Principles of Management Chapter 3: Ethics

Flashcard maker : Lily Taylor
Sustainable growth
an economic growth and development that meets present needs without harming the needs of future generations.
Compliance-based ethics programs
company mechanisms typically designed by corporate counsel to prevent, detect and punish legal violations.
Unconscious biases
a bias that people favor themselves and their group.
Moral Awareness
having realized an issue has ethical implicaitons
Order of levels in the pyramid of global corporate social responsibility from bottom to top
Unethical Behavior
behavior that is not obvious and is not limited to government fines and penalties.
Preconventional Stage
Classification under the Kohlberg Model of Cognitive moral development that suggests that people made decisions based on concrete rewards and punishments and immediate self interest.
Economic Responsibility
a business responsibility that includes satisfying obligations to its investors
an ethical behavior based on the opinions and behaviors of relevant other people.
ethical system defining acceptable behavior as that which maximizes consequences for the individual.
Caux principles
ethical principles established by the international executives based in Caux, Switzerland in collaboration with business leaders from Japan, Europe and the US.
An ethical system stating that the greatest good for the greatest number should be the overriding concern of decision makers.
ethical issue
situation problem or opportunity in which and individual must choose among several actions that must be evaluated as morally right or wrong.
business ethics
the moral principles and standards that guide behavior in the world of business
the ethical system stating that all people should uphold certain fundamental values that society needs to function. rules against murder, deceit, torture and oppression
moral philosophy
the principles rules and values use in deciding what is right or wrong
virtue ethics
perspective that what is moral comes from what a mature person with “good” moral character would deem right
integrity-based ethics programs
company mechanisms designed to instill in people a personal responsibility for ethical behavior.
transcendent education
an education with five higher goals that balance self-interest with responsibility to others
philanthropic responsibilities
additional behaviors and activities that society finds desirable and that the vales of the business support
Ecocentric Management
Its goal is the creation of sustainable economic development and improvement of quality of life worldwide for all organizational stakeholders
Life-Cycle analysis
the process of analyzing the process of a product from the cradle to the grave
Principles, rules, and values people use in deciding what is right or wrong make up a/an ______________.
Moral philosophy
Julia is self-centered and only concerned about how she can get ahead in her career. She is functioning under the ethical system called _____________.
In considering raises, your boss is focused on providing the biggest pay increases for the greatest number of his staff. He is operating under a/an ______________ philosophy.
In response to such corporate scandals as Enron and WorldCom, Congress passed the ______________ to improve investor confidence.
Sarbanes-Oxley Act
An organization’s ______________ is the processes by which decisions are evaluated and made on the basis of right and wrong.
ethical climate
Corporate ethics programs range from ______________, designed by corporate lawyers to prevent, detect, and punish legal violations, to ______________, which are designed to instill a personal responsibility for ethical behavior.
compliance based integrity based
Making ethical decisions requires three things: ______________, ______________, and ______________.
moral awareness, moral judgement and moral character
The Level-3 (worst) costs of unethical behavior related to customers are _________ and _________.
customer defections and loss of reputation
Giovanni has repeatedly brought a serious ethical problem to his manager’s attention but has been ignored. He decides that his only course of action is to notify authorities of the wrongdoing; this is called ______________.
The obligation toward society assumed by business is called ______________.
corporate social responsibility
Legal responsibilities are concerned with ______________, while ethical responsibilities are focused on meeting ______________.
obeying laws social expectations
Empathy, generativity, mutuality, civil aspiration, and intolerance of ineffective humanity are the five higher goals that characterize a/an ______________.
transcendent education
General Electric’s “ecomagination” program was developed out of concern for the ______________.
natural environment
Acid rain is an example of ______________.
industrial pollutions
_____________ has the goal of creating sustainable economic development and improving the quality of life worldwide for all organizational stakeholders.
ecocentric management
Josh is trying to prepare a plan for his organization that allows it to grow in the present without harming future generations. He is concerned with ______________.
sustainable growth
Analyzing all inputs and outputs, through a “cradle-to-grave” life of a product, to determine its environmental impact is called ______________.
life cycle analysis
Conventional Stage
Classification under the Kohlberg Model of Cognitive moral development that suggests that people conform to the expectations of ethical behavior held by groups or institutions such as society, family or peers
Principled Stage
Classification under the Kohlberg Model of Cognitive moral development that suggests that people see beyond authority, laws and norms and follow their self-chosen ethical principles
3 stages of Classification under the Kohlberg Model of Cognitive Moral Development
1. Preconventional
2. Conventional
3. Principled
5 major ethical systems
1. Universalism
2. Egoism
4. Relativism
5. Virtue ethics
How can companies influence their ethics environments?
• Organizations can evaluate their ethical climate, the processes by
which decisions are made on the basis of right and wrong.
• They can look for danger signs such as excessive emphasis on
short-term over long-term goals, quick-fix solutions, a focus solely
on financial costs, or a concern only for legalities or public relations.
• They can develop written ethics codes and standards to guide
Outline a process for making ethical decisions.
• Moral awareness is the realization that an issue has ethical
• Moral judgment involves knowing what actions are morally
• Moral character is the strength and persistence to act according to
your ethics, despite challenges.
Ethical Leader
One who is both a moral person and a moral manager influencing others to behave ethically
Pyramid of Philanthropic Responsibility
Social Dimensions of Competitive Context
Value Chain Social Issues
Generic Social Issues
Generic Social Issues
Social Issues that are not significantly affected by a company’s operations nor materially affect it’s long term competitiveness
Example: Reading in classrooms, sponsoring little league teams, a factory plants trees .
Value Chain Social Issues
Social issues that are significantly affected by a company’s activities in the ordinary course of business
Example: Starbucks Shade Grown Beans and Organic Beans, and Chipotle and Migrant Workers
Social Dimensions of Competitive Context
Social issues in the external environment that significantly affect the underlining drivers of a company’s competitiveness in the locations where it operates. Example: New Belgium Brewery
Moral Manager
someone who influences others to behave ethically
Transcendent Education
An education with five higher goals that balance self-interest with responsibility to others.

