MSU LAW 231 Chapter 3

Jayne is opening her own bakery. As she develops her company policies, she is concerned about the morality of her actions and how those actions will affect her employees, her stakeholders, and herself. Jayne studying the rightness or wrongness of her actions as they apply to her business constitutes the study of:

business ethics.

Alexander, the CEO of Westwind Baby Furnishings, received a report from one of his quality inspectors about a possible defect in the Baby Sleeptime Crib Westwind had just started to market. The report said the bed was not safe for older babies, because there was a chance it would collapse if the baby climbed up onto the railing. Westwind had manufactured 20,000 Baby Sleeptime Cribs and would lose a great deal of money if it could not market the cribs. Alexander decided to proceed with the sale of the cribs anyway, to maximize company short-run profits. Possible consequences Westwind could face for such unethical conduct include:

lawsuits, large settlements, and bad publicity.

n evaluating the four factors, it seems that Grey's decision was _____. If Grey had thought through his options as if all food manufacturers would make the same decision, he would be applying __________________. If Grey had analyzed his options using ________, he would have evaluated the costs and benefits of each option to determine the ________ for the ___________ and most likely ________ shipped the food.

unethical, Kant's categorical imperative, utilitarianism, greatest good, greatest number, would not have

Under which theory of ethics would a decision be ethical if it provides the greatest benefit for the largest number of individuals?

utilitarianism

Juan owns a manufacturing company that wants to expand its line of plastics. To expand and still make a profit, pollution into the local river will be significantly increased. In evaluating his decision, Juan tries to determine whether expanding the company's line of plastics would produce the greatest amount of good for the greatest number of people. In doing so, Juan is following the ethical principle known as:

utilitarianism.

Grey wants to evaluate the outcome for all stakeholders to inform his decision making. Grey first should consider ______________ to determine the legal and ethical issues related to implementing a corporate food safety compliance policy. After the initial step, Grey should list his possible actions related to the new law and evaluate each option for ___________. Using the information from the first two steps, Grey should work with his staff to come to a consensus and develop a plan of action. Because Grey has used the stakeholder theory to inform his decision making, he has evaluated the protentional outcome for: ___________, _____________, ___________, as well as ___________.

who the stakeholders are, each stakeholder, shareholders, employees and vendors, customers, the community

Which of the following are considerations of corporate social responsibility? Choose 3 answer choices.

- Ethical treatment of employees and suppliers - Environmental impact of a business - Issues within the community where a business is located

Which of the following illustrates a financial or non-financial cost of unreported unethical behavior to a company? Choose 2 answers.

- Sweet Home Diner lost half of its business when the community became outraged with the owner for failing to stop the racist social media postings of the restaurant manager. - Employee morale hit an all-time low when Scott, the line supervisor, ignored repeated instances of harassment by certain employees.

Which of the following are methods of preventing unethical behavior? Choose 2 answers.

- terminating an employee for unethical behavior - establishing a company code of ethics

When making a decision using the stakeholder theory of management, a business professional would place more weight on which of the following? Choose 2 answers.

- the impact of its decisions on employees over the profitability of the business - the harm to customers from using the company's product over profits

Which of the following represent two of the potential financial costs of reporting unethical behavior? Choose 2 answer choices.

- the loss of top performing employees - penalties, fines, and lawsuits against the company

A company exhibits responsible corporate citizenship when it:

- uses its wealth and influence to benefit society as a whole.

Samantha has been the top salesperson at her company for the last six months in a row. Samantha has been using high-pressure techniques to meet the unrealistically high sales quotas in her division, including marking up the price so she can offer a good discount to the customers, lying about the quality of the product, and telling customers that the items are one-of-a-kind when they are not. Her manager, Samuel, is aware of the tactics Samantha is using but does not say anything because Samantha makes their division look great. Here, the parties guilty of unethical behavior include:

Samantha and Samuel.

Under which principle of ethics would a person consider whether his or her action is one that every other person should take?

Kant's categorical imperative

You are the manager of a sandwich shop called Buns-R-Us, which has twelve employees. The corporate office has a very robust ethical code of conduct for employee behavior and has trained each employee on it. On a personal level, you disagree with some of the rules. And, because you are the manager, you choose not to follow them. When your employees see that you, as the manager, do not follow the rules, what's the likely consequence?

They will likely not follow the rules either.

The ethical model that focuses on the outcome of a decision, as opposed to the motives behind the decision, is:

Utilitarianism

To assess the fourth factor, Grey should evaluate how much it might _____ the company to continue to test until the salmonella result is negative. Grey's approach to profits in making this decision seems to be ______ profit maximization. In this case, Grey should consider not just the _____ of testing, but also the ______ of potential lawsuits or settlements.

cost, short run, cost, cost

Which of the following activities is an example of corporate social responsibility?

establishment of a foundation that funds high school educational initiatives

In evaluating the second factor, Grey should analyze what the _____ might say if the shipped food caused sickness or death. Knowingly or recklessly allowing someone to become sick from the food because the company continued to test the food until the salmonella test was negative ______ be a public relations problem. In evaluating the third factor, Grey would look at the ______ for consumers and employees. Grey's instructions to repeat the tests until the results were negative, ______ support the health and safety of consumers.

media, would, safety risks, did not

Ethics is the consideration of how one should act, based on which of the following concepts?

morality, or principles of right and wrong

There are four different aspects of a decision that a business should evaluate in order to maximize profits and be a good corporate citizen. In evaluating the first of the four factors, Grey should determine whether his failure to report the results to the Food and Drug Administration is a violation of _____. In this case, Grey ____ have a legal duty to perform internal tests on food produced at his plant to check for contamination. Grey ____ have a legal duty to report the initial test results to the U.S. Food and Drug Administration. Merely complying with the law is known as the ____________.

the law, did, did not, moral minimum

In ethics, compliance with the law is considered:

the moral minimum.

Karishma and Stephen, co-owners of Roundtree Corporation, are discussing a new benefits package they are considering for their employees. The proposed plan is more expensive for the company than the current plan but will offer better benefits to the employees. Stephen wants to decide based solely on the effect on the owners of the corporation, while Karishma's position is that the employees should be taken into consideration as well. Stephen is more concerned with the _____________ theory of management, and Karishma is more concerned with the __________ theory of management.

shareholder; stakeholder

Under the principle of rights, the term "rights" refers to:

the fundamental rights of human beings.