IAI Actuarial Core Principles · Business Finance · Ethical responsibilities of owners and managers
A company director must choose between a cheaper production method that breaches no law but releases pollutants harming a nearby village, and a costlier cleaner method. Applying a consequentialist (utilitarian) approach to business ethics, what would the director do?
A consequentialist director weighs the overall benefits and harms of each method for everyone affected, including the villagers, and chooses the option giving the greatest net good. Legality alone or personal gain does not decide the matter; outcomes do.
- AWeigh the overall benefits and harms to everyone affected and pick the option producing the greatest net goodCorrect
- BChoose the cheaper method because no law is breached
- CFollow a fixed rule of duty irrespective of outcomes
- DChoose whichever option the director would personally want to be seen choosing, to protect reputation
- Choose the option that maximises the director's bonus
Explanation
Consequentialism judges actions by their outcomes, so the director weighs total benefits and harms across all affected parties. Relying on legality alone is a legalistic view, fixed rules reflect a deontological approach, and reputation or bonus motives are self-interest rather than an ethical theory.
Did you get it right without looking?
One question tells you little. A timed set on Ethical responsibilities of owners and managers shows your real accuracy, how long you take and where you lose marks.
More Ethical responsibilities of owners and managers questions
- Under Indian company law as generally taught, a company meeting the prescribed net worth, turnover or profit thresholds must spend a minimum…
- A company's directors approve a large donation to a charity chaired by a director's relative, justified as CSR. Which statement best identif…
- The board of a company is considering a project that is highly profitable but would release pollutants into a river, in breach of a regulato…
- A director of an Indian company discovers that his brother's firm could supply the company with a service at a competitive price. What is th…
- Which of the following is the best example of a company embedding ethics into its organisation, rather than merely stating it?
- A listed Indian company's annual CSR obligation is Rs 2.4 crore. It spends Rs 1.9 crore on eligible projects in the year, none of it on ongo…