Model Answers
Answers to Review & Critical Thinking Questions (1) Define business ethics and describe an ethical situation in which you had to distinguish between right and wrong.
Business ethics is a set of principles that should be followed when conducting business. In addition to a firm’s social responsibility, which describes the firm’s responsibility to its community and to the environment, business ethics also include the firm’s responsibility to its customers, employees, and creditors.
An example of an ethical situation coupled with a natural internal conflict is a student taking an exam in a classroom when the instructor has left the room. The opportunity to cheat is now present. The ethical question now enters the mind of the student who must decide right from wrong.
(2) Identify the entities to which firms have a social responsibility. Briefly describe the social responsibility a firm has to each entity.
The major areas of social responsibility for a business are: a. Customers - Firms have the responsibility to use ethical sales practices and ensure product-related customer safety. b. Employees - Businesses have a responsibility toward their employees to ensure their workplace safety, proper treatment by other employees, and equal opportunity. Firms should have a written Code of Responsibility and a formal grievance policy. c. Owners (stockholders) and Creditors - The primary goal of a firm is to increase the wealth of the owners. Business decisions then are made with the owners’ interest in mind. Firms are
Business ethics is a set of principles that should be followed when conducting business. In addition to a firm’s social responsibility, which describes the firm’s responsibility to its community and to the environment, business ethics also include the firm’s responsibility to its customers, employees, and creditors.
An example of an ethical situation coupled with a natural internal conflict is a student taking an exam in a classroom when the instructor has left the room. The opportunity to cheat is now present. The ethical question now enters the mind of the student who must decide right from wrong.
(2) Identify the entities to which firms have a social responsibility. Briefly describe the social responsibility a firm has to each entity.
The major areas of social responsibility for a business are: a. Customers - Firms have the responsibility to use ethical sales practices and ensure product-related customer safety. b. Employees - Businesses have a responsibility toward their employees to ensure their workplace safety, proper treatment by other employees, and equal opportunity. Firms should have a written Code of Responsibility and a formal grievance policy. c. Owners (stockholders) and Creditors - The primary goal of a firm is to increase the wealth of the owners. Business decisions then are made with the owners’ interest in mind. Firms are