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Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

Complete Solution Manual for SM TB Business Ethics Now 6e Andrew Ghillyer

CHAPTER 1 Understanding Ethics Table of Contents Chapter Summary and Learning Outcomes Learning Outcomes Frontline Focus: ―Doing the Right Thing‖ Questions Learning Outcome 1 Learning Outcome 2 Learning Outcome 3 Learning Outcome 4 Learning Outcome 5 Life Skills Progress ✓Questions Ethical Dilemma Frontline Focus: ―Doing the Right Thing—Megan Makes a Decision‖ Questions Key Terms Review Questions Review Exercises Team Exercises Thinking Critically

1-2 1-2 1-2 1-3 1-3 1-5 1-6 1-6 1-9 1-9 1-12 1-14 1-15 1-16 1-17 1-19 1-21

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

Chapter Summary This chapter begins by defining ethics and how people decipher between ―right‖ and ―wrong‖ or ―good‖ and ―bad‖ behavior. It explores how people live their lives according to a standard of ―right‖ or ―wrong‖ behavior and how their personal set of morals are formed. Society plays a role in the traditions and customs that shape the standards or moral set that people adopt. Common standards shared among individuals can be called values or a values system. Some people have different definitions of ethics such as, personal integrity, rules of appropriate individual behavior, rules of appropriate behavior for a community or society, and some define ethics as simply ―doing the right thing.‖ The Golden Rule—do unto others as you would have them do unto you—is also a goal of living an ethical life by some. There are also some ethical theories discussed, which are divided into three categories—virtue ethics, ethics for the greater good, and universal ethics. The chapter concludes with a discussion on ethical relativism, applied ethics, ethical dilemmas, and how to resolve these situations.

Learning Outcomes After studying this chapter, the student should be able to: 1. 2. 3. 4. 5.

Define ethics. Explain the role of values in ethical decision making. Understand opposing ethical theories and their limitations. Discuss ethical relativism. Explain an ethical dilemma and apply a process to resolve it.

Extended Chapter Outline Frontline Focus ―Doing the Right Thing‖ Questions 1.

What would be ―the right thing‖ to do here? How would the ―Golden Rule‖ relate to Megan‘s decision? The ―right thing‖ to do here would be to run the Wilson‘s application through the standard procedure and approve their application, pending everything in the background check returns as acceptable. The Golden Rule—do unto others as you would have them do unto you—applies to Megan‘s decision because she wouldn‘t want someone to deny or purposely delay her application because of her ethnicity.

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

How would you resolve this ethical dilemma? Review the three-step process in ‗Resolving Ethical Dilemmas‘ for more details.

First, Megan needs to analyze the consequences. If she listens to Kate, she will hinder the Wilson‘s chances of getting an apartment. If she goes against Kate, she will jeopardize her job, but will do the ―right thing‖ with respect to the Golden Rule by not discriminating. Second, Megan should analyze possible actions. Listening to Kate would be unethical, whereas disobeying Kate would be the honest, fair, and ―right thing‖ to do. Finally, Megan must make a decision. 3.

What should Megan do now? Megan needs to make a decision. She needs to approach Kate in a professional manner and have a discussion on her ethical point of view. The ethical decision would be to follow through with the Wilson‘s application in the standard procedure just the same as any other family.

Learning Outcome 1: Define Ethics. •

Ethics is the manner by which we try to live our lives according to a standard of ―right‖ or ―wrong‖ behavior—in both how we think and behave toward others and how we would like them to think and behave toward us. o How people arrive at the definition of what‘s right and wrong is a result of many factors, including how they were raised, their religion, and the traditions and beliefs of their society. ➢ Society is a structured community of people bound together by similar traditions and customs.

Learning Outcome 2: Explain the Role of Values in Ethical Decision Making. •

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Moral standards are principles based on religious, cultural, or philosophical beliefs by which judgments are made about good or bad behavior. o Culture is a particular set of attitudes, beliefs, and practices that characterize a group of individuals. Beliefs can come from many different sources: o Friends o Family o Ethnic background o Religion

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

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o School o The media—television, radio, newspapers, magazines, or the Internet o Personal role models and mentors One‘s personal set of morals—morality—represents a collection of all these influences as they build up over one‘s lifetime. Standards of ethical behavior are absorbed by osmosis as an individual observes the examples (both positive and negative) set by everyone around the individual—parents, family members, friends, peers, and neighbors. o When individuals share similar standards in a community, the terms values and value system are used. o The terms morals and values are often used to mean the same thing—a set of personal principles by which you aim to live your life. ➢ A value system is a set of personal principles formalized into a code of behavior. A person‘s values can be said to have a specific ―worth‖ for them. That worth can be expressed in two ways: o An intrinsic value—the quality by which a value is a good thing in itself and is pursued for its own sake, whether anything comes from that pursuit or not. For example, happiness, health, and self-respect. o An instrumental value—the quality by which the pursuit of one value is a good way to reach another value. For example, money is valued for what it can buy rather than for itself. The impact of a person‘s or a group‘s value system can be seen in the extent to which his or her daily lives are influenced by those values. o The greatest test of any personal value system comes when an individual is presented with a situation that places those values in direct conflict with an action. For example: ➢ Lying is wrong—but what if you were lying to protect the life of a loved one? ➢ Stealing is wrong—but what if you were stealing food for a starving child? ➢ Killing is wrong—but what if you had to kill someone in self-defense to protect your own life? o It is this grey area that makes the study of ethics so complex. If individuals asked their friends and family what ethics means to them, they would probably arrive at a list of four basic categories: o Simple truth—right and wrong or good and bad. o A question of someone‘s personal character—his or her integrity. o Rules of appropriate individual behavior. o Rules of appropriate behavior for a community or society The first category—a simple truth—also may be be expressed as simply doing the right thing.

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

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The second category—personal integrity, demonstrated by someone‘s behavior—looks at ethics from an external rather than an internal viewpoint. Rules of appropriate individual behavior represent the idea that the moral standards people develop for themselves impact their lives on a daily basis in their behavior and the other types of decisions they make. Rules of appropriate behavior for a community or society remind people that they must eventually bring their personal value system into a world that is shared with people who will probably have both similar and very different value systems. Each category represents a different feature of ethics. o On one level, the study of ethics seeks to understand how people make the choices they make—how they develop their own set of moral standards, how they live their lives on the basis of those standards, and how they judge the behavior of others in relation to those standards. o On a second level, people then try to use that understanding to develop a set of ideals or principles by which a group of ethical individuals can combine as a community with a common understanding of how they ―ought‖ to behave. For some, the goal of living an ethical life is expressed by the Golden Rule—do unto others as you would have them do unto you, or treat others as you would like to be treated. o The danger with the Golden Rule is that not everyone thinks like you, acts like you, or believes in the same principles that you do, so to live your life on the assumption that your pursuit of an ethical ideal will match others‘ ethical ideals could get you into trouble.

Learning Outcome 3: Understand Opposing Ethical Theories and Their Limitations. • •

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Ethical theories can be divided into three categories—virtue ethics, ethics for the greater good, and universal ethics. Virtue ethics is a concept of living your life according to a commitment to the achievement of a clear ideal—what sort of person would I like to become, and how do I go about becoming that person? o The Greek philosopher Aristotle‘s belief in individual character and integrity established this concept. o The problem with virtue ethics is that societies can place different emphasis on different virtues. Ethics for the greater good is more focused on the outcome of an individual‘s actions rather than the apparent virtue of the actions themselves—that is, a focus on the greatest good for the greatest number of people. o Originally proposed by a Scottish philosopher named David Hume, this approach is also referred to as utilitarianism—ethical choices that offer the greatest good for the greatest number of people.

