Business Ethics Exam Notes
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Questions and Answers

What is required for whistle-blowing to take place?

The individual must have adequate knowledge of wrongdoing that could damage society.

What characterizes a centralized organization?

  • Coordination and control are usually informal.
  • Decision-making authority is delegated to lower levels.
  • Decision-making authority is concentrated in the hands of top-level managers. (correct)
  • Flexibility and quick reaction to changes.

    • Decentralized organizations have a high number of formal rules.

    False

    What are the two types of groups mentioned in the document?

    <p>Formal group and informal group.</p> Signup and view all the answers

    What is a major component of an ethics program?

    <p>Implementing a training program.</p> Signup and view all the answers

    Which of the following is true about codes of conduct?

    <p>They describe what an organization expects of its employees.</p> Signup and view all the answers

    What is an ethics audit?

    <p>A systematic evaluation of an organization's ethics program and performance.</p> Signup and view all the answers

    A values orientation in ethics programs strives to develop shared ______.

    <p>values</p> Signup and view all the answers

    Ethics programs only focus on compliance with regulations.

    <p>False</p> Signup and view all the answers

    What can ethics programs help avoid?

    <p>Legal problems</p> Signup and view all the answers

    What do ethics officers provide in an organization?

    <p>Necessary oversight.</p> Signup and view all the answers

    What does ethics mean to you?

    <p>Integrity, principles, moral, honesty, right, fairness, responsibility, and more</p> Signup and view all the answers

    Why is ethics important in business?

    <p>Ethics guides individuals to tell the truth, keep promises, and help others to make positive decisions.</p> Signup and view all the answers

    Can you think of an example of a time a business engaged in unethical behavior?

    <p>Gossiping about colleagues, taking sick leave while being well, time-sheet manipulation, handling personal business on work time.</p> Signup and view all the answers

    Morals represent a person's personal philosophies about right and wrong.

    <p>True</p> Signup and view all the answers

    What is business ethics?

    <p>Comprises organizational principles, values, and norms that guide individual and group behavior in business.</p> Signup and view all the answers

    What are the primary reasons for studying business ethics?

    <p>To identify ethical issues, recognize approaches for resolving them, cope with conflicts between personal and organizational values.</p> Signup and view all the answers

    Which of the following is a factor influencing ethical culture in an organization? (Select all that apply)

    <p>Top management's leadership</p> Signup and view all the answers

    What is the stakeholder model of corporate governance?

    <p>A broader view of business purpose that considers stakeholder welfare alongside corporate needs.</p> Signup and view all the answers

    The demand for ________ investing is increasing.

    <p>socially responsible</p> Signup and view all the answers

    Ethical businesses are always the most profitable.

    <p>False</p> Signup and view all the answers

    Stakeholders are those who have a __________ or claim in some aspect of a company's products or operations.

    <p>stake</p> Signup and view all the answers

    All stakeholders engage directly in transactions with a company.

    <p>False</p> Signup and view all the answers

    What type of stakeholders are employees, customers, and shareholders considered?

    <p>Primary stakeholders</p> Signup and view all the answers

    What is corporate governance?

    <p>The development of formal systems of accountability, oversight, and control within a corporation.</p> Signup and view all the answers

    What is one of the four levels of social responsibility?

    <p>Economic</p> Signup and view all the answers

    What is moral philosophy?

    <p>The specific principles or values people use to decide what is right and wrong.</p> Signup and view all the answers

    What is the responsibility of board members concerning the firm's resources?

    <p>Assume legal responsibility for the firm's resources and decisions.</p> Signup and view all the answers

    What is executive compensation?

    <p>How executives are compensated for their leadership, organizational service, and performance.</p> Signup and view all the answers

    Which statement describes a caring culture?

    <p>High concern for people but minimal concern for performance issues.</p> Signup and view all the answers

    Obedience to authority is a reason employees resolve business ethics issues by simply following directives.

    <p>True</p> Signup and view all the answers

    List the three fundamental elements that motivate people to be fair.

    <p>Equality, reciprocity, and optimization.</p> Signup and view all the answers

    Ethical dilemmas have a right or ethical choice.

