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ANS: Businesses expect their employees to be loyal and to act in the best interests of the company. An ethical conflict can arise when an individual must decide between loyalty to the company and truthfulness in business relationships. But when the truth about a company is not favorable, an ethical conflict can arise. Explain how state and federal laws protect whistle-blowers. ANS: With the Sarbanes-Oxley Act, an individual can be prosecuted for retaliating against an employee for taking concerns of unlawful conduct to a public official.

In addition, private firms must provide procedures for anonymous reporting of accusations. In addition, whistle-blowers can seek protection under the False Claims Act, under which they can fi le a lawsuit on behalf. Charges against health care companies for fraudulent billing for Medicare or Medicaid are examples of this type of lawsuit. ANS: At the most basic level, a code of conduct may simply specify ground rules for acceptable behavior, such as identifying the laws and regulations that employees must obey.

Other companies use their codes of conduct to identify key corporate values and provide frameworks that guide employees as they resolve moral and ethical dilemmas. The development of a corporate culture to support business ethics happens on four levels. Explain each of the four levels. ANS: The four levels of development of a corporate culture to support business ethics are ethical awareness, ethical education, ethical action, and ethical leadership.

Ethical awareness is the foundation of an ethical climate. Employees need help in identifying ethical problems and need guidance in how to respond. Ethical reasoning involves ethics training programs to provide employees with the tools they need to evaluate ethical dilemmas and arrive at suitable decisions. Ethical action involves the structures and procedures that firms establish to enable their employees to follow ethical behavior.

Companies encourage ethical action by providing support for employees faced with dilemmas, such as an employee hotline. Ethical leadership charges each employee at every level with the responsibility for being an ethical leader. Why is ethical leadership so important? ANS: Without supervisors and managers demonstrating ethical behavior, employees are not as likely to follow a set of ethical standards.

Companies where managers set good examples have fewer incidences of unethical behavior, and employees report higher levels of satisfaction.

Explain social responsibility. It is the recognition that business must be concerned with the qualitative dimensions of consumer, employee, and societal benefits, as well as the quantitative measures of sales and profits, by which business performance is traditionally measured. What is a social audit? Who conducts it? ANS: A social audit is a formal procedure to identify and evaluate all company activities that relate to social issues such as conservation, employment practices, environmental protection, and philanthropy.

The audit informs management about how well the company is performing in these areas. Social audits often are conducted internally by firms. Outside groups, such as environmental organizations and public-interest groups, also conduct social audits. What is green marketing? ANS: Green marketing is a marketing strategy that promotes environmental friendly products and production methods.

What are the objectives of the consumerism? ANS: Consumerism refers to the public demand that that a business consider the wants and needs of its customers in making decisions. Consumerism is based on the belief that consumers have certain rights. President Kennedy summarized many of the ideals of consumerism in a speech in which he listed four basic consumer rights: the right to safety, the right to be informed, the right to choose, and the right to be heard.

Explain product liability and briefly describe what this means in terms of social responsibility. ANS: Product liability refers to the responsibility of manufacturers for injuries and damages caused by their products.

Items that lead to injuries, either directly or indirectly, can have disastrous consequences for their makers. Many companies put their products through rigorous testing to avoid safety problems.

Still, testing alone cannot foresee every eventuality. Companies must try to consider all possibilities and provide adequate warning of potential dangers. ANS: The Food and Drug Administration FDA , which sets standards for advertising conducted by drug manufacturers, eased restrictions for prescription drug advertising on television.

In print ads, drug makers are required to spell out potential side effects and the proper uses of prescription drugs. Because of the requirement to disclose this information, prescription drug television advertising was limited. Why do investors expect a firm to act ethically and exhibit social responsibility?

ANS: Even though the primary purpose of a firm is to make a profit, investors also expect the firm to act ethically, as well as legally, and exhibit social responsibility. Investors know that the failure of a firm to act ethically, legally, or without a sense of social responsibility can result in substantial monetary losses to investors. Ethical understanding and reasoning BT:.

Explain how state and federal agencies carry out their responsibilities of protecting investors from financial misdeeds.

Include examples of specific organizations and agencies. At the federal level, the Securities and Exchange Commission SEC investigates suspicions of unethical or illegal behavior by publicly traded firms. It investigates accusations that a business is using faulty accounting practices to inaccurately portray its financial resources and profits to investors. Regulation FD Fair Disclosure is an SEC rule that requires publicly traded companies to announce major information to the general public, rather than first disclosing the information to selected major investors.