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

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The problem with this approach to ethics is the idea that the ends justify the means. ➢ If all an individual focuses on is doing the greatest good for the greatest number of people, no one is accountable for the actions that are taken to achieve that outcome. Originally attributed to a German philosopher named Immanuel Kant, universal ethics argues that there are certain and universal principles that should apply to all ethical judgments. o Universal ethics refer to actions that are taken out of duty and obligation to a purely moral ideal rather than based on the needs of the situation, since the universal principles are seen to apply to everyone, everywhere, all the time. o The problem with this approach is the reverse of the weakness in ethics for the greater good. ➢ If all an individual focuses on is abiding by a universal principle, no one is accountable for the consequences of the actions taken to abide by those principles.

Learning Outcome 4: Discuss Ethical Relativism. • •

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When faced with the requirement to select a model of how we ought to live our lives, many people choose the idea of ethical relativism. Ethical relativism is the concept that the traditions of an individual‘s society, the individual‘s personal opinions, and the circumstances of the present moment define the individual‘s ethical principles. The idea of relativism implies some degree of flexibility as opposed to strict black-andwhite rules. o It also offers the comfort of being a part of the ethical majority in a person‘s community or society instead of standing by the person‘s individual beliefs as an outsider from the group.

Learning Outcome 5: Explain an Ethical Dilemma and Apply a Process to Resolve It. • • • •

Applied ethics is the study of how ethical theories are put into practice. The basic assumption of ethical theory is that a person as an individual or community is in control of all the factors that influence the choices that he or she makes. Ethical dilemma is a situation in which there is no obvious right or wrong decision, but rather a right or right answer. Any idealized set of principles or standards inevitably faces some form of challenge. o For ethical theories, that challenge takes the form of a dilemma in which the decision people must make requires them to make a right choice knowing full well that they are:

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

➢ ➢ ➢ ➢

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Leaving an equally right choice undone Likely to suffer something bad as a result of that choice Contradicting a personal ethical principle in making that choice Abandoning an ethical value of their community or society in making that choice In reality, the ―answer‖ to an ethical dilemma is often the lesser of two evils, it is questionable to assume that there will always be an acceptable answer—it‘s more a question of whether or not you can arrive at an outcome you can live with. Two distinct approaches to handling ethical dilemmas can be identified: o One is to focus on the practical consequences of what people choose to do. o The other is to focus on the actions themselves and the degree to which they were the right actions to take. The following is a three-step process for solving an ethical problem: o Step 1—analyze the consequences o Step 2—analyze the actions o Step 3—make a decision Arthur Dobrin identified eight questions people should consider when resolving an ethical dilemma: o What are the facts? o What can you guess about the facts you don‟t know? o What do the facts mean? o What does the problem look like through the eyes of the people involved? o What will happen if you choose one thing rather than another? o What do your feelings tell you? o What will you think of yourself if you decide one thing or another? o Can you explain and justify your decision to others? The application of these steps is based on some key assumptions: o There is sufficient time for the degree of contemplation that such questions require; second o There is enough information available for people to answer the questions o The dilemma presents alternative resolutions for people to select from When people are attempting to resolve an ethical dilemma, they follow a process of ethical reasoning. o Ethical reasoning is a process of looking at the information available to us in resolving an ethical dilemma, and drawing conclusions based on that information in relation to our own ethical standards. Lawrence Kohlberg developed a framework that presents the argument that people develop a reasoning process over time, moving through six distinct stages (classified into three levels of moral development) as they are exposed to major influences in our lives: o Level 1: Preconventional—at this lowest level of moral development, a person‘s

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

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perception of right and wrong is initially directly linked to the expectation of punishment or reward. ➢ Stage 1: Obedience and punishment orientation—a person is focused on avoidance of punishment and deference to power and authority, i.e., something is right or wrong because a recognized authority figure says it is. ➢ Stage 2: Individualism, instrumentalism, and exchange—as a more organized and advanced form of stage 1, a person is focused on satisfying his or her own needs, i.e., something is right or wrong because it helps the person get what he or she wants or needs. o Level 2: Conventional—a person continues to become aware of broader influences outside the family. ➢ Stage 3: “Good boy/nice girl” orientation—a person is focused on meeting the expectations of family members, i.e., something is right or wrong because it pleases those family members. Stereotypical behavior is recognized, and conformity to that behavior develops. ➢ Stage 4: Law-and-order orientation—a person is increasingly aware of his or her membership in a society and the existence of codes of behavior, i.e., something is right or wrong because codes of legal, religious, or social behavior dictate it. o Level 3: Postconventional—at this highest level of ethical reasoning, a person makes a clear effort to define principles and moral values that reflect an individual value system rather than simply reflecting the group position. ➢ Stage 5: Social contract legalistic orientation—a person is focused on individual rights and the development of standards based on critical examination, i.e., something is right or wrong because it has withstood scrutiny by the society in which the principle is accepted. ➢ Stage 6: Universal ethical principle orientation—a person is focused on selfchosen ethical principles that are found to be comprehensive and consistent, i.e., something is right or wrong because it reflects that person‘s individual value system and the conscious choices he or she makes in life. Kohlberg‘s framework offers us a clearer view into the process of ethical reasoning—that is, that someone can arrive at a decision, in this case the resolution of an ethical dilemma— on the basis of a moral rationale that is built on the cumulative experience of his or her life. o Kohlberg also believed that a person could not move or jump beyond the next stage of his or her six stages. ➢ It would be impossible for a person to comprehend the moral issues and dilemmas at a level so far beyond his or her life experience and education.

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

Life Skills What Do You Stand For, Or What Will You Stand Against? This Life Skills box discusses how one‘s personal value system is developed. It also talks about how this model helps people make difficult decisions. People‘s value systems are developed as a child from their parents, friends, society, and often their upbringing. It is unique to each person.

Progress ✓ Questions 1.

What is the definition of ethics? Ethics is defined as the manner by which we try to live our lives according to a standard of ―right‖ or ―wrong‖ behavior—in both how we think and behave toward others and how we would like them to think and behave toward us.

What is a moral compass, and how would you apply it? An individual‘s morality, or personal set of morals, represents a collection of religious, cultural, or philosophical beliefs or influences as they are built up over a lifetime. The standards an individual learns or observes provide a moral compass, which is a sense of personal direction to guide them in the choices they make in their lifetime.

Explain the difference between intrinsic and instrumental values. Intrinsic value is the quality by which a value is a good thing in itself and is pursued for its own sake, whether anything comes from that pursuit or not. For example, happiness, health, and self-respect can all be said to have intrinsic value. Instrumental value is the quality by which the pursuit of one value is a good way to reach another value. For example, money is valued for what it can buy rather than for itself.

List the four basic categories of ethics. The four basic categories of ethics are: • Simple truth—right and wrong or good and bad • A question of someone‘s personal character—his or her integrity • Rules of appropriate individual behavior • Rules of appropriate behavior for a community or society.

What is the Golden Rule?

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

The Golden Rule is do unto others as you would have them do unto you or treat others as you would like to be treated. 6.

List the three basic ethical theories. The three basic ethical theories are: • Virtue ethics • Ethics for the greater good—utilitarianism • Universal ethics

Identify the limitations of each theory. Following are the limitations of each of the basic ethical theories: • The problem with virtue ethics is that societies can place different emphasis on different virtues so if the virtues people hope to achieve aren‘t a direct reflection of the values of the society in which they live, there is a real danger of value conflict. • The problem with the ethics for the greater good or utilitarianism is the idea that the ends justify the means. If all people focus on is doing the greatest good for the greatest number of people, no one is accountable for the actions that are taken to achieve that outcome. • The problem with the universal ethics approach is the reverse of the weakness in ethics for the greater good. If all people focus on is abiding by a universal principle, no one is accountable for the consequences of the actions taken to abide by those principles.

