Business Ethics: Ethical Decision Making & Cases / Edition 9

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More accessible and readable than ever with its vibrant new four-color design, Business Ethics: Ethical Decision Making and Cases, 8e gives you unparalleled insight into the complex environment in which managers confront ethical decision making. Extremely practical, this market-leading text uses a unique managerial framework packed with real-world illustrations to address the overall concepts, processes, and best practices associated with successful business ethics programs-helping you see exactly how ethics can be integrated into key strategic business decisions. The Eighth Edition's comprehensive updates reflect the latest developments in the economic crisis, as well as the ever-increasing academic and governmental attention being given to this area. In addition, the text's current, real-world examples, cases, exercises, simulations, and practice tests give you plenty of opportunities to put chapter concepts into action.

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The current global economic crisis presents one of the most teachable moments of the century. Our online web portal features the solutions you want in an easy-to-use teachable format, including a global issues database, a thorough overview and timeline of events leading up to the global economic crisis,links to the latest news and resources, and more!

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Editorial Reviews

From the Publisher
"I believe this author and this book to be one of the best in the industry. Each new edition appears to adequately cover all new and emerging topics." -Victor Lipe, Trident Technical College
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Product Details

  • ISBN-13: 9781111825164
  • Publisher: Cengage Learning
  • Publication date: 1/1/2012
  • Edition description: Older Edition
  • Edition number: 9
  • Pages: 576
  • Sales rank: 471,963
  • Product dimensions: 7.30 (w) x 9.00 (h) x 0.90 (d)

Meet the Author

O. C. Ferrell (Ph.D., Louisiana State University) is University Distinguished Professor of Business Ethics at Belmont University. He most recently served nine years as University Distinguished Professor Marketing and Creative Enterprise Scholar at the University of New Mexico. His academic research focuses on ethical decision-making, stakeholder relationships and social responsibility. He is a leading publisher in the area of marketing ethics and stakeholder orientation to achieve marketing performance in organizations. Dr. Ferrell is past president of the Academic Council of the American Marketing Association and chaired the American Marketing Association Ethics Committee twice. Under his leadership, the committee developed the AMA Code of Ethics and the AMA Code of Ethics for Marketing on the Internet. He is Vice President of Publications for the Academy of Marketing Science. He has received the Cutco Vector Distinguished Marketing Educator Award from the Academy of Marketing Science. Dr. Ferrell is the co-author of 20 books and more than 100 articles. His articles have been published in the JOURNAL OF MARKETING RESEARCH, JOURNAL OF MARKETING, JOURNAL OF BUSINESS ETHICS, JOURNAL OF BUSINESS RESEARCH, JOURNAL OF THE ACADEMY OF MARKETING SCIENCE, JOURNAL OF PUBLIC POLICY & MARKETING, and THE ACADEMY OF MANAGEMENT EXECUTIVE, as well as other journals. His MARKETING: CONCEPTS AND STRATEGY TEXT, co-authored with Bill Pride, is one of the most widely adopted principles of marketing text in the world. BUSINESS ETHICS: ETHICAL DECISION MAKING AND CASES is co-authored with John Fraedrich and Linda Ferrell and is a leading business ethics. Dr. Ferrell has served as an expert witness on marketing issues for a number of legal cases over the past 20 years. He has been quoted in leading business publications such as USA TODAY and WALL STREET JOURNAL, and he has appeared on NBC's The Today Show discussing marketing-related issues.

