Chapter 1: The concept of business ethics

● What is business ethics?

- According to the book, business ethics comprises organizational principles, values,
and norms that may originate from individuals, organization statements, or from the
legal system that primarily guide individual and group behavior in business.
Otherwise speaking, business ethics is the application of moral conduct into running a
business.
+ Principles: are defined as basic ideas or rules that explains or controls how
something happens or works. For example: human rights, freedom of speech,
and fundamentals of justice.
+ Values: are enduring beliefs and ideas that are socially enforced. Several
desirable or ethical values for business today are teamwork, trust, and
integrity.
- Some special aspects must be considered when applying ethics to business:
+ First, to survive, businesses must earn a profit. If profits are realized through
misconduct, however, the life of the organization may be shortened.
+ Second, businesses must balance their desire for profits against the needs of
society.
- Ethics contributes to employee commitment:
+ Employee commitment comes from workers who believe their future is tied to
that of the organization and from a willingness to make personal sacrifices for
the organization. The more a company is dedicated to taking care of its
employees, the more likely the employees will take care of the organization.
+ Home Depot associates participate in disaster- relief efforts after hurricanes
and tornadoes, rebuilding roofs, repairing water damage, planting trees, and
clearing roads in their communities
+ A commitment by the company increases the employees’ loyalty to the
company and their support of its objectives.
The software company SAS topped Fortune’s “100 Best Places to work for”
list for eight years thanks to the way it values its employees. During the
recession, its founder refused to lay off workers and instead asked his
employees to offer ideas on how to reduce costs. By actively engaging
employees in cost- cutting measures, SAS was able to cut expenses by 6-7%.
+ Lead to performance- enhancing outcomes within the organization.
- Ethics contributes to investor loyalty:
- Ethics contributes to customer satisfaction:
- Ethics contributes to profits:
● How does responsible business make sense?
From my perspective, responsible businesses mean that businesses operate ethically-
they demand a high standard of business ethics in all facets of operations. They not
only focus on profits of the firms or benefits of their shareholders, but also take care
of their employees, customers, investors and the society.
 For employees, responsible businesses are businesses that treat their workers with full
respect, meet their requirements such as: fair salaries, safe working environment,
reasonable workload, health insurance, training courses , and encourage them to
propose their opinions in the meetings.

Consequently, these increase productivity of firms and their employees are willing to
commit and stay loyal to those organizations. Besides, enterprises embracing business
ethics also easily attract and retain highly talented individuals which contributes a lot
to the development of the firms.

For customers, responsible businesses always strive to develop and adapt products
that satisfy customers. Because if customers are satisfied and happy with the products
and customer service, they will come back; however, if they are disgruntled, they will
tell others about their dissatisfaction with the company and discourage friends from
purchasing it. Obviously, this takes a toll on profits and the reputation.

For investors, they gain investors’ credibility by being transparent about financial
reports, business operations, business ventures.

Finally, responsible businesses are a friendly neighbor with the society through
paying attention to the environment . Because the public is extremely critical of
unethical business practices and pressure from the community can limit companies’
activities.
Hence, running businesses in a consistently ethical manner helps build
trustworthiness, solid reputation; strengthen relationships with stakeholders; and also
brings long- term financial achievements for firms.

