International Business Chapter 5 Explain The Friedman Doctrine Who Developed The Philosophy How Well Does This

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91.

Explain the Friedman doctrine. Who developed the philosophy? How well

does this approach hold up ethically?

In 1970, Milton Friedman suggested that the only social responsibility of

business is to increase profits, so long as the company stays within the

rules of law. He explicitly rejects the idea that business should undertake

social expenditures beyond those mandated by the law and required for the

efficient running of a business. Friedman does state that businesses should

behave in an ethical manner and not engage in deception and fraud,

however, most economists believe that his approach to ethics does not hold

up well. For example, even though child labor may not be against the law in

a particular country, it is still unethical to use child labor.

AACSB: Ethics

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 05-04 Describe the different philosophical approaches to ethics.

Topic: Philosophical Approaches to Ethics

92.

Discuss the cultural relativism approach to business ethics. What is the

connection between this approach and the phrase “When in Rome do as the

Romans”? How well does this approach hold up ethically?

The cultural relativism approach is the belief that ethics are nothing more

than the reflection of a culture and accordingly, a firm should adopt the

ethics of the culture in which it is operating. This approach is often

summarized by the maxim “When in Rome do as the Romans.” Cultural

relativism does not stand up well to business ethics because it suggests

that if a culture allows slavery, then it is acceptable for a firm to use slaves

as well. Cultural relativism implicitly rejects the idea that universal notions

of morality transcend different cultures, however, some universal notions of

morality are found across cultures.

AACSB: Ethics

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 05-04 Describe the different philosophical approaches to ethics.

Topic: Philosophical Approaches to Ethics

93.

Discuss the naive immoralist’s approach to business ethics. What are the

criticisms of this approach?

The naive immoralist asserts that if a manager of a multinational sees that

firms from other nations are not following ethical norms in a host nation,

that manager should not either. This approach has been criticized with the

argument that simply accepting an action as being ethically justified just

because everyone is doing it is not sufficient. Moreover, the multinational

company does have the ability to change the prevailing practice in the

country.

AACSB: Ethics

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 05-04 Describe the different philosophical approaches to ethics.

Topic: Philosophical Approaches to Ethics

94.

Discuss the utilitarian approach to business ethics. When was this

approach developed? What are its drawbacks?

The utilitarian approach to business ethics was developed in the 18th and

19th centuries by philosophers such as David Hume, Jeremy Bentham, and

John Stuart Mill. The utilitarian approach to ethics holds that the moral

worth of actions or practices is determined by their consequences. An

action is judged to be desirable if it leads to the best possible balance of

good consequences over bad consequences. The best decisions are those

that produce the greatest good for the greatest number of people.

This approach has certain limitations. One serious drawback of the

utilitarian approach is that it is difficult to measure the benefits, costs, and

risks of a course of action. A second problem is that the philosophy omits

the consideration of justice.

AACSB: Ethics

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 05-04 Describe the different philosophical approaches to ethics.

Topic: Philosophical Approaches to Ethics

95.

What is the veil of ignorance? Why is it important to business?

The veil of ignorance was developed by John Rawls as part of his approach

to justice theories. According to Rawls, valid principles of justice are those

with which all persons would agree if they could freely and impartially

consider the situation. Impartiality is guaranteed by the veil of ignorance.

Under the veil of ignorance, everyone is imagined to be ignorant of all of

his/her particular characteristics. Under these conditions everyone would

agree that (1) each person be permitted the maximum amount of basic

liberty compatible with a similar liberty for others, and (2) once basic liberty

is assured, inequality in basic social goods is to be allowed only if such

inequalities benefit everyone.

AACSB: Ethics

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 05-04 Describe the different philosophical approaches to ethics.

Topic: Philosophical Approaches to Ethics

96.

What are the ways in which international business and its managers can

ensure that ethical issues are considered in business decisions?

An international business and its managers can take several steps to make

sure ethical issues are considered in business decisions. Some of these are:

(1) favor hiring and promoting people with a well-grounded sense of

personal ethics; (2) build an organizational culture that places a high value

on ethical behavior; (3) make sure that leaders within the business not only

articulate the rhetoric of ethical behavior, but also act in a manner that is

consistent with that rhetoric; (4) put decision-making processes in place

that require people to consider the ethical dimension of business decisions;

and (5) develop moral courage.

AACSB: Ethics

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 05-05 Explain how managers can incorporate ethical considerations into their decision making.

Topic: Implications for Managers

97.

What is a code of ethics?

A code of ethics is a formal statement of the ethical priorities a business

adheres to. Often, the code of ethics draws heavily upon documents such as

the UN Universal Declaration of Human Rights, which itself is grounded in

Kantian and rights-based theories of moral philosophy.

AACSB: Ethics

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 05-05 Explain how managers can incorporate ethical considerations into their decision making.

Topic: Implications for Managers

98.

Describe the five-step process that businesses can use to think through

ethical problems?

Some experts on ethics have recommended a five-step process to think

through ethical problems. In step 1, businesspeople should identify which

stakeholders a decision would affect and in what ways. Stakeholder

analysis involves a certain amount of moral imagination. Step 2 involves

judging the ethics of the proposed strategic decision, given the information

gained in step 1. Managers need to determine whether a proposed decision

would violate the fundamental rights of any stakeholders. Step 3 requires

managers to establish moral intent. This means the business must resolve

to place moral concerns ahead of other concerns in cases where either the

fundamental rights of stakeholders or key moral principles have been

violated. Step 4 requires the company to engage in ethical behavior. Step 5

requires the business to audit its decisions, reviewing them to make sure

99.

Why do organizations appoint an ethics officer?

To make sure that a business behaves in an ethical manner, a number of

firms now have ethics officers. These individuals are responsible for making

sure that all employees are trained to be ethically aware, that ethical

considerations enter the business decision-making process, and that the

company’s code of ethics is followed. Ethics officers may also be

responsible for auditing decisions to make sure they are consistent with this

code. In many businesses, ethics officers act as an internal ombudsperson

with responsibility for handling confidential inquiries from employees,

investigating complaints from employees or others, reporting findings, and

making recommendations for change.

AACSB: Ethics

Blooms: Remember

Difficulty: 1 Easy

Learning Objective: 05-05 Explain how managers can incorporate ethical considerations into their decision making.

Topic: Implications for Managers

100.

How can companies strengthen the moral courage of employees?

Companies can strengthen the moral courage of employees by committing

themselves to not retaliate against employees who exercise moral courage,

say no to superiors, or otherwise complain about unethical actions.

Companies can also set up ethics hotlines, which allow employees to

anonymously register a complaint with a corporate ethics officer.

AACSB: Ethics

Blooms: Remember

Difficulty: 1 Easy

Learning Objective: 05-05 Explain how managers can incorporate ethical considerations into their decision making.

Topic: Implications for Managers