Business Ethics: Cases andSelected Readings, 7th Ed.Marianne M. JenningsUnit 3© 2012 Cengage Learning. All Rights Reserved...
91Milton Friedman• The primary responsibility of a corporation isto__________________________.• Managers as agents• Busine...
92R. Edward Freeman• Stakeholders• Who are they?• How do we weigh in with them?• What is the goal of stakeholder theory?© ...
93Freeman’s Stakeholders© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted t...
Entine and Jennings1. Does the company comply with the law?2. Does the company have a sense ofpropriety?3. How honestly do...
Entine and Jennings (cont’d)5. How does the company treat its employees?6. How does the company handle third-partyethics i...
96Robert Halfon• Why do corporations engage in socialresponsibility?• What impact does social responsibility haveon a corp...
97Michael Novak’sContrasting Stakeholders• The Homestead Act Stakeholder: Propertyownership, work, and freedom fromgovernm...
98Michael Novak on theCorporation in Society“The corporation is what it is and does what itdoes; but it is an invention of...
99Marjorie Kelly –Divine Right of Capital• What is the current relationship betweenshareholders, employees, and corporatio...
100Kelly – 6 and 6• Economic Aristocracy– Worldview– Privilege– Property– Governance– Liberty– Sovereignty• Economic Democ...
101Schools of Thought onSocial ResponsibilityMoral question: Whoseinterest should corporationserve?Policy question: Best w...
102A Few Quiz QuestionsWhat CEO said, “We are the good guys. We areon the side of angels.” and “We are doing God’swork her...
Jeffrey Skilling – while CEO ofEnron, circa 2000Lloyd Blankfein – CEO, GoldmanSachs, November 2009© 2012 Cengage Learning....
104“My integrity is intact.”© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or post...
105Former Arthur AndersenCEO, Joe BerardinoFollowing Enron’s, WorldCom’s, WasteManagement’s, BaptistFoundation’s, GlobalCr...
106Guess Who Said It?"Ethical standards and practices in theworkplace are the pillars of successfulemployment and ultimate...
107Franklin Raines, former CEO ofFannie Mae (ousted in 2005)Final report on what went wrongconcludes: “[management was]man...
108Guess Who Said It!“It’s more than just money. You’ve got to giveback to the community that supported you.”© 2012 Cengag...
109John Rigas, former CEO ofAdelphia,Convicted of embezzlement,15-year sentence© 2012 Cengage Learning. All Rights Reserve...
Guess Who Said It!“Go after the men who seek outprostitutes.”© 2012 Cengage Learning. All Rights Reserved. May not bescann...
Eliot Spitzer, 2004, as New YorkAttorney General in setting up aspecial task force and new laws toend prostitution in New ...
Guess Who Said It?“I have done absolutely nothingwrong.”112© 2012 Cengage Learning. All Rights Reserved. May not bescanned...
Rod R. Blagojevich,former governor of Illinois113© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied o...
Guess Who Said It!“In today’s regulatory environment,it’s virtually impossible to violatethe rules. It’s impossible for av...
Bernie Madoff: October 7, 2007115© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or...
Guess Who Said It!“Embezzlement cannot be condoned in anymanner. [n]ot only did he steal from thestockholders . . . But he...
117© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessib...
118Guess Who Said It!“I have the highest ethical standards.”© 2012 Cengage Learning. All Rights Reserved. May not bescanne...
119Dr. William McGuireFormer CEO United Health Group, to hisboard when confronted by it with aninvestigation that revealed...
120Guess Who Said It?“We have ethics here.”© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or dupl...
121Ellen FrishbergFormer student loan director at JohnsHopkins, in an interview with theBaltimore Sun, one month before sh...
122TimeLatency Awareness Activism Regulation/LitigationSocial/Regulatory/Litigation CyclePublicMovestheCycle© 2012 Cengage...
123Regulatory Cycle: Time andOptionsCOSTTIMEOPTIONS© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied...
124Cell Phone Distractions© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted...
FOAs at CountrywideNAME/TITLE AMOUNT RATE YEARSFranklin Raines $982,253 5.125% 10Former CEO $986,340 4.125% 10Fannie MaeJa...
