978-0470639948 Chapter 2 Solution Manual Part 4

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Collins Instructor’s Guide

CHAPTER 2 KEY WORDS

B Corporation (p. 51): a certification process for branding a business as being ethical,

sustainable, and socially responsible.

Bill of Rights (p. 37): 1791 amendments to the U.S. Constitution establishing the fundament

rights of U.S. citizens – right to freedom of speech, press, religion, etc.

Boston Tea Party (p. 37): action taken in December 1773 by colonists in response to East India

Company’s monopolistic business practices; 8 percent of tea consumed in colonial America

dumped into Boston Harbor.

Capitalism (p. 38): an economic system based on freedom and competition in both product and

labor markets.

Charters (p. 35): document granted by the British government that allowed several people to

create an organization by pooling their financial resources, which enabled bigger and riskier

business projects to be undertaken.

Federal Sentencing Guidelines (p. 49): a set of rules established in 1991 for determining

company fines that encourages, though not requires, managers to implement policies and

procedures that reinforce ethical behaviors.

Government regulation (p. 48): binding rules established by government that restrict business

freedom.

Industrial Revolution (p. 40): Technological innovation based on the division of labor that

spread from Great Britain to the United States in the early 1800s; features include hand tools

replaced by machines and concentration of business in factories and large firms.

Labor union (p. 42): an association of employees that advances its members interest, such as

wages, benefits, work rules, and other conditions of employment, through collective bargaining

with employers.

Living wage (p. 46): the amount of money a full-time employee needs to either afford the basic

necessities in life or exceed the poverty threshold.

Marx, Karl (p. 42): co-author of Communist Manifesto (published 1848) that declared the

workers of the world should unite against greedy capitalists and take over ownership of the

means of production.

Mercantilist policies (p. 38): British economic system based on sanctioning monopolies, quotas,

and strict regulation of product and labor markets.

Minimum wage (p. 46): the lowest wage determined by Congress that an employer can legally

pay an employee.

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Optimal Ethics Systems Model (p. 52): a model that synthesizes various best practices

approaches for reinforcing ethical behaviors, and reducing ethical risks, throughout the

workplace.

Plymouth Company (p. 36): an association of merchants in England that obtained a charter to

establish a trading colony on the northeast coast of America.

Sherman Antitrust Act of 1890 (p. 41): Congressional legislation that outlawed monopolies.

Slavery (p. 41): labor system where individuals are owned by other people and subject to the

whims of their owners.

Smith, Adam (p. 38): prominent Scottish enlightenment thinker (1723-1790) who

conceptualized free market capitalism in Wealth of Nations, published in 1776.

Virginia Company of London (p. 35): granted charter by King James to search for gold and

gems, and trade in furs and spices in now modern-day Virginia and North Carolina.

CHAPTER 2 ANCILLARY MATERIALS

Websites to Explore

Government Statistics

oBureau of Labor Statistics, available at: http://www.bls.gov/data/.

oU.S. Census Bureau, Income Data, available at:

http://www.census.gov/hhes/www/income/income.html.

oU.S. Census Bureau, Poverty Data, available at:

http://www.census.gov/hhes/www/poverty/poverty.html.

Indexes and Calculators

oInequality Index, available at: http://extremeinequality.org/?page_id=8.

o“The Inflation Calculator,” available at: http://www.westegg.com/inflation/.

oEconomic Policy Institute, “Basic Family Budget Calculator,” available at:

http://www.epi.org/content/budget_calculator/.

“The 400 Richest Americans,” Forbes, available at:

http://www.forbes.com/wealth/forbes-400.

United States Sentencing Commission, “Organizational Guidelines,” available at:

http://www.ussc.gov/orgguide.htm.

B Corporation, available at: www.bcorporation.net.

Best Place to Work Video

Best Place to Work – REI, available at:

http://money.cnn.com/video/fortune/2010/01/20/f_bctwf_rei_outdoors.fortune/.

