proprietorships
The owner has unlimited liability for the business, meaning that if someone sues, the owner's personal as well as business assets are at risk. Also, financing can be harder to obtain because business success rests on one person's shoulders.
what is a chief ethics officer
a company executive who oversees all aspects of ethics and legal compliance, including establishing and broadly communicating standards, conducting ethics training programs, dealing with exceptions or problems, and advising senior managers in the ethical and compliance aspects of decisions.
what happens under the utilitarian approach
a decision maker is expected to consider the effect of each decision alternative on all parties and select the one that optimizes the benefits for the greatest number of people.
what is a business plan
a document specifying the business details prepared by an entrepreneur prior to opening a new business
what is B Lab
a nonprofit organization that provides a nonlegal framework for meeting high standards of social and environmental performance, public transparency, and legal accountability.
what is crowdfunding or crowd investing
a way of raising capital by receiving small amounts of money from a large number of investors, usually through social media and the Internet
What is sustainability?
ability to generate wealth without compromising environmental responsibility and social stewardship, thus meeting the current and future needs of stakeholders while preserving the environment and society so that future generations can meet their needs as well.
what is an ethics hot-line
allows employees to report questionable behavior as well as seek guidance concerning ethical dilemmas
what is a corporation
an artificial entity created by the state and existing apart from its owners.
what is a co-working facility
an open office environment that is shared by multiple freelance entrepreneurs as well as corporate telecommuting employees or others who do not have a regular office
what is a stakeholder
any group or person within or outside the organization that has some type of investment or interest in the organization's performance and is affected by the organization's actions (employees, customers, shareholders, and so forth).
what is a principle based statement
are designed to affect corporate culture; they define fundamental values and contain general language about company responsibilities, quality of products, and treatment of employees.
what is compensatory justice
argues that individuals should be compensated for the cost of their injuries by the party responsible.
what is the moral rights approach
asserts that human beings have fundamental rights and liberties that cannot be taken away by an individual's decision.
what is individualism supposed to do
believed to lead to honesty and integrity because that works best in the long run. Lying and cheating for immediate self-interest just causes business associates to lie and cheat in return.
what is debt financing
borrowing money that has to be repaid at a later date to start a business is referred to as debt financing
who is the head of ethic offices
chief ethics officer or chief ethics or compliance officer
Definition of Ethics
code of moral principles and values that governs the behaviors of a person or group with respect to what is right or wrong.
what organizational mechanisms help employees and the company stay on an ethical footing
codes of ethics, ethical structures, and measures to protect whistle-blowers
what is equity financing
consists of funds that are invested in exchange for ownership in the company.
what happens under the individualism approach
contends that acts are moral when they promote the individual's best long-term interests.
what are general statements of principle called
corporate credos
what is unethical behavior
decision that enables an individual or company to benefit at society's expense
what is a sole proprietorship
defined as an unincorporated business owned by an individual for profit.
what is locus of control
defines whether he or she places the primary responsibility within the self or on outside forces.
what are the disadvantages of franchising
disadvantages are the lack of control that occurs when franchisors want every business managed in exactly the same way.
what do ethical managers do
display honesty and integrity, communicate and enforce ethical standards through their behavior, are fair in their decisions and the distribution of rewards, and show kindness and concern for others.
what is the virtual incubator
does not require that people set up on site. These virtual organizations connect entrepreneurs with a wide range of experts and mentors and offer lower overhead and cost savings for cash-strapped small-business owners.
what is the issue with individualism
easily misinterpreted to support immediate self-gain, it is not popular in the highly organized and group-oriented society of today.
why are sole proprietorships popular
easy to start and have few legal requirements
The utilitarian ethic is cited as the basis for the recent trend among companies to monitor
employee use of the Internet and police personal habits such as alcohol and tobacco consumption, because such behavior affects the entire workplace.
who are hard workers
enjoy putting in long hours and dedication to build a larger more profitable business
what is angel financing
equity financing for businesses with high potential
two options for financing
equity financing or debt financing
what type of offices do companies set up to ensure ethical standards are apart of the company
ethic offices
what are the disadvantages of a corporation
expensive and complex to do the paperwork required to incorporate the business and to keep the records required by law.
what is social entrepreneurship
focuses primarily on creating social value by providing solutions to social problems, with a secondary purpose of generating profit and returns
what is a policy based statement
generally outline the procedures to be used in specific ethical situations. These situations include marketing practices, conflicts of interest, observance of laws, proprietary information, political gifts, and equal opportunities.
what is a venture capital firm
group of companies or individuals that invests money in a new or expanding businesses for ownership and potential profits
what happens at the postconventional or principle level (third level)
guided by an internal set of values based on the universal principles of justice and will even disobey rules or laws that violate these principles.
what is the justice approach
holds that moral decisions must be based on standards of equity, fairness, and impartiality.
who are jugglers
includes entrepreneurs who like the chance that a small business gives them to handles everything themselves. These high-energy people thrive on the pressure of paying bills, meeting deadlines, and making payroll.
