Business Ethics - Peregrine - Section Review Questions

Why study Business Ethics

-An individual's personal values and morality are only one factor in the ethical decision-making process -Being a good person and having sound personal ethics may not be sufficient to handle the ethical issues that arise in a business organization -Business strategy decisions involve complex and detailed discussions, and a high level of personal moral development may not prevent an individual from violating the law in an organizational context -The values people learn from family, religion, and school may not provide specific guidelines for complex business decisions

Match the model of corporate governance to its descriptor A. Shareholder model of corporate governance B. Stakeholder model of corporate governance founded in classic economic precepts, including maximizing wealth for investors and owners adopts a broader view of the purpose of business re: stockholders and other stakeholders

A. Shareholder model of corporate governance: founded in classic economic precepts, including maximizing wealth for investors and owners B. Stakeholder model of corporate governance: adopts a broader view of the purpose of business re: stockholders and other stakeholders

The Benefits of Business Ethics

Employee Commitment: Employee commitment comes from employees' belief that their future is tied to that of the organization and their willingness to make personal sacrifices for the organization. The more a company is dedicated to taking care of its employees, the more likely it is that the employee will take care of the organization. Investor Loyalty: Investors today are increasingly concerned about the ethics, social responsibility, and reputation of companies in which they invest. Investors recognize that an ethical climate provides a foundation for efficiency, productivity, and profits, while negative publicity, lawsuits, and fines can lower stock prices, diminish customer loyalty, and threaten a company's long-term viability. Customer Satisfaction: Research indicates that a majority of consumers place social responsibility ahead of brand reputation or financial factors when forming impressions of companies; consumers may avoid the products of companies they perceive as irresponsible. A strong organizational ethical environment usually focuses on the core value of placing customers' interests first. Profits: Many studies have found a positive relationship between corporate social responsibility and business performance. Companies convicted of misconduct experience a significantly lower return on assets and return on sales than firms that have not faced such charges.

High-ranking persons known to respect legal and ethical standards that have oversight on organizational ethics programs are known as _______________

Ethics officers

Harmful Products

Governments in advanced industrialized nations have banned the sale of certain products that are considered harmful. However, some companies in those nations continue to sell those products in other countries where they remain legal. Some products that are not harmful in some countries may be so in others because of issues related to literacy, unsanitary conditions, and cultural values.

Bribery

In many cultures, giving bribes, also known as facilitating payments, is an acceptable business practice. Companies that do business internationally should be aware that bribes are an ethical issue, and the practice is more prevalent in some countries than in others.

____________________ refers to ideas and creative materials people develop to solve problems, carry out applications, educate, and entertain others.

Intellectual Property, IP

Pollution and the Natural Environment

Many countries are working together to create alliances and standards for environmental responsibility to minimize the negative effects of pollution. Some countries are taking legal action against polluting firms in an effort to defend air and water quality. In some countries, however, groups have lobbied governments to increase the level of pollution they allow.

___________ operate on a global scale with ties to multiple nations and have been the subject of much ethical criticism

Multinational Corporations, Multinational Corporation, MNCs, MNC

Opportunity Factors

Opportunity describes the conditions in an organization that limit or permit ethical or unethical behavior. Opportunity results from conditions that either provide rewards, whether internal or external, or fail to erect barriers against unethical behavior. Opportunity relates to individuals' immediate job context: where they work, with whom they work, and the nature of the work.

"We" versus "them" is known as _____________

Self-reference criterion

A __________________ is the degree to which a firm understands and addresses stakeholder demands and is comprised of: -the organization-wide generation of data about stakeholder groups and assessment of the firm's interactions with these groups -the distribution of this information throughout the firm -the organization's responsiveness as a whole to this information

Stakeholder orientation

Ethical Issue Intensity

The intensity of an ethical issue relates to its perceived importance to the decision-maker. Ethical issue intensity, then, can be defined as the relevance or importance of an ethical issue in the eyes of the individual, work group, and/or organization. Research suggests that individuals are subject to six "spheres of influence" when confronted with ethical choices: the workplace, family, religion, legal system, community, and profession.

Ethics Training

Training programs can make employees aware of available resources, support systems, and designated personnel who can assist them with ethical and legal advice. They can also empower employees to ask tough questions and make ethical decisions. Many companies are now incorporating ethics training into their employee and management development training efforts.

Sexual and Racial Discrimination

Various U.S. and European laws prohibit businesses from discriminating on the basis of sex, race, religion, or disabilities in their hiring, firing, and promotion decisions. However, the problem of discrimination is still a reality in the world.

Price Discrimination

When a firm charges different prices to different groups of customers, it may be accused of price discrimination. When a market is artificially divided into segments and each segment is subject to different prices, inequalities may emerge that cannot be explained by added costs. When companies market their products outside their own countries, the costs of transportation, taxes, tariffs, and other expenses can raise their prices.

Individual Factors

When people need to resolve ethical issues in their daily lives, they often base their decisions on their own values and principles of right or wrong. In the workplace, ethical issues can involve honesty, conflicts of interest, discrimination, nepotism, and theft, among others. The individual's stage of cognitive development can affect their decisions. Individual factors include gender, education, nationality, age, and locus of control.

