Ethics and Compliance Principles

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Questions and Answers

AIDS prevention groups saw GSK's use of WTO regulation as acting at which level of social responsibility?

Economic

By providing anti-AIDS drugs at a fraction of their usual costs in Africa, GSK was acting at which level of social responsibility?

Discretionary

What kind of strategy did Coca-Cola use to respond to its social responsibility problems regarding water contamination in India?

Reactive strategy

To respond to an ethical question about their advertisement, the broker used a(n) ____ strategy.

Reactive Signup and view all the answers

Bayer AG implemented a(n) ____ strategy after being indicted for price-fixing.

Reactive Signup and view all the answers

The social responsiveness strategy that could be considered essentially a public relations approach is the ____ strategy.

Defensive Signup and view all the answers

A company implementing a(n) ____ strategy would choose to accept responsibility for a problem and do all that society expects to solve problems.

Accommodative Signup and view all the answers

A company implementing a(n) ____ strategy would demonstrate the greatest willingness to meet or exceed society's expectations.

Proactive Signup and view all the answers

Which of the following statements about ethics is true?

Ethics is the set of moral principles or values that defines right and wrong. Signup and view all the answers

The ____ determined that companies can be prosecuted and punished for the illegal or unethical actions of employees even if management didn't know about the unethical behavior.

U.S. Sentencing Commission Guidelines Signup and view all the answers

Which of the following organizations are covered by the U.S. Sentencing Commission Guidelines?

All organizations Signup and view all the answers

If a catalog retailer promised customers it would not sell their information and it did, the retailer would be guilty of invasion of privacy. Its sentence would be determined by ____.

The U.S. Sentencing Commission Guidelines Signup and view all the answers

The U.S. Sentencing Commission Guidelines impose smaller fines on companies that ____.

Have already established a specific type of compliance program. Signup and view all the answers

According to the U.S. Sentencing Commission Guidelines, what is one method used to determine the level of the offense?

Examining the loss incurred by the victims. Signup and view all the answers

What does it mean when the text says that the U.S. Sentencing Guidelines use a 'carrot and stick' approach?

The Guidelines offer lower fines to companies that take proactive steps. Signup and view all the answers

To create a compliance program that is acceptable under the U.S. Sentencing Guidelines, a company should ____.

Do all of these. Signup and view all the answers

When addressing issues of high ____, managers are more aware of the impact their decisions have on others.

Ethical intensity. Signup and view all the answers

What term describes the degree of concern people have about an ethical issue?

Ethical intensity. Signup and view all the answers

Ethical intensity depends on all of the following EXCEPT ____.

Social commitment Signup and view all the answers

Ethical intensity depends in part upon ____.

Temporal immediacy. Signup and view all the answers

What greater ethical intensity is associated with intentional theft and sale of defense secrets compared to pilferage?

Magnitude of influence. Signup and view all the answers

What produced strong ethical intensity regarding the closure of IAG's H. Freeman factory?

Temporal immediacy. Signup and view all the answers

Due to ____, the intentional pollution of a metropolitan water supply would have greater ethical intensity than insider trading.

All of these. Signup and view all the answers

What does ethical intensity signify?

It is strong when decisions have large, certain, immediate consequences. Signup and view all the answers

What caused a much greater magnitude of consequences than predicted for Shell Oil Company's plan?

Magnitude of consequences. Signup and view all the answers

What are the three stages of moral development identified by Kohlberg?

Pre-conventional level, conventional level, and post-conventional level. Signup and view all the answers

At which level of Kohlberg's stages of moral development is Doug operating?

Pre-conventional. Signup and view all the answers

According to Kohlberg's model, people at the ____ make decisions based on selfish reasons.

Pre-conventional level. Signup and view all the answers

According to Kohlberg's model, people at the ____ make decisions that conform to societal expectations.

Conventional level. Signup and view all the answers

According to Kohlberg's model, people at the ____ use internalized ethical principles.

Post-conventional level. Signup and view all the answers

To encourage more ethical decision making in an organization, managers should ____.

Do all of these. Signup and view all the answers

What is a written test that estimates employee honesty?