>< If companies behave unethically, the life of them will be shortened and easily
collapse in one day. For instance, Enron Corporation- was the largest American
energy corporation but collapsed as swiftly as it developed because of taking
advantage of MTM accounting method to hide the mounting losses and liabilities,
exaggerating its revenue and profit. Thousands of employees suddenly were left
jobless. Several executives were convicted of federal crimes. The company's unethical
behavior also led to the downfall of one of the oldest and biggest accounting firms,
Arthur Andersen.
● YES/ NO QUESTIONS:
1. Business ethics focuses mostly on personal ethical issues: No
2. Business ethics deals with right or wrong behaviour within a particular organization:
Yes
3. An ethical culture is based upon the norms and values of the company: Yes
4. Business ethics contributes to investor loyalty: Yes
5. The trend is away from cultural or ethically based initiatives to legal initiatives in
organizations: No
6. Investments in business ethics do not support the bottom line: No
● CASE:
1. Although the allegations against Nikhil of female employees have not happened to
Lael, she still should engage in reporting the incidents. Because if she does not report
these problems, she will most likely be the next victim of sexual harassment in the
workplace and so will other female employees. It is urgent for Lael to be a
whistleblower as this type of wrongdoing endangers the well-being of female
employees as well as violates what is referred to in the franchise employee handbook.
Besides, her report helps the owner grasp that behavior and solve it; otherwise, the
firm still encounters high employee turnover and further negative publicity if
discovered.
2. - The absence of an ethics hotline at Best East Franchise Corporation is a significant
barrier to reporting misconduct. (Lack of an ethics hotline to report such incidents)
- Nikhil, being the son of the owner and his position of power in the business.
3. - Lael needs to discuss with senior employees regarding the plan of action.
- Instead of hastily reporting the misconduct to the owner, she should collect all
persuasive evidences proving that Nikhil and a group of male employees’ behaviors
constitute sexual harassment which violates the company rule. Then she should hand
that report to the compliance team and the owner to address the unethical problem
internally.
Chapter 2: Stakeholders
● Definition:
- Customers, investors and shareholders, employees, suppliers, government agencies,
communities, and many others who have a “stake” or claim in some aspect of a
company’s products, operations, markets, industry, and outcomes are known as
stakeholders.
+ Shareholders: supply capital
+ Suppliers: offer material resources or intangible knowledge
+ Employees and managers: grant expertise, leadership and commitment
+ Customers: generate revenue and provide loyalty with word- of- mouth
promotion
+ Local communities: provide infrastructure
+ The media: transmits positive corporate images
- Identifying stakeholders: 2 types
+ Primary stakeholders: absolutely essential for a firm’s survival; including
employees, customers, investors, shareholders, government and communities
providing infrastructure.
+ Secondary ones: media, trade associations and special interest group
● Stakeholders’ different desires/ needs:
- Owners:
+ Maximize profit
+ Produce more products for customers
+ Receive customers’ trust
+ Hold significant shares of the firm
+ Have a significant role in strategy
+ Often make substantial decisions regarding both internal and external
stakeholders.
- Managers
+ Maximize profits in the long- run
+ Manage human resource efficiently
+ Play a substantial role in determining the strategy of the organization
+ Have a significant voice in operational decisions.
+ Accountable for the decisions made, and act as a point of contact between
shareholders, the board of directors, and the organization itself.
- Employees
+ High income, career promotion, skills training and development, a safe and
healthy working environment
+ Respect in the workplace
+ Have significant financial and time investments in the organization
+ Carry out the strategy, tactics, and operations of the organization
- Customers:
+ High quality but low- price products
+ Pay later
+ They want firms to apply the most advanced innovations in manufacturing
processes and use high- quality inputs.
- Suppliers:
 + Sell products with high prices.
+ Supply inputs and create values to the business
+ Timely payments, shipments, communication, and operational processes are
key to maintaining a strong relationship with this stakeholder group

- Local community:
+ Want companies to be good neighbors that prioritize social responsibility.
- Government:
+ Tax businesses
+ Provide regulatory oversight, ensuring that accounting procedures, ethical
practices, and legal concerns are being handled responsibly by business
representatives.
● Approaches:
- Traditional business ethics approach: Companies have a single-minded focus on
their shareholders at the cost of everybody else’s interest. Traditional companies
added up elements that contributed to cost—raw material, labor, other overheads,
financing, etc.—and added their profit margin to arrive at a selling price to achieve
the company’s profit objectives. In doing so, they were only considering the economic
cost of doing business and ignored the social and environmental cost of doing
business.

