BUS 200 - Ethics in Business Practices
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Questions and Answers

What does stakeholder theory emphasize in a business context?

  • The independence of business from social obligations
  • Maximizing short-term profits for shareholders
  • Limiting the influence of external stakeholders in corporate decisions
  • The interconnected relationships between businesses and all parties with a stake (correct)

What distinguishes a benefit corporation from a traditional corporation?

  • It is solely focused on maximizing shareholder profits
  • It is legally required to prioritize stakeholder impacts alongside profits (correct)
  • It must meet stricter regulations on financial reporting
  • It is a non-profit organization by definition

Which of the following allows for small payments to facilitate a deal according to the Foreign Corrupt Practices Act?

  • Exclusive contracts with government officials
  • Large monetary incentives to officials
  • Facilitating payments to expedite a deal or transaction (correct)
  • Commission-based promotions for government agents

What is one of the primary roles of the Sarbanes-Oxley Act related to corporate governance?

<p>It establishes stringent accounting standards and reporting practices (A)</p> Signup and view all the answers

Which company is noted as part of the Certified B Corporation movement?

<p>Patagonia (C)</p> Signup and view all the answers

Which country is ranked as the least corrupt according to Transparency International?

<p>Denmark (A)</p> Signup and view all the answers

What legislation prohibits bribery of foreign officials in the U.S.?

<p>Foreign Corrupt Practices Act (FCPA) (C)</p> Signup and view all the answers

Which of the following is NOT a requirement of the Foreign Corrupt Practices Act?

<p>Disclosure of income tax returns (D)</p> Signup and view all the answers

What is one key global issue concerning workplace ethics mentioned?

<p>Working Conditions and Human Rights (D)</p> Signup and view all the answers

Which of the following best defines diversity in the workplace?

<p>Variety of social viewpoints and identities (D)</p> Signup and view all the answers

What issue did H&M face regarding its business practices?

<p>Terms of Engagement compliance (C)</p> Signup and view all the answers

What is a primary focus of the Foreign Corrupt Practices Act?

<p>Preventing the bribery of foreign officials (A)</p> Signup and view all the answers

What does rights theory assert about human beings?

<p>Every human being has rights that must be protected. (D)</p> Signup and view all the answers

Which ethical theory argues that the morality of an act is determined by cultural context?

<p>Cultural relativism (A)</p> Signup and view all the answers

What defines a code of ethics in a business context?

<p>A formal statement of ethical values and expected conduct (C)</p> Signup and view all the answers

According to the theory of justice, what is essential for a society?

<p>Cooperation within an egalitarian economic system (C)</p> Signup and view all the answers

What are the principal sources of unethical behavior in businesses?

<p>Moral integrity of individuals and managerial policies (C)</p> Signup and view all the answers

How did Milton Friedman view a company's responsibility?

<p>To maximize profits solely for stakeholders (A)</p> Signup and view all the answers

What is a key characteristic of competitive advantage in business?

<p>It is an attribute that is difficult to imitate. (B)</p> Signup and view all the answers

What does corporate social responsibility (CSR) advocate for in a company?

<p>Incorporating social objectives in business goals (A)</p> Signup and view all the answers

What is one of the primary benefits of adopting ethical behavior and social responsibility in business?

<p>Higher employee retention and loyalty. (A)</p> Signup and view all the answers

What characteristic is essential for a good global ethics code?

<p>Built-in flexibility for local managerial discretion (B)</p> Signup and view all the answers

Which of the following describes utilitarianism in ethical theory?

<p>It emphasizes the importance of happiness and good outcomes. (B)</p> Signup and view all the answers

What can be a consequence of a company's commitment to ethical conduct?

<p>Enhanced brand loyalty and differentiation. (A)</p> Signup and view all the answers

Why is trustworthiness considered important in competitive multinational companies?

<p>It creates a foundation for ethical behavior. (C)</p> Signup and view all the answers

Which of the following is NOT a reason why businesses should be ethically responsible?

<p>To maximize short-term financial gains only. (A)</p> Signup and view all the answers

How does ethical behavior align with social responsibility?

<p>Ethical behavior supports the broader goals of social responsibility. (A)</p> Signup and view all the answers

How can businesses achieve a sustainable competitive advantage?

<p>By prioritizing ethical conduct and social responsibility. (D)</p> Signup and view all the answers

What does stakeholder theory highlight about the relationships in a business context?

<p>The interconnected relationships between a business and all parties affected by its activities. (C)</p> Signup and view all the answers

Which statement correctly describes benefit corporations?

