Business Ethics and Corporate Management

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Questions and Answers

What is a common opinion held by some CEOs?

Ethics is the only imperative for corporate management.

Increasing market capitalization is not important.

The end justifies the means. (correct)

Profit is the only yardstick of efficiency.

What is a consequence of a corporation behaving ethically?

Suppliers are not affected by ethical behavior.

Only customers are affected by ethical behavior.

Loyalty, quality, and productivity from employees increase. (correct)

Loyalty and quality from employees decrease.

What is an example of a company that has benefited from ethical practices?

WorldCom

Infosys (correct)

Tata Steel (correct)

Enron

What is an outcome of running a business ethically?

Increased profits and market capitalization. Signup and view all the answers

What happens when a corporation exercises care in meeting responsibilities to employees?

Employees become loyal, and quality and productivity increase. Signup and view all the answers

What is a characteristic of organizations that work on synergy and delegation?

Employees are given importance in organizational affairs. Signup and view all the answers

Why do employees behave ethically when treated ethically?

Because they feel a sense of ownership and sincerity. Signup and view all the answers

What is a consequence of applying ethics in business?

It makes good sense and is beneficial. Signup and view all the answers

What is corporate governance defined as by the Phoenix School of Management?

A set of policies and procedures used by directors in the conduct of a company's affairs. Signup and view all the answers

What is a critical aspect of corporate governance in a public company?

Filing accurate and timely reports with regulators Signup and view all the answers

Who bears a special responsibility for promoting integrity throughout an organization?

CEO and senior leadership of the finance department Signup and view all the answers

What is a key principle of corporate governance?

Protection of stakeholders' interests Signup and view all the answers

What is a characteristic of a well-governed company?

Presence of ethical practices Signup and view all the answers

What is a goal of corporate governance?

Protection of stakeholders' interests Signup and view all the answers

What does corporate governance involve?

An entire system with codes, values, rules, and structures Signup and view all the answers

Why is transparency important in corporate governance?

To protect stakeholders' interests Signup and view all the answers

What is the essence of ethics in a profession?

A moral content and code of conduct Signup and view all the answers

What is the consequence of not practicing basic principles of integrity in business?

Company can come to grief, even if it's successful Signup and view all the answers

What is the purpose of transparency in business operations?

To ensure accountability and protect stakeholders' interests Signup and view all the answers

What are business ethics related to?

Issues of what is right and wrong Signup and view all the answers

What is the relationship between values and ethics?

Values are to individuals, ethics are to business Signup and view all the answers

What is a value?

A conception of what an individual or group regards as desirable Signup and view all the answers

Where do individuals imbibe their personal values from?

From parents, teachers, and elders Signup and view all the answers

What is the consequence of having a benign attitude to welfare in an organization?

An industrialist may do more for workers than what the labor law stipulates Signup and view all the answers

What is a key distinction between ethics and religion?

Ethics applies to people of all religious affiliations Signup and view all the answers

What is the focus of business ethics?

Application of ethical principles of integrity and fairness, focusing on benefits to all stakeholders Signup and view all the answers

What is a key characteristic that business managers should possess?

Integrity, impartiality, and responsiveness to public interest Signup and view all the answers

What is a significant change in the business environment in recent times?

Globalization of business and increased competition Signup and view all the answers

What is a key factor that contributes to a business organization's success in the global market?

Strength of its human resource and goodwill of its stakeholders Signup and view all the answers

What is the emphasis of business ethics in today's world?

The business of business is ethical business Signup and view all the answers

What is the primary concern of good corporate governance?

Protecting the environment and serving all stakeholders Signup and view all the answers

What is the consequence of prioritizing shareholders' interests over environmental laws?

Environmental degradation and harm to local communities Signup and view all the answers

What is the most effective way to promote ethical conduct in corporate governance?

Voluntary adoption by company management Signup and view all the answers

What is the purpose of disclosing directors' interests in contracts?

To increase transparency and accountability Signup and view all the answers

What is the limitation of statutory provisions in ensuring corporate governance?

They are often observed in letter, not in spirit Signup and view all the answers

What is the role of auditors in corporate governance?

To report on the financial management of the company to shareholders Signup and view all the answers

What is the consequence of weak regulatory frameworks in corporate governance?

Manipulation by unscrupulous individuals Signup and view all the answers

What is the primary responsibility of the board and top management in corporate governance?

To observe all provisions in letter and in spirit Signup and view all the answers

Study Notes

Constraints to Ethical Practices

Choosing an ethical alternative and benefiting from it may take time, which can be a constraint.
Some CEOs prioritize profit and market capitalization over ethics, believing that the end justifies the means.

Benefits of Ethical Practices

Companies that follow ethical practices can double their profits and show increased market capitalization.
Examples of successful companies that follow ethical practices include Tata Steel and Infosys in India.

Importance of Ethics in Business

Running a business ethically is good for sustaining business and makes sense.
Ethical behavior prompts other business associates to behave ethically as well.
Honesty, integrity, and transparency are the touchstones of business ethics.

Corporate Governance

Corporate governance refers to a set of policies and procedures that guide a company's affairs and relationships with stakeholders.
It involves codes, rules, and structures to direct and control business and non-business organizations.
Transparency, integrity, full disclosure of financial and non-financial information, and protection of stakeholders' interests are essential aspects of corporate governance.

Ethical Practices in Corporate Governance

Good corporate governance should consider all stakeholders, not just shareholders.
Corporate governance should come from within and not be imposed by regulators.
There should be statutory provisions for enforcing ethical conduct, but companies should also go beyond these rules to serve stakeholders.
Members of the board and top management should ensure that ethical practices are followed both in letter and in spirit.

Ethics and Business

Ethics involves systemizing, defending, and recommending concepts of right and wrong behavior.
Ethics is different from religion, law, cultural traits, and feelings, and is not a science.
Business ethics is the application of ethical principles of integrity and fairness, and concentrates on the benefits to all stakeholders.
Business managers should have integrity, impartiality, and responsiveness to public interest, accountability, and honesty.

Development of Business Ethics

Ethics was part of theological discussion before 1960.
Later, writers like Raymond Baumbart, Richard T. De George, and others contributed to the development of business ethics.
Academic pursuits, the Church, B-schools, and consumer movement also added to the development of business ethics.

Globalization and Business Ethics

In today's world, business is synonymous with ethical business.
With globalization, business organizations have to compete for a share in the global market on their own internal strength, particularly on the strength of their human resource, and on the good-will of their stakeholders.

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Description

This quiz assesses your understanding of business ethics and corporate management, including the importance of ethical practices and the potential constraints of adopting such practices.