question

Define: Ethics

answer

The study and practice of decisions about what is good or right (inquiry into the nature and grounds of morality where the term morality is taken to mean moral judgments, standards and rules of conduct; the study of the general nature of morals and of specific moral choices; moral philosophy; and the rules or standards governing the conduct of the members of a profession)

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Define: Business Ethics

answer

Principles and standards that guide behavior in the world of Business; the application of ethics to the problems and opportunities experienced by business people (whether business practices are acceptable)

question

Define: Living Wage

answer

income sufficient for education, recreation, health, and retirement

question

List the four consumer rights presented by JFK.

answer

* right to safety, * right to be informed, * right to choose, and * right to be heard.

question

List the six principles proposed by the Defense Industry Initiative on Business Ethics and Conduct (DII).

answer

1. support codes of conduct 2. provide ethics training 3. create an open atmosphere 4. perform extensive internal audits and reporting 5. preserve the integrity of the defense industry 6. adopt a philosophy of public accountability

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Define: Ethical Culture

answer

character or decision making process that employees use to determine whether their responses to ethical issues are right or wrong; the component of corporate culture that captures the rules and principles that an organization defines as appropriate conduct

question

List the steps for developing an ethical culture in an organization.

answer

* Communicate core values to employees * Create ethics programs * Appoint ethic officers to oversee them

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List the three benefits to business of a clear Ethical Culture

answer

* Employee commitment and trust * Investor loyalty * Customer Satisfaction and trust (which all lead to increased profits)

question

List four issues that may foster the development of Ethical Culture.

answer

* absence of abusive behavior, * a safe work environment, * competitive salaries, and * fulfillment of all contractual obligations toward employees

question

Define: Sweat Shop

answer

facilities that abuse or underpay their work force

question

List the five stages of Business Ethics Development.

answer

1. before 1960, 2. the 1960s, 3. the 1970s, 4. the 1980s, and 5. the 1990s (and continues to evolve in the twenty-first century)

question

Describe: Business Ethics before 1960

answer

Religious Perspective * Fair Deal program defined civil rights and environmental responsibilities as ethical issues business had to address

question

Describe: Business Ethics 1960's

answer

Social Issues & Consumerism * Rise of social issues in Business * Society turned to causes * culminated the "consumer bill of rights"

question

Describe: Business Ethics 1970's

answer

Enlightenment Begins * Business Ethics emerging as a field * explored ethical issues attempting to understand how decisions were made * social responsibility and organizations responsibility have a positive impact

question

Describe: Business Ethic's 1980's

answer

Consolidation and Implementation Starts * centers on Business ethics provided publications, courses, and seminars * companies established ethics committees * The Defense Industry on Business Ethics and Conduct was developed

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Describe: Business Ethics 1990's

answer

Institutionalization of Business Ethics * Government continued to support self regulation * Federal Sentencing Guidelines for Organizations (FSGO) set the tone for organizational misconduct (the Stick!)

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Describe: Business Ethics 2000's

answer

A new focus on Business Ethics * Sarbanes-Oxley Act of 2002 stiffened penalties for corporate fraud and established an accounting oversight board * 2004 amendment to FSGO required business governing authority be well informed about its ethics program

question

T/F: Business ethics focuses mostly on personal ethical issues.

answer

False (Business ethics focuses on organizational concerns - legal and ethical—employees, customers, suppliers, society)

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T/F: Business ethics deals with right or wrong behavior within a particular organization.

answer

True (Definition)

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T/F: The 1990s could be characterized as the period when ethics programs were greatly influenced by government legislation.

answer

True (The impact of the FSGO means that the 1990s are seen as the period in which business ethics were institutionalized.)

question

T/F: Business ethics contributes to investor loyalty.

answer

True (Many studies have shown that trust and ethical conduct contribute to investor loyalty.)

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T/F: The trend is away from cultural or ethically based initiatives to legal initiatives in organizations.

answer

False (Many businesses are communicating their core values to their employees by creating ethics programs and appointing ethics officers to oversee them.)

question

Define: Corporate Governance

answer

formal system of accountability, oversight, and control of ethical and socially responsible behavior (system by which companies are directed and controlled; a set of relationships between a company's management, its board, its shareholders and other stakeholders; it deals with prevention or mitigation of the conflict of interests of stakeholders)

question

Define: Stakeholder

answer

anyone who has a "stake" or claim in some aspect of a company's products, operations, markets, industry, and outcomes

question

T/F: Stakeholders provide resources that are more or less critical to a firm's long-term success. These resources may be both tangible and intangible. Stakeholders' ability to withdraw—or to threaten to withdraw—these needed resources gives them power over businesses.

