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BUSINESS ETHICS CHAPTER 10-12

——- occurs when the middle class shrinks, resulting in highly concentrated wealth among the rich and a large number of poor people with very few resources.
Bimodal Wealth Distribution (Haiti and China)
The G Zero risk is a global ethical risk. It refers to
the idea that countries are becoming increasingly nationalistic, rather than globalized
What concepts refers to economic theories advocating the creation of a society where wealth and power are distributed evenly, relative to the amount of work expended in production?
Socialism
The practice of charging high prices for products sold in home markets while selling the same products in foreign markets at low prices, which do not cover the cost of exporting, is known as
Dumping
Who argued during 1930s that the state could stimulate economic growth and improve stability stability in private sector?
John Maynard Keynes
When in Rome, as do as the Romans do, you must adapt to the cultural practices of the country in which you are operating are rationalizations business people sometimes offer for straying, from their own ethical values when doing business abroad. This practice is called.
Cultural Relativism
—– is a term used by Adam Smith to explain the inherent mechanism at work in free market systems that keep commerce in equilibrium. It is also known as the “invisible hand”
Laissez-fair
Which of the following is not an article in the UN Human Rights Declaration?
The right to electricity and running water.
Increasing the wealth gap between nations and misusing and misallocating scarce resources are ethical issue accusations related to
Multinational corporations
The —– formed in 1995 and administers it own trade agreements, facilitates future trade negotiations, settles trade disputes, and monitors the trade policies of member nations.
World Trade Organization
These values were developed by a reverend and the UN Secretary General. They express support for the universal human rights
The Global Sullivan Principles
Power distance dimension refers to the “power inequality” between superiors and subordinates.Which of the following countries probably ranks high on the power of distance scale?
Arabia Saudita
Which of the following has the power to enact legally binding ground rules for international commerce and trade policy?
World Trade Organization
Risk Compartmentalization occurs when:
Various profits centers within an organization become unaware of the consequences of their actions on the firm as a whole.
What is the AACSB?
An international organization that promotes a set of principles promoting the teaching of responsible management in business school.
——assumes that economic decisions are influenced by human behavior
Behavioral economics
——products encourage consumers to return and buy more. This approach is also known as planned obsolescence.
Made-to-brake
Which two developing countries are expected to generate some of the largest increases in consumption in the future.
China and India
—-is based upon the assumption that people are predictable and will maximize the utility of their choices relative to their needs and wants.
Rational economics
—– allows for private ownership of property and features a large government equipped to offer such services as education and health care to its citizens
Social Democracy
What is the purpose of the UN Global Compact?
To promote human rights, sustainability, and erradicate corruption
An unconscious reference to one’s cultural values, experiences, and knowledge is referred to as the
Self reference criterion
Which of the following organizations emerged for the
Bretton Woods agreement of 1944, where a group of international leaders decided that the primary responsibility for the regulation of monetary relationships among nationals economies should rest in an extra-national body?
International Monetary Fund
— was a result of a meeting in which international leaders decided that primary responsibility for the regulation of monetary relationship among nations should rest in an external body
International Monetary Fund
What is the major role or the International Monetary Fund (IMF)
It makes short term loans to member countries that have deficits and provides foreign currencies for its members.
—- has been codified in a United nations document and is defined as an inherent dignity with equal and inalienable rights as the foundation of freedom, justice, and peace in the world.
Human rights
—-Assume(s) that a the market, through its own inherent mechanism, will keep commerce in equilibrium.
Laissez-faire economics
Which of the following is not a key area of global ethical risk, as outlined by Eurasia Group?
Unequal levels of child labor laws
Which of the following statements about multinational corporations (MNCs) is false.
MNCs are inherently unethical and always do harm in the countries in which they operate.
Which of the following is not criticism of or charge against multinational corporations (MNCs)
They pay excessively high taxes everywhere.
What is a living wage?
The minimum wage that a worker requires to meet basic needs
Those who ascribe consumerism
Believe that consumers, not producers, should dictate the economic structure of a society.
According to the world trade organization, which of the following products and services are most vulnerable to protectionism?
Shoes, cars, and steel
—-assumes that humans may not act rationally because of genetics, learned behavior, and rules of thumb.
Behavioral Economics
As business facilitates exchanges, consumption beyond basic needs will increase globally. The important issues related to consumerism include all but of the following?
What are the impacts of certain forms of consumerism on the environment, on society, and on individuals?
Which of the following is a measure taken by governments to curtail MNC practices that create ethical issues?
Imposing export taxes to force MNCs to share more of their profits.
The benefit of healthcare is being debated as to whether it is a right or privilege. Which of the following counties does not consider health care to be a right?
United States
—-refers to how members of a society respond to ambiguity. A high score means that a culture tends to minimize risk-taking.
Uncertainty Avoidance
The grow of internet and differing security laws between countries has led to increase in concern for the human right of
Privacy
—- identified for cultural dimensions that can have a profound impact on the business environment: individualism/collectivism, power distance, uncertainty avoidance, and masculinity/femininity.
Geert Hofstede
—involves transactions across national boundaries. It is a practice that bring together people who have different cultures, values, laws, and ethical standards.