Provide an example of each theory in practice. Following are examples of each theory in practice: • An example of virtue ethics would be Christian societies‘ values based on faith, hope, and charity. • An example of utilitarianism would be when Adolf Hitler and his Nazi party launched a national genocide against Jews and ―defective‖ people on the utilitarian grounds of restoring the Aryan race. • An example of universal ethics would be ethically justifying stem cell research because of the potential to cure major illnesses, such as Parkinson‘s, cancer, heart disease, etc.

Define ethical relativism. Ethical relativism is the concept that the traditions of people‘s society, their personal opinions, and the circumstances of the present moment define their ethical principles.

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

10. Define applied ethics. Applied ethics is the study of how ethical theories are put into practice. 11. What is an ethical dilemma? An ethical dilemma is a situation in which there is no obvious right or wrong decision, but rather a right or right answer. 12. Explain the three-step process for resolving an ethical dilemma. Following is the three-step process for resolving an ethical dilemma: • Step 1. Analyze the consequences—in this step, people should ask themselves questions like, who will be helped by what they do? Who will be harmed? What kind of benefits and harm are we talking about? And, how does all this look over the long run as well as the short run? • Step 2. Analyze the actions—in this step, people should consider all the options from a different perspective, without thinking about the consequences. • Step 3. Make a decision—in this step, people should take both parts of their analysis into account, and make a decision. 13. What are the eight questions you should consider in resolving an ethical dilemma? Following are the eight questions that people should consider while resolving an ethical dilemma: • What are the facts? • What can you guess about the facts you don‘t know? • What do the facts mean? • What does the problem look like through the eyes of the people involved? • What will happen if you choose one thing rather than another? • What do your feelings tell you? • What will you think of yourself if you decide one thing or another? • Can you explain and justify your decision to others? 14. What assumptions are we making in the resolution of a dilemma? What should you do if you can‘t answer these eight questions for the dilemma you are looking to resolve? Some of the key assumptions in the application of these steps are: • There is sufficient time for the degree of contemplation that such questions require. 1-11 Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

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There is enough information available to you to answer the questions. The dilemma presents alternative resolutions for you to select from.

If the eight questions cannot be answered, then the analysis becomes a question of finding a palatable resolution that people can live with rather than the most appropriate solution. 15. What are Kohlberg‘s three levels of moral development? Kohlberg‘s three levels of moral development are: • Preconventional • Conventional • Postconventional 16. What are the six stages of development in those three levels? The six stages of development in Kohlberg‘s three levels of moral development are: • Level 1: Preconventional o Stage 1: Obedience and punishment orientation o Stage 2: Individualism, instrumentalism, and exchange • Level 2: Conventional o Stage 3: ―Good boy/nice girl‖ orientation o Stage 4: Law-and-order orientation • Level 3: Postconventional o Stage 5: Social contract orientation o Stage 6: Universal ethical principle orientation

Ethical Dilemma 1.1 – Peer Pressure 1.

In what ways does giving in to peer pressure constitute ethical relativism? Students‘ responses will vary. In society, individuals and groups often feel pressured by their peers to perform tasks or to participate in other behaviors that they would not normally consider. Giving into peer pressure could constitute ethical relativism, where those traditions of the society, personal opinions, and the circumstances of the present moment define their ethical principles.

How could you use your personal value system to fight back against peer pressure?

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

Students‘ responses will vary. Individuals can choose not to contribute to peer pressure. For example, an individual can draw on their personal opinions, values, or beliefs to define their ethical principles and use those morals or traits to form an opinion against an action that contributes to peer pressure. 3.

How would you communicate the risks of sexting to students who are struggling to deal with peer pressure? Students‘ responses will vary. Students need to be taught about the negative consequences and tragic incidents that have occurred related to sexting. Inform the students that they have the right to choose how they act or react towards peer pressure. Students need to be taught how to be individuals and how to make decisions that are legal and parallel with the traditions of society, their personal opinions, and their ethical principles.

Is a change in the law the best option for addressing this problem? Why or why not? Students‘ responses will vary. In some cases a change in the law could be beneficial by helping prosecute those who violate laws against sexting. In some cases individuals or groups perform acts because they know that it is against the law.

1.2 – The Overcrowded Lifeboat 1.

Did the captain make the right decision? Why or why not? Students‘ responses will vary. This was a tough choice and the captain needed to analyze the consequences of his actions. He did not consider that the life boat may have been rescued before anyone died. The lives of innocent people cannot be sacrificed and the captain does not have the authority to decide who will or will not die.

What other choices could the captain have made? Students‘ responses will vary. The captain could have tried to contact emergency units or other nearby ships. The captain could have kept everyone on the lifeboat until help arrived, rather than sacrificing the weak.

If you had been on the jury, how would you have decided? Why? Students‘ responses will vary. Some of them may support the captain‘s decision because saving the strong makes more sense than indirectly killing the strong because of the weak. Others might oppose the captain‘s decision by saying that the captain wasn‘t the one who

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

gave life to the people thus he was no one to decide whom to sacrifice. 4.

Which ethical theory or theories could be applied here? Many of the students will tell that the ethics for the greater good theory and the universal ethics theory can be applied to this scenario. Ethics for the greater good theory focuses on the greatest good for the greatest number of people. The captain was trying to save as many people as possible, but in order to do that, he was willing to sacrifice others. Also, according to the universal ethics theory, actions are taken out of duty and obligation to a purely moral ideal rather than based on the needs of the situation and no one is accountable for the consequences of the actions taken. Sacrificing the weak could be seen as ethically justifiable because it saved some lives.

Frontline Focus ―Doing the Right Thing—Megan Makes a Decision‖ Questions 1.

Did Megan make the right choice here? Megan did make the right choice by approving the Wilsons‘ application. As stated in the text, had Megan followed Kate‘s instructions, this would have been discriminatory and could have resulted in legal threats. Giving the apartment to the Wilsons will eliminate any guilty feelings Megan would have felt if she had followed Kate‘s instructions. Dealing with Kate will be much easier than legal suits.

What do you think Kate‘s reaction will be? Students‘ answers will vary. Kate could be very understanding or very angry with Megan. If she feels that she has something to prove as the new boss then Kate will most likely be angry and reprimand Megan for not following instructions.

What would have been the risks for Oxford Lake if Megan had decided not to rent the apartment to the Wilsons? Students‘ responses will vary. If Megan had listened to Kate and buried the Wilsons‘ file, Oxford Lake could have been brought into a legal situation for discriminatory action. Also, Oxford Lake‘s reputation was on the line with Megan‘s decision. A lawsuit could‘ve ruined the company‘s image and hurt their relationship with potential applicants/clients.

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

Key Terms Applied Ethics: The study of how ethical theories are put into practice. Culture: A particular set of attitudes, beliefs, and practices that characterize a group of individuals. Ethical Dilemma: A situation in which there is no obvious right or wrong decision, but rather a right or right answer. Ethical Reasoning: Looking at the information available to us in resolving an ethical dilemma and drawing conclusions based on that information in relation to our own ethical standards. Ethical Relativism: Concept that the traditions of your society, your personal opinions, and the circumstances of the present moment define your ethical principles. Ethics: The manner by which we try to live our lives according to a standard of ―right‖ or ―wrong‖ behavior—in both how we think and behave toward others and how we would like them to think and behave toward us. The Golden Rule: Do unto others as you would have them do unto you. Instrumental Value: The quality by which the pursuit of one value is a good way to reach another value. For example, money is valued for what it can buy rather than for itself. Intrinsic Value: The quality by which a value is a good thing in itself and is pursued for its own sake, whether anything comes from that pursuit or not. Society: A structured community of people bound together by similar traditions and customs. Universal Ethics: Actions that are taken out of duty and obligation to a purely moral ideal rather than based on the needs of the situation, since the universal principles are seen to apply to everyone, everywhere, all the time. Utilitarianism: Ethical choices that offer the greatest good for the greatest number of people. Value System: A set of personal principles formalized into a code of behavior. Virtue Ethics: A concept of living your life according to a commitment to the achievement of a clear ideal—what sort of person would I like to become, and how do I go about becoming that

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

person?

