Chapter 2 Ethics and Business Decision Making

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Ethics
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Moral principles and values applied to social behavior
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Business Ethics
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Ethics in a business context; a consensus as to what constitutes right or wrong behavior in the world of business and the application of moral principles to situations that arise in a business setting.
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Moral Minimum
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The minimum degree of ethical behavior expected of a business firm, which is usually defined as compliance with the law.
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Stock Buyback
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The purchase of shares of a company’s own stock by that company on the open market.
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Stock Option
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An agreement that grants the owner the option to buy a given number of shares of stock, usually within a set time period.
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Ethical Reasoning
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A reasoning process in which an individual links his or her moral convictions or ethical standards tot eh particular situation at hand.
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Categorical Imperative
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A concept developed by the philosopher Immanuel Kant as an ethical guideline for behavior. In deciding whether an action is right or wrong, or desirable or undesirable, a person should evaluate the action in terms of what would happen if everybody else in the same situation, or category, acted the same way.
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Principle of Rights
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The principle that human beings have certain fundamental rights (to life, liberty, and the pursuit of happiness, for example). Those who adhere to this “rights theory” believe that a key factor in determining whether a business decision is ethical is how that decision affects the rights of various groups. These groups include the firm’s owners, its employees, the consumers of its products or services, its suppliers, the community in which it does business, and society as a whole.
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Utilitarianism
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An approach to ethical reasoning that evaluates behavior in light of the consequences of that behavior for those who will be affected by it, rather than on the basis of an absolute ethical or moral values. In utilitarian reasoning, a “good” decision is one that results in the greatest good for the greatest number of people affected by the decision.
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Cost-Benefit Analysis
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A decision-making technique that involves weighing the costs of a given action against the benefits of that action.
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Corporate Social Responsibility
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The idea that corporations can and should act ethically and be accountable to society for their actions.

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