SOLUTION MANUAL FOR
Understanding Business Ethics 3rd Edition Peter A. Stanwick, Sarah D. Stanwick
Chapter 1-13
Chapter 1
The Foundation of Ethical Thought
The purpose of this chapter is to give the students a broad overview of the theoretical foundation
that supports ethical decision-making. It is from this theoretical grounding that the students can
understand how their decisions related to ethical issues can impact not only themselves but
others as well. In addition, this chapter introduces the structure of the textbook which allows the
instructor to also explain his or her structure for the class.
Key Learning Points
There are a number of key learning points which can be accomplished when this chapter is
presented to your students. These learning points include:
1. The chapter introduces the student to the concepts of ethics and business ethics.
2. Ethics is a complex concept to describe. Different philosophies have used different theories in
order to help explain and guide ethical behavior.
3. Although some of the theories presented in this chapter were developed over two thousand
years ago, they are appropriate and applicable to today‟s business environment.
4. This chapter demonstrates that the eight underlying principles presented in the Global
Business Standards Codex are interrelated with each other as well as with the major
philosophical theories related to ethics.
5. “Panera Cares Community cafes: A Loaf in Every Arm” demonstrates how one company can
address the needs of many stakeholders.
6. Sir Nicholas Winton: A True Humanitarian demonstrates that one person can have an impact
on many others by doing “the right thing” even at great personal risk.
Panera Cares Community Cafes: A Loaf in Every Arm
The opening vignette highlights how one company, Panera Bread, has developed an outreach
program of providing food for which the customers will pay only what they can. If the customer
does not have any money, they can donate 1 hour of volunteer work in exchange for the meal.
An interesting fact is that 60 percent of the customers pay the retail value, 20 percent pay below
the retail value, and 20 percent pay above the retail value of the meal.
,1. Ask the class how many of them have volunteered for a nonprofit organization.
Follow up with those who respond positively by asking them why they volunteered. An
additional follow-up question would be to ask if those same students would consider
volunteering in the future.
2. How does Panera Bread satisfy the demands of the stockholders by potentially “giving away”
food and profits?
It could be argued that Panera Bread has an enlightened stakeholder perspective to address the
needs of its customers. Not only does this program support those in need in the local
communities but it sends a message to all of Panera‟s stakeholders that it is interested in serving
their needs. Furthermore, the long-term financial benefit of this program could be that as those
customers increase their standard of living, they can afford to pay the full price of the meal and
will have become brand loyal to Panera Bread due to this program.
3. Would this type of program work for other restaurants?
It is expected that this could create a lively discussion in the class. For those who agree that it
could be transferred to other restaurants, the argument could be that the underlying philosophy of
the program is to support those people in the local community who have food security issues.
Therefore, it should be applicable in any type of food service. For those who say no, it could be
argued that Panera Bread probably has higher profit margins on its food than other type of quick
service restaurants. Therefore, other fast-food restaurants such as McDonalds and Burger King
do not have the flexibility to offer their food at “below cost”.
Definition of Ethics and Business Ethics
To introduce the concepts of Ethics and Business Ethics to the students in the classroom, a good
starting discussion point would be to ask the students what kind of ethical dilemmas they have
faced in the past. A follow-up discussion point would be to ask them what type of ethical
dilemmas they think they will face in their jobs after they have graduated.
The Role of Morals
It is important for students to understand the three components of morals: individual principles,
individual character, and the consequences of the actions. Due to the multifaceted nature of
morals, the students need to realize that they may have ethical principles but if their character
ignores or down plays the significance of the consequences, “ethical” people can do “unethical”
actions. Therefore, the Greed is Good example from the movie Wall Street is a good visual
example to highlight this potential conflict. Gordon Gekko believes that he has moral principles,
,but based on his unethical character and his disregard for the consequences of his actions, he
does unethical activities.
Is Greed Good?
