MGMT 320 Lectures 11-12, Quiz 3

Wells Fargo Case

Wells Fargo employees created fake, unauthorized, bank accounts for their customers because they were under pressure to meet their quota, then employees speak out, their stocks fell, CEO Stumpf took huge profits during the time, without much being given back to the employees

"how can you rebuild trust?"

cross selling

Many analysts attributed Wells Fargo's financial success in large part to its prowess in

this & it refers to the practice of marketing related or complementary

products to an organization's existing customers

Amazon fake reviews

third party sellers pay/bribe customers to leave reviews on their product by giving them the product for free

The Guardian released over 100 pages of leaked documents revealing Facebook's internal rules.

Facebook's content policies resemble United States law, but also have important differences.

For example, Facebook generally allows the sharing of animal abuse, a category of speech the Supreme Court deemed protected in 2010. But diverging from First Amendment law, Facebook will remove that same imagery if a user shows sadism, defined as the "enjoyment of suffering."

Similarly, Facebook's manual on credible threats of violence echoes First Amendment law on incitement and true threats by focusing on the imminence of violence.

But there are also crucial distinctions. Where First Amendment law protects speech about public figures more than speech about private individuals, Facebook does the opposite. If a user calls for violence, however generic, against a head of state, Facebook deems that a credible threat against a "vulnerable person." While the government cannot arrest you for saying it, Facebook will remove the post.

No due process on these sites

Section 230 of the Communications Decency Act

"No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider."

doping

the unlawful use of drugs to enhance or inhibit the performance of an athlete, racehorse, or greyhound.

Students Disciplined in Harvard Scandal

Harvard has forced dozens of students to leave in its larges cheating scandal in memory, the university made clear in summing up the affair on Friday.

Ernst & Young ethics scandal

fined $100 million after admitting its employees cheated on their ethics exams

Fake Resume & George Santos

lied his way to congress and was ousted by his coworkers, serial liar.

Ethics

a construction of what is right and wrong

Business ethics

focuses on what is right and wrong in the business world.

two distinct theories about how businesses should approach ethics

theory of amorality and the theory of moral unity (both have to do with perception of morals)

Theory of Amorality

The belief that business should be conducted without reference to the full range or ethical standards, restraints and ideals in society.

conventionalist ethics

Business is a game where special lower ethics are permissible.

Jello-shots example: Little technicalities in promises, rules, etc

Section 230 of the communication decencies act

provision of US law that provides immunity to online platforms from liability for content created by their users.

It essentially shields websites, social media platforms, and other online services from being held legally responsible for defamatory, illegal, or offensive content posted by their users.

This protection allows these platforms to moderate content, remove harmful material, and develop new technologies without fear of being sued for the actions of their users.

Story of Backpage.com

Sold advertisements to Pimps prostituting women, but due to Section 230 of the communication decencies act, they were able to take advertising money for illegal advertising

Definition of the theory of amorality and the conventionalist ethics within business

Theory of Moral Unity

businesses should be judged by the same moral/ethical considerations that apply throughout society

Ethical relativism

the idea that there is no fixed ethical mindset, but that ethics rules depend on the time, place, and other circumstances. “when in Rome do as the Romans.”

Ethical relativism especially applies for businesses that operate globally: T/F

True

'We Blew It': Nike Admits to Mistakes Over Child Labor

The multi-billion-dollar sportswear company Nike admitted yesterday that it "blew it" by employing children in Third World countries but added that ending the practice might be difficult.

Daniel Kahneman

Ethics questions tests for business people, Nobel Prize / Economics - Psychology & Public Affairs, Princeton) World renowned scholar

As business students, the way you THINK about business is very different than the way the public thinks: T/F

True

Businesses should act ethically to….

enhance performance

Poor ethics has negative consequences: the financial costs of reputation damage often exceed the financial costs of fines

Ex: VW - total costs exceeded 35 billion; company also is no longer an admired companies.

Businesses should act ethically to….

comply with legal requirements

Every company wants to reduce their fines:

The govt strongly encourages business to adopt robust internal compliance programs, like employees knowing what the rules are... this reduces the fines when a company gets into trouble

7 steps

U.S. Sentencing Guidelines’ _ ____ take into consideration proactive things a business is doing BEFORE the business gets into trouble.

Businesses should act ethically to….

prevent or minimize harm

ethical failures can cause many harms to the business in terms of reputation, health, financial, etc

Businesses should act ethically to….

meet the demands of business stakeholders

Stakeholders include customers, who prefer to buy from ethical firms (and, by extension, prefer not to buy from unethical firms).

