Chapter1 Ethics

8/9/2019 Chapter1 Ethics

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Chapter 01Ethics and Business

True/False Questions

1. Ethical decision making in business is limited to major corporate decisions with dramatic socialconsequences.

Answer: FalseDifficulty: Easy

earning !bjecti"e: #1$#1%opic: &ntroduction: 'aking the (ase for )usiness Ethics

)loom*s %a+onomy: ,emember

AA(-): Ethics

age: /Feedback: Ethical decision making in business is not at all limited to the type of major corporate decisions

with dramatic social consequences. At some point0 e"ery worker0 and certainly e"eryone in a management

role0 will be faced with an issue that will require ethical decision making.

. &n business0 e"ery decision can be co"ered by economic0 legal0 or company rules and regulations.

Answer: FalseDifficulty: Easy


)loom*s %a+onomy: ,ememberAA(-): Ethics

age: /

Feedback: At some point0 e"ery worker0 and certainly e"eryone in a managerial role0 will be faced with an

issue that will require ethical decision making. 2ot e"ery decision can be co"ered by economic0 legal0 orcompany rules and regulations.

3. %he direct costs of unethical business practice are more "isible today than they ha"e e"er been before.

Answer: %rue

Difficulty: Easy



age: 4Feedback: %he direct costs of unethical business practice are more "isible today than perhaps they ha"e e"er

been before. %he first decade of the new millennium has been riddled with highly publici5ed corporatescandals0 the effects of which did not escape people of any social or income class.

/. &n a general sense0 a business stakeholder is one who has made substantial financial in"estments in thebusiness.

Answer: False

Difficulty: 'edium



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)loom*s %a+onomy: 6nderstandAA(-): Ethics

age: 7

Feedback: &n a general sense0 a business stakeholder will be anyone who affects or is affected by decisions

made within the firm0 for better or worse.

4. A firm*s ethical reputation can pro"ide a competiti"e ad"antage in the marketplace with customers0

suppliers0 and employees. Answer: %rueDifficulty: Easyearning !bjecti"e: #1$#1

%opic: &ntroduction: 'aking the (ase for )usiness Ethics


AA(-): Ethicsage: 8

Feedback: A firm*s ethical reputation can pro"ide a competiti"e edge in the marketplace with customers0suppliers0 and employees.

9. %he rayson$;imes ay for erformance Act was passed to amend the e+ecuti"e compensation

pro"isions of the Emergency Economic -tabili5ation Act of ##8.Answer: %rue

Difficulty: Easyearning !bjecti"e: #1$#1

%opic: &ntroduction: 'aking the (ase for )usiness Ethics)loom*s %a+onomy: ,emember

AA(-): Ethics

age: 1#

Feedback: %he rayson$;imes ay for erformance Act was passed


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)loom*s %a+onomy: 6nderstand AA(-): Analyticage: 17

Feedback: 2orms establish the guidelines or standards for determining what we should do0 how we should

act0 what type of person we should be. Another way of e+pressing this point is to say that norms appeal to

certain "alues that would be promoted or attained by acting in a certain way.

1#. %echnically speaking0 "alues are not necessarily positi"e or ethical in nature. Answer: %rue

Difficulty: 'edium earning !bjecti"e: #1$#/%opic: )usiness Ethics as ersonal &ntegrity and -ocial ,esponsibility)loom*s %a+onomy: 6nderstand

AA(-): Ethics

age: 18

Feedback: &n general0 "alues are those beliefs that incline us to act or to choose one way rather than another.!ne important implication of this guidance0 of course0 is that an indi"idual*s or a corporation*s set of "alues

may lead to either ethical or unethical result.

11. Ethical "alues are personal codes of ethics that ensure that indi"idually0 a person meets his or her

standards of well$being. Answer: False

Difficulty: 'ediumearning !bjecti"e: #1$#/

%opic: )usiness Ethics as ersonal &ntegrity and -ocial ,esponsibility)loom*s %a+onomy: 6nderstand

AA(-): Ethicsage: 18

Feedback: &t is important to know two elements of ethical "alues. First0 ethical "alues ser"e the ends of

human well$being. -econd0 the well$being promoted by ethical "alues is not a personal and selfish well$

being. %hus0 ethical "alues are those beliefs and principles that impartially promote human well$being.