During this discussion, playing the Greed is Good clip from the movie “Wall Street”
(https://www.youtube.com/watch?v=6Da1tDKFfno) will enhance this argument. As they are
watching the clip, ask the students to observe how the shareholders emotions shift during the
speech to no longer supporting management‟s position on the acquisition to supporting Gordon
Gekko‟s proposal. This discussion could also address the issue of a charismatic leader. Gordon
Gekko is very charismatic and therefore makes his ideas much more convincing whether they are
ethical or not.
Why is Studying Ethics Important?
The 2012 Ernst & Young study highlighted that 15 percent of the respondents reported that they
would be willing to pay a bribe in order to close a deal. A follow-up question for the students
would be how many of those respondents would also be willing to give a bribe but did not want
to admit an illegal activity on the survey. Furthermore, 39 percent of the respondents stated that
bribery was common in their industry. The results of this study have demonstrated that
employees are consistently being challenged on their ethical beliefs. Since more employees are
evaluated on their individual performance, there is a high financial incentive to perform unethical
activities in order “to get the job done”. Therefore, the students need to be aware that they will
face numerous ethical dilemmas in their careers and they need to understand what the potential
consequences of those actions would have on their professional and personal life.
The Foundations of Ethical Theory
Types of Ethical Examinations
Descriptive—The presentation of facts that relate to a specific set of circumstances related to an
ethical issue.
Analytical—Using the facts of the ethical situation to try to understand or analyze the actions of
the decision-makers as related to the ethical issue.
Normative—A prescribed course of action that is recommended to avoid unethical behavior in
future.
An Example of Ethical Examinations Using Enron Executives
Descriptive—Ken Lay and Jeff Skilling were found guilty of fraud based on their actions as top
executives at Enron.
Analytical—Ken Lay and Jeff Skilling, through their cognitive lens, believed that they were
doing nothing wrong. In addition, if they were doing something wrong doing, they were not
aware of it and/or did not bother to ask about it. Alternatively, Ken Lay and Jeff Skilling knew
, exactly what they were doing in a calculated attempt to defraud Enron‟s stockholders.
Furthermore, they actively tried to conceal their behavior in order to try to avoid prosecution by
the federal government.
Normative—Need to have a code of ethics that creates real consequences if unethical behavior is
detected. Try to ensure that power is not concentrated at the CEO level by having a separation of
the CEO and the Chairman of the Board. Have the appointment of a Chief Ethics Officer who
reports to the Board of Directors and is accountable to ensure the ethical conduct of all the
employees within the firm. Revise the selection and reward system for employees to try and
ensure that ethical people are selected and rewarded for their positive ethical behavior.
Teleological Frameworks
Ethical Egoism—Each individual‟s own self-interests drive them. On balance, there are more
positive than negative results.
Utilitarianism—Each individual‟s actions will be based on providing the greatest good to the
greatest number of people.
Sidgwick‟s Dualism—The middle ground between Ethical Egoism and Utilitarianism. Sidgwick
argues that self-interest can be included in determining the greatest good for the greatest number
and that the other two theories are not mutually exclusive.
After these three theories have been presented, a good leading discussion point would be to
discuss what drives a free market system. If it is individual self-interest, is it an Ethical Egoism
based system? If this is true, then why are there so many nonprofit organizations? Could
Sidgwick‟s Dualism be the answer—that a free market system is driven both by the extrinsic
rewards by the accumulation of material goods as well as the intrinsic rewards of helping others?
This would support Sidgwick‟s argument that individual actions need to be explained from the
rational benevolence aspect of Utilitarianism and the prudence aspect of Ethical Egoism. At this
point, you can refer back to the opening vignette on the Panera Cares program. It could be
argued that the Panera Cares program would be an example of Sidgwick‟s Dualism. It is an
outreach program which serves the needs of the community (utilitarianism) while still focusing
on receiving revenues and profits from the program (ethical egoism).
Deontological Frameworks
Existentialism—The only person who can determine right and wrong is based on the free will of
the person making the decisions. As a result, duty is connected with actions—each individual
determines the value of his/her actions.
Contractarianism (Social Contract Theory)—All individuals agree to social contracts to be
members within society. As a member of society, each individual agrees to certain social norms.