Professor Fraedrich's dissertation (1988) was the nexus for the ethics book "Business Ethics: Ethical Decision Making and Cases" (11th edition) 2016, and is the most widely used undergraduate business ethics text in the U.S. Dr. Fraedrich has the distinction of being one of 50 marketing ethics professors selected to participate in an International Consortium on Ethics and Social Responsibility. In his career, he has presented, written, and/or published over 50 pieces related to business ethics alone. On a global level, he has helped affect business ethics dialogue by being the only ethics professor invited by a former U.S. Secretary of State to participate in an executive seminar on globalization and its implications and challenges for societies, corporate responsibility, and public policy and included ambassadors and economic ministers from Argentina, Australia, Bosnia/Herzegovina, Germany, the Republic of Georgia, Lesotho, Mexico, Peru, and Poland, as well as Fortune 100 firms such as Raytheon, Lockheed-Martin, and Sumitomo Corporation. He was invited by FEDERASUL, a prestigious business organization in Brazil, to discuss business ethics on a panel that included one of Brazil's Supreme Court Justices as well as a former ambassador. In 2006-2007, Professor Fraedrich was awarded the Bill Daniels Distinguished Professor of Business Ethics at the University of Wyoming, College of Business. Recently, Professor Fraedrich was invited to teach for the Department of the Army at the General Officer level concerning "The Consequences of Power." His class included 13 Brigadier Generals as well as five star generals (two lieutenant generals and three major generals). He is also the author of integrated application-oriented ethics software for academics and Fortune 500 corporations.

Dr. Linda Ferrell (Ph.D. University of Memphis) is professor of marketing at Belmont University. Dr. Ferrell coauthored Business and Society with O. C. Ferrell and Debbie M. Thorne and is co-author of Business in a Changing World with O.C. Ferrell and Geoff Hirt. She won the Best Paper award twice at the American Marketing Association's National Summer Educators Meeting and has published over 30 articles in JOURNAL OF THE ACADEMY OF MARKETING SCIENCE, JOURNAL OF PUBLIC POLICY & MARKETING, JOURNAL OF PERSONAL SELLING & SALES MANAGEMENT, AMS REVIEW, JOURNAL OF STRATEGIC MARKETING, JOURNAL OF BUSINESS ETHICS, and CASE RESEARCH JOURNAL, as well as others.

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Table of Contents

Part 1 An Overview of Business Ethics 1

Chapter 1 The Importance of Business Ethics 2

Chapter Objectives 3

Chapter Outline 3

An Ethical Dilemma 3

Business Ethics Defined 7

Why Study Business Ethics? 8

A Crisis in Business Ethics 8

The Reasons for Studying Business Ethics 10

The Development of Business Ethics 11

Before 1960: Ethics in Business 11

The 1960s: The Rise of Social Issues in Business 12

The 1970s: Business Ethics as an Emerging Field 13

The 1980s: Consolidation 13

The 1990s: Institutionalization of Business Ethics 14

The Twenty-First Century: A New Focus on Business Ethics 15

Developing an Organizational and Global Ethical Culture 16

The Benefits of Business Ethics 17

Ethics Contribute to Employee Commitment 18

Ethics Contribute to Investor Loyalty 19

Ethics Contribute to Customer Satisfaction 20

Ethics Contribute to Profits 21

Our Framework for Studying Business Ethics 22

Summary 24

Important Terms for Review 26

Resolving Business Challenges 26

Check Your EQ 37

Chapter 2 Stakeholder Relationships Social Responsibility and Corporate Governance 28