1. %he well$being promoted by ethical "alues is not a personal and selfish well$being. Answer: %rueDifficulty: Easy earning !bjecti"e: #1$#/ %opic: )usiness Ethics as ersonal &ntegrity and -ocial

,esponsibility)loom*s %a+onomy: ,emember AA(-): Ethics> Analytic

age: 18Feedback: &t is important to know two elements of ethical "alues. First0 ethical "alues ser"e the ends of

human well$being. -econd0 the well$being promoted by ethical "alues is not a personal and selfish well$being. %hus0 ethical "alues are those beliefs and principles that impartially promote human well$being.

13. -ocieties that "alue indi"idual freedom will be reluctant to legally require acts of charity0 personalintegrity0 and common decency.

Answer: %rue

Difficulty: Easy earning !bjecti"e: #1$#4 %opic: Ethics and the aw)loom*s %a+onomy: ,emember AA(-): Ethics age: 1

Feedback: -ocieties that "alue indi"idual freedom will be reluctant to legally require more than just an

ethical minimum. -uch liberal societies will seek legally to prohibit the most serious ethical harms0 but theywill not legally require acts of charity0 common decency0 and personal integrity that may otherwise

comprise the social fabric of a de"eloped culture.

1/. &n ci"il law0 there is no room for ambiguity in applying the law because much of the law is establishedby past precedent.

Answer: False


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%opic: Ethics and the aw


AA(-): Ethicsage: 3 Feedback: &n ci"il law ?as opposed to criminal law@0 where much of the law is established by past

precedent0 there is always room for ambiguity in applying the law.

14. Ethical theories are patterns of thinking0 or methodologies0 to help us decide what to do.Answer: %rue

Difficulty: Easy

earning !bjecti"e: #1$#7

%opic: Ethics as ractical ,eason)loom*s %a+onomy: ,emember

AA(-): Ethicsage: 9

Feedback: Ethical theories are patterns of thinking0 or methodologies0 to help us decide what to do.

Multiple Choice Questions

19. hich of the following statements is true about ethical decision making in businessB

a. Ethical decision making is not limited to the type of major corporate decisions with dramatic socialconsequences.

b. E"ery employee does not face an issue that requires ethical decision making.

c. All ethical decisions can be co"ered by economic0 legal0 or company rules and regulations.

d. Ethical decision making should not rely on the personal "alues and principles of the indi"iduals in"ol"ed.Answer: a

Difficulty: 'ediumearning !bjecti"e: #1$#1

%opic: &ntroduction: 'aking the (ase for )usiness Ethics)loom*s %a+onomy: 6nderstand

AA(-): Ethicsage: /

Feedback: Ethical decision making in business is not at all limited to the type of major corporate decisionswith dramatic social consequences.


a. Ethical decision making is limited to the type of major corporate decisions with social consequences.

b. At some point0 e"ery worker will be faced with an issue that will require ethical decision making.

c. All ethical decisions can be co"ered by economic0 legal0 or company rules and regulations.

d. Ethical decision making should not rely on the personal "alues and principles of the indi"iduals in"ol"ed.Answer: bDifficulty: 'edium



)loom*s %a+onomy: 6nderstandAA(-): Ethics

age: /Feedback: At some point0 e"ery worker0 and certainly e"eryone in a management role0 will be faced with an

issue that will require ethical decision making.


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a. Ethical decision making is limited to the type of major corporate decisions with social consequences.

b. E"ery employee does not face an issue that requires ethical decision making.

c. All ethical decisions can be co"ered by economic0 legal0 or company rules and regulations.d. Ethical decision making should rely on the personal "alues and principles of the indi"iduals in"ol"ed.

Answer: d

Difficulty: 'ediumearning !bjecti"e: #1$#1%opic: &ntroduction: 'aking the (ase for )usiness Ethics

)loom*s %a+onomy: 6nderstand

AA(-): Ethics

age: /Feedback: Ethical decision making must rely on the personal "alues and principles of the indi"iduals

in"ol"ed.

