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?

It establishes stringent accounting standards and reporting practices Signup and view all the answers

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

Patagonia Signup and view all the answers

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

Denmark Signup and view all the answers

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

Foreign Corrupt Practices Act (FCPA) Signup and view all the answers

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

Disclosure of income tax returns Signup and view all the answers

What is one key global issue concerning workplace ethics mentioned?

Working Conditions and Human Rights Signup and view all the answers

Which of the following best defines diversity in the workplace?

Variety of social viewpoints and identities Signup and view all the answers

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

Terms of Engagement compliance Signup and view all the answers

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

Preventing the bribery of foreign officials Signup and view all the answers

What does rights theory assert about human beings?

Every human being has rights that must be protected. Signup and view all the answers

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

Cultural relativism Signup and view all the answers

What defines a code of ethics in a business context?

A formal statement of ethical values and expected conduct Signup and view all the answers

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

Cooperation within an egalitarian economic system Signup and view all the answers

What are the principal sources of unethical behavior in businesses?

Moral integrity of individuals and managerial policies Signup and view all the answers

How did Milton Friedman view a company's responsibility?

To maximize profits solely for stakeholders Signup and view all the answers

What is a key characteristic of competitive advantage in business?

It is an attribute that is difficult to imitate. Signup and view all the answers

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

Incorporating social objectives in business goals Signup and view all the answers

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

Higher employee retention and loyalty. Signup and view all the answers

What characteristic is essential for a good global ethics code?

Built-in flexibility for local managerial discretion Signup and view all the answers

Which of the following describes utilitarianism in ethical theory?

It emphasizes the importance of happiness and good outcomes. Signup and view all the answers

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

Enhanced brand loyalty and differentiation. Signup and view all the answers

Why is trustworthiness considered important in competitive multinational companies?

It creates a foundation for ethical behavior. Signup and view all the answers

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

To maximize short-term financial gains only. Signup and view all the answers

How does ethical behavior align with social responsibility?

Ethical behavior supports the broader goals of social responsibility. Signup and view all the answers

How can businesses achieve a sustainable competitive advantage?

By prioritizing ethical conduct and social responsibility. Signup and view all the answers

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

The interconnected relationships between a business and all parties affected by its activities. Signup and view all the answers

Which statement correctly describes benefit corporations?

They can legally pursue stakeholder impacts alongside earning profits. Signup and view all the answers

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

Permitting only small payments to facilitate business transactions. Signup and view all the answers

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

The Sarbanes-Oxley Act Signup and view all the answers

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

The absence of regulatory frameworks. Signup and view all the answers

What does the rights theory fundamentally assert about governments?

Governments are obligated to protect human rights. Signup and view all the answers

Which of the following best describes cultural relativism?

The notion that morality is determined by a specific culture's perception. Signup and view all the answers

What central principle does the theory of justice prioritize?

Ensuring free citizens have equal basic rights. Signup and view all the answers

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

It includes built-in flexibility for local discretion. Signup and view all the answers

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

The moral integrity of individuals. Signup and view all the answers

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

To maximize profits for its owners. Signup and view all the answers

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

To incorporate social objectives into their goals. Signup and view all the answers

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

It should apply universally without recognition of local cultures. Signup and view all the answers

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

To foster brand loyalty and differentiation Signup and view all the answers

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

Increased employee turnover Signup and view all the answers

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

Trustworthiness and integrity Signup and view all the answers

What does utilitarianism emphasize in ethical decision-making?

Maximizing happiness and minimizing unhappiness Signup and view all the answers

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

Commitment to ethical practices Signup and view all the answers

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

Lower legal fees associated with compliance Signup and view all the answers

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

Ethical behavior often aligns with societal expectations for business. Signup and view all the answers

How can ethical conduct impact community relationships for companies?

It helps build enhanced goodwill within the community. Signup and view all the answers

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

Prohibition of the bribe itself and record-keeping requirements for publicly traded corporations Signup and view all the answers

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

By representing a broad range of social viewpoints, cultural perspectives, and identities Signup and view all the answers

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

The Lockheed bribery scandal in Japan Signup and view all the answers

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

Adapting monitoring techniques to various cultural contexts Signup and view all the answers

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

Venezuela Signup and view all the answers

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

They are often met with resistance from employees of partner companies Signup and view all the answers

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

Publicly traded corporations must maintain accurate records of transactions involving foreign officials Signup and view all the answers

What aspect of workplace diversity can lead to improved innovation?

Increased representation of various social perspectives Signup and view all the answers

Study Notes

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

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.

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.

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.