Chapter Objectives 29

Chapter Outline 29

An Ethical Dilemma 29

Stakeholders Define Ethical Issues in Business 31

Identifying Stakeholders 33

A Stakeholder Orientation 34

Social Responsibility and the Importance of a Stakeholder Orientation 37

Social Responsibility and Ethics 38

Corporate Governance Provides Formalized Responsibility to Stakeholders 41

Views of Corporate Governance 43

The Role of Boards of Directors 44

Implementing A Stakeholder Perspective 47

Step 1 Assessing the Corporate Culture 47

Step 2 IdentifyingStakeholder Groups 47

Step 3 Identifying Stakeholder Issues 48

Step 4 Assessing Organizational Commitment to Social Responsibility 48

Step 5 Identifying Resources and Determining Urgency 49

Step 6 Gaining Stakeholder Feedback 49

Summary 49

Important Terms for Review 51

Resolving Ethical Business Challenges 51

Check your EQ 53

Part 2 Ethical Issues and the Institutionalization of Business Ethics 55

Chapter 3 Emerging Business Ethics Issues 56

Chapter Objectives 57

Chapter Outline 57

An Ethical Dilemma 57

Recognizing An Ethical Issue 60

Honesty 62

Fairness 63

Integrity 63

Ethical Issues and Dilemmas in Business 64

Abusive or Intimidating Behavior 64

Lying 67

Conflicts of Interest 68

Bribery 68

Corporate Intelligence 69

Discrimination 70

Sexual Harassment 72

Environmental Issues 74

Fraud 76

Consumer Fraud 79

Financial Misconduct 80

Insider Trading 81

Intellectual Property Rights 81

Privacy Issues 82

The Challenge of Determining an Ethical Issue in Business 84

Summary 85

Important terms for review 86

Resolving Ethical Business Challenges 87

Check your EQ 89

Chapter 4 The institutionalization of Business Ethics 90

Chapter Objectives 91

Chapter Outline 91

An Ethical Dilemma 91

Managing Ethical Risk through Mandated and Voluntary Programs 93

Mandated Requirements for Legal Compliance 95

Laws Regulating Competition 97

Laws Protecting Consumers 98

Laws Promoting Equity and Safety 101

Laws Protecting the Environment 102

Gatekeepers and Stakeholders 105

Accountants 106

Risk Assessment 106

The Sarbanes-Oxley Act 107

Public Company Accounting Oversight Board 109

Conflicts of Interest: Auditor and Analyst Independence 110

Enhanced Financial Disclosures 110

Whistle-Blower Protection 110

Corporate and Criminal Fraud Accountability 111

Cost of Compliance 111

Laws That Encourage Ethical Conduct 112

Federal Sentencing Guidelines for Organizations 113

Highly Appropriate Core Practices 116

Philanthropic Contributions 117

Strategic Philanthropy 118

Summary 119

Important terms for review 120

resolving ethical business challenges 120

Check your EQ 123

Part 3 The Decision Making Process 125

Chapter 5 Ethical Decision Making and Ethical Leadership 126

Chapter Objectives 127

Chapter Outline 127

An Ethical Dilemma 127

A Framework for Ethical Decision Making in Business 128

Ethical Issue Intensity 129

Individual Factors 130

Organizational Factors 132

Opportunity 133

Business Ethics Evaluations and Intentions 135

Using the Ethical Decision Making Framework to Improve Ethical Decisions 136

The Role of Leadership in a Corporate Culture 137

Leadership Styles Influence Ethical Decisions 138

Habits of Strong Ethical Leaders 140

Ethical Leaders Have Strong Personal Character 141

Ethical Leaders Have a Passion to Do Right 141

Ethical Leaders Are Proactive 141

Ethical Leaders Consider Stakeholders' Interests 142

Ethical Leaders Are Role Models for the Organization's Values 142

Ethical Leaders Are Transparent and Actively Involved in Organizational Decision Making 143

Ethical Leaders Are Competent Managers Who Take a Holistic View of the Firm's Ethical Culture 143

Summary 144

Important Terms for Review 145

Resolving Ethical Business Challenges 145

Check your EQ 147

Chapter 6 Individual Factors: Moral Philosophies and Values 148

Chapter Objectives 149

Chapter Outline 149

An Ethical Dilemma 149

Moral Philosophy Defined 151

Moral Philosophies 152

Goodness-Instrumental and Intrinsic 154

Teleology 155

Deontology 158

Relativist Perspective 160

Virtue Ethics 161

Justice 163

Applying Moral Philosophy to Ethical Decision Making 164

Cognitive Moral Development 166

White-Collar Crime 168

The Role of Individual Factors in Business Ethics 172

Summary 172

Important terms for review 174

Resolving Ethical Business Challenges 175

Check your EQ 177

Chapter 7 Organization Factors: The Role of Ethical Culture and Relationships 178

