IB EXAM I: Ch. 5 Ethics, Corporate Social Responsibility, and Sustainability

What is a true statement about how personal ethics might be challenged in international transactions?

Expatriate (a person who lives outside their native country) managers may face MORE pressure to violate their personal ethics.

Customers, suppliers, and unions are all examples of (EXTERNAL OR INTERNAL?) stakeholders.

External

Kantian Ethics

Kantian ethics holds that one should always respect the humanity in others and act in accordance with rules that could apply to everyone.

Example of a Naive Immoralist

Marion, a manager at a multinational investment firm located in Italy, knows that the company isn't reporting accurate profits to the government. She explains that this action is fine because all the multinational investment firms behave in the same manner. Marion is a naive immoralist.

Sustainable Strategies

Strategies that not only help the multinational firm make good profits, but that do so without harming the environment, while simultaneously ensuring that the corporation acts in a socially responsible manner with regard to its multiple stakeholders.

General Motors adopted what principles in order to continue business operations in South Africa during the apartheid movement?

Sullivan principles

Friedman Doctrine

The Friedman Doctrine states that increasing profits is the only social responsibility a company has. One of the straw men approaches to ethics.

Business Ethics

The accepted principles of right or wrong governing the conduct of businesspeople.

Garrett Hardin described how herders shared common land for grazing. It was advantageous to the poor to place more and more livestock on the commons because it would mean more income. Why did these actions result in ultimate tragedy?

The commons were overgrazed and eventually destroyed by the livestock.

Corporate Social Responsibility

The idea that business people should favor decisions that have both good economic and social consequences is corporate social responsibility.

In an organization where personal ethics are important, what is an example of an individual that should be considered for a job opening?

The individual who has a disappointing interview despite having verified glowing letters of recommendation that attest to his integrity. (Best option out of the other choices)

Stakeholders

The individuals or groups that have an interest, stake, or claim in the actions and overall performance of a company.

Justice Theories

The justice theories concentrate on the attainment of a fair and equitable distribution of economic goods and services.

What ethical theory emphasizes that the best actions are those that benefit the most number of people and harm the least number of people?

Utilitarianism

The principles, standards, convictions, and beliefs that a group adopts are called their:

Values

In the 1980s, Western businesses questioned the ethics of operating in South Africa because the apartheid system in place there:

Violated basic human rights.

Example of Ethical Dilemma

Young children are permitted to work in the manufacturing of soccer balls in Pakistan, but this would not be legal in the U.S. Yet, a company wants to sell these soccer balls in the U.S. This is one example of an ethical dilemma.

Zolo Corp. is a multinational company. What business practice of Zolo would be considered ethical with regard to HUMAN RIGHTS?

Operating in a developing nation that lacks the democratic structures of developed nations.

Internal Stakeholders

People who work for or own the business such as employees, directors, and stockholders.

Corporate Social Responsibility (CSR)

Refers to the idea that businesspeople should consider the social consequences of economic actions when making business decisions and that there should be a presumption in favor of decisions that have both good economic and social consequences.

Noblesse Oblige

Refers to the moral obligation to act in an honorable and benevolent manner.

What common phrase can be used to describe the straw men approach known as cultural relativism?

"When in Rome, do as the Romans do."

A company pursuing a sustainable strategy would NOT adopt policies that:

-Ensure that they participate in situations that result in a tragedy. -Negatively affect the well-being of key stakeholders, such as employees and suppliers. -Deplete the environment for short-term economic gain.

A firm's organizational culture:

-Is set by leadership. -Can reinforce the need for ethical behavior. -Can deemphasize business ethics.

What are the 4 determinants of ethical behavior?

1. Leadership 2. Societal culture 3. Organizational culture 4. Personal ethics

The straw men approach to ethics is comprised of what 4 approaches?

1. Naive immoralist 2. Cultural relativism 3. Friedman doctrine 4. Righteous moralist

Just Distribution

A just distribution is one that is considered fair and equitable. Giving people that which they are due is part of a just distribution.

One criticism of the naive immoralist is that:

A multinational must accept that it can change the prevailing business practices in a country.

Ethics

A system of moral principles.

A business strategy that does not violate the accepted principles of right or wrong governing the conduct of businesspeople is called:

An ethical strategy A course of action that does not violate a company's business ethics.

