1. Chapter 2 Business Ethics Chapter 2: Business Ethics
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2. Overview
LO2-1: What are business ethics and the social responsibility of business?
LO2-2: How are business law and business ethics related?
LO2-3: How can we use the WPH framework for ethical business decisions?

3. Chapter 2 Discussion
Chapter 2 of the textbook cites The Golden Rule as a guideline for ethical decision-making, noting the following ways to interpret this principle:
Do unto others as you want them to gratify you;
Be considerate of others' feelings as you want them to be considerate of yours;
Treat others as persons of rational dignity like you;
Extend brotherly or sisterly love to others, as you would want them to do to you;
Treat others according to moral insight, as you would have others treat you;
Do to others as God wants you to do to them.
Is it truly possible to follow The Golden Rule and operate a business successfully? For example, would this principle require you to extend brotherly or sisterly love to a business competitor or a government regulator? Can a business owner be considerate of others' feelings and simultaneously seek to maximize profits?
Chapter 2 Discussion: Chapter 2 of the textbook cites The Golden Rule as a guideline for ethical decision-making, noting the following ways to interpret this principle: 1. Do unto others as you want them to gratify you; 2. Be considerate of others' feelings as you want them to be considerate of yours; 3. Treat others as persons of rational dignity like you; 4. Extend brotherly or sisterly love to others, as you would want them to do to you; 5. Treat others according to moral insight, as you would have others treat you; 6. Do to others as God wants you to do to them.
Is it truly possible to follow The Golden Rule and operate a business successfully? For example, would this principle require you to extend brotherly or sisterly love to a business competitor or a government regulator? Can a business owner be considerate of others' feelings and simultaneously seek to maximize profits?
[Instructor: See The WPH Framework for Business Ethics in Chapter 2]

4. Chapter 2 Hypothetical Case 1
As hiring coordinator for Hennessey Networking Solutions, Inc. (Hennessey), Andrea Templeton knew that her position was of utmost importance to her company in terms of hiring candidates who were well-qualified, and who would best contribute to the company's overall success. On her desk was the employment application and resume of Timothy Carraway. Templeton had just finished her interview of Carraway, who was the last in a long line of interviewees who had applied for an entry-level information technology (IT) position at Hennessey. Hennessey only had one opening available. During Carraway's interview, the candidate revealed that seven years ago, he had been tried and convicted in federal court for selling a significant amount of cocaine. Carraway had also revealed the conviction on his employment application. Carraway went to great lengths to explain to Templeton that he sincerely regretted the indiscretions of his youth, and that he had spent the last seven years of his life paying penance, and reforming his life. After serving three years in federal penitentiary, Carraway had earned his bachelor's degree in Information Technology, graduating with honors. Carraway's interview had gone very well. In fact, Andrea felt that in terms of his personality and education, he was the best fit for the position. Templeton was obviously concerned about Carraway's criminal background, but she was also concerned about the young man should he not find an employment opportunity after graduating from college. Without a legitimate employment option, would Carraway revert back to his criminal ways?
Does Hennessey have an ethical obligation to hire Timothy Carraway? Should Templeton's hire decision be based exclusively on Carraway's qualifications for the job? Why or why not?
Chapter 2 Hypothetical Case 1: As hiring coordinator for Hennessey Networking Solutions, Inc. (Hennessey), Andrea Templeton knew that her position was of utmost importance to her company in terms of hiring candidates who were well-qualified, and who would best contribute to the company's overall success. On her desk was the employment application and resume of Timothy Carraway. Templeton had just finished her interview of Carraway, who was the last in a long line of interviewees who had applied for an entry-level information technology (IT) position at Hennessey. Hennessey only had one opening available. During Carraway's interview, the candidate revealed that seven years ago, he had been tried and convicted in federal court for selling a significant amount of cocaine. Carraway had also revealed the conviction on his employment application. Carraway went to great lengths to explain to Templeton that he sincerely regretted the indiscretions of his youth, and that he had spent the last seven years of his life paying penance, and reforming his life. After serving three years in federal penitentiary, Carraway had earned his bachelor's degree in Information Technology, graduating with honors.
Carraway's interview had gone very well. In fact, Andrea felt that in terms of his personality and education, he was the best fit for the position. Templeton was obviously concerned about Carraway's criminal background, but she was also concerned about the young man should he not find an employment opportunity after graduating from college. Without a legitimate employment option, would Carraway revert back to his criminal ways?
Does Hennessey have an ethical obligation to hire Timothy Carraway? Should Templeton's hire decision be based exclusively on Carraway's qualifications for the job? Why or why not?
[Instructor: See The WPH Framework for Business Ethics in Chapter 2]