<p>They can legally pursue stakeholder impacts alongside earning profits. (C)</p> Signup and view all the answers

What is a requirement of the Foreign Corrupt Practices Act (FCPA)?

<p>Permitting only small payments to facilitate business transactions. (A)</p> Signup and view all the answers

Which act imposes stringent accounting standards and reporting practices for companies?

<p>The Sarbanes-Oxley Act (D)</p> Signup and view all the answers

What is a primary cause typically associated with corruption in global business?

<p>The absence of regulatory frameworks. (A)</p> Signup and view all the answers

What does the rights theory fundamentally assert about governments?

<p>Governments are obligated to protect human rights. (B)</p> Signup and view all the answers

Which of the following best describes cultural relativism?

<p>The notion that morality is determined by a specific culture's perception. (C)</p> Signup and view all the answers

What central principle does the theory of justice prioritize?

<p>Ensuring free citizens have equal basic rights. (C)</p> Signup and view all the answers

What is an essential characteristic of a well-constructed code of ethics?

<p>It includes built-in flexibility for local discretion. (B)</p> Signup and view all the answers

Which factor is considered a primary source of unethical behavior in businesses?

<p>The moral integrity of individuals. (C)</p> Signup and view all the answers

According to Milton Friedman, what is the main responsibility of a company?

<p>To maximize profits for its owners. (B)</p> Signup and view all the answers

What does corporate social responsibility (CSR) advocate for companies?

<p>To incorporate social objectives into their goals. (D)</p> Signup and view all the answers

What is a common misconception about the responsibilities of a corporate ethics code?

<p>It should apply universally without recognition of local cultures. (A)</p> Signup and view all the answers

What is the primary reason for multinational companies to prioritize ethical conduct beyond legal compliance?

<p>To foster brand loyalty and differentiation (B)</p> Signup and view all the answers

Which of the following is NOT a benefit of embracing ethical behavior and social responsibility in business?

<p>Increased employee turnover (C)</p> Signup and view all the answers

In the context of competitive advantage, what characteristic is essential for a firm to outperform its competitors?

<p>Trustworthiness and integrity (B)</p> Signup and view all the answers

What does utilitarianism emphasize in ethical decision-making?

<p>Maximizing happiness and minimizing unhappiness (C)</p> Signup and view all the answers

Which factor contributes to higher employee morale in companies that practice social responsibility?

<p>Commitment to ethical practices (A)</p> Signup and view all the answers

What is a common outcome of strong ethical behavior in a business?

<p>Lower legal fees associated with compliance (B)</p> Signup and view all the answers

Which of the following best describes the relationship between ethical behavior and societal expectations?

<p>Ethical behavior often aligns with societal expectations for business. (C)</p> Signup and view all the answers

How can ethical conduct impact community relationships for companies?

<p>It helps build enhanced goodwill within the community. (B)</p> Signup and view all the answers

What are the two key provisions included in the Foreign Corrupt Practices Act?

<p>Prohibition of the bribe itself and record-keeping requirements for publicly traded corporations (C)</p> Signup and view all the answers

How does diversity in the workplace enhance a firm's performance?

<p>By representing a broad range of social viewpoints, cultural perspectives, and identities (C)</p> Signup and view all the answers

What significant event led to the establishment of the Foreign Corrupt Practices Act?

<p>The Lockheed bribery scandal in Japan (C)</p> Signup and view all the answers

What is a common challenge companies face when monitoring employee behavior globally?

<p>Adapting monitoring techniques to various cultural contexts (D)</p> Signup and view all the answers

Which country is ranked as one of the most corrupt according to Transparency International?

<p>Venezuela (B)</p> Signup and view all the answers

Why might companies struggle to implement terms of engagement like those of Levi Strauss?

<p>They are often met with resistance from employees of partner companies (C)</p> Signup and view all the answers

What does the Foreign Corrupt Practices Act require in terms of record-keeping?

<p>Publicly traded corporations must maintain accurate records of transactions involving foreign officials (B)</p> Signup and view all the answers

What aspect of workplace diversity can lead to improved innovation?

<p>Increased representation of various social perspectives (D)</p> Signup and view all the answers

Flashcards

Stakeholder Theory

A view of business that focuses on the connections between a company and those who are affected by or affect it.

Stakeholders

All individuals or groups who are affected by or can affect a company's actions.

Benefit Corporation

A type of company legally required to consider the positive impact on stakeholders alongside profit.

FCPA

US law that prohibits bribery of foreign officials by US companies.

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Corruption (Global Business)

Dishonest or fraudulent behavior by those in positions of power in global business transactions.