answer

True

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List the two types of Stakeholders

answer

* Primary * Secondary

question

Describe: Primary Stakeholders

answer

those whose continued association is absolutely necessary for a firm's survival

question

List the Primary Stakeholders

answer

Customers Investors Employees Shareholders Government (regulation agencies) Communities (infrastructure)

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Describe: Secondary Stakeholders

answer

those that do not typically engage in transactions with a company and thus are not essential for its survival

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List the Secondary Stakeholders.

answer

Media Trade Associations Special Interest Groups Competitors

question

Define: Stakeholder Orientation

answer

degree to which a firm understands and addresses stakeholder demands

question

List the activities associated with Stakeholder Orientation.

answer

1. generation of data about stakeholder groups and assessment of the firm's effects on these groups, 2. the distribution of this information throughout the firm, and 3. the organization's responsiveness to this intelligence.

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List/Describe the four steps to Social Responsibility.

answer

* Economic - maximizing stakeholder wealth and value * Legal - abiding by all laws and government regulations * Ethical - following standards of acceptable behavior * Philanthropic - giving back to society

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Define: Corporate Citizenship

answer

extent to which businesses strategically meet social responsibilities placed on them by their various stakeholders

question

List the four interrelated dimensions of Corporate Citizenship.

answer

• Strong sustained economic performance • Rigorous compliance • Ethical actions beyond what is required by the law • Voluntary contributions that advance reputation and stakeholder commitment

question

Describe: International Organization for Standardization (ISO) 26000

answer

corporate responsibility guideline (assist organizations in contributing to sustainable development; intended to encourage them to go beyond legal compliance)

question

Define: Philanthropic Responsibility

answer

activities that are not required of businesses but promote human welfare or goodwill

question

T/F: Governance also provides mechanisms for identifying risks and for planning for recovery when mistakes or problems occur. A governance system that does not provide checks and balances creates opportunities for top managers to put their own self-interests before those of important stakeholders.

answer

True

question

Define: Fiduciaries

answer

Persons placed in positions of trust who use due care and loyalty in acting on behalf of the best interests of the organization.

question

T/F: Conflicts of interest exist when a director uses the position to obtain personal gain usually at the expense of the organization.

answer

True (violation of fiduciary duties to stakeholders)

question

T/F: Directors are not held responsible for negative outcomes if they are informed and diligent in their decision making. This means they have an obligation to request information, research, use accountants and attorneys, and obtain the services of ethical compliance consultants.

answer

True

question

List the three major components of Corporate Governance.

answer

* Accountability, * Oversight, and * Control

question

Define: Accountability

answer

how closely workplace decisions are aligned with a firm's stated strategic direction and its compliance with ethical and legal considerations

question

Define: Oversight

answer

a system of checks and balances that limit employees' and managers' opportunities to deviate from policies and strategies and that prevent unethical and illegal activities

question

Define: Control

answer

process of auditing and improving organizational decisions and actions

question

List the major Corporate Governance Issues.

answer

* Shareholder rights * Executive compensation * Composition and structure of the board of directors * Auditing and control * Risk management * CEO selection and termination decisions * Integrity of financial reporting * Stakeholder participation and input into decisions * Compliance with corporate governance reform * Role of the CEO in board decisions * Organizational ethics programs

question

Describe: Shareholder Model of Corporate Governance

answer

focuses on developing and improving the formal system for maintaining performance accountability between top management and the firm's shareholders (Maximizing wealth for investors and owners; drives a firm's decisions toward serving the best interest of investors)

question

Describe: Stakeholders Model of Corporate Governance

answer

creating governance systems that consider stakeholder welfare in tandem with corporate needs and interests (Managers implement appropriate mechanisms to develop long term relationships)

question

List the six steps for Implementing a Stakeholder Perspective

answer

1. Assessing the Corporate Culture 2. Identifying Stakeholder Groups 3. Identifying Stakeholder Issues 4. Assessing Organizational Commitment to Social Responsibility 5. Identifying Resources and Determining Urgency 6. Gaining Stakeholder Feedback

question

T/F: Social responsibility in business refers to maximizing the visibility of social involvement.

answer

False (Social responsibility refers to an organization's obligation to maximize its positive impact on society and minimize its negative impact.)

question

T/F: Stakeholders provide resources that are more or less critical to a firm's long-term success.

answer

True (These resources are both tangible and intangible.)

question

T/F: Three primary stakeholders are customers, special-interest groups, and the media.