5. Chapter 2 Hypothetical Case 2
What is the best source for ethical business practices: the individual employee, or the business organization itself? To what extent should individual employees be allowed to lend input in the creation of a code of ethics for a business organization? In the event that an individual employee's ethical standards differ from his/her employer's code of ethics, what can/should be done to resolve those differences?
Chapter 2 Hypothetical Case 2: What is the best source for ethical business practices: The individual employee, or the business organization itself? To what extent should individual employees be allowed to lend input in the creation of a code of ethics for a business organization? In the event that an individual employee's ethical standards differ from his or her employer's code of ethics, what can or should be done to resolve those differences?
[Instructor: See Business Law and Business Ethics in Chapter 2]

6. What Is Business Ethics?
Ethics: The study and practice of decisions about what is good or right
Business ethics: The use of ethical principles to solve business dilemmas
Ethical dilemma: A question about how a person should behave that requires the person to reflect about the advantages and disadvantages of the optional choices for various stakeholders
In addressing the topic of business ethics, several key definitions are important to comprehend. First, ethics is the study and practice of decisions about what is good or right.
Second, business ethics is the application of ethics to the problems and opportunities experienced by businesspeople.
Third, an ethical dilemma is a problem regarding what a firm should do in situations where no clear, just decision is available.

7. Business Ethics and Social Responsibility
Social responsibility of business: The responsibility of firms doing business within a community to meet the expectations that the community imposes on them
Firms always subject to the implicit threat that legislation will impose social obligations on them
Firms acting outside the prevailing ethical norms risk ill will and damage to their reputations, profits, and continued existence.
The social responsibility of business represents expectations that the community imposes on firms doing business within its borders. These expectations must be honored to a certain extent, even when a firm wishes to ignore them, because firms are always subject to the implicit threat that legislation will impose social obligations on them. So, if the community expects businesses to obey certain standards of fairness even when the standards interfere with profit maximization, firms that choose to ignore that expectation do so at their peril. 
When firms forget that they are part of a larger community and act outside the prevailing ethical norms of that community, they risk the damage to reputation and ill will that comes from being identified as unethical. They then risk not only profits but their continued existence.

8. How Business Law and Business Ethics Are Related
Law and business ethics serve as an interactive system—informing and assessing each other
Business ethics builds on business law
Business law provides a floor for business ethics, telling business leaders the minimally accepted course of action
Law and business ethics serve as an interactive system—informing and assessing each other. Business ethics builds on business law. The law both affects and is affected by evolving ethical patterns. But business law provides only a floor for business ethics, telling business leaders the minimally acceptable course of action.

9. WPH Process of Ethical Decision Making: W—WHO (Stakeholders)
Consumers
Owners or investors
Management
Employees
Community
Future generations
A useful set of ethical guidelines requires recognition that managerial decisions must meet the following primary criteria:
The decisions affect particular groups of stakeholders in the firm. The pertinent question is thus, whom would this decision affect?
The decisions are made in pursuit of a particular purpose. Business decisions are instruments toward an ethical end.
The decisions must meet the standards of action-oriented business behavior. Managers need a doable set of guidelines for how to make ethical decisions.
The WPH process of ethical decision-making first involves a determination of who is affected by the decision-making process. These individuals are known as stakeholders, and include consumers, owners or investors, management, employees, the community-at-large, and future generations.

10. WPH Process of Ethical Decision Making: P—PURPOSE (Values)
Freedom
Security
Justice
Efficiency
The WPH process of ethical decision-making next involves a determination of the purpose or values involved in the decision-making process. These purposes or values include freedom, security, justice, and efficiency.

11. Primary Values and Business Ethics: Freedom
To act without restriction from rules imposed by others
To possess the capacity or resources to act as one wishes
To escape the cares and demands of this world entirely
The primary values of freedom include the right to act without restriction from rules imposed by others, the right to possess the capacity or resources to act as one wishes, and the right to escape the cares and demands of this world entirely.

12. Primary Values and Business Ethics: Security
To possess a large enough supply of goods and services to meet basic needs
To be safe from those wishing to interfere with your property rights
To achieve the psychological condition of self-confidence to such an extent that risks are welcome
The primary values of security include the right to possess a large enough supply of goods and services to meet basic needs, the right to be safe from those wishing to interfere with your property rights, and the right to achieve self-confidence to such an extent that risks are welcome.