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Business Ethics Issue Video

“Inside the Meltdown,” Frontline, about 2008 financial crisis; February 17, 2009, 57

minutes, available at: http://www.pbs.org/wgbh/pages/frontline/meltdown/view/?

utm_campaign=viewpage&utm_medium=grid&utm_source=grid.

TEDTalks Videos

Evolution of Compassion: Robert Wright uses evolutionary biology and game theory to

explain why we appreciate the Golden Rule (“Do unto others…”), why we sometimes

ignore it, and why there’s hope that, in the near future, we might all have the compassion

to follow it; October 2009, 17 minutes, available at:

http://www.ted.com/talks/robert_wright_the_evolution_of_compassion.html.

Responding to Being Told You’ll Die Soon: Carnegie Mellon professor Randy Pausch,

who was dying of pancreatic cancer, delivered a “last lecture” on how to really achieve

your childhood dreams; September 2007,76 minutes, available at:

http://www.ted.com/talks/randy_pausch_really_achieving_your_childhood_dreams.html.

Conversations with Charlie Rose

A conversation about the indictment of Jeffrey Skilling, former CEO of Enron;

February 19, 2004, 20 minutes, available at:

http://www.charlierose.com/view/interview/1567.

A conversation with Kurt Eichenwald of “The New York Times” about the collapse of

Enron in his book “Conspiracy of Fools;” March 17, 2005, 38 minutes, available at

http://www.charlierose.com/view/interview/1003.

CHAPTER 2 ETHICAL DILEMMA ANALYSIS

Each chapter contains three real-life ethical dilemmas: (a) What would you do? (all scenarios

provided by my students), (b) Let’s Build a Building (all scenarios provided by a construction

consultant), and (c) In the Real Word: Enron (more in-depth explanations available in Denis

Collins (2006) Behaving Badly: Ethical Lessons from Enron).

Have students apply Exhibit 5.11 “Critical Thinking Decision-Making Process Table” to analyze

these ethical dilemmas (instructions below). By doing so, students develop a habit for analyzing

decisions that take into consideration ethical concerns.

Step 1: Write the decision options in the appropriate column below.

Step 2: Apply the seven “Applying Ethical Theories to Decision Making” questions to the

decision to obtain relevant ethical information.

Step 3: Insert the ethical strength and weakness revealed by each of the seven ethical questions in

the appropriate column below.

Step 4: Review the option strengths and insert in the options column what “value” supports the

option (i.e., honesty, loyalty, efficiency, respect, job security, profits, etc.)

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Step 5: Given the strengths and weaknesses, choose a decision option, explain why that option

and value were chosen rather than the alternative options, and determine how to manage the

weaknesses associated with the option chosen.

NOTE ON ETHICAL DILEMMA ANALYSES AND AUTHOR RECOMMENDATION – The

“author” (me) is stating his best judgment. All the ethical dilemmas are difficult and involve

tradeoffs, some more so than others. As noted throughout the textbook, everyone has a different

moral intuition and those reasoning at the same level of moral development can disagree about

the right thing to do. In addition, everyone has a different level of risk comfort (my risk comfort

is rather high). The teacher can use my recommendation as grounds for student agreement or

disagreement.

CHAPTER 2 ANALYSIS FOR WHAT WOULD YOU DO?

1) Who are all the people affected by the action?

2) What option benefits me the most?

Ask Jessica to confidentially work unpaid overtime and give her equivalent paid time off on a

3) What option does my social group support?

Leave the work undone (#1) or pay Jessica overtime and cut labor costs some other way (#2):

4) What option is legal?

Leave the work undone (#1) or pay Jessica overtime and cut labor costs some other way (#2).

5) What option is the greatest good for the greatest number of people affected?

6) What option is based on truthfulness and respect/integrity toward each stakeholder?

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being violated. You are being accountable by reducing labor costs elsewhere.

7) What option would a virtuous person do?

