BUS240 The Libor Scandal Case Analysis

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Case analysis assignments consist of readings from the An Introduction to Business Ethics text by Joseph DesJardins and answering case discussion questions. Be sure to follow the guidelines sheet in the Content Browser under Case Analysis Papers. You should read the case and answer the questions using the information in the chapter. You must defend your position and answers. Each assignment should be typed and double-spaced. Be sure to follow the guidelines in the content column. Type out the words of each assigned question and then the answer to the question. Keep your answer to one typed page

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Fif th Edition Highlights of the Fifh Edition: • NEW! Discussion cases throughout focused on Goldman Sachs, the LIBOR banking scandal, Patagonia, and Chick-fil-A and same-sex marriage. Additional revised and updated cases include discussions on Walmart and bribery in Mexico, Apple and Foxconn in China, executive compensation, conflicts of interest at Goldman Sachs, and employee privacy. What Instructors are Saying about An Introduction to Business Ethics: “A great book, thorough and accessible.”– Jessica McManus, Notre Dame University “Provides all the major areas in Business Ethics . . . It is clear, challenging, and comprehensive.” – Andy Wible, Meskegon Community College DesJardins Visit www.mhhe.com/desjardins5e for a wealth of student and instructor resources! An Introduction to Business Ethics Joseph DesJardins MD DALIM 1222303 01/05/13 CYAN MAG YELO BLACK • A revised discussion of ethical theory which de-emphasizes philosophical jargon, introduces ethics as involving frameworks and paterns of reasoning rather than as abstract “theories,” and expands discussion of ethical principles, rights, and duties. An Introduction to Business Ethics Since its inception, An Introduction to Business Ethics by Joseph DesJardins has been a cutingedge resource for the business ethics course. DesJardins’ unique multidisciplinary approach offers critical analysis and integrates the perspective of philosophy with management, law, economics, and public policy, providing a clear, concise, yet reasonably comprehensive introductory survey of the ethical choices available to us in business. Fif th Edition A N I N T R O D U C T I O N T O B U S I N E S S E T H I C S Fi f t h E d i t i o n Joseph DesJardins C o l l e g e o f S t . B e n e d i c t / S t . J o h n ’s U n i v e r s i t y TM des38324_fm_i-xiv.indd i 1/17/13 4:21 PM TM AN INTRODUCTION TO BUSINESS ETHICS, FIFTH EDITION Published by McGraw-Hill/Irwin, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY, 10020. Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved. Printed in the United States of America. Previous editions © 2011, 2009 and 2006. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of The McGraw-Hill Companies, Inc., including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning. Some ancillaries, including electronic and print components, may not be available to customers outside the United States. This book is printed on acid-free paper. 1 2 3 4 5 6 7 8 9 0 DOC/DOC 1 0 9 8 7 6 5 4 3 ISBN 978-0-07-803832-7 MHID 0-07-803832-4 Senior Vice President, Products & Markets: Kurt L. Strand Vice President, General Manager, Products & Markets: Michael Ryan Vice President, Content Production & Technology Services: Kimberly Meriwether David Managing Director: William Glass Executive Director of Development: Lisa Pinto Brand Manager: Laura Wilk Managing Development Editor: Sara Jaeger Marketing Specialist: Alexandra Schultz Editorial Coordinator: Adina Lonn Director, Content Production: Terri Schiesl Project Manager: Erin Melloy Buyer: Jennifer Pickel Cover Designer: Studio Montage, St. Louis, MO Cover Image: Getty Images/Digital Vision/RF Media Project Manager: Sridevi Palani Typeface: 10/12 Palatino Compositor: MPS Limited Printer: R.R. Donnlley All credits appearing on page or at the end of the book are considered to be an extension of the copyright page. Library of Congress Cataloging-in-Publication Data DesJardins, Joseph R. An introduction to business ethics/Joseph DesJardins.