MGMT 402 FINAL EXAM STUDY GUIDE
Power of Authority - Answer -studies show we have an innate desire to please authority figures
(ex. please parents even when we're adults)
Milgram Experiment - Answer -The subject kept asking who would be responsible
The subject was visibly upset, but listened to authority
Obedience to Authortity - Answer -We place enormous emphasis on gaining favor with our
superiors, and everything else becomes less important
Is a CFO more likely to commit accounting fraud when it benefits CFO or their boss? - Answer -
When it benefits their boss!
Will nurses follow a doctor's orders to administer an obviously harmful dose of a drug? - Answer -
When polled, most nurses said no
When tested unknowingly, almost all administered the drug
Mitigating the Power of Authority - Answer -Many professional codes of conduct make
subordinates liable for their behavior, even if directed by a superior
Have a reserve and be prepared to leave your position
Think carefully about the type of organization you wish to join at the outset
Problems with the Challenger - Answer -Roger Bosijoly (engineer at Morton Thiokol) noticed
problems with some seals on rocket boosters
Seals would fail in cold weather
Mission scheduled for January 28, 1986, with temperature of 30ºF
Nasa's Response to Thiokol - Answer -I am appalled by your recommendation
My god. When do you want me to launch, next April?
Caused Thiokol managers to "put their management hats on and override the engineers"
Boisjoly's Legacy - Answer -Spent 30 years traveling the world, speaking about ethical decision-
making
After death, wife said, "He always stood by his work. He lived an honorable and ethical life. And he
was at peace when he died."
Role Morality - Answer -We feel OK about behaving in a way that we would consider to be
unethical if we were acting on our own behalf
Happens when we act on behalf of someone else
Role Morality and Family Businesses - Answer -Small family businesses are typically more
ethically and socially responsible, while larger corporations tend to act less ethically
Fight Role Morality? - Answer -Own your actions
Do not compartmentalize your life
Pressure from the System - Answer -The system incentivizes unethical behavior
, Ex. Add an extra 5 dollars to your expense report for Uber fares
Wells Fargo and System Pressure - Answer -Intense pressure for bankers to cross-sell to
customers
Bankers had a quota of selling 8.5 products per day
Result:
Up to 1.5 million fraudulently opened checking/savings accounts
More than 500,000 fraudulently opened credit cards
Navigating an Unethical System - Answer -Good:
Work to succeed ethically within the system
Find a new system
Bad:
Go along with the unethical system
Government's Goal with Antitrust Laws - Answer -Benefit consumers and maximize competition
Key Antitrust Laws - Answer -Sherman Act (1890)
Clayton Act (1914)
Teddy Roosevelt - Answer -Trust Buster
Broke up lots of large companies
Problem was he alone decided which companies were good vs. bad (not a good model)
Unilateral Restraints - Answer -One company acting alone to harm competition
Ex. Monopolies, price discrimination, tying arrangements
Innocent Monopoly - Answer -You have a monopoly, but for a good reason
Natural Monopoly - Answer -An organization is so good at what they do, no one wants to use
competition
Ex. Google
Illegal Monopoly - Answer -Three Criteria:
Monopoly Power
Defined Market
Willful Act of Monopolization
Monopoly Power - Answer -When you have the ability/power to set prices in an industry
Usually 70% market share
Defined Market - Answer -Geographic or Product Type
Ex. One person owns all the car dealerships in Southern AZ
Willful Act of Monopolization - Answer -This is what gets people in trouble
When an organization actually tries to drive competition out of business
Ex. Walmart drives a local general store out of business
DeBeers Diamonds - Answer -In 1902, they controlled 90% of the world's diamond supply
In 1945, 1957, 1974, and 1994, faced antitrust charges from the DOJ
Power of Authority - Answer -studies show we have an innate desire to please authority figures
(ex. please parents even when we're adults)
Milgram Experiment - Answer -The subject kept asking who would be responsible
The subject was visibly upset, but listened to authority
Obedience to Authortity - Answer -We place enormous emphasis on gaining favor with our
superiors, and everything else becomes less important
Is a CFO more likely to commit accounting fraud when it benefits CFO or their boss? - Answer -
When it benefits their boss!
Will nurses follow a doctor's orders to administer an obviously harmful dose of a drug? - Answer -
When polled, most nurses said no
When tested unknowingly, almost all administered the drug
Mitigating the Power of Authority - Answer -Many professional codes of conduct make
subordinates liable for their behavior, even if directed by a superior
Have a reserve and be prepared to leave your position
Think carefully about the type of organization you wish to join at the outset
Problems with the Challenger - Answer -Roger Bosijoly (engineer at Morton Thiokol) noticed
problems with some seals on rocket boosters
Seals would fail in cold weather
Mission scheduled for January 28, 1986, with temperature of 30ºF
Nasa's Response to Thiokol - Answer -I am appalled by your recommendation
My god. When do you want me to launch, next April?
Caused Thiokol managers to "put their management hats on and override the engineers"
Boisjoly's Legacy - Answer -Spent 30 years traveling the world, speaking about ethical decision-
making
After death, wife said, "He always stood by his work. He lived an honorable and ethical life. And he
was at peace when he died."
Role Morality - Answer -We feel OK about behaving in a way that we would consider to be
unethical if we were acting on our own behalf
Happens when we act on behalf of someone else
Role Morality and Family Businesses - Answer -Small family businesses are typically more
ethically and socially responsible, while larger corporations tend to act less ethically
Fight Role Morality? - Answer -Own your actions
Do not compartmentalize your life
Pressure from the System - Answer -The system incentivizes unethical behavior
, Ex. Add an extra 5 dollars to your expense report for Uber fares
Wells Fargo and System Pressure - Answer -Intense pressure for bankers to cross-sell to
customers
Bankers had a quota of selling 8.5 products per day
Result:
Up to 1.5 million fraudulently opened checking/savings accounts
More than 500,000 fraudulently opened credit cards
Navigating an Unethical System - Answer -Good:
Work to succeed ethically within the system
Find a new system
Bad:
Go along with the unethical system
Government's Goal with Antitrust Laws - Answer -Benefit consumers and maximize competition
Key Antitrust Laws - Answer -Sherman Act (1890)
Clayton Act (1914)
Teddy Roosevelt - Answer -Trust Buster
Broke up lots of large companies
Problem was he alone decided which companies were good vs. bad (not a good model)
Unilateral Restraints - Answer -One company acting alone to harm competition
Ex. Monopolies, price discrimination, tying arrangements
Innocent Monopoly - Answer -You have a monopoly, but for a good reason
Natural Monopoly - Answer -An organization is so good at what they do, no one wants to use
competition
Ex. Google
Illegal Monopoly - Answer -Three Criteria:
Monopoly Power
Defined Market
Willful Act of Monopolization
Monopoly Power - Answer -When you have the ability/power to set prices in an industry
Usually 70% market share
Defined Market - Answer -Geographic or Product Type
Ex. One person owns all the car dealerships in Southern AZ
Willful Act of Monopolization - Answer -This is what gets people in trouble
When an organization actually tries to drive competition out of business
Ex. Walmart drives a local general store out of business
DeBeers Diamonds - Answer -In 1902, they controlled 90% of the world's diamond supply
In 1945, 1957, 1974, and 1994, faced antitrust charges from the DOJ
