For this assignment, please respond to the following questions/prompts analyzing the following theories: Ethical Relativism, Subjectivism, Emotivism, Conventionalism, Divine Command Theory, Natural Law Theory, Moderate Objectivism.

1. Construct a chart comparing and contrasting the above theories. In this chart you will want to a) define the theory/position, b) identify agreement between the theory and others in the chart, c) note places of disagreement between the theory and the others on the chart.

2. Identify what you consider to be the single most difficult objection to each of the theories identified above.

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QUESTION 1

1. When developing an ethical culture, there has to be a(n)_______element because every organization has employees that will try to take advantage if there is an opportunity for misconduct.

rules-based

statement of mission

ethical

compliance

punitive

2 points

QUESTION 2

1. The apathetic organizational culture exhibits

high concern for people but minimal concern for performance.

little concern for people but a high concern for performance.

minimal concern for people and performance

high concern for people and performance.

no concern for maintaining a cohesive organizational culture.

2 points

QUESTION 3

1. Which of the following statements about corporate culture is false?

Corporate culture refers to the patterns and rules that govern the behavior of an organization and its employees, particularly the shared values, beliefs, and customs.

The values and ethical beliefs that actually guide a firm’s employees tend not to be the same ones that management states as defining the firm’s culture.

Corporate culture includes the behavioral patterns, concepts, values, ceremonies, and rituals that take place in an organization.

The culture of an organization may be explicitly stated or unspoken.

Failure to monitor or manage an organization’s culture may foster unethical behavior.

2 points

QUESTION 4

1. A cultural audit may be used to identify

how cultured a firm’s employees are.

unethical employees

unethical organizations

an organization’s culture

organizational structure

2 points

QUESTION 5

1. The 2010 passage of the Dodd-Frank Act proposed additional monetary incentives for whistle-blowers. A primary concern about these new incentives is:

they will encourage too many employees to attempt to blow the whistle on firms, even those that have done nothing wrong

people do not generally respond at all to monetary incentives

whistle-blowers might be tempted to report to the SEC with their reports and not report the misconduct to the company’s internal compliance program.

people may exaggerate their claims in order to get a reward.

the funds paid out to whistle-blower might bankrupt companies

2 points

QUESTION 6

1. Marcus is the top-performing development director his non-profit organization has ever had. He possesses countless tricks and tips to continue to bring in donations, positive publicity, and supporters. Marcus would likely have _____ over new development department staff.

coercive power

group power

legitimate power

expert power

democratic power

2 points

QUESTION 7

1. _____ bring together the functional expertise of employees from several different areas of the organization on a single project.

Quality circles

Informal groups

Teams

Work groups

Committees

2 points

QUESTION 8

1. In order for whistle-blowing to be effective,

financial compensation must be very high

employees must wish ill on the organization for which they work.

lawmakers must make an effort to force employees to discuss details about the misconduct.

it requires that the individual have adequate knowledge of wrongdoing that could damage society.

it must occur at a very large multinational corporation

2 points

QUESTION 9

1. Which of the following statements about group norms is false?

Group norms define the limit on deviation from group expectations

Group norms have the power to force a strong degree of conformity among group members

Management must carefully monitor the norms of all the various groups within the organization, as well as the organization’s corporate culture

Sanctions may be necessary to bring in line a group whose norms deviate sharply from the overall culture

Group norms never conflict with the overall organization’s culture

2 points

QUESTION 10

1. Motivation is defined as

a person’s incentive or drive to work

a force within the individual that focuses his or her behavior on achieving a goal.

personal ambition without regard to the impact on others

a desire to be finished with a project.

individual goals.

2 points

QUESTION 11

1. A strong ethics program includes all of the following elements except

a clause promising good stock market performance.

a written code of conduct or ethics.

formal ethics training.

auditing, monitoring, enforcement, and revision of standards.

an ethics officer to oversee the program.

2 points

QUESTION 12

1. _____ are formal statements that describe what an organization expects of its employees in terms of ethical behavior.

Mission statements

Codes of conduct

Policies on confidentiality

Environmental policies

The Federal Sentencing Guidelines for Organizations

2 points

QUESTION 13

1. What is not a common mistake when designing and implementing an ethics program?

Failing to fully understand the goals of the program.

Not setting realistic or measurable goals.

Having top management take ownership of the ethics program.

Developing materials that do not address the needs of the average employee.

Transferring a program between countries and cultures without making adjustments.

2 points

QUESTION 14

1. Which of the following is the most comprehensive?

Code of values.

Code of conduct.

Code of ethics.

Statement of values.

