DSST Business Ethics and Society

  1. What is ethics?
    • An attempt to apply moral principles to business operations
    • the study of morality
  2. Describe morality
    a person's character, their beliefs, their behaviors and can dictate how they act or respond in different situations.
  3. What are the 3 major categories of ethics?
    • Social
    • Economical
    • Legal
  4. Describe social ethics
    the way people interact with one another
  5. Describe economical ethics
    deal with business and money related issues
  6. Describe legal ethics
    deals with the action of lawyers
  7. What is business ethics?
    a study of the extent to which an action can be viewed as necessary for businesses to thrive, and when it becomes unethical
  8. Describe Enron's ethical situation
    • Enron was a gas company
    • used bad accounting practices
    • hid the company's debt by SPEs (special-purpose entities)
  9. Describe the Tyco International ethical situation
    • in 1990s Dennis Kozlowski -> CEO
    • SEC launched investigation on company
    • CEO used company money to pay for personal purchases
    • stole around 75 million
    • with CFO moved money from company account into personal acounts
  10. Describe the Worldcom ethical situation
    • declared bankruptcy
    • internal audit -> wrongly reported expenses
    • showed false debt infomtation
  11. When was the Sarbanes- Oxley Act passed?
  12. What is the Sarbanes- Oxley Act?
    tighened laws enforcing accounting and auditing practices to help restore stakeholder confidence in securities markets
  13. Describe the Martha Stewart Incident
    came under investigation for insider trading
  14. Describe the Nike scandal
    • many products produced in asian factories with
    • low wages
    • dangerous working conditions
    • suffered from protests and complaints
    • accepted responsibility
    • improved work conditions
  15. What is hedoism?
    theory which claims that a person's happiness or pleasure is the only ultimate good.
  16. What is Egoism
    the belief that people should act only in their best interests.
  17. What is Relativism?
    the theory that ethics is subject to society.
  18. What is Consequentialism?
    any type of moral theory which determines the morality of an action based on the result or consequences that it produces.
  19. What is teleological ethics?
    • consequences of action -> good; action = moral
    • consequences of action -> bad; action = immoral
  20. Who developed the utilitarian theory?
    John Stuart Mill
  21. What is Utilitarian?
    • a social theory that associates an actions morality to its positive and negative consequences
    • ex: if the benefits exceed the cost then the action is moral.
  22. What are the 2 types of utilitarianism?
    • Act
    • Rule
  23. What is Act utilitarianism?
    considers all the possible actiuons that can be taken and deciding which would be most favorable for all involved
  24. What is rule utilitarianism?
    • considers actions independently of situation, determines whether it is moral as a genral rule
    • based on which will reuslt in the greastes good for socitey, which is most acceptable
  25. What is Deontology?
    based on the idea of duty
  26. Who developed Kantian Ethics? ( a deontology theory)
    Immanuel Kant
  27. Describe kant ethics
    • sole indicator of morality is a persons motivation for doing and action
    • the only TRULY good motive is good will- acting our of a sense of duty
  28. What is the Truth In Lending Act (TILA)?
    • a regualation which prevents lenders from exploiting those that they lend money to.
    •  requires that ceratin information be disclosed when a person is applying for a loan or credit
    • helps person to more easily compare different options
  29. Describe the theory of virtue ethics
    • People will act according to what they believe is moral
    •  they decide this as they grow and develop and interact with one another
  30. Who developed the Kohlerg Model of Cognitive Moral Development?
    • Lawrence Kohlberg,
    • psychologist
    • 6 stages
    • 3 levels
  31. Descibe stage 1 of Kohlbergs Moral Stage Theory
    • a person is motivated by avoidance of punishment
    • lowest stage
    • ex: a business acting appropriately -> the consequences of breaking the law
  32. Descibe stage 2 of Kohlbergs Moral Stage Theory
    • a person is motivated through seeking rewards
    • ex: company donates to charity -> tax write off
  33. Descibe stage 3 of Kohlbergs Moral Stage Theory
    • a person is motivated b how they believe thier actions will be percieved,also how it benefits/ hurts others
    • ex: a business chooses to dispose of nuclear waste properly -> they worry about the negative impact on customers and the environment
  34. Descibe stage 4 of Kohlbergs Moral Stage Theory
    • a person is motivated by the demands of authority figures
    • ex: a company would would dispose of the nuclear waste properly -> it is the law
  35. Descibe stage 5 of Kohlbergs Moral Stage Theory
    • a person is motivated by an obligation to society
    • ex: using the previous examples- the company feels obligated to society to ensure that no one is harmed by the nuclear waste they generate
  36. Descibe stage 6 of Kohlbergs Moral Stage Theory
    • a person believes in adherence to universal principles
    • ruled by conscience
    • few people if any achieve this degree of moral development
  37. Name and Identify the 3 levels of the Kohlberg Theory
    • level 1- pre-conventional morality - stages 1 & 2
    • level 2- conventional morality- stages 3 & 4
    • level 3- post conventional- stages 5 & 6
  38. What is Proprietorship?
    where there is one owner of a business
  39. What is a partnership?
    • multiple owners
    • ran the same way as a proprietorship
  40. what is a corporation?
    • does not have a single owner
    • has many shareholders
    • led by board of directors
  41. What is the responsibility of the board of directors/
    • appointing people to oversee daily operations of the business
    • has legal responsibility for the actions of the company
    • hiring managers and important corporate officers
  42. What is social responsibility?
    the expectations and standards which are embodied in a business based on collective concernsa of owners, employees, suppliers, and the community of that business
  43. What is CSR/ Corporate Responsibility?
    • the consideration of large companies about the well-being of society when they make business decisions.
    •  requires companies to consider people & the environment along with their own profit.
  44. What are the 4 levels of responsibility?
    • Economic
    • legal
    • ethical
    • philanthropic
  45. Describe economic responsibility
    • most basic and fundamental level of responsibility of a company
    • attempts to maximize profits and do the best it can as a business financially
  46. Describe legal responsibility
    to know and abide by government regulations
  47. what are regulations?
    • cover everything from employee issues to issues of international trade
    • e.g.: privacy, wages
  48. Identify the "must do" responsibilities of a business
    legal and economical
  49. Describe ethical responsibility
    whether a business follows acceptable standards of behavior

