Business Ethics Chapter 3
Terms in this set (46)
Who concerns determine whether a specific business action or decision is ethical?
Stakeholders' ethical concerns determine whether specific business actions and decisions are perceived as ethical or unethical. In the case of the government, community, and society, what was merely an ethical issue can soon become a legal debate and eventually law.
When do people typically make ethical decisions?
People make ethical decisions only after they recognize that a particular issue or situation has an ethical component; thus, a first step toward understanding business ethics is to develop ethical-issue awareness.
When do Ethical decisions typically arise?
Ethical issues typically arise because of conflicts among individuals' personal moral philosophies and values, the values and culture of the organizations in which they work, and those of the society in which they live
What is collusion?
Collusion is a secret agreement between two or more parties for a fraudulent, illegal, or deceitful purpose.
Define Deceitful Purposes as it pertains to business ethics.
Deceitful purposes" is the relevant phrase in regards to business ethics, in that it suggests trickery, misrepresentation, or a strategy designed to lead others to believe one truth but not the entire truth.
Define Honesty as it pertains to business ethics.
Honesty refers to truthfulness or trustworthiness. To be honest is to tell the truth to the best of your knowledge without hiding anything.
What is an Ethical Issue?
An ethical issue is a problem, situation, or opportunity that requires an individual, group, or organization to choose among several actions that must be evaluated as right or wrong, ethical or unethical
What is an Ethical Dilemma
An ethical dilemma is a problem, situation, or opportunity that requires an individual, group, or organization to choose among several wrong or unethical actions. There is not simply one right or ethical choice in a dilemma, only less unethical or illegal choices as perceived by any and all stakeholders.
What a conflict of interest?
A conflict of interest exists when an individual must choose whether to advance his or her own interests, those of the organization, or those of some other group.
What is Bribery?
Bribery is the practice of offering something (usually money) in order to gain an illicit advantage. The key issue regarding whether or not something is considered bribery is determining whether the act is illicit or contrary to accepted morality or convention.
What is Corporate Intelligence?
Defined broadly, corporate intelligence is the collection and analysis of information on markets, technologies, customers, and competitors, as well as on socioeconomic and external political trends.
Corporate intelligence (CI) involves an in-depth discovery of information from corporate records, court documents, regulatory filings, and press releases, as well as any other background information that can be found about a company or its executives.
What are the three distinct models of Corporate Intelligence?
a passive monitoring system for early warning, tactical field support, and support dedicated to top-management strategy.
What is the Equal Employment Opportunity Commission (EEOC) and what do they do?
Employment Opportunity Commission (EEOC) is a federal agency that administers and enforces civil rights laws against workplace discrimination. The EEOC investigates discrimination complaints based on an individual's race, color, national origin, religion, sex, age, disability, genetic information, and retaliation for reporting, participating in, and/or opposing a discriminatory practice
As it pertains to discrimination, when can a company be sued?
A company in the United States can be sued if it (1) refuses to hire an individual, (2) maintains a system of employment that unreasonably excludes an individual from employment, (3) discharges an individual, or (4) discriminates against an individual with respect to hiring, employment terms, promotion, or privileges of employment as it relates to the definition of discrimination.
What are the Specifications of the Age Discrimination Act?
Another form of discrimination involves discriminating against individuals on the basis of age. The Age Discrimination in Employment Act specifically outlaws hiring practices that discriminate against people between the ages of 49 and 69, as well as those that require employees to retire before the age of 70
What is the Affirmative Action Program?
To help build work forces that reflect their customer base, many companies have initiated affirmative action programs, which involve efforts to recruit, hire, train, and promote qualified individuals from groups that have traditionally been discriminated against on the basis of race, gender, or other characteristics. Such initiatives may be imposed by federal law on an employer that contracts or subcontracts for business with the federal government, as part of a settlement agreement with a state or federal agency, or by court order
To ensure that Affirmative Actions programs are fair, what implementations were established by the Supreme Court?
To ensure that affirmative action programs are fair, the Supreme Court has established a number of standards to guide their implementation:
(1) There must be a strong reason for developing an affirmative action program;
(2) affirmative action programs must apply only to qualified candidates; and
(3) affirmative action programs must be limited and temporary and therefore cannot include "rigid and inflexible quotas
What Sexual Harassment?
