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Foundations of Business- Chapter 4; Mathis (TCU)

In the business world, social responsibility refers to
the obligation of a business organization to contribute to society.
A nation’s legal system provides businesses with _____ for examining ethical standards.
a starting point
The function of laws in the United States is to establish and enforce _____ that apply to everyone in society.
ethical norms
The Drof Motor Company has created an exciting new vehicle, the Terminator. One reason that the company is so excited about this vehicle is that once the 60,000-mile warranty ends, the vehicle will begin to experience mechanical problems generating more service income for the company. This behavior is
legal and unethical.
Why bother about ethics?
The idea of doing good ought to be worthy for its own sake, especially today.
_____ apply to everyone across a broad spectrum of situations regardless of political, religious, class, and ethnic divisions.
Universal ethical standards
The goal of universal ethical standards is to
provide guidelines that apply to everyone across a broad spectrum of situations.
A company with international operations may rely on universal ethical standards to guide
decision making across a broad spectrum of situations.
A nonprofit, nonpartisan organization, Character Counts has created a set of universal ethical standards that transcend cultures. Which of the following is not a universal ethical standard?
religion
Janet reasons, “It’s wrong to lie, However, it’s okay to overstate my expense account on my last trip because I really need the money, and the company hasn’t given me a raise in the past year.” This is an example of an employee who applies _____ to fit the situation at hand.
relative ethical standards
The nonprofit, nonpartisan organization Character Counts has worked with educators, community leaders, and experts in the field to establish a set of
core ethical values that transcend political, ethnic, class, and religious differences.
As a technology driven company, Google, Inc.’s corporate code of conduct is quite simple, “Do No Evil.” Google, Inc. is using _____ that applies to everyone across the organization to ensure ethical behavior.
a universal ethical standard
_____ are the moral principles that govern behavior, while a(n) _____ occurs when the behavior results in a choice among alternatives, each of which has negative consequences.
Ethics; ethical dilemma
Business ethics and individual ethics differ based on the fact that
business ethics focus on the application of right and wrong in a business setting, while individual ethics are one’s personal standards of right and wrong.
A couple of weeks ago, your boss had a private conversation with you. She explained that the company’s financial performance is poor, and the firm is looking at the possibility of layoffs. She then asked for you to help her determine whether positions in your division should be cut—and if so, which ones. After analyzing the situation, you believe that cutting jobs would almost certainly improve the company’s profitability. However, several of the workers who are most likely to be cut are good friends, and you know they would suffer significant financial hardship if they lost their jobs. Your report to your boss is due tomorrow. It appears that you are facing a(n)
ethical dilemma.
It often takes a pharmaceutical firm 15 or more years to develop a new drug. The sales from these new drugs must recover the expenses of research and development. Many of these pharmaceutical firms want to support socially responsible causes. When they are asked to lower the price of drugs distributed to third world nations, it becomes a(n) _____. Do they forego profits for investors and to fund additional research in order to help those in need?
ethical dilemma
You are a manager for a large financial services firm whose brokers trade stocks and bonds for individual customers. Your boss has provided you with your team’s sales goals for the following six months. You know that the fastest way to achieve the lofty numbers is to recruit experienced brokers from competitor firms to join your firm. These professionals are likely to bring loyal clients who initiate a lot of trades, making you a clear winner in the eyes of top management.
The current brokers in your department are good. They’ve worked hard and done everything you’ve asked of them. But they are young and inexperienced. There is a good chance they can achieve the sales goals, but it’s not a sure thing. If you seek to recruit new brokers, your current brokers will move down in the ranks and will earn smaller commissions.
This describes an ethical dilemma between your personal goals and your responsibility as a manager of others.
Which of the following would be described as an ethical dilemma?
Horatio is in middle management and has to assign a project to his team. He wants the best results he can get, but also knows that the company will roll out a new downsizing strategy after the project is turned in, and most of his team will be terminated. Now one of them has asked him for advice about a confidential job offer from a competitor.