Many companies develop a formal statement of primary values and ethical standards for employees and managers to follow. This is called a:

Code of ethics A business's formal statement of ethical priorities.

A company's organizational ? reflects the values and norms that are shared among employees of an organization.

Culture

An accurate description of the apartheid system in South Africa is it:

Entailed the segregation of housing, employment, public facilities and social events. Apartheid system: (in South Africa) a policy or system go segregation or discrimination on grounds of race.

Ethical issues arise in international business when:

Environmental regulations in host nations are less stringent than those in the home country.

Ethical Dilemmas

Ethical dilemmas are situations where none of the available alternatives seems morally acceptable.

According to Hofstede's theory, cultures high in masculinity and power distance are (MORE OR LESS?) likely to engage in unethical behavior.

More

The accepted standards or ways of doing things in a particular setting are known as:

Norms

The OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions

Obliges its member states and other signatories to make the bribery of foreign public officials a criminal offense. Convention on Combating Bribery of Foreign Public Officials in International Business Transactions: An OECD conventions that establishes legally binding standards to criminalize bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective.

Righteous Moralist

One that claims that a multinational's home-country standards of ethics are the appropriate ones for companies to follow in foreign countries. One of the straw men approaches to ethics.

Naive Immoralist

One who asserts that if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either. One of the straw men approaches to ethics.

Cultural Relativism

The belief that ethics are culturally determined and that firms should adopt the ethics of the cultures in which they operate. One of the straw men approaches to ethics.

Naive Immoralist

The naive immoralist believes that if a multinational firm does not follow the ethical norms of the host country, then other multinational firms don't have to follow them.

Rights Theories

The rights theories recognize that there are things we CANNOT do against individuals because they have certain moral, fundamental rights. Certain theories accept that there are rights, both positive and negative, that all humans have simply because they are human. These are called rights theories.

Organizational Culture

The values and norms shared among an organization's employees.

What statement accurately describes developed nations with regard to the environment?

They have more substantive environmental regulations.

What statements would be considered acceptable according to the concept of cultural relativism?

-If a culture supports slavery, it is okay to use slave labor. -You should adopt the culture of the country that you are doing business in, no matter what. -There is a rejection of universal notions of morality.

What 2 messages did leaders at Daimler send to employees when they tolerated the use of bribes to facilitate business?

-Organizational objectives are more important than personal ethics. -Managers should do whatever it takes to succeed.

What theories provide the moral compass that is important when thinking through the ethical implications of decisions in a systematic way?

-Rawls' theory of justice -Rights theories

Foreign Corrupt Practices Act (FCPA)

U.S. law regulating behavior regarding the conduct of international business in the taking of bribes and other unethical actions.

An organization's code of ethics may be partially based on documents such as the:

UN Universal Declaration of Human Rights

TimeTurner Corp. is a company based in the U.S. that manufactures luxury wrist watches. By western standards, if the company uses sweatshop labor to make these watches it is most likely to be considered:

Unethical

Utilitarian Ethics

Utilitarian ethics measure actions on a cost-benefit scale.

Starbucks' ethical sourcing policies are an example of:

A sustainable strategy that benefits multiple stakeholders including shareholders, the environment, local communities, and customers.

Who argued that it was ethically justified for General Motors to operate in South Africa so long as conditions of disobeying and promoting the abolition of apartheid laws were fulfilled?

Leon Sullivan

The basic principles and values that govern interactions between individuals are:

Personal ethics

The (RIGHTEOUS OR NAIVE?) moralist believes it is always the appropriate strategy to adopt home-country ethical standards.

Righteous moralist The righteous moralist person says that the multinational home country standards of ethics are the appropriate approach to follow in foreign countries.

Example of Ethical Dilemma

Sharon is visiting her company's manufacturing subcontractor in Pakistan. She notices children working on the machinery with no air conditioning and little access to water. But she also knows these children are probably supporting their families. This is an example of an ethical dilemma.

How do facilitating payments benefit a company?

Smooths the progress of services to which the business is entitled.

What 3 actions can managers take to ensure that ethical issues are considered in business decision making?

1. Build an organizational culture that values ethical behavior. 2. Implement decision-making processes that consider ethical aspects of business decisions. 3. Favor hiring and promoting of people with a sense of personal ethics.