1=. &n a general sense0 a business CCCCC is anyone who affects or is affected by decisions made within the

firm0 for better or worse.

a. nomineeb. stakeholder

c. stockholderd. watchdog

Answer: bDifficulty: Easy



)loom*s %a+onomy: ,ememberAA(-): Analytic

age: 7Feedback: &n a general sense0 a business stakeholder will be anyone who affects or is affected by decisions


#. hich of the following best describes a business stakeholderBa. !nly the minority shareholders in a business entity

b. !nly those who ha"e acquired significant shares in a firmc. Anyone who audits a firm

d. Anyone who affects or is affected by decisions made within a firmAnswer: d

Difficulty: Easy


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AA(-): Analytic

age: 7Feedback: &n a general sense0 a business stakeholder will be anyone who affects or is affected by decisions


1. &dentify the bill that was passed in April ##= to amend the e+ecuti"e compensation pro"isions of theEmergency Economic -tabili5ation Act of ##8 to prohibit unreasonable and e+cessi"e compensation and

compensation not based on performance standards.

a. ramm,udman;ollings erformance and ,esults Act

b. Employee ay (omparability Actc. rayson$;imes ay for erformance Act

d. -tatutory ay$As$ou$o ActAnswer: c

Difficulty: Easy


%opic: &ntroduction: 'aking the (ase for )usiness Ethics)loom*s %a+onomy: ,emember

AA(-): Analyticage: 1#

Feedback: %he rayson$;imes ay for erformance Act was passed in April ##=0


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performance standards. %his bill would ban future


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earning !bjecti"e: #1$#3%opic: )usiness Ethics as ersonal &ntegrity and -ocial ,esponsibility

)loom*s %a+onomy: ,emember AA(-): Ethics> Analytic

age: 1/

Feedback: hilosophers often emphasi5e that ethics is normati"e0 which means that it deals with ourreasoning about how we should act.

9. hich of the following obser"ations is true of ethicsBa. &t is descripti"e in nature.b. &t deals with our reasoning about how we should act.

c. &t pro"ides an account of how and why people act the way they do.

d. &t is equi"alent to law$abiding beha"ior.

Answer: bDifficulty: Easy earning !bjecti"e: #1$#3

%opic: )usiness Ethics as ersonal &ntegrity and -ocial ,esponsibility)loom*s %a+onomy: ,emember AA(-): Ethics> Analytic

age: 1/

Feedback: hilosophers often emphasi5e that ethics is normati"e0 which means that it deals with our

reasoning about how we should act. As a normati"e discipline0 ethics seeks an account of how and whypeople should act a certain way0 rather than how they do act.

7. ike ethics0 social sciences such as psychology and sociology also e+amine human decision making and

actions. ;owe"er0 these fields differ from ethics because they are CCCCC.a. normati"e in nature

b. descripti"e in nature

c. persuasi"e in nature

d. stipulati"e in natureAnswer: b



age: 1/Feedback: -ocial sciences0 such as psychology and sociology0 also e+amine human decision making and

actions> but these sciences are descripti"e rather than normati"e.

8. Ethics seeks an account of how and why people should act a certain way0 rather than how they do act.%his nature of ethics makes it a?n@ CCCCC discipline.

a. descripti"e

b. supererogatory

c. normati"e

d. stipulati"e Answer: cDifficulty: 'ediumearning !bjecti"e: #1$#3

%opic: )usiness Ethics as ersonal &ntegrity and -ocial ,esponsibility

)loom*s %a+onomy: 6nderstand

AA(-): Ethics> Analyticage: 1/

Feedback: As a normati"e discipline0 ethics seeks an account of how and why people should act a certainway0 rather than how they do act.


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=. As a CCCCC discipline0 ethics seeks an account of how and why people should act a certain way.a. descripti"e

b. supererogatory

c. normati"e

d. stipulati"eAnswer: c

Difficulty: 'edium

earning !bjecti"e: #1$#3%opic: )usiness Ethics as ersonal &ntegrity and -ocial ,esponsibility)loom*s %a+onomy: ,emember

AA(-): Ethics> Analytic

age: 1/

Feedback: As a normati"e discipline0 ethics seeks an account of how and why people should act a certainway0 rather than how they do act.

