quiz 2 study guide ethics

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East Carolina University *

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Law

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Apr 3, 2024

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docx

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John Marshall’s definition of a corporation (artificial being, legal creation): An artificial being, invisible, intangible, and existing only in the contemplation of law. Referring to that a corporation is treated legally as an artificial being or person with some of the same rights as ordinary persons. Corporate internal structure (CEO, board, shareholders): CEO is the brain and is appointed by the board of directors, board of directors is the nerves and if elected by the shareholders (one vote per share), and the workers are the legs and arms. Advantages and disadvantages of setting up business as a corporation: Advantages- shell shares to the public, borrow money and take losses on behalf of your corporation without running any personal financial risk. if you break laws when managing your corporation, the corporation itself may pay the penalty while the individual will not be charged with anything. Disadvantage- if you sell your shares, you are diluting your ownership and could end up losing control of your company. The Foreign Corrupt Practices Act (FPCA), purpose, penalties: Fiduciary duty (the duty to act as a trusted financial agent for others): The three concerns of Corporate Social Responsibility (CSR) (Figure 4.3): Social, ecological (environmental) and economic. Must take responsibility for their impact on society and the environment.
Why Steven Lovett rejects CSR (4.4): it does not actually establish or encourage the kind of permanent and authentic improvements we, as a society and as businesspeople want in the relationship between the marketplace and society. Why Lovett believes businesses have no moral obligations to outsiders (4.4): obligations is rule- based thinking. Anthony Flew (profits are not immoral by nature) (intro to Chapter 4): Business does have the moral right to focus solely on profit, which of course if tantamount o denying CSR. Definition of Stakeholder Theory of business obligations (4.5): Corporations have a moral duty to consider every entity affected by their actions. Those affected are called Stakeholders. List, ranking of stakeholders by John Mackey (founder of Whole Foods Market): customers, employees, invertors(shareholders), suppliers, communities and the environment. Meaning of value, as defined by Lovett (4.5): resilient prosperity for the corporation and its stakeholders, where stakeholders for Lovett are primarily just the shareholders and investors.
Why Lovett rejects the Stakeholder Theory (4.5): First 6 are on his list. He regards the shareholders as the owners of the corporation. Presumable, as owners, they would have full property right in the corporation and could expect that it should be run totally to their benefit. He also believes it is too difficult to identify all the stakeholders. Definition of the Shareholder Theory (4.5): Milton Friedman’s support of the Shareholder Theory (4.5): shareholders own the corporation, meaning that for him, the moral responsibility of a corporation is exclusively to make profits for the shareholders. Attitude toward charity of the Stakeholder and Shareholder Theories: The only justification for corporate charity is when it Is part of a public relations play to increase their profits. Why Lovett believes businesses cannot have social responsibilities (4.5): Definition of culture (5.1): a sense among its members that they belong to the same group, a sufficient background for the practices of the group to reach maturity, and a relatively stable or unchanging commitment to a particular set of rules. Can artificial beings have moral obligations? (5.1):
Benefits from running an ethical corporation (5.2): employees will be more committed, creative, satisfied and loyal, the investors will be more trusting and loyal as a result investing more money and consumers will be more satisfied and loyal. Compliance versus “value,” where value is resilient prosperity (long-term profit) (5.3): Primary value that Lovett has in mind is the accumulation of long-term profits for the owners of the corporation. Corporations are required to comply with a large number of government regulations. Federal Sentencing Guidelines for Organizations (5.3): Federal criteria for an effective compliance program (5.3): Moral advice to corporate leaders (5.5): Ethics as a stimulus to resilient prosperity (6.1): Prosperity means value. It means growth and resiliency and sustainability. If business ethics concentrates solely on this sort of physical or economic value, business ethics might be another branch of economics intended to make business activities more productive rather than a discipline meant to investigate and justify moral restrictions on economic production. Steps to identify the existence of an ethical dilemma (7.2): questions are: is the issue likely to harm someone in some way, is this issue addressed by any
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