- Responsible business approach: fulfill organizations while benefit other

stakeholders.In the process, companies start focusing on maximizing the interests of
all stakeholders—which includes promoters, investors, vendors, customers,
employees, the community, government and the environment - instead of just
maximizing profit for shareholders.
+ Example: Unilever is working towards maximizing benefits for all its
stakeholders—investors, consumers, employees, and the communities where it
operates—rather than pursuing the narrow path of maximizing returns only for
its shareholders and primary investors. Unilever adopted a Sustainable Living
Plan in 2010 as a way of doing business. The goal is to double sales by 2020
even as it halves its environmental footprint and helps more than a billion
people improve health and well-being.
Lesson 2:
● If I follow a traditional business ethics approach, I would decide to hire local people
to work on my farms and pay them less than 2 million VND ( which is the same as the
market salary here):
- Because according to the traditional business ethics approach, the ultimate
objective is to maximize the profit of my firm, and my competitive advantage
is low cost. That’s why I can not raise the price of my commodity and just
only minimize the cost for my commodity as much as possible. Another
probability is to expand the scale of my business; however, to increase
productivity, I need to invest an additional amount of money in renting land
and capital, which puts up the cost for my firm significantly. In this case, I
probably face an unprofitable business.
● If I follow a responsible business approach, I would still hire local people to work on
my farms, but besides maximizing the profit, I would devotedly fulfill other
stakeholders’ objectives to obtain the well-being of all stakeholders.
- First of all, I would improve the quality of natural resources here because
natural resources are essential factors of production. For example, improving
the soil with methods like fertilizing, irrigation,.. And investing in a water
filtration system, which would increase productivity and the quality of my
products. Then it is obvious that the total revenue would go up, and the scale
of my firm would be extended. => Requirement to employ more workers=>
More jobs for local people => Local economy would be improved, attract
more investors => Owner, shareholder and customers would be happy.
- I also would obey the Law on Environment Protection to satisfy the public
here.
- Regarding the salary, I would pay them about 2 million VND, excluding social
insurance, health insurance, bonus, educational support for their children, and
also upgrade the capital , which can reduce substantially heavy workloads of
workers => Employees, Customers would be satisfied

● Stakeholders’ rights:
- Shareholders:
First, they need to ensure the safety of investments by managing risks and protecting assets.
Second, they should provide fair and regular dividends or interest, which means giving
shareholders a consistent return on their investment.
Furthermore, shareholders should be given the full information regarding the company’s
practices. In other words, accurate and transparent reports have to be supplied. Financial
information must be disclosed and doubts must be clarified.
Finally, it is the responsibility of the company to utilize resources properly, minimize
wastage so that maximum profits can be earned. Increasing profit means that shareholders’
earning will be higher, and this can call for more capital for the company. Besides, businesses
need to offer reasonable opportunities for participation of shareholders in policy decisions.

- Employees:
No enterprise can succeed without the whole-hearted cooperation of the employees. Well-run
organizations take into account employee opinions, concerns, and values in shaping the
strategy, vision, and mission of the firm. The responsibilities of business towards employees
are explained as follow:
The company must pay adequate and attractive salaries along with incentives such as
overtime allowance, bonus, etc. to all employees. Wages payable to employees should be
fixed by considering the nature of work. The company should frame suitable wage plans for
increments and timely revision of wages.
The business organizations must provide good working conditions to their employees such as
adequate lighting, safe drink water, minimizing sound pollution, etc. They also need to make
sure that working conditions protect their employees’ physical and mental health.
Business organizations should offer enough opportunities of promotion to their talented and
qualified employees. Also, they should encourage other employees to express themselves.
This will motivate the workers to work hard.
The security of job provides mental peace and employees can work with full dedication and
concentration.
Ex: It is undisputed that Google is an ideal working environment for technology graduates.
Google shows extreme care for its employees and provides them with extensive benefits and
perks. These include competitive salaries, comprehensive healthcare coverage, and generous
parental leave policies. Additionally, Google offers on-site amenities such as fitness centers,
recreational areas, and wellness programs to promote physical and mental well-being. The
company also prioritizes work-life balance through flexible work arrangements and generous
vacation policies.
- Customers:
- Suppliers:

- Government:
- Community:

● YES/NO QUESTIONS:
1. Social responsibility in business refers to maximizing the visibility of social
involvement: No
=> Social responsibility refers to an organization’s obligation to maximize its positive
impact on society and minimize its negative impact.
2. Stakeholders provide resources that are more or less critical to a firm’s long- term
success: Yes
3. Three primary stakeholders are customers, special interest groups, and the media: No
=> Although customers are primary stakeholders, special interest groups and the
media are usually considered secondary stakeholders.
4. The most significant influence on ethical behavior in an organization is the
opportunity to engage in unethical behavior: No
=> Other influences such as corporate culture have more impact on ethical decisions
within an organization.
5. The stakeholder perspective is useful in managing social responsibility and business
ethics: Yes
● CASE:
1. When Demarco meets with the tribal leaders, firstly, he should listen to their concerns
and queries regarding the mining project. Subsequently, if the tribes decided to
oppose this project, he ought to convince them by talking about the benefits the
indigenous people will get with this project. Demarco has to tactfully make them
understand the positive sides of the mining project if carried out, such as the
employment opportunities, the construction of schools and hospitals. Besides, the
environmentally friendly extraction methods the company uses will help the forest to
restore. Regarding the adverse impact of the project, as a representative of the firm, he
should promise to mitigate the negative effect of the project on the community and
environment, and if the company violates that promise, it will definitely compensate
for the tribal members. Finally, Demarco should negotiate with the tribal leaders
about the terms of the project so as to receive their approval.
2. The priorities in balancing the various stakeholders’ interests should start with the
primary stakeholders:
- For the tribes, the firm should ensure that their traditional lifestyle must not be
compromised and the project will bring numerous economic benefits to their
residence. The company should also commit that the environment here will be intact
during the project.
- For Xeon’s employees, this mining project needs carrying out to provide job
opportunities for them. And during the project, the company should guarantee its
workers’ safety.
3. The CEO and board of directors of Xeon can continue operations and maintain a
stakeholder orientation if Demarco manages to convince the tribal leaders as well as
makes them fully grasp the pros and cons of the project; and the company proposes
some proper measures to mitigate the impact on all stakeholders before proceeding.

