Ch3 Flashcards
ethics
individual standards or moral values about what is right and wrong or good or bad
business ethics
ethical or unethical behaviours by a manager or employee of an organization
managerial ethics
standards of behaviour that guide individual managers in their work
conflict of interest
occurs when an activity benefits the employee at the expense of the employer
price gourging
charging unreasonably high prices
What is the three-step model to determine whether behaviour is ethical or not?
- Gather relevant facts
- Determine most appropriate moral values
- Make a judgement based on the rightness or wrongness of the activity/policy
What is a common dilemma faced by managers?
expense account claims
What are the four ethical norms used to determine whether behaviour is ethical?
- utility, rights, justice, and caring
What are some technological innovations that have created new ethical dilemmas?
cloning, email snooping, bioengineered foods
Ponzi scheme
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
What are the three most common factors that cause individuals to behave unethically?
pressure, opportunity, and rationalization
What should organizations do to reduce unethical behaviour?
demonstrate top management commitment to ethical standards, adopr written codes of ethics, and provide ethics training to employees
ethical sourcing
monitoring factories of a supplier to make sure they are providing good working conditions
Corporate social responsibility (CSR)
the idea that a business should balance its commitments to individuals and groups that are directly affected by the organization’s activities
organizational stakeholders
groups, individuals, and organizations that are directly affected by the practices of an organization and that therefore have a stake in its performance
Social Return on Investment (SROI)
a new measure that helps companies understand, manage, and communicate the social value of their activities for stakeholders
managerial capitalism
the view that the company’s only responsibility is to make as much profit as possible for its shareholders (without breaking laws)
fair trade
a movement motivated by concerns that workers in developing countries are not receiving fair payment for their products
What are the four areas most firms consider when defining their social responsibilities?
environment, customers, employees, and investors
air pollution
pollution that occurs when a combination of factors lowers air quality
Kyoto Summit (1997)
an early attempt by various governments to make an agreement on ways to reduce pollution
cap and trade system
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
toxic wastes
pollution resulting from the emission of chemical and/or radioactive byproducts of various manufacturing processes into the air, water, or land
biomass
Plant and animal waste used to make energy
consumerism
a social movement that seeks to protect and expand the rights of their consumers in their dealings with businesses
What are the rights of consumers?
- The right to safe products
- The right to be informed about relevant aspects of a product
- the right to be heard
- the right to choose what they buy
- the right to be educated about purchases
collusion
an illegal agreement among companies to fix prices for their products
What are the ethical issues in advertising?
truth in advertising, advertising of counterfeit brands, using stealth advertising, and advertising that’s morally objectionable
stealth (undercover advertising)
companies paying individuals to advertise their products without disclosing that they are paid advertisers
whistle-blower
a person who calls attention to an unethical, illegal, and/or socially irresponsible practice of a company by publicizing it
What are some ways that managers can act irresponsibly toward investors?
improper financial management, misrepresentation of finances, cheque kiting, and insider trading
examples of improper financial management
making bad financial decisions, paying too much salaries, sending people to extravagant retreats
cheque kiting
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
insider trading
the use of confidentialinformation to gain from the purchase or sale of stock
What are the types of approaches to social responsibility?
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)
What are the four steps required for an organization to become socially responsible?
- top management must strongly support CSR and make it a factor in strategic planning.
- A committee of top managers must develop a plan detailing the level of support that will be provided
- Assign an executive the authority to act as director of the firm’s social agenda
- occasional social audits
sustainable development
activities that meet current needs, but will not put future generations at a disadvantage when they try to meet their needs
social audit
a systematic analysis of how a firm is using funds earmarked for social responsibility goals and how effective the money spent has been
triple bottom line reporting
measuring the social, environmental, and economic performance of a company