Chapter Objectives 179

Chapter Outline 179

An Ethical Dilemma 179

Defining Corporate Culture 181

The Role of Corporate Culture in Ethical Decision Making 183

Ethical Frameworks and Evaluations of Corporate Culture 184

Ethics as a Component of Corporate Culture 186

Compliance versus Value-based Ethical Cultures 188

Differential Association 190

Whistle-Blowing 191

Leaders Influence Corporate Culture 194

Reward Power 194

Coercive Power 195

Legitimate Power 195

Expert Power 196

Referent Power 196

Motivating Ethical Behavior 197

Organizational Structure and Business Ethics 198

Group Dimensions of Corporate Structure and Culture 201

Types of Groups 201

Group Norms 204

Variation in Employee Conduct 204

Can People Control Their Own Actions Within a Corporate Culture? 206

Summary 208

Important terms for review 209

Resolving Ethical Business Challenges 210

Check year EQ 211

Part 4 Implementing Business Ethics in a Global Economy 213

Chapter 8 Developing an Effective Ethics Program 214

Chapter Objectives 215

Chapter Outline 215

An Ethical Dilemma 215

The Responsibility of the Corporation as a Moral Agent 217

The Need for Organizational Ethics Programs 219

An Effective Ethics Program 221

An Ethics Program Can Help Avoid Legal Problems 222

Values versus Compliance Programs 224

Codes of Conduct 224

Ethics Officers 227

Ethics Training and Communication 228

Systems to Monitor and Enforce Ethical Standards 230

Continuous Improvement of the Ethics Program 232

Common Mistakes in Designing and Implementing an Ethics Program 233

Summary 235

Important Terms for Review 236

resolving ethical Business Challenges 237

Check your EQ 239

Chapter 9 Implementing and Auditing Ethics Programs 240

Chapter Objectives 241

Chapter Outline 241

An Ethical Dilemma 241

The Ethics Audit 243

Benefits of Ethics Auditing 244

Ethical Crisis Management and Recovery 246

Challenges of Measuring Nonfinancial Performance 248

Risks and Requirements in Ethics Auditing 251

The Auditing Process 252

Secure Commitment of Top Managers and Board of Directors 253

Establish a Committee to Oversee the Ethics Audit 254

Define the Scope of the Audit Process 255

Review Organizational Mission, Values, Goals and Policies and Define Ethical Priorities 255

Collect and Analyze Relevant Information 257

Verify the Results 261

Report the Findings 262

The Strategic Importance of Ethics Auditing 262

Summary 265

Important Terms for Review 267

Resolving Ethical Business Challenges 267

Check your EQ 269

Chapter 10 Globalization of Ethical Decision Making 270

Chapter Objectives 271

Chapter Outline 271

An Ethical Dilemma 271

Capitalism, Economics and Business Ethics 273

Common Values Goals and Business Practices 278

Global Business Practices 281

Consumerism 284

Human Rights 286

Health Care 288

Labor 288

Sustainable Development 290

International Monetary Fund (IMF) 291

World Trade Organization (WTO) 292

The Multinational Corporation (MNC) 293

Summary 296

Important Terms for Review 297

Resolving Ethical Business Challenges 297

Check your EQ 290

Part 5 Cases 300

Case 1 Monsanto Attempts to Balance Stakeholder Interests 302

Case 2 Wal-Mart: The Future is Sustainability 314

Case 3 The American Red Cross 327

Case 4 Countrywide Financial: The Subprime Meltdown 338

Case 5 Arthur Andersen: Questionable Accounting Practices 348

Case 6 Coping with Financial and Ethical Risks at American International Group (AIG) 357

Case 7 Starbucks' Mission: Social Responsibility and Brand Strength 367

Case 8 The Fraud of the Century: The Case of Bernard Madoff 375

Case 9 NIKE: Managing Ethical Missteps-Sweatshops to Leadership in Employment Practices 386

Case 10 Banking Industry Meltdown: The Ethical and Financial Risks of Derivatives 397

Case 11 The Coca-Cola Company Struggles with Ethical Crises 407

Case 12 Enron: Questionable Accounting Leads to Collapse 419

Case 13 BP (Beyond Petroleum) Focuses on Sustainability 431

Case 14 Tyco International: Leadership Crisis 440

Case 15 Responds to Ethical Challenges 448

Case 16 PETCO Develops Successful Stakeholder Relationships 458

Case 17 Home Depot Implements Stakeholder Orientation 466

Case 18 New Belgium Brewing: Ethical and Environmental Responsibility 476

Notes 486

Index 501

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