FACTS: Stilton was promoted to chief executive officer (CEO) of Tamik, Inc. a pharmaceutical company that manufactures a vaccine called Kafluk, which supposedly provides some defense against bird flu. The company began marketing Kafluk throughout Asia. After numerous media reports that bird flu might soon become a worldwide epidemic, the demand for Kafluk increased, sales soared, and Tamik earned record profits. Tamik’s CEO, Stilton, then began receiving disturbing reports from Southeast Asia that in some patients, Kafluk had caused psychiatric disturbances, including severe hallucinations, and heart and lung problems. Stilton, was informed that six children in Japan had died after receiving the vaccine. To cover up the story and prevent negative publicity, instructed Tamik’s partners in Asia to offer cash to the Japanese families whose children had died in exchanged for their silence. Silton also refused to authorize additional research within the company to study the potential side effects of Kafluk. Using the information presented in chapter 7 of the 11th ed. textbook, answer the following questions:

1) What is business ethics, and why is it important? and how can business leaders encourage their companies to act ethically?

2) How do duty-based ethical standards differ from outcome-based ethical standards?

3) If Kafluk prevented fifty Asian people who were exposed to bird flu from dying, would Stilton’s conduct in this situation be ethical under a outcome-based ethical standard? Why or why not?

4) Would Stilton’s conduct be ethical under a duty- based ethical standard? Why or why not?

5) Did Tamik or Silton violate the Foreign Corrupt Practice Act in this scenario? Why or why not?

1A. What is business ethics, and why is it important? Ethics is the study of what constitutes right or wrong behavior—the fairness, justness, rightness, or wrongness of an action. Business ethics focuses on what constitutes ethical behavior in the world of business. An understanding of business ethics is important to the long-run viability of a business firm and to the well being of the firm’s officers, managers, and employees. A business firm also owes duties to a variety of “stakeholders” whom the firm’s decisions and activities may affect significantly.

2A. How do duty-based ethical standards differ from outcome-based ethical standards? Duty-based ethical standards are derived from religious precepts or philosophical principles. Outcome-based ethics focus on the consequences of an action, not on the nature of the action or on a set of pre-established moral values or religious beliefs.

3A. What are five steps that a business person can take to evaluate whether his or her actions are ethical? The first step is inquiry, the business decision maker must understand the problem, identify the parties involved and collect the relevant facts. Step 2 is to list the possible actions and goals, and discuss and evaluate the ethical principles of each option. The third step is to make a decision or adopt a plan of action. The fourth step is to articulate or document the reasoning (justification) underlying the decision. Once the decision has been made and implemented, step 5 is to evaluate the solution to determine if it was effective. This final step guides the businessperson when making future ethical decisions.

4A. How can business leaders encourage their companies to act ethically? Ethical leadership is important to create and maintain an ethical workplace. Managers can set standards, and apply those standards to themselves and their firm’s employees.

5A. What types of ethical issues might arise in the context of international business transactions? The most common types of issues to arise in an international context are those created by the different ethical standards and practices among different cultures and nations. These may include employment policies, the treatment of women and minorities, and (less likely) situations involving bribes.

Explanation:

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