Statement of principles

2 points

QUESTION 15

1. The Federal Sentencing Guidelines for Organizations require federal judges to increase fines for organizations that continually

improve their ethics programs.

eliminate misconduct.

fail to install a Federal Sentencing Guidelines program.

fail to report ethics program activities.

tolerate misconduct.

2 points

QUESTION 16

1. Which of the following legislation has increased the responsibilities on ethics officers and boards of directors to monitor financial reporting?

Sarbanes-Oxley Act

Robinson Patman Act

Ethics Officer Responsibility Act

Sherman Antitrust Act

Enron Financial Responsibility Act

2 points

QUESTION 17

1. Individuals, often from the same department, who band together for purposes that may or may not be relevant to the organization are called

Quality circles

informal groups

teams

work groups

committees

2 points

QUESTION 18

1. When a foreman orders an assembly-line employee to carry out a task, which the employee perceives as unethical yet the employee feels compelled to complete, the foreman is exercising

legitimate power

expert power

reward power

contingent punishment power

non contingent reward behavior

2 points

QUESTION 19

1. To motivate employees, an organization offers _____ to _____ employees to work toward organizational objectives.

punishment; force

peer pressure; guilt

incentives; encourage

rewards; bribe

threats; frighten

2 points

QUESTION 20

1. Which of the following cultures combines high levels of concern for people and performance?

Apathetic culture

Caring culture

Integrative culture

Exacting culture

Cooperative culture

2 points

QUESTION 21

1. Ethical concerns in centralized structures can occur because of very little

mobility

upward communication

scapegoating

downward communication

communication rigidity

2 points

QUESTION 22

1. A code of ethics that does not address specific high-risk activities within the scope of daily activities is

sufficient

inadequate

satisfactory

acceptable as long as individual values prevent misconduct

acceptable according to the Federal Sentencing Guidelines for Organizations

2 points

QUESTION 23

1. All of the following are useful in monitoring ethical conduct and measuring the effectiveness of the ethical program except

observation of employees

internal audits

firing

surveys

reporting systems

2 points

QUESTION 24

1. Most executives feel that which of the following is the primary reason for much of the unchecked misconduct in business?

Bad employees

An inattentive board of directors

Customer pressures

Financial performance pressures

inadequate ethics and compliance programs

2 points

QUESTION 25

1. Which of the following is an advantage of a values-based ethics program over a compliance-based one?

Employees learn to make decisions based on values such as fairness, compassion, respect, and transparency

Diverse employees have differing values.

It requires employees to identify with and commit to specific required conduct.

A values orientation uses legal terms, statutes, and contracts that teach employees the rules and penalties for noncompliance.

Values and compliance programs both take basically the same approach.

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Write a five page double-spaced essay addressing the case below. This case has three parts: A, B, and C. Your paper should begin by addressing Parts A and B, which go together. Next address Part C.  When answering questions, refer to your textbook, reading materials, and class discussions. Incorporate the model steps for resolving ethical dilemmas and the ethical theories that you studied. Also try to incorporate your own personal experience.

Reading for Part A

You are a sales representative at a large computer company (Microtech, Inc., which is publically traded under symbol MCT) that sells new computers and provides technical support to customers. The company offers a number of different technical support packages, ranging from unlimited technical support for three years (the most expensive package) to unlimited technical support for one month (the least expensive package).

You are paid 100% on commission. The company employs thousands of employees of employee’s national wide. Second quarter profits failed to meet analysts’ expectations, thus pushing the stock price down. Unless the company makes a substantial sale quickly, it may also miss third quarter expectations, further depressing the stock price.

You haven’t made a sale in a while and have two young children to support. You also understand that some executives at your company will want to exercise stock options next quarter.

You have a chance to strike a lucrative deal with a Fortune 500 company to sell them 3,000 new computers and three years of unlimited technical support. The purchasing agent from the Fortune 500 company explain that she needs 3,000 computers delivered within two months, or her company will incur high costs.

You have 1,000 new computers in you warehouse that can be delivered on time. However, the remaining 2,000 computers would have to be ordered from the manufacturer. Normally the manufacturer could have them ready for delivery within a month. However, you happened to know that the manufacturer has a long list of back-orders and will take four to five months to deliver.

Closing the deal now would ensure that your company exceeds projected sales for the third quarter. That would boost company’s stock price and help executives who want to exercise stock options. You would also earn a big commission.

You have a choice. You could tell the Fortune 500 purchasing agent, “no problem,” sign the contract, deliver 1,000 computers quickly, and then blame the delay of the other 2,000 computers on the manufactures. Your contract would specify that your company is not liable for manufacture delays, so you’d be covered. Or you could tell the Fortune 500 Company the truth and risk losing the deal.