13. Primary Values and Business Ethics: Justice
To receive the products of your labor
To treat all humans identically, regardless of race, class, gender, age, and sexual preferences
To provide resources in proportion to need
To possess anything that someone else is willing to grant you
The primary values of justice include the right to receive the products of your labor, the right to treat all humans identically (regardless of race, class, gender, age, and sexual preferences), the right to provide resources in proportion to need, and the right to possess anything that someone else is willing to grant you.

14. Primary Values and Business Ethics: Efficiency
To maximize the amount of wealth in society
To get the most from a particular output
To minimize costs
The primary values of efficiency include the right to maximize the amount of wealth in society, the right to get the most from a particular output, and the right to minimize costs.

15. WPH Process of Ethical Decision Making: H—HOW (Guidelines)
Public disclosure
Universalization
Golden Rule
The WPH process of ethical decision-making finally involves the determination of how to best conduct the decision-making process, in recognition of appropriate decision-making guidelines. This includes public disclosure, universalization, and adherence to the Golden Rule.
The premise behind the public disclosure test is that ethics is hard work, labor that we might avoid if we did not have frequent reminders that we live in a community. The universalization test asks us to consider what the world would be like were our decision copied by everyone else before we act. As mentioned earlier, the Golden Rule is the idea that we should interact with other people in a manner consistent with the way we would like them to interact with us.

16. Chapter 2 Hypothetical Case 3
Yogo Apparel, a manufacturer of women's athletic wear, has seen explosive growth in sales of its most popular yoga pant over the past two months, thanks to some very flattering publicity. Sales are so strong, in fact, that the company's U.S.-based supplier cannot keep up with demand. The company's president, Susan Keough, receives a bid from an offshore supplier that promises to make the pants in its own facilities at 10 times the capacity of the U.S. supplier and at two-thirds of the cost.
Keough asks one of her managers, Steven Little, to investigate the offshore suppliers' history of workers'-rights complaints. The news is not good: Little reports that the supplier has been accused of multiple instances of worker abuse, including forced overtime, sexual harassment, and suppression of organized labor. Keough and Little approach several other vendors, but none can produce the quantity Yogo needs at the price it is able to pay.
Chapter 2 Hypothetical Case 3: Yogo Apparel, a manufacturer of women's athletic wear, has seen explosive growth in sales of its most popular yoga pant over the past two months, thanks to some very flattering publicity. Sales are so strong, in fact, that the company's U.S.-based supplier cannot keep up with demand. The company's president, Susan Keough, receives a bid from an offshore supplier that promises to make the pants in its own facilities at 10 times the capacity of the U.S. supplier and at two-thirds of the cost. Keough asks one of her managers, Steven Little, to investigate the offshore suppliers' history of workers'-rights complaints. The news is not good: Little reports that the supplier has been accused of multiple instances of worker abuse, including forced overtime, sexual harassment, and suppression of organized labor. Keough and Little approach several other vendors, but none can produce the quantity Yogo needs at the price it is able to pay.
[Instructor: See The WPH Framework for Business Ethics in Chapter 2]

17. Chapter 2 Hypothetical Case 3 (cont'd)
Imagine that you are in Keough's situation. Apparel stores and Yogo's own website are inundated with orders for the yoga pants. Yogo cannot keep up with the demand without looking elsewhere. Yogo's stock has risen dramatically as a result of the surge in sales, and shareholders expect the growth to continue. What are the possible ramifications for Yogo if Keough chooses to use this supplier? What type of exposure does Yogo have—legally, in terms of potential damage to its reputation, and in terms of risk to profit?
What if you are in Little's position, and Keough chooses to move forward with the offshore supplier? What would you do?
Chapter 2 Hypothetical Case 3 (cont'd): Imagine that you are in Keough's situation. Apparel stores and Yogo's own website are inundated with orders for the yoga pants. Yogo cannot keep up with the demand without looking elsewhere. Yogo's stock has risen dramatically as a result of the surge in sales, and shareholders expect the growth to continue. What are the possible ramifications for Yogo if Keough chooses to use this supplier? What type of exposure does Yogo have—legally, in terms of potential damage to its reputation, and in terms of risk to profit? What if you are in Little's position, and Keough chooses to move forward with the offshore supplier? What would you do?
[Instructor: See The WPH Framework for Business Ethics in Chapter 2]