—Fifth edition. pages cm ISBN 978-0-07-803832-7 (alk. paper) 1. Business ethics. I. Title. HF5387.D392 2014 174’.4—dc23 2012048757 www.mhhe.com des38324_fm_i-xiv.indd ii 1/17/13 4:21 PM About the Author J oe DesJardins is Vice Provost, as well as Professor in the Department of Philosophy, at the College of St. Benedict and St. John’s University in Minnesota. His other books include Business Ethics: Decision Making for Personal Integrity and Social Responsibility (with Laura Hartman and Chris MacDonald); Environmental Ethics: An Introduction to Environmental Philosophy; Environmental Ethics: Concepts, Policy, and Theory; Contemporary Issues in Business Ethics (co-editor with John McCall); and Business, Ethics, and the Environment. He is the former Executive Director of the Society for Business Ethics and has published and lectured extensively in the areas of business ethics, environmental ethics, and sustainability. He received his B.A. from Southern Connecticut State University and his M.A. and Ph.D. from the University of Notre Dame. He previously taught at Villanova University. iii des38324_fm_i-xiv.indd iii 1/17/13 4:21 PM To Linda des38324_fm_i-xiv.indd iv 1/17/13 4:21 PM Contents Preface x Chapter One: Why Study Ethics? 1 Learning Objectives Discussion Case: The LIBOR Scandal: Is It Ok If Everyone Does It? Discussion Questions 1.1 Why Study Business Ethics? 1.2 Values and Ethics: Doing Good and Doing Well 1.3 The Nature and Goals of Business Ethics 1.4 Business Ethics and the Law 1.5 Ethics and Ethos 1.6 Morality, Virtues, and Social Ethics 1.7 Ethical Perspectives: Managers and Other Stakeholders 1.8 A Model for Ethical Decision Making Reflections on the Chapter Discussion Case Chapter Review Questions 1 2 4 4 6 10 12 13 15 16 17 18 19 Chapter Two: Ethical Theory and Business 20 Learning Objectives Discussion Case: AIG Bonuses and Executive Salary Caps Discussion Questions 2.1 Introduction 2.2 Ethical Relativism and Reasoning in Ethics 2.3 Modern Ethical Theory: Utilitarian Ethics 2.4 Challenges to Utilitarianism 2.5 Utilitarianism and Business Policy 2.6 Principle-Based Ethics 2.7 Virtue Ethics 2.8 Summary and Review Reflections on the Chapter Discussion Case Chapter Review Questions 20 21 22 23 25 29 33 35 37 41 44 45 46 v des38324_fm_i-xiv.indd v 1/17/13 4:21 PM vi Contents Chapter Three: Corporate Social Responsibility 48 Learning Objectives Discussion Case: Walmart Discussion Questions 3.1 Introduction 3.2 The Economic Model of Corporate Social Responsibility 3.3 Critical Assessment of the Economic Model: The Utilitarian Defense 3.4 Critical Assessment of the Economic Model: The Private Property Defense 3.5 The Philanthropic Model of Corporate Social Responsibility 3.6 Modified Version of the Economic Model: The Moral Minimum 3.7 The Stakeholder Model of Corporate Social Responsibility 3.8 Strategic Model of Corporate Social Responsibility: Sustainability 3.9 Summary and Review Reflections on the Chapter Discussion Case Chapter Review Questions 48 49 52 53 53 Chapter Four: Corporate Culture, Governance, and Ethical Leadership 56 61 64 65 67 71 74 75 76 79 Learning Objectives Discussion Case: Goldman Sachs’s “Toxic Culture” Discussion Questions 4.1 Introduction 4.2 What is Corporate Culture? 4.3 Culture and Ethics 4.4 Ethical Leadership and Corporate Culture 4.5 Effective Leadership and Ethical Leadership 4.6 Building a Values-Based Corporate Culture 4.7 Mandating and Enforcing Ethical Culture: The Federal Sentencing Guidelines Reflections on the Chapter Discussion Case Chapter Review Questions 79 80 81 81 82 83 86 87 89 Chapter Five: The Meaning and Value of Work 97 Learning Objectives Discussion Case: Social Enterprises and Social Entrepreneurs Discussion Questions 5.1 Introduction 5.2 The Meanings of Work 5.3 The Value of Work 5.4 Conventional Views of Work 5.5 The Human Fulfillment Model des38324_fm_i-xiv.indd vi 92 94 94 97 98 100 101 102 104 107 109 1/17/13 4:21 PM vii Contents 5.6 5.7 The Liberal Model of Work Business’s Responsibility for Meaningful Work Reflections on the Chapter Discussion Case Chapter Review Questions 112 114 116 117 Chapter Six: Moral Rights in the