Bus Chapter 4

4Student: _______________________________________________________________________________________

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1. The Enron scandal illustrates the difference between unethical behavior and illegal behavior.

2. Ethical behavior requires more than following the law.

3. Legal behavior and ethical behavior are basically the same.

4. A society gets into trouble when people consider only what is illegal and not also what is ethical or unethical.

5. Ethical behavior refers to the standards that are accepted by society as right or wrong.

6. People should look at each situation individually and decide for themselves if it is right or wrong.

7. Given the level of diversity within the United States, agreement on common standards of ethical behavior is unachievable.

8. An accurate statement regarding this chapter is: "Business law establishes ethical behavior."

9. Legal behavior is directly related to our relationships with others, while ethical behavior is not.

10. Legal behavior is a first step toward ethical behavior.

11. Laws that protect us from fraud, theft and violence determine ethical behavior.

12. Moral behavior refers to behavior that is accepted by society as right versus wrong.

13. Ethical behavior focuses on treating others fairly.

14. Making accounting records more transparent may help restore trust in the free-market system and leaders in general.

15. Punishing business leaders who have broken the law may help restore trust in the free-market system and leaders in general.

16. Making businesspeople more accountable for company actions may help restore trust in the free-market system and leaders in general.

17. According to the Legal Briefcase box, "Paying the Price", corporate executives who commit fraud, securities fraud, and other business crimes are sentenced to fines, but not to jail because these acts are not considered to be criminal convictions.

18. People involved in business may be tempted to do something unethical in order to increase sales and profits, but rarely do because if they are caught, our legal system will deal harshly with them.

19. Jake and his college friends frequent a small pub on weekends. Last weekend, after a few beers, one of his friends decided to take the salt and pepper shaker from their table because they needed a set at their apartment. In this situation, this was not a particularly questionable activity because it was a restaurant where one pays for these extras.

20. According to the Legal Briefcase box, "Paying the Price", the Enron case was a landmark because it demonstrated clearly that company regulations and policies always represent the best interests of all employees, and not only those employees holding the highest company positions.

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21. According to the Legal Briefcase box, "Paying the Price", the Enron case demonstrates the need for more accounting transparency.

22. According to the Legal Briefcase box, "Paying the Price", the fate of Arthur Anderson demonstrates that the law will protect your firm from problems due to the wrong-doings of other firms that you do business with.

23. The Legal Briefcase box, "Paying the Price" talks about illegal acts committed by executives at Enron, WorldCom, and Tyco International. This discussion demonstrates that business crimes are clearly illegal according to law, but seldom do they affect the operations of firms.

24. Ethical behavior involves the clear and easy choice of right and wrong actions towards others.

25. Over two-thirds of the American population report never giving any time to the community.

26. Both managers and workers cite low managerial ethics as a major cause of American businesses' competitive woes.

27. A common form of cheating in schools today is plagiarizing material from the Internet.

28. Making ethical choices is always easy.

29. Two recent studies found a strong correlation between academic dishonesty among undergraduates and dishonesty at work.

30. The question "Is it legal?" establishes ethical behavior.

31. It can be very difficult to maintain a balance between ethics and goals such as pleasing stakeholders.

32. Trying to make decisions that will benefit all parties involved is consistent with the question "How will it make me feel about myself?"

33. While telling an abusive joke about an ethnic group may not be unlawful, it is unethical.

34. An ethical manager's decisions are based only on the following questions: "Is it legal?" and "Is it profitable?"

35. Behavior that is in conflict with your values and sense of right and wrong can damage your self esteem.

36. When facing an ethical dilemma, it is often helpful to discuss the situation with your supervisor because ethical decisions will always withstand scrutiny.

37. Business behavior determines the ethics of society. We can improve society's moral and ethical behavior by first making a commitment to improving business's moral and ethical behavior.

38. Utilizing the phrase "the ends justify the means" as a corporate value system can negatively impact company morale and competitiveness.

39. Barney extends his lunch break beyond the allotted time. Wilma uses the office telephone for unauthorized personal phone calls. Fred misrepresents his product to a potential customer. All of these are examples of unethical behavior.

40. In reality, ethical behavior depends on the situation. For example, in negotiating a contract with your employees, the way they win higher wages is by your losing the fight to hold down labor costs. You realize it is a win-lose relationship.