Questions on Part A

What pressure do you face?  What are the sources of pressure? How might these pressures affect your judgment? What could you do to address these pressures? What questions should you ask yourself as you decide whether to close the deal or not with the Fortune 500 purchasing agent. List as many questions as you can and try to answer each one. Who would be affected if you chose to close the deal with the Fortune 500 Company? Describe exactly how each entity/person would be affected in the short term and the long term. What would your final decision be? What ethical theory/ theories would you use to justify your final decision?

Reading for Part B

Your significant other, with whom you share and apartment, owns a large computer dealership, Bleevit Computers, Inc.  Bleevit refurbishes computers that are returned within the initial warranty period (usually 30 days). The computers that Bleevit refurbishes include the mode that the Fortune 500 Company wants to purchase. You significant other tells you that Bleevit would supply 2,000 refurbished computers by the delivery deadline. So you could have 1,000 new computers delivered to the Fortune 500 company from the manufactures and 2,000 refurbished computers delivered to it from Bleevit, all on time.

Your significant other, who would make a lot of money from this deal, points out to you that the Fortune 500 company would probably never know that any of its computers were not new because Bleevit’s refurbished computers look brand new to the untrained eye.

The main different is that refurbished computers tend to crash more often and experience more technical difficulties than new computers. However, your company could probably fix most of these problems through technical support. Although there might be instances where data would be irretrievably lost in a computer crash, these cases would probably not be too frequent.

Additionally, your company could save on the purchase price of computers. Returned computers are generally cheaper than new ones. Bleevit, moreover, can give you company an especially good price because, as you happen to know, it uses cheap child labor in Mexico to refurbish certain computers parts. The children work nine hours a day, seven days a week, in windowless facilities for four dollars a week.

However, your company would lose money on the three-year unlimited technical support package because the 2,000 refurbished computers would require far more technical support than your company would normally expect to provide to a client who purchases 2,000 new computers. However, you would not be there to take the heat, as you plan to leave within nine months to start your own computer dealership.

Questions on part B

What pressure do you face to close the deal with Bleevit? What are the sources of those pressures? How could these pressures cloud your judgment? How might your leaving in nine months affect your decision about whether to close the deal with Bleevit? How should you handle that situation?

Would the fact that the fortune 500 company should probably never know that any of its computers were refurbished make it legal for you company to deliver this computer? Why or why not? Would it make it ethical? Why or why not?

Since technical support would fix many computer problems, would the fact that your company will provide unlimited technical support for three years make it legal for your company to deliver refurbished computers to the Fortune 500 company? Would it make it ethical? Why or why not?

If you bought 2,000 computers from Bleevit, whom would your decision affect? Describe exactly how each entity/person would be affected in the short term and the long term

What questions should you ask yourself as you consider whether to buy 2,000 refurbished computers from Bleevit or not? List as many questions as you can, and try to answer/ address each one.

What would you final decision be? What ethical theory/theories would you use to defend your final decision?

Reading for Part C:

You are an investment and wealth management advisor who advises numerous clients ranging from average income investors to extremely wealthy individuals.  In addition, you have several large firms for whom you provide investment consultation.   You provide your services for a base fee and take additional fees that are a percentage of your gains from clients.  You have a solid reputation and your track record on your investments is very strong.

Your brother, Steve, is the CFO for a company called MicroTech, which is publically traded under ticker symbol ‘MCT’ in the U.S. and several other foreign stock exchanges.  Steve has been employed at MicroTech for about ten years and also has a large stake in the company. MicroTech sells new computers and related accessories.  In addition, they also sell technical support packages that range from unlimited technical support for three years (the most expensive package) to unlimited technical support for one month (least expensive package).

One day while going about your business, you receive a phone call from your brother, Steve.  He starts off the conversation normally, making small talk.  After a few minutes brother begins to talk business and says he thinks he may have a way for the both of you to make a lot of money.  Your brother gives you advance notice that MicroTech has been in confidential talks with a large competitor about a potential merger.  Steve states that the deal is 99% certain to happen.  The acquisition would give MicroTech a substantial boost in market share, up to a 20% by Steve’s estimates.

Steve proposes using this information to make some money.  He suggests that you and he form an offshore dummy corporation that will purchase the stock in exchanges that are in countries that do not have insider trading laws or enforcement of insider trading laws (There are approximately 15 counties that have stock markets that do not have insider trading laws.  Of the countries that have insider trading laws, only 38 enforce those laws).