Review Questions NOTE: Some questions allow for a number of different answers. Below are some suggestions. 1.

Why do we study ethics? Students‘ responses will vary. Individuals and groups study ethics to learn how and why people make right and wrong decisions.

Why should we be concerned about doing ―the right thing‖? Students‘ responses will vary. There are many laws and morals related to doing ―the right thing‖. Individuals learn to do the right thing to avoid going to prison or breaking the law.

If each of us has a unique set of influences and values that contribute to our personal value system, how can that be applied to a community as a whole? Students‘ responses will vary. Students can discuss the Golden Rule and how the greater good should be applied to community. Students should recall that in universal ethics, universal principles are applied to everyone. Individuals who have good personal value systems implement positive social change in their community.

Is it unrealistic to expect others to live by the Golden Rule? Students‘ responses will vary. Some students may respond that it is realistic to expect others to live by the Golden Rule—do onto others as you would have them do unto you.

Consider how you have resolved ethical dilemmas in the past. What would you do differently now? Students‘ responses will vary. Students should recall what they did to resolve an ethical dilemma in the past. Students should note the three-step process for resolving an ethical dilemma and how the outcome might have changed the resolution of the dilemma.

What would you do if your resolution of an ethical dilemma turned out to be the wrong approach and it actually made things worse? Student responses will vary. Many of them may say that they would learn from the situation

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

and try to take a different decision the next time such a situation arises.

Review Exercises 1.

You buy a candy bar at the store and pay the cashier with a $5 bill. You are mistakenly given change from a $20 bill. What do you do? Students‘ responses will vary. Some of the students may feel that they should tell the cashier that they paid with a $5 bill because after analyzing the consequences they should realize that the cashier‘s money drawer would be short that night and the cashier would probably be reprimanded. Also, following the virtue ethics theory discussed in the chapter, telling the cashier is the honorable and fair action to take.

You are riding in a taxicab and notice a $20 bill that has obviously fallen from someone‘s wallet or pocketbook. What do you do? Students‘ responses will vary. For some students the right thing to do would be to tell the cab driver. It may or may not be his payment/tip from a previous passenger. Others may take a more relativistic approach and decide that the earlier passenger may not notice the loss, and that the cab driver would probably keep the money if he/she found it, therefore it‘s ‗found money.‘

You live in a small Midwestern town and have just lost your job at the local bookstore. The best-paying job you can find is at the local meatpacking plant, but you are a vegetarian and feel strongly that killing animals for food is unjust. What do you do? Students‘ responses will vary. Most of the students may feel that they must analyze the consequences and actions of each option. If they feel strongly about working at the meatpacking plant, then should stay true to their values and begin looking for other options. Are there other opportunities in the area? Can they commute or move to another town?

You are having a romantic dinner with your spouse to celebrate your wedding anniversary. Suddenly, at a nearby table, a man starts yelling at the young woman he is dining with and becomes so verbally abusive that she starts to cry. What do you do? Students‘ responses will vary. Most of the students may feel that no one deserves to be abused, physically or verbally. One option could be to say something to your waiter/waitress and have management address the issue. Another option could be to approach the man; however, this would be interfering in a situation where you know very little of the facts.

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

You are shopping in a department store and observe a young man taking a watch from a display stand on the jewelry counter and slipping it into his pocket. What do you do? Students‘ responses will vary. Most of the students may feel that the man is obviously stealing and should be punished for his actions. The most appropriate action would be to inform a store manager or employee that you witnessed the young man stick the watch in his pocket. Also, there may be some who feel indifferent about the action and may altogether ignore the incident.

You are the manager of a nonprofit orphanage. At the end of the year, a local car dealer approaches you with a proposition. He will give you a two-year-old van worth $10,000 that he has just taken as a trade-in on a new vehicle if you will provide him with a tax-deductible donation receipt for a new van worth $30,000. Your current transportation is in very bad shape, and the children really enjoy the field trips they take. Do you accept his proposition? Students‘ responses will vary. Most of the students may feel that this goes against values such as integrity, fairness, honor, etc. Although the children may really enjoy field trips and the orphanage may need new transportation, it would be unethical to accept this proposition. The orphanage should fundraise for new transportation, rather than giving into a bribe.

Internet Exercises 1.

Visit the Center for the Study of Ethics in the Professions (CSEP) at the Illinois Institute of Technology: http://ethics.iit.edu. a.

What is the stated mission of CSEP? The Center for the Study of Ethics in the Professions (CSEP) was established in 1976 to promote research and teaching on practical moral problems in the professions. It generates professional ethics courses at IIT and assists faculty at other universities to prepare for teaching professional ethics and to develop courses and programs (http://ethics.iit.edu/about/history-mission-center).

Identify and briefly summarize a current CSEP research project. Student responses will vary. They may choose from the Codes of Ethics Collection, CSEP Publications, Ethics Education Library, NanoEthics Bank, Software Engineering Archive, Ethics in the Natural Course of Research, or IIT Code of Ethics.

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

Explain the purpose of the ―NanoEthicsBank.‖ The NanoEthicsBank is a database conceived as a resource for researchers, scholars, students, and the general public who are interested in the social and ethical implications of nanotechnology. It is part of the larger Harvard-based database NanoConnection to Society (http://ethics.iit.edu/research/nano-ethics-bank).

Do you think that an ―Ethics Bowl‖ competition at your institution would be useful in discussing the issues of professional ethics? Why or why not? Student responses may vary. Most of the students may feel that having an ―Ethics Bowl‖ at institutions would be useful as this would combine the excitement and fun of a competitive tournament with a valuable educational experience for the students.

In these days of increasing evidence of questionable ethical practices, many organizations, communities, and business schools are committing to ethics pledges as a means of underscoring the importance of ethical standards of behavior in today‘s society. Using Internet research, find two examples of such pledges and answer the following questions: a.

Why did you select these two examples specifically? Students‘ responses will vary.

Why did each entity choose to make an ethical pledge? Students‘ responses will vary based on the examples they choose.

In what ways are the pledges similar and different? Students‘ responses will vary based on the examples they choose.

If you proposed the idea of an ethics pledge at your school or job, what do you think the reaction would be? Students‘ responses will vary.

Team Exercises 1.

Take me out to the cheap seats.

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

Divide into two groups and prepare arguments for and against the following behavior: My dad takes me to a lot of baseball games and always buys the cheapest tickets in the park. When the game starts, he moves to better, unoccupied seats, dragging me along. It embarrasses me. Is it OK for us to sit in seats we didn‟t pay for? Students‘ responses will vary. Some students may feel it is not OK to sit in seats that one didn‘t pay for. This is essentially stealing from the baseball park. The park is a business and their product is the ticket. Stealing is unethical and this person and his/her father should be sitting in the seats that they paid for. Others may argue that since the seats are going to waste anyway, where‘s the harm? 2.

Umbrella exchange. Divide into two groups and prepare arguments for and against the following behavior: One rainy evening I wandered into a shop, where I left my name-brand umbrella in a basket near the door. When I was ready to leave, my umbrella was gone. There were several others in the basket, and I decided to take another name-brand umbrella. Should I have taken it, or taken a lesser-quality model, or just gotten wet? Students‘ responses will vary. For most, stealing is unethical and this is what this scenario displays. This person should not have taken any other umbrella. It is unfortunate that the person‘s umbrella was stolen or mistakenly picked up, but that does not justify taking someone else‘s umbrella.

