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Arts and Humanities
Ch.4 Business Ethics
Terms in this set (19)
The study of what constitutes right and wrong behavior.
Ethics in a business context; a consensus of what constitutes right or wrong behavior in the world of business and the application of moral principles to situations that arise in a business setting.
Why study Business Ethics?
1. Profit Maximization: Strengthening a corporation through ethical acts to gain profit.
2. Triple-Bottom Line: The idea that investors and others should consider not only corporate profits, but also the corporation's impact on people and on the planet in assessing the firm. (The bottom line is people, planet, and profits.)
The minimum degree of ethical behavior expected of a business firm, which is usually defined as compliance with the law.
A reasoning process in which an individual links his or her moral convictions or ethical standards to the particular situation at hand.
An ethical philosophy rooted in the idea that every person has certain duties to others, including both humans and the planet. Those duties may be derived from religious principles or from other philosophical reasoning.
Principle of Rights
The principle that human beings have certain fundamental rights (to life, freedom, and the pursuit of happiness, for example). Those who adhere to this "rights theory" believe that a key factor in determining whether a business decision is ethical is how that decision AFFECTS THE RIGHTS OF OTHERS. These others include the firm's owners, its employees, the consumers of its products or services, its suppliers, the community in which it does business, and society as a whole.
Kantian Ethical Principles
German Philosopher Immanuel Kant identified general guiding principles of Duty-Based Ethics. Believed human beings are endowed with moral integrity and the capacity to reason.
A concept developed by the philosopher Immanuel Kant as an ethical guideline for behavior. In deciding whether an action is right or wrong, or desirable or undesirable, a person should evaluate the action in terms of WHAT WOULD HAPPEN IF EVERYONE ELSE in the same situation, or category, acted the same way.
An ethical philosophy that focuses on the impacts of a decision on society or on key stakeholders.
An approach to ethical reasoning in which ethically correct behavior is related to an evaluation of the consequences of a given action on those who will be affected by it. In utilitarian reasoning, a "good" decision is one that results in the GREATEST GOOD for the greatest number of people affected by the decision.
1. Determine which individuals are effected.
2. Cost Benefit Analysis: A decision-making technique that involves weighing the costs of a given action against the benefits of the action.
3. Make choice among alternatives
Corporate Social Responsibility (CSR)
The concept that corporations can and should act ethically and be accountable to society for their actions. Commitment to good citizenship, improving society and minimizing environmental impact. (Stakeholders, Shareholders, Community)
Ethical Systematic Approach
Groups, other than the company's shareholders, that are affected by corporate decisions. Stakeholders include employees, customers, creditors, suppliers, and the community in which the corporation operates.
Foreign Corrupt Practices Act (FCPA)
-Prohibits bribery to foreign officials to act in their favor
-Allows bribes to minor officials, "grease payment"
-Permits payments to foreign officials if such payments are lawful in foreign country
Johnson Construction v. Schaffer
-Johnson Construction took their leaking truck to Schaffer 3 different times because it was not repaired properly the first times, the third time Schaffer quoted the damage at $1,000 but ended up charging over $5000, therefore Johnson Construction filed a lawsuit for unfair trading practices.
Holding: Trail court held that Schaffer acted deceptively and wrongfully, awarded Johnson Company with $4250 and Schaffer his $1000, Schaffer appeals
-Appellate court affirmed trail courts actions.
May v. Chrysler Group LLC
-Otto May went through 3 years of harassment while working for Chrysler which they did little to stop and filed a lawsuit for $3.5 million in punitive damages.
-Holding: Judge overturned damages award, May appealed
-Appellate court: reinstated punitive damages award based on the unethical nature of Chrysler's failure to sufficiently address the issue
Moseley v. Pepco Energy Services
-Moseley works for Pepco for 25 years in which he sees the manager Herzog act in unethical ways by hiring family members, Moseley reports it on the yearly ethical survey and Herzog is then fired, Moseley applies for his position and is denied i.e.
-Files lawsuit against the unethical behavior of the company
-Holding: the is question of fact, and defendants dismiss of summary judgement is denied
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