Pay Jessica overtime and cut labor costs some other way (#2). Moral character is

Option Option Strengths Based on

Application of Ethical Theories

Option Weaknesses Based on

Application of Ethical Theories

undone

work schedule

overtime and cut

costs elsewhere

You will still be within budget

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AUTHOR’S RECOMMENDATION: Option #2: Pay Jessica overtime and cut labor costs some

other way – This is based on social group relativism, cultural relativism, utilitarianism,

deontology, and virtue ethics. The work gets done for the good of the organization and you are

being accountable by cutting labor costs elsewhere. Plus you are not violating company or union

policies. You are disobeying your boss. Apologize to your boss and hope that the boss

understands your reasoning on doing this for the good of the company. If demoted, then do the

best you can, continue working hard, and hopefully your hard work and conscientiousness will

earn you another chance at being a manager.

CHAPTER 2 ANALYSIS FOR LET’S BUILD A BUILDING

1) Who are all the people affected by the action?

2) What option benefits me the most?

3) What option does my social group support?

Stay with $3 million building (#1) or delay construction for one year to raise extra money

4) What option is legal?

5) What option is the greatest good for the greatest number of people affected?

Delay construction for one year to raise extra money (#3): Building a state-of-the-art

6) What option is based on truthfulness and respect/integrity toward each stakeholder?

Delay construction for one year to raise extra money (#3): This option demonstrates the most

7) What option would a virtuous person do?

Delay construction for one year to raise extra money (#3): Moral character is strengthened by

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Option Option Strengths Based on

Application of Ethical Theories

Option Weaknesses Based on

Application of Ethical Theories

Can begin construction

immediately

land

Good for employees and

environment

Ensures desired location

money

environment

Ensures extra money can be raised

Option and Value

#1: Stay with $3 million building: Affordability

Chosen Because #1: Stay with $3 million building: The board supports the project,

fundraising goal obtainable, guarantees desired location

How Will You

Manage Chosen

#1: Stay with $3 million building: Plan on making eco-friendly changes

over time as more funds are obtained

AUTHOR’S RECOMMENDATION: Option #3: Delay construction for 1 year to raise extra

money – This is based on social group relativism, cultural relativism, utilitarianism, deontology,

and virtue ethics. It is somewhat hypocritical for an environmental nonprofit organization to not

pursue a state-of-the-art eco-friendly building. It is good for the environment and employees, and

sets a standard for other organizations and buildings. But, if the land option is purchased now

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(#2), and the money can’t be raised, the organization can go bankrupt. Explore if the option to

buy the land is renewable for 1 more year; if not, find another desirable location.

CHAPTER 2 ANALYSIS FOR IN THE REAL WORLD: ENRON

1) Who are all the people affected by the action?

2) What option benefits me the most?

Invest in the Gas Bank (#2): Enron is teetering on the verge of bankruptcy and traditional

avenues for raising revenue are insufficient. The energy market is being deregulated. This is

3) What option does my social group support?

Mixed: Enron’s executive team (social group) is steeped in the traditional pipeline business

4) What option is legal?

5) What option is the greatest good for the greatest number of people affected?

Invest in the Gas Bank (#2): Enron is on the verge of bankruptcy. The Gas Bank, if

6) What option is based on truthfulness and respect/integrity toward each stakeholder?

Invest in the Gas Bank (#2): Not taking some drastic action while on the verge of bankruptcy

7) What option would a virtuous person do?

Option Option Strengths Based on

Application of Ethical Theories

Option Weaknesses Based on

Application of Ethical Theories

team has skills to do

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innovative industry leader Lack of management skills in this

area

Option and Value

Chosen

#1: Stay focused on pipeline. Maximize existing strengths.

#2: Invest in Gas Bank. Organizational survival, innovation

AUTHOR RECOMMENDATION: Option #2: Invest in the Gas Bank – This is based on egoism,

cultural relativism, utilitarianism, deontology, and virtue ethics. Current strategies are not

working. Skilling works for a premier consulting company and the plan makes sense, despite the

high risks. Only do so, however, with appropriate management expertise, which means making

the investment contingent on Jeff Skilling becoming CEO of the Gas Bank and making his salary

dependent on the new division’s success.

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