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Define ethics.
- Ethics is a set of moral principles or values that governs the conduct of an individual or group.
- It is the study of what is "right" or "good" for human beings, what people "ought to do".
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What are some differences between law and ethics?
- legal acts may be unethical and ethical acts may be illegal
- legality is often a reliable guide to ethical behavior, but it is not a perfect standard
- law provides sanctions, ethical standards may not
- law is enforced by government, ethics by your conscience
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Name some rationalizations that might be signs of a possible ethical dilemma.
- "everybody does it"
- "it won't hurt anyone"
- "the system is unfair"
- "I was just following orders"
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What are the 3 steps to ethical decision-making at the individual level?
- awareness of ethical issues and dilemmas
- ethical reasoning
- ethical action / decision
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What is the court of public opinion?
reputation
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Name the 4 ethical theories.
- Ethical fundamentalism
- Utilitarianism
- Ethical relativism
- Kantian ethics
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Explain ethical fundamentalism.
looking at an outside source for ethical rules (eg. religious literature)
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Explain Utilitarianism.
- based on results
- ethical is what brings the greatest good to the greatest number of people
- cost/benefit analysis
- ends justify means
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Explain ethical relativism.
- no moral absolutes
- everyone is free to do what is right in his/her own eyes
- do your own thing
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Explain Kantian ethics.
- based on duty
- people owe moral duties that are based on universal rules that are discovered through reasoning
- no exceptions or special treatment
- judge by estimating the consequences if everyone would do it
- do unto others as you want them do unto you
- ends and means have to be ethical
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Why should a business be ethical?
- Internal benefits
- External benefits
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What are some internal benefits of ethical behavior of a business?
trust => cooperation => synergies => reduced transaction costs + increased efficiency => increased profit
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Ethical leadership starts...
...at the top and trickles down.
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To be ethical, a comapny needs to be ________ free.
To be thical, a company needs to be hypocritical free.
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What are some external benefits of ethical behavior of a business?
- reputation is part of goodwill and can enhance profits
- benefit to society through forming of values and norms by the company's threatment of its employees and communities
- may lead to less government regulation if businesses behave ethically by themselves
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What are the 4 theories of social responsibility for businesses?
- maximizing profits
- moral minimum
- stakeholder interest
- corporate citizenship
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What ethical duty does a business owe to society under the theory of maximizing profits?
Maximize profits for shareholders within the contraint of fair competition (old thought process).
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What ethical duty does a business owe to society under the theory of moral minimum?
- Make profit, but avoid causing harn to others / correct any injury caused
- environmental and occupational safety laws
=> shareholders still come first
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What ethical duty does a business owe to society under the theory of stakeholder interest?
Duty to consider the effects of its actions on persons other than shareholders (customers, creditors, suppliers...)
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What ethical duty does a business owe to society under the theory of corporate citizenship?
Duty to do "good", help solve problems caused by others, promote the same social goals as other members of society
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Which theory/theories of social responsibility is/are used by most organizations?
moral minimum or stakeholder interest
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Which theory/theories of social responsibility is/are used by most of the largest organizations?
corporate citizenship
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What are some arguments against social involvement of businesses?
- improper; serve shareholders only
- unfair; diverts funds rightfully belonging to shareholders and/or employees to unrelated third party
- lack of accountability; allows abuses to occur
- corporations have little expertise
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Why aren't businesses more ethical?
- pressured for results
- lack of enforcement
- comfort through rationalizing
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What are the 4 steps to ethical decision-making at the organizational level?
- Awareness of ethical issues/dilemmas
- Ethical reasoning - train employees
- Ethical action/decision
- Ethical leadership
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Why is legal compliance the moral/ethical minimum?
- Simply obeying the law does not make the business practice ethical.
- Managers must contemplate the thical implications of a business decision.
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How can a company set the right ethical tone?
- attitude at the top - the behavior of the company's managers is model to other employees
- code of ethics - establish rules of ethical behavior and incentives for employees
- corporate compliance programs - SOX, social audits
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What are the 3 tests for resolving ethical dilemmas?
- front-of-the-newspaper-test
- Wall Street Journal Model
- Texas Instruments Ethics Quick Test
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What are the 3 steps to resolve ethical dilemmas according to the Wall Street Journal model?
- compliance - are any laws violated?
- contribution - what does this action contribute to customers, employees, shareholders?
- consequences - how will this action affect the company, me, employees, shareholders?
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___________ __________ creates the ethical system in a business, with rules and rewards/punishments.
Corporate governance creates the ethical system in a business, with rules and rewards/punishments.
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What is the question you have to ask yourself when faced with an ethical dilemma according to the front-of-the-newspaper-test?
Would you be willing to see your actions on the front page of the newspaper for everyone to read?
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What is the Texas Instruments Ethics Quick Test?
- Is the action legal?
- Does it comply with our values?
- Will you feel bad if you do it?
- How will it look in the newspaper?
- If you know it's wrong, don't do it!
- If you're not sure, ask.
- Keep asking until you get an answer.
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What are moral absolutes?
Lines you would never cross to be successful, win, gain a contract etc.
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How are business ethics different on a global level?
- employees must be trained in cross-cultural business pratices
- act with American values while overseas to justify in public
- differentiate bribes from "grease" payments
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What are "grease" payments?
Payment to make a process faster; not a bribe
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