Countrywide Mortgage• Directors’ friends were given breaks oninterest rates and lending policies• Management gave the boar...
The A-Rod Explanation“I knew we weren’t taking Tic Tacs.. . . I wanted to prove to everyonethat I was worth, you know, and...
Two People Under Pressure, Together“Clemens was determined to prove he wasn’t fading,and McNamee, having just arrived at t...
129The Great DisposableDiaper DebatePRO CONOnly 2% of solid waste 7,800 diapers/childGreater environmental 2-5 years for p...
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BADM 2133 UNIT 3

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BADM 2133 UNIT 3

  1. 1. Business Ethics: Cases andSelected Readings, 7th Ed.Marianne M. JenningsUnit 3© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.
  2. 2. 91Milton Friedman• The primary responsibility of a corporation isto__________________________.• Managers as agents• Business and the political processes• When is voluntary action appropriate?• What is the relationship between governmentand business?© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.
  3. 3. 92R. Edward Freeman• Stakeholders• Who are they?• How do we weigh in with them?• What is the goal of stakeholder theory?© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.
  4. 4. 93Freeman’s Stakeholders© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.
  5. 5. Entine and Jennings1. Does the company comply with the law?2. Does the company have a sense ofpropriety?3. How honestly do product claims match withreality?4. How forthcoming is the company withinformation?94© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.
  6. 6. Entine and Jennings (cont’d)5. How does the company treat its employees?6. How does the company handle third-partyethics issues?7. How charitable is the company?8. How does the company react when facedwith negative disclosures?95© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.
  7. 7. 96Robert Halfon• Why do corporations engage in socialresponsibility?• What impact does social responsibility haveon a corporation’s virtue ethics?© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.
  8. 8. 97Michael Novak’sContrasting Stakeholders• The Homestead Act Stakeholder: Propertyownership, work, and freedom fromgovernment control• Social Democracy Stakeholder: Those whodeem themselves entitled to make demandson the system and receive from it© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.
  9. 9. 98Michael Novak on theCorporation in Society“The corporation is what it is and does what itdoes; but it is an invention of free people, nota cold meteor fallen from the skies.”© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.
  10. 10. 99Marjorie Kelly –Divine Right of Capital• What is the current relationship betweenshareholders, employees, and corporations?• What issues, problems, inequities, does Kellybelieve results from these interrelationships?• What data does she use to support her hypotheses?• What changes does Kelly believe should be made?• Are there flaws in Kelly’s reasoning and reforms?© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.
  11. 11. 100Kelly – 6 and 6• Economic Aristocracy– Worldview– Privilege– Property– Governance– Liberty– Sovereignty• Economic Democracy– Enlightenment– Equality– Public Good– Democracy– Justice– Evolution© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.
  12. 12. 101Schools of Thought onSocial ResponsibilityMoral question: Whoseinterest should corporationserve?Policy question: Best way toserve interest is if thecorporation is responsive to:Inherence Shareholders only Shareholders onlyEnlightenedSelf-InterestShareholders only Larger societyInvisible Hand Larger society Shareholders onlySocialResponsibilityLarger society Larger societyAdapted with permission of American Business Law Journal from D. Hatano, “Should CorporationsExercise Their Freedom of Speech Rights?” 22 A.B.L.J. 165 (1984).© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessible
  13. 13. 102A Few Quiz QuestionsWhat CEO said, “We are the good guys. We areon the side of angels.” and “We are doing God’swork here”?© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.
  14. 14. Jeffrey Skilling – while CEO ofEnron, circa 2000Lloyd Blankfein – CEO, GoldmanSachs, November 2009© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.103
  15. 15. 104“My integrity is intact.”© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.
  16. 16. 105Former Arthur AndersenCEO, Joe BerardinoFollowing Enron’s, WorldCom’s, WasteManagement’s, BaptistFoundation’s, GlobalCrossing’s, Sunbeam’s, etc. collapses© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.
  17. 17. 106Guess Who Said It?"Ethical standards and practices in theworkplace are the pillars of successfulemployment and ultimately the benchmarkfor a strong business."© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.
  18. 18. 107Franklin Raines, former CEO ofFannie Mae (ousted in 2005)Final report on what went wrongconcludes: “[management was]manipulating earnings and creating an‘unethical and arrogant culture’”© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.