    NAFTA and WTO are working to develop universal ethical standards
  50. Identify ways that businesses benefit from ethical practices
    • employee commitment
    • contributes to investor loyalty
    • contributes to customer satisfaction
  51. Describe philanthropic responsibility
    • the way the company "gives back" to the community it operates in
    •  essentially entirely unregulated
    • helps develop a repuatation
  52. What is altruism?
    placing the good of others above yourself
  53. What is reciprocity?
    • the idea that people should treat others the way they themselves want to be treated
    • e.g.: the golden rule
  54. What is a shareholder
    • a person who literally owns a part of a corporation
    • e.g.: has purchased stocks, or shares of a company

    • affected by decisions made by the company
    • e.g.: shareholder, managers, other employees, customers of company
  55. Identify the two basic ways that ethics can be regulated within a business
    voluntary practices and mandated boundaries
  56. Describe voluntary practices
    the ethical practices of a business that are not required, but the business chooses to engage in them
  57. Describe mandated boundaries
    Includes all laws, rules, regulations and requirements imposed from external sources
  58. Identify the 2 categories of law
    Civil and criminal
  59. What is criminal law?
    • enforced by government agencies, and is typically passed to prohibit actions such as fraud or theft
    • e.g.: police
    • violators of ciminal law are subject to punishment such as fines, jail, or prison sentences
  60. What is civil law?
    • deals with a person, organization or business' rights and responsibilities
    •  never involves government agencies prosecuting a person for breaking a law
  61. Identify the types of laws and regulations that apply to a business
    • laws regulating competition
    • protecting consumers
    • ensuring equality and safety
  62. What are the antitrust laws (procompetition legislation)?
    laws designed to prevent monopolies from forming which were hamrful to the economy as a whole
  63. Define 'market'
    a place where goods and services are bought and sold.
  64. What is an economy?
    a conglomerate of all different markets
  65. What is a monopoly?
    when a single person or business is the only supplier of a particular product
  66. Which law prohibit unfair or deceptive business acts?

    A. Wheeler-Lea Act
    B. Lanham Act
    C. Trademark Counterfeiting Act
    D. Clayton Act
    A. Wheeler-Lea Act
  67. Which law protects trademarks and brand names?

    D. Lanham Act
  68. Which law punishes those that deal in counterfeit goods?

    D. Trademark  Counterfeiting Act
  69. Which law prohibits price discrimination and exclusive dealing?

    D. Clayton Act
  70. What was the first consumer protection law and when was it passed?
    • Pure Food and Drug Act
    • passed in 1906
  71. What are the responsiblities of the FTC  (Federal Trade Commision)?
    • enforcing consumer protection laws
    • regualtling any economic issue that affects the average citizen
  72. What are the responsiblities of the FTC's Bureau of Consumer Protection Act?
    protects consumers from unfair business practices by regulating advertising and marketing
  73. What does COPPA stand for?
    Children's Online Privacy Protection Act
  74. What does COPPA do?
    prevents companies from obtaining personal information from children under 13 without their parents consent
  75. Which law controls the labeling of hazardous household substances?