Businesses should act ethically to….

promote personal morality

An ethical company aligns with individuals' desires to act ethically.

Kohlberg’s 6 stages of development

1. To avoid punishment.

2. To satisfy self-centered needs

3. To conform to the group interest to please others in the group.

4. To accept legal restrictions as being in the best interest of society.

5. To accept legal restrictions balanced with individual rights as being in the best interests of society and the individual.

6. To find satisfaction in being ethical and moral for personal reasons.

culture

Beliefs, customs, and traditions of a specific group of people.

New York City with UN Diplomats and parking tickets

There was a significant correlation between countries whose diplomats who got a lot of parking tickets and the level of corruption in those countries, ultimately, culture has a huge impact on our ethics and behavior

Volkswagen's Clean Diesel Campaign.

From 2009 to 2015, Volkswagen sold cars that had defeat device: software designed to cheat on government emissions tests installed on their cars. Eventually, this lead to a huge lawsuit.

Strategic Defaults: Should you walk away from your mortgage?

the gov is offering some relief to homeowners who are paying a mortgage who have lose their job and can no longer pay for their mortgage.

Strategic defaults are when you walk away from your mortgage even though you are somewhat capable of still paying for it, because the house is now outrageously overpriced, being marked up almost double it's actual value.

W.E.I.R.D.

Western, Educated, Industrialized, Rich and Democratic

WEIRD Countries

The US, Canada, Western Europe, Australia, etc

Non-WEIRD Countries

all other countries, not Western, Educated, Industrialized, Rich and Democratic, more collectivistic

Nepotism

the practice among those with power or influence of favouring relatives, friends, or associates, especially by giving them jobs.

Competitive Pressure

When companies are squeezed for profits (or simply want more), they sometimes engage in unethical behavior.

Conflicts of Interest

exist whenever a person or organization is incentivized (by personal, or organizational self-interest) in a way that compromises that person's, or organization's loyalty, or objectivity, vis-à-vis another party and can cause an ethical dilemma

Microsoft senior manager Brian Jorgenson

insider trading case within WA state relating to Microsoft stock

insider trading

an unethical activity in which insiders use private company information to further their own fortunes or those of their family and friends

Sarbanes-Oxley Act of 2002

requires that the CEO and CFO of large companies that have publicly traded stock personally certify that financial reports made to the SEC comply with SEC rules and that info in the reports are accurate.

suitability

a requirement to determine if an insurance product or an investment is appropriate for a particular customer

fiduciary

making a decision in the best interest for a particular customer, made with care and trust

Cross-cultural contradictions.

businesspeople, companies and corporations can be unaware of cultural norms in foreign countries, and this can lead to unethical conduct. ex: 1994 World Cup, bottles of Heineken beer displayed the flag Saudi Arabia, Quran forbids the use of alcohol, so Muslims complained

Rationalization to justify ethical failures

- "the ends justify the means" (a distortion of utilitarianism) ex: Walter White

white collar crimes

offenses committed in the business world like insider trading, ponzi schemes

corporate culture

the shared experiences, stories, beliefs, and norms that characterize an organization, ethical management is more likely to lead to employees acting ethically.

uber's unwritten corporate culture

"Don't ask permission; ask forgiveness."

Facebook's early culture

"Move fast and break things."

Egoism (self-centered)

company interest and economic efficiency

Benevolence (concern for others)

Team interest,

Social Responsibility

Principle (integrity approach)

company rules and procedures, laws and professional codes

Duty based (deontological)

pre-existing rules guide you to determining what is ethical

-EX: get up in the morning & already know what rules you will follow

-Deep-seated

-EX: will not commit murder

result oriented (consequentianlist)

has several permutations, but all essentially look to the end results to determine whether conduct is ethical.

Utilitarianism, is the best known form of this

utilitarianism

or cost-benefit analysis, is the best known (and most widely used) form of consequentialist reasoning.

the runaway trolley

A trolley is going to run over five people and kill them

If you intervene, and pull a lever, it will only run over one person

-Separates people into two ethical groups but its complicated

Immanuel Kant

philosopher of Enlightenment-separated science and morality into separate branches of knowledge-science could describe nature, it could not provide a guide for morality. Wrote Critique of Pure Reason

viture-based ethics

a moral philosophy that emphasizes the role of character and virtues in ethical decision-making. Instead of focusing on rules, consequences, or duties, this examines the moral character of the person performing the action

how the person/entity is being compensated

a way to judge if a conflict of interest exists