Overt integrity test. Signup and view all the answers

Managers can use integrity tests to _____.

Select and hire ethical employees. Signup and view all the answers

What type of integrity test indirectly estimates employee honesty?

Personality-based. Signup and view all the answers

What is a code of ethics?

A set of principles for employees to follow. Signup and view all the answers

What should the Code of Ethics for members of the Society of American Foresters include?

Standards and procedures specific to the forestry industry. Signup and view all the answers

Which of the following is an objective of ethics training?

Achieve all of these Signup and view all the answers

Which of the following are important factors in the creation of an ethical business climate EXCEPT ____.

Official approval of the company's ethics code by government regulators Signup and view all the answers

What is the last step in the basic model of ethical decision making?

Act. Signup and view all the answers

After identifying the problem in the basic model of ethical decision making, what is the next step?

Identify the constituents. Signup and view all the answers

What role did the former Oracle vice president play in reporting unethical behavior?

Whistleblower. Signup and view all the answers

What problem is exemplified by operations vice president Jared Bowen's situation with Wal-Mart?

The severe consequences of being a whistleblower Signup and view all the answers

The basic model of ethical decision making ____.

Is not accurately described by any of these. Signup and view all the answers

What did Mark Graf become alarmed about in relation to safety standards?

Whistleblower. Signup and view all the answers

Why is it often difficult for an employee to assume the role of whistleblower?

Because the employee is often the one punished. Signup and view all the answers

Which of the following statements about whistleblowing is true?

It often has serious consequences for the whistleblower Signup and view all the answers

Historically, what does economic responsibility mean?

Making a profit by producing a product valued by society. Signup and view all the answers

What is social responsibility?

A business' obligation to pursue policies that benefit society. Signup and view all the answers

What decision did Kowalski's Markets make regarding a property in a lower-class community?

They had a social responsibility to provide a neighborhood grocery store. Signup and view all the answers

What did BP Amoco's CEO indicate about the company's commitment?

Social responsibility. Signup and view all the answers

What model would the indicted rubber chemical manufacturers likely use to justify their actions?

Shareholder model Signup and view all the answers

What does the shareholder model hold regarding social responsibility?

As long as a company operates legally, it should maximize profits Signup and view all the answers

According to Milton Friedman, what undermines market efficiency?

The time, money, and attention diverted to social causes. Signup and view all the answers

What are various persons or groups with a legitimate interest in a company's actions called?

Stakeholders. Signup and view all the answers

Which of the following is NOT a stakeholder group that an organization must satisfy?

The media Signup and view all the answers

In the context of Kowalski's Markets expansion, who is an example of a primary stakeholder group?

Customers in the Camden neighborhood. Signup and view all the answers

The two general categories of stakeholders are stakeholders and stakeholders.

Primary; secondary. Signup and view all the answers

What are primary stakeholders?

Groups on which the organization depends for long-term survival. Signup and view all the answers

When Coca-Cola was ordered to stop production due to pesticide concerns, the Indian government served as a(n)

Primary stakeholder. Signup and view all the answers

According to the stakeholder model, what is management’s most important responsibility?

Long-term survival. Signup and view all the answers

Which of the following is an example of a stakeholder group that an organization must satisfy?

All of these Signup and view all the answers

According to the stakeholder model, which primary stakeholder group is theoretically most important?

All primary stakeholders are of equal importance Signup and view all the answers

Why are secondary stakeholders important to a company?

They can affect public perceptions and opinions. Signup and view all the answers

What are secondary stakeholders?

Any groups that can influence or be influenced by the company. Signup and view all the answers

Under the stakeholder model, who would not engage regularly with the company but can still affect perceptions?

The media. Signup and view all the answers

Which of the following is a secondary stakeholder group?

The media Signup and view all the answers

What role were the Coca-Cola products bottled in India playing before government intervention?

Secondary stakeholders. Signup and view all the answers

Which of the following is an example of a secondary stakeholder group for Video Arts?

Business magazines that run ads for the training video. Signup and view all the answers

What does the example of Shell's Brent Spar illustrate about secondary stakeholders?