Telecomm Issues

With the advent of satellites, email, and the internet, information can be accessed in a matter of seconds instead of weeks; as a result, businesses can become the victims as well as the perpetrators of unethical actions.

The ________________ addresses economic and social issues involving agriculture, textiles and clothing, banking, telecommunications, government purchases, industrial standards, food sanitation regulations, services, and intellectual property. It also provides legally binding ground rules for international commerce and trade policy. The organization attempts to reduce barriers to trade between and within nations and settle trade disputes.

World Trade Organization, WTO

Transactional Leader

attempt to create employee satisfaction through negotiating or "bartering" for desired behaviors or levels of performance.

Transformational Leaders

strive to raise employees' level of commitment and foster trust and motivation

Match the type of stakeholder to its definition A. Primary stakeholders B. Secondary stakeholders those whose continued association is absolutely necessary for a firm's survival do not typically engage in transactions with a company and thus are not essential

A. Primary stakeholders:those whose continued association is absolutely necessary for a firm's survival B. Secondary stakeholders:do not typically engage in transactions with a company and thus are not essential

Five top recommendations to CEOs for rebuilding trust and confidence in American firms

-Making customers the top priority -Assuming personal responsibility and accountability -Communicating openly and frequently with customers -Handling crises more honestly -Sticking to the code of business ethics no matter what

Common Mistakes in Developing a Training Program

-Not having a clear understanding of the goals of the program from the beginning -Not setting realistic and measurable program objectives -Senior management's failure to take ownership of the ethics program -Developing program materials that do not address the needs of the average employee -Transferring a domestic program internationally -Designing a program as a series of lectures

Ethical Leaders... have strong personal character have a passion to do right are proactive consider stakeholder's interest are role models for the organization's values are transparent and actively involved in organizational decision-making are competent managers who take a holistic view of the firm's ethical culture

-have strong personal character -have a passion to do right -are proactive -consider stakeholder's interest -are role models for the organizational values -are transparent and actively involved in organizational decision-making

Match the leader type to its attributes A. Authoritative leader B. Pacesetting leader C. Coercive leader D. Affiliative leader E. Coaching leader F. Democratic leader demands instantaneous obedience and focuses on achievement, initiative, and self-control inspires employees, facilitates change, and creates a strong positive performance climate values people and relies on friendship and trust to promote flexibility and innovation relies on participation and teamwork to reach collaborative decisions can create a negative climate because of high standards that he or she sets builds a positive climate, delegates responsibility, and is skillful in issuing challenges

A. Authoritative leader: inspires employees, facilitates change, and creates a strong positive performance climate B. Pacesetting leader: can create a negative climate because of high standards that he or she sets C. Coercive leader: demands instantaneous obedience and focuses on achievement, initiative, and self-control D. Affiliative leader: values people and relies on friendship and trust to promote flexibility and innovation E. Coaching leader: builds a positive climate, delegates responsibility, and is skillful in issuing challenges F. Democratic leader: relies on participation and teamwork to reach collaborative decisions

Match the relativist to their belief A. Cultural relativist B. Business relativist C. Ethical relativist morality varies from culture to culture, and business practices are viewed accordingly only one culture defines ethical behavior for the whole globe with no exceptions there are no ethical standards except, maybe, for the ones in the transaction culture

A. Cultural relativist: morality varies from culture to culture, and business practices are viewed accordingly B. Business relativist: there are no ethical standards except, maybe, for the ones in the transaction culture C. Ethical relativist: only one culture defines ethical behavior for the whole globe with no exceptions

Match the type of ethical statement to its descriptor A. Statement of values B. Code of conduct C. Code of ethics consists of general statements, sometimes inspirational, that serve as the basis for rules may contain inspirational statements but specifies acceptable/unacceptable behavior conceived by management and are fully developed with input from all stakeholders

A. Statement of values: conceived by management and are fully developed with input from all stakeholders B. Code of conduct: may contain inspirational statements but specifies acceptable/unacceptable behavior C. Code of ethics: consists of general statements, sometimes inspirational, that serve as the basis for rules

To promote legal and ethical conduct, an organization should develop an organizational ethics program by establishing, communicating, and monitoring the ethical values and legal requirements that characterize its history, culture, industry, and operating environment. A. True B. False

A. True

Match the approach to its descriptor A. moral rights approach B. utilitarian approach C. justice approach decisions should result in the greatest good for the greatest number or people no decision should infringe upon the fundamental rights of the individual decisions should be guided by impartial standards of fairness and equity

A. moral rights approach: no decision should infringe upon the fundamental rights of the individual B. utilitarian approach: decisions should result in the greatest good for the greatest number or people C. justice approach: decisions should be guided by impartial standards of fairness and equity

Organizational Factors

Although people can and do make individual ethical choices in business situations, no one operates alone. Research has shown that in the workplace, an organization's values often have a greater influence on decisions than a person's own values. Although people outside the organization, such as family members and friends, also influence decision-makers, an organization's culture and structure operate through the relationships of its members to influence their ethical decisions.