3#. %he CCCCC discipline pro"ides an account of how and why people do act the way they do.

a. descripti"e

b. supererogatory

c. normati"ed. stipulati"e

Answer: aDifficulty: 'edium

earning !bjecti"e: #1$#3%opic: )usiness Ethics as ersonal &ntegrity and -ocial ,esponsibility



age: 1/Feedback: -ocial sciences0 such as psychology and sociology0 also e+amine human decision making and

actions> but these sciences are descripti"e rather than normati"e. hen we say that they are descripti"e0 werefer to the fact that they pro"ide an account of how and why people do act the way they dothey describe.

31. &ndi"idual codes of conduct based on one*s "alue structures regarding how one should li"e0 how one

should act0 what one should do0 what kind of a person should one be etc. is sometimes referred to as CCCCC.a. morality b. independence c. leadership d. rationality

Answer: aDifficulty: 'edium earning !bjecti"e: #1$#3

%opic: )usiness Ethics as ersonal &ntegrity and -ocial ,esponsibility)loom*s %a+onomy: 6nderstand AA(-): Ethics> Analytic

age: 1/

Feedback: ;ow should we li"eB %his fundamental question of ethics can be interpreted in two ways. and0therefore0 it is sometimes referred to as morality.

3. 'orality is the aspect of ethics that we can refer to by the phrase


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AA(-): Ethics> Analyticage: 1/

Feedback: 'orality is the aspect of ethics that we refer to by the phrase Analytic age: 14

Feedback: )usiness ethics is concerned with how business institutions ought to be structured0 about whetherthey ha"e a responsibility to the greater society ?corporate social responsibility or (-,@0 and about making

decisions that will impact many people other than the indi"idual decision maker. %his aspect of business

ethics asks people to e+amine business institutions from a social rather than from an indi"idual perspecti"e.

%his broader social aspect of ethics is referred to as decision making for social responsibility.

39. CCCCC establish the guidelines or standards for determining what one should do0 how one should act0what type of person one should be. a. ,oles b. Attitudes c. 2orms d. aws

Answer: cDifficulty: Easy earning !bjecti"e: #1$#/


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%opic: )usiness Ethics as ersonal &ntegrity and -ocial ,esponsibility )loom*s %a+onomy: ,ememberAA(-): Analytic

age: 17

Feedback: 2orms establish the guidelines or standards for determining what we should do0 how we should

act0 what type of person we should be.

37. 2orms:

a. are the underlying beliefs that cause people to act or to decide one way rather than another. b. arestandards of appropriate and proper beha"ior. c. are referred to by the phrase


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age: 17

Feedback: e can think of "alues as the underlying beliefs that cause us to act or to decide one way rather

than another.

/#. hich of the following is true about "aluesB

a. Galues are the highest standards of appropriate and proper beha"ior.b. (orporate scandals pro"e the fact that indi"iduals ha"e personal "alues0 but institutions lack "alues.c. Galues cannot lead to unethical results.

d. Galues are underlying beliefs that cause us to act or to decide in a certain way.

Answer: d

Difficulty: 'ediumearning !bjecti"e: #1$#/



age: 17

Feedback: e can think of "alues as the underlying beliefs that cause us to act or to decide one way ratherthan another.

/1. hich of the following are beliefs and principles that pro"ide the ultimate guide to a company*s

decision makingB a. 'ission statement b. (ore "alues c. ;istorical milestones d. Gision statementAnswer: b

Difficulty: Easy earning !bjecti"e: #1$#/


)loom*s %a+onomy: ,emember AA(-): Ethics> Analyticage: 18

Feedback: A company*s core "alues are those beliefs and principles that pro"ide the ultimate guide to itsdecision making.

/. hich of the following best describe the norms that guide employees0 implicitly more often than not0 to

beha"e in ways that the firm "alues and finds worthyB a. !rgani5ational culture b. o"ernment*s financialregulations c. &ndustrial norms d. egal statutes

Answer: a Difficulty: Easy earning !bjecti"e: #1$#/%opic: )usiness Ethics as ersonal &ntegrity and -ocial ,esponsibility

)loom*s %a+onomy: ,emember AA(-): Ethics> Analyticage: 18

Feedback: %alk of a corporation*s


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acts and choices should be acceptable and reasonable from all rele"ant points of "iew.

