Business Ethics Now (Ghillyer) Chapter 3 Organizational

Ethics
Study online at quizlet.com/_2d72sb
1.

Why is
Business
Ethics
different from
general
ethics?

> Other parties have a vested interest in the

ethical performance of an organization.
> Employees may have situations were their
personal value system conflicts with ethical
standards of organization.

2.

Organizational
culture (KEY
TERM)

Values, beliefs, and norms that all of the

employees of that organization share. Sum of
all written and informal policies and
procedures.

Value chain
(KEY TERM)

Key functional inputs that an organization

provides in the transformation of raw
materials into a delivered product or service.
>Research and development
>Manufacturing
>Marketing
>Sales
>Customer Service

3.

4.

Support
Activities to
Value Chain

>Human Resource Management

>Finance
>Information Systems
>Management

5.

Finance

Includes internal accounting personnel,

external accounting personnel, and external
auditors.

6.

External
auditors

Certify the accuracy of a company's financial

statements.

7.

Information
Systems

Maintains the technology backbone of the

organization - data transfer and security, email communications, internal and external
websites, individual hardware and software.

8.

Management

Supervisory role that oversees all operational

functions.

9.

Research and
Development
Pressures

Opposing objectives:
1. develop a product design that will allow the
organization to capture and maintain a
leading position in its market.
2. Commitment to consumer to create
products that are of highest quality, safety
and reliability.

10.

11.

Research and
Development
Ethical
Dilemmas

>Critical commitment to the consumer in the

provision of product quality, safety and
reliability.
>Tough decisions made when delivery of
design does not match the manufacturing
cost figures.
>Come when decisions are made about
product quality.

Manufacturing
Pressures

Build it fast or build it right

12.

Manufacturing
Ethical
Dilemmas

>Ethical challenges inherent in arriving at a

compromise
>Which corners can be cut and by how much
>Do we build the best-quality product and
price it accordingly; or do we build a product
that meets a price point that is lower than our
competition, even if it means using poorerquality materials?

13.

Marketing
Pressures

Communicating information to their customers

about he functionality and availability of a
product and then communicating back to the
organization the feedback from the customers
versus trying to et customers to buy products
they don't really need and could easily live
without.

14.

Marketing
Ethical
Dilemmas

Tied to:
Utilitarianism - since customers are satisfied,
the good outcome justifies the methods used
to achieve that outcome no matter how
misleading the message or how unnecessary
the product sold
Universal ethics - the process itself is wrong,
irrespective of the outcome achieved;
manipulating customer that never needed the
product by slick ad campaign

15.

Marketing
code of ethics

Adapted by the American Marketing

Association.
>Doing no harm
>Fostering trust
>Improving "customer confidence in the
integrity of the marketing exchange system
Clear ethical values - (honesty, responsibility,
faireness, respect, openness and citizenship)
BUT is encouraging people to buy things they
don't need a truly ethical process?

16.

Human
Resources

Directly involved in the relationship between

the company and the employee throughout
that employee's contract with the company.

17.

Exit interview

Way of learning from departing employee to

give feedback for the company's strategic
plan for future growth and development.

18.

Human
Resources
Ethics
Dilemmas

Every step of the life cycle of that companyemployee contract has the potential for ethical
transgressions.
HR acts as the conscience of the organization
in many ways.

19.

Why HR
should be the
center of
corporate
code of
ethics

1. Ensure that ethics is a top organizational

priority (ethical champion and hiring a formal
ethics officer).
2. Ensure that leadership selection and
development processes include an ethics
component (biggest challenge is convincing
leadership team that it's not just the rank-andfile employees who need to be trained).
3. Ensure that the right programs and policies
are in place (absence of appropriate policies
and training programs can increase the fines
for unethical behavior).
4. Stay current on ethics issues, including
changing legislation and sentencing guidelines
for unethical conduct.

28.

Ethical
Challenges for
Accounting
Firms

>unrealistic delivery deadlines

>reduced fees
>fees contingent upon providing numbers
satisfactory to client

29.

Certification
of financial
statements
(ethical
dilemma

Meant to be for public's benefit rather than

the corporation. Paid for by corporation, but
for the public.

30.

American
Institute of
Certified
Public
Accountants

Last resort of ethical guidance for accounting

profession.

20.

Three areas
of finance
function

1. Financial transactions
2. Accounting
3. Auditing

31.

Conflict of
Interest (KEY
TERM)

Situation in which one relationship or

obligation places you in direct conflict with an
existing relationship or obligation.

21.

Financial
transactions

Process by which the flow of money through

an organization is handled.

32.

22.

Accounting
Function
(KEY TERM)

Tracks all financial transactions by

documenting the money coming in (credits)
and money going out (debits) and balancing
the accounts at the end of a period.

Examples of
conflicts of
interest

23.

Auditing
Function
(KEY TERM)

Certification of an organization's financial

statements or books, as being accurate by an
impartial third -party professional. (Can have
internal auditors on staff as well as use
external professionals).

> What is best for your shareholders may not

be best for your employees and the
community (moving production over seas
because it is cheaper).
>Selling a product that is potentially harmful
to your customers.
>Selling a product that is potentially harmful
to the environment.

33.

Addressing
conflicts of
interest

Must come from top of the organization--key

decisions on policy and capital expenditures;
otherwise department projects rather an
organization wide initiatives.

Internal
Auditors

Have a professional code of ethics. They are

the organization's safety net.
>Grounded by professionalism, integrity and
efficiency.
>Make objective assessments of operations
and share ideas for best practices.
>Provide counsel for improving controls,
processes and procedures, performance and
risk management.
>Suggest way for reducing costs, enhancing
revenues, and improving costs.
>Deliver competent consulting, assurance and
facilitation services.

34.

Utilitarianism
(KEY TERM)

Ethical choices that offer the greatest good

for the greatest number of people.

35.

Universal
Ethics (KEY
TERM)

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.

36.

Organizational
Ethics

Made up of organizational culture and value

chain.

37.

Auditor's Code
of Ethics

>Not falsifying documents.

>Not stealing money from the organization.
>Not undertaking any other form of fraudulent
activity.
>Related to the management of the
organization's finances.

24.

25.

Third party
professionals
(contractors)

Create increased potential for ethical

challenges and dilemmas.

26.

GAAP (KEY
TERM)

The generally accepted accounting principles

that govern the accounting profession - not a
set of laws and established legal precedents,
but a set of standard operating procedures
with the profession.

27.

Ethical
Challenges
Faced by
Internal
Auditors

>creative bookkeeping techniques

>falsifying accounts
>underreporting income
>overvaluing assets
>questionable deductions