    <p>False</p> Signup and view all the answers

    What is an ethical decision-making model intended for?

    <p>To provide insights about ethical decision making in businesses.</p> Signup and view all the answers

    Which moral philosophy focuses on producing the greatest good for the greatest number?

    <p>Utilitarianism</p> Signup and view all the answers

    What is considered a conflict of interest?

    <p>When an individual must choose between competing interests.</p> Signup and view all the answers

    What does discrimination refer to in a business context?

    <p>Prejudices based on race, color, religion, sex, marital status, age, national origin, or veteran status.</p> Signup and view all the answers

    What aspect does distributive justice evaluate?

    <p>The outcomes or results of a business relationship.</p> Signup and view all the answers

    Which agency protects against workplace discrimination in the U.S.?

    <p>Equal Employment Opportunity Commission (EEOC)</p> Signup and view all the answers

    A culture that emphasizes the importance of ethics can reduce __________.

    <p>misconduct</p> Signup and view all the answers

    Lying can be both commission and omission.

    <p>True</p> Signup and view all the answers

    What is the role of top-level support in ethical decision making?

    <p>It helps employees engage in their personal approaches to ethical decision making.</p> Signup and view all the answers

    What is the Age Discrimination in Employment Act?

    <p>It outlaws against hiring people of 40 years or older.</p> Signup and view all the answers

    Which is true about compliance culture?

    <p>It uses laws and regulatory rules to create codes.</p> Signup and view all the answers

    What is defined as abusive or intimidating behavior in the workplace?

    <p>Physical threats, insults, and harassment</p> Signup and view all the answers

    What does the term whistle-blowing refer to?

    <p>Exposing an employer's wrongdoing to outsiders.</p> Signup and view all the answers

    What is instrumental concern in ethics?

    <p>Focus on positive outcomes, such as firm profitability.</p> Signup and view all the answers

    What does insider trading refer to?

    <p>The buying or selling of stocks by insiders who possess information that is not yet public.</p> Signup and view all the answers

    Study Notes

    Chapter 1: The Importance of Business Ethics

    • Ethics encompasses integrity, fairness, responsibility, and moral judgment.
    • Business ethics influences daily decisions, guiding behavior and establishing a framework for just actions.
    • Unethical behaviors include gossiping, dishonest sick leaves, and manipulation of work hours.
    • Morals refer to personal philosophies, while business ethics is shaped by organizational values and legal norms.
    • Ethics impacts workplace integrity, highlighting the pressure to compromise standards and retaliation for reporting misconduct.
    • Observed misconduct statistics in the U.S. workforce reveal significant concerns about workplace ethics.
    • Ethical dilemmas can arise from conflicts between personal morals and organizational values.

    Chapter 2: Stakeholder Relationships, Social Responsibility, and Corporate Governance

    • Stakeholders are individuals or groups with a vested interest in a company's operations, including customers, employees, and communities.
    • Ethical guidelines for stakeholders can be normative (ideal treatment), descriptive (actual firm behavior), or instrumental (consequences of behavior).
    • Primary stakeholders are essential for a firm's survival; secondary stakeholders may influence indirectly.
    • Stakeholder orientation measures an organization's understanding and response to stakeholder demands.
    • Social responsibility balances maximizing positive impacts and minimizing negatives on stakeholders, operating at economic, legal, ethical, and philanthropic levels.
    • Corporate citizenship involves fulfilling responsibilities across all stakeholder-related dimensions.
    • Reputation is a valuable corporate asset tied to stakeholder perceptions and trust.
    • The stakeholder model enhances accountability and aligns corporate governance with stakeholder interests.

    Benefits of Business Ethics

    • Ethical practices lead to enhanced employee commitment and lower turnover rates.
    • Companies perceived as ethical generate higher customer satisfaction and trust.
    • Ethical firms can expect better profits, as ethical conduct intertwines with effective performance in competitive markets.

    Issues in Social Responsibility

    • Social responsibility addresses stakeholder needs and fosters long-term relationships for mutual benefit.
    • Key contemporary ethical issues include data privacy, consumer protection, and sustainable practices.
    • Corporate governance structures create accountability, oversight, and control mechanisms to prevent unethical decisions.

