Ethics 4-6 Quiz

shareholder model of corporate governance

purpose of business is to maximize profits for shareholders

fairness

quality of being just, equitable, and impartial

stakeholder interaction model

reciprocal relationships between the firm and and a host of stakeholders

stakeholder orientation

degree to which a firm understands and addresses stakeholder demands; can be viewed as a continuum (firms likely to adopt the concept to varying degrees)

ethical judgment

moral reasoning and ethical decision making skills with objectivity

morals

personal philosophies that define right and wrong

ethical awareness

ability to recognize ethical issues

T/F: economist Milton Friedman is often criticized for his approach to corporate social responsibility as expressed in "The Social Responsibility of Business is to Increase its Profits," The New York Times Magazine, September 13, 1970, which he viewed as making as much money as possible making as much money as possible while conforming to the basic rules of the society as possible while conforming to the basic rules of the society as embodied in the law, and NOTHING MORE

False

T/F: In the scene "The Carousel," we see a room full of white males in positions of responsibility. Those who made the hiring decisions at Sterling Cooper and Kodak appear to have failed to exhibit optimization in their hiring practices

True

T/F: corporate governance is the development of formal systems of accountability, overshight, and control

True

T/F: social responsibility is an organization's obligation to maximize its positive impact on stakeholders and minimize its negative impact

True

conflict of interest

When an individual must choose whether to advance his or her own interests, those of the organization, or those of some other individual or group

A stakeholder is

a party that has an interest in a company and can either affect or be affected by the company in some way

ethical knowledge

ability to identify key concepts and understand different ethical approaches and theories

ethical culture

acceptable behavior as defines by the company and industry

social responsibility

an organization's obligation to maximize its positive impact on stakeholders and minimize its negative impact

fraud

any purposeful communication that deceives, manipulates, or conceals facts in order to harm others

an organization's obligation to maximize its positive impact on stakeholders

corporate social responsibility

lying by commission

creating a perception/belief by words that intentionally deceive the receiver of the message

According to our authors, an ethical issue is a problem, situation, or opportunity a. that has no correct answer b. harms the environment c. requiring society as a whole to choose among several actions that must be evaluated as right or wrong d. requiring an individual, group, or organization to choose among several actions that must be evaluated as right or wrong, ethical or unethical. e. requiring an individual, group, or organization to choose between harming consumers or the environment and earning more profits

d

under the business judgment rule: a. directors are essentially asked to operate in a reasonable manner and avoid conflicts of interest b. directors are presumed to exercise care when making decisions c. are largely shielded from liability for a business decision just because it turned out to be a poor business choice d. all of the above e. a and b only

d. all of the above

In the competitive world of 1960s advertising on Madison Avenue, issues relating to fairness and honesty may arise because business is sometimes regarded as a a. legal case where everything must be done by law b. contest with the most ethical firm winning c. guerilla war where businesses seek to destroy each other d. game governed by its own rules rather than those of society e. game governed by social values

d. game governed by its own rules rather than those of society

descriptive approach

describes a business' impact on stakeholders and the relative importance of each stakeholder group to a business; you care about stakeholder theory because it describes the actual way a business works

As senior partner of advertising firm Sterling Cooper, Bert Cooper likes to preach the value of __________, an important element of virtue that means, among other things, being whole, sound, and in an unimpaired condition. (Whether Bert always practices what he preaches is another matter.) a. optimization b. ethical issue c. honesty d. trust e. integrity

e. integrity

why is it important for businesses to recognize secondary stakeholder groups? a. they are absolutely necessary for the firm's survival b. they include the employees necessary for the firm's success c. they always have more power than primary stakeholders d. they provide vital resources that companies need e. they have legitimacy and the power to influence outcomes

e. they have legitimacy and the power to influence outcomes

four levels of social responsibility

economic, legal, ethical, philanthropic

adam smith

emphaszied that each individual has to produce for the common good

benefits of business ethics

employee commitment, investor loyalty, customer satisfaction, profits,

values

enduring beliefs and ideals that are socially enforced (trust and integrity)