Chapter 3: Ethical issues

- Các loại, lấy vd, động cơ
● FOUNDATIONAL VALUES FOR IDENTIFYING ETHICAL ISSUES:
- Integrity: relates to product quality, open communication, transparency, and
relationships. Therefore, integrity is a foundational value for managers to build an
internal organizational culture of trust.
- Honesty: refers to truthfulness or trustworthiness. To be honest is to tell the truth to
the best of your knowledge without hiding anything.
+ Dishonesty: can be broadly defined as a lack of integrity, incomplete
disclosure, and un unwillingness to tell the truth. Lying, cheating and stealing
are actions usually associated with dishonest conduct.
- Fairness: is the quality of being just, equitable, and impartial. There are 3
fundamental elements that motivate people to be fair: equality, reciprocity, and
optimization.
+ Equality: is about the distribution of benefits and resources. This distributions
could be applied to stakeholders or the greater society,
+ Reciprocity: is an interchange of giving and receiving in social relationships.
Reciprocity occurs when an action that has an effect upon another is
reciprocated with an action that has an approximately equal effect. Reciprocity
is the return of favors approximately equal in value.
+ Optimization: is the trade-off between equity (equality) and efficiency
(maximum productivity). Discriminating on the basis of gender, race, or
religion is generally considered unfair because these qualities have little
bearing upon a person’s ability to do a job. The optimal way to hire is to
choose the employee who is the most talented, proficient, educated, and able.
Ideas of fairness are sometimes shaped by vested interests. One or both parties
in the relationship may view an action as unfair or unethical because the
outcome was less beneficial than expected.
● ETHICAL ISSUES AND DILEMMAS IN BUSINESS:
- An ethical issue is a problem, situation, or opportunity that requires an individual,
group, or organization to choose among several actions that must be evaluated as
right or wrong, ethical or unethical.
- An ethical dilemma is a problem, situation, or opportunity that requires an
individual, group, or organization to choose among several actions that have negative
outcomes.
+ There is not a right or ethical choice in a dilemma, only less unethical or
illegal choices as perceived by any and all stakeholders.
● Misuse of company time and resources: refers to the use of company time,
resources for non- company purposes of employees.
- Using company computer software and Internet services for personal business is one
of the most common ways employees misuse company resources.
- Typical examples of using a computer to abuse company time include sending
personal emails, shopping, downloading music, doing personal banking, surfing the
Internet for information about sports or romance, or visiting social networking sites
such as Facebook.
- Boeing, implemented policies delineating the acceptable use of such resources.
Boeing’s policy states resource use is acceptable when it does not result in
“significant added costs, disruption of business processes, or any other disadvantage
to the company.” The policy further states use of company resources for non-
company purposes is only acceptable when an employee receives explicit permission
to do so.
● Abusive or Intimidating behavior (Hành vi lạm dụng hoặc đe dọa): includes
physical threats, false accusations, being annoying, profanity, insults, yelling,
harshness, ignoring someone, and unreasonableness.
- Bullying is associated with a hostile workplace where someone (or a group)
considered a target is threatened, harassed, belittled, verbally abused or overly
criticized. Bullying also occurs between companies that are in intense competition.
- Apple had been accused of monopolistic bullying. Former Palm CEO Edward
Colligan accused the late Steve Jobs, former CEO of Apple, of anti- competitive
behavior toward his firm. Jobs allegedly contacted Colligan to propose an agreement
not to hire workers from each other’s companies. According to the allegations, Jobs
went on to state if Palm continued to poach Apple employees, it could expect a law-
suit from Apple accusing Palm of patent infringement. Five tech workers filed
lawsuits against Apple, Google, and other tech firms regarding the existence of “no
hire” agreements. If these agreements were made, they would most likely be
considered anti competitive because they place both employees and rival companies
at a disadvantage.
● Although Walmart is one of largest retail companies in the world, it has been
criticized for low wages and benefits. In December 2005, Walmart was ordered to pay
172 million dollars to more than 100 000 California employees in a class-action
lawsuit claiming that Walmart routinely denied meal breaks. The California
employees also alleged that they were denied rest breaks and Walmart managers
deliberately altered time cards to prevent overtime. Also, this company has been
accused of failing to provide health insurance for more than 60 percent of employees.
A new Walmart policy eliminates healthcare coverage for new workers who work less
than 30 hours a week. It also states that it reserves the right to cut healthcare coverage
of workers whose work week goes below 30 hours.
● Lying:
- Commission lying: is creating a perception or belief by words that intentionally
deceive the receiver of the message; for example, lying about being at work, expense
reports, or carrying out work assignments. Commission lying also entails
intentionally creating “noise” within the communication that knowingly confuses or
deceives the receiver
- Lying by commission can involve complex forms, procedures, contracts, words that
are spelled the same but have different meanings, or refuting the truth with a false
statement. Forms of commission lying include puffery in advertising.
- Ex: A company owned by PepsiCo, Naked Juice claimed their juices were ‘All
Natural’, which was challenged in court and found to be untrue. Even though Pepsico
defended the claims, they ended up settling for $9 million and removing the ‘All
Natural’ tag from their juices.
- Omission lying is intentionally not informing others of any differences, problems,
safety warnings, or negative issues relating to the product or company that
significantly affect awareness, intention, or behavior.
- Ex: FreeCreditReport.com promotes itself as a way for consumers to check their
credit scores. Many customers do not realize that FreeCreditReport.com is a credit-
 monitoring service that costs $14.95 per month and they will be charged if they do not
cancel the service within 30 days.
● Conflicts of interest:
- A conflict of interest exists when an individual must choose whether to advance his or
her own interests, those of the organization, or those of some other group.
- To avoid conflicts of interest, employees must be able to separate their private
interests from their business dealings. Organizations must also avoid potential
conflicts of interest when providing products.
● Bribery:
- Bribery is the practice of offering something (often money) in order to gain an illicit
advantage from someone in authority. Gifts, entertainment, and travel can also be
used as bribes. The key issue regarding whether or not something is considered
bribery is whether it is used to gain an advantage in a relationship.
- Bribery can be defined as an unlawful act, but it can also be a business ethics issue in
that a culture includes such fees as standard practice.
- Active corruption or active bribery, meaning the person who promises or gives the
bribe commits the offense.
- Passive bribery is an offense committed by the official who receives the bribe. It is
not an offense, however, if the advantage was permitted or required by the written law
or regulation of the foreign public official’s country, including case law.
- Ex: The producers of one of the most famous brands in the automobile industry,
Mercedes Benz, paid $185 million to the United States against charges of bribery and
corruption in 2010. Foreign officials were provided with money and gifts between the
time period of 1998 and 2008 to get government contracts, and more than $56 million
were paid on around 200 occasions in at least 22 countries.

