Chapter 7

Question 1

is the study of appropriate business policies and practices regarding potentially controversial subjectsincluding corporate governance,insider trading, bribery, discrimination, corporate social responsibility, and fiduciary responsibilities.

Answer 1

Business ethics

Question 2

Importance of Business Ethics

Answer 2

Control Business Malpractices
Better Relation with Employees Improves Customer Satisfaction Increase Profitability
Improves Business Goodwill
Better Decision Making
Protection of Society

Question 3

Philosophies of Business Ethics and Social Responsibility

Answer 3

The Friedman View -
The Cultural Relativist View -
The Righteous Moralist View -
The Utilitarian View

Question 4

named for its main supporter, the late economist Milton Friedman – says a company’s sole responsibility is to maximize profits for its owners (shareholders) while operating within the law.

Answer 4

Friedman View

Question 5

says that a company should adopt local ethics wherever it operates because all belief systems are determined within a cultural context

Answer 5

Cultural Relativist View

Question 6

says that a company should maintain its homecountry ethics wherever it operates because the home-country’s view of ethics and responsibility is superior to other’s view.

Answer 6

Righteous Moralist View

Question 7

says that a company should behave in a way that maximizes “good” outcomes and minimizes “bad” outcomes wherever it operates.

Answer 7

The utilitarian view

Question 8

Root causes of unethical behavior

Answer 8

Personal Ethics-
Decision-making processes- Leadership-
Unrealistic performance expectations- Organized culture

Question 9

Ethical Issues in international business

Answer 9

employment practices
human rights
environmental regulations
corruption
The moral obligation of multinational companies

Question 10

is dishonest behavior by those in positions of power, such as managers or government officials.

Answer 10

Corruption

Question 11

Corruption can include

Answer 11

giving or accepting bribes or inappropriate gifts,
double-dealing,
under-the-table transactions, manipulating elections,
diverting funds,
laundering money and
defrauding investors

Question 12

is a fraudulent investing scam promising highrates of returnwith little risk to investors.

Answer 12

A Ponzi Scheme:

Question 13

is defined byBlack’s Law Dictionaryas theoffering,giving,receiving, orsolicitingof any item of value to influence the actions of an official, or other person, in charge of a public orlegalduty.

Answer 13

Bribery

Question 14

is the wrongful use of actual or threatened force, violence, or intimidation to gain money or property from an individual or entity

Answer 14

Extortion

Question 15

Pros to CSR

Answer 15

Profitability and Value
Better Customer Relations

Question 16

Cons to CSR

Answer 16

CSR costs money to implement
Conflicts with the Profit Motive
Consumers are wise to greenwashing

Question 17

is term used to describe corporate practices that appear to be environmentally responsible without actually representing a change in how a company conducts its business

Answer 17

Greenwashing

Question 18

Act that was designed to prevent the kind of fraud and abuse that led to the Enron downfall

Answer 18

Sarbanes-Oxley Act of 2002

Question 19

Causes of the Enron Scandal

Answer 19

Dubious Accounting Practices
Enron’s misleading accounts
Mark to market accounting
Special purpose entities
Executive compensation
Financial Audit
Overstatement of Profits