Global Business
Global business ethics apply to the myriad of ethical issues any company faces when operating in both the local and global environment.
False
Ethical relativism is an ethical viewpoint based on the assumption that there no objective and universal moral standards.
True
Corruption and bribery usually result in higher public spending , lower quality project, undetermined competition, and the inefficient allocation resources.
True
The foreign practices corrupt act (FPCA) forbids all multinational companies in the world for making of offering payments or gift to foreign governments officials for the sake or gaining or retaining business.
False
Hypernorms are norms that are accepted by all cultures and organizations irrespective of local cultures.
True
Which cultural values promotes lower corruption?
Gender Egalitarism
Which or the following statements is not true regarding bribery?
Bribery could reduce the price of products and potentially increase company’s profit with help of local government.
—– is the ethical viewpoint that basic moral and ethical principles transcended cultural and national boundaries.
Ethical universalism
Which code of ethics focuses on the legal responsibility of the company?
First generation Code of Ethics
——shift ethics monitoring to employees by providing the means to report ethical violations.
Whistle-Blowing programs
Work climate represents the shared perceptions of procedures, policies, and practices, and is the only formal aspect of the organization.
False
Formal components of ethical culture include elements such as the vision and mission, codes of conduct, ant the socialization process that new and existing employees go through.
True
Independent ethical climate has norms and values that encourage ethical decision-making that serve the organization’s interest or provide personal benefits.
False
Inspirational-idealistic codes focus on broad, virtues themes such as “Be honest”
True
A compliance program emphasizes the law, prevention, and detection, and punishment violation of the relevant laws.
True
This occurs when the organization has norms and values that encourage people to make ethical decisions based on a set of standards
Principled climates
There are three types of of ethical codes. Which one explains the regulatory codes?
they specified how to behave in specific situations, typically which a “do and don’t” approach.
Bimodal Wealth distribution
Haiti and China
Rational economics
It is based on the assumption that people are predictable and will maximize the utility of their choices relative to their needs and wants.
Some people will act irrationally even when they have a clear idea of the consequences or their actions.
Behavioral economics
Assumes human act irrationally because of genetics, emotions, learned behavior, an heuristics, or rules of thumbs.
multinational corporations
They are public companies that operate on a global scale without significant ties to any nation or region. Examples of US multinational corporation include: Nike, Monsanto, and Cisco Systems.
A Living Wage
It refers to a minimum wage workers require to meet basic needs.
Australia minimum wage 15.37
United Kingdom 9.57
Executive compesnation
Swiss government Say on Pay
1:12 Initiative for Fair Pay. Limits executive pay to more of twelve times the company’s lowest paid employee. Swiss receiving support in Swiss.
This kind of mentality is called shareholder activism
Leadership
It is the ability or authority to guide and direct others toward a goal.
Most people agree that:
effective leadership is essential for a company.
Ethical decisions are one dimension of leadership.
Ethical leadership create a ethical culture.
Top managers provide a blueprint for a firm’s corporate culture.
True
Leadership has a significant impact in ethical decision because
leaders have the power of motivate others an enforce the organization’s norms, policies, and viewpoints.
Directors have e legal obligation to manage companies
For the best interest of the corporation.
Ethical leadershps
Skills develop through years of training, experience and leaning others best practices of leadership.
Ethical leaders duties:
Should not turn blind eye to observed misconduct.
They never operate in a silo of decision making. They seek to encourage the development of other leader within the organization.
They also try to develop policies and procedures that provide incentives to those who train new leaders.
Seven habits of strong leaders
1- Strong personal character
2- Passion to do right
3- Proactive
4- Consider all stakeholders’s interest
5- Role models for the organization values
6- They are transparent and actively involve in decision making
7- They are holistic view of the firm’s ethical culture
Benefit of ethical leadership
1- It has direct impact in corporate culture
2- It lead to higher employee satisfaction and commitment.
3- Create competitive advantage through employee satisfaction and productivity
4- It is a foundational requirement for impacting the long term market evaluation of the firm.
Ethical leadership adopt one or two approaches of leadership
1- A compliance -based approach
2- A integrity- based approach
A compliance -based approach
They emphasize in obedience to rules, regulations and set processes in place to ensure compliance.
A integrity- based approach
Leaders take responsibility about firms ethical culture and hold employees accountable for practicing ethical behaviors and core practices. (Chief Officers, human Resource managers, am board member of committee).
The unethical leaders is usually
1- Egocentric, and often does whatever it takes to achieve the organization’s objective and his/her own.
2- Psychopathic: Having superficial charm, no conscience, grandiose self worth, little or not empathy, and enjoy floating the rules
Apathetic leaders
They are not necessarily unethical. They care little for ethics within the company.
Ethical Conflicts
It occur when there are two or more positions on an ethical decisions.
Sometimes ethical conflict emerge because employees feels uncomfortable about their own or their co-workers ethical decisions.
Conflict management styles
1- Competing
2- Collaborating
3- Avoiding
4- accomodating
Competing:
They are highly assertive and not very collaborative. They believe in winning at any cost and measure of success by how much the other side loses.