Chris just signed off on a large corporate bank loan that infuses badly needed capital into his fledgling startup company. As a matter of tax planning, his strategy has always been to categorize anything he can as a business expense—from games of golf, to meals where the company is even briefly mentioned, to a company lease on a new BMW. But the bank loan was specifically written to provide capital for his current project, and with payments and interest included, he really can’t afford much else. Which answer is the most true?
Chris’s behavior is both stupid and unethical, because he is being dishonest while simultaneously diverting funds from the project that will enable his company to survive.
Rapper MC Chillz Lite has a multi-platinum record on the charts. He has built his Hip Hop empire from the ground up on his line of signature assault weapon toys and sugar-free candy. As he relaxes in his enormous house, he gets a call from his agent, who wants him to volunteer at the local Boys and Girls Club. He agrees, but when he arrives there he finds the cash box unattended and steals about $200 before volunteering and leaving. A few days later, his agent calls asking for information about the incident, and MC Chillz Lite accuses the Director of the Boys and Girls Club of falsely accusing him of theft and threatens litigation. He does not know that they have him on camera stealing. What are the ethical implications?
You are who you are when nobody is looking. MC Chillz Lite not only discredited himself, but also damaged his own company. In addition, he besmirched the reputation of a large charity organization.
Mary found out that there is a management position available at competitor’s store and has applied for it. During the interview process, the prospective new employer asks Mary if she has access to her company’s client list. The prospective new employer implies that Mary would be guaranteed the position with a sizable compensation package if she would be willing to bring the client list with her. Mary really could use the extra money. Mary has encountered an ethical dilemma, what should she do?
Mary should decline to bring the client list with her, since this request is unethical.
AIG’s CEO, Edward Liddy, demonstrated his lack of personal commitment to high ethical standards by
spending more than $440,000 of the company’s bailout money on a sales retreat.
The role of the CEO in setting the ethical tone for a company is
to establish high ethical standards, clearly communicate these standards, and demonstrate a strong personal commitment to them.
A unifying written document that articulates a firm’s ethical priorities is described as the company’s
code of ethics
A _____ establishes expectations for ethical behavior at all levels of the organization.
code of ethics
Research indicates that the organizational culture
has significant influence on the individual employee’s ethical behavior.
The purpose of a written code of ethics is to
provide guidance to help employees make sound ethical decisions across a range of situations.
According to research by the Ethics Resource Center (ERC), the most important influence on ethical behavior in the workplace is
organizational culture.
Homer Watkins is in middle management at Ram Rod Motors. On several occasions he has noticed company executives behaving legally but unethically. When he mentioned this behavior and inquired about the company’s code of ethics to a coworker she just laughed, “Code of ethics? There is no code of ethics—this is just how this place operates—get used to it.” Based on research done by the Ethics Resource Center, Ram Rod Motors will likely experience
ethical lapses throughout the organization, since organizational culture greatly influences the conduct of employees.
As Chair of the Board of Directors, Susan Waskal is concerned about the ethical standards at InKlone, Inc. She has asked you to create a standard by which employees have the information they need to make ethical decisions across a range of situations. Susan has asked you to create a(n)
code of ethics.
Which of the following is NOT an important step in the successful implementation of a code of ethics?
Establish different standards for workers in different regions or countries in order to take cultural differences into account.
When an organization develops a code of ethics, research has indicated that it is important to integrate the code of ethics into which of the following areas?
new employee orientation as well as ongoing training
A person who reports illegal or unethical behavior within an organization is known as a
whistle-blower.
With the passage of the Sarbanes-Oxley Act, the U.S. government now provides more protection to workers who engage in
whistle-blowing.
A code of ethics should include
executive buy-in and top management communication and leading by example.
Pat has noticed some of his company’s sales representatives behaving in an unethical manner with clients. He intends to report this ethical lapse through his company’s anonymous ethics hotline. If he reports this unethical behavior, he would be a
whistle-blower.
_____ concern(s) the obligation of a business to contribute to society.
Social responsibility
The outdoor clothing company Patagonia, Inc. pledges one percent of the company’s annual revenue to environmental causes around the world. Founders of the company believe they have an obligation to contribute to society. This is an example of
social responsibility.
The primary duty of socially responsible companies to their investors is to
seek to generate long-term profits while meeting responsibilities to all stakeholders.