Workplace 119 Learning Objectives Discussion Case: Electronic Privacy at Work Discussion Questions 6.1 Introduction: Employee Rights 6.2 The Right to Work 6.3 Employment at Will 6.4 Due Process in the Workplace 6.5 Participation Rights 6.6 Employee Health and Safety 6.7 Privacy in the Workplace Reflections on the Chapter Discussion Case Chapter Review Questions 119 120 121 122 123 127 129 132 134 139 143 143 Chapter Seven: Employee Responsibilities 145 Learning Objectives Discussion Case: Conflicts of Interests in Subprime Mortgages and at Goldman Sachs and Enron Discussion Questions 7.1 Introduction 7.2 The Narrow View of Employee Responsibilities: Employees as Agents 7.3 Professional Ethics and the Gatekeeper Function 7.4 Managerial Responsibility and Conflicts of Interest 7.5 Trust and Loyalty in the Workplace 7.6 Responsibilities to Third Parties: Honesty, Whistle-Blowing, and Insider Trading Reflections on the Chapter Discussion Case Chapter Review Questions 145 Chapter Eight: Marketing Ethics: Product Safety and Pricing Learning Objectives Discussion Case: Life-Cycle Responsibility for Products Discussion Questions 8.1 Introduction: Marketing and Ethics 8.2 Ethical Issues in Marketing: An Overview 8.3 Ethical Responsibility for Products: From Caveat Emptor to Negligence des38324_fm_i-xiv.indd vii 146 151 151 152 157 160 163 165 171 172 174 174 175 177 177 178 181 1/17/13 4:21 PM viii 8.4 8.5 Contents Strict Product Liability Ethics and Pricing Reflections on the Chapter Discussion Case Chapter Review Questions Chapter Nine: Marketing Ethics: Advertising and Target Marketing 185 187 191 192 194 Learning Objectives Discussion Case: Predatory Lending: Subprime Mortgages and Credit Cards Discussion Questions 9.1 Introduction: Ethics of Sales, Advertising, and Product Placement 9.2 Regulating Deceptive and Unfair Sales and Advertising 9.3 Marketing Ethics and Consumer Autonomy 9.4 Targeting the Vulnerable: Marketing and Sales Reflections on the Chapter Discussion Case Chapter Review Questions 194 Chapter Ten: Business’s Environmental Responsibilities 216 Learning Objectives Discussion Case: Sustainable Business Discussion Questions 10.1 Corporate Social Responsibility and the Environment 10.2 Business’s Responsibility as Environmental Regulation 10.3 Business Ethics and Sustainable Economics 10.4 Business Ethics in the Age of Sustainable Development 10.5 The “Business Case” for Sustainability Reflections on the Chapter Discussion Case Chapter Review Questions 216 217 219 219 221 223 227 230 232 233 Chapter Eleven: Diversity and Discrimination 234 Learning Objectives Discussion Case: Chick-fil-A and Same-Sex Marriage Discussion Questions 11.1 Introduction: Diversity and Equality 11.2 Discrimination, Equal Opportunity, and Affirmative Action 11.3 Preferential Treatment in Employment 11.4 Arguments Against Preferential Hiring 11.5 Arguments in Support of Preferential Hiring 11.6 Sexual Harassment in the Workplace Reflections on the Chapter Discussion Case Chapter Review Questions 234 235 236 237 238 243 247 250 253 258 259 des38324_fm_i-xiv.indd viii 195 196 197 200 203 208 212 214 1/17/13 4:21 PM Contents ix Chapter Twelve: International Business and Globalization 261 Learning Objectives Discussion Case: Business in a Global Setting Discussion Questions 12.1 Introduction 12.2 Ethical Relativism and Cross-Cultural Values 12.3 Cross-Cultural Values and International Rights 12.4 Globalization and International Business 12.5 Globalization and the Poor 12.6 “Race to the Bottom” 12.7 Democracy, Cultural Integrity, and Human Rights Reflections on the Chapter Discussion Case Chapter Review Questions 261 262 263 264 265 267 269 271 273 275 278 279 Photo Credits Index 281 283 des38324_fm_i-xiv.indd ix 1/17/13 4:21 PM Preface to the Fifth Edition My overarching goal in the fifth edition of this text remains what it was for the first edition: “to provide a clear, concise, and reasonably comprehensive introductory survey of the ethical choices available to us in business.” This book arose from the challenges encountered in my own teaching of business ethics. Over the years I have taught business ethics in many settings and with many