3 fundamental elements that motivate people to be fair

equality, reciprocity, optimization

puffery

exaggerated advertising, blustering, and boasting

corporate citizenship

extent to which businesses strategically meet the economic, legal, ethical, and philanthropic responsibilities placed on them by various stakeholders, impacts reputation (one of organization's greatest assets)

why study business ethics

firm survival, profitability, stakeholder expectations, contribute to societal goals

dodge motor case

ford wanted to end dividends for shareholders in favor of investing in new plants and minority shareholders sued and won

this statute makes it illegal for US businesses to bribe government officials of other countries

foreign corrupt practices act

normative approach

identifies ethical guidelines that dictate how firms ought to treat stakeholders; you care about stakeholder theory because it is just and fair

stakeholder framework

identifies internal/external stakeholders who agree, collaborate, and engage in confrontations on ethical issues; allows organizations to identify, monitor, and respond to needs/expectations of stakeholder groups

foundational values

integrity honesty and fairness

lying by omission

intentionally not informing others of any differences/problems relating to the company

reciprocity

interchange of giving and recieving in social relationships

quid pro quo harassment

involves demands for sexual favors by a superior from a subordinate in exchange for workplace benefit

risks of stakeholder goal oriented mgmt

lack of effectiveness, wandering by committee, mission shift, financial failure

dishonesty

lack/absences of integrity and unwillingness to tell the truth; lying cheating and stealing are actions associated with dishonest conduct

risks of stockholder goal oriented mgmt

loss of public respect, end justifies means, human casualties, loss of support community

FCPA and small facilitation payments

made to induce public officials in foreign countries to perform their functions such as issuing licenses or permits

instrumental approach

managing stakeholders should result in the achievement of business goals (increased profitability, growth); you care about stakeholder theory because it will make more money for your business

implied falsity

message has a tendency to mislead, confuse or deceive the public; literally true but implies a false message

goal of ethical culture

minimize the need for enforced compliance of rules and maximize the use of principles that contribute to ethical reasoning in difficult/new situations

the rise of social issues in business

modern consumer movement begins in 1965, Nader's unsafe at any speed criticized the auto industry for putting profit ahead of lives and safety

business ethics

organizational principles values and norms; may originate from individuals organizational statements or legal system; guide individual and group behavior in business

classic agency problem

ownership and control are separate, managers act as agents for investors who primary goal is increasing value of the stock, investors and managers are distinct parties w unique insights goals and values

stakeholder model

places board of directors in the position of balancing the interests and conflicts of a company's various constituencies

bribery

practice of offering something in order to gain an illicit advantage from someone in authority

in the 1920s this movement attempted to provide citizens with a living wage

progressive movement

global compact

set of 10 principles concerning human rights, labor, and anti-corruption by the UN

principles

specific boundaries for behavior that often become the basis for rules (human rights, freedom of speech)

4 interrelated dimensions

strong sustained economic performance, rigorous compliance to the law, ethical actions beyond what the law requires, voluntary contributions that advance the reputation and stakeholder commitment of the organization

1930s this was the governments response to the great depression which asked business to work more closely with the government to raise family income

the new deal

workplace integrity

the pressure to compromise organizational standards, observed misconduct, reporting of misconduct when observed and retaliation against reports

john cardinal o'hara on business

the primary function of commerce is service to mankind

secondary stakeholders

those who are not typically engaged directly in transactions with a company and are therefore not essential to its survival: media, trade associations, special interest groups

primary stakeholders

those whose continued association and resources are absolutely necessary for a firm's survival: customers, shareholders, employees, suppliers, gov agencies

optimization

trade off between equity and efficiency

honesty

truthfulness or trustworthiness

value dilemma

two or more beliefs/ideals conflict with one another

moral dilemma

two or more choices in conflict with one another, all undesirable

integrity

uncompromising adherence to a set or group of values

this body of teaching or thought expressed in a series of papal encyclicals included concern for workers' rights and living wages

what is catholic social ethics aka catholic social teaching

president johnson created a series of programs that sought to provide all citizens with some degree of economic stability

what is the great society

consumer fraud

when consumers attempt to deceive business for their own gain (shoplifting, collusion, duplicity, guile)

in 1962 president kennedy delivered a special message that outlined four basic consumer rights

consumer bill of rights

in the 1960s consumer activists helped secure passage of statutes such as the wholesome meat act of 1967

consumer protection laws

The extent to which a firm meets the economic, legal, ethical, and philanthropic responsibilities placed on it by various stakeholders is referred to as its _____ a. reputation b. corporate citizenship c. corporate ethical audit e. ethical citizenship e. fiduciary duties

b. corporate citizenship

Advertising firms Sterling Cooper and McCann Erickson reach a secret agreement to fix the prices on rates they will propose to cigarette company Lucky Strike when bidding its work. Such a fraudulent, illegal, or deceitful scheme is known as a. optimization b. insider trading c. collusion d. a dilemma e. a conflict of interest

c. collusion

corporate intelligence

collection and analysis of info on markets, technologies, customers, and competitors as well as on socioeconomic and external political trends

what did milton friedman say

concern for stakeholders is pure socialism, businesses don't have responsibilities because they aren't people they are property, do good on your own time

why do ethical issues often arise

conflicts among individuals' morals and the core values and culture of the organizations where they work