    D. Federal Hazardous substances Labeling Act
  76. Which law allows the government to recall dangerous toys?

    A. Clayton Act
    B. Federal Hazardous substances Labeling Act
    C. Toy Safety Act
    D. Federal Trade Commission
    C. Toy Safety Act
  77. Which law requires nutritional information on all processed foods?

    C. Nutritional Labeling and Education Act
  78. What does Title VII state?
    • A person may not be discriminates against based on their race, color, religion, gender, or nationality.
    • a business cannot refuse to hire someone or do business with someone based on any of those factors
  79. Describe affrimative action
    programs which seek to reduce or reverse the effects of discrimnation
  80. What is comparable worth?
    came as a result to the widespread past discrimination against women
  81. What is the purpose of comparable worth?
    Ensures that jobs typically held by women that involve the same levels of work and risk as other jobs, receive the same level of pay.
  82. Which law ensures equal pay for both men and women?

    B. Equal Pay Act
  83. Which law prohibits discrimination  based on age?

    D. Age Discrimination in Employment Act
  84. Which law prohibits discrimination based on preganancy or related medical conditions?

    D. Preganacy Discrimination Act
  85. Describe the Americans with Disabilities Act (ADA)
    Designed to ensure that people with disabilities recieve the same opportunites for work as people without disabilities.

    applies to all government agencies, labor unions & private employers with more than 15 employees

    ADA do not have preference
  86. What is the purpose of the Occupational Safety and Health Administration ( OSHA)?
    • ensure that business employ proper safety methods and maintain safe working conditions.
    • Protects agains workplace hazard
  87. What is the purpose of the Environmental Protection Agency (EPA)?
    ensure that environmental laws are followed
  88. Which law mandates air quality standards?

    B. Clean Air Act
  89. Which law protects Endangered plants and animals?

    A. Endangered Species Act
  90. Which law's purpose is to reduce and eliminate water pollution?

    B. Federal Water Pollution Act
  91. Which law addresses the EPA's ability to respond to oil spills?

    A. Oil Protection Act
  92. What the Food and Drug Administration (FDA) and what are its repsonsibilities?
    • a regulatory agency-> reports to the Dept of Health & Human Services
    • Responsible for ensuring public health and safety
    • monitors products which come into conatact with people;ensures taht they are safe, sanitarry and properly labeled
    • make sure that businesses dont cut corners with potentially dangerous products
    • e.g.: food, drugs, vaccines, cosmetics, radioactive products
  93. What is Ergonomics?
    • the study of designing more comfortably or easily used equipment
    • to make workers more productive
  94. Describe Human Resource Management (HRM)
    management of employees which includes : hiring, training, preventing employees from quitting, attracting employees, reatining employees
  95. When was the concept of living wage first introduced?
  96. Describe living wage
    a wage that is suffienct to allow education, good health, and eventually retirement
  97. Describe the Workers Adjustment and Retraining Notification Act (WARN Act)
    requires that employers give at least 60 days advanced warning to employees before a plant closure or mass layoff
  98. What is a Non-Disclosure Agreement (NDA)?
    Agreement  between two or more groups to keep information private