The spectrum of socially responsible behavior of firms may vary from
no contributions, to responsive contributions, to proactive contributions.
Stakeholders are
groups or individuals with a personal interest in the performance and actions of a business.
Companies that want to develop socially responsible objectives
should identify key stakeholders and consider their priorities.
A canoe and recreation club recently filed suit against a number of manufacturing plants located along the Missouri River. In the suit, the club claimed that the plants failed to adequately treat the waste that is being dumped into the streams and waterways, thus adversely affecting the recreational opportunities available to club members. The canoe and recreation club is an example of a(n) _____ of the manufacturing companies that operate these plants.
stakeholder
The _____ of a company that produces gourmet coffee include its employees, coffee bean growers who supply the company, people who drink its gourmet coffee, and the people who live in the community where the company produces the coffee.
investors
Ben & Jerry’s is recognized for being a socially conscious trendsetter. As a socially responsible company, this maker of high-quality ice cream is likely to focus on
finding the proper balance between earning profits and meeting responsibilities to other stakeholders.
The spectrum of how firms address issues concerning social responsibility ranges
from firms that never contribute to socially responsible causes to firms that choose to integrate social responsibility into their strategic plans.
Harbor Paint Products, Inc. proactively implemented an incentive program that rewarded employees for soliciting customer feedback on its new deck stain product. Outside sales professionals, inside customer service representatives, and partner retail associates were asked to contribute a minimum of seven customer impressions (positive or negative) each week into a company marketing data base. The program promoted
consumerism and the right to be heard.
_____ is the social movement supporting the consumer’s right to be informed, to be safe, to choose, and to be heard.
Consumerism
Socially responsible employers
“All of the Above”
act in compliance with all employment laws.
embrace diversity in the workplace by respecting and valuing each employee.
advocate balance between work and family commitments.
Consumerism is a widely accepted social movement. Proponents of this movement believe _____ is a right of all consumers.
the right to be informed
In regard to social responsibility, _____ is the most ethically responsive economic system.
a free market economy based on capitalism, steered by ethical people, is the most agile economic system ever conceived
Which scenario is preferable, ethically speaking, for stakeholder groups?
Organic juice manufacturer Odwalla finds e.coli bacteria in its product, but not before it hits the market. Several people become ill, and one little girl dies. The CEO shuts down all production, recalls all product, conducts an investigation to fix the problem, resumes production, and attends the girl’s funeral all before FDA intervention occurs
Deliberately designing a product to fail in order to shorten the time between consumer purchase and repurchase is known as
planned obsolescence.
When a company designs a product to fail in order to shorten the time between consumer repurchases. This practice is referred to as
planned obsolescence.
D Fizzle is the chief executive officer of Pop Rocks Mining Company. He has convinced the company’s board of directors to implement a program which reduces the company’s impact on the environment in which it operates, although this program will negatively impact the company’s net income in the short term. The company is making an effort to meet the needs of all
stakeholders.
In 2009, Amazon remotely and abruptly deleted some digital editions of books from the Kindle devices of customers who had already purchased them. Amazon chose to handle this situation by
refunding the purchase price and issuing a personal apology by the founder and CEO
Corporate _____ is the donation of time and/or money to nonprofit organizations in an effort to support charitable causes.
philanthropy
J.H. Marshall, the CEO of ANS Oil Drilling, Inc., has decided to set aside $100,000 of company profit each year to donate to nonprofit organizations in the local area. These donations are an example of
corporate philanthropy.
The goal of _____ is to meet the needs of the current generation without harming the ability of future generations to meet their needs.
sustainable development
_____ is the use of marketing partnerships between businesses and nonprofit organizations. The partnerships are designed to spike sales for the company and raise money for the nonprofit organization.
Cause-related marketing
___ focuses on business contributions to the community through the actions of the business itself rather than donations of money and time.
Corporate responsibility
Firms that participate in cause-related marketing
often find that such programs help build their brands and increase sales.
Recently, Estée Lauder announced that it will donate a portion of each sale of its Gwyneth Paltrow-endorsed perfume to breast cancer research. This is an example of
cause-related marketing.
Quest Systems, a local information technology firm, donates old computer equipment to a recycling company. Quest is demonstrating
corporate responsibility.