A gift out of the blue. Divide into two groups and prepare arguments for and against the following behavior: I‟m a regular customer of a men‟s clothing mail-order company, and it sends me new catalogs about six times a year. I usually order something because the clothes are good quality with a money-back guarantee, and if the item doesn‟t fit or doesn‟t look as good on me as it did in the catalog, the return process is very easy. Last month I ordered a couple of new shirts. When the package arrived, there were three shirts in the box, all in my size, in the three colors available for that shirt. There was no note or card, and the receipt showed that my credit card had been charged for two shirts. I just assumed that someone in the shipping department was recognizing me as a valuable customer—what a nice gesture, don‟t you think? Students‘ responses will vary. This would be a nice gesture if that was the case. This person is simply rationalizing why he should keep the shirts. If they were a gift, most likely there would have been a note accompanying his order explaining that the extra shirts were his

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

valuable customer gift. Some of the students may feel that the person needs to call the company and tell them about the mistake. 4.

Renting a dress? Divide into two groups and prepare arguments for and against the following behavior: My friend works for a company that manages fund-raising events for nonprofit organizations— mostly gala benefits and auctions. Since these events all take place in the same city, she often crosses paths with the same people from one event to the other. The job doesn‟t pay a lot, but the dress code is usually very formal. To stretch her budget and ensure that she‟s not wearing the same dress at every event, she buys dresses, wears them once, has them professionally dry-cleaned, reattaches the label using her own label gun, and returns them to the store, claiming that they were the wrong color or not a good fit. She argues that the dry-cleaning bill is just like a rental charge and she always returns them for store credit, not cash. The dress shop may have made a sale, but is this fair? Students‘ responses will vary. Rationalization is taking place in this situation. Some students may feel that just because the store is making a sale does not mean that it is ethical to continuously return dresses for store credit after wearing them.

Thinking Critically 1.1 – Three Cups of Tea: Mismanagement or Fraud? 1. Based on the evidence presented in this case study, was Mortenson‘s work at the CAI an example of deliberate fraud or mismanagement? Defend your position. Students‘ responses will vary based on their opinions or stands they take based on the information provided in the case. Specific details in the case support the allegations that much of Mortenson‘s story was either significantly embellished or fabricated. Mortenson, by contrast, blamed his coauthor‘s ―artistic license‖ and ―time compression‖ in telling his story as being at the root of much of the confusion and misinformation. Also, Penguin Publishing, the publisher, has admitted that minimal fact checking was performed in reviewing the first draft of the book. 2. How does the conduct of the CAI board relate to this case? Students‘ responses will vary. The Central Asia Institute (CAI) board shouldn‘t have spent 2 million on private charter flights for Mortenson‘s speaking engagements, even when he was reimbursed for travel fees by event organizers. Further, it should have taken a bigger share

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

(may be 45 to 49 percent) for its work in Central Asia. Although the CAI removed Mortenson from day-to-day operations (though he remains in a ―visionary‖ capacity with the organization), and appointed a new, larger, board of directors, these actions might have come in a bit late and may not be enough. 3. From a business ethics perspective, which was worse, the conduct of the CAI board or the conduct of Mortenson himself? Why? Students‘ responses will vary. Most students may feel Mortenson‘s conduct was worse because it was his actions that led to the CAI‘s conduct. 4. Why would CAI want to keep Mortenson in a ―visionary‖ capacity? Students‘ responses will vary. Some of the students may feel that CAI kept Mortenson in a ―visionary‖ capacity because the idea of building schools in Korphe and other areas of Central Asia was originally his. 5. If Mortenson‘s claims have misled donors, should the CAI return the money? Why or why not? Students‘ responses will vary. Some of the students may feel that since, Mortenson‘s claims have misled donors it will only be right or ethical for the CAI to return their money. Others may feel otherwise stating that it was not the CAI who misled the donors so there is no need to return the money, rather the CAI should make all possible fresh attempts to work toward building the schools. 6. What should be done to restore the reputation of the CAI? Students‘ responses will vary. Students may feel that the CAI should stay true and continue with its mission by building even more schools in Central Asia and actively supporting them.

1.2 – The Man Who Shocked the World 1. Critics of Milgram‘s research have argued that the physical separation between the participant and the teacher in one room and the learner in the other made it easier for the participant to inflict the shocks. Do you think that made a difference? Why or why not? Students‘ responses will vary. The physical separation could have been a variable in the experiment affecting the outcome. However, the participants were still aware that the higher voltage shocks were supposed to be causing potentially fatal pain. The actor was still visible

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

and participants were able to see the ―pain‖ they were causing by the shocks. It may have had a more dramatic effect on the participants to be in the same room as the learner. 2. The treatment of the participants in the study raised as much criticism as the results the study generated. Was it ethical to mislead them into believing that they were really inflicting pain on the learners? Why? Students‘ responses will vary. It was not unethical to mislead them in believing that they were really inflicting pain. This is essentially the same as medical experiments when patients are given a placebo pill or sugar pill. In addition, the participants were informed at the conclusion of the experiment. 3. The participants were introduced to the learners as equal participants in the study—that is, volunteers just like them. Do you think that made a difference in the decision to keep increasing the voltage? Why? Students‘ responses will vary. It is possible that participants continued increasing the voltage because they were under the impression that the learner was volunteering; although, it still should not have mattered when it came to a point of possible death. Volunteering to die is not an excuse to kill someone. 4. What do you think Milgram‘s research tells us about our individual ethical standards? Students‘ responses will vary. Milgram‘s research tells us that our individual ethical standards are based on selfish reasons or on what we‘re told to do, rather than thinking of others. 5. Would you have agreed to participate in this study? Why or why not? Students‘ responses will vary based on individual beliefs and value systems. 6. Do you think if the study were repeated today we would get the same kind of results? Why? Students‘ responses will vary. Many of them may say that if the study were repeated today, we wouldn‘t get the same kind of results because today people may come forward and accept that such experiments are wrong and shouldn‘t be done.

1.3 – Life and Death 1. Should people have the moral right to end their lives if they so please?

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

Students‘ responses will vary. Suicide is not a moral right. Although some may feel that it will simply eliminate their pain and suffering, they are not thinking of all the pain and suffering that it will cause family and friends. 2. Does being near the end of one‘s life make the decision to end it justified? Students‘ responses will vary. This would still be ending one‘s life earlier than it is meant to end. People will have differing opinions and views on these issues based on their personal or religious beliefs and upbringing. 3. What might the phrase ―right to die‖ mean? Students‘ responses will vary. Many people use the phrase ―it‘s a free country‖ or push the issue of human rights. Just because it is your life doesn‘t give you the right or option to end it; if you do, it would still be classified as a suicide. 4. Do people have the right to seek assistance in dying? Students‘ responses will vary. Assistance in dying would constitute unethical behavior. Our lives are meant to take their natural course, not to be ended by ourselves or anyone else. 5. Do people have the right to give assistance in dying? Students‘ responses will vary. Some students may feel that people, who have no chance of recovering, are suffering, or are only being kept alive through man-made machines should have the right to be assisted in dying. These people should, after gaining the consent of their family, be taken off the machines and then allowed to let their natural life take its course. 6. What kind of restrictions, if any, should there be on assisted suicide? Students‘ responses will vary.

CHAPTER 2 Defining Business Ethics

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

Table of Contents Chapter Summary and Learning Outcomes Learning Outcomes Frontline Focus: ―The Customer is Always Right‖ Questions Learning Outcome 1 Learning Outcome 2 Learning Outcome 3 Learning Outcome 4 Learning Outcome 5 Learning Outcome 6 Life Skills Progress ✓Questions Ethical Dilemma Frontline Focus: ―The Customer is Always Right—Carol Makes a Decision‖ Questions Key Terms Review Questions Review Exercises Internet Exercises Team Exercises Thinking Critically

2-2 2-2 2-2 2-3 2-3 2-4 2-5 2-5 2-6 2-6 2-7 2-10 2-13 2-13 2-14 2-15 2-16 2-16 2-19

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

Chapter Summary This chapter begins by defining how ethics are applied to business behavior. It describes and explains who the stakeholders are in an organization, their interests in the organization, and the impact on them from unethical behavior. Many people, because of the track record over the past two decades, believe that business ethics is an oxymoron, the combination of two contradictory terms. This chapter also discusses the history of business ethics and the dramatic changes that have taken place in the business environment over the last five decades. It continues going into deeper detail about the definition and resolution of ethical dilemmas. It discusses four commonly held rationalizations that can lead to misconduct. In conclusion, this chapter begins looking at the aspects in building and operating an ethical business.