    • have time specifications, are not indefinate
    • have to state purpose of agreement
  99. What is a whistleblower?
    • a person who comes forward with information exposing wrongdoing by or within a company.
    • e.g.: anything illegal or unethical
  100. Describe the Whistleblower Protection Act
    Protects employees of the federal government who expose incidences of waste of funds, abuse, of authority, violations of laws or any other issue from any action being taken against them
  101. Describe the False Claims Act
    encourages employees to expose efforts by a company to avoid paying federal taxes, providing false information to the federal government, conspiring to do either of those things or other acts which involve fraud toward the federal government
  102. Identify the 4 elements of the Sarbanes-Oaxley Act relating to whistleblowers.
    • 1. company must have a system of internal auditing through which an employee can file complaints
    • 2. create legal responsibilty for lawyers to inform on clients who violate SEC regulations
    • 3. prohibits any from of retailiation by employers to employees who legally inform about ethics violations to the proper sources and provide the whistleblowers with compensation for legal fees.
    • 4. allows for violators of any of the other elements can be charged under criminal law
  103. Describe discrimination
    • an issue of personal belief and ethics
    • occurs on the basis of demographics
    •  e.g.: race, gender, religion, marital status, ethinicity
  104. Identify some ways in which would be illegal for businesses to discriminate
    • based demographics
    • creating a situation which favors certain types of people to an unreasonable extent in hiring
    • firing practices
    • discriminating against a group of customers
  105. What is the name for discrimination that occurs naturally on a basis of job qualification?
    unintentional discrimination or statistical discrimination
  106. Describe unintentional discrimination/ statistical discrimination
    disproportionate number of workers that fall into a certain category, but not done so deliberately.
  107. Who addresses discrimination complaints?
    Equal Employment Opportunity Commission (EEOC)
  108. Identify the guidelines for creating affirmative action programs
    • 1. must be strong, and demonstrable, reason for initiating the program
    • 2. program should only apply to qualified candidates
    • 3. cannot be permanently and rigidly defined
  109. Define sexual harassment
    • any repeated unwanted behavior of a sexual nature
    • e.g.: physical actions, words, images, and written material
  110. Describe hostile work environment
    created when an action is unwanted, severe, ans it has an effect on a person's ability to work
  111. describe quid pro quo sexual harassment
    when a person feels that their employment status is dependent on responding to unwelcome sexual advances
  112. What is a labor union?
    legal entities with the ability to bargain  on behalf of workers to improve working conditions
  113. How do labor unions work and what issues do they deal with?
    • operate on the basis of collective bargaining
    • all workers act as one in neogotiating with management
    • deal with issues ranging from workplace safety to wages etc
  114. Explain the Fair Labor Standards Act (FLSA)
    • outlines actions that are not allowed by management in an attempt to protect the rights of employees to form a union
    • describes any practice that would interefere with a workers ability to create or operate within a union
    • e.g.:discriminating against employees that belong to unions, refusing to bargain with unions
  115. Define fraud
    any deliberate attempt to decieve, manipulate, or conceal facts.
  116. What is puffery?
    Exaggeration, or making claims that are not reasonable and misleading customers
  117. Define implied falsity
    when an advertisment is technically true on a literal basis, but by  nature has the tendency to mislead or confuse customers.
  118. What is literal falsity?
    when and advertisement is not true in nature
  119. Identify the 4 P's of advertising
    • product
    • place
    • promotion
    • price
  120. Describe price discrimination
    • when a company charges different amounts for a different product situation
    •  e.g.: charging who urgently needs a product and different price than someone else who is buying the product
  121. Describe predatory pricing
    a practice of providing goods at lower prices than competitors in order to drive competitors out of business
  122. What is dumping?
    when a company sells a large number of products at a price below the fair value
  123. What is consumer fraud?
    when consumers or customers work to decieve businesses for their own gain
  124. Define proprietary information
    • information which a company keeps confedential
    • believed to give company a competitive advantage
    • e.g.: trade secrets, budgets, profit margins,secret formulas, recipes
  125. Describe a patent
    • can only be obtained for information which a person or business can prove is new ans non-obvious
    • must have actually invented something
  126. what is the purpose of a copyright?
    protects the proprietart information of written materials
  127. Describe a trademark
    • words or names that can be identified with specific companies and products
    • e.g.: logos, symbols & brand names
  128. Describe corporate intelligence
    the ethical and legal way of gathering information
  129. Identify the two ways in which corporate intelligence can be used
    strategic and tactical
  130. Define strategic intelligence
    information gathering that has its purpose in the long run success of the business
  131. Define tectical intelligence
    used to help the company make short term decisions
  132. What is coporate espionage?
    • the unethical and illegal side of information gathering
    • by obtaining proprietary information in an unethical way
    • e.g.: hacking, social engineering
  133. What is hacking?
    the process of breaking into computers or networks
  134. What is dumpster diving?
