BLAW 310: Chapter 3 – Business Ethics

Business ethics is not more complicated than personal ethics.
Ethics is concerned with the fairness or justness of an action.
Adhering strictly to all business laws is all that is necessary to fulfill all business ethics obligations.
Business ethics focuses on ethical behavior in the business world.
Ethics is less certain than law.
Compliance with the law does not necessarily fulfill all ethical obligations.
Focusing on a firm’s short-term profits without considering the company’s long-term needs may be acting unethically.
The legality of an action is always clear.
To be a “good citizen,” hen making decisions a business should not evaluate the public relations impact.
Ethics can be highly subjective and subject change over time.
Acting in good faith gives a business firm a better chance of defending its actions in court.
An ethical code of conduct typically outlines a company’s policies.
There is no debate that employees have an absolute right to free expression to make negative posts in social media about other employees and managers.
Many companies have provided guidelines about what is appropriate when making posts on social media accounts.
No one believes that judging a job candidate based on what he or she does outside the work environment is ethical.
A company can broadly prohibit its employees from criticizing the company via social media.
Ethical reasoning is the process through which an individual links his or her moral convictions or ethical standards to the particular situation at hand.
Duty-based ethical standards often come from religious precepts or through philosophical reasoning.
According to German philosopher Immanuel Kant, individuals should evaluate their actions in light of the consequences that would follow if they were the only members of society that acted in that way.
Absolute mandates such as the commandment “Thou shalt not steal” can be justifiably broken if there is a benevolent motive.
The categorical imperative cannot be applied to many business actions.
In ethical terms, a cost-benefit analysis is an assessment of the negative and positive effects of alternative actions on individuals.
According to utilitarianism, it matters how many people suffer a negative effect from an act.
According to utilitarianism, an action that affects the majority adversely is morally wrong.
Corporations can be good citizens by promoting goals that society deems worthwhile.
Corporations can be perceived as owing ethical duties to groups other than their shareholders.
If the interests of different stakeholders conflict, it can be difficult to determine which group’s interest should receive greater weight.
A business firm’s profits may suffer if the firm is not a “good corporate citizen.”
Management’s behavior sets the ethical tone of a firm.
Setting realistic workplace goals can increase the probability that employ¬ees will act unethically.
Managers should apply the same ethical standards to themselves and to their employees.
An ethics program can clarify what a company considers to be unacceptable conduct.
The effectiveness of a company’s code of ethics is determined by the commitment of the company leadership to enforcing the code.
Some companies set up confidential systems for employees to “raise red flags” about suspected unethical practices.
Bribery of foreign government officials is both an ethical and a legal issue.
Any decision by the management of Fast-Food Franchise Corporation may significantly affect its

a. operators only.
b. operators, owners, suppliers, the community, or society as a whole.
c. owners only.
d. suppliers, the community, or society as a whole.

Lia works for Media Marketing Company. Her job includes putting “spin” on the firm’s successes and failures. In this context, ethics consist of

a. “bad” versus “good” publicity.
b. questions of rightness and wrongness.
c. the firm’s quarterly revenue.
d. whatever is legal.

John is sales manager for Kleen ‘N Brite Products, Inc. Compared to John’s personal activities, his business activities most likely involve

a. more complex ethical issues
b. no ethical issues.
c. simpler ethical issues.
d. the same ethical issues.

Mary works in the public relations department of New Trends Sales Company. Her job includes portraying New Trends’s activities in their best light. In this context, ethics consist of

a. a different set of principles from those that apply to other activities.
b. the same moral principles that apply to non-business activities.
c. those principles that produce the most favorable financial outcome.
d. those principles that produce the most favorable financial outcome.

Flexo Trucking Company transports hazard¬ous waste. Garn is a Flexo driver, whom the company knows drives longer hours than federal regula¬tions permit. One night, Garn exceeds the limit and has an accident. Spilled chemicals contaminate Hill City’s water source, forcing the residents to move away. Flexo acted unethically because

a. Flexo showed reckless disregard for Hill City’s residents and others
b. Garn exceeded the federal time limit.
c. harm was caused by an unfortunate accident.
d. Hill City should have better protected its water source.

In studying the legal environment of business, Professor Dooley’s students also review ethics in a business context. Ethics includes the study of what constitutes

a. fair or just behavior.
b. financially rewarding behavior.
c. legal behavior.
d. religious behavior.

Peak & Vale Accountants provides other firms with accounting services. Questions of what is ethical involve the extent to which Peak & Vale has

a. a legal duty beyond those duties mandated by ethics.
b. an ethical duty beyond those duties mandated by law.
c. any duty beyond those mandated by both ethics and the law.
d. any duty when it is uncertain whether a legal duty exists.

