Exam 3: Conducting Business Ethically and Responsibly

Air Canada sued WestJet, claiming that WestJet had accessed an Air Canada website which contained confidential information. What was the outcome of the lawsuit? The court ruled that there was nothing unethical about a person from WestJet accessing the website if they could figure out how to do it. WestJet admitted it had behaved in an unethical fashion, paid Air Canada $5 million dollars, and gave $10 million to children's charities. Air Canada was able to show that it had lost a lot of business because of the incident, and WestJet had to reimburse Air Canada for the lost business. The court declined to rule on the case. The court ruled that this was merely a competitive squabble between two companies and that no fine would be imposed.

The three general factors that have been identified as important in causing individuals to behave in unethical ways are pressure, opportunity, and rationalization. the chance for financial gain, opportunity, and poor control systems. the potential for monetary, status, and power gains for the individual. pressure from peers, subordinates, and superiors. the potential for financial gain, emotional gain, and prestige.

MKD Transportation operates a fleet of container ships and tankers that transport goods around the globe. Company executives have just been contacted by the media with a report that one of their ships is leaking an oily substance off the coast of Belize. Who are MKD's stakeholders in this instance?

Bendix Corp.'s Board of Directors has just received a detailed plan regarding social responsibility activities that was developed by a committee of top managers at the company. What is the next step Bendix Corp. should take if it wants to follow the four-step process for managing social responsibility programs? A social audit must be conducted. The government must identify specific things the company is doing that need to be corrected. Make sure that support must is evident from top management. A director of the firm's social agenda must be appointed. A committee of top managers must develop a strategic plan for social responsibility.

Which of the following illustrates how a company could be irresponsible with respect to its investors? Use profits to fund research and development The president overstates the positive impact of a new contract The board of directors declares a stock split Management accepts a takeover bid from another company No dividends are declared even though the company made a profit

Which of the following illustrates consumers' rights to safe products? Clothing must be labelled with information about its proper care. A new vacuum cleaner must be free of electrical hazards while in use cleaning a consumer's home. There must be open competition in the marketplace. Procter & Gamble provides a toll-free telephone number for consumers to use for complaints or questions. Food products must list their ingredients.

There is general agreement that workers shouldn't damage the reputation of the company they work for, and there is consensus about what constitutes going "too far" when posting criticisms of the company on social media.

Counterfeit goods are harmful to companies that have spent a lot of time and money developing brand name goods for sale, but counterfeit products are beneficial for consumers because they get lower prices for expensive products like counterfeit motorcycles and pharmaceuticals.

Which of the following illustrates consumers' rights to safe products? Food products must list their ingredients Open competition in the marketplace A new vacuum cleaner must be free of electrical hazards Procter & Gamble provides a toll-free telephone number for consumers to use for complaints or questions Clothing must be labelled with information about its proper care

There is a general consensus in Canada that social responsibility should take precedence over profits.

Peter, the president of a small company, wants his employees to be aware that they should act ethically. Which of the following has proven most effective in improving ethical behaviour in a business firm? Reward managers who have secured an advantage for the firm, even if their behaviour might be seen by some people as unethical Demonstrate top management commitment to high ethical standards Do not publicly bring attention to unethical behaviour, instead deal with it privately Fire all unethical employees Do nothing to reinforce the undesirable behaviour and it will not be repeated

By adding labels on spray cans indicating that the contents are flammable and instructions on how to use it correctly, which consumer right is being met? Right to be informed Right to safe products Right to be heard Right to choose No consumer right is being satisfied

The illegal practice of writing cheques against money that has not yet arrived at the bank on which the cheque has been drawn is called insider trading. whistle blowing. managing the monetary float. kickbacks. cheque kiting.

Janet is the CEO of Xanadu Corp. She believes very strongly that the purpose of a business firm is to make as much money as possible as long as it doesn't break the law while doing so. Janet is reflecting the view called managerial capitalism.

Behavior that conforms to individual beliefs and social norms about what is right and good is referred to as social reaction behaviour. ethical behaviour. generally accepted behaviour. collusional behaviour. motivational behaviour.

What constitutes ethical and unethical behavior is determined partly by the individual and partly by culture.

Marlene is a shoe buyer for a large department store. Six months ago, she accepted a free trip to Barbados from one of the companies that she buys shoes from. Now, the company is strongly hinting that it wants Marlene to increase the size of her next order, and Marlene feels some obligation to do so because of the free trip she received. Marlene is involved in illegal behaviour. a conflict of interest. collusion. insider trading. price gouging.

Publication of a company's code of ethics ensures that employees will perform their duties in an ethical manner.

What are the four ethical norms and the issues that they deal with?

John wants his employees to be aware that they should act ethically. He should fire anyone who behaves unethically. not draw public attention to any employee's unethical behaviour, but instead deal with it privately. publicly reward ethical behaviour and ignore unethical behaviour. publicly discipline employees who behave unethically, but don't fire them. adopt a written code of ethics.