    term used to describe going through the trash of a company whose information you are after, in an attempt to gather information
  135. Define social engineering
    • people hacking
    • using people to try and learn infromation about target company
    • e.g.: shoulder surfing, whacking, phone eavesdropping
  136. Define conflict of interest
    when a person has multiple interests and they influence each other
  137. Define self- dealing conflict of interest
    when a person is a part of ( or benefits from) both ends of a deal
  138. Define outside employment conflict of interest
    when a person has multiple jobs and their interests conflict between them
  139. define pump and dump
    when a broker owns securities and spreads rumors about them to make the price go up, then sells before prices go back down
  140. Describe Legal insider trading
    • occurs when a person legally trades stock within their company
    • can only buy and sell within a six month period
  141. Describe illegal insider trading
    when an insider gains information about the company which is not available to the public and uses that information when buying stock
  142. What is spam?
    when a person or business sends out a large amounts of email
  143. What is a virus?
    a piece of code which is used to disrupt computer function
  144. What is a cookie?
    • software that is usedon the site to track user information for personalization
    • can track customer and employee activity
  145. Summarize the Privacy Act of 1974
    • a person has the right to know and access any files that the federal government is keeping on them
    • prevents government agencies from sharing information that they have with other agencies
    • can only be shared with the individual whose information it is 
  146. Summarize the USA Patriot Act (Patriot Act)
    • allows the FBI to search the email, phone records, and financial records of citizens
    • can even search homes and offices of citizens without their knowledge.
  147. Identify the 3 organizations that are attempting to create a standardized set of business ethics
    • World Trade Organization (WTO)
    • North American Free Trade Agreement (NAFTA)
    • European Union (EU)
  148. Which organization have the responsibility of stabilizing international trade and preventing trade crises?
    International Monetary Fund
  149. Which organization is responsible for fostering economic development
    the World Bank
  150. Describe NAFTA?
    • agreement between Canada, Mexico, and the US
    • to lower trading barriers
    • dealing with trade dispute between the countries
  151. Describe WTO
    • deals with trade on a global level
    • eliminate barriers to trade
    • help developing countries in trade matters
    • supervise international trade
    • settle trade disputes among member countries
  152. Describe the Caux Round Table
    • swiss organization
    • works to create awareness in businesses around the globe and teach tools and strategies to maintain a minimum ethical standard
  153. Describe the Kimberley Process Certification Scheme (KPCS)
    • created to stop the circulation of conflict diamonds
    • e.g.: blood diamonds, war diamonds
    • states that rough diamond (uncut) must be shipped in tamper proof containers and be certified
  154. what is self reference criterion?
    • an unconscious method of judgement
    • a person's perceptions of the world emerge from their past experiences and their values
  155. What are the Global Sullivan Principles?
    • promoting equal opportunity for all races
    • promoting respect for human rights
    • respect of intellectual property
    • refusing to accept bribes
    • ensuring employee safety
  156. Describe the United Nations' Global COmpact
    • focuses on protecting the environment
    • abolishing child labor
    • permitting unions to form
  157. What is the Kyoto Protocol?
    • an amendment to the United Nations Framework Convention on Climate Change (UNFCC)
    • agreement aims to reduce the collective worldwide greenhouse gas emissions by 5.2 %
  158. Which two countries do not support the Kyoto Protocol?
    United States and Australia
  159. What is a Multinational Corporation (MNC)?
    • a company that is publicy traded
    • e.g.: a person could buy or sell stocks
    • has a strong presence in multiple countries
    • has potential to influence worldwide policy
  160. Describe the Foreign Corrupt Practices Act
    • makes it illegal for any U.S. citizen to bribe a foreign offical
    • makes it illegal for anyone (citizen or not) on U.S. soil to further such payment
    • does allow grease payments
  161. Describe a grease payment
    • when a person pays a low level offical to make something happen faster than it normally would
    • involve relativly small amounts of money
    • attempting to make others do their job faster
  162. Describe a bribe
    • an attempt to influence someone to make a decision that they wouldnt normally make.
    • can be a from or promotion, tips, special consideration, stock options, any form of property
  163. What is the Human Rights Watch?
    a global organization which works to expose and reduce incidences of human rights violations.
  164. Identify the 3 gusidelines of the Human Right Watch
    • 1. communication between management and employee is critical
    • e.g.: open  and clear lines of communication
    • 2. encourages managers to be informed about issues that are specific to the region in which they are operating
    • e.g.: all cultures are different and
    • 3. companies need to meet the minimum legal requirements as far as human rights go
    • e.g.: best practices
  165. What is outsourcing?
    • when a company moves part of their business to another location
    • e.g.: another country, or in country with another company, usually for decreasing price,
  166. What is the Alien Tort Claims Act?
    allows foreign citizens to bring a citizen of the U.S. to trial in the U.S.
  167. What is corporate governance?
    a system of accountability, oversight, and control within the company
  168. What is accountability
Card Set
DSST Business Ethics and Society
DSST Business Ethics and Society