Chapter 5

Question 1

What is the difference between ethics and legality?

Answer 1

Ethics - standards of moral behaviour

Legality - refers to laws that protect us from fraud, violence, theft etc

Question 2

What are the reasons that a business should be managed ethically?

Answer 2

• to maintain a good reputation
• to keep existing customers and attract new ones
• to avoid lawsuits
• to reduce employee turnover
• to avoid government intervention

Question 3

What 2 categories can ethics be classified into?

Answer 3

1. Compliance-based ethics code: emphasize preventing unlawful behaviour by increasing control
2. Integrity-based ethics codes: define the organization’s guiding values, create an environment that supports ethical behaviour

Question 4

What are whistleblowers?

Answer 4

People who report illegal or unethical behaviour

Question 5

What is corporate social responsibility?

Answer 5

The concern business’ have for the welfare of society, not just their owners

Question 6

What are arguments for and against CSR?

Answer 6

For: Businesses owe their existence to the societies they serve and cannot succeed in failing societies

Against: Managers who pursue CSR and using invested money and are stealing from investors

Question 7

What is corporate philanthropy?

Answer 7

Charitable donations to non-profit groups

Question 8

What are corporate social initiatives?

Answer 8

Includes enhanced forms of corporate philanthropy that are more directly related to the company’s competencies

Question 9

What is corporate responsibility?

Answer 9

Includes hiring minority workers, making safe products, minimizing pollution, providing a safe work environment

Question 10

What is corporate policy?

Answer 10

Refers to the position a firm takes on social and political issues

Question 11

What are the two views of corporate responsibility to stakeholders?

Answer 11

1. Strategic Approach - management’s primary orientation be toward the economic interests of shareholders
2. Pluralist Approach - recognizes the responsibility of management to optimize profits, but not at the expense of employees, suppliers or the community

Question 12

What are the 4 basic rights of consumers?

Answer 12

1. The right to safety
2. The right to be informed
3. The right to choose
4. The right to be heard

Question 13

What is insider trading?

Answer 13

Using private company information to further one’s own fortunes

Question 14

What is a social audit?

Answer 14

A systematic evaluation of an organization’s progress toward implementing programs that are socially responsible

Question 15

What is a triple-bottom line?

Answer 15

A framework for measuring and reporting corporate performance against economic, social and environmental parameters

Question 16

What are the 4 types of watchdogs that enforce ethical and social responsibility policies?

Answer 16

1. Socially conscious investors
2. Environmentalists
3. Union officials
4. Customers

Question 17

What is sustainable development?

Answer 17

Implementing a process that integrates environmental, economic and social considerations into decision making

Question 18

What is fair trade?

Answer 18

A social movement dedicated to making sure that producers in developing countries are paid a fair price for the goods we consume