answer

False (Although customers are primary stakeholders, special-interest groups are usually considered secondary stakeholders.)

question

T/F: The most significant influence on ethical behavior in the organization is the opportunity to engage in unethical behavior.

answer

False (Ignorant others have more impact on ethical decisions within the organization.)

question

T/F: The stakeholder perspective is useful in managing social responsibility and business ethics.

answer

True (Refer to the six steps!)

question

List the three Universal ethical concepts that pervade business ethics.

answer

* honesty, * fairness, and * integrity

question

Define: Honesty

answer

truthfulness or trustworthiness

question

Define: Dishonesty.

answer

ack of integrity, incomplete disclosure, and an unwillingness to tell the truth. Dishonesty is also synonymous with lying, cheating, and stealing.

question

Define: Fairness

answer

the quality of being just, equitable, and impartial

question

List the three fundamental elements of Fairness.

answer

• Equality • Reciprocity • Optimization

question

Define: Equality

answer

How wealth or income is distributed between employees within a company, a country, or across the globe

question

Define: Reciprocity

answer

an interchange of giving and receiving in social relationships (the return of small favors that are approximately equal in value; ex: workers are compensated with wages that are approximately equal to their effort)

question

Define: Integrity

answer

being whole, sound, and in an unimpaired condition (one of the most important and often-cited terms regarding virtue)

question

Define: Optimization

answer

tradeoff between equity and efficiency

question

T/F: Businesses are expected to follow all applicable laws and regulations, and should not knowingly harm customers, clients, employees, or even other competitors through deception, misrepresentation, or coercion if they have integrity.

answer

True

question

Define: Ethical Issue.

answer

a problem, situation, or opportunity that requires an individual, group, or organization to choose among several actions that must be evaluated as right or wrong, ethical or unethical

question

Define: Ethical Dilemma.

answer

a problem, situation, or opportunity that requires an individual, group, or organization to choose among several wrong or unethical actions. (A problem about what a firm should do for which no clear, right decision is available)

question

List the common Ethical Issues.

answer

• abusive or intimidating behavior, • lying, • conflict of interest, • bribery, • corporate intelligence, • discrimination, • sexual harassment, • environmental issues, • fraud, • insider trading, • intellectual-property rights, and • privacy issues

question

T/F: Characteristics of the job, the culture, and the organization of the society in which one does business can create ethical issues.

answer

True

question

Describe: Abusive or Intimidating Behavior

answer

physical threats, false accusations, being annoying, profanity, insults, yelling, harshness, ignoring someone, and unreasonableness (most common ethical problem for employers)

question

Define: Lying.

answer

misrepresentation and distorting the truth

question

List the three forms of Lying

answer

* causing damage or harm, * a "white lie" which doesn't cause damage, or * statements that are obviously meant to engage or entertain with no malice

question

List the types of lying that cause Business Ethical Issues.

answer

* Commission Lying * Omission Lying

question

Describe: Commission Lying

answer

creating a perception or belief by words that intentionally deceive the receiver of the message (Includes Noise & Puffery in advertising)

question

Define: Noise as related to Commission Lying.

answer

technical explanations that the communicator knows the receiver does not understand

question

Define: Omission Lying

answer

withholding information of a material nature (intentionally not informing the channel member of any differences, problems, safety warnings, or negative issues relating to the product, service, or company that significantly affects awareness, intention, or behavior)

question

T/F: When lying damages others, it can be the focus of a lawsuit. When a lie becomes unethical in business, it is based on the context and intent to distort the truth. A lie becomes illegal if it is determined by the judgment of courts to damage others.

answer

True

question

Define: Conflict of interest

answer

exist when an individual must chose whether to advance his or her own interests those of the organization or those of some other group (To avoid conflicts of interest, employees must be able to separate their private interests from their business dealings.)

question

Define: Bribery

answer

practice of offering something usually money in order to gain an illicit advantage

question

List/Describe the two type of Bribery.

answer

• Active Bribery - an offense committed by the person who promises or gives the bribe • Passive Bribery - an offense committed by the official who receives the bribe. (It is not an offense, however, if the advantage was permitted or required by the written law or regulation of the foreign public official's country, including case law.)

question

T/F: Facilitation Payments are payments made to obtain or retain business or other improper advantages and do not constitute bribery payments.

answer

True

question

Define: Corporate Intelligence (CI) .

answer

the collection and analysis of information on markets, technologies, customers, and competitors, as well as on socioeconomic and external political trends (Corporate intelligence involves an in-depth discovery of information from corporate records, court documents, regulatory filings, and press releases, as well as any other background information that can be found about a company or its executives.)