Which of the following actions best demonstrates the practice of corporate responsibility?
A company changes its business practices to serve its low-income customers better
Home Depot employs more Olympic hopefuls than any other U.S. company through its Olympic Job Opportunities Program. The business offers athletes full-time pay and benefits for a flexible 20-hour work week in order to accommodate demanding training schedules. This is an example of:
corporate responsibility.
Doing business to meet the needs of the current generation without harming the ability of future generations to meet their needs is called
sustainable development.
In an effort to embrace _____, a large community college system recently built a new “green” campus where facilities were designed and constructed to use energy and water more efficiently in order to conserve the environment and its resources for future generations.
sustainable development
McDonald’s has worked hard to reduce waste by shipping orange juice as frozen concentrate, reducing orange juice packaging by 75%. The company has developed an extensive recycling program. These actions are examples of
sustainable development.
In regard to sustainability, which scenario is the most ethical?
Companies should be proactive in how their operations could impact all stakeholders, environmental concerns included.
Developing and promoting environmentally sound products and practices to gain a competitive edge is called
green marketing.
PepsiCo recently calculated the carbon footprint for its Tropicana orange juice brand and was surprised to learn that one-third of its emissions came from
applying fertilizer to the orange groves.
While most consumers care about the environment, green marketing has presented a tough challenge for the following reason:
consumers will not sacrifice price, performance or convenience to buy green products.
Many large corporations track three different types of emissions. All of the following emissions are tracked EXCEPT
emissions from employee homes.
Transparency International’s yearly index of “perceived corruption” showed which country has the lowest score, suggesting that rampant corruption is part of their business culture?
India
Globalization has made ethics and social responsibility _____ for workers at every level.
even more complicated
2008 Transparency International indicated that firms from ____ were most likely to offer or accept bribes.
Russia, China, and Mexico
A study by Transparency International of bribery by firms operating in foreign countries found that U.S. multinational firms were
less likely to pay bribes than Russian, Chinese, or Mexican companies but more likely to pay bribes than companies from most Western European nations.
_____ are among the most challenging issues faced by companies and individuals that are involved in international businesses.
Bribery and corruption
The Foreign Corrupt Practices Act
forbids U.S. companies from offering bribes when engaged in foreign business transactions.
A study by Transparency International suggests that most of the world’s poorer nations have business cultures that
are characterized by rampant corruption
What does a living wage mean globally?
companies must base their decision on their own values and the laws of both the U.S. and their host country
Which of the following is most ethical, globally speaking?
Low wages and working conditions for unskilled labor in developing countries are relative. If it is socially acceptable for a worker to earn less than he would in America, but his wage is fair, there is no harm being done.
Socially responsible companies should establish codes of conduct for their ______ that set clear policies for human rights, wages, safety, and environmental impact.
Vendors
Establishing a code of conduct for vendors in foreign nations
requires American firms to deal with a wide range of issues involving human rights, wages, worker safety, and environmental protection.
Which of the following serves as a good example of a proactive socially responsible approach toward global marketing?
Establishing codes of conduct for vendors, setting clear policies for human rights policies, wages, safety rules, and environmental impact.
During the 1990s, Levi Strauss discovered that two of its suppliers were not living up to their code of conduct. Instead of firing the workers, Levi Strauss developed a creative win-win situation. The type of worker issues the leaders of Levi Strauss were concerned with included
child labor.
A(n)_____ is the systematic evaluation of how well a firm is meeting its goals of ethics and social responsibility.
social audit
The double bottom line social audit procedure
measures both a firm’s financial performance and its efforts to meet social responsibilities.
In today’s business environment many businesses are monitoring themselves conducting a systematic evaluation of how well the business is meeting its ethics and social responsibilities. This process is referred to as a(n):
social audit.
Explain the steps involved in a social audit, in proper order.
Set goals, determine how to meet them, establish a double bottom line that allows for balance between profit and social responsibility.
Ethical challenges in business include all of the following, EXCEPT
code of ethics.
Key areas of interest for a company’s office of ethics and compliance would include all of the following EXCEPT
setting goals for a social audit.

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