Sexual harassment is a form of sex discrimination that violates Title VII of the Civil Rights Act of 1964.
Sexual harassment can be defined as any repeated, unwanted behavior of a sexual nature perpetrated upon one individual by another. It may be verbal, visual, written, or physical and can occur between people of different genders or those of the same sex
What must an employee do to establish the presence of Sexual Harassment?
To establish sexual harassment, an employee must understand the definition of a hostile work environment, for which three criteria must be met: the conduct was unwelcome; the conduct was severe, pervasive, and regarded by the claimant as so hostile or offensive as to alter his or her conditions of employment; and the conduct was such that a reasonable person would find it hostile or offensive.
What is need to assert a Hostile Environment?
To assert a hostile work environment, an employee need not prove that it seriously affected his or her psychological well-being nor caused an injury; the decisive issue is whether the conduct interfered with the claimant's work performance.29
What is the key Ethical Issue of Sexual Harassment?
The key ethical issue within sexual harassment is called dual relationships or unethically intimate relationships. A dual relationship is defined as a personal, loving, and/or sexual relationship with someone with whom you share professional responsibilities. Potentially, unethical dual relationships are those where the relationship causes either a direct or indirect conflict of interest or a risk of impairment to professional judgment
What must the accused do to protect him or herself from sexual harassment claims?
Another important factor in sexual harassment cases is intent. If the sexual advances in any form are considered mutual, then consent is created. The problem is that, unless the employee or employer gets something in writing before the romantic action, consent can always be questioned, and when it comes to sexual harassment, the alleged perpetrator must prove mutual consent
What steps should be taken to avoid sexual misconduct in the workplace?
1. A statement of policy naming someone in the company as ultimately responsible for preventing harassment at the company.
2.A definition of sexual harassment that includes unwelcome advances, requests for sexual favors, and any other verbal, visual, or physical conduct of a sexual nature; that provides examples of each; and that reminds employees that the list of examples is not all inclusive.
3. A nonretaliation policy that protects complainants and witnesses.
4.Specific procedures for prevention of such practices at early stages. However, if a company puts these procedures in writing, they are expected by law to train, measure, and ensure that the policies are being
5.Establish, enforce, and encourage victims of sexual harassment to report 6.Establish a reporting procedure.
7. Make sure that the company has timely reporting requirements to the proper authorities. Usually, there is a time limitation to file the complaint for a formal administrative sexual charge, ranging from six months to a year. However, the 7374failure to meet a shorter complaint period (for example, sixty to ninety days) so that a "rapid response" and remediation may occur and to help to ensure a harassment-free environment could be a company's defense against the charge that it was negligent.
What is the Kyoto Protocol?
The Kyoto Protocol is an international treaty on climate change committed to reducing emissions of carbon dioxide and five other greenhouse gases and to engaging in emissions trading if they maintain or increase emissions of these gases. The objective is to stabilize greenhouse-gas concentrations in the atmosphere at a level that would prevent dangerous climate changes.
What is Fraud?
In general, fraud is any purposeful communication that deceives, manipulates, or conceals facts in order to create a false impression. Fraud is a crime and convictions may result in fines, imprisonment, or both.
What is Accounting Fraud?
Accounting fraud usually involves a corporation's financial reports in which companies provide important information on which investors and others base decisions that may involve millions of dollars. If the documents contain inaccurate information, whether intentionally or not, then lawsuits and criminal penalties may result.
What is Marketing Fraud?
Marketing fraud—the process of creating, distributing, promoting, and pricing products—is another business area that generates potential ethical issues. False or misleading marketing communications can destroy customers' trust in a company. Lying, a major ethical issue involving communications, is potentially a significant problem. In both external and internal communications, it causes ethical predicaments because it destroys trust.
What is Puffery?
Puffery can be defined as exaggerated advertising, blustering, and boasting upon which no reasonable buyer would rely and is not actionable under the Lanham Act
What is Implied Falsity?
