Chap 7-8: Common Unethical Practices of Business Establishments & Ethical Dilemma

Question 1

Unethical problems in business ethics occur in

Answer 1

many forms and types

Question 2

The most common of these unethical practices of business establishments are

Answer 2

misrepresentation and over-persuasion

Question 3

Misrepresentation may be classified into two types

Answer 3

Direct misrepresentation and indirect misrepresentation

Question 4

Direct misrepresentation is characterized by

Answer 4

actively misrepresenting about the product or customers

Question 5

practice of placing the product in containers of exaggerated sizes and misleading shapes to give a false impression of its actual contents

Answer 5

Deceptive Packaging

Question 6

is the practice of making false statements on the label of a product or making its container similar to a well-known product for the purpose of deceiving the customer as to the quality and/or quantity of a product being sold

Answer 6

Misbranding or Mislabeling

Question 7

serves a useful purpose if it conveys the right information.

Answer 7

Advertisement

Question 8

Advertisement is the principal means by which people are informed about the

Answer 8

availability, nature, and uses of old and new products.

Question 9

Advertising does not always tell the “whole truth and nothing but the truth” if

Answer 9

it greatly exaggerates the virtues of a product and tells only half of the truth or else sign praises to its non-existence.

Question 10

If advertising does not provide a useful service anymore to the customers, it can become the

Answer 10

agent of misrepresentation

Question 11

is the unethical practice of debasing of a pure or genuine commodity by imitating or counterfeiting it, by adding something to increase its bulk or volume, or by substituting an inferior product for a superior one for the purpose of profit or gain.

Answer 11

Adulteration

Question 12

Adulteration is unethical because

Answer 12

an inferior product is passed off as a superior one. This does not meet the standard for fair service, that is achieving success by offering better service.

Question 13

The mechanism of a the weighing scale is tampered with or something is unobtrusively attached to it so that the scale registers more than the actual weight.

Answer 13

Weight Understatement or Short Weighing

Question 14

The modus operandi of sellers in short weighing is to

Answer 14

use two sets of scales, one which gives the correct weight and has been sealed by the authorities and another which looks identical but registers more weight than the product.

Question 15

The measurement stick or standard is shorter than the real length or smaller in volume than the standard.

Answer 15

Measurement understatement or short measurement

Question 16

In this unethical practice, the seller gives the customer less than the number asked for or paid for

Answer 16

Quantity understatement or short numbering

Question 17

Is characterized by omitting adverse or unfavorable information about the product or service

Answer 17

Indirect Misrepresentation

Question 18

Under the concept, the seller is not obligated to reveal any defect in the product or service he is selling. It is responsibility of the customer to determine for himself the defects of the product

Answer 18

Caveat emptor

Question 19

Caveat emperor is a practice very common among

Answer 19

salesmen

Question 20

Caveat emperor translated means

Answer 20

“let the buyer beware”

Question 21

In caveat emperor the seller is a

Answer 21

witness for the goods he is selling. He testifies to its nature, features, uses, and qualities.

Question 22

Caveat emperor is unethical because

Answer 22

it takes advantage of the buyer’s lack of information. This is passive deception which is also lying

Question 23

No business transaction is fair where one of the parties does not exactly know what he is giving away or receiving in return, what misrepresentation is this?

Answer 23

Deliberate Withholding of Information

Question 24

is passive deception because the businessman is unable to provide the customer with the complete information that the latter needs to make a fair decision

Answer 24

Business Ignorance

Question 25

Direct misrepresentation gives business a bad name while indirect misrepresentation or ___________________ is not as obvious, it nonetheless contributes to the impression that businessman are liars and are out to make a fast buck.

Answer 25

Passive Deception

Question 26

is the process of appealing to the emotions of a prospective customer and urging him to buy an item of merchandise he needs.

Answer 26

Persuasion

Question 27

Persuasion is legitimate and necessary in the selling of goods if it is

Answer 27

done in the interest of a buyer

Question 28

Persuasion used for the sole benefit of selling a product without considering the interest of the buyer

Answer 28

Over-Persuasion

Question 29

Practices of corporate management that involve ethical considerations may be classified into two:

Answer 29

practices of the Board of Directors and practices of executive officers

Question 30

Some of the BOD help themselves to the earnings that otherwise would go to the other stockholders. This is done by voting for themselves and executive officers huge per diems, large salaries, big bonuses that do not commensurate to the value of their services.

Answer 30

Plain Graft

Question 31

Interlocking directorship is often practiced by

Answer 31

a person who holds directorial positions in two or more corporation that do business with each other

Question 32

This practice may involve conflict of interest and can result to disloyal selling

Answer 32

Interlocking Directorship

Question 33

happens when this person is compelled to decide which of the two corporation's interest should be protected or upheld. Thus, whatever decisions the person makes, he betrays the trust reposed on him by the shareholders of either of the two companies

Answer 33

Disloyal Selling

Question 34

involves trading in a public's company's stock by someone who has non-public material information about that stock for any reason.

Answer 34

Insider trading

Question 35

Insider trading can be either illegal or legal depending on

Answer 35

when the insider makes the trade

Question 36

Is any information that could substantially impact on investor's decision to buy or sell the security that has not been made available to the public

Answer 36

Material non-public information

Question 37

Legal insider trading happens when

Answer 37

directors of the company purchase or sell shares, but they disclose their transactions legally

Question 38

Unethical Practices of Executive Officers and Lower Level Managers

Answer 38

1. Claiming a vacation trip to be a business trip 2. Having employees do work unrelated to the business 3. Loose or ineffective controls 4. Unfair labor practices 5. Making false claims about losses to free themselves from paying the compensation and benefits provided by law 6. Making employees sign documents showing that they are receiving fully what they are entitled to under the law when in fact they are only receiving a fraction of what they are supposed to get 7. Sexual Harassment

Question 39

Unethical Practices of Employees

Answer 39

1. Conflicts of Interest 2. Dishonesty

Question 40

is a situation a person faces in which a decision must be made about the inappropriate behavior.

Answer 40

Ethical Dilemma

Question 41

Six-step approach to resolving ethical dilemmas:

Answer 41

1. Obtain the relevant facts 2. Identify the ethical issues from the facts 3. Determine who is affected by the outcome of the dilemma and how each person or group is affected 4. Identify the alternatives available to the person who must resolve the dilemma 5. Identify the likely consequences of each alternative 6. Decide the appropriate action