Business Ethics Exam

Question 1

What is Peter Drucker’s key ethical principle?

Answer 1

“Above all, do no harm.” He believes there is no distinction between personal and business ethics, and we should never intentionally cause harm to others.

Question 2

Who are the main adherents of Utilitarianism, and what is its main goal?

Answer 2

John Stuart Mill is the primary adherent. The main goal of Utilitarianism is to create the greatest possible well-being and happiness for the greatest number of people.

Question 3

Theory that suggests that everything is determined by self-interest. Individuals should not interfere with others’ judgments, and laws are necessary to maintain order.

Answer 3

Ethical Egoism

Question 4

The ethical theory that emphasizes duty and moral obligation. Actions are considered ethical or unethical independent of their consequences, based on principles of individual rights and justice.

Answer 4

Deontology

Question 5

Developed by Immanuel Kant, consists of two principles: the Principle of Humanity and the Principle of Universal Law.

Answer 5

The Categorical Imperative

Question 6

Theory that posits that right and wrong come from a divine source, such as the Ten Commandments or natural law.

Answer 6

Divine Command

Question 7

What are the three types of fairness in justice?

Answer 7

Distributive justice: How much each person gets.

Procedural justice: How the distribution is determined.

Interactional justice: Whether the offer was made with dignity and respect.

Question 8

What is the difference between Shareholder theory (Friedman) and Stakeholder theory (Freeman)?

Answer 8

Shareholder theory (Friedman): Corporate executives have a responsibility to maximize profits for shareholders while following societal rules.

Stakeholder theory (Freeman): A firm must consider the interests of all parties affected by its decisions, not just shareholders, emphasizing corporate social responsibility.

Question 9

What functions do stereotypes serve?

Answer 9

Cognitive: They help make sense of the world and process information efficiently.

Motivational: They protect social identity.

Normative: They define what is considered typical or expected behavior.

Question 10

What is the difference between descriptive and prescriptive stereotypes?

Answer 10

Descriptive stereotypes describe characteristics associated with a group.

Prescriptive stereotypes describe how people should behave according to societal expectations.

Question 11

The minimum acceptable offer or bottom line at which a negotiator is indifferent between agreeing to a deal or walking away.

Answer 11

Reservation Price

Question 12

The range between the buyer’s and seller’s reservation prices. If the buyer’s reservation price is higher than the seller’s, a positive bargaining zone exists.

Answer 12

The Bargaining Zone

Question 13

Authority: Using expertise or credentials to influence.

Commitment and Consistency: People tend to stick to their commitments.

Social Proof: People tend to follow others’ behavior.

Liking: People are influenced by those they like.

Answer 13

Influence tactics in negotiation

Question 14

Technique involves asking a series of questions that guide the target into agreeing with a particular position by trapping them in a corner.

Answer 14

Four Walls technique

Question 15

Sustainability is crucial because it helps businesses meet the needs of the present without compromising the ability of future generations to meet their needs. It also represents opportunities for innovation and long-term success.

Answer 15

Why sustainability is important

Question 16

Less facial pleasantness

Nervousness or tension

A higher-pitched voice

Pupil dilation

Fidgeting

Answer 16

Characteristics of liars

Question 17

The main issues include:

Environmental degradation

Waste and circular economy

Resource sourcing

Labor practices

Animal welfare

Consumer transparency

Answer 17

Main product social issues

Question 18

Bribery

Discrimination

Intellectual property rights

Answer 18

The three prominent cross-cultural issues

Question 19

Offering of money or valuable consideration to corrupt someone’s behavior.

Answer 19

Bribery

Question 20

Enron executives engaged in fraudulent activities to inflate stock prices and hide financial losses, leading to the company’s collapse and one of the largest bankruptcies in history.

Answer 20

The smartest guys in the room case

Question 21

The controversy arose when Harvard editor Suzy Wetlaufer’s personal relationship with Welch compromised journalistic objectivity, leading to her resignation.

Answer 21

Jack Welch and the Harvard Review

Question 22

Johnson & Johnson recalled millions of Tylenol capsules after cyanide-laced capsules killed several people, and they introduced tamper-resistant packaging. The company later faced several quality control and safety issues, damaging its reputation.

Answer 22

Tylenol recall incident 1982

Question 23

Payments made by manufacturers to retailers for shelf space in stores, often criticized for creating barriers for smaller companies and potentially being seen as bribery.

Answer 23

Slotting fees

Question 24

A group of youth plaintiffs sued McDonald’s for health issues like obesity, claiming misleading advertising. The case was dismissed, but later appealed, highlighting debates on fast-food liability for consumer health.

Answer 24

McDonald’s lawsuit regarding fast-food liability

Question 26

1. 62% of executives consider sustainability necessary for competitiveness today. 2. It leads to long-term value creation. 3. Sustainability aligns with consumer expectations for transparency and corporate responsibility.

Answer 26

What are some reasons why businesses should embrace sustainability

Question 27

What is the definition of sustainability

Answer 27

Sustainability focuses on meeting the needs of the present without compromising the ability of future generations to meet their needs.

Question 28

It’s better for the buyer or seller to make the first offer if they have information about the other party's reservation price or if it is an appropriate situation, like job negotiations.

Answer 28

True

Question 29

Technique involves asking a series of questions that force the other party into a position where they must comply with the negotiator's request.

Answer 29

Four Walls Technique

Question 30

Why are slotting fees controversial?