According to the view that New Allied Manufacturing Corporation is a “citizen,” New Allied is expected to

a. participate in bettering communities and society.
b. primarily generate revenue for its owners.
c. have no responsibility other than profit maximization.
d. efficiently allocate scarce resources.

Destiny and Eduardo, investors in Competitive Acquisitions Corporation, are dissatisfied with the profit-maximization theory of corporate objectives. These investors and others who look beyond profits and dividends may consider the triple bottom line, which does not include a corporation’s

a. impact on people.
b. profits.
c. impact on the planet.
d. congressional lobbying activities.

Precision Engineering Inc., like other corporations, is subject to laws that are broad in their purpose and their scope. Compliance with these laws is not always sufficient to determine “right” behavior because

a. the law does not codify all ethical requirements.
b. company codes are also sources of law.
c. business decisions can have negative impacts.
d. ethical problems occur in business.

David, the chief accounting officer of Tension Fencing Corporation, wants to be sure that all the company’s accounts are legal and ethical. Sometimes, however, he is unsure exactly what is legal and what is illegal. David should

a. not worry about what is legal or illegal as long as the corporate executives benefit in the short run.
b. try his best to not do anything illegal and keep documentation showing that he always acts in good faith.
c. not worry about what is legal or illegal as long as it benefits the shareholders.
d. not worry about what is legal or illegal as long as it benefits the chief executive of the corporation.

Eden, the chief executive officer of Flo-Thru Piping Corporation, wants to ensure that Flo-Thru’s activities are legal and ethical. The best course for Eden and Flo-Thru is to act in

a. good faith.
b. ignorance of the law.
c. regard for the firm’s shareholders only.
d. their own self interest.

With respect to the potential for American Discount Stores, Inc., and any other major corporation to suffer damage to its reputation or loss of profits through negative publicity, the Internet has

a. increased the potential.
b. decreased the potential.
c. had no impact.
d. allowed a company to keep negative information or opinions hidden.

Ridgeline Excavation & Construction, LLC, creates an internal code of ethics. Like the codes of other firms, Ridgeline’s company code is not

a. law.
b. a set of rules that the company can enforce.
c. an outline of the company’s policies.
d. a guide for decision makers facing ethical questions.

PriceLess Retail Corporation specifies that its employees should not use social media to damage the company, harm another person’s reputation, or violate company policies. An employee who violates these rules may be subject to discipline and could be fired. According to the National Labor Relations Board, this social media policy

a. violates federal labor law.
b. is too lenient toward employees.
c. is too stringent toward management.
d. is necessary to prevent inaccurate statements from being spread across the Internet.

In business deals, Fiona, the chief executive officer of Snacks n’ Bites, Inc., follows duty-based ethical standards. These are most likely derived from

a. a corporate ethics code.
b. a cost-benefit analysis.
c. philosophical reasoning.
d. the law.

Lyle, vice-president of sales for Mi-T Electric, Inc., adheres to Judeo-Christian re¬lig-ious ethical standards. With respect to their application, these standards are

a. absolute.
b. analytical.
c. discretionary.
d. utilitarian.

Julia, the head executive of Fine Woolen Sweaters, Inc., is a committed Christian who strongly adheres to the Ten Commandments. One of Julia’s employees is found to be stealing sweaters and giving them to a local homeless shelter. Julia is likely to

a. punish the employee for stealing even though the employee’s motive was benevolent.
b. view the employee’s actions as justified because the employee was clothing the poor.
c. contribute more sweaters to the homeless shelter.
d. gently reprimand the employee without suggesting that the employee’s actions were unethical.

Carrie Ann works at Paper Products, Inc. She considers taking home a few sheets of stationery so she can write letters to her ailing grandmother. Since Paper Products produces thousands of sheets of stationery every day no one will miss the few sheets she takes and company profits will not be affected. Carrie Ann then considers what would happen if every employee took some stationery home and decides not to take any. Carrie Ann is being influenced by

a. the categorical imperative.
b. the principle of rights.
c. a cost-benefit analysis.
d. outcome-based ethics.

In making business decisions, Glenda, personnel manager for HVAC Maintenance, Inc., applies her belief that all persons have fundamental rights. This is

a. a religious rule.
b. the categorical imperative.
c. the principle of rights.
d. utilitarianism.

Ryan, the owner of SuperMart Stores, Inc., adheres to the “principle of rights” theory. Under this theory, a key factor in determining whether a business decision is ethical is how that decision affects

a. the right determination under a cost-benefit analysis.
b. the rights of others.
c. the “right” thing to do.
d. the right to make a profit.

In making decisions for Smartt Investments, Rita uses a cost-benefit analysis. This is a part of

a. duty-based ethics.
b. Kantian ethics.
c. rights-based ethics.
d. utilitarian ethics.

