Business Law Ch 5

1. First step 2. Second step 3. Third step 4. Fourth step 5. Fifth step

1. Inquiry 2. Discussion 3. Decision 4. Justification 5. Evaluation

When making decisions, a business should evaluate:

1. The legal implications of each decision 2. The public relations impact 3. The safety risks for consumers and employees 4. The financial implications

Companies must keep detailed records that ____ and fairly reflect _______payments.

Accurately, foreign

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.

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

Because corporate watch groups will discover and publicize unethical behavior by suppliers, link it to the American company, and harm its reputation.

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.

One view of duty-based ethics focuses on the principle of rights. Choose the four groups whose rights may be affected by business decisions.

Consumers, suppliers, shareholders, employees

Some companies have begun to focus their decision making on the triple bottom line. Which three of the following are the three key concepts of the triple bottom line

Corporate profits, the impact of profits on people, the impact of profits on people

Under the theory of corporate social responsibility, many corporations publish reports outlining how they are good corporate citizens. These are often called:

Corporate sustainability reports

Most companies attempt to link law and ethics by

Creating company codes of ethics

The listing of alternatives and evaluation of them using ethical theories occurs in the ______ stage and the agreement of a plan of action happens in the _______ stage.

Discussion, decision

The idea that individuals should evaluate their actions in light of the consequences that would follow if everyone in society acted in the same way is known as the:

Equal behavior principle

All shareholders are stakeholders and all stakeholders are shareholders.

False

Business ethics are consistent only with short-run profit maximization

False

If a company chooses to do something that is legal, that decision also will always be ethical

False

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

False

Religious ethical principles allow managers to make decisions with few possible negative consequences.

False

The justification stage is used to explain the decision and rationalize why a bad decision may actually be good

False

Flexo Trucking Company transports hazardous waste. Garn is a Flexo driver, whom the company knows drives longer hours than federal regulations permit. One night, Garn exceeds the limit and has an accident. Spilled chemicals contaminate Hill City's water source, forcing the residents to move away. Flexo acted unethically because​

Flexo showed reckless disregard for Hill City's residents and others.

Since the late 1970s, the _______ has prohibited U.S. businesses from bribing foreign officials.

Foreign Corrupt Practices Act

Business ethics does NOT focus on

How businesses are treated under international law.

___________identified several general guiding principles for moral behavior.

Immanuel Kant

________is the key to setting an ethical tone for a business.

Management's attitude

in the theory of profit _______, resources flow to where they are _________ by society, allowing businesses to focus on their ______.

Maximization, most highly valued, strengths

Compliance with the law is sometimes called the

Moral minimum

Corporate social responsibility is a relatively ______ concept and ______imposed on corporations by law.

New, is not

Gamma corporation, an American company, signs a contract with Theta corporation, a company from another nation, where Theta will provide Gamma with certain raw materials. Because of the economy in its nation, there are many more people looking for jobs than there are jobs available. Theta hires employees at extremely low wages and does not maintain facilities up to American standards. Newspapers accuse Gamma of engaging in unethical behavior. Is Gamma's behavior ethical?

No, because Gamma has an ethical obligation to make sure that people who work for the company, either directly or indirectly, are being treated fairly.

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.

The inquiry analysis involves identifying the_____ and collecting the relevant ______ .

Parties, facts

The application of morals and ethics to a situation is usually called ethical______. This study is typically divided into two major categories. The first ______ ethics is often founded in religion or philosophy. The second _________ ethics focuses on the impacts of a decision on ________

Reasoning, duty based, outcome based, stakeholders

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

Sarbanes-Oxley Act

Customers, creditors, suppliers, employees and the community in which a business operates are all:

Stakeholders

An in-depth understanding of ethics is important to the long-term viability of a business because unethical decisions will negatively and directly impact all of the following except which one?

The business's number of product

A company may not have a social media policy that prohibits making negative statements about the company or any of its employees because:

The government protects employees' rights to engage in "concerted activities"

Rupert and Cordelia own an American company that does business in foreign nations. Getting a license in a new country can be challenging. As they try to enter into business in a new country, Rupert fills out the license paperwork and takes it to the correct office. There, he pays the front-desk person $100 to process the paperwork, as is the custom in that country. Cordelia, who has connections in that country, schedules an appointment with the minister of commerce, who has the authority to determine which foreign companies get licenses, and pays him $200 to approve their license. Which payment(s) likely violated the Foreign Corrupt Practices Act?

The payment made by Cordelia but not the payment made by Rupert.

9. The utilitarian approach to decision making has been seen as problematic by some because even the greatest good to the greatest number may create unacceptable harm to the few

True

Businesses may face many ethical issues with regard to social media

True

Corporate social responsibility combines a commitment to good corporate citizenship with a commitment to making ethical decisions, improving society, and minimizing environmental impact.

True

The FCPA does not prohibit payments to low-level employees of foreign nations who exercise little (or no) discretion in their jobs, but merely process paperwork.

True

The application of the principle of rights, or rights theory, often involves conflicting rights.

True

Which three of the following may contribute to a lack of ethics in a workplace?

Unrealistic production or sales goals, managers who do not actively discuss ethics, unethical activities by management

A major premise of the ________ approach to ethics is "the greatest good for the greatest number." Thus, an action is morally ________ when it creates the _______ amount of harm for the fewest people. A _______ analysis involves assessing the negative and positive effects of alternative actions.