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● Corporate Intelligence:
- Corporate intelligence is the collection and analysis of information on markets,
technologies, customers, and competitors, as well as on socioeconomic and external
political trends.
- There are three distinct types of intelligence models:
+ a passive monitoring system for early warning,
+ tactical field support,
+ and support dedicated to top management strategy.
- Corporate intelligence (CI) involves an in-depth discovery of information from
corporate records, court documents, regulatory filings, and press releases, as well as
any other background information about a company or its executives. Corporate
intelligence can be a legitimate inquiry into meaningful information used in staying
competitive.
- For instance, it is legal for a software company to monitor its competitor’s online
activities such as blogs and Facebook posts. If the company learns from monitoring its
competitor’s public postings it is likely planning to launch a new product, the
company could use this intelligence to release the product first and beat the
competition. Such an activity is acceptable.

- Hacking is considered one of the top three methods for obtaining trade secrets.
+ System hacking: assumes the attacker already has access to a low-level,
privileged-user account.
+ Remote hacking: involves attempting to remotely penetrate a system across
the Internet. A remote hacker usually begins with no special privileges and
tries to obtain higher level or administrative access.
+ Physical hacking: requires the CI agent to enter a facility personally. Once
inside, he or she can find a vacant or unsecured workstation with an
employee’s login name and password.
● Discrimination:
- Discrimination on the basis of race, color, religion, sex, marital status, sexual
orientation, public assistance status, disability, age, national origin, or veteran status
is illegal in many countries.
- Discrimination on the basis of political opinions or affiliation with a union is defined
as harassment.
- Discrimination remains a significant ethical issue in business despite decades of
legislation attempting to outlaw it .
- Discrimination can also be an ethical issue in business when companies use race or
other personal factors to discriminate against specific groups of customers. Many
companies have been accused of using race, disabilities, gender, or age to deny
service or to charge higher prices to certain ethnic groups.
- Ex: Although women account for more than two-thirds of all Walmart
employees, they make up less than 10 percent of store management. In
2001, six female Walmart employees sued their company in US federal court
alleging that Walmart discriminated against them in salary, bonuses and training. The
lawsuit represents approximately 1.5 million current and former female Walmart
employees, which makes it the largest workplace bias case in US history.
● Sexual harassment:
- Sexual harassment can be defined as any repeated, unwanted behavior of a sexual
nature perpetrated upon one individual by another. It may be verbal, visual, written,
or physical and can occur between people of different genders or those of the same
gender.
- The key ethical issues associated with sexual harassment are dual relationships and
unethically intimate relationships.
+ A dual relationship is defined as a personal, loving, and/or sexual relationship
with someone with whom you share professional responsibilities.
 + Unethical dual relationships are those where the relationship could potentially
cause a direct or indirect conflict of interest or a risk of impairment to
professional judgment.
- Ex: In 2020, two McDonald’s employees in Florida filed a $500 million class action
lawsuit against the fast-food giant, alleging systemic sexual harassment. The suit
represents around 5,000 women from over 100 McDonald’s outlets across the US.
The allegations include groping, sexual assault, and sexually-charged comments at a
specific McDonald’s restaurant near Orlando, Florida.
● Fraud:
- Fraud is any purposeful communication that deceives, manipulates, or conceals facts
in order to harm others.
- Fraud can be a crime and convictions may result in fines, imprisonment, or both.
+ Accounting fraud usually involves a corporation’s financial reports, in
which companies provide important information on which investors and others
base decisions involving millions of dollars.
+ Marketing fraud—the process of dishonestly creating, distributing,
promoting, and pricing products.
+ Consumer fraud occurs when consumers attempt to deceive businesses for
their own gain. Consumers engage in many other forms of fraud against
businesses, including price tag switching, item switching, lying to obtain
age-related and other discounts, and taking advantage of generous return
policies by returning used items, especially clothing that has been worn
(with the price tags still attached).
- Ex: In 2001, Enron Corporation which was the largest American energy corporation
at that time faced an accusation of accounting fraud after being disclosed to abuse
MTM accounting method and SPEs to inflate its earnings and hide the mounting
debts. Thousands of employees suddenly were left jobless. Several executives were
convicted of federal crimes. The company's unethical behavior also led to the
downfall of one of the oldest and biggest accounting firms, Arthur Andersen.
● Financial Misconduct:
- The failure to understand and manage ethical risks played a significant role in the
financial crisis.
- The difference between bad business decisions and business misconduct can be hard
to determine, and there is a thin line between the ethics of using only financial
incentives to gauge performance and the use of holistic measures that include ethics,
transparency, and responsibility to stakeholders
- Risk management in the financial industry is a key concern, including paying bonuses
to executives who failed in their duties.
- Ex: Wells Fargo, one of the largest banks in the US, was prosecuted for a series of
customer abuse scandals between 2016 and 2017. The bank was found to have created
millions of fake credit accounts and credit cards in the names of real customers (a
practice that cost Wells Fargo a $185 million fine), charging excessive fees on loans
to small businesses, discriminating against black and Latino customers with risky and
high-interest loans, charging insurance premiums without notifying customers (fine
$1 billion), securities fraud (fined $480 million)...
● Insider trading:
- An insider is any officer, director, or owner of 10 percent or more of a class of a
company’s securities.
- There are 2 types of insider trading:
 + Illegal insider trading is the buying or selling of stocks by insiders who
possess information that is not yet public. This act can be committed by
anyone who has access to nonpublic material, such as brokers, family, friends,
and employees. In addition, someone caught “tipping” an outsider with
nonpublic information can also be found liable. To determine if an insider
gave a tip illegally the SEC uses the Dirks test, that states if a tipster breaches
his or her trust with the company and understands that this was a breach, he or
she is liable for insider trading.