Learning Outcomes After studying this chapter, the student should be able to: 1. 2. 3. 4. 5. 6.

Define the term business ethics. Identify an organization‘s stakeholders. Discuss the position that business ethics is an oxymoron. Summarize the history of business ethics. Identify and propose a resolution for an ethical dilemma in your work environment. Explain how executives and employees seek to justify unethical behavior.

Extended Chapter Outline Frontline Focus ―The Customer is Always Right‖ Questions 4. Look at Figures 2.1 and 2.2, and identify which stakeholders would be directly impacted by Dave‘s plan to sabotage the new healthy menu. The stakeholders that would be directly impacted by Dave‘s plan would include customers, employees, and stockholders or shareholders. 5.

Describe the ethical dilemma that Carol is facing here. Carol is faced with the ethical dilemma of whether to abide or not to abide by Dave‘s new plan.

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

What should Carol do now? Carol must decide if her values are strong enough to stand up to this dilemma. She could go along with Dave‘s plan and limit the number of new items and push side items and desserts; or, if her values do not agree with Dave‘s, Carol could leave the company or could express her opinion to Dave‘s boss.

Learning Outcome 1: Define the Term Business Ethics. • •

•

Business ethics is the application of ethical standards to business behavior. Students of business ethics can approach the topic from two distinct perspectives: o A descriptive summation of the customs, attitudes, and rules that are observed within a business. o A normative (or prescriptive) evaluation of the degree to which the observed customs, attitudes, and rules can be said to be ethical. In either case, business ethics should not be applied as a separate set of moral standards or ethical concepts from general ethics. o Ethical behavior, it is argued, should be the same both inside and outside a business situation. By recognizing the challenging environment of business, people are acknowledging the identity of the key players impacted by any potentially unethical behavior—the stakeholders. o In addition, people can identify the troubling situation where their personal values may be placed in direct conflict with standards of behavior they feel are expected of them by their employer.

Learning Outcome 2: Identify an Organization’s Stakeholders. •

• •

Figure 2.1 maps out the relevant stakeholders for any organization and their respective interests in the ethical operation of that organization—stockholders or shareholders, employees, customers, suppliers/vendor partners, retailers/wholesalers, federal government, creditors, and community. A stakeholder is someone with a share or interest in a business enterprise. Not every stakeholder will be relevant in every business situation. o Not all companies use wholesalers to deliver their products or services to their customers. o Customers would not be involved in payroll decisions between the organization and its employees.

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

•

Of great concern is the involvement of stakeholders with the actions of the organization and the extent to which they would be impacted by unethical behavior.

Learning Outcome 3: Discuss the Position that Business Ethics is an Oxymoron. • •

•

Over the last two decades, the ethical track record of many organizations would lead people to believe that no ethical policies or procedures have been in place. Corporate governance is the system by which business corporations are directed and controlled. o It is the extent to which the officers of a corporation are fulfilling the duties and responsibilities of their offices to the relevant stakeholders. The standard of corporate governance appears to be at the lowest level in business history: o Several prominent organizations—Enron, WorldCom, Lehman Brothers, Bear Stearns—have been found to have hidden the true state of their precarious finances from their stakeholders. o Others—Adelphia Cable, Tyco, and Merrill Lynch—have been found to have senior officers who appeared to regard the organization‘s funds as their personal bank accounts. o Financial reports are released that are then restated at a later date. o Products are rushed to market that have to be recalled due to safety problems at a later date (Toyota). o Organizations are being sued for monopolistic practices (Microsoft), race and gender discrimination (Walmart, Texaco, Denny‘s), and environmental contamination (GE). o CEO salary increases far exceed those of the employees they lead. o CEO salaries have increased while shareholder returns have fallen. o CEOs continue to receive bonuses while the stocks of their companies underperform the market average and thousands of employees are being laid off. Therefore, it is understandable that many observers would believe that the business world lacks any sense of ethical behavior whatsoever. o Some would even argue that the two words are incompatible and ―business ethics‖ is really an oxymoron—the combination of two contradictory terms, such as ―deafening silence‖ or ―jumbo shrimp‖. While these may not be the best of times for business ethics, it could be argued that the recent negative publicity has served as a wake-up call for many organizations to take a more active role in establishing standards of ethical conduct in their daily operations. o One of the key indicators in this process has been the increased prominence of a formal code of ethics in an organization‘s public statements. Code of ethics is a company‘s written standards of ethical behavior that are designed to guide managers and employees in making the decisions and choices they face every day.

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

The code of ethics can be seen to serve a dual function: ➢ As a message to the organization‘s stakeholders, the code should represent a clear corporate commitment to the highest standards of ethical behavior. ➢ As an internal document, the code should represent a clear guide to managers and employees in making the decisions and choices they face every day.

Learning Outcome 4: Summarize the History of Business Ethics o

Figure 2.3 illustrates several dramatic changes that have taken place in the business environment over the last five decades: o The increased presence of an employee voice has made individual employees feel more comfortable speaking out against actions of their employers that they feel to be irresponsible or unethical. o The issue of corporate social responsibility has advanced from an abstract debate to a core performance-assessment issue with clearly established legal liabilities. o Corporate ethics has moved from the domain of legal and human resource departments into the organizational mainstream with the appointment of corporate ethics officers with clear mandates. o Codes of ethics have matured from cosmetic public relations documents into performance-measurement documents that an increasing number of organizations are now committing to share with all their stakeholders. o The 2002 Sarbanes-Oxley Act has introduced greater accountability for chief executive officers and boards of directors in signing off on the financial performance records of the organizations they represent.

Learning Outcome 5: Identify and Propose a Resolution for an Ethical Dilemma in Your Work Environment. •

• •

When employees observe unethical behavior (e.g., fraud, or theft of company property) or are asked to do something that conflicts with their own personal values, the extent of the guidance available to them is often a series of clichés: o Consult the company code of ethics. o Do what‘s right for the organization‘s stakeholders. o Do what‘s legal. o Do what you think is best (―use your best judgment‖). o Do the right thing. Ethical dilemma is a situation in which there is no obvious right or wrong decision, but rather a right or right answer. Resolution of an ethical dilemma can be achieved by first reorganizing the type of conflict people are dealing with:

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

•

Truth versus loyalty—do you tell the truth or remain loyal to the person or organization that is asking you not to reveal that truth? o Short-term versus long-term—does your decision have a short-term consequence or a longer-term consequence? o Justice versus mercy—do you perceive this issue as a question of dispensing justice or mercy? (Which one are you more comfortable with?) o Individual versus community—will your choice affect one individual or a wider group or community? ➢ In the examples given above, both sides are right to some extent, but since people can‘t take both actions, they are required to select the better or higher right based on their own resolution process. Once people have reached a decision as to the type of conflict they are facing, three resolution principles are available to them: o Ends-based—which decision would provide the greatest good for the greatest number of people? o Rules-based—what would happen if everyone made the same decision as you? o The Golden Rule—do unto others as you would have them do unto you. ➢ None of these principles can be said to offer a perfect solution or resolution to the problem because one cannot possibly predict the reactions of the other people involved in the scenario. ➢ However, the process of resolution at least offers something more meaningful than ―going with your gut feeling‖ or ―doing what‘s right.‖

Learning Outcome 6: Explain How Executives and Employees Seek to Justify Unethical Behavior. •

Saul Gellerman identified ―four commonly held rationalizations that can lead to misconduct‖: o A belief that the activity is within reasonable ethical and legal limits—that is, that it is not “really” illegal or immoral. o A belief that the activity is in the individual‟s or the corporation‟s best interests— that the individual would somehow be expected to undertake the activity. o A belief that the activity is safe because it will never be found out or publicized—the classic crime-and-punishment issue of discovery. o A belief that because the activity helps the company, the company will condone it and even protect the person who engages in it.