Utilitarian, correct, fewest, cost benefit

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

Utilitarianism

Brick & Mortar Construction & Masonry Corporation's ethics committee is asked a question: Should the firm bid low to obtain a contract that it knows it can fulfill only at a higher price? A practical method of investigating and answering this question involves all of the following steps except​

absolution

Corporate social responsibility is most successful when a company undertakes activities that

are significant and related to its business operations

Ricardo suspects his supervisor Simone of unethical accounting practices. But Ricardo does not want to report Simone if she will find out who reported her and fire Ricardo. An important feature of online reporting systems like EthicsPoint is that an employee reporting unethical behavior​

can do so anonymously.

Carly is a manager at a business. When she has a job opening, she regularly does Internet searches on applicants to see if they have social media accounts. If so, she reviews whatever she can access. Her findings, or lack of findings, go into her notes and may influence whether she interviews and ultimately hires an applicant. Carly's actions are:

clearly legal but ethically uncertain

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.

GetTogether, A Social Media Company encourages its managers to behave ethically, reasoning that lower-level employees will take their cues from management. One of the most important ways to create and maintain an ethical workplace is for GetTogether's management to​

demonstrate a commitment to ethical decision making.

Duane and Elizabeth start a business manufacturing pencil and pen holders out of recycled materials. They draft a mission statement where they declare that they are committed to environmentalism and to using their profits to improve the quality of life of the homeless. The declaration of beliefs in a mission statement is most often associated with:

duty-based ethics

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 his decision will affect the rights of his employees, his consumers, and others

Brewster, the chief executive officer of Cog & Gear Lubricants Corporation, wants to ensure that Cog & Gear's activities are legal and ethical. The best course for Brewster and Cog & Gear is to act​

in good faith

In attempting to maximize profits, executives and employees of Capital Solutions, Inc., and other corporations have to distinguish between short-run and long-run profit maximization. Business ethics is consistent only with​

long-run profit maximization

Daisy works for eMarketing, Inc. Her job includes putting "spin" on the firm's successes and failures. In this context, ethics has to do with how businesspersons, in making their decisions, apply

moral and ethical principles.

Cora owns a Christian bookstore and tries to run it in accordance with Judeo-Christian values. Cora learns that Margo, one of her employees, has been taking money from the cash register and giving it to homeless people who come into the store. Under an analysis of duty-based ethics with a religious foundation, Margo's behavior is

not acceptable because stealing is never justifiable.

Any decision by the management of Fast-Food Franchise Corporation may significantly affect its​

operators, owners, suppliers, the community, or society as a whole.

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

Chie runs a business and is committed to the triple bottom line. This means that she is concerned with:

the impact of the company's decisions on its profits, its people, and the planet.

In making business decisions, Glenda, personnel manager for HVAC Maintenance, Inc., applies her belief that all persons have fundamental rights. This is​

the principle of rights

Mary works in the accounting department of New Trends Sales Company. Her job includes reviewing expense reports submitted by management and employees. In determining which expenses are "padding," Mary should apply to management​

the same ethical principles that apply to employees

Major Construction & Manufacturing Corporation makes a side payment to a government official in India. Under the Foreign Corrupt Practices Act, this is permitted​

under no circumstances.

Jane Sanderson worked in a travel-service office and had access to the reservation systems of several airlines. She 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 Sandersons' behavior was:

unethical and illegal, because their actions constituted theft from the airlines

Ethics can be defined as the study of

what constitutes right and wrong behavior

Julie is sales manager for Kelso's Concrete & Stone Products, Inc. In applying ethical principles to the business of the firm, Kelso's and Julie will most likely evaluate​

what duties and responsibilities should exist for the business.

Under the "stakeholder view" of corporate social responsibility, the most difficult aspect of the stakeholder analysis faced by the management of Natural Gas Piping Corporation is determining​

which group's interest should receive greater weight.

James worked for a corporation that measured its success in terms of short-term profits. James truly believed that the company could be a better company, and make more money, if it changed its strategy to focus on being a good citizen and by giving back to the community. These beliefs likely:

would result in a long term benefit to the company and an increase in long term profits.

As part of a hiring process, Codex Marketing Company conducts an Internet search to discover what a job candidate has posted. To Codex, this act should present​

​an ethical issue.

Metal Fabrication, Inc. expends funds and takes steps to ensure that all employees are safe on the job, that all products are safe for consumers, and that the environmental impact of the corporation is minimal. Metal's owners and management appear to believe in the concept of​

​corporate social responsibility.

In business deals, Fiona, the chief executive officer of Glazed Donuts, Inc., follows duty-based ethical standards. These are most likely derived from​

​philosophical reasoning.

In studying the business law, students also review ethics in a business context. Ethics includes the study of what constitutes​

​right or wrong behavior.

Ethical standards would most likely be considered violated if Team Logos Merchandising Corporation deals with a company in a developing nation that​

​routinely violates labor and environmental standards

Ross, a research manager for Stock & Bond Investments, Inc., adheres to utilitarian ethics. Ross will determine that an action is morally correct when it produces the greatest good for

​the most people

In making decisions for Commercial Janitorial & Maintenance Services, Inc., Isaiah uses a cost-benefit analysis. This analysis is part of​

​utilitarianism.