Chapter 3: Ethics and Social Responsibility
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Review and Assignments for Chapter 3
Review Quesons
1. It is sometimes said that ethics hold a person to higher standards than laws. Explain.
Students’ answers will vary. Ethics refer to the moral principles or values that generally
govern the conduct of an individual or a group. The laws address the lowest common
2. Explain the difference between ethics and morals, and describe the relationship
between the two.
Students’ answers will vary. Ethics refer to the moral principles or values that generally
govern the conduct of an individual or a group. Morals are the rules people develop as a
Applicaon Quesons
1. What are the differences between preconventional morality, conventional morality,
and postconventional morality? Give an example of each.
Students’ answers will vary. Preconventional morality is childlike; it is calculating,
self-centered, and even selfish, based on what will be immediately punished or rewarded.
Conventional morality moves from an egocentric viewpoint toward the expectations of
2. Describe at least three situations in which you would not purchase the products of a
firm even though it is very socially responsible.
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Chapter 3: Ethics and Social Responsibility
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3. A firm’s only responsibility to society is to earn a fair profit. Comment.
Students’ answers will vary. There are several theories pertaining to CSR. The newest
theory is called sustainability. This refers to the idea that socially responsible companies
will outperform their peers by focusing on the world’s social problems and viewing them
4. Is sustainability a viable concept for America’s businesses?
Students’ answers will vary. Sustainability refers to the idea that socially responsible
companies will outperform their peers by focusing on the world’s social problems and
Applicaon Exercise
Purpose: Many companies today are concerned with social responsibility. They may pursue
Setting It Up: Have the students choose a company and find that company’s website on the
Internet. Once they get to the website, have them look for information that tells them about the
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Chapter 3: Ethics and Social Responsibility
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Ethics Exercise
Jane Barksdale has designed a line of clothing targeted toward Hispanic Americans. The items
are sold only by catalog and on the Internet. She thinks she can increase sales by claiming in ads
that the firm is owned by a Hispanic American and that all the company’s employees are
Hispanic Americans. She is not Hispanic American nor are most of her employees. She needs a
high level of sales to pay her bank loan and remain in business.
Questions
1. Should Jane claim that she is Hispanic American? Explain your response.
Jane should not claim to be Hispanic American; this classifies as falsifying claims. To
2. Does the Federal Trade Commission address this issue? Go to www.ftc.gov, and
search for guidelines for small business advertising or e-commerce. What does Jane
risk in making false claims in her ads?
Under the Fair Trade Commission Act (FTC):
There are several risks that Jane would encounter by making false claims in her ads. The
penalties that the FTC imposes depend on the nature of the violation. The remedies that the
FTC or the courts have imposed are given below.
A. Cease and desist orders: These legally binding orders require companies to stop
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Chapter 3: Ethics and Social Responsibility
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B. Civil penalties, consumer redress, and other monetary remedies: Civil penalties range
C. Corrective advertising, disclosures, and other informational remedies: Advertisers
Video Assignment: Zappos
Zappos, the world’s largest online shoe retailer, discusses its commitment to social responsibility
and to ethical behavior. Developing employee activities and long-term relationships with
charitable organizations allow Zappos to ingrain the importance of helping into its organizational
culture. Zappos culture also guides its employees to make ethical decisions.
1. At which level of the pyramid of corporate social responsibility is Zappos operating?
a. Level 1: Economic responsibilities
b. Level 2: Legal responsibilities
c. Level 3: Ethical responsibilities
d. Level 4: Philanthropic responsibilities
2. At which level of morality does Zappos appear to operate?
a. Preconventional
b. Postconventional
c. Conventional
d. Unconventional
3. Zappos employees are “driven” to participate in charitable activities and feel that giving
back to the community is something that they “must do.” What does this demonstrate about
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Chapter 3: Ethics and Social Responsibility
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Zappos employees?
a. Zappos employees operate at the preconventional level of morality.
b. Zappos employees focus on the ethical responsibilities of their jobs.
c. Zappos employees have morals that match Zappos values and norms.
d. Zappos employees follow the specific Zappos code of ethics.
4. Zappos relationship with Goodie Two Shoes is an example of cause-related marketing.
a. True—Zappos uses its work with Goodie Two Shoes to spread information about
Zappos to new markets.
b. True—Goodie Two Shoes gets more donations from people who know Zappos
donates shoes.
c. False—Zappos s involvement with Goodie Two Shoes is considered corporate ʼ
giving, not cause-marketing.
d. False—Goodie Two Shoes is a for-profit organization, so any marketing is not
considered cause-related.
5. According to Rob, management action on ethics and social consensus is the major
influence on employee’s ethical decision making.
a. True—Rob says that Zappos culture is the main “ethical” guideline given to
employees.
b. False—Zappos code of ethics is written for employee reference in decision making.
c. True—But the happiness hippie is a major factor in ethical decision making.
d. False—Developing relationships with charities helps the employees develop strong
codes of personal ethics.
6. By emphasizing its core values to all its employees and ensuring that everyone adheres to
those values, Zappos is:
a. telling them that this is the code of ethics.
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Chapter 3: Ethics and Social Responsibility
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b. stressing the importance of adhering to those values and, by extension, making
ethical decisions.
c. emphasizing how important discussing ethics is to them.
d. demonstrating unconventional morality.
7. Zappos founders operate at the postconventional level of morality.
a. True
b. False
8. Zappos uses a code of ethics to guide its employees to discuss what is right and wrong and
ultimately make better decisions.
a. True
b. False
9. Would Zappos employees agree with the following statement from your textbook?
“Businesses say they want to be responsible citizens, but that’s often not their only reason
for taking action … Networking opportunities is a popular [reason].”
a. Yes, they would agree.
b. No, they would not agree.
10. Zappos as a company concentrates most of its advertising dollars into green marketing
initiatives rather than focusing on donating money to charity.
a. True
b. False
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Chapter 3: Ethics and Social Responsibility
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Case Assignment: Givling
Even the official government website offering guidance on financial aid and student loans cannot
Many states have increased tuition prices to public universities in recent years to make up
for shortcomings in other areas of the budget. Interest rates have risen, and more people are
“Donald Trump, I, gamblers, the manager that swindled me—we all declared
Givling is a venture that merges the popularity of online trivia games with the success of
“The student debt financial structure is a huge wrong in our country that needs to be
corrected. The solution seemed so straightforward and clear to me. I thought there must be a way
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Chapter 3: Ethics and Social Responsibility
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At its most basic, Givling is a trivia game. Players pay 50 centers per game to be assigned
In addition to the winning team receiving a daily cash prize, Givling also pays funds
toward the student loan debt of 10 players at a time: the top five people in the queue lineup, three
Givling is very transparent about where the money goes, a must for successful
Many people told Pratt that she was trying to achieve the impossible. “One venture
Sources: C. Carter, “Creative Giving: Givling’s Trivia- and Crowdfunding-Based Solution to
Student Debt,” The Huffington Post, January 16, 2015, accessed October 21, 2016,
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