Understanding Business Ethics 3rd Edition Peter A. Stanwick, Sarah D. Stanwick
Chapter 1-13
Chapter 1
The Foundation of Ethical Thought
The purpose of this chapter is to give the students a broad overview of the theoretical foundation
that supports ethical decision-making. It is from this theoretical grounding that the students can
understand how their decisions related to ethical issues can impact not only themselves but
others as well. In addition, this chapter introduces the structure of the textbook which allows the
instructor to also explain his or her structure for the class.
Key Learning Points
There are a number of key learning points which can be accomplished when this chapter is
presented to your students. These learning points include:
1. The chapter introduces the student to the concepts of ethics and business ethics.
2. Ethics is a complex concept to describe. Different philosophies have used different theories in
order to help explain and guide ethical behavior.
3. Although some of the theories presented in this chapter were developed over two thousand
years ago, they are appropriate and applicable to today‟s business environment.
4. This chapter demonstrates that the eight underlying principles presented in the Global
Business Standards Codex are interrelated with each other as well as with the major
philosophical theories related to ethics.
5. “Panera Cares Community cafes: A Loaf in Every Arm” demonstrates how one company can
address the needs of many stakeholders.
6. Sir Nicholas Winton: A True Humanitarian demonstrates that one person can have an impact
on many others by doing “the right thing” even at great personal risk.
Panera Cares Community Cafes: A Loaf in Every Arm
The opening vignette highlights how one company, Panera Bread, has developed an outreach
program of providing food for which the customers will pay only what they can. If the customer
does not have any money, they can donate 1 hour of volunteer work in exchange for the meal.
An interesting fact is that 60 percent of the customers pay the retail value, 20 percent pay below
the retail value, and 20 percent pay above the retail value of the meal.
,1. Ask the class how many of them have volunteered for a nonprofit organization.
Follow up with those who respond positively by asking them why they volunteered. An
additional follow-up question would be to ask if those same students would consider
volunteering in the future.
2. How does Panera Bread satisfy the demands of the stockholders by potentially “giving away”
food and profits?
It could be argued that Panera Bread has an enlightened stakeholder perspective to address the
needs of its customers. Not only does this program support those in need in the local
communities but it sends a message to all of Panera‟s stakeholders that it is interested in serving
their needs. Furthermore, the long-term financial benefit of this program could be that as those
customers increase their standard of living, they can afford to pay the full price of the meal and
will have become brand loyal to Panera Bread due to this program.
3. Would this type of program work for other restaurants?
It is expected that this could create a lively discussion in the class. For those who agree that it
could be transferred to other restaurants, the argument could be that the underlying philosophy of
the program is to support those people in the local community who have food security issues.
Therefore, it should be applicable in any type of food service. For those who say no, it could be
argued that Panera Bread probably has higher profit margins on its food than other type of quick
service restaurants. Therefore, other fast-food restaurants such as McDonalds and Burger King
do not have the flexibility to offer their food at “below cost”.
Definition of Ethics and Business Ethics
To introduce the concepts of Ethics and Business Ethics to the students in the classroom, a good
starting discussion point would be to ask the students what kind of ethical dilemmas they have
faced in the past. A follow-up discussion point would be to ask them what type of ethical
dilemmas they think they will face in their jobs after they have graduated.
The Role of Morals
It is important for students to understand the three components of morals: individual principles,
individual character, and the consequences of the actions. Due to the multifaceted nature of
morals, the students need to realize that they may have ethical principles but if their character
ignores or down plays the significance of the consequences, “ethical” people can do “unethical”
actions. Therefore, the Greed is Good example from the movie Wall Street is a good visual
example to highlight this potential conflict. Gordon Gekko believes that he has moral principles,
,but based on his unethical character and his disregard for the consequences of his actions, he
does unethical activities.
Is Greed Good?