what happens at the preconventional level (first level)
individuals are concerned with external rewards and punishments and obey authority to avoid detrimental personal consequences
what happens at the postconventional level
internal values become more important than the expectations of significant others
what are the 4 primary stakeholders
investors, shareholders, employees, customers and suppliers
what does the franchisee do
invests his or her money and owns the business but does not have to develop a new product, create a new company, or test the market.
what is franchising
is a business arrangement where a firm (franchisor) collects upfront and ongoing fees in exchange for individuals or other firms (franchisees) to offer products and services under its brand name and using its processes.
what is a benefit corporation
is a for-profit organization that has stated purpose that includes creating a material positive impact on society; is required to consider the impact of all decisions not only on shareholders but on employees, the community, and the environment; and voluntarily holds itself to high standards of accountability and transparency.
what is a code of ethics
is a formal statement of a company's values concerning ethics and social issues; it communicates to employees what the company stands for.
what is an ethics committee
is a group of executives (and sometimes lower-level employees as well) appointed to oversee company ethics. The committee provides rulings on questionable ethical issues and assumes responsibility for disciplining wrongdoers.
what is the definition of free choice
is at the opposite end of the scale and pertains to behavior about which the law has no say and for which an individual or organization enjoys complete freedom.
what is microcredit
lending small amounts of money to small businesses in poverty stricken villages in India
in an organizational context where does the preconventional level exist
level may be associated with managers who use an autocratic or coercive leadership style, with employees oriented toward dependable accomplishment of specific tasks.
who are sustainers
like the chance to balance work and personal life and often don't want the business to grow too large
what does it mean if a corporation is certified B
means a company meets B Lab's highest standards of verified, overall social and environmental performance, public transparency, and legal accountability.
what is ethical leadership
means that managers are honest and trustworthy, are fair in their dealings with employees and customers, and behave ethically in both their personal and professional lives.
what is the triple bottom line
measuring an organization's social performance, its environmental performance, and its financial performance. This is sometimes called the three Ps: People, Planet, and Profit.
who is the individual that makes an ethical choice is an organization
moral agent
what is the utilitarian approach
moral behavior produces the greatest good for the greatest number.
what is an important personal factor
moral development
what is greenwashing
occurs when a company tries to portray itself as more environmentally minded than it actually is.
what is normative strategy
one based on norms and values to guide decision making
what is the need to achieve
people are motivated to excel and pick situations in which success is likely
what is high external locus of control
people believe that outside forces determine what happens to them
what happens at the conventional level (second level)
people learn to conform to the expectations of good behavior as defined by colleagues, family, friends, and society
who are idealists
people who like the idea of working on something that is new, creative, or personally meaningful
what does the franchisor do
provide an established name and national advertising to stimulate local demand for the product or service.
what does stakeholder mapping do
provides a systematic way to identify the expectations, needs, importance, and relative power of various stakeholders, which may change over time.
what is conscious capitalism or shared value approach
refers to following organizational policies and practices that both enhance the economic success of a company and advance the economic and social conditions of the communities in which the company operates.
what is corporate social responsibility (CRS)
refers to the obligation of organizational managers to make choices and take actions that will enhance the welfare and interests of society as well as the organization.
what is distributive justice
requires that different treatment of people not be based on arbitrary characteristics.
what is procedural justice
requires that rules be administered fairly. Rules should be clearly stated and consistently and impartially enforced.
who are optimizers
rewarded by the personal satisfaction of being business owners
when managers operate from a higher level of development they may use a form of
servant leadership, focusing on the needs of followers and encouraging other to think for themselves.
what is the practical approach
sidesteps debates about what is right, good or just and bases decisions on prevailing standard of the profession and the larger society, taking the interests of all stakeholders into account
what is the fastest growing segment of small business in both the US and Canada
sole proprietorship
what are the three legal structures
sole proprietorship partnership corporation
Definition of entrepreneur
someone who engages in entrepreneurship.
what technique is used by stakeholders to grow interest
stakeholder mapping
what is high internal locus of control
that their actions determine what happens to them
definition of entrepreneurship
the process of initiating a business venture, organizing the necessary resources, assuming the associated risks, and enjoying the rewards.
what is discretionary responsibility
the responsibility that goes beyond societal expectations to contribute to the community welfare
the justice approach is closest to what
thinking underlying the domain of law because it assumes that justice is applied through rules and regulations
what is the definition of pivot
to change the strategic direction of the business
business incubator
typically provides shared office space, management support services, and management and legal advice to entrepreneurs
what is a partnership
unincorporated business owned by two or more people. Partnerships, like proprietorships, are relatively easy to start.
what are the disadvantages of a partnership
unlimited liability of the partners and the disagreements that almost always occur among strong-minded people.
when using the practical approach managers will combine what in their thinking
utilitarian, moral rights, and justice approaches in their thinking and decision making.
what is the codified law
values and standards are written into the legal system and enforceable in the courts. In this area, lawmakers set rules that people and corporations must follow in a certain way, such as obtaining licenses for driving, paying corporate taxes, and following other local, state, and national laws.