Chapter 3 Flashcards
Ethics
just, right vs. wrong, morality
Business Ethics
What constitutes right and wrong behavior in the world of business and how moral and ethical principles are applied by businesspeople to situations that arise in their daily work lives.
Why study business ethics?
lawmakers intentionally leave loopholes in the law so we need ethical business people to make the right decisions
Law does NOT equal ethical behavior
just because the law allows you to do something doesn’t mean that it is ethical, making an ethical decision does start with compliance with the law
It would be illegal and unethical to sell toys with led that are against US regulatory code in the US, but what about in a 3rd world country that doesn’t have the regulatory code? Is that unethical?
It’s not illegal, but unethical.
Moral Minimum
at a minimum to make a moral, ethical decision we need to comply with the law
Private/Professional Codes of Ethics
professions also have codes of ethics (the accounting profession, the law profession) Accountants can personally be sued
Business as a Profit Maximizer
traditionally why you go into business: to make money, if your sole purpose is to make a lot of money, it could lead to unethical decisions
Business as a Corporate Citizen
more modern approach to business, triple bottom line focus (perception of more ethical)
Triple bottom line
Profits
Decisions we make, and impact on people
Decisions we make, and impact on the planet
Four-part analysis of the importance of ethical leadership
- Legal implications of a decision (relates to minimum)
- Public relations impact
- Safety risk for customers and employees
- Financial implications
Al-Dabagh v. Case Western Reserve University
Medical student who the university wouldn’t certify for graduation and who was dismissed from the school based on a violation of the school’s core competency of professionalism, which includes “ethical, honest, responsible, and reliable behavior.” Amier did extremely well academically (top of class), sexually harassed students, asked instructors to not count him late/absent, rude condescending behavior, drunk driving conviction.
Committee of students unanimously agreed to kick him out. He tried to argue that the only thing that matters is academics.
The court sided with the university.
Unrealistic Goals for Employees
setting unrealistic goals for employees can lead to unethical behavior.
Impossible to reach sales quotas, leads to cutting corners
Fostering of Unethical Conduct
you’re the manager and you are lying to the client, the client asked you to do something illegal and you do it
Watson Lab. v. State of Mississippi
Watson Laboratories, Inc. makes generic drugs, which are provided by pharmacies to Medicaid patients. In the state of Mississippi, a claim is submitted for the cost of the drug to Mississippi Medicaid. The claim is paid according to a percentage of the drug’s average wholesale price (AWP). Like other drug makers, Watson published its products’ AWPs. But for more than a dozen years, Warson set each AWP to meet the requirements to obtain a generic designation for the drug, without regard to the actual price. When Mississippi Medicaid learned that the actual prices were much lower than the published AWPs, the state filed a lawsuit in a Mississippi state court against Watson, alleging fraud.
The court concluded that Watson had caused the state to overpay for the drugs and ordered the payment of more than $30 million in penalties, damages, and interest. Watson appealed.