formats. I sometimes relied on an anthology of readings, other times I emphasized case studies. I taught business ethics as a lecture course and in a small seminar. Most recently, I taught business ethics exclusively to undergraduates in a liberal arts setting. It is difficult to imagine another discipline that is as multidisciplinary, taught in as many formats and as many contexts, by faculty with as many different backgrounds and with as many different aims, as business ethics. Yet, although the students, format, pedagogy, and teaching goals change, the basic philosophical and conceptual structure for the field remains relatively stable. There are a range of stakeholders with whom business interacts: employees, customers, suppliers, governments, society. Each of these relationships creates ethical responsibilities, and every adult unavoidably will interact with business in several of these roles. A course in business ethics, therefore, should ask students to examine this range of responsibilities from the perspective of employee, customer, and citizen as well as from the perspective of business manager or executive. Students should consider such issues in terms of both the type of lives they themselves wish to lead and the type of public policy for governing business they are willing to support. My hope was that this book could provide a basic framework for examining the range of ethical issues that arise in a business context. With this basic framework provided, individual instructors would then be free to develop their courses in various ways. I have been grateful to learn that this book is being used in a wide variety of settings. Many people have chosen to use it as a supplement to the instructor’s own lectures, an anthologized collection of readings, a series of case studies, or some combination of all three. Others have chosen to use this text to cover the ethics component of another course in such business-related disciplines as management, marketing, accounting, human resources. The book also has been used to provide coverage of x des38324_fm_i-xiv.indd x 1/17/13 4:21 PM Preface to the Fifth Edition xi business-related topics in more general courses in applied or professional ethics. I take this variety of uses as evidence that the first edition was reasonably successful in achieving its goals. NEW TO THE FIFTH EDITION The primary goal of this new edition is to update cases with more contemporary examples and to continue to revise the text for the sake of clarity and accessibility for students. To those ends, readers will note the following major changes for the fifth edition: • Every chapter begins with a new, or revised and updated, discussion case. • Highlights include new cases on Goldman Sachs, the LIBOR banking scandal, Patagonia, and Chick-fil-A and same-sex marriage. Revised and updated cases include new discussions on Walmart and bribery in Mexico, Apple and Foxconn in China, executive compensation, conflicts of interest at Goldman Sachs, and employee privacy. A revised discussion of ethical theory that deemphasizes philosophical jargon (readers will no longer see the word “deontological” for example!). The new discussion introduces ethics as involving frameworks and patterns of reasoning rather than as “theories” and substitutes a discussion of ethical principles, rights, and duties for the former section on deontological ethics. As always, a new edition provides an opportunity to not only update material, but to present it in a more accessible style. It has been gratifying to learn that readers have found the book clearly written and accessible to students unfamiliar with the field. In continuing to strive for these goals, I have rewritten some sections, deleted some outdated cases and dated material, and worked to improve the clarity of the more philosophical sections. Readers of previous editions will find a familiar format. Each chapter begins with a discussion case developed from actual events. The intent of these cases is to raise questions and get students thinking and talking about the ethical issues that will be introduced in the chapter. The text of each chapter then tries to do three things: • Identify