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Business Law and Ethics Chapter 2

Moral Principles and values applied to social behavior
Business Ethics
What constitutes right or wrong behavior and the application of oral principles in a business context
Moral Minimum
The minimum degree of ethical behavior expected of a businessperson, which is usually defined as compliance with the law
stock buyback
The purchase of shares of a company’s own stock by that company on the open market
stock option
An agreement that grants the owner the option to buy a given number of shares of stock at a set price, usually within a specific time period
ethical reasoning
A reasoning process in which an individual links his or her moral convictions or ethical standards to the particular situation
principle of rights
The belief that human beings have certain fundamental rights. Whether a business action or decision is ethical depends on how it affects the rights of various groups, such as owners, employees,consumers,suppliers,the community,and society
An approach to ethical reasoning in which an action is evaluated in terms of its consequences for those whom it will affect.
cost-benefit analysis
A decision making technique that involves weighing the costs of a given action against the benefits of that action.
corporate social responsibility
The idea that corporations can and should act ethically and be accountable to society for their actions.
Any decision by the management of Fast-Food Franchise Corporation may significantly affect its
A) operators only.
B) operators, owners, suppliers, the community, or society as a whole.
C) owners only.
D) suppliers, the community, or society as a whole only.
John is sales manager for Kleen ‘N Brite Products, Inc. Compared to John’s personal activities, his business activities most likely involve
A) more complex ethical issues.
B) no ethical issues.
C) simpler ethical issues.
D) the same ethical issues.
3.Flexo Trucking Company transports hazard¬ous waste. Garn is a Flexo driver, whom the company knows drives longer hours than federal regulations permit. One night, Garn exceeds the limit and has an accident. Spilled chemicals contaminate Hill City’s water source, forcing the residents to move away. Flexo acted unethically because
A) Flexo showed reckless disregard for Hill City’s residents and others.
B) Garn exceeded the federal time limit.
C) harm was caused by an unfortunate accident.
D) Hill City should have better protected its water source.
In studying the legal environment of business, Professor Dooley’s students also review ethics in a business context. Ethics includes the study of what constitutes
A) fair or just behavior.
B) financially rewarding behavior.
C) legal behavior.
D) religious behavior.
Peak & Vale Accountants provides other firms with accounting services. Questions of what is ethical involve the extent to which Peak & Vale has
A) a legal duty beyond those duties mandated by ethics.
B) an ethical duty beyond those duties mandated by law.
C) any duty beyond those mandated by both ethics and the law.
D) any duty when it is uncertain whether a legal duty exists.
Eden, the chief executive officer of Flo-Thru Piping Corporation, wants to ensure that Flo-Thru’s activities are legal and ethical. The best course for Eden and Flo-Thru is to act in
A) good faith.
B) ignorance of the law.
C) regard for the firm’s shareholders only.
D) their own self interest.
Straitway Company encourages its managers to behave ethically, reasoning that the employees will take their cues from management. One of the most important ways to create and maintain an ethical behavior workplace is for management to
A) demonstrate a commitment to ethical decision making.
B) discreetly engage in unethical or illegal acts.
C) look the other way when an employee engages in an unethical act.
D) direct employees to “do as we say, not as we do.”
Ergonomic Corporation convenes its employees for its managers to announce (1) a new company-wide ethical code of conduct, (2) an ad campaign to publicize the new code, and (3) the discharge of employees who do not adhere to the code. One of the most effective ways to set a tone of ethical behavior within a business organization is
A) to create an ethical code of conduct.
B) to discharge employees who create the appearance of impropriety.
C) to post a marketing campaign online touting the firm’s ethical tone.
D) for management to direct employees to “do as we say, not as we do.”
Richard suspects his supervisor of unethical accounting practices. However, he does not want to lose his job if he reports the supervisor and the supervisor finds out who reported him. An important feature of online reporting systems like EthicsPoint is
A) the employee reporting the unethical behavior can do so anonymously.
B) the employee reporting the unethical behavior is financially compensated if he loses his job as a result of the report.
C) the employee reporting the unethical behavior must give his full name when making the report.
D) the employee reporting the unethical behavior must have another employee supporting him.
In business deals, Fiona, the chief executive officer of Snacks n’ Bites, Inc., follows duty-based ethical standards. These are most likely derived from
A) a corporate ethics code.
B) a cost-benefit analysis.
C) philosophical reasoning.
D) the law.
Lyle, vice-president of sales for Mi-T Electric, Inc., adheres to Judeo-Christian religious ethical standards. With respect to their application, these standards are
A) absolute.
B) analytical.
C) discretionary.
D) utilitarian.
Carrie Ann works at Paper Products, Inc. She considers taking home a few sheets of stationery so she can write letters to her ailing grandmother. Since Paper Products produces thousands of sheets of stationery every day no one will miss the few sheets she takes and company profits will not be affected. Carrie Ann then considers what would happen if every employee took some stationery home and decides not to take any. Carrie Ann is being influenced by
A) the categorical imperative.
B) the principle of rights.
C) a cost-benefit analysis.
D) outcome-based ethics.
In making decisions for Smart Investments, Rita uses a cost-benefit analysis. This is a part of
A) duty-based ethics.
B) Kantian ethics.
C) rights-based ethics.
D) utilitarian ethics.
Ryan, the owner of SuperMart Stores, Inc., adheres to the “principle of rights” theory. Under this theory, a key factor in determining whether a business decision is ethical is how that decision affects
A) the right determination under a cost-benefit analysis.
B) the rights of others.
C) the “right” thing to do.
D) the right to make a profit.
Hailey, a lawyer on the staff of International Group, always considers the consequences of an action rather than the nature of the action itself when making ethical decisions in a business context. Hailey is applying
A) the utilitarian theory of ethics in business contexts.
B) religious beliefs in business contexts.
C) Kantian ethics in business contexts.
D) the principle of rights theory of ethics in business contexts.
Bob, research manager for CornAgri Products, Inc., applies utilitarian ethics to determine that an action is morally correct when it produces the greatest good for
A) Bob.
B) CornAgri.
C) the fewest people.
D) the most people.
MeatMen, Inc. spends a great deal of money and effort to ensure that all employees are safe on the job, that all products are safe for consumers, and that the environmental impact of the corporation is minimal. MeatMen appears to strongly believe in the concept of
A) the moral minimum.
B) corporate social responsibility.
C) “grey areas” in the law.
D) government oversight.
Applied Business Corporation makes and markets its products nationwide. Under the stakeholder approach, to be considered socially responsible when making a business decision, Applied must take into account the needs of
A) its consumers, the community, and society only.
B) its employees and owners only.
C) its employees, owners, consumers, the community, and society.
D) no one.
Rio Business Corporation pays potential clients, including private foreign companies and the representatives of foreign labor organizations to facilitate business. If Rio knows that the payments will be passed on to a foreign government, this practice is
A) illegal if the payments violate the Foreign Corrupt Practices Act.
B) legal because a third party acts as a “go-between.”
C) legal because private parties are involved on both sides of the deal.
D) legal because the payments are intended to facilitate business.
Bilt-Well Construction Corporation makes a side payment to a government official in Nigeria to obtain a contract. In the United States, this is
A) illegal and unethical.
B) illegal but not unethical.
C) unethical but not illegal.
D) legal and ethical.

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