Questions for Part C:

1. What, if any, are the ethical dilemmas presented in the case above?  Are there any conflicts of interest that could arise?
2. How does the fact that international trading laws differ affect the morality and ethics of this situation?
3. If international laws and cultures have different ethical standards, which ones do you follow?  What makes one ideology better than another?
4. How is it possible that the actions of you and Steve could be done legally overseas but also be considered unethical at the same time?  Aren’t laws supposed to support ethical and moral behavior?
5. Make an ethically based argument on how you should proceed in this situation.  Frame your ethical argument in terms of legality or economic resource allocation, or economic social good, or contractual obligations.  Also comment on the CFA code of ethics and how the application of the CFA code of ethics may affect your decision.

As you answer these questions, refer to the models for resolving ethical dilemmas and the ethical theories that you studied in class and in your textbook.

Ethical Arguments

General Ethics Discussion:

Utilitarian (John Stuart Mill) ethics vs. Deontological (Kantian) ethics

To whom is the manager responsible?  Shareholders, employees, community?

Agency dilemma:  manager seeks personal gain, possibly at expense of shareholders.

Legal vs. ethical

Benefits, harms, rights, wrongs

Economic vs. legal

Ethics is based on forming argument, defending argument and decision

Part C discussion:

Is it unethical to trade on material non-public information since those without this information are at a disadvantage? (Fairness (Kantian) argument of ethics)

Since use of material non-public information is legal (or implicitly legal in the case of no prosecution) in some countries, is it also ethical to make the insider trades? (Legal argument of ethics)

By trading on this information the price of the stock will move towards a full information equilibrium price.  Those who trade after the new equilibrium price is reached will benefit since the stock is efficiently priced.  A few will lose money initially, but many will benefit later. (Economic argument of ethics.  In this case the economics supports the ethics of insider trading)

When the market makers and dealers expect insider trading, they increase the spreads which lowers the price sellers receive and raises the price buyers pay for stock.  The “information” effect of legal insider trading can make the market less efficient and raise the cost of capital.  Higher cost of capital makes capital allocation less efficient and the economic resource allocation less efficient in general.  (Economic argument of ethics.  In this case the economics does not support the ethics of insider trading)

Steve then argues that your clients have hired you to manage their accounts and to maximize returns for the risk level they have specified.  By not acting on the inside information in markets where it is legal to do so, you are violating the contract with the clients.  (Utilitarian argument that many will benefit from your actions.  Could argue that your contract permits insider trading since you are benefiting the clients)

Discuss the CFA code of ethics, which is pro-client based, but also prohibits the use of insider information for yourself or clients.

References:

CFA Code of Ethics

“The Ethics of Management” 6th Edition, by LaRue Tone Hosmer

Utpal Bhattacharya, Hazem Daouk, 2002, “The World Price of Insider Trading”, Journal of Finance, Feb 2002, pp 75 – 108.

“Investment Ethics”, Sarah Peck, Wiley Publishers, 2011.

Performance Criteria

Below Expectations:

Meets Expectations

Exceeds Expectations

1. Understands basic structure of ethical arguments (Utilitarian (Economic), Legal, Kantian) and the relation to financial decisions

Little to no understanding of ethical arguments as they relate to financial decisions.

Some understanding of ethical arguments as they relate to financial decisions.

Clear understanding of ethical arguments as they relate to financial decisions.

1

2

3

2. Can identify conflicts of interests and pressures that could lead to unethical financial conduct

none or incomplete identification of some or all of the relevant conflicts and pressures

somewhat detailed identification of the majority of relevant conflicts and pressures.

Clear and detailed identification of majority of relevant conflicts and pressure.

1

2

3

3. understand what kinds of questions are helpful to ask oneself when confronting a financial ethical dilemma

none or incomplete identification of some useful questions to ask to address ethical dilemma

somewhat detailed identification of some useful questions to ask to address ethical dilemma

clear and detailed identification of some useful questions to ask to address ethical dilemma

1

2

3

4. Understands that what is legal may not always be ethical and that what is ethical may sometimes not be legal

little to no awareness of ethical v. legal issues as they relate to business decisions.

awareness of ethical v. legal issues as they relate to business decisions.

clear and detailed analysis of ethical v. legal issues as they relate to business decisions

1

2

3

5. Appreciates that ethical norms vary across different countries and cultures

Failure to identify cultural issues that could possibly impact business practices

identifies cultural issues that could possibly impact business practices.

clear and detailed analysis of cultural issues that could possibly impact business practices.

1

2

3

6. overall impression of applied business ethics skills

Little to no awareness of ethical issues as they relate to business practices.

Awareness of ethical issues as they relate to business practices

Clear understanding of ethical issues as they relate to business practices

1

2

3

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Principalism, especially in the context of bioethics in the United States, has often been critiqued for raising the principle of autonomy to the highest place, such that it trumps all other principles or values.How would you rank the importance of each of the four principles?How do you believe they would be ordered in the context of the Christian biblical narrative? Refer to the lecture and topic readings in your response.

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