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

Life Skills Making Tough Choices This Life Skills box discusses what happens when your personal values appear to directly conflict with those of your employer. Three options are open—leave and find another job; keep your head down, do what you have been asked to do, and hold on to the job; or, talk to someone in the company about how uncomfortable the situation is making you feel and see if you can change things. All three options are tough choices.

Progress Questions 1.

Explain the term business ethics. Business ethics is the application of ethical standards to business behavior.

Explain the difference between a descriptive and prescriptive approach to business ethics. A descriptive approach is a descriptive summation of the customs, attitudes, and rules that are observed within a business. This involves documenting what is happening. A prescriptive approach is a prescriptive evaluation of the degree to which the observed customs, attitudes, and rules can be said to be ethical. This involves recommending what should be happening.

Identify six stakeholders of an organization. Stakeholders of an organization can include stockholders or shareholders, employees, customers, suppliers or vendor partners, retailers or wholesalers, federal government, creditors, and community.

Give four examples of how stakeholders could be negatively impacted by unethical corporate behavior. The following are four examples of how stakeholders could be negatively impacted by unethical corporate behavior: • Stockholders could lose value of their stock ownership. • Employees could lose their job. • Customers could receive poor service quality. • Suppliers may not be paid for invoices when a company declares bankruptcy.

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

Define the term oxymoron and provide three examples. An oxymoron is the combination of two contradictory terms, such as ―deafening silence,‖ ―jumbo shrimp,‖ or ―authentic reproduction.‖

Is the term business ethics an oxymoron? Explain your answer. Student answers will vary. Given the ethical track record of organizations over the last several decades, many students may believe that the business world lacks any sense of ethical behavior. Thus, they will argue that the two words ―business‖ and ―ethics‖ are as incompatible as in an oxymoron.

Define the term corporate governance. Corporate governance is the system by which business corporations are directed and controlled.

Explain the term code of ethics. A code of ethics is a company‘s written standards of ethical behavior that are designed to guide managers and employees in making the decisions and choices they face every day.

Identify a major ethical dilemma in each of the last five decades. Following are some of the major ethical dilemmas in each of the last five decades: • 1960s—environmental issues, increased employee-employer tension, civil rights issues dominate, honesty, the work ethic changes, and drug use escalates. • 1970s—employee militancy, human rights issues surface, and some firms choose to cover rather than correct dilemmas. • 1980s—bribes and illegal contracting practices, influence peddling, deceptive advertising, financial fraud, and transparency issues arise. • 1990s—unsafe work practices in Third World countries, increased corporate liability for personal damage, and financial mismanagement and fraud. • 2000s—cyber crime, increased corporate liability, privacy issues, financial mismanagement, international corruption, loss of privacy, and intellectual property theft.

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

10. Identify a key development in business ethics in each of the last five decades. Following are the key developments in business ethics in each of the last five decades: • 1960s: o Companies begin establishing codes of conduct and values statements o Birth of social responsibility movement o Corporations address ethics issues through legal or personnel departments • 1970s: o Ethics Resource Center (ERC) founded (1977) o Compliance with laws highlighted o Federal Corrupt Practices Act passed in 1977 o Values movement begins to move ethics away from compliance orientation to being ―values centered‖ • 1980s: o ERC develops the U.S. Code of Ethics for Government Service o ERC forms first business ethics office at General Dynamics o Defense Industry Initiative established o Some companies create ombudsman positions in addition to ethics officer roles o False Claims Act (government contracting) • 1990s: o Federal Sentencing Guidelines (1991) o Class action lawsuits. o Global Sullivan Principles (1999 o In re Caremark o ERC establishes international business ethics centers o Royal Dutch/Shell International begins issuing annual reports on its ethical performance • 2000s: o Business regulations mandate stronger ethical safeguards (Federal Sentencing Guidelines for Organizations; Sarbanes-Oxley Act of 2002) o Anticorruption efforts grow o Shift to emphasis on corporate social responsibility and integrity management o Formation of international ethics centers to serve the needs of global business o OECD Convention on Bribery (1997-2000) 11. Which decade saw the most development in business ethics? Why? The 1990s saw the most developments in business ethics because of global expansion and the emergence of the Internet.

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

12. Which decade saw the most ethical dilemmas? Why? The 2000s saw the most ethical dilemmas because of the Internet, international expansion, and financial mismanagement. 17. Give four examples of the clichés employees often hear when faced with an ethical dilemma. Some examples of the clichés employees often hear when faced with an ethical dilemma are: • Consult the company code of ethics. • Do what‘s right for the organization‘s stakeholders. • Do what‘s legal. • Do what you think is best (―use your best judgment‖). • Do the right thing. 18. List the four types of ethical conflict. The four types of ethical conflict are: • Truth versus loyalty • Short-term versus long-term • Justice versus mercy • Individual versus community 19. List the three principles available to you in resolving an ethical dilemma. The three principles for resolving an ethical dilemma are: • Ends-based • Rules-based • The Golden Rule 20. Give an example of an ethical business dilemma you have faced in your career, and explain how you resolved it, indicating the type of conflict you experienced and the resolution principle you adopted. Students‘ responses will vary. The ethical dilemma described should fit the definition—a situation in which there is no obvious right or wrong decision, but rather a right or right answer.

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

Ethical Dilemma 2.1 – The Ford Pinto 1.

Should a manufacturer go beyond government standards if it feels there may be a potential safety hazard with its product? Students‘ responses will vary. Students may argue that a manufacturer should go above and beyond the government‘s standards if it feels there may be a potential safety hazard with its products. Other will argue that a manufacturer will only do what is required by government standards. However, to remain competitive in the marketplace, a manufacturer can go above and beyond to ensure that the consumer is safe. This strategy not only benefits the stakeholders, but also establishes a positive reputation within the industry.

Once the safety issue became apparent, should Ford have recalled the vehicle and paid for the retrofit? Should it have invited owners to pay for the new barrier if they so chose? If only half the owners responded to the recall, what would the company‘s obligation be? Student responses will vary. Some of the students may feel that Ford should have recalled the vehicle and paid for the retrofit once they knew that there was a safety issue. Ford‘s obligation would be far less if only half the owners responded to the recall; and the company needed to pay for the new barrier to project to consumers that they care about consumers‘ wellness and business.

Is there a difference for a consumer between being able to make a conscious decision about upgrading safety features (such as side airbags) and relying on the manufacturer to determine features such as the tensile strength of the gas tank? Student responses will vary. There is a huge difference between being able to make a conscious decision about a safety-feature upgrade and relying on a manufacturer to determine the safety features. Typically, manufacturers only have the obligation to offer basic or required safety features on the automobiles sold to consumers.

4. Once Pintos had a poor reputation, they were often sold at a discount. Do private sellers have the same obligations as Ford if they sell a car they know may have design defects? Does the discount price absolve sellers from any responsibility for the product? Student responses will vary. Private owners should have the same obligation as Ford if they sell a car they know may have design defects. A discount price should not absolve sellers

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

from any responsibility for the product. It is important for sellers to have a strong code of ethics in their business transactions.

2.2 – Three-Card Monte 5.

Summarize the positions of both critics and supporters of these tax strategies. Critics call the tax strategies (the movement of those funds) by many companies as deliberate tax avoidance; and supporters call it profit maximization.