and explain the ethical issues involved; • Direct students to an examination of these issues from the points of view of various stakeholders; and • Lead students through some initial steps of a philosophical analysis of these issues. The emphasis remains on encouraging student thinking, reasoning, and decision making rather than on providing answers or promoting a specific set of conclusions. To this end, a section on ethical decision making at the end of chapter 1 provides one model for decision making that might prove useful throughout the remainder of the text. des38324_fm_i-xiv.indd xi 1/17/13 4:21 PM xii Preface to the Fifth Edition ACKNOWLEDGMENTS As with previous editions, my greatest debt in writing this book is to those scholars engaged in the academic research of business ethics. I tried to acknowledge their work whenever I relied on it in this text, but in case I have missed anyone, I hope this general acknowledgment can serve to repay my debt to the business ethics community. I also acknowledge three members of that community who deserve special mention and thanks. My own work in business ethics has, for over 20 years, benefited from the friendships of John McCall, Ron Duska, and Laura Hartman. They will no doubt find much in this book that sounds familiar. Twenty years of friendship and collaboration tends to blur the lines of authorship, but it is fair to say that I have learned much more from John, Ron, and Laura than they from me. Previous editions have also benefited from the advice of a number of people who read and commented on various chapters. In particular, I would like to thank Norman Bowie, Ernie Diedrich, Al Gini, Patrick Murphy, Denis Arnold, and Christopher Pynes. I owe sincere thanks to the following teachers and scholars who were gracious enough to review previous editions of this book for McGraw-Hill: Dr. Edwin A. Coolbaugh—Johnson & Wales University; Jill Dieterlie—Eastern Michigan University; Glenn Moots—Northwood University; Jane HammangBuhl—Marygrove College; Ilona Motsif—Trinity College; Bonnie Fremgen— University of Notre Dame; Sheila Bradford—Tulsa Community College; Donald Skubik—California Baptist University; Sandra Powell—Weber State University; Gerald Williams—Seton Hall University; Leslie Connell— University of Central Florida; Brad K. Wilburn—Santa Clara University; Carlo Filice—SUNY, Genesco; Brian Barnes—University of Louisville; Marvin Brown—University of San Francisco; Patrice DiQuinzio—Muhlenberg College; Julian Friedland—Leeds School of Business, University of Colorado at Boulder; Derek S. Jeffreys—The University of Wisconsin, Green Bay; Albert B. Maggio Jr.—bicoastal-law.com; Andy Wible—Muskegon Community College; Christina L. Stamper—Western Michigan University; Charles R. Fenner, Jr.— State University of New York at Canton; Sandra Obilade—Brescia University; Lisa Marie Plantamura—Centenary College; James E. Welch—Kentucky Wesleyan College; Adis M. Vila—Dickinson College; Chester Holloman— Shorter College; Jan Jordan—Paris Junior College; Jon Adam Matthews— Central Carolina Community College; Bruce Alan Kibler—University of Wisconsin-Superior The fifth edition benefited from the thorough and thoughtful reviews by: • • • • • Carla Johnson, St. Cloud State University Martha Helland, University of Sioux Falls Jessica MacManus, Notre Dame David Levy, State University of New York—Geneseo Barbara Bar ...
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benwamonicah
School: Duke University

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BUS 240.01
September 19, 2013

CASE ANALYSIS PAPER #1: THE LIBOR SCANDAL

By the virtual of operating in the banking industry set up, the main stakeholders that are
most affected in the LIBOR Scandal are the unsuspecting people who operate using the banks in
a number of different ways. Most of the stakeholders fall into the category of customers or rather
those who bank with the company. There are also those who save with the company as well as
investors. The stakeholders have put their money in the company and they trust it to take great
care of the money. They believe that their...

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