Business Ethics

Question 1

Ethics

Answer 1

Beliefs about right and wrong

• Laws provide a basic standard of behavior but truly ethical behavior goes beyond the basics.
• Universal Ethical Standards are applied to a broad spectrum of situations.
• Trustworthiness, Respect, Responsibility, Fairness, Caring, Citizenship (difference between legal and ethical)

Question 2

Business ethics

Answer 2

The application of right and wrong in the workplace
Ethical dilemmas, values and decision making in business

Question 3

Corporate social responsibility

Answer 3

The obligation of a business to contribute to society and all of its stakeholders.

+ The obligation of a business to assess and take responsibility for its effects on environmental and social well being which goes beyond what is simply legal.

Note: Businesses must also take into consideration the actions of their suppliers and how they treat their employees, the environment and the community

Question 4

Ethics and the individual
How to make ethical decisions

Answer 4

• Ethical choices begin with individuals
• Personal needs, family, personality traits, religion and culture will influence a person’s value system

How to Make Ethical Decisions
Do you understand the dimensions of the problem? Who would benefit? Who would suffer? Are the alternative solutions legal? Are they fair? Does your decision make you comfortable? Could you defend your decision on the nightly news?

Question 5

4 ethical challenges and their definition

Answer 5

Conflict of interest
Situation in which an employee must choose between a business’ welfare and personal gain

Honesty and integrity
Doing what you say you will do and accepting responsibility for your mistakes

Loyalty vs truth
Businesspeople expect their employees to be loyal and to act in the best interest of the company

Whistle-Blowing
Employees’ disclosure to company officials, government authorities, or the media of illegal, immoral, or unethical practices by an organisation

Question 6

Legal vs ethical
(4 combinaisons of legal, illegal, ethical and unethical)

Answer 6

Legal and ethical
Producing high-quality products
Rewarding integrity
Treating employees fairly
Contributing to the community
Respecting the environment

Legal and unethical
Paying non-living wages to workers in developing countries
Producing products that you know will break before their time
Promoting R-rated movies to young teens

Illegal and ethical
Providing rock bottom prices only to distributors in underserved areas
Collaborating with other medical clinics to guarantee low prices in low-income countries (collusion)

Illegal and unethical
Encouraging fraudulent accounting
Embezzling money
Engaging in sexual harassment
Practicing collusion with competitors

Question 7

How to ensure ethical behaviour in an organization

Answer 7

Organizations as a whole will influence ethical behaviour in many ways.

• Some important aspects:
– establish expectations for ethical behaviour with a code of ethics conduct that each employee must sign
– integrate ethics into staff training
– maintain a clear reporting structure
– establish protection for whistleblowers (those that denounce certain unethical actions)
– Make sure that executives lead by example

Question 8

Corporate social responsibility (CSR)
3 points

Answer 8

• Corporate social responsibility (CSR) promotes a vision of business accountability to a wide range of stakeholders, besides shareholders and investors.
• Key areas of concern are environmental protection and the wellbeing of employees, the community and civil society in general, both now and in the future.
• A majority of Americans hope businesses will drive social and environmental change in the absence of government regulation.

Question 9

Who are the stakeholders of a business

Answer 9

Employees
Customers
Environment (including animals)
Community
Investors (corporate governance)

Question 10

CSR : employees

Answer 10

Jobs that comply with legal standards
Providing equal opportunity and diversity
Work place safety
Minimum wage
Protection from sexual harassment
Valuing employee opinions
Providing work/life balance

Question 11

CSR : customers

Answer 11

Respecting consumerism principals:
The right to be safe
The right to be informed
The right to choose
The right to be heard
Delivering quality products
Avoiding planned obsolescence to shorten product life

Question 12

CSR : environment

Answer 12

Avoiding waste of natural resources
Pollution control
Environmental sustainability
Green marketing
Humane treatment of animals
Protection of wildlife

Question 13

CSR : Investors (corporate governance)

Answer 13

Meeting legal standards in all aspects
Spending money wisely
Honesty and transparency in reporting

Question 14

CSR : community

Answer 14

Corporate philanthropy (donations)
Cause related marketing
Demonstrating responsibility by the way it conducts business
Protecting the community values

Question 15

Corporate philanthropy

Answer 15

Business donations to nonprofit groups, including both money and time
CSR is not just about how much of its profits a company donates, but HOW it makes its profits

Question 16

Cause related marketing

Answer 16

Partnerships between businesses and not-for-profit organizations, designed to increase sales for the company and raise money for the not-for-profit organization.