Supporters and critics of these tax strategies agree that corporations are making use of legal financial options that are available to them under current tax law. However, does that equate to ethical business conduct? Why or why not? Student responses will vary. Some of them may say that what Microsoft, Apple, HewlettPackard (HP), and Google are doing does not equate to ethical business conduct. They may cite the following reasons to support their answer: • Microsoft elected to shift the intellectual property (IP) rights for software that the company developed in America to Puerto Rico, Ireland, and Singapore. As a result, the earnings from those IP rights can now be taxed at a much lower local rate rather than at the American rate of as much as 35 percent, which contributes significantly to Microsoft‘s overall tax rate of only 4 percent. • Google avoided almost $2 billion in worldwide income taxes in 2011 by moving $9.8 billion in revenues to a Bermuda shell company (where there is no corporate income tax). o Should any one of these companies ever need any of the money being held overseas, rather than ―repatriating‖ the funds (and paying taxes), the company simply borrows the money from its subsidiary as a short-term loan (and pays no taxes). o Students may not find this deliberate act to avoid tax an ethical business conduct.

The French chairman and CEO of Louis Vuitton, Bernard Arnault, recently announced that he was leaving France for Belgium, allegedly to avoid the new highest-income tax rate of 75 percent. Is that any different from what corporations are doing? Why or why not? Student responses will vary. Arnault is leaving France just to avoid paying high income taxes. This is no different from what corporations are doing because. Microsoft, for example, elected to shift the intellectual property (IP) rights for software that the company developed in America to Puerto Rico, Ireland, and Singapore so that the earnings from those IP rights can be taxed at a much lower local rate rather than at the American rate of as much

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

as 35 percent, which contributes significantly to Microsoft‘s overall tax rate of only 4 percent. Should it ever need of any of the money being held overseas, rather than ―repatriating‖ the funds (and paying taxes), the company simply borrows the money from its subsidiary as a short-term loan (and pays no taxes). 8.

Is there a potential solution that would represent a more ethical business approach to the payment of corporate taxes? Explain your answer. Student responses will vary. Some of them may suggest that corporations who pay their taxes on time could be given some kind of a subsidy.

Frontline Focus ―The Customer Is Always Right—Carol Makes a Decision‖ Questions 4. Did Carol make the right choice here? Students‘ answers will vary. Carol did a good job of keeping track of the sales and information needed to show Dave that he wouldn‘t have to purposely run out of new items. She also was able to keep customers happy while she gathered the information. However, she will need to present this information to Dave in a professional and courteous manner so that she does not to insult him or his idea. 5. What do you think Dave‘s reaction will be? Students‘ answers will vary. Dave‘s reaction will depend on how Carol approaches him with the information. If she accuses him of being unethical and wrong, Dave will not be happy and probably reprimand Carol for not following instructions. If Carol can portray the information in a manner that does not insult Dave, she may be rewarded for taking initiative as an innovative and inspiring team leader. 6. What would the risk have been for the restaurant if it had implemented Dave‘s plan and deliberately run out of the new items? Students‘ answers will vary. The risk would have been the loss of customers, both old and new. Customers loyal to the old menu items would continue to purchase those items, with an occasional new item. However, new customers would be driven away and frustrated if they were constantly told that the restaurant was out of an item and offered something else instead.

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

Key Terms Business Ethics: The application of ethical standards to business behavior. Code of Ethics: A company‘s written standards of ethical behavior that are designed to guide managers and employees in making the decisions and choices they face every day. Corporate Governance: The system by which business corporations are directed and controlled. Ethical Dilemma: A situation in which there is no obvious right or wrong decision, but rather a right or right answer. Oxymoron: The combination of two contradictory terms, such as ―deafening silence‖ or ―jumbo shrimp.‖ Stakeholder: Someone with a share or interest in a business enterprise.

Review Questions NOTE: Some questions allow for a number of different answers. Below are some suggestions. 4.

Based on the history of business ethics reviewed in this chapter, do you think the business world is becoming more or less ethical? Explain your answer. Students‘ responses will vary. Some students may say that the business world is becoming less ethical based on the number of bailouts that resulted from the financial crisis in 2008 and 2009. Government is increasing the laws, regulations, and the punishment associated with unethical behavior and in the long run this will make businesses become more ethical. Others may say regulation is creating more problems, rather than solving them.

How would you propose the resolution of an ethical dilemma using The Golden Rule? Student responses will vary. Students need to propose an ethical dilemma and use the Golden Rule—do unto others as you would have them do unto you—in their responses.

Why should a short-term or long-term consequence make a difference in resolving an ethical dilemma? Student responses will vary. The resolution of any ethical dilemma requires the recognition of the type of conflict at hand. Individuals can see both the short-term and long-term

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

consequences that result in unethical behavior. Short-term consequences may require a different resolution principle. For example, for a long-term consequence, the manager could consider an ends-based resolution principle; and for a short-term consequence, the manager may consider the Golden Rule resolution principle or the rules-based resolution principle. 7.

Of the four commonly held rationalizations for unethical behavior proposed by Saul Gellerman, which one do you think gets used most often? Why? The students‘ responses will vary based on their perceptions, but students are expected to include one of Gellerman‘s four rationalizations in their responses.

Is it ever acceptable to justify unethical behavior? Why or why not? Student responses will vary. However, it is never acceptable to justify unethical behavior. Most organizations have formal code of ethics and they expect their employees to adhere to them.

Explain what ―doing the right thing‖ in a business environment means to you. The students‘ responses will vary. The student should explain his/her view of what ―doing the right thing‖ in a business environment means to the individual student.

Review Exercises 7.

Since you are traveling on company time, does the free ticket belong to you or your company? Defend your choice. Student responses will vary. The ticket belongs to the company. The company is paying for your travel expenses; therefore, the ―right thing to do‖ is to professionally and ethically represent your company and complete the assignment at the best of your ability.

If the later flight was actually the next day (and the airline offered you an accommodation voucher along with the meal vouchers) and you would be late getting into work, would you make the same choice? Explain your answer. Student responses will vary. If there was no way around this situation, then this would be fine. However, if you simply chose to take the late flight to receive the upgrades, then it would not be fair to your employer. A better choice would be to take the flight that was originally booked and return to work as scheduled.

Solutions Manual for Business Ethics Now 6th Edition Andrew Ghillyer

What if the offer only reached a $100 discount coupon on another ticket—would you still take it? If so, would you hold the same opinion about whether the coupon belonged to you or your company? Student responses will vary. The amount of extra time spent waiting for the late flight would not be worth the $100 discount on another ticket, especially if it means getting to work late. If the discount were taken, the coupon would belong to the company.

10. Should your company offer a clearly stated policy on this issue, or should it trust its employees to ―do the right thing?‖ Explain your answer. Student responses will vary. There should be a clearly stated policy regarding traveling on company time and resources. However, there will always be situational issues that arise that may or may not be covered, in which case the company should trust their employees, along with giving them ethical training.

Internet Exercises 1.

Locate the website for the Ethics Compliance Initiative (ECI) and review the ‗Ethics Compliance Toolkit‘. The ‘PLUS Ethical Decision-Making Model‘ lists seven steps to ethical decision making. What are they?

Step 1: Define the problem Step 2: Seek out relevant assistance, guidance and support. Step 3: Identify alternatives. Step 4: Evaluate the alternatives. Step 5: Make the decision Step 6: Implement the decision Step 7: Evaluate the decision

The Ethics Resource Center (www.ethics.org) is also part of the ECI. a. What is the stated mission of the ECI? When accessed on May 27, 2019, the following information was available on the website: The Ethics & Compliance Initiative (ECI) is a non-profit organization that empowers its members across the globe to operate their businesses at the highest levels of integrity. The organization provides research and a best practice community, as well as certification opportunities for ethics & compliance professionals. Through its membership, ECI represents entities across nearly every industry, located in 37 countries on six continents each dedicated to promoting the highest levels of integrity.