//. Dramatic e+amples from history0 including 2a5i ermany and apartheid in -outh Africa0 demonstrate

that:

a. societies "aluing freedom welcome laws that require more than the ethical minimum.b. ethical responsibilities gi"e rise to more and more regulations.

c. obedience to law is sufficient to fulfill one*s ethical duties.

d. one*s ethical responsibility may run counter to the law.Answer: dDifficulty: 'edium earning !bjecti"e: #1$#4


)loom*s %a+onomy: 6nderstand AA(-): Ethics

age: 1=Feedback: ;olding that obedience to the law is sufficient to fulfill one*s ethical duties begs the question of

whether the law0 itself0 is ethical. Dramatic e+amples from history0 including 2a5i ermany and apartheidin -outh Africa0 demonstrate that one*s ethical responsibility may run counter to the law.

/4. %elling organi5ations that their ethical responsibilities end with obedience to the law:


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a. is just in"iting more legal regulation. b. is enough to maintain an ethical business en"ironment. c. reducesthe frequency of corporate scandals. d. eliminates ambiguity while making personal ethics$related decisions.

Answer: a

Difficulty: ;ard earning !bjecti"e: #1$#4

%opic: Ethics and the aw)loom*s %a+onomy: 6nderstand


age: 1Feedback: %elling business that its ethical responsibilities end with obedience to the law is just in"itingmore legal regulation.

/9. %he failure of personal ethics among companies like Enron and orld(om led to the creation of the:

a. )rooks Act.b. ramm$each$)liley Act.

c. (linger(ohen Act.d. -arbanes!+ley Act.

Answer: d

Difficulty: Easy

earning !bjecti"e: #1$#4%opic: Ethics and the aw


age: 1Feedback: &t was the failure of personal ethics among companies such as Enron and orld(om that led to

the creation of the -arbanes$!+ley Act and many other legal reforms.

/7. hich of the following obser"ations is trueBa. !bedience to the law is sufficient to fulfill one*s ethical duties.

b. %he law is "ery effecti"e at promoting Analyticage: 1

Feedback: %he law cannot possibly anticipate e"ery new dilemma that businesses might

face> so0 often0 there may not be a regulation for the particular dilemma that confronts a business leader.

/8. hich of the following helps identify potential e"ents that may affect the entity0 and manage risk to bewithin its risk appetite0 to pro"ide reasonable assurance regarding the achie"ement of entity objecti"esBa. ,isk a"ersion

b. ,isk benchmarking

c. ,isk assessment

d. ,isk minimi5ationAnswer: c




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age: 3

Feedback: ,isk assessment is defined as


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b. Abstractc. %heoretical

d. Descripti"e

Answer: c


%opic: Ethics as ractical ,eason

)loom*s %a+onomy: ,ememberAA(-): Ethicsage: /

Feedback: %heoretical reasoning is reasoning about what we should belie"e.

43. hich of the following refers to the pursuit of truth and the highest standard for what we shouldbelie"eB

a. %heoretical reasonb. (ritical reason

c. hilanthropic reason

d. ractical reason

Answer: aDifficulty: Easy

earning !bjecti"e: #1$#7%opic: Ethics as ractical ,eason


age: /

Feedback: %heoretical reason is the pursuit of truth0 which is the highest standard for what we should

belie"e.

4/. According to the tradition of theoretical reason0 CCCCC is the great arbiter of truth.a. religion

b. perceptionc. science

d. ethicsAnswer: c


%opic: Ethics as ractical ,eason)loom*s %a+onomy: ,emember


age: /0 9

Feedback: %heoretical reason is the pursuit of truth0 which is the highest standard for what we should

belie"e. According to this tradition0 science is the great arbiter of truth.