  19. 19. 108Guess Who Said It!“It’s more than just money. You’ve got to giveback to the community that supported you.”© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.
  20. 20. 109John Rigas, former CEO ofAdelphia,Convicted of embezzlement,15-year sentence© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.
  21. 21. Guess Who Said It!“Go after the men who seek outprostitutes.”© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.110
  22. 22. Eliot Spitzer, 2004, as New YorkAttorney General in setting up aspecial task force and new laws toend prostitution in New York111© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.
  23. 23. Guess Who Said It?“I have done absolutely nothingwrong.”112© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.
  24. 24. Rod R. Blagojevich,former governor of Illinois113© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.
  25. 25. Guess Who Said It!“In today’s regulatory environment,it’s virtually impossible to violatethe rules. It’s impossible for aviolation to go undetected,certainly not for a considerableperiod of time.”© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.114
  26. 26. Bernie Madoff: October 7, 2007115© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.
  27. 27. Guess Who Said It!“Embezzlement cannot be condoned in anymanner. [n]ot only did he steal from thestockholders . . . But he breached the fiduciaryduty placed in him. Wrongdoing of this natureagainst society is considered a grave matter. . .[h]e should receive the maximum sentence.”© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.116
  28. 28. 117© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.
  29. 29. 118Guess Who Said It!“I have the highest ethical standards.”© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.
  30. 30. 119Dr. William McGuireFormer CEO United Health Group, to hisboard when confronted by it with aninvestigation that revealed backdating onone-half billion in his stock options© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.
  31. 31. 120Guess Who Said It?“We have ethics here.”© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.
  32. 32. 121Ellen FrishbergFormer student loan director at JohnsHopkins, in an interview with theBaltimore Sun, one month before she wasplaced on leave after the discovery thatshe had $130,000 in consultingarrangements with the university’spreferred lenders. She has resigned.© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.
  33. 33. 122TimeLatency Awareness Activism Regulation/LitigationSocial/Regulatory/Litigation CyclePublicMovestheCycle© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.
  34. 34. 123Regulatory Cycle: Time andOptionsCOSTTIMEOPTIONS© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.
  35. 35. 124Cell Phone Distractions© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.
  36. 36. FOAs at CountrywideNAME/TITLE AMOUNT RATE YEARSFranklin Raines $982,253 5.125% 10Former CEO $986,340 4.125% 10Fannie MaeJamie Gorelick $960,149 5.00% 10Vice ChairFannie MaeJames Johnson $971,650 3.875% 3Former CEOFannie MaeDaniel Mudd $2,965,000 4.250% 7COO/CEOFannie Mae© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.125
  37. 37. Countrywide Mortgage• Directors’ friends were given breaks oninterest rates and lending policies• Management gave the board members agreat many perks• Management also gave friends favorableloans (FOAs: Friends of Angelo)• Company was intertwined with regulatorsthrough campaign contributions and closefriendships© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.126
  38. 38. The A-Rod Explanation“I knew we weren’t taking Tic Tacs.. . . I wanted to prove to everyonethat I was worth, you know, andbeing one of the greatestbaseball players of all time.”Alex Rodriguez on his steroid use from 2001-2003127© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.
  39. 39. Two People Under Pressure, Together“Clemens was determined to prove he wasn’t fading,and McNamee, having just arrived at the Show, wascommitted to staying there. So there would be otherinjections, but with the first one the two men crosseda stark line into territory they would never escape.Clemens became a cheater, and McNamee became hisenabler.”Teri Thompson, Nathaniel Vinton, Michael O’Keeffe,and Christian Red, American Icon: The Fall of RogerClemens and the Rise of Steroids in America’sPastime, Alfred Knopf (2009)© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.128
  40. 40. 129The Great DisposableDiaper DebatePRO CONOnly 2% of solid waste 7,800 diapers/childGreater environmental 2-5 years for plastic to break downimpact of cloth if energyand water laundry 20 states regulate municipal inincluded regulations4 of 5 Americans preferdisposable© 2012 Cengage Learning. All Rights Reserved. May not bescanned, copied or duplicated, or posted to a publicly accessiblewebsite, in whole or in part.

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