Many companies used cause-related marketing to improve their image and profits but continue practices that are not consistent with CSR

Question 17

Example of poor CSR in sport

Answer 17

Lance Armstrong’s career ended with the biggest sports fraud in history, causing problems for his sponsors and his foundation.

Question 18

Responsibility to employees

Answer 18

• Meet legal standards (minimum wage, your overtime, holidays) as a minimum
• Provide workplace safety (e.g. protective equipment, comfortable environment)
• Protect against harassment
• Value employees’ opinions
• Provide work/life balance (e.g. flexible working hours, day-care at the office)
• Respect and encourage diversity (e.g. gender, ethnicity)
• Offer various benefits that encourage employee well-being (e.g. health plans)

Question 19

Consumerism
What are the 4 rights

Answer 19

Right to safety
Right to be informed
Right to choose
Right to be heard

Question 20

Right to safety

Answer 20

The consumers’ right to safety means that products they purchase must be safe for their intended use, must include thorough and explicit directions for proper use, and must be tested by the manufacturer to ensure product quality and reliability. Business firms should also be aware that consumers and the government have been winning an increasing number of product-liability lawsuits against sellers of defective products. Moreover, the amount of the awards in these suits has been steadily increasing. Yet another major reason for improving product safety is the consumer’s demand for safe products. People will simply stop buying a product they believe is unsafe or unreliable.

Question 21

Right to be informed

Answer 21

The right to be informed means that consumers must have access to complete information about a product before they buy it. Detailed information about ingredients and nutrition must be provided on food containers, information about fabrics and laundering methods must be attached to clothing and lenders must disclose the true cost of borrowing the money they make available to costumers who purchase merchandise on credit. In addition, manufacturers must inform consumers about the potential dangers of using their products.

Question 22

Right to choose

Answer 22

The right to choose means that consumers have a choice of products, offered by different manufacturers and sellers, to satisfy a particular need. The government has done its part by encouraging competition through anti trust legislation. Competition and the resulting freedom of choice provide additional benefits for customers by reducing prices. Collusion between companies is one key reason for a lack of competition in the market.

Question 23

Right to be heard

Answer 23

The forth right means that someone will listen and take appropriate action when customers complain. In fact, corporate management teams begun listening to consumer complains after the end of World War II when competition begun again to increase. Today, businesses are listening even more attentively and many larger firms have consumer relations departments that can be easily contacted via toll-free phone numbers. Actually, one of the services every consumer today expects to receive from the companies he or she selects to purchase things from is consumer support.

Question 24

Poor CSR to customers : rotten apple?

Answer 24

APPLE COMPUTERS:
• iPods had irreplaceable battery.
• Batteries died after 18 months.
• Customers were encouraged to purchase new iPods
• Two customers posted high profile protest videos online.
• APPLE announced replacement program.

Planned obsolescence : Deliberately designing products to fail in order to shorten the time between consumer repurchases

Question 25

Responsibility to community

Answer 25

• Respecting values of local community and their quality of life
• Providing jobs to local workers and improving the local economy
• Donations to increase the quality of life (i.e. community centers, hockey rinks, etc.)
• Encouragement of diversity and inclusion
• Donating paid volunteer time to local charities
• Donations to local charities (through corporate philanthropy and cause-related marketing)

Question 26

Responsibility to investors

Answer 26

Fair stewardship and full disclosure
• No conflict of interest for executives, managers or board of directors (e.g. awarding contracts to family members, etc.)
• Responsible use of corporate dollars (e.g. avoid waste, non-related business expenses)
• Honest reporting of financial information (e.g. disclose potential problems and issues, avoid falsified information)

Question 27

Sustainable development

Answer 27

Sustainable development – doing business to meet the needs of this generation without harming the ability of future generations (conserving energy, natural resources and wildlife and reducing waste and air, soil and water pollution)

Question 28

Green marketing

Answer 28

Green marketing – marketing truly environmental products and practices (may also provide a competitive advantage)