They can influence organizational strategy. Signup and view all the answers

What is the responsibility of the U.S. Postal Service concerning ethical advertising?

Take ethical responsibility for its actions. Signup and view all the answers

What responsibility did the rubber chemical manufacturers ignore?

Legal responsibility to society. Signup and view all the answers

____ are the expectations that a company will voluntarily serve a social role beyond its economic responsibilities.

Discretionary responsibilities. Signup and view all the answers

When are companies not considered unethical?

If they do not perform their discretionary responsibilities. Signup and view all the answers

What illegal action can companies that buy ramin wood in Malaysia be accused of?

Ignoring their legal responsibility to society. Signup and view all the answers

Which of the following statements about social responsibility is true?

Economic and legal responsibilities play a larger role in a company's social responsibility. Signup and view all the answers

What does Lever's Fair & Lovely emphasize regarding its responsibility?

Economic responsibility to make a profit. Signup and view all the answers

Study Notes

Ethics and Responsibility

Ethics are defined as a set of moral principles guiding what is considered right and wrong.
The U.S. Sentencing Commission Guidelines hold companies accountable for illegal actions committed by employees, regardless of management's awareness.
All organizations fall under the U.S. Sentencing Commission Guidelines for ethical accountability and consequences.
Violation of privacy, like selling customer information after a promise not to, incurs consequences defined by these Guidelines.

Compliance and Ethical Intensity

Companies that implement compliance programs benefit from reduced fines under the U.S. Sentencing Guidelines.
Determining the seriousness of an ethical breach can involve assessing the loss experienced by victims.
The concept of "ethical intensity" refers to the level of concern and awareness surrounding ethical issues by decision-makers.

Influences on Ethical Decisions

Ethical intensity grows when decisions have immediate, significant consequences or when individuals are psychologically close to those affected.
Factors such as temporal immediacy and magnitude of influence affect ethical intensity.
Situations causing immediate ethical implications, like environmental pollution, rate higher in ethical intensity than isolated incidents like minor insider trading.

Kohlberg's Stages of Moral Development

Kohlberg outlines three stages of moral development: pre-conventional, conventional, and post-conventional.
Individuals at the pre-conventional level make decisions based on self-interest, while those at the conventional level conform to societal norms.
Post-conventional individuals apply their internalized ethical principles when making decisions.

Promoting Ethical Decision Making

Organizations should adopt various strategies, including establishing comprehensive codes of ethics and conducting ethics training to foster a more ethical workplace.
Integrity tests, both overt and personality-based, can help in selecting ethical employees.

Stakeholders and Responsibilities

Primary stakeholders are essential for an organization’s survival, including employees, customers, and suppliers, while secondary stakeholders can influence public opinion.
Economic responsibility focuses on profit-making, while ethical and discretionary responsibilities encourage businesses to address societal needs.

Whistleblowing

Whistleblowers often face challenges and repercussions for reporting unethical behavior, despite their actions being crucial for accountability.
Public accountability mechanisms may protect whistleblowers, but fear of personal consequences often deters such actions.

CSR encompasses a business’s obligations to make decisions benefiting society beyond legal compliance.
The shareholder model prioritizes profit maximization while the stakeholder model advocates for balancing multiple stakeholder interests for long-term success.
Discretionary responsibilities reflect a company’s voluntary actions to serve societal roles beyond its economic, legal, and ethical obligations.

Reactive and Proactive Strategies

Companies may adopt reactive strategies in response to crises or criticisms rather than implementing proactive measures that align with ethical responsibilities.
Approaches to handling ethical issues vary, with some companies employing defensive strategies to mitigate public relations damage.

These notes cover essential concepts and principles related to ethics, responsible decision-making, stakeholder dynamics, and corporate behavior, crucial for understanding the framework of ethical practices in management.

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Description

This quiz explores the fundamental concepts of ethics and compliance in organizations, emphasizing the role of the U.S. Sentencing Commission Guidelines. It examines the importance of ethical accountability, ethical intensity, and the influences on decision-making related to ethical issues. Test your understanding of how ethical breaches and compliance programs impact organizations.