44. hich of the following can be thought of as the answer to the fundamental questions of theoretical

reasonB

a. %he scientific method

b. %he practical approachc. %he contingency approach

d. %he normati"e modelAnswer: a

Difficulty: 'edium


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age: 9Feedback: %heoretical reason is the pursuit of truth0 which is the highest standard for what we should

belie"e. According to this tradition0 science is the great arbiter of truth. %hus0 the scientific method can be

thought of as the answer to the fundamental questions of theoretical reason: hat should we belie"eB

Fill in the Blank Questions

49. A?n@ CCCCC is anyone affected0 for better or for worse0 by the decisions made within a particular firm.Answer: stakeholder

Difficulty: Easy earning !bjecti"e: #1$#1 %opic: &ntroduction: 'aking the (ase for )usiness Ethics)loom*s %a+onomy: ,emember AA(-): Ethics age: 7

Feedback: &n a general sense0 a business stakeholder will be anyone who affects or is affected by decisions



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47. &n an organi5ational conte+t0 CCCCC is the skill of creating a circumstance in which good people are ableto do good0 and bad people are pre"ented from doing bad. Answer: ethical business leadership

Difficulty: Easy earning !bjecti"e: #1$#3 %opic: )usiness Ethics as ersonal &ntegrity and -ocial

,esponsibility

)loom*s %a+onomy: ,emember AA(-): Ethics age: 1Feedback: Ethical business leadership is the skill to create the circumstances within which good people are

able to do good0 and bad people are pre"ented from doing bad.

48. CCCCC is the aspect of ethics that is referred to by the phrase


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91. 2ormati"e disciplines presuppose some underlying CCCCC.Answer: "alues


%opic: )usiness Ethics as ersonal &ntegrity and -ocial ,esponsibility )loom*s %a+onomy: ,emember


Feedback: 2ormati"e disciplines presuppose some underlying "alues.

9. CCCCC ser"e the ends of human well$being.Answer: Ethical "alues


%opic: )usiness Ethics as ersonal &ntegrity and -ocial ,esponsibility )loom*s %a+onomy: ,emember


Feedback: Ethical "alues ser"e the ends of human well$being. Acts and decisions that seek to promotehuman welfare are acts and decisions based on ethical "alues.

93. !ne way to distinguish the "arious types of "alues is in terms of the ends they ser"e. CCCCC "alues ser"e

the end of beauty.Answer: Aesthetic

Difficulty: Easy earning !bjecti"e: #1$#/%opic: )usiness Ethics as ersonal &ntegrity and -ocial ,esponsibility )loom*s %a+onomy: ,emember


Feedback: !ne way to distinguish "arious types of "alues is in terms of the ends they ser"e. Financial

"alues ser"e monetary ends> religious "alues ser"e spiritual ends> aesthetic "alues ser"e the end of beauty>

legal "alues ser"e law0 order0 and justice0 and so forth.

9/. %he CCCCC requires employers to make reasonable accommodations for employees with disabilities.Answer: Americans with Disabilities Act

Difficulty: Easy earning !bjecti"e: #1$#9%opic: Ethics and the aw )loom*s %a+onomy: ,emember

AA(-): Analyticage: 1

Feedback: %he Americans with Disabilities Act ?ADA@ requires employers to make reasonableaccommodations for employees with disabilities.


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94. According to CCCCC0 science is the great arbiter of truth. Answer: theoretical reasonDifficulty: 'edium earning !bjecti"e: #1$#7

%opic: Ethics as ractical ,eason )loom*s %a+onomy: ,emember AA(-): Ethics

age: /> 9

Feedback: %heoretical reason is the pursuit of truth0 which is the highest standard for what we shouldbelie"e. According to this tradition0 science is the great arbiter of truth.

Essay Questions

99. E+plain how ethical decisions are required to be made by e"erybody0 and how they ha"e the capacity to

influence more than just the decision maker.

Answer: Ethical decision making in business is not limited to the type of major corporate decisions withdramatic social consequences known in the form of Enron0 H'organ0 and orld(om etc. At some point0

e"ery worker0 and certainly e"eryone in a management role0 will be faced with an issue that will requireethical decision making. 2ot e"ery decision can be co"ered by economic0 legal0 or company rules and

regulations. 'ore often than not0 responsible decision making must rely on the personal "alues and

principles of the indi"iduals in"ol"ed. &ndi"iduals will ha"e to decide for themsel"es what type of person

they want to be. At other times0 decisions will in"ol"e significant general policy issues that affect entireorgani5ations0 as happened in all the well$known corporate scandals. %he managerial role especially

in"ol"es decision making that establishes organi5ational precedents and has organi5ational and socialconsequences.

