2.10b Review Questions
1.Why might an individual with high ethical standards act less ethically in business than in his or her personal life?
Pressure from low or declining profits can cause a person with normally high ethical standards to behave less ethically in business.
2.How would an organizational code of ethics help ensure ethical business behavior?
An organizational code of ethics would help a firm establish a guide to acceptable and ethical behavior for employees to follow.
3.How and why did the American business environment change after the Great Depression?
The Great Depression and its national consequences showed both the American people and their government that a more centralized control over certain kinds of businesses and business activities would be required in the future to prevent our economy from falling victim to the forces that caused the Depression.
4.What are the major differences between the economic model of social responsibility and the socioeconomic model?
The economic model of social responsibility holds that society will benefit most when business is left alone to produce and market profitable goods. The socioeconomic model places emphasis not only on profits but also on the impact of business decisions on society. (See Table 2.3.)
5.What are the arguments for and against increasing the social responsibility of business?
The arguments for increasing the social responsibility of business are the following:
a.Business cannot ignore social issues because it is a part of our society.
b.Business has the technical, financial, and managerial resources that are needed to tackle today’s complex social issues.
c.By helping resolve social issues, business can create a more stable environment for long-term profitability.
d.Socially responsible decision making by business firms can prevent increased government intervention.
The arguments against increasing social responsibility are the following:
a.Business managers are primarily responsible to stockholders, so management must be concerned with providing a return on owners’ investments.
b.Corporate time, money, and talent should be used to maximize profits, not to solve society’s problems.
c.Because social problems affect society in general, business should not be expected to solve these problems.
d.Social issues are the responsibility of officials who are elected for that purpose and who are accountable to the voters for their decisions.
6.Describe and give an example of each of the six basic rights of consumers.
The right to safety. The products consumers purchase must be safe for their intended use, include thorough and explicit directions for proper use, and have been tested by the manufacturer to ensure product quality and reliability. Consumer safety would be an especially important consideration in the manufacture and sale of a product such as a hedge trimmer.
The right to be informed. Consumers should be given complete information about a product, such as ingredients in food or how to take care of a specific garment. Producers should also give information about the potential dangers of using their products, such as a reaction to drugs.
The right to choose. Because of competition, consumers can choose the particular product they want among several similar products, such as automobiles or men’s shirts.
The right to be heard. Citizens can complain through the Better Business Bureau or can often call a company directly on a toll-free number.
The right to consumer education. People are entitled to be fully informed about their rights as consumers. An example would be the disclosure notices provided by banks or credit card companies.
The right to service. Consumers have the right to convenience, courtesy, and responsiveness from...