Ch3

Question 1

ethics

Answer 1

individual standards or moral values about what is right and wrong or good or bad

Question 2

business ethics

Answer 2

ethical or unethical behaviours by a manager or employee of an organization

Question 3

managerial ethics

Answer 3

standards of behaviour that guide individual managers in their work

Question 4

conflict of interest

Answer 4

occurs when an activity benefits the employee at the expense of the employer

Question 5

price gourging

Answer 5

charging unreasonably high prices

Question 6

What is the three-step model to determine whether behaviour is ethical or not?

Answer 6

1. Gather relevant facts
2. Determine most appropriate moral values
3. Make a judgement based on the rightness or wrongness of the activity/policy

Question 7

What is a common dilemma faced by managers?

Answer 7

expense account claims

Question 8

What are the four ethical norms used to determine whether behaviour is ethical?

Answer 8

• utility, rights, justice, and caring

Question 9

What are some technological innovations that have created new ethical dilemmas?

Answer 9

cloning, email snooping, bioengineered foods

Question 10

Ponzi scheme

Answer 10

promises investors large returns on their money, but the money taken in by those running the scheme is not invested. The money paid by later investors is used to pay off early investors

Question 11

What are the three most common factors that cause individuals to behave unethically?

Answer 11

pressure, opportunity, and rationalization

Question 12

What should organizations do to reduce unethical behaviour?

Answer 12

demonstrate top management commitment to ethical standards, adopr written codes of ethics, and provide ethics training to employees

Question 13

ethical sourcing

Answer 13

monitoring factories of a supplier to make sure they are providing good working conditions

Question 14

Corporate social responsibility (CSR)

Answer 14

the idea that a business should balance its commitments to individuals and groups that are directly affected by the organization’s activities

Question 15

organizational stakeholders

Answer 15

groups, individuals, and organizations that are directly affected by the practices of an organization and that therefore have a stake in its performance

Question 16

Social Return on Investment (SROI)

Answer 16

a new measure that helps companies understand, manage, and communicate the social value of their activities for stakeholders

Question 17

managerial capitalism

Answer 17

the view that the company’s only responsibility is to make as much profit as possible for its shareholders (without breaking laws)

Question 18

fair trade

Answer 18

a movement motivated by concerns that workers in developing countries are not receiving fair payment for their products

Question 19

What are the four areas most firms consider when defining their social responsibilities?

Answer 19

environment, customers, employees, and investors

Question 20

air pollution

Answer 20

pollution that occurs when a combination of factors lowers air quality

Question 21

Kyoto Summit (1997)

Answer 21

an early attempt by various governments to make an agreement on ways to reduce pollution

Question 22

cap and trade system

Answer 22

created by the United Nations. Companies can purchase carbon credits which give them the right to pollute atmosphere with CO2, but the money collected is used to help fund clean-air projects in developing nations

Question 23

toxic wastes

Answer 23

pollution resulting from the emission of chemical and/or radioactive byproducts of various manufacturing processes into the air, water, or land

Question 24

biomass

Answer 24

Plant and animal waste used to make energy

Question 25

consumerism

Answer 25

a social movement that seeks to protect and expand the rights of their consumers in their dealings with businesses

Question 26

What are the rights of consumers?

Answer 26

1. The right to safe products
2. The right to be informed about relevant aspects of a product
3. the right to be heard
4. the right to choose what they buy
5. the right to be educated about purchases

Question 27

collusion

Answer 27

an illegal agreement among companies to fix prices for their products

Question 28

What are the ethical issues in advertising?

Answer 28

truth in advertising, advertising of counterfeit brands, using stealth advertising, and advertising that’s morally objectionable

Question 29

stealth (undercover advertising)

Answer 29

companies paying individuals to advertise their products without disclosing that they are paid advertisers

Question 30

whistle-blower

Answer 30

a person who calls attention to an unethical, illegal, and/or socially irresponsible practice of a company by publicizing it

Question 31

What are some ways that managers can act irresponsibly toward investors?

Answer 31

improper financial management, misrepresentation of finances, cheque kiting, and insider trading

Question 32

examples of improper financial management

Answer 32

making bad financial decisions, paying too much salaries, sending people to extravagant retreats

Question 33

cheque kiting

Answer 33

illegal practice of writing cheques against money that has not yet arrived at the bank on which the cheque has been written, relying on that money arriving before the cheque clears

Question 34

insider trading

Answer 34

the use of confidentialinformation to gain from the purchase or sale of stock

Question 35

What are the types of approaches to social responsibility?

Answer 35

obstructionist stance (do as little as possible), defensive stance (bare minimum required by law), accommodative stance (meets legal and ethical requirements, sometimes going beyond), proactive stance (seeks opportunities for social responsibility)

Question 36

What are the four steps required for an organization to become socially responsible?

Answer 36

1. top management must strongly support CSR and make it a factor in strategic planning.
2. A committee of top managers must develop a plan detailing the level of support that will be provided
3. Assign an executive the authority to act as director of the firm’s social agenda
4. occasional social audits

Question 37

sustainable development

Answer 37

activities that meet current needs, but will not put future generations at a disadvantage when they try to meet their needs

Question 38

social audit

Answer 38

a systematic analysis of how a firm is using funds earmarked for social responsibility goals and how effective the money spent has been

Question 39

triple bottom line reporting

Answer 39

measuring the social, environmental, and economic performance of a company