41. You are in a business meeting at work that requires your group to make an ethical decision. Your willingness to post the final decision on the bulletin

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board in the break room for all to see passes the test: "How will it make me feel about myself?"

42. As the human resources director for your company, it is your job to evaluate the company's benefits plan. Although several workers utilize the company day care facility, the facility costs the firm considerably more than another benefit might cost, such as having an on-site physician. The on-site physician services are supported by insurance, and the physician actually rents space from the company. Under these circumstances, eliminating the day care is a balanced decision.

43. On her company website, Ali asks customers who fill orders to place a check-mark in a box if they are willing to let her share their information with her suppliers. By asking this question, Ali is addressing privacy issues, and covering her actions in case someone should try to sue her for sharing private information. She is responding to the question, "Are my proposed actions legal?"

44. In the Making Ethical Decisions box, "To Tube or Not to Tube?" about loading videos onto YouTube, the author makes the point that the dilemma facing all parties involved is legal, but not ethical.

45. The Making Ethical Decisions box titled, "To Tube or Not to Tube?" demonstrates how new technology can change the landscape, and people's perspectives on what is legal and what is ethical.

46. Trust between workers and managers must be based on a foundation of fairness, honesty, openness, and moral integrity.

47. A growing number of people feel that an employee's ethics are a personal matter, and have nothing to do with management.

48. The majority of CEOs believe that employee misconduct results from the failure of organizational leadership to establish ethical standards.

49. Management can create an environment in which unethical behavior can develop.

50. Corporate values, like personal values, are learned by observing what others do.

51. Effective corporate values start with employees and develop throughout the organization to include top management.

52. In order to maintain a good reputation, it is good strategy to manage your business ethically.

53. A business should be managed ethically to keep existing customers and attract new customers.

54. One good reason for managing a business ethically is to help reduce employee turnover.

55. In order to do the right thing for all stakeholders, a business should be managed ethically.

56. Overly ambitious business goals and employee incentives can lead to unethical behavior.

57. An ethic of justice is based on a sense of responsibility to reduce actual harm or suffering.

58. An ethic of care is based on a sense of responsibility to reduce actual harm or suffering.

59. An ethic of care is based on principles like justice, fairness, equality, or authority.

60. Employers should proceed cautiously when designing an employee incentive program that rewards employees strictly on increased sales.

61. "Do what I say, not what I do" can be an effective code of conduct to instill corporate values.

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62. Using the phrase: "Quality is job #1", as part of a corporate mission statement, can influence the ethical behavior of employees.

63. Employees, just like children, can observe behavior and adopt standards of right and wrong.

64. "Actions speak louder than words!", is an old saying that refers to the fact that people's actions - how they act as opposed to what they say - are often testament to their true ethical values.

65. As a manager, you have a responsibility for the unethical behavior of your employees.

66. In order to avoid the costly act of being sued in court, it makes good sense to manage your business ethically.

67. When faced with slow sales and low profits, even managers with strong ethical values may feel pressured to compromise those values.

68. Several years ago, the garment and soft goods industry agreed to adopt higher ethical standards with respect to contract manufacturers that produce their goods. The leadership agreed that this was a good approach in order to avoid the U.S. government from intervening and creating new laws to force the industry to only work with foreign manufacturers who operated with high ethical standards. This was sensible strategy on the part of the garment and soft goods industry.

69. Integrity-based ethics codes are based on avoiding legal punishment.

70. Compliance-based ethics codes are based on preventing unlawful behavior.

71. Businesses with a formal code of ethics are less common now than in the past.

72. Compliance-based ethics codes focus on preventing unlawful behavior by increasing control and by penalizing wrongdoers.

73. In order to be successful, efforts to improve the ethical behavior of businesses must begin with top management's support of a corporate code of conduct.

74. Businesses recognize that pressure to violate ethical standards can come from either inside or outside of the firm.

75. People who report illegal or unethical behavior are called whistleblowers.

76. As a result of pressure from business lobbyists, Congress failed to pass legislation protecting whistleblowers.

77. The job of an ethics officer is to serve as a counselor for employees and as an investigator for the company.

78. Enforcement is perhaps the most important step in an effective code of ethics.

79. A code of ethics designed to avoid criminal misconduct is an example of a compliance-based ethics code.

80. An integrity-based ethics code moves beyond legal compliance in order to create a "do-the-right-thing" climate.

81. To be effective, an organization's code of ethics needs to be communicated to outsiders such as suppliers, subcontractors, and customers.