Difficulty: 'edium earning !bjecti"e: #1$#1 %opic: &ntroduction: 'aking the (ase for )usiness Ethics)loom*s %a+onomy: 6nderstand AA(-): Ethics

age: /

97. E+plain how the study of ethics was "iewed until recently0 and what kind of shift in focus has occurredpost the scandals.

Answer: As recently as the mid$1==#s0 articles in such major publications as %he all -treet Hournal0 the;ar"ard )usiness ,e"iew0 and 6.-. 2ews and orld ,eport questioned the legitimacy and "alue of

teaching classes in business ethics. Few disciplines face the type of skepticism that commonly confrontedcourses in business ethics. 'any students belie"ed that


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ethics will find themsel"es as unprepared for careers in business as students who are unfamiliar withaccounting and finance. &ndeed0 it is fair to say that students will not be fully prepared0 e"en within fields

such as accounting0 finance0 human resource management0 marketing0 and management unless they are

familiar with the ethical issues that arise within those specific fields.

Difficulty: ;ard earning !bjecti"e: #1$#1%opic: &ntroduction: 'aking the (ase for )usiness Ethics )loom*s %a+onomy: 6nderstand AA(-): Ethics>

Analytic

age: 4$9

98. Describe the ad"antages associated with ethical decision$making.

Answer: 6nethical beha"ior not only creates legal risks for a business0 it creates financial and marketing

risks as well. 'anaging these risks requires managers and e+ecuti"es to remain "igilant about their

company*s ethics. &t is "ery clear now that a company can lose in the marketplace0 it can go out of business0and its employees can go to jail if no one is paying attention to the ethical standards of the firm.

A firm*s ethical reputation can pro"ide a competiti"e ad"antage in the marketplace and with customers0suppliers0 and employees. 'anaging ethically can also pay significant di"idends in organi5ational structure

and efficiency. %rust0 loyalty0 commitment0 creati"ity0 and initiati"e are just some of the organi5ational

benefits that are more likely to flourish within ethically stable and credible organi5ations.

Difficulty: Easy earning !bjecti"e: #1$#1%opic: &ntroduction: 'aking the (ase for )usiness Ethics )loom*s %a+onomy: 6nderstand AA(-): Ethics>

Analyticage: 7$8

9=. Discuss the hesitation ?that may be justified@ associated with teaching ethics. E+plain briefly how the

authors of this te+t belie"e that ethics can be taught constructi"ely in a class.

Answer: art of the hesitation about teaching ethics in"ol"es the potential for abuse> e+pecting teachers to

influence beha"ior may be "iewed as permission for teachers to impose their own "iews on students. 'anybelie"e that teachers should remain "alue$neutral in the classroom and respect a student*s own "iews.

Another part of this concern is that the line between moti"ating students and manipulating students is anarrow one. %here are many ways to influence someone*s beha"ior0 including threats0 guilt0 pressure0

bullying0 and intimidation.)ut not all forms of influencing beha"ior raise such concerns. %here is a major difference between

manipulating someone and persuading someone0 between threatening and reasoning. %he authors of thiste+t belie"e that the tension between knowledge and beha"ior can be resol"ed by emphasi5ing ethical

judgment0 ethical deliberation0 and ethical decision making. %he only academically and ethically legitimateway to do this is through careful and reasoned decision making. %he fundamental assumption is that a

process of rational decision making0 a process that in"ol"es careful thought and deliberation0 can and willresult in beha"ior that is more reasonable0 accountable0 and ethical.


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Difficulty: 'edium earning !bjecti"e: #1$# %opic: )usiness Ethics as Ethical Decision making )loom*s%a+onomy: 6nderstand AA(-): Ethics age: 11

7#. Define ethics. ;ow is it different from social sciences such as psychology and sociologyB

Answer: Ethics refers not only to an academic discipline0 but to that arena of human life studied by thisacademic discipline0 namely0 how human beings should properly li"e their li"es.

hilosophers often emphasi5e that ethics is normati"e0 in that it deals with our reasoning about how we

should act. -ocial sciences such as psychology and sociology also e+amine human decision$making andactions0 but these sciences are descripti"e rather than normati"e. %hey pro"ide an account of how and whypeople do act the way they do> as a normati"e discipline0 ethics seeks an account of how and why people

should act a certain way0 rather than how they do act.