……an education that teaches students to leave a legacy that extends beyond the bottom line

Goals of Transcendent Education
Empathy – feeling your decisions as potential victims might feel them, to gain wisdom
Generativity – learning how to give as well as take, to others in the present as well as take, to others in the present as well as to future generations.
Mutuality – viewing success not merely as personal gain, but a common victory
Civil aspiration – thinking not just in terms of “don’ts” (lie, cheat, steal, kill), but also in terms of positive contributions
Intolerance of ineffective humanity – speaking out against unethical actions
Doing Well by Doing Good
Companies can maximize profits as well as act as good corporate citizens.
Corporate social responsibility can be used as a competitive advantage.
The effects of corporate social responsibility on the bottom line depends on the corporate strategy
Depends on whether or not activities are inline with corporate strategies.
An act that established strict accounting and reporting rules to make senior managers more accountable and to improve and maintain investor confidence.
Requires that organizations
1.Have more independent board directors, not just company insiders
2. Adhere strictly to accounting rules
3. Have senior managers personally sign off on financial results
Downsides of Sarbanes-Oxley
Distracts from real work

Makes executives more risk averse

Costly time and money expenditures for compliance

Writing Effective Ethics Codes
Involve those who have to live with the code in the development of the code

Focus on real-life situations that employees can relate to

Keep it short and simple, so it is easy to understand and remember

Write about values and shared beliefs that are important and that people can really believe in

Set the tone at the top, having executives talk about and live up to the statement

Evaluate your Ethical duties
Would you be proud to see the action widely reported in newspapers?
Would it build a sense of community among those involved?
Would it generate the greatest social good?
Would you be willing to see others take the same action when you might be the victim?
Does it harm the “least among us”?
Does it interfere with the right of all others to develop their skills to the fullest?
Ethical Dilemmas
CEO pay: and Forbes Top 100 for 2012
Commercialism in schools
Religion at work: Electrolux
Wages : Costco
Global Corporate Social Responsibility
Economic responsibility – to produce goods and services that society wants at a price that perpetuates the business and satisfies its obligations to investors.
Legal responsibility – to obey local, state, federal, and relevant international laws.
Ethical responsibility – to meet other societal expectations, not written as law.
Philanthropic responsibility – to behave and act in ways that society finds desirable and valuable.
Danger signs of unethical behavior
Excessive emphasis on short-term revenues over longer-term considerations

Failure to establish a written code of ethics

Desire for simple, “quick fix” solutions to ethical problems

Unwillingness to take an ethical stand that may impose financial costs

Consideration of ethics solely as a legal issue or a public relations tool

Lack of clear procedures for handling ethical problems

Responsiveness to the demands of shareholders at the expense of other constituencies

3 ways sustainable growth can be applied
1. As a framework for organizations to use in communicating to all stakeholders
2. As a planning and strategy guide
3. As a tool for evaluating and improving the ability to compete
What are the reasons for businesses’ growing interest in the natural environment?
Philosophical / Ethical reasoning
Satisfy consumer demand
React to a competitors’s actions
Meet requests from customers or suppliers,
Comply with guidelines
Create competitive advantages
1 of 2 ideals underpinning Caux Principles. Means living/working together for common good, allowing cooperation and mutual prosperity to coexists with healthy and fair competition
Human dignity
2nd of 2 ideals underpinning Caux Principles. It concerns the value of each person as an end, not a means, to fulfillment of others’ purposes

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