question

T/F: Proprietary information like secret formulas, manufacturing schematics, merger or acquisition plans, and marketing strategies all have tremendous value.

answer

True

question

List the two primary methods of collection Corporate Intelligence.

answer

* Hacking * Social Engineering

question

Define: Hacking.

answer

Manipulation of electronic equipment to gain information. (depending on actual method, hacking may be illegal as well as unethical)

question

List/Describe the three hacking methods

answer

o System Hacking - the attacker already has access to a low-level, privileged-user account. o Remote Hacking - attempting to penetrate remotely a system across the Internet. o Physical Hacking - the CI agent enters the facility

question

Define: Social Engineering.

answer

tricking of individuals into revealing their passwords or other valuable corporate information

question

List the common methods of Social Engineering.

answer

o Shoulder Surfing o Password Guessing o Phishing o Dumpster Diving o Whacking o Eavesdropping

question

Define: Discrimination.

answer

any negative action committed the basis of someone's race, color, religion, sex, marital status, sexual orientation, public assistance status, disability, age, national origin, or veteran status

question

Define: Harassment.

answer

discrimination on the basis of political opinions or affiliation with a union

question

Define: Sexual Harassment.

answer

any repeated, unwanted behavior of a sexual nature perpetrated upon one individual by another

question

List the actions a company must take to avoid charges of Sexual Harassment.

answer

1. A statement of policy 2. A definition of sexual harassment 3. A non-retaliation policy 4. Specific procedures for prevention 5. Establish, enforce, and encourage victims of sexual harassment to report the behavior to authorized individuals. 6. Establish a reporting procedure. 7. Make sure that the company has timely reporting requirements to the proper authorities.

question

Define: Fraud.

answer

deceptive practices to advance his or her own interests over those of his or her organization or some other group; any purposeful communication that deceives, manipulates, or conceals facts in order to create a false impression

question

List the three major types of fraud.

answer

* Accounting * Marketing * Consumer

question

Define: Insider Trading.

answer

buying or selling of stocks by insiders who possess material that is still not public

question

Define: Intellectual Property Rights.

answer

legal protection of intellectual properties such as music, books, and movies

question

T/F: Laws such as the Copyright Act of 1976, the Digital Millennium Copyright Act, and the Digital Theft Deterrence and Copyright Damages Improvement Act of 1999 were designed to protect the creators of intellectual property.

answer

True

question

Describe: Privacy Issues.

answer

* consumer awareness of information collection, * consumer control over how companies use the personal information

question

T/F: Business can be considered a game people play like basketball or boxing.

answer

False (People are not economically self-sufficient and cannot withdraw from the game of business.)

question

T/F: Key ethical issues in an organization relate to fraud, discrimination, honesty and fairness, conflicts of interest, and technology.

answer

True (See pages 64-82 regarding these key ethical issues and their implications for the organization.)

question

T/F: Over half of a national sample of employees observe some type of misconduct.

answer

True (Figure 3-2 indicates observed misconduct by employees.)

question

T/F: Fraud occurs when a false impression exists, which conceals facts.

answer

False (Fraud must be purposeful, rather than accidental, and exists when deception and manipulation of facts are concealed to create a false impression that causes harm.)

question

T/F: The most observed form of misconduct is fraud.

answer

False (The most observed form of misconduct in Table 3-1 is abusive or intimidating behavior toward employees)

question

Describe: Voluntary Boundaries of Ethical Behavior

answer

management initiated boundaries of conduct (beliefs, values, voluntary policies)

question

Describe: Mandated Boundaries of Ethical Behavior

answer

an externally imposed boundaries of conduct (laws, rules, regulations)

question

T/F: Laws are categorized as either civil or criminal. Laws establish the basic ground rules for responsible business activities.

answer

True

question

Define: Core Practice.

answer

A highly appropriate and common practice that helps ensure compliance with legal requirements, Industry self-regulation, and societal expectations (documented best practices, often encouraged by legal and regulatory forces as well as industry trade associations)

question

List the Mandated Requirements for Legal Compliance

answer

* Laws Regulating Competition * Laws Protecting Consumers * Laws Promoting Equity and Safety * Laws Protecting the Environment

question

Define: Philanthropy

answer

giving back to communities and causes

question

Managing Responsibility and Business Ethics

answer

The steps include: assessing the corporate culture; identifying stakeholder groups; identifying stakeholder issues; assessing the organizational commitment to social responsibility; identifying resources and determining urgency; gaining stakeholder feedback.

