Chapter 2: Integrity and Ethics: Foundations for Success in Small Business

Question 1

What is Integrity?

Answer 1

A general sense of honesty and reliability that is expressed in a strong commitment to doing the right thing regardless of the circumstances

Question 2

Acting with integrity requires that an individual first considers this

Answer 2

the welfare of others

Question 3

A business owner should strive to live up to the highest standards of these in their business relationships

Answer 3

Honesty, fairness, and respect

Question 4

Entrepreneurs must often make decisions regarding what is

Answer 4

Respectful and fair

Question 5

Different groups must be considered while making decisions. These groups are

Answer 5

Owners/Stockholders
Customers
Employees
Community 
Government

Question 6

Individuals or groups who either can affect or are affected by the performance of the company

Answer 6

Stakeholders

Question 7

The big three stakeholders are

Answer 7

Owners, Customers, and Employees

Question 8

The big three is often referred to as

Answer 8

Primary Stakeholders

Question 9

Some believe there is only one social responsibility of business, and that is to use its resources and engage in activities designed to increase these

Answer 9

Profits

Question 10

Profits should be earned

Answer 10

honestly

Question 11

Owners have a clear and legitimate right to benefit from the

Answer 11

financial profit of the company

Question 12

These can sometimes be misleading without technically being illegal

Answer 12

Financial Reports

Question 13

Who must the company please?

Answer 13

Customers

Question 14

Owners who take customers seriously and care about them as individuals are

Answer 14

Apt to have more of them

Question 15

Customer satisfaction with excellent products and service leads to

Answer 15

Healthy Sales

Question 16

These issues are inherent in decisions and practices regarding hiring, promotions, salary increases, dismissals, layoffs, and work assignments

Answer 16

Fairness, honesty, and impartiality

Question 17

What are employees concerned with that should not be ignored

Answer 17

Privacy, safety, and health issues

Question 18

With employees, as well as everyone else, what should owners be?

Answer 18

Truthful and fair

Question 19

What should owners show their employees?

Answer 19

Proper Appreciation

Question 20

What kind of work employee should an owner create?

Answer 20

a positive one

Question 21

Lapses in integrity can do this easily

Answer 21

Pass down from superiors to subordinates like a virus

Question 22

What is a company’s ethical obligations to the community?

Answer 22

Social Responsibilities

Question 23

Social responsibilities are often referred to as

Answer 23

the price of freedom to operate independently in a free economy

Question 24

Although companies should not expect a reward from their social contributions, customers often do reward them through these

Answer 24

repeat sales, and a willingness to pay a little more for what they get

Question 25

Social responsibilities can be seen as this

Answer 25

a luxury that the company simply cannot afford

Question 26

An owner must limit his social contributions to

Answer 26

what a company can afford

Question 27

A commitment to the community is not only good ethically, but it can be

Answer 27

good for business

Question 28

How does the government intervene directly into the economy?

Answer 28

By establishing laws to ensure healthy competition

Question 29

What are some examples of the government intervening in business matters?

Answer 29

Workplace Safety | Equal Employment

Question 30

What is it called when a company conceals some income?

Answer 30

Skimming

Question 31

Paying all forms of required taxes is a

Answer 31

Non-negotiable feature of integrity

Question 32

Misrepresentation of the facts to mislead others intentionally and earn their confidence is known as

Answer 32

The Legitimacy lie

Question 33

What does a legitimacy lie do to a company in the eyes of its customers

Answer 33

threatens the reputation and the trust that goes with it

Question 34

What are some concerns of prospective customers

Answer 34

Will the product serve my needs better than the alternative? Do the company's representatives know what they are talking about? Will the organizations still be around to stand behind its product if I have a problem six months from now?

Question 35

A small firm's legitimacy is staked on who?

Answer 35

The reputation of its owner

Question 36

How must a company be with customers about its practices and its privacy policy?

Answer 36

Honest and transparent

Question 37

Original intellectual creations, including inventions, literary creations, and works of art that are protected by patents and copyrights

Answer 37

Intellectual Property

Question 38

The belief that the ethical standards of one's own country can be applied universally

Answer 38

Ethical Imperialism

Question 39

The belief that ethical standards are subject to local interpretation

Answer 39

Social Relativism

Question 40

Long term benefits of adapting ethical and responsible business practices include

Answer 40

Improved financial performance Enhanced brand image and reputation Increased sales and customer loyalty Improved productivity and quality Better recruitment and reduced employee turnover Fewer regulatory inspections and less paperwork Improved access to capital

Question 41

What is the greatest benefit of integrity in business?

Answer 41

The trust it generates

Question 42

Beliefs that provide a foundation for ethical behavior in a firm is known as a person or business'

Answer 42

Underlying values

Question 43

What does business behavior reflect?

Answer 43

The level of a person's commitment to honesty, respect, truthfulness, etc

Question 44

The founder must express the importance of integrity by

Answer 44

leading with integrity

Question 45

What is key to a firm's ethical performance?

Answer 45

The personal integrity of the founder and/or owner

Question 46

Integrity in a business requires this

Answer 46

A supportive organizational culture

Question 47

What are the five fundamental principles for a supportive organizational culture?

Answer 47

``` Purpose Pride Patience Persistence Perspective ```

Question 48

Vision for the company including the founder's core values are known as

Answer 48

Purpose

Question 49

This will lead to more ethical behavior in the business

Answer 49

Pride

Question 50

It is important to not push too hard for short term results

Answer 50

Patience

Question 51

Stand by your word; do not back down

Answer 51

Patience

Question 52

It is important to reflect on where your business is going, why it's going there, and how you plan to get it there

Answer 52

Perspective

Question 53

The official standards of employee behavior formulated by a business owner is known as a

Answer 53

Code of Ethics

Question 54

The code of ethics shape and improve organizations by

Answer 54

Defining behavioral expectations Communicating that those expectations apply to employees to all levels of the business Helping employees convey the company's standards of conduct to suppliers and customers Serving as a tool for handling peer pressure Providing a formal channel for communicating with superiors without fear of reprisal

Question 55

Other than expressing the principles that should be followed by employees, what should a code of ethics do?

Answer 55

Provides examples of these principles in action

Question 56

What does the Better Business Bureau do?

Answer 56

Shapes the conduct of businesses and promote ethical conduct

Question 57

The BBB promotes ethical behavior by

Answer 57

Providing consumers with information so they can make informed decisions Creating an incentive for businesses to adhere to proper practices and addressing customer complaints Resolving questions or disputes through mediation or arbitration

Question 58

The Ethical Decision Making Process is

Answer 58

``` Define the problem Identify alternative solutions to the problem Evaluate the identified alternatives Make the Decision Implement the decision Evaluate the decision ```

Question 59

A profitable company that responds to customers' needs while showing reasonable concern for the environment

Answer 59

Sustainable small business

Question 60

The effort to protect and preserve the environment

Answer 60

Environmentalism