Speed Money

A payment which ensures that a business receives the standard treatment that it ought to receive from a foreign government.

Ethical Dilemma

A situation in which there is no ethically acceptable solution.

Example of a Sustainable Strategy

A strategy designed to reduce CO2 emissions.

Sustainable Strategy

A sustainable strategy is a conscious and proactive use of methods that do not harm the planet, people, or profits while leaving a positive impact.

It is wrong to cheat on a test. Conversely, it is right to:

Accept responsibility for your actions.

What aspect of international business convinced Leon Sullivan to lead the way in eliminating apartheid in South Africa?

Ethics

What management system serves as the organization's internal control point for improprieties?

Ethics Officer Improprieties: a failure to observe standards or show due honesty or modesty; improper language, behavior, or character. To ensure that the business has appropriate legal compliance programs and acts in an ethical manner, some firms now have created a position for an ethics officer.

Example of Moral Courage

Maria's boss has asked her to do whatever it takes to secure a contract. Maria knows that paying a bribe would ensure that the contract would be signed, but walks away because she knows that while paying the bribe would ensure large profits, doing so would be unethical. Maria is demonstrating moral courage.

What helps managers walk away from a decision that is profitable, but not ethical?

Moral courage

No matter where your business is conducted, a common standard of principles for all nations and cultures to ensure fundamental rights is laid out in:

The United Nations Universal Declaration of Human Rights A United Nations document that lays down the basic principles of human rights that should be adhered to.

Cultural Relativism

The belief that ethics are culturally determined and a firm should adopt the ethics of a country it is doing business in.

Kantian Ethics

The belief that people should be treated as ends and never as means to the ends of others.

What leader behavior is most likely to promote a strong ethical culture in an organization?

The boss who consistently demonstrates strong personal ethics in all of his dealings with clients.

Utilitarian Approach to Ethics

These hold that the moral worth of actions or practices is determined by their consequences.

Business people may behave unethically because they forget to ask whether the decision or action they are making is ethical. T or F?

True

The managers of ABC Manufacturing are struggling to meet their quota. They decide to eliminate 2 quality control steps in the manufacturing process. This is unethical behavior that was a result of:

Unrealistic performance goals

According to Rawls' view of justice, when people operate under a VEIL OF IGNORANCE, they would unanimously agree on 2 fundamental principles of justice. What are these 2 principles?

1. Each person is permitted the maximum amount of basic liberties compatible with a similar liberty for others. 2. Once basic liberty is ensured, inequality in basic social goods is to be allowed only if such inequalities benefit everyone.

Carla questioned the ethics of her company in hiring an Indonesian firm to manufacture its clothing products. She knew that women who worked in these sewing factories were forced to work long hours in substandard conditions and she knew she wouldn't like to work that way. Carla is demonstrating the use of:

A moral imagination

When Phil's manufacturing company was fined by the U.S. government for the amount of carbon dioxide it released into the air, it decided to move its business to Thailand where it knew there were fewer restrictions on air emissions.

Environmentalists would most likely question the ethical implications of this decision.

Scandinavia scores high on the individualism and uncertainty avoidance measures of societal culture. According to Hofstede's dimensions of societal culture, Scandinavia is more likely to engage in ? business behavior than - for example - Russia.

Ethical

What ethics theory BEST meshes with John Rawls' justice theory?

Kantian ethics

Roboton Inc. has moved its production to a new nation. It freely dumps its harmful waste in the rivers and causes environmental degradation. In this case, Roboton has contributed to the:

Global tragedy of the commons

Because ? violations were so prevalent in Myanmar in the 1990s, many Western companies could no longer condone doing business there.

Human rights

External Stakeholders

Individuals or groups that have some claim on a firm such as customers, suppliers, and unions.

Employees, directors, and stockholders are examples of (EXTERNAL OR INTERNAL?) stakeholders.

Internal

The justice theory attributed to (Who?) emphasizes the socially just distribution of goods in society.

John Rawls

One important drawback to the utilitarian philosophy to business ethics is that it does not consider:

Justice

Problems with Kantian ethics include:

-It does not address moral emotions, like compassion. -It ignores the consequence of an action. -It is absolute, so it does not address conflicts of duty.