The agency also operates an Office of Internet Enforcement to target fraud in online trading and online sales of stock by unlicensed sellers.

Business ethics begins with. When management considers social and economic issues in decision making, the company is practicing.

Businesses have responsibilities to. Which of the following statements best justifies why a company should act in an ethical manner? The government will take action if a firm fails to act ethically. Acting ethically always maximizes profits in the immediate future. Acting ethically will help a company to prosper in the long run.

The right thing to do is always the least expensive alternative. Businesses should a. Which of the following statements is correct? Ethical conflicts usually arise in trying to serve the needs of separate constituents. Setting ethical standards is always clear-cut. The ethical values of individual employees have no influence on the decisions and actions a business takes.

Setting ethical standards is easy. Everyone b. No one c. Only top-level managers d. Department supervisors b. Ethics compliance officers c. Human Resource managers d. High-level personnel responsible for compliance Government regulation Consistent enforcement Consistent improvement.

Which of the following is not an example of unethical or illegal acts in the workplace? Misreporting time on the job b. Internet abuse c. Whistle-blowing d. Technology has a. Experiences b. Religion c. Culture d. Many people rationalize unethical acts at work because they a.

Arwan decides not to cheat on his exam because he fears he will be caught and receive no credit if he is caught.

Arwan is in the stage of his ethical development. Hemi is a reckless driver and always jumps the red light in the absence of any patrol officers, but he refrains from speeding on highways as he is fearful of paying up hefty fines to patrol officers.

Hemi is most likely to be in the stage of ethical development. When an individual moves beyond his or her own needs and desires and takes the needs of society into consideration when making decisions, in which stage of ethical development is this individual? Preconventional b. Conventional c. Postconventional d. Individuals who focus only on their own interests when making decisions are at the of ethical development. Manelin avoids using his office computer for personal use, even though his company does not have a specific policy forbidding it.

Manelin is at the stage of ethical development. If an individual follows personal principles for resolving ethical dilemmas and considers personal, group, and societal interests, he or she is at the stage of ethical development. Alezae does not make personal long-distance phone calls at work because it will cost her employer money. Alezae is in the stage of ethical developement. Aimon makes a point of turning off the lights in his office when he is not using it because it saves his company money and saves energy for the environment.

Aimon is in the stage of ethical development. Brianna focuses on her duty to family and work and bases her actions on the expectations of various groups in her life.

Brianna is in stage of ethical development. Glafira is an investment advisor and wants to recommend a stock she happens to own. How should Glafira best deal with this potential conflict of interest? She should not make the recommendation. She should make a negative recommendation. She should make a positive recommendation and then sell the stock. She should disclose the fact that she owns the stock while making the recommendation. Branka is a diabetes educator at a local clinic.

Branka declined the gift. Which ethical challenge did she face? Whistle-blowing b. Honesty and integrity c. Culture shock d.

How should a businessperson deal with a conflict of interest? Ignore it b. Send an email to the superior c. Disclose it or avoid it d. Benito knows there may be an error and will tell them about it but only if they ask. They do not ask. During a meeting with government regulators, Nicole voluntarily points out a potential problem with a new product her company is testing. Nicole has shown. Daichi takes responsibility for an error made by his assistant on a project.

Daichi has shown. Horus is a new employee at an IT firm. Soon he learns of the unethical practices done by his superiors and other employees at the firm. He immediately informs such instances and behaviors to the upper management and other officials at the firm. This act by Horus is known as. Bente knows of a defect in a product his company sells. He will disclose the defect but only if the customer specifically asks about it.

Kanai learns that her company is secretly dumping untreated waste into the city sewer systems, and she informs the local EPA office. She is acting as a whistle-blower.

She has a conflict of interest. She is showing integrity. She is showing loyalty. Loyalty versus truth b. Conflict of interest c. Honesty and integrity d. Rangsey was a foreman at Hi-Way Construction and discovered his company was deliberately using faulty materials for a project.

BT: AP. Americans with Disabilities Act b. Sarbanes-Oxley Act c. Consumer Rights Act d. A formal statement that defines how the organization expects and requires employees to resolve ethical questions is. Which of the following can improve ethical reasoning in a company?

Practical training sessions c. Mission statement d. Organizational culture. Online simulation training such as the Ethics Challenge can help to improve ethical a. Macrozine Inc. An ethics compliance officer is available in the Human Resources office or through an employee hotline. This is an example of ethical.

It will stay about the same. It will improve. It will create uncertainty among employees. It will deteriorate. It will remain the same. It will generate healthy competition.

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