+ Legal insider trading involves legally buying and selling stock in an insider’s
own company, but not all the time. Insiders are required to report their insider
transactions within two business days of the date the transaction occurred.
- Ex: In 2013, SAC Capital Advisors, headed by billionaire Steven Cohen,
encountered a record fine of up to 1.2 billion USD after admitting to insider trading.
The investigation related to this incident has lasted a decade. Of the eight former SAC
employees facing criminal charges, six have pleaded guilty. The company was also
forced to stop managing money for outside investors.

● Intellectual Property Rights: involve the legal protection of intellectual property

such as music, books and movies.
● Privacy issues:
- Consumer advocates continue to warn consumers about new threats to their privacy,
especially within the health care and Internet industries..
- Some privacy issues that must be addressed by businesses include the monitoring of
employees’ use of available technology and consumer privacy.
- Ex: Equifax faced a large ethical scandal when hackers stole data from more than 148
million consumers.A research found that the systems Equifax was using were old, and
their security systems were out-of-date and could have been updated to prevent the
breach. Besides, Equifax didn’t report the stolen data for two months. This means that
for two months, consumers who had their data stolen were walking around, with no
idea there could be any issues. This led the Equifax CEO to step down, and nobody
knows where the data is, or who has it.

● YES/NO QUESTIONS:
1. Business can be considered a game people play, like basketball or boxing: No
2. Key ethical issues in an organization relate to fraud, discrimination, honesty and
fairness, conflicts of interest, and privacy: Yes
3. Only 10 percent of employees observe abusive behavior in the workplace: No
4. Fraud occurs when a false impression exists, which conceal facts: No

=> False impression is created after purposefully concealing facts

5. Time theft is the most commonly observed type of misconduct: Yes

● CASE:
1. The celebrity spokesperson for Uber Bacon products is Gloria Kunies. She turned to
vegetarianism as a result of her high cholesterol. This implies that it is impossible for
Mrs. Kunies to endorse Uber Bacon, and the company’s product has negative effects
on health. However, Daniel is lying to customers by a dishonest advertisement, as he
wants to please his boss.
2. Tren
3. - Uber Bacon might incur financial loss if the firm might be charged a fine by the
respective federation because of false information advertisement. Moreover, when the
customers find out that the advertisement is false information, they will feel betrayed
and the business will lose the active customers as well as new potential customers.
The reputation of Uber Bacon and Mrs. Kunies will definitely go down if discovered.

- This possible scandal may also negatively affect YOLO’s future business, lose
potential competitive advantage in the advertisement industry.