    The Role of Boards of Directors

    • Boards of directors must balance stakeholder interests, ensuring ethical culture and compliance within organizations.
    • Accountability for corporate governance has intensified, demanding transparency and diverse perspectives among board members.
    • Executive compensation must align with company performance, with stakeholders favoring equitable pay practices.

    Implementing a Stakeholder Perspective

    • Assessing corporate culture involves identifying values and behaviors affecting social responsibility.
    • Recognizing stakeholder needs is essential for effective communication and responsiveness.
    • Evaluating the urgency of stakeholder issues is reliant on their power and legitimacy.

    Conclusion

    • Business ethics serves as a critical element in decision-making, fostering integrity and responsible behavior in organizational contexts.
    • A strategic approach to stakeholder engagement and corporate governance will promote ethical conduct and business success.### Identifying Resources and Determining Urgency
    • Actions assessed based on required financial and organizational investments.
    • Urgency dictated by significance of the challenge and stakeholder pressure.

    Gaining Stakeholder Feedback

    • Satisfaction and reputation surveys gauge general assessments of a firm.
    • Analysis of stakeholder-generated media provides insights into firm contributions.
    • Formal research methods include focus groups, surveys, and observations.

    Recognizing an Ethical Issue

    • Ethical awareness crucial for identifying ethical components in situations.
    • Dilemmas present negative consequences for all alternatives.
    • Collusion involves secret agreements for fraudulent purposes.

    Foundational Values for Identifying Ethical Issues

    • Integrity: Essential virtue indicating sound and balanced corporate culture.
    • Honesty: Refers to truthfulness; business relationships require clarity in rules.
    • Fairness: Encompasses justice, equity, and equality through three motivational elements:
      • Equality: Fair distribution of resources.
      • Reciprocity: Mutual exchange in relationships.
      • Optimization: Balancing equity with efficiency.

    Emerging Ethical Issues and Dilemmas in Business

    • Ethical Issues: Situations requiring evaluation of right vs. wrong actions.
    • Ethical Dilemmas: No clear right choice exists; only less harmful alternatives.
    • Misuse of company resources, including time theft and personal use of work resources, causes significant losses.
    • Abusive behavior includes verbal and physical threats creating hostile work environments.
    • Workplace bullying lacks legal protection in the U.S., leading to debates on potential laws to protect employees.

    Lying and Conflicts of Interest

    • Lying: Can be commission (intentional deception) or omission (withholding critical information).
    • Conflicts of Interest: Arise when personal interests conflict with professional obligations.

    Bribery and Corporate Intelligence

    • Bribery: Offering something to gain advantage; classified into active and passive forms.
    • Corporate Intelligence: Involves collecting information about various market factors for strategic decisions.

    Discrimination and Harassment

    • Discrimination: Illegal prejudices based on numerous factors, including race and gender.
    • Sexual Harassment: Includes unwanted behaviors creating a hostile work environment.
    • Fraud: Involves deceptive practices harming others, can be accounting or marketing fraud.

    Financial Misconduct and Insider Trading

    • Financial misconduct played a role in the Great Recession, often linked to subprime lending.
    • Insider Trading: Illegal practice of trading stocks based on non-public information; legal if disclosed to the SEC.

    Challenge of Determining Ethical Issues

    • Stakeholder concerns often highlight ethical problems in business.
    • Ethical issues evolve with changing societal values; crisis management requires prompt responses.

    Factors Affecting Ethical Decision Making

    • Influenced by organizational culture, climate, significant others, power dynamics, and opportunities.

    Ethical Issue Intensity and Individual Factors

    • Ethical issue intensity underscores the importance assigned to decisions by individuals and groups.
    • Individual factors impacting decisions include gender, education, nationality, age, and locus of control.

    Organizational Factors

    • Corporate Culture: Embodies shared values and norms related to decision-making.
    • Ethical Culture: Defined by acceptable behaviors and supported by top management and organizational policies.

    Opportunity and Ethical Behavior

    • Opportunity shapes ethical or unethical behaviors based on organizational conditions.
    • The immediate context of work impacts ethical decisions and oversight.

