Class 9 (Stakeholder Management, Ethical Dilemmas)

Question 1

what is a stakeholder?

Answer 1

Any actor who could be affected by the
organization’s actions
• Any actors who seek to influence the organization’s
actions

Question 2

what are the questions to ask to understand your key stakeholders?

Answer 2

– Who are your key stakeholders?
• individuals, group, unit or organization that has a stake in whether you are successful in accomplishing your goals

– What are each stakeholders’ interests and expectations?
• Put a (+) sign beside those interest or expectations that are positive and a (-) sign beside those interests or expectations that are negative

– What is the importance of each stakeholder to the successful accomplishment of your goal?

– What is the strength of your relationship with each stakeholder group?

– What actions must you take to meet, clarify, or realign stakeholder interests and expectations?

Question 3

what is political economy of trade?

Answer 3

consumers versus
concentrated stakeholders (“special interest”
groups)

Question 4

describe public choice analysis according to Buchanan and Tullock (1962)

Answer 4

Those stakeholders who would benefit from trade protection (affected
industries, firms & unions) face relatively large benefits/costs if
protection increased / removed
– Therefore these stakeholders have strong incentive to organize for protection

• Those stakeholders who would benefit from trade liberalization
(consumers and firms buying from protected industry) face smaller
benefits/costs on a smaller scale individually if trade is liberalized / restricted
– The cost of defeating the protectionist stakeholders is very high relative to the
benefits of liberalization to the individual consumer
– Therefore consumers have less incentive to organize and may adopt “free rider” stance: let someone else bear political costs of organizing to remove
tariffs

Question 5

public choice example: Jones Act (1920)

Answer 5

Jones act requires that all US coastal shipping

be carried in US built, US owned, US registered, US crewed ships

Question 6

to look at moral development, what 3 levels should be examined?

Answer 6

– At the preconventional level individuals learn what is right and wrong, but may not understand why their behavior is right or wrong

– At the conventional level role-conformity is learned from peers and societal laws

– Finally, in the post conventional level people internalize moral behavior

Question 7

what are the 3 approaches/foundations of ethical behavior?

Answer 7

Teleological approach

Utilitarianism

Deontological approach

Question 8

describe teleological approach

Answer 8

– Decisions are based on the consequences of the action

Question 9

describe utilitarianism

Answer 9

– An action is right if it produces the greatest amount of good

Question 10

describe deontological approach

Answer 10

– Moral judgments are made and moral reasoning occurs independently of consequences

Question 11

relativism vs normatism

Answer 11

• Relativism
– ethical truths depend on the groups holding them

• Normativism
– there are universal standards of behavior that all cultures should follow

Question 12

legal justification is appropriate for ethical choices because:

Answer 12

– The law embodies many of a country’s moral principles
– The law provides a clearly defined set of rules
– The law contains enforceable rules that apply to everyone
– The law reflects careful and wide-ranging discussions

Question 13

the law is inadequate for ethical choices because:

Answer 13

– Some things that are unethical are not illegal
– Laws are slow to develop in emerging areas of concern
– Laws may be based on imprecisely defined moral concepts
– The law often needs to undergo scrutiny by the courts
– The law is not very efficient

Question 14

what is Extraterritoriality?

Answer 14

– imposing domestic legal and ethical practices on the

foreign subsidiaries of companies headquartered in their jurisdictions

Question 15

Countries looking for solutions to common problems
take similar legal steps
– Consider:

Answer 15

• activities that affect the well-being of people

* activities that affect the environment

Question 16

corruption

Answer 16

– the misuse of entrusted power for private gain

Question 17

bribery and why it occurs:

Answer 17

– payments or promises to pay cash or anything of value
– Occurs
• to obtain government contracts
• to get public officials to do what they should be doing
anyway

Question 18

what are initiatives trying to stop bribery?

Answer 18

International accords to stop bribery
– OECD Anti-Bribery Convention
– ICC code of rules
– UN Convention against Corruption

• Regional initiatives include
– EU efforts
– U.S. Foreign Corrupt Practices Act and Sarbanes-Oxley legislation

• Industry initiatives include
– 2005 World Economic Forum zero tolerance pact

Question 19

what is sustainability

Answer 19

– meeting the needs of the present without compromising the

ability of future generations to meet their own needs

Question 20

Companies compromise the environment in multiple

ways:

Answer 20

– contamination of air, soil, or water during manufacturing

– producing products that emit fossil-fuel contaminants

Question 21

ethical dilemmas in the pharmaceutical industry

Answer 21

Tiered pricing and other price-related issues
• WTO Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS)
– generic drugs
• R&D and the Bottom Line
– India

Question 22

ethical labour issues include:

Answer 22

– Wages
– Child labor
– Working conditions
– Working hours
– Freedom of association

Question 23

The UN Global Compact establishes guidelines for:

Answer 23

appropriate behavior in human rights
– labor
– the environment
– anti-corruption

Question 24

a code of conduct:

Answer 24

– sets global policy that must be complied with
– communicates the code to employees, suppliers, and
subcontractors
– ensures that policies are carried out
– reports results to external stakeholders
– Should be as clear as possible (Dan Ariely)

Question 25

unethical and irresponsible behaviour could:

Answer 25

– result in legal sanctions
– result in consumer boycotts
– lower employee morale
– cost sales because of bad publicity

Question 26

when companies face possible losses because of import competition, they have four options:

Answer 26

1. move operations to another country
2. concentrate on market niches that attract less intl. comp.
3. adopt int. innovations such as greater efficiency or superior products
4. try to get governmental protection