Difficulty: Easy earning !bjecti"e: #1$#3> #1$#

%opic: )usiness Ethics as Ethical Decision 'aking> )usiness Ethics as ersonal &ntegrity and -ocial,esponsibility )loom*s %a+onomy: ,emember AA(-): Ethics

age: 110 1/

71. Differentiate the concepts of morality and social ethics.

Answer: %he fundamental question of ethics


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7. hy is Iethics* considered a normati"e disciplineB

Answer: %o say that ethics is a normati"e discipline is to say that it deals with norms0 those standards of

appropriate and proper ?or


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74. Discuss the impact of maintaining that holding to the law is sufficient to fulfill one*s ethical duties0 and

what it says about the law itself.Answer: ;olding that obedience to the law is sufficient to fulfill one*s ethical duties begs the question of

whether or not the law itself is ethical. E+amples from history0 2a5i ermany and apartheid in -outh Africa

being the most ob"ious0 demonstrate that one*s ethical responsibility may run counter to the law.!n a more practical le"el0 this question can ha"e significant implications in a global economy in whichbusinesses operate in countries with legal systems different from those of their home country. -ome

countries make child labor or se+ual discrimination legal0 but businesses that choose to adopt such practices

do not escape ethical responsibility for doing so. From the perspecti"e of ethics0 a business does not forgo

its ethical responsibilities based on obedience to the law.Difficulty: 'edium earning !bjecti"e: #1$#4

%opic: Ethics and the aw )loom*s %a+onomy: 6nderstand AA(-): Ethics> Analyticage: 1=

79. E+plain the difficulties associated with telling businesses that its ethical responsibilities end with

obedience to the law.Answer: %elling business that its ethical responsibilities end with obedience to the law is just in"iting more

legal regulation. %he difficulty of trying to create laws to co"er each and e"ery possible business challengewould be enormous. %he task would require such specificity that the number of regulated areas would

become unmanageable.Additionally0 it was the failure of personal ethics among such companies as Enron and orld(om0 after all

that led to the creation of the -arbanes$!+ley Act and many other legal reforms. &f business restricts its

ethical responsibilities to obedience to the law0 it should not be surprising to find a new wa"e of go"ernment

regulations that require what were formerly "oluntary actions.Difficulty: Easy earning !bjecti"e: #1$#4

%opic: Ethics and the aw )loom*s %a+onomy: 6nderstand AA(-): Ethics> Analyticage: 1

77. Discuss the importance of precedents for most laws concerning business.

Answer: 'ost of the laws that concern business are based on past cases that establish legal precedents. Eachprecedent applies general rules to the specific circumstances of an indi"idual case. &n most business

situations0 asking


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will always remain somewhat open.Difficulty: Easy earning !bjecti"e: #1$#9

%opic: Ethics and the aw )loom*s %a+onomy: ,emember AA(-): Ethics age: $3

78. Define risk assessment.Answer: ,isk assessment is defined as a process to identify potential e"ents that may affect the entity0 and

manage risk to be within its risk appetite0 to pro"ide reasonable assurance regarding the achie"ement of

entity objecti"es.Difficulty: Easyearning !bjecti"e: #1$#9



AA(-): Analyticage: 3

7=. hile using the risk assessment model what might the decision makers include in their assessment

before taking actionB

Answer: 6sing the risk assessment model0 decision makers might include in their assessment before taking

action:J the likelihood of being challenged in court

J the likelihood of losing the caseJ the likelihood of settling for financial damages

J a comparison of those costsJ the financial benefits of taking the action

J the ethical implication of the options a"ailable

Difficulty: Easy

earning !bjecti"e: #1$#9%opic: Ethics and the aw


age: 3$/

8#. Differentiate between practical reason and theoretical reason.Answer: ractical reason is described as reasoning about what we should do0 whereas theoretical reason

in"ol"es reasoning about what we should belie"e.Difficulty: Easy



AA(-): Ethics

age: /

Chapter1 Ethics

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Transcript of Chapter1 Ethics