Ch. 2 Business Ethics

What is ethics?

The study and practice of decisions about what is good or right.

What is business ethics?

The application of ethics to the special problems and opportunities that businesspeople experience.

What is an ethical dilemma?

A problem about what a firm should do when no clear right decision is available.

What is social responsibility of business?

The expectations the community imposes on firms doing business within its borders.

What is the main idea behind ethical conversations?

Ethical conversations are about finding the better thing to do, rather than finding one and only one right answer.

Why is business ethics difficult for firms?

Firms must balance earning profits with acting as genuine and reliable corporations.

What is the relationship between business ethics and social responsibility?

Business ethics concerns what businesses should do ethically, while social responsibility concerns the expectations the community places on businesses.

Why must businesses consider social responsibility?

Businesses are expected to follow certain moral and community standards even when doing so may interfere with profit maximization.

How can legislation affect business ethics?

Firms may face legislation if they fail to meet certain moral and social expectations of the community.

What are values?

Our sense of what is good or desirable.

What are core company values?

The fundamental beliefs and principles that make up a company's mission and beliefs.

Why are values important to business ethics?

Values provide a starting point for thinking about what a business should and should not do.

What is the WH Framework?

A framework for analyzing business decisions by asking Who will be affected and How the decision should be made.

What does the W in the WH Framework stand for?

Who: identifying the relevant stakeholders affected by a decision.

What does the H in the WH Framework stand for?

How: determining how to make the ethical decision using ethical guidelines.

What is the first question in the WH Process?

Who would this decision affect?

What is the second question in the WH Process?

How should the decision be made ethically?

What are stakeholders?

Groups of people affected by a firm's decisions.

Who are the major stakeholders?

Customers, owners/shareholders, management, employees, the community, and future generations.

Why are stakeholders important in ethical decision-making?

Business decisions can affect different groups, so managers must consider who will be helped or harmed.

What are the three ethical guidelines in the WH Framework?

Public Disclosure, Universalization, and the Golden Rule.

What is the Golden Rule?

The idea that we should interact with other people in a manner consistent with the way we would like to be treated.

What is one interpretation of the Golden Rule?

Do to others as you want them to do to you.

What is another interpretation of the Golden Rule?

Be considerate of others' feelings as you want them to be considerate of yours.

What is another interpretation of the Golden Rule involving dignity?

Treat others as persons of rational dignity, as you would want to be treated.

What is another interpretation of the Golden Rule involving familial love?

Extend familial love to others, as you would want them to extend it to you.

What is another interpretation of the Golden Rule involving moral insight?

Treat others according to moral insight, as you would have others treat you.

What is another interpretation of the Golden Rule involving God?

Do to others as God wants you to do to them.

What is the Public Disclosure Test?

A test that asks you to imagine your actions being publicly disclosed or broadcast on national television.

What question does the Public Disclosure Test ask?

Would I be comfortable if everyone knew about or saw what I did?

What is another name for the Public Disclosure Test?

The Television Test.

What is the purpose of the Public Disclosure Test?

To determine whether you would be comfortable with your decision being made public.

What is the Universalization Test?

A test that asks what the world would be like if everyone copied your decision or behavior.

What question does the Universalization Test ask?

What would happen if everyone acted the way I am considering acting?

What is the purpose of the Universalization Test?

To determine whether your action would set a good example if everyone followed it.

What does the WH Framework require managers to consider?

Who is affected by the decision and how the decision should be made ethically.

Why do ethical decisions need action-oriented guidelines?

Managers need practical and doable guidelines for making ethical decisions.

What does an ethical decision affect?

Particular groups of stakeholders involved with or affected by the firm's operations.

What is the difference between ethics and business ethics?

Ethics is the general study of what is good or right; business ethics applies those principles to business situations.

What is the difference between business ethics and business law?

Business ethics concerns what businesses should do based on ethical principles, while business law establishes legally required rules businesses must follow.

Can something be legal but unethical?

Yes. An action can comply with the law but still violate ethical standards.

Can something be ethical but not required by law?

Yes. Businesses may choose to do what is ethically right even when the law does not require it.

Why can ethical dilemmas be difficult?

Because there may be no clear right answer and different stakeholders may benefit or be harmed.

What is the main purpose of the WH Framework?

To help managers make ethical business decisions by identifying affected stakeholders and applying ethical guidelines.