Chapter 4

Question 1

Ethics definition

Answer 1

The inner guiding moral principles, values and beliefs that people use to analyse or interpret a situation and then decide what is the appropriate way to behave

Ethics indicates what is innapropriate behaviour and what a person should do to avoid harming another person

Question 2

Ethical dilemma

Answer 2

The difficulty people face when
* they have to decide if they should act in a way that might help another person or group
* even though doing so might go against their own self-interest

whether or not something is ethical or unethical is disputable

Question 3

Ethics and Law

Answer 3

Neither ethics and law remain fixed - they change over time

Ethical beliefs change as time passes; laws change to reflect these changing beliefs of society

Question 4

What is a stakeholder

Answer 4

People and groups that supply a company with its productive resources and so have claim or stake in the company

Question 5

Stakeholders and ethics

Answer 5

Stakeholders can directly benefit or be harmed by the company’s actions - ethical actions are important to them

Question 6

Examples of stakeholders

Answer 6

1. Stockholders
2. Managers
3. Customers
4. Community
5. Suppliers and Distributors
6. Employees

Question 7

Stockholders

stakeholders

Answer 7

Owns stock/shares in a company
* have partial ownership in the company
* have right to receive dividends

Question 8

Utilitarian Rule

Rules for ethical decision making

Answer 8

An ethical decision should produce the greatest good for the greatest number of people

Dillemma: How to measure the benefit and harm that will be done to each stakeholder group

Question 9

Moral Right Rule

Rules for ethical decision making

Answer 9

An ethical decision should maintain and protect the fundamental rights and priveleges of people

• “Do unto others as you would have them do unto you”

Dillemma: Decisions that will protect the rights of some often will hurt the rights of others

Question 10

Justice Rule

Rules for ethical decision making

Answer 10

An ethical decision distributes benefits and harms among people and groups in a fair, equitable, or impartial way

Dilemma: To act fairly

Question 11

Practical Rule

Rules for ethical decision making

Answer 11

An ethical decision is one that a manager has no reluctance about communicating to people outside the company - because the typical person in a society would think it is acceptable

Question 12

Practical Rule

A business decision is ethically acceptable if a manager can answer the following:

Rules for ethical decision making

Answer 12

1. Does my decision fall within the accepted values or standards that typically apply in business activity today?
2. Am I willing to see the decision communicated to all people and groups affected by it? (reported on TV, social media)
3. Would the people with whom I have a significant personal relationship (family, friends) approve of the decision?

Question 13

Effects of ethical and unethical behaviour

Answer 13

Ethical behaviour increases while unethical behaviour reduces:
* Efficiency and effectiveness
* Company performance
* Standard of living, wellbeing and prosperity

Question 14

Trust

Answer 14

The willingness of one person/group to have faith or confidence in the goodwill of another person, even though this puts them at risk

When one person acts in a trustworthy way, this encourages others to act in the same way

Question 15

Reputation

Answer 15

The esteem or high repute that individuals or organisations gain when they behave ethically

A manager or company known for ethical business practices will develop a good reputation

Question 16

The sources of ethics:

Answer 16

1. Societal Ethics
2. Occupational Ethics
3. Individual Ethics
4. Organisational Ethics

Question 17

Societal Ethics

Answer 17

Standards that govern how members of a society should deal with one another in matters involving issues such as fairness, justice, poverty, and the rights of the inividual

Societal ethics vary among societies

Question 18

Occupational Ethics

Answer 18

Standards that govern how members of a profession, trade, or craft should conduct themselves when performing work-related activities

Question 19

Individual Ethics

Answer 19

Personal standards and values that determine how people view their responsibilities to others and how they should act in situations when their own self-interests are at stake

Question 20

Organisational Ethics

Answer 20

The guiding practices and beliefs through which a particular company and its managers view their responsibility toward their stakeholders

Credo - company’s code of ethics

Question 21

Social responsibility

Answer 21

The way a company views their duty or obligation to make decisions that protect, enhance, and promote the welfare and well-being of stakeholders and society as a whole

Question 22

Why be socially responsible?

Answer 22

• Good reputation - enhances profitability
• Enhances quality of life - If all companies in a society are socially responsible
• “You reap what you sow”

Question 23

Approaches to social responsibillity

Answer 23

From low to high social responsibility:

1. Obstructionist approach
2. Defensive approach
3. Accommodative approach
4. Proactive approach

Question 24

Obstructionist approach

Answer 24

Companies and their managers choose not to behave in a socially responsible way and instead behave unethically and illegally

unethical and illegal

Question 25

Defensive approach

Answer 25

Companies and their managers behave ethically to the degree that they stay within the law and strictly abide by legal requirements | unethical and legal ## Footnote make no attempt to exercise social responsibility beyond what the law dictates

Question 26

Accommodative approach

Answer 26

Companies and their managers behave legally and ethically and try to balance the interests of different stakeholders as the need arises | want to do the right thing ## Footnote Acknowledges the need to support social responsibility

Question 27

Proactive approach

Answer 27

Companies and their managers go out of their way to learn the needs of different stakeholder groups and use organisational resources to promote the interests of all stakeholders | exceptional ## Footnote Actively embrace socially responsible behaviour

Question 28

The role of organisational culture

Answer 28

Ethical organisational cultures encourage organisational members to behave in a socially responsible manner

Question 29

Ethics officer

Answer 29

A manager responsible for communicating and teaching ethical standards to all employees and monitoring their conformity to those standards ## Footnote or an ethics ombudsperson