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Competitive Advantage

A quality hard to copy that lets a company beat its rivals in the same industry.

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Ethical Behavior

Actions in line with moral principles or good conduct.

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Ethical Dilemma

A situation where there's no easy answer regarding good conduct.

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Utilitarianism

Ethical theory focused on maximizing happiness and minimizing unhappiness.

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Rights Theory

Ethics theory stating that humans have rights, and governments must protect them.

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Social Responsibility

Prioritizing ethical conduct and sustainable business practices over just legal compliance.

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Cultural Relativism

Ethics theory where morality depends on the culture's beliefs at the time.

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Brand Loyalty

Customers' preference and faithfulness towards a specific brand.

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Theory of Justice

Ethics theory emphasizing equal rights and cooperation for a fair society.

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Employee Retention

Maintaining current employees.

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Code of Ethics

Formal statement of ethical values and professional conduct.

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Trustworthiness

The quality of being reliable and truthful.

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Ethical Imperialism

Global ethics code with built-in flexibility for local managers.

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Moral Integrity

Individual's personal and ethical soundness.

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Corporate Social Responsibility (CSR)

Companies incorporating social objectives into their goals, positively impacting society.

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Maximize Profits

A company's responsibility, according to some, is solely to increase shareholder profits.

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Foreign Corrupt Practices Act (FCPA)

A US law that prohibits bribery of foreign officials to gain or maintain business.

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FCPA prohibition

FCPA prohibits offering, paying, promising, or authorizing payments to foreign officials to influence their official actions or gain an unfair advantage.

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FCPA record-keeping

Publicly traded corporations must maintain accurate records of financial transactions to prevent bribery.

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Working Conditions and Human Rights

Companies monitor their employees and business partners to ensure fair labor practices regarding working conditions and human rights.

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Levi Strauss’ “Terms of Engagement”

A corporate initiative to improve working conditions and address human rights concerns.

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Corporate Social Responsibility

Companies monitoring the actions of themselves and their business partners to ensure ethically responsible practices.

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Workplace Diversity

Having a wide variety of employee perspectives, backgrounds, experiences, and identities in a company.

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Corruption Ranking

Transparency International lists countries based on their levels of perceived corruption.

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Internal Stakeholders

Individuals or groups within a company who are directly involved in its operations, such as employees, managers, and owners.

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External Stakeholders

Individuals or groups outside of a company who are affected by or can influence its actions, such as customers, suppliers, and governments.

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Certified B Corporation

A company that meets rigorous standards of social and environmental performance, accountability, and transparency.

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What makes a multinational company competitive?

Competitive multinationals prioritize ethical conduct, social responsibility, and sustainable business practices beyond legal compliance.

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Why are ethics and social responsibility important?

They offer benefits like greater brand loyalty, higher employee retention, increased sales, enhanced community goodwill, and reduced risk of legal issues.

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Unethical Behavior Sources

The two main causes of unethical behavior are: (1) individual's moral integrity, and (2) the company's management structure or policies.

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Adam Smith's Perspective

Adam Smith believed that competitive markets are the most efficient way to allocate resources and maximize well-being for society.

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Milton Friedman's View

Milton Friedman argued that a company's primary responsibility is to maximize profits for its owners (shareholders).

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Transparency International

A non-governmental organization that measures and ranks countries based on their perceived level of corruption.

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What does Transparency International's Corruption Perceptions Index measure?

The Corruption Perceptions Index (CPI) ranks countries based on how corrupt their public sector is perceived to be.

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What are the two key provisions of the FCPA?

The FCPA prohibits bribery itself and requires public companies to maintain accurate records of their financial transactions.

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What is workplace diversity?

A company's workforce reflects a wide range of perspectives, backgrounds, experiences, and identities.

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Why is diversity in the workplace important?

Diversity in the workplace means different viewpoints and experiences are considered, leading to more innovative solutions and a better understanding of customers.

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What is Levi Strauss’ “Terms of Engagement”?

Levi Strauss's initiative to ensure ethical working conditions and respect for human rights in their supply chain.

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What is the impact of companies monitoring working conditions and human rights?

Companies monitoring their own employees and their business partners ensure fair labor practices and respect for human rights.

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Study Notes

BUS 200 - Ethics and Social Responsibility

  • This course covers ethics and social responsibility in business.
  • The course aims to provide students with knowledge and skills in this area.
  • It emphasizes a holistic approach, going beyond legal compliance.

Multinational Companies and Ethical Conduct

  • Leading global companies today prioritize ethical conduct, social responsibility, and sustainable practices.
  • Key elements include accountability and ethical decision-making.
  • Important moral aspects, including moral issues, are also addressed.

