Study Guide for MGMT 3940 In Class Test

Test will consist of 25 questions, mostly multiple choice questions. There may be a few short answer questions. The In
Class portion is worth 50 points.

Bring in a page (long) scantron sheet to record your multiple choice answers and a pencil.

The test covers chapters 1, 2, 3, and 4.

Chapter 1 -- History of Business and Business Ethics
- What was the involvement in government in business over time?
1920s- low
- When were periods of self-regulation by business?
- 1920
- When were periods of great government regulation?
Why did people work in the various decades?
- What were some of the main ethical issues for each decade?
- What are the Defense Industry self-imposed business ethic principles? What did the Federal Sentencing
Guidelines put in place in terms of ethics? What did Sarbanes Oxley require?
- For the 1920s, 1950s, 1960s, 1970s, 1980s, 1990s, 2000s what were the main ethical issues? What role did
What is the protestant work ethic?
- Recall our discussion of the Industrial Revolution and how things changed. How did it change the way we
worked? How did it give rise to some major ethical issues that were addressed in the decades that followed?
- What were examples of things that were ethical at one point in time, and later in time were deemed unethical in
business?
- When did social responsibility become a major topic of conversation and why did it become so?
- Why did we study the History of the purpose of work and business ethics?

Chapter 2
- Definition of stakeholders- customers, investors and shareholders, employees, suppliers, gov agencies,
communities, and many others who have a stake or claim in some aspect of a companys products,
operations, markets, industry, and outcomes
- What is the difference between a primary and secondary stakeholder?
- Primary stakeholders- are those whose continued association is absolutely necessary for a firms survival;
including employees, customers, investors, and shareholders, as well as the governments and communities
that provide necessary infrastructure
- Secondary Stakeholders- dont typically engage in transactions with a company and thus are not essential for
its survival; these include the media, trade associations, and special interest groups.


- Recall our discussion of Nike and Jim Keadys work focused on Nike. Be able to identify the stakeholders
impacted by Nike.
-
- What is the definition of social responsibility?
- An organization obligation to maximize its positive impact on stakeholders and to minimize its negative
impact
- What is the traditional purpose of business (or economic level of social responsibility)? Maximizing stakeholder
wealth and or value
- What is social obligation (or legal level of social responsibility)? Abiding by all laws and government regulations
- What is social responsiveness (or the ethical level of social responsibility)? Following standards of acceptable
behavior as judged by stakeholders
- What is pure social responsibility (or the philanthropic level of social responsibility)? giving back to society
- Understand and recall the positions of Milton Friedmans and John Mackeys beliefs about social responsibility.
-
- What was the Tomorrows Leaders Group approach to social responsibility?
-
- Recall the homework and the video about the Hidden Face of Globalization. Who are the stakeholders
impacted?
- What is corporate governance? Who is responsible for corporate governance within a corporation?
- Board of directors
- To remove the opportunity for employees to make unethical decisions, most companies have developed
formal systems of accountability, oversight, and control
- Who sets CEO pay? What are the responsibilities of boards of directors?
- Executive compensation
- Composition and structure of the board of directors
- Auditing and control
- Risk management
- Ceo selection and termination decisions
- Integrity of financial reporting
- Stakeholder participation and input into decisions
- Compliance with corporate governance reform
- Role of the ceo in board decisions
- Organizational ethics programs

- What does it mean to be a fiduciary?

- Are persons placed in positions of trust who use due care and loyalty in acting on behalf of the best interests
of the organization
- What does it mean to have a stakeholder perspective to corporate responsibility?
- Assessing the corporate culture
- Identifying stakeholder groups
- Identifying stakeholder issues
- Assessing organizational commitment to social responsibility
- Identifying resources and determining urgency
- Gaining stakeholder feedback
- Refer to the yellow handout about duty of care, duty of loyalty, the business judgment rule, and responsibilities
of boards of directors.
Duty of care- to make informed and prudent decisions
Duty of loyalty- that all decisions should be in the interests of the corporation and its stakeholders
Business judgment rule- act in good faith
With the care that an ordinarily prudent person in a like position would exercise under similar circumstances
In a manner the directors reasonably believe to be in the best interest of the corporation


CONTINUED ON PAGE 2





Chapter 3 (only the issues we get to in class)
- Why do people commit unethical behavior?
-
-
- What is honesty? What is fairness?
- Honesty= truthfulness or trustworthiness. To be honest is to tell the truth to the best of your knowledge without
hiding anything
- Fairness= is the quality of being just, equitable, and impartial. Fairness clearly overlaps with other commonly
used terms such as justice, equity, equality, and morality equality, reciprocity, and optimization
- What is a conflict of interest? Be able to recognize a conflict of interest.
- Conflict of interest= exists when an individual must choose whether to advance his or her own interests, those
of the organization, or those of some other group.
- Why is bribery unethical?
-
- What is corporate intelligence? = is the collection and analysis of information on markets, technologies,
customers, and competitors, as well as on socioeconomic and external political trends.
- ----3 types of intelligence models
- 1) passive monitoring system for early warning, 2) tactical field support 3) support dedicated to top
management strategy
- What is discrimination?- on basis of race, color, religion, sex, marital status, , sexual orientation, public
assistance status, disability, age, national origin, or veteran status is illegal
- What is fraud? =any purposeful communication that deceives, manipulates, or conceals facts in order to create a
false impression.
- Why should a company be held responsible for what its employees do?=

Chapter 4 Institutionalization of Ethics
- What is it?=established laws, customs, and expected organizational programs that are considered normative in
establishing
- How are things that a group agrees upon institutionalized? (voluntary boundary, core practice, mandated
boundary). Be able to identify an example of each.
- Voluntary boundary= include the beliefs, values, and voluntary contractual obligations of a business..google
- Core practice= are documented best practices often encouraged by legal and regulatory forces as well as
industry trade associations..
- Mandated boundary= are the externally imposed boundaries of conduct, such as laws, rules, regulations, and
other requirements
- What categories of laws have been based to institutionalized ethical action of businesses?
- 1) laws regulating commerce 2) laws protecting consumers 3) laws promoting equity and safety in the workplace
4) environmental laws 5) laws that encourage ethical conduct
- Recall our discussion of the environmental disaster, Love Canal. Who acted illegally? Unethically?
- Why are laws ineffective at ensuring ethical conduct? loopholes
- Recently we have passed laws targeted to ensure ethical conduct (Sarbanes Oxley, Federal Sentencing
Guidelines, Whistleblower protections). What do these laws have in common? Public accounting oversight
board
- Recall that the Defense Industry Principles were included in Federal Sentencing Guidelines and the Sarbanes
Oxley Act. What does that mean?

Important Videos
Milton Friedman clips
John Mackey clip on Conscious Capitalism
Tomorrows Leaders Group clip
Hidden Face of Globalization
Nike Clips/Jim Keady Clips
Love Canal clips
Singing CPA Sarbanes Oxley requirements

Also important are your In Class Assignments, homework assignments, and any handouts I provided during
this part of the material. But I will not test you on the John Hooker arguments (1
st
homework).