Hailey, a lawyer on the staff of International Group, always considers the consequences of an action rather than the nature of the action itself when making ethical decisions in a business context. Hailey is applying

a. the utilitarian theory of ethics in business contexts.
b. religious beliefs in business contexts.
c. Kantian ethics in business contexts.
d. the principle of rights theory of ethics in business contexts.

Bob, research manager for CornAgri Products, Inc., applies utilitarian ethics to determine that an action is morally correct when it produces the greatest good for

a. Bob.
b. CornAgri.
c. the fewest people.
d. the most people.

In deciding questions of corporate social responsibility, Valley Disposal & Recycling, Inc., is concerned with

a. how the corporation can best fulfill any ethical duty to society.
b. the effect on corporate profits of ignoring any ethical duty to society.
c. whether the corporation owes any ethical duty to society.
d. all of the choices.

MeatMen, Inc. spends a great deal of money and effort to ensure that all employees are safe on the job, that all products are safe for consumers, and that the environmental impact of the corporation is minimal. MeatMen appears to strongly believe in the concept of

a. the moral minimum.
b. corporate social responsibility.
c. “grey areas” in the law.
d. government oversight.

Applied Business Corporation makes and markets its products nationwide. Under the stakeholder approach, to be considered socially responsible when making a business decision, Applied must take into account the needs of

a. its consumers, the community, and society only.
b. its employees and owners only.
c. its employees, owners, consumers, the community, and society.
d. no one.

A common ethical dilemma faced by the management of Spencer Hydraulics Corporation involves the effect that its decision will have on

a. one group as opposed to another.
b. the firm’s competitors.
c. the government.
d. the U.S. Chamber of Commerce.

Margaret is the top manager of Pecans, Inc. She sets strict ethical standards for all employees. Margaret, however, often takes some of the company’s best nuts and sells them from her house. The ethical tone at Pecans, Inc. is

a. likely to be good because Margaret has set such strict standards for her employees.
b. not likely to be good because although Margaret sets strict ethical standards for the other employees, she does not follow them.
c. not related to either Margaret’s ethical standards or her own unethical behavior.
d. not likely to be good because employees tend to resent strict ethical standards.

Straitway Company encourages its managers to behave ethically, reasoning that the employees will take their cues from management. One of the most important ways to create and maintain an ethical behavior workplace is for management to

a. demonstrate a commitment to ethical decision making.
b. discreetly engage in unethical or illegal acts.
c. look the other way when an employee engages in an unethical act.
d. direct employees to “do as we say, not as we do.”

Ergonomic Corporation convenes its employees for its managers to announce (1) a new company-wide ethical code of conduct, (2) an ad campaign to publicize the new code, and (3) the discharge of employees who do not adhere to the code. One of the most effective ways to set a tone of ethical behavior within a business organization is

a. to create an ethical code of conduct.
b. to discharge employees who create the appearance of impropriety.
c. to post a marketing campaign online touting the firm’s ethical tone.
d. for management to direct employees to “do as we say, not as we do.”

Richard suspects his supervisor of unethical accounting practices. However, he does not want to lose his job if he reports the supervisor and the supervisor finds out who reported him. An important feature of online reporting systems like NAVEX Global is

a. the employee reporting the unethical behavior can do so anonymously.
b. the employee reporting the unethical behavior is financially compensated if he loses his job as a result of the report.
c. the employee reporting the unethical behavior must give his full name when making the report.
d. the employee reporting the unethical behavior must have another employee supporting him.

At a meeting of employees, Fuel Injection Design & Manufacturing, Inc.’s managers announce the creation of a new company-wide code of ethical conduct and the initiation of an ad campaign to publicize the new code. They also say that any employees who do not adhere to the code will be discharged. The effectiveness of this code will be determined by

a. the commitment of company leadership to enforcing the code.
b. the extent to which the employees comply with the code.
c. a marketing campaign posted online to tout the firm’s ethical tone.
d. management directing employees to “do as we say, not as we do.”

Ethical standards would most likely be considered violated if Team Logos Merchandising Corporation deals with a company in a developing nation that

a. agrees to produce goods at Team Logos’s desired price.
b. goes unnoticed by “corporate watch” groups.
c. routinely violates labor and environmental standards.
d. pays its workers less than the U.S. minimum wage.

To assist in detecting illegal bribes, International Civil Engineers, Inc., and all other U.S. companies must

a. conceal financial records that reveal past bribes.
b. keep records that “accurately and fairly” reflect their financial activities.
c. make bribes through third parties rather than directly to officials.
d. permit payments to foreign officials that are unlawful in that country.


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