During this discussion, playing the Greed is Good clip from the movie “Wall Street”
(https://www.youtube.com/watch?v=6Da1tDKFfno) will enhance this argument. As they are
watching the clip, ask the students to observe how the shareholders emotions shift during the
speech to no longer supporting management‟s position on the acquisition to supporting Gordon
Gekko‟s proposal. This discussion could also address the issue of a charismatic leader. Gordon
Gekko is very charismatic and therefore makes his ideas much more convincing whether they are
ethical or not.
Why is Studying Ethics Important?
The 2012 Ernst & Young study highlighted that 15 percent of the respondents reported that they
would be willing to pay a bribe in order to close a deal. A follow-up question for the students
would be how many of those respondents would also be willing to give a bribe but did not want
to admit an illegal activity on the survey. Furthermore, 39 percent of the respondents stated that
bribery was common in their industry. The results of this study have demonstrated that
employees are consistently being challenged on their ethical beliefs. Since more employees are
evaluated on their individual performance, there is a high financial incentive to perform unethical
activities in order “to get the job done”. Therefore, the students need to be aware that they will
face numerous ethical dilemmas in their careers and they need to understand what the potential
consequences of those actions would have on their professional and personal life.
The Foundations of Ethical Theory
Types of Ethical Examinations
Descriptive—The presentation of facts that relate to a specific set of circumstances related to an
ethical issue.
Analytical—Using the facts of the ethical situation to try to understand or analyze the actions of
the decision-makers as related to the ethical issue.
Normative—A prescribed course of action that is recommended to avoid unethical behavior in
future.
An Example of Ethical Examinations Using Enron Executives
Descriptive—Ken Lay and Jeff Skilling were found guilty of fraud based on their actions as top
executives at Enron.
Analytical—Ken Lay and Jeff Skilling, through their cognitive lens, believed that they were
doing nothing wrong. In addition, if they were doing something wrong doing, they were not
aware of it and/or did not bother to ask about it. Alternatively, Ken Lay and Jeff Skilling knew
, exactly what they were doing in a calculated attempt to defraud Enron‟s stockholders.
Furthermore, they actively tried to conceal their behavior in order to try to avoid prosecution by
the federal government.
Normative—Need to have a code of ethics that creates real consequences if unethical behavior is
detected. Try to ensure that power is not concentrated at the CEO level by having a separation of
the CEO and the Chairman of the Board. Have the appointment of a Chief Ethics Officer who
reports to the Board of Directors and is accountable to ensure the ethical conduct of all the
employees within the firm. Revise the selection and reward system for employees to try and
ensure that ethical people are selected and rewarded for their positive ethical behavior.
Teleological Frameworks
Ethical Egoism—Each individual‟s own self-interests drive them. On balance, there are more
positive than negative results.
Utilitarianism—Each individual‟s actions will be based on providing the greatest good to the
greatest number of people.
Sidgwick‟s Dualism—The middle ground between Ethical Egoism and Utilitarianism. Sidgwick
argues that self-interest can be included in determining the greatest good for the greatest number
and that the other two theories are not mutually exclusive.
After these three theories have been presented, a good leading discussion point would be to
discuss what drives a free market system. If it is individual self-interest, is it an Ethical Egoism
based system? If this is true, then why are there so many nonprofit organizations? Could
Sidgwick‟s Dualism be the answer—that a free market system is driven both by the extrinsic
rewards by the accumulation of material goods as well as the intrinsic rewards of helping others?
This would support Sidgwick‟s argument that individual actions need to be explained from the
rational benevolence aspect of Utilitarianism and the prudence aspect of Ethical Egoism. At this
point, you can refer back to the opening vignette on the Panera Cares program. It could be
argued that the Panera Cares program would be an example of Sidgwick‟s Dualism. It is an
outreach program which serves the needs of the community (utilitarianism) while still focusing
on receiving revenues and profits from the program (ethical egoism).
Deontological Frameworks
Existentialism—The only person who can determine right and wrong is based on the free will of
the person making the decisions. As a result, duty is connected with actions—each individual
determines the value of his/her actions.
Contractarianism (Social Contract Theory)—All individuals agree to social contracts to be
members within society. As a member of society, each individual agrees to certain social norms.
