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Bmgt 421: Business Ethics Question Paper

Bmgt 421: Business Ethics

Course:Bachelor Of Commerce

Institution: Kabarak University question papers

Exam Year:2012

KABARAK
UNIVERSITY
UNIVERSITY EXAMINATIONS
2012/2013 ACADEMIC YEAR
FOR THE DEGREE OF BACHELOR OF COMMERCE

BMGT 421: BUSINESS ETHICS
DAY: FRIDAY

DATE: 12/04/2013
TIME: 2.00 – 4.00 P.M.

STREAM: Y4S2
INSTRUCTIONS:
? Answer Question One and any other two questions
Question One
Read the Case Study and answer the questions that follow
The educated Kenyan consumers with televisions watch television for over 30 hours a week,
listen to about 1,200 hours of radio, spend 180 hours reading daily newspapers and magazines,
etc. All of these media include advertising which viewer, listener, or reader sees or hears. The
advertising messages are also presented through billboards, mail, buses, taxis, and nearly
everywhere you look. It is estimated that the educated consumer sees or hears more than 7
million advertisements in their lifetime.

The advertising ultimate goal for profit-earning organisations is to sell products. The goal is
attained when the customers are informed, persuaded and reminded to buy the organisation’s
products or services. There are many people who criticize the role of advertising.

Criticism against advertising. Most of the criticisms are of economic nature. For example:

In terms of competition the critics feel that the large amounts of advertising done by large firms
merely increase competition.
Large firms prevent small firms from entering into the new markets by way of advertising
The counter argument is that the consumers are careful enough not to accept heavily advertised
brands that will not meet their needs. Advertising attracts people to try a product but if they are
not satisfied they will just leave it.
It is arguable that advertising increases costs of advertised products. The advertised products cost
more than the unadvertised ones. However, the counter argument is that the informative role of
advertising saves the consumer in:
? finding out when and where is available
? its price
? its features and benefits, etc
It has been argued that much of advertising is not about information, but persuasion. Advertising
shifts demand backward and forward among the brands that are essentially the same. The counter
argument is that advertising can sometimes result in lower prices, especially if it can expand the
market. In this case a firm can produce larger quantities and achieve economies of scale that
results in lower unit costs. These cost savings can then be passed to consumers in the form of
lower prices. Advertising has its advantages and disadvantages.

Social role of advertising. Although advertising contributes to the economic benefits, some
critics feel that it has socially undesirable effects, e.g.
It emphases materialism because its ultimate objectives is to create a sale. It moulds values in
addition to achieving its sales objectives, especially when the consumers accept the advertised
goods as the norm or standard of correct behaviour.
? Advertising is intrusive because it gets your attention before it has any effects. Hence it
intrudes on whatever else you may be doing. Some critics argue that there is too much of
it.
? Advertising exploits people’s emotions. The emotional response is provoked to produce
effects in people. This can be positive e.g. generosity appeals, affection, patriotism,
security or sociability. But it can also be negative e.g. creating anxieties and fears,
emphasizing the darker side of a person’s personality or organizational integrity.
? Advertising creates unrealistic images, e.g. portraying the ideal man or woman. This is
based on physical appearance and social status. Simplistic stereotypes are created though
not the real truth of human nature. Hence consumers just develop superficial criteria they
use to evaluate themselves and others.

? Advertising uses bad tastes and creates a lower standard of decency. Privacy is not
respected e.g. the use of sexual themes and innuendos, provocative poses, inadequately
clad models, etc.
? Advertising exploits the innocent minds of children
? Advertising promotes distrust and cynicism.

The counter arguments are that:
? Advertising intention is to sell products
? Not to shape the values of society, and
? Society can reject the contrary values created by advertising

a) Basing your discussion on the facts given in the case study, what would you consider as the
role of ethical advertizing in a free-enterprise economy? (10mks)

b) How true would you say are the concerns of critics of advertizing? (10mks)

c) Other than advertizing, why should organizations be concerned with business ethics? (10mks)
Question Two
a) Can insider trading ever be considered ethical in the business world? Discuss (10mks)
b) Sexual harassment is an area that is drawing attention in business organizations. What
measures should organizations put in place to prevent sexual harassment (10mks)

Question Three
a) Can bribery in an organizational context ever be considered ethical? Explain (4mks)
b) You have been appointed to be in charge of ethics in a well established commercial enterprise.
Your immediate task is to establish compliance programs. How will you undertake the task
(10mks)

c) How can an enterprise gain competitive edge by practicing good corporate governance (6mks)

Question Four
a) Examine the major arguments that have been raised in support of Corporate Social
Responsibility (12mks)

b) Assess the application of ethics of duty in business operations (8mks)

Bmgt 421: Business Ethics Question Paper

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