Importance of Competitive Advantage

  • Competitive advantage refers to a firm's ability to outperform its industry rivals.
  • This is achieved through several factors:
    • Difficult-to-imitate attributes
    • High trustworthiness
    • Strong integrity
    • Ethical behavior
    • A reputation for doing good

Ethical and Socially Responsible Conduct

  • Embedding ethical behavior and social responsibility provides a multitude of benefits. These include:
    • Improved brand loyalty and differentiation
    • Enhanced employee retention and morale
    • Higher sales and profit margins
    • Strengthened community goodwill
    • Reduced risk of legal challenges, protests, boycotts

People Wanting Businesses to Lead on Social Change

  • A significant percentage of people believe CEOs should speak out on societal challenges, even when the government isn't acting.
  • A large proportion also think businesses should intervene if the government fails to address social issues.
  • Consumers and employees alike believe CEOs should take the lead on social change initiatives
  • Specific examples of public expectations include:
    • CEOs speaking out on societal challenges.
    • Businesses stepping in when the government fails to address social issues.
    • Consumers using their power to change corporate practices.
    • CEOs taking responsibility for implementing social change.

Ethical Theories

  • Ethical behavior: Individual actions aligned with moral principles and good conduct.
  • Ethical dilemma: A moral problem that requires a decision.
  • Utilitarianism: Ethics guiding actions toward maximizing happiness and minimizing unhappiness.
  • Rights theory: All humans have rights, and governments are obligated to protect them.
  • Cultural relativism: Morality depends on cultural context and norms.
  • Theory of justice: Describes a society with equal rights and an egalitarian economic system.

Business Ethics: Codes of Ethics

  • A code of ethics is a formal statement defining ethical values and professional conduct expected within an organization.
  • Global codes of ethics often include built-in flexibility to allow for discretion by local management.

Sources of Unethical Behavior in Business

  • The moral character of individuals is a common source of unethical behavior.
  • Company policies and leadership play a significant role.
  • Leading by example is a vital key element in establishing ethical behavior at any level in the organization.

Corporate Social Responsibility (CSR)

  • CSR is the belief that companies should incorporate social objectives into their goals and contribute positively to society.
  • Various approaches to CSR exists ranging from Adam Smith's focus on efficient allocation of resources to maximize well-being to Milton Friedman's emphasis on maximizing profits for shareholders.

Corporate Social Responsibility: Pyramid of Social Responsibilities

  • Carroll's pyramid of CSR highlights the hierarchical importance of various responsibilities.
    • Economic Responsibilities: Required for survival (e.g., making profits).
    • Legal Responsibilities: Required by society (e.g., following laws).
    • Ethical Responsibilities: Expected by society (e.g., treating people fairly).
    • Philanthropic Responsibilities: Desirable, voluntary for the benefit of society e.g., charitable giving

Stakeholder Theory

  • Stakeholder theory focuses on the interconnected relationships between a business and all interested parties (stakeholders).
  • Stakeholders can include internal and external parties who are impacted by or can impact the organization.

Benefit Corporations

  • Benefit corporations are legally structured businesses that have the explicit goal of having stakeholders benefits aligned with profits.

Additional Key Global Issues

  • Bribery and Corruption: The Foreign Corrupt Practices Act (FCPA) prohibits bribery of foreign officials. This includes small payments to expedite transactions, which are permitted, but bribery that aims at making a deal happen is not. The Sarbanes-Oxley Act also focuses on stringent accounting and reporting practices for firms.
  • Working Conditions and Human Rights: Companies are increasingly evaluating their and their suppliers' workers' working conditions. Examples include Levi Strauss' "Terms of Engagement" and H&M's efforts.
  • Diversity, Equity, and Inclusion (DEI): Practices to promote diversity, equity, and inclusion in the workplace. DEI statements from companies such as Apple and McDonald's. Impact sourcing as a practice to include marginalized groups in the global workforce is presented.
  • Corruption Issues: Issues around bribery, as well as ethical considerations regarding what constitutes bribery. Specific global issues related to corruption and bribery are highlighted.
  • Corruption as global business issue: This includes asking relevant questions like: what corruption is in global business, the cause, who is responsible, and where is it a major problem.
  • Least and most corrupt countries: Data on least and most corrupt countries according to Transparency International are presented.

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Description

This quiz explores key concepts of ethics and social responsibility in business, focusing on multinational companies and competitive advantage. It highlights the importance of ethical conduct and its impact on corporate reputation. Students will learn about accountability, decision-making, and the benefits of socially responsible practices.

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