Business Ethics Exam 1 Review – Flashcards
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Principles
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Specific boundaries for behavior that are UNIVERSAL and ABSOLUTE.
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Social Responsibility
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An organization's obligation to maximize its positive impact and minimize its negative impact on stakeholders.
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What is consumerism?
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Protects the rights of consumers.
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Ethics is a part of decision making of what level(s) of work and management?
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All of them.
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The six principles of the Defense Industry Initiative on Business Ethics and Conduct became the foundation for what?
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Federal Sentencing Guidelines for Organizations.
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Ethical Culture
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The character of the decision-making process that employees use to determine whether their responses to ethical issues are right or wrong based on values and norms.
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According to the rule of ethical culture in performance, what are the drivers of profit?
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Investor loyalty, employee commitment, customer satisfaction, & ethical culture.
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What is essential in building long-term relationships between businesses and consumers?
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Trust.
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In the Reagan/Bush eras, what was the major focus of the business world on?
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They were the first to promote self-regulation rather than regulation by the government.
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What does employees' perceptions of their firm as having an ethical culture lead to?
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Enhanced performance.
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Employees feel less pressure to compromise ethically, observe less misconduct, are more satisfied with their organizations, and feel more valued when they see what applied in the workplace?
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They see honesty, respect, and trust applied in the workplace.
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Investors are concerned about business ethics because they know that misconduct can do what?
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Lower the stock value & prices.
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Most organizations with strong ethical climates usually focus on the core value of placing whose interests first?
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Customers.
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(SHORT ANSWER)How does ethics contribute to customer satisfaction?
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Repeat customers, customer loyalty, grows customer satisfaction, & gaining a better understanding of your customer's needs.
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(SHORT ANSWER)We all learn values from sources such as family, religion, and school. Why might these sources of individual values not prove very helpful when making complex business decisions?
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It might not be the best for the business. Business ethical decisions are close calls.
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(SHORT ANSWER)What are three special aspects of business that need to be considered when applying ethics to business?
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1) Businesses must make a profit to survive. 2) Businesses must balance their desires for profits in the need of the desires of the society. 3) Maintaining a balance in business requires comprises & trade offs.
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The study of Business Ethics in North America has evolved through 5 stages, list each of the five stages (or eras):
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-Before the 1960s -1960s -1970s -1980s -1990s till now
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In what decade did Business Ethics become an emerging field to study?
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1970s
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List some examples of Primary Stakeholders:
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Customers, Employees, Shareholders, Investors
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List some examples of Secondary Stakeholders:
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Media, trade associations, special interest groups, journalists
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What are some benefits primary stakeholders tend to provide to organizations?
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Supplies of capital and resources, Expertise and leadership, Word-of-mouth promotion, and Infrastructure.
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Stakeholders' power over businesses stems from their ability to do what?
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Withdrawal or withhold resources.
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Discuss the Stakeholder Interaction Model:
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-Involves a two-way relationship between your firm & stakeholders. -Recognizes the input of investor, employees, and suppliers..& a dialogue with a firms external and internal environment.
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What is a stakeholder orientation?
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- The degree to which a firm understands and addresses stakeholder demands. - It can be viewed as a continuum.
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What are the 3 activities associated with the stakeholder orientation (know them in correct order)?
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1) Generation of data about stakeholder groups 2) Distribution of the information throughout the firm 3) Organization's responsiveness to this intelligence
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A stakeholder orientation is not complete unless it includes what?
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Activities that actually address the stakeholder's issue.
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What are the specific steps for implementing the stakeholder perspective?
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1) Identifying your stakeholder groups 2) Identifying stakeholder issues 3) Identifying & gaining stakeholder feedback 4) Accessing organizational commitment to social groups
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What are the four levels of social responsibility?
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-Economic -Legal -Ethical -Philanthropic
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What did The Foreign Corrupt Practices Act outlaw?
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Bribery of officials in other countries.
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What is the Sarbanes-Oxley Act? What is a result of this act?
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-Enacted to restore confidence in financial reporting and business ethics after the accounting scandals of the early 2000s. -A far-reaching change to organizational control and accounting systems, making securities fraud a criminal offense. -Because of Sarbanes-Oxley, publicly traded companies must develop a code of ethics to assist in maintaining transparency in financial reporting.
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Business Ethics
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- It comprises the principles, values, and standards that guide behavior in the world of business. - Business ethics is NOT entirely an extension of an individual's own personal ethics. - Know that business ethics is becoming a management issue to achieve competitive advantage.
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What is the Defense Industry Initiative on Business and Ethics and why was it developed?
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Was developed in the 1980s to guide corporate support for ethical conduct by establishing a method for discussing best practices.
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What is the Federal Sentencing Guidelines for Organizations and what does it focus on?
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Focus(es) on firms taking action to prevent and detect business misconduct in cooperation with government regulation.
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The Federal Sentencing Guidelines for Organizations set the tone for organizational ethics compliance programs by:
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Codifying into law incentives for organizations to take action such as developing ethical compliance programs to prevent misconduct.
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Stakeholders
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Those who have a claim in some aspect of a firm's products, operations, markets, industry, and outcomes.
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Primary Stakeholders
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A stakeholder group that is absolutely necessary for a firm's survival.
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Shareholders provide resources to an organization that are critical to long term success. Which of the following does the book suggest that suppliers offer?
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Material resources and/or intangible knowledge.
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List some methods typically employed by firms when researching relevant stakeholder groups?
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Surveys, focus groups, internet searches, press reviews
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Public health and safety and support of local organizations are issues most relevant to which stakeholder group?
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Community.
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What is the ISO 26000 and why was it established?
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It was established as a corporate responsibility regulation that is meant to encourage discussions on the role of social responsibility and the importance of stakeholders.
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Corporate Citizenship
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The term used to express how a firm meets its stakeholder expectations of its economic, legal, ethical, and philanthropic responsibilities.
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Corporate Governance
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Formal systems of accountability, oversight, and control that companies have developed to remove the opportunity for employees to make unethical decisions.
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Major corporate governance issues normally involve what types of decisions:
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Strategic-level
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One policy to address the issue of executive pay was implemented by J.P. Morgan, it stated that:
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Managers should earn no more than twenty times the pay of other employees.
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Why do critics argue that high compensation for boards of directors is a bad thing?
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It could cause conflicts of interest between the directors and the organization.
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What methods do special interest groups use to force organizations to alter their products or change their practices?
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They can do activities that generate negative press.
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(SHORT ANSWER)Why is ethical misconduct more difficult to overcome than poor financial performance?
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It destroys trust which harms your reputation.
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(SHORT ANSWER)Discuss the difference between primary and secondary stakeholders in the stakeholder interaction model and give examples of each type:
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Primary stakeholders are affected daily, and secondary stakeholders don't engage in the interactions of the company. Its not crucial to the day to day functions. A few examples of primary stakeholders would be employees, investors, and customers. A few examples of secondary stakeholders would be trade associations, media, and special interest groups.
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(SHORT ANSWER) The term Ethics and Social Responsibility are often used interchangeably, but each has a distinct meaning. Define Ethics and Social Responsibility and explain the difference between the two concepts:
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Ethics is a part of decision making at all levels of work and management. Social Responsibility is an organization's obligation to maximize positive impact and minimize negative impact on stakeholders. Social Responsibility is your effect on stakeholders, and to have a positive effect you need to be ethical.
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In corporate governance, what is the process of auditing and improving organizational decisions and actions?
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Control.
