BUSINESS ETHICS MBA EXAM ANSWER SHEET

Business Ethics MBA EXAM ANSWER SHEET

Business Ethics

SECTION - A

1. Answer any ten of the following in about 3-4 lines each: (2x10-20)

a) Define Business Ethics.

Business ethics (also corporate ethics) is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations. Business ethics has normative and descriptive dimensions. As a corporate practice and a career specialization, the field is primarily normative. Academics attempting to understand business behavior employ descriptive methods. The range and quantity of business ethical issues reflects the interaction of profit-maximizing behavior with non-economic concerns. Interest in business ethics accelerated dramatically during the 1980s and 1990s, both within major corporations and within academia. For example, most major corporations today promote their commitment to non-economic values under headings such as ethics codes and social responsibility charters. Adam Smith said, "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices." Governments use laws and regulations to point business behavior in what they perceive to be beneficial directions

b) What is morality?

Morality  is the differentiation of intentions, decisions, and actions between those that are distinguished as proper and those that are improper: In other words, it is the disjunction between right and wrong. Morality can be a body of standards or principles derived from a code of conduct from a particular philosophy, religion, or culture, or it can derive from a standard that a person believes should be universal. Morality may also be specifically synonumous with "goodness" or "rightness."

c) How religion and ethics are related?

Ethics involves systematizing, defending, and recommending concepts of right and wrong behavior. A central aspect of ethics is "the good life", the life worth living or life that is simply satisfying, which is held by many philosophers to be more important than traditional moral conduct.

Most religions have an ethical component, often derived from purported supernatural revelation or guidance. Some assert that religion is necessary to live ethically. Blackburn states that, there are those who "would say that we can only flourish under the umbrella of a strong social order, cemented by common adherence to a particular religious tradition

d) What is ethical dilemma?

An ethical dilemma is a complex situation that often involves an apparent mental conflict between moral imperatives, in which to obey one would result in transgressing another. Sometimes called ethical paradoxes in moral philosophy, ethical dilemmas are often invoked in an attempt to refute an ethical system or moral code, or to improve it so as to resolve the paradox.

e) Define Corporate Governance.

Corporate governance refers to the set of systems, principles and processes by which a company is governed. They provide the guidelines as to how the company can be directed or controlled such that it can fulfil its goals and objectives in a manner that adds to the value of the company and is also beneficial for all stakeholders in the long term. Stakeholders in this case would include everyone ranging from the board of directors, management, shareholders to customers, employees and society. The management of the company hence assumes the role of a trustee for all the others.

f) What are attitudes?

Attitudes are the mental dispositions people have towards others and the current circumstances before making decisions that result in behaviour. People primarily form their attitudes from underlying values and beliefs.

However, factors which may not have been internalised as beliefs and values can still influence a person’s attitudes at the point of decision-making. Typical influences include the desire to please, political correctness, convenience, peer pressure, and psychological stressors.

g) What is the psychological egoism?

Psychological egoism is the view that humans are always motivated by self-interest, even in what seem to be acts of altruism. It claims that, when people choose to help others, they do so ultimately because of the personal benefits that they themselves expect to obtain, directly or indirectly, from doing so. This is a descriptive rather than normative view, since it only makes claims about how things are, not how they ought to be. It is, however, related to several other normative forms of egoism, such as ethical egoism and rational egoism.

A specific form of psychological egoism is psychological hedonism, the view that the ultimate motive for all voluntary human action is the desire to experience pleasure or to avoid pain. Many discussions of psychological egoism focus on this type, but the two are not the same: theorists have explained behavior motivated by self-interest without using pleasure and pain as the final causes of behavior

h) State the two unethical practices in Software Company?

1 - Hiding the ability to cancel
Canceling your account should be as easy as opening an account.  Many times I have to dig and call to cancel my account.  It should be as easy to cancel as it was to open, IMO. 


2- Asking for a credit card for a "free" trial.

Then, charging if you don't cancel. Notice they don't send you a reminder right before the first bill to make sure you still want it? Obviously they are hoping you will forget and then they can bill you.

i) What are tax ratios?

Tax rates and ratios are different, though related, measurements. A business tax rate is the percentage of taxable income that a company is responsible for paying as tax to the state or federal government. As with individual income tax rates, business tax rates vary based on income and filing status. Tax ratios are a series of financial ratios that compare a company's tax rate, or the amount of money it pays in tax, to its total revenue, net income, equity value or some other measure of worth

k) What is whistle blowing?

Whistle blowing means calling attention to wrongdoing that is occurring within an organization. The Government Accountability Project lists four ways to blow the whistle:

·         reporting wrongdoing or a violation of the law to the proper authorities.

·         such as a supervisor, a hotline or an Inspector General

·         refusing to participate in workplace wrongdoing

·         testifying in a legal proceeding

·         leaking evidence of wrongdoing to the media

Of course, whistle blowing goes on in the private sector, where some of the most famous figures include former Enron Vice President Sherron Watkins and tobacco executive Jeffrey Wigand. But because government, by its very nature, is supposed to be open and transparent, full disclosure of unethical or illegal behavior in the public sphere is particularly important. Not all of the problems in the public sphere are, however, generated within the government organization; outside vendors, contractors, and individuals can participate in and even breed government corruption.

SECTION - B

Answer any three of the following. Each question carries 5 marks. (3x5=15)

2. Explain the significance of ethics in business planning and decision making.

In confining ethical decision making to a business or group context, decisions on ethics are necessarily limited to actions and words (e.g., no deceit in sales promotion, use words to manipulate performance, ...). Right behavior can be evaluated though actions and words, but there is no way to know one's thoughts. Per our distinction, thoughts and beliefs (e.g., I want to help and benefit my customer as opposed to I want their money without regards to what is right, personal gain at the cost of someone else's reputation, ...) will be confined to moral decisions that are part of personal decision making.

Clearly our thoughts affect our words and deeds, and in a group context, ethics in decision making can be evaluated through the tangible evidence and outcomes from words and actions. Again, thoughts and motivation are left to the personal realm. As a consequence, evaluation of appropriate ethical behavior will have limitations. In all outcomes there are the following possibilities:

• Right motivation with right action
• Right motivation with wrong action
• Wrong motivation with right action
• Wrong motivation with wrong action

Addressing ethics in decision making in business or other large organizations or groups (e.g., government) does point to the need to ensure that key focusing decisions (the decisions highlighted in green) have been made and are in place. In particular, the business decision for core values should be in place to provide the goals/requirements that will be used to create and constrain the criteria used in the network of business decisions. This focusing decision can influence criteria for decisions throughout the network of business decisions (the decisions in blue), directly influencing ethical decision making and organizational conduct. Additional related decisions include choosing the business mission and the code of conduct that will add compliance criteria to decisions across the business decision network.

Here are some criteria that can help ensure appropriate ethical considerations are part of the decisions being made in the organization:

• Compliance - Does it conform to the company's values and code of ethics? Does it meet (should exceed) legal requirements?
• Promote good and reduce harm - What solution will be good to the most people while minimizing any possible harm?
• Responsibility - What alternative provides the most responsible response? Does the solution ensure meeting our duties as a good corporate citizen?
• Respects and preserves rights - Does the option negatively impact an individual's or organization's rights?
• Promotes trust - Does the solution lead to honest and open communication? Is it truthful? Is there full disclosure?
• Builds reputation - Would a headline of your decision generate pride or shame? Does your solution add to or detract with the identity you want for the organization?

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