Collaborating
It is the advantageous. They are cooperative and assertive. They collaborate with others to find a creative way to obtain a beneficial solution.
Avoiding
They are not effective because they avoid conflict at any cost- even if it leads to misconduct. They are uncooperative and non-assertive. Even if they area aware of misconduct, they have no desire to manage.
Accomodating
Leaders who adopt this style are highly cooperative and non-assertive. Individuals this approach to conflict give in to the other side even if it means sacrificing their own interest and values. It could be a unethical disater.
Communication for becoming better leaders
1- Asking what people need, and include what people need to hear
2- Stop talking and listen more
3- Take a real conversations
4- Communicate bad news in the same way, with the same zest, as good news.
5- share performance feedback with others regularly
6- Be purposeful and thoughtful in how to communicate
7- As for feedback so you can improve your skills
8-Work on your blind spots in your leadership abilities
Leadership communication skills
1- Interpersonal communication
2- small group communication (teams)
* group think
* group polarization(extreme position)
3- Nonverbal communication
4- Listening
Leader-follower congruence
It occurs when leaders and followers share the same vision, ethical expectations, and objectives for the company.
Power Differences in the workplace
Ethical leaders can mitigate power differences through frequent communication with workers.
Ethical leaders should move among employees and listen to their feedback and concerns.
Employee feedbacks
It can be generate in different ways, including interviews, anonymous survey, ethical audits, and websites.
Leadership influence in ethical decisions
The challenge for leaders is in gaining organization influences how its employees act. They gain trust and commitment of organizational members, which it is essential to organization success.
Emotional intelligence
They are skilled in self-awareness, self control, and relationship building.
Six Leadership style that are based on emotional intelligence
1- The coercive leader- Obedience- Adequate in time of crisis.
2- The authoritative leader-It is considered one of the most effective style: inspire employee follow vision, facilitate changes, and create strong positive performance.
3- The affiliate leader: Leader value peoples, their emotions, and their needs, and relies on friendship, and trust to promote flexibility, innovation and taking risk.
4- The democratic leader: Relies on participation and team work to reach a collaborative decisions. It focuses in communication a create a positive climate for achieving results.
5- The pacesetting leaders: It can create a negative climate because of the high standards that he or she sets. Quick result for high motivate individuals.
6- The coaching leader: It create a positive climate by developing skills to foster long term success, delegating responsibility, and skillfully issuing challenging assignments.
Authentic Leaders
they are passionate about the company, live out corporate value daily in their behavior in the workplace, and form long term relationships with employees and other stakeholders.
RADAR model
R-Recognize ethical issues
A-Avoid misconduct wherever is possible
D-Discover ethical risk areas
A-Answer stakeholder concerns when an ethical issue come to light
R-Recover from a misconduct disaster by improving upon weakness in ethics program.
Sustainbaility
It is a potential for a long term well being of natural environment. It falls into the social responsibility. Create long term favorable stakeholders responses.
If an organization is sustainable is also ethical.
Global environment issues
1- Atmospheric
* air pollution
* Acid rain
* Global Warming
2- Water
* Water pollution
* Water Quantity
3- Land
* Land pollution
* Waste management
* Deforestation
* Urban Sprawl
* Biodiversity
Genetically modified organisms (GM)
Genetically modified foods are going to save impoverished ares from starvation and revolutionize agriculture, or destroy biodiversity and us all sick.
GM manipulated plant and animal DNA to produce a desired effect: Like resistance, to pest and viruses, etc. (Monsanto, DuPont)
Environmental Protection agency (EPA)
It was created in 1970 to coordinate environmental issues and enforces environmental legislation in US:
1- Protecting Americans from significant health and environmental risk.
2- Managing environmental risk based on empirical information.
3- Ensuring the fairness and effectiveness of laws protecting human health and the environment
3- Ensuring environmental protection is an integral consideration in US policies
4- Making available access to accurate information that allows participation in managing health and environmental risks.
5- Making sure environmental legislation contributes to diverse, sustainable, and economically productive communities and ecosystems.
Laws protecting Environment
Clean Air Act 1970
National Environmental Policy Act 1970
Coastal zone Management Act 1972
Federal Water Pollution Control Act 1972
Noise Pollution Control Act 1972
Federal Insecticide, fungicide and Rodenticide Act 1972
Endangered Species Act 1973
Safe Drinking Water Act 1974
Energy Policy and Conservation Act 1975
Toxic Substances Control Act 1975
Resource Conservation and Recovery Act 1976
Comprehensive Environmental Response Compensation and Liability Act 1980
Emergency Planning and Community Right to Know Act 1986
Oil Pollution Act 1990
Pollution Prevention Act 1990
Food Quality Protection Act 1996
energy Policy Act 2005
Energy Independence and Security Act 2007
Green Marketing
It is a strategic involving stakeholder assessment to create meaning-ful long-term relationships with customers, while maintaining, supporting, and enhancing the natural environment.
Greenwashing
It involves misleading a customer into thinking a product or service is more environmentally friendly than it really is. (Puffery)
Recycling
It is the reprocessing of material, especially steel, aluminium, paper, glass, rubber, and some plastics for reuse.

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