question

Describe: Civil Law.

answer

the rights and duties of individuals and organizations

question

Describe: Criminal Law.

answer

prohibits specific actions, such as fraud, theft, or securities trading violations, but also imposes fines or imprisonment as punishment (the state or nation enforces criminal laws)

question

List the four sources of Civil & Criminal Law.

answer

• U.S. Constitution (constitutional law), • precedents established by judges (common law), • federal and state laws or statutes (statutory law), and • federal and state administrative agencies (administrative law).

question

List the five common categories of Laws & Regulations

answer

1. regulation of competition, 2. protection of consumers, 3. promotion of equity and safety, 4. protection of the natural environment, and 5. incentives to encourage organizational compliance programs to deter misconduct

question

Describe: Federal Sentencing Guidelines For Organizations (FSGO)

answer

• an incentive for organizations to develop and implement programs designed to foster ethical and legal compliance (1991) • developed by the U.S. Sentencing Commission • apply to all felonies and class A misdemeanors committed by employees in association with their work

question

T/F: Organizations that have demonstrated due diligence in developing effective compliance programs that discourage courage unethical and illegal conduct may be subject to reduced organizational penalties if an employee commits a crime.

answer

True

question

List the seven steps of Due Diligence.

answer

1. A firm must develop and disseminate a code of conduct 2. High-ranking personnel must have oversight over the program. 3. No one with a known propensity to engage in misconduct should be put in a position of authority. 4. A communications system for disseminating standards and procedures 5. Organizational communications should include a way for employees to report misconduct 6. If misconduct is detected, then the firm must take appropriate and fair disciplinary action. 7. After misconduct has been discovered, the organization must take steps to prevent similar offenses in the future.

question

T/F: Core practices move the emphasis from a focus on individuals' moral capability to developing structurally sound organization core practices and developing structural integrity for both financial performance and non-financial performance.

answer

True

question

List the four benefits of Philanthropic Contributions by a business.

answer

• improves the quality of life and helps make communities places where people want to do business, raise families, and enjoy life. • reduces government involvement by providing assistance to stakeholders. • develops employee leadership skills. • helps create an ethical culture and the values that can act as a buffer to organizational misconduct.

question

Define: Strategic Philanthropy

answer

the synergistic and mutually beneficial use of an organization's core competencies and resources to deal with key stakeholders so as to bring about organizational and societal benefits.

question

T/F: Voluntary practices include documented best practices.

answer

False (Core practices are documented best practices.)

question

T/F: The primary method for resolving business ethics disputes is through the criminal court system.

answer

False (Lawsuits and civil litigation are the primary way in which business ethics disputes are resolved.)

question

T/F: The FSGO provides an incentive for organizations to conscientiously develop and implement ethics programs.

answer

True (Well-designed ethics and compliance programs can minimize legal liability when organizational misconduct is detected.)

question

T/F: The Sarbanes-Oxley Act encourages CEOs and CFOs to report their financial statements accurately.

answer

False (The Sarbanes-Oxley Act requires CEOs and CFOs to accurately report their financial statements to a federal oversight committee; they must sign the document and are held personally liable for any inaccuracies.)

question

T/F: Strategic philanthropy represents a new direction in corporate giving that maximizes the benefit to societal or community needs and relates to business objectives.

answer

True (Strategic philanthropy helps both society and the organization.)

question

Multiple Choice: In analyzing a situation to determine how to act ethically, a business manager should: A. gather background information by either talking firsthand with the people involved or by talking to those who gained information informally through the company "grapevine." B. narrowly focus on a single issue. C. determine whether an alternative is "just." D. All of the answers are correct.

answer

C

question

Multiple Choice: Zeno, Inc. is considering relocating its manufacturing facility from Illinois to Mexico City. The stakeholders in this decision might include: A. Zeno's shareholders. B. customers. C. the Illinois community in which Zeno operates. D. All of the above.

answer

D

question

Multiple Choice: Why should ethics be a concern to business? A. Society as a whole benefits from ethical behavior. B. People feel better when they behave ethically. C. Unethical behavior can be very costly. D. All of the above.

answer

D

question

Multiple Choice: Why do many major corporations actively encourage ethical behavior? A. Unethical behavior always damages a business. B. Unethical behavior can quickly destroy a business. C. Unethical acts are always illegal. D. All of the above are reasons that corporations actively encourage ethical behavior.

answer

B

LWC1/EST1: Ethics Chapters 1-4 Ethical Issues In Business – Flashcards

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