Answer 30

Slotting fees are seen as a form of bribery or extortion, often benefiting larger manufacturers and making it difficult for smaller companies to enter the market.

Question 31

What are the concerns with cereal marketing claims?

Answer 31

Companies like General Mills and Kellogg's have faced scrutiny for misleading claims about health benefits, such as "clinically proven" benefits that were not substantiated by FDA standards.

Question 32

What did Walt Disney and Nickelodeon do regarding unhealthy food ads?

Answer 32

Walt Disney stopped accepting ads for unhealthy foods in 2012, setting nutritional standards, while Nickelodeon continued airing ads for unhealthy products, sparking criticism.

Question 33

What ethical issues arose from Jack Welch's affair with Suzy Wetlaufer?

Answer 33

The affair raised questions about journalistic ethics, leading to Wetlaufer’s resignation request and a scandal about Welch’s extensive retirement perks, eventually prompting an SEC investigation into GE's disclosure practices.

Question 34

"Above all, do no harm." Drucker believes that business ethics should align with personal ethics, and companies should ensure they do not intentionally harm people.

Answer 34

key principle of Peter Drucker's ethical approach

Question 35

An ethical theory that promotes actions that maximize well-being or happiness for the greatest number of people. Adherents: John Stuart Mill.

Answer 35

What is Utilitarianism?

Question 36

Theory that asserts that people should act according to their self-interest, as long as it doesn’t harm others. It argues that moral agents should prioritize their own well-being over others.

Answer 36

What is the Ethical Egoism theory?

Question 37

Key adherents of what theory include Ayn Rand, Thomas Hobbes, and Adam Smith.

Answer 37

Ethical Egoism

Question 38

Theory suggests that individuals have basic rights that must be respected and protected by society and government, regardless of the consequences. It often conflicts with Utilitarianism.

Answer 38

What is Rights Theory in ethics?

Question 39

Theory focuses on the inherent morality of actions based on principles like individual rights and justice, regardless of the outcomes.

Answer 39

What does Deontology emphasize in ethical decision-making?

Question 40

A principle that states that one should act only according to maxims that can be consistently willed as a universal law, meaning actions should be universally applicable.

Answer 40

What is the Categorical Imperative in Deontology (Immanuel Kant)?

Question 41

Theory that asserts that ethical standards and moral obligations come from a divine source, such as religious teachings or divine law.

Answer 41

What does Divine Command Theory state about ethics?

Question 42

The central idea of what theory is to create the greatest possible well-being for the greatest number of people, focusing on the consequences of actions.

Answer 42

What is the central idea behind Utilitarianism?

Question 43

Type of Justice: The fairness of the processes used to determine how resources are distributed or how decisions are made.

Answer 43

What is Procedural Justice?

Question 44

What is Interactional Justice?

Answer 44

Type of justice: relates to how individuals are treated in interpersonal interactions, emphasizing dignity and respect when offers or decisions are delivered.

Question 45

The best option available to a party if the current negotiations fail. It helps establish a reservation price and strengthens one's bargaining position.

Answer 45

What is "BATNA" in negotiation?

Question 46

The idea that people are more likely to follow the actions of others, especially if they believe those others are similar to themselves.

Answer 46

Social Proof

Question 47

Liars may exhibit nervousness, a higher-pitched voice, pupil dilation, facial tension, and fidgeting, and their facial expressions may appear less pleasant.

Answer 47

How are liars typically characterized in terms of body language?

Question 48

Ethics in government involves applying moral principles to decisions made by public officials, ensuring transparency, accountability, and fairness in actions and policies.

Answer 48

How is ethics applied in government?

Question 49

The Enron scandal highlighted the dangers of corporate corruption, unethical decision-making, and fraudulent activities, leading to significant financial losses and job layoffs.

Answer 49

What did the Enron scandal teach us about corporate ethics?

Question 50

Rights Theory

Answer 50

Everyone has rights, and the government should protect them.

Question 51

Deontology

Answer 51

We can’t know the results prior to an action, so what is ethical is determined by principles of individual rights & justice

Question 52

Right and wrong come from a divine source (e.g., Ten Commandments, natural law).

Answer 52

Divine Command

Question 53

CARR * Business is a special case with its own set of rules. * If you can’t take the heat, stay out of the kitchen. * Position on bluffing: “Falsehood ceases to be falsehood when it is understood on all sides that the truth is not expected to be spoken.” * The ethics of business are games ethics, different from the ethics of religion. VS. DRUCKER * No distinction between personal and business ethics * We can’t always promise that we’ll make people better off, but we can promise not to intentionally cause them harm * “Above all, do no harm.”

Answer 53

Know Carr and Drucker perspectives on business

Question 54

- Characteristics associated with members of a group - Accomplishments by stereotyped groups are often diminished

Answer 54

Descriptive stereotypes

Question 55

“what most do, all should do” -Violating the prescriptive part of stereotypes can lead to sanctions; e.g. the “irritation” reported by some that Ann Hopkins did not dress or behave as expected by a woman. -Ann Hopkins’ job required assertive and aggressive posture assumed of a male, but the female stereotype demands that she not dress or behave in a masculine way.

Answer 55

Prescriptive stereotypes

Question 56

* Align strategy & sustainability * Compliance first, then competitive advantage * Reactive to proactive * Transparency * Board of directors * Top-down company approach

Answer 56

How to implement sustainability Business & its Product; Ethics in Government