82. Since most ethics violations are small and rather insignificant in nature, employees need to understand that addressing these issues is secondary to making profits. CEOs may be justified in putting these on the back-burner, waiting for more convenient moments to address them.

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83. America's business ethics can improve simply by requiring written contracts with employees, customers, and owners. This alone will do the job!

84. An important step in improving U.S. business ethics is for companies to hire whistleblowers.

85. Dewy Cheatum encourages his employees to create and use legal loopholes to gain a competitive advantage. In keeping within the legal limits of the law, the employees are within their compliance-based ethics rights.

86. The brewers of Budweiser beer encourage their customers to drink responsibly and "know when to say when." This reflects a compliance-based approach to ethics.

87. Cigarette producers label their products with warnings of potential health hazards. Due to the fact that this is a government mandated disclosure, it is part of the industry's compliance-based ethics.

88. In light of the fact that over 60% of all theft in retail stores is committed by employees, New Generations Clothier, Inc., requires that managers personally unlock fitting rooms for all sales associates and count the number of items associates take to the fitting rooms. This policy is written in the company manual. Breaking with the policy is grounds for dismissal. It is correct to say that this is part of New Generations' compliance-based ethics.

89. At Fast-Track Financial Services, it is not unusual for a financial consultant to lose a client to another consultant working out of the same office. Clients have a right to do business with whomever they choose. If it is a high net worth client, with the potential for high commissions on sales, the incentive to steal a fellow co-worker's client exists because the firm's culture has not established integrity based ethics to deter this activity.

90. Corporate social responsibility refers to the concern businesses have for the welfare of society.

91. Corporate philanthropy refers to the position a firm takes on issues that affect society.

92. A charitable donation contributed by a corporation is an example of corporate philanthropy.

93. Business issues such as minority hiring practices and pollution control fall under the umbrella of corporate responsibility.

94. As a show of corporate responsibility to your customers, your firm may elect to provide more information regarding your product than the law demands.

95. Corporate philanthropy refers to the position a firm takes on social and political issues.

96. When stating a firm position on various social and political issues, corporate policies often commit company profits to back these positions.

97. Recent surveys indicate that students are willing to agree to lower salaries if they know their employer is participating in socially responsible activities.

98. In the discussion of corporate social responsibility, stakeholders and stockholders refer to the same group.

99. One responsibility of business is to satisfy customers by offering them goods and services with real value.

100. Studies show that consumers are not concerned about the socially conscious behavior of the firms with which they do business.

101. Customers learn to trust companies that consistently demonstrate good behavior. Those same companies can lose this position with one, socially irresponsible activity.

102. Some investors believe it makes financial as well as moral sense to invest in companies whose practices promote sensitivity towards the

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environment.

103. "Fair disclosure" refers to a Securities and Exchange Commission rule that states when a publicly traded firm discloses information, it must share it with everyone.

104. Insider trading occurs when employees of publicly traded companies use private company information to profit in the stock market.

105. Insider trading provides the information needed for the securities markets to operate fairly and efficiently.

106. Businesses have a social responsibility to create jobs.

107. Promoting social justice is a responsibility of society, but not business.

108. In the long run, a firm's loyalty to their employees can pay off financially.

109. Getting even is one of the most powerful incentives for good people to do bad things.

110. A recent study revealed that employee fraud causes 30% of all business failures.

111. The green movement has turned the heads of very few firms.

112. A social audit is a systematic evaluation of an organization's progress toward implementing programs that are profitable.

113. The green movement has resulted in a positive impact on U.S. jobs.

114. "Greenwashed" companies have taken the green movement to the next level. These firms are so green, the U.S. government gives them a special designation.

115. A firm's net social contribution is a company report that measures the difference between its positive social contributions and its negative social impact.

116. A public good is one that everyone gets to enjoy regardless of who pays for it.

117. When it comes to ethics and social responsibility, the public's perception of a firm is as important as what the firm does.

118. A social audit measures a firm's progress in the area of worker-management relations.

119. A list of "watchdogs" (including customers, socially conscious investors, and environmentalists) monitor how well firms enforce their ethical and social responsibility policies.

120. A business that takes a public position on a political issue that affects the welfare of society is exercising corporate