Chapter 7: Organizational Factors

● Corporate culture:
- Corporate culture refers to the set of values, beliefs, goals, norms, and ways of solving
problems that members(employees) of an organization share. These shared values
may be formally expressed or unspoken.
- 2 basic dimensions to describe an organization’s culture:
+ Concern for people - the organization’s efforts to care for its employees
 + Concern for performance- the organization’s efforts to focus on output and
employee productivity.
- 4 organizational cultures:

- Ex:
+ Apathetic culture: Countrywide Financial seemed to show little concern for
employees and customers. The company’s culture appeared to encourage unethical
conduct in exchange for profits
+ Caring culture:
Patagonia is known for its strong commitment to environmental and social
responsibility. The company provides extensive support for its employees, such as
paid volunteer time and excellent work-life balance policies.
Zappos emphasizes customer service and employee happiness. The company culture
is focused on creating a positive work environment and providing exceptional service
to customers.
+ Exacting culture: Amazon’s culture is often described as exacting. They prioritize
results, efficiency, and customer satisfaction. The company sets high standards for
performance, which can sometimes lead to intense work environments. While they
achieve impressive results, employee well-being has been a point of criticism.
+ Integrative culture: Google is known for its collaborative work environment,
innovation, and employee perks. Google encourages creativity and teamwork while
also driving high performance.
- A cultural audit identifies an organizational culture.
● Leadership:
● Organizational structure:
● Group influences:
 ● YES/NO QUESTIONS:

No, Yes, Yes, No, No

● CASE:
1. The organizational structure of ABCO organization is centralized, as Candace already
mentioned about her quick adaptation to the highly bureaucratic organization, and the
division of labor is well- defined with multiple levels of management such as
immediate supervisors, division managers, and other higher-level executives. Besides,
the problem recognition of the firm is relatively low. This is inferred from that if
Candace hadn’t noticed Britney about the misconduct of some supervisors, no top-
level manager would have been conscious about that.
2. Britney’s leadership style is coercive power. This approach involves influencing
someone's decision by withholding something as punishment if they do not follow
commands. Britney threatened Candace that if she did not reveal the names of the
managers she wanted to mention, Britney would consider Candance part of the
problems around here. This instilled a fear in Candace’s mind, making her hesitate
whether to reveal or not.
3. Apart from those two options, she might decide to quit her job. However, I find this is
not a wise choice since that misconduct doesn’t really affect her job benefits at all.
Furthermore, with her hard work and proven talent for implementing projects, she will
definitely gain promotions. From my perspective, Candace should choose one of
those. If she chooses to refuse Britney, she should say that her remark was based on a
hunch and that she has no factual proof to back up her allegation. Or she can choose
to give Britney the names of the managers she believes are causing her problems.
Both alternatives are undesirable for Candace, but she has no way out of this
dilemma. I recommend that she informs Britney that she has no proof to back up her
allegation and that it was only a hunch. This way, none of her colleagues will be
upset, and she may work hard to regain her boss's trust.
Chapter 6: Individual factors
- Teleology ethics stipulate that acts are morally right or acceptable if they produce
some desired results such as the realization of self- interest- interest or utility.
+ Utilitarianism is concerned with maximizing total utility, or providing the
greatest benefit for the greatest number of people. In making ethical decisions,
utilitarians often conduct cost- benefit analyses that consider the costs and
benefits to all affected parties.
➔ Rule utilitarians determine behavior on the basis of rules designed to
promote the greatest utility rather than by examining particular
situations.
➔ Act utilitarians examine the action itself rather than the rules governing
the action, to determine if it results in the greatest utility.
 + Egoism:defines right or acceptable behavior in terms of its consequences for
the individual. Egoists believe they should make decisions that maximize their
own self-interest, which is defined differently by each individual.
➔ However, there also is enlightened egoism. Enlightened egoists take a
long-range perspective and allow for the well-being of others although
their own self-interest remains paramount.
- Deontology ethics focus on the rights of individuals and the intentions behind an
individual’s particular behavior rather than its consequences. Deontologists believe
individuals have certain absolute rights that must be respected such as: freedom of
conscience, freedom of consent, freedom of privacy, freedom of speech.
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