    Ethical Decision-Making Model

    • Provides insights into the processes behind ethical decision-making, distinguishing issues from dilemmas.
    • Recognizes the role of individual factors in shaping ethical decision-making behavior.

    Normative Considerations in Ethical Decision Making

    • Normative approaches dictate ideal conduct within organizations.
    • Institutional influences help form values and norms impacting ethical behavior.

    Understanding Ethical Decision Making

    • Top management support plays a vital role in promoting ethical behavior among employees.
    • Knowledge of ethical decision-making enhances overall decision quality and effectiveness.### Moral Philosophy vs. Business Ethics
    • Moral philosophy involves individual principles and values to determine right and wrong.
    • Business ethics pertains to group decisions and actions within organizational contexts.
    • Moral philosophies often defend economic systems like capitalism.

    Definitions and Key Theories

    • Moral Philosophy: Principles guiding personal judgments about right and wrong.
    • Economic Value Orientation: Ethical actions are determined by their economic outcomes.
    • Idealism: Emphasizes mental constructs and ideals in moral decision-making.
    • Realism: Belief that self-interest guides individual actions.

    Major Moral Philosophies

    • Teleology: Actions deemed right if they yield desired outcomes (e.g., pleasure or utility).

      • Egoism: Focus on self-interest, varying from wealth to personal satisfaction.
      • Utilitarianism: Pursuing the greatest good for the greatest number of people.

    • Deontology: Focus on equal respect for all individuals, emphasizing individual rights over outcomes.

    • Relativist Perspective: Ethical definitions are based on subjective experiences; highlights culture-based differences in moral outlook.

      • Descriptive Relativism: Observations of diverse cultural ethics.
      • Meta-ethical Relativism: Individual perspectives shape ethical disputes.
      • Normative Relativism: All opinions are equally valid.

    • Virtue Ethics: Ethical actions are connected to individual character and community roles.

    Justice in Ethical Framework

    • Justice: Fair treatment and reward according to ethical standards.
      • Distributive Justice: Evaluates fairness in outcomes.
      • Procedural Justice: Focuses on processes leading to outcomes.
      • Interactional Justice: Considers treatment within organizational relationships.

    Ethical Decision-Making Influences

    • Corporate culture influences ethical decision-making processes.
    • Employees may face ethical dilemmas due to conflicting values between personal beliefs and corporate objectives.
    • External factors, such as management's tone, affect ethical climate.

    Corporate Culture Concepts

    • Organizational Culture: Shared values and norms that shape employee behavior.
    • Corporate Culture: Beliefs driving management practices within a company.
    • Ethical culture promotes integrity and compliance among employees.

    Types of Ethical Culture

    • Apathetic Culture: Low concern for people and performance.
    • Caring Culture: High concern for people, low emphasis on performance.
    • Exacting Culture: High focus on performance with minimal people's concern.
    • Integrative Culture: Balances high concern for both people and performance.

    Compliance vs. Values-Based Programs

    • Compliance Culture: Focuses on adherence to laws and regulations; suitable for short-term risk management.
    • Values-Based Culture: Centers on shared company values, promoting ethical conduct and decision-making.

    Whistle-Blowing

    • Whistle-blowing involves exposing wrongdoing to external parties; can be internal or external.
    • Legal protections exist for whistle-blowers under laws like SOX and the Dodd–Frank Act.

    Organizational Structure and Decision-Making

    • Centralized Organizations: Decision-making is limited to top management; suited for routine processes.
    • Decentralized Organizations: Allows broader decision-making across all levels; promotes flexibility and quicker responses.

    Importance of Ethics Programs

    • Effective ethics programs create awareness of legal and ethical challenges.
    • Ethics programs are crucial for maintaining public trust and guiding corporate behavior.
    • Organizations should monitor ethical standards and encourage employee engagement for ethical practices.

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    Business Ethics Exam Notes PDF

    Description

    Prepare for your Business Ethics exam with these comprehensive notes covering multiple-choice questions from all chapters and detailed guidelines for essay responses. Focused study areas include key concepts from Chapter 2 on ethical procedures, Chapter 3 on ethical issues, and comparisons in Chapter 6 between teams and groups.

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