Implied falsity means that the message has a tendency to mislead, confuse, or deceive the public. The advertising claims that use implied falsity are those that are literally true but imply another message that is false. In most cases, this can be done only through a time-consuming and expensive consumer survey, whose results are often inconclusive
What is Literally False?
The characterization of an advertising claim as literally false can be divided into two subcategories: tests prove (establishment claims), in which the advertisement cites a study or test that establishes the claim; and bald assertions (nonestablishment claims), in which the advertisement makes a claim that cannot be substantiated, as when a commercial states that a certain product is superior to any other on the market.
What are Labeling issues?
Labeling issues are even murkier. For example, Netgear Inc. agreed to settle a class-action suit that claimed it exaggerated the data-transfer speeds of its wireless equipment
What is Slamming?
Slamming, or changing a customer's phone service without authorization, is another important issue involving labeling that is specific to the telephone industry. AT&T sued Business Discount Plan (BDP), accusing it of using fraud and deception to routinely "slam" customers to its telecommunication service by suggesting that they were affiliated with AT&T. As part of the settlement, BDP had to send letters to consumers telling them that BDP was not affiliated with AT&T
What is Consumer Fraud?
Consumer fraud involves intentional deception to derive an unfair economic advantage by an individual or group over an organization. Examples of fraudulent activities include shoplifting, collusion or duplicity, and guile.
What is Collusion as it pertains to Consumer Fraud?
Collusion typically involves an employee who assists the consumer in fraud. For example, a cashier may not ring up all merchandise or may give an unwarranted discount.
What is Duplicity as it pertains to Consumer Fraud?
Duplicity may involve a consumer staging an accident in a grocery store and then seeking damages against the store for its lack of attention to safety. A consumer may purchase, wear, and then return an item of clothing for a full refund. In other situations, the consumer may ask for a refund by claiming a defect.
What is Guile as it pertains to Consumer Fraud?
Guile is associated with a person who is crafty or understands right/wrong behavior but uses tricks to obtain an unfair advantage. The advantage is unfair because the person has the intent to go against the right behavior or end.
What is insider trading?
Insider trading is the illegal practice of trading on the stock exchange to one's own advantage through having access to confidential information. There are two types of insider trading: illegal and legal.
What is Illegal Insider Trading
Illegal insider trading is the buying or selling of stocks by insiders who possess material that is still not public. The act, which puts insiders in breach of their fiduciary duty, can be committed by anyone who has access to nonpublic material, such as brokers, family, friends, and employees.
What is Legal Insider Trading?
Legal insider trading involves legally buying and selling stock in an insider's own company, but not all the time. Insiders are required to report their insider transactions within two business days of the date the transaction occurred.
What do Intellectual Property Rights involve?
Intellectual-property rights involve the legal protection of intellectual properties such as music, books, and movies. Laws such as the Copyright Act of 1976, the Digital Millennium Copyright Act, and the Digital Theft Deterrence and Copyright Damages Improvement Act of 1999 were designed to protect the creators of intellectual property.
List some privacy issues that must be addressed in the workplace?
Some privacy issues that must be addressed by businesses include the monitoring of employees' use of available technology and consumer privacy. Current research suggests that, even if businesses use price discounts or personalized services, consumers remain suspicious. However, certain materialistic consumers are still willing to provide personal information, despite the potential risks.54
1. Business can be considered a game people play like basketball or boxing.
YES or NO
No. People are not economically self-sufficient and cannot withdraw from the game of business.
2. Key ethical issues in an organization relate to fraud, discrimination, honesty and fairness, conflicts of interest, and technology.
YES or NO
Yes. See pages 64-82 regarding these key ethical issues and their implications for the organization.
3. Over half of a national sample of employees observe some type of misconduct.
YES or NO
Yes. Figure 3-2 indicates observed misconduct by employees
4. Fraud occurs when a false impression exists, which conceals facts.
YES or NO
No. Fraud must be purposeful, rather than accidental, and exists when deception and manipulation of facts are concealed to create a false impression that causes harm.
5. The most observed form of misconduct is fraud.
YES or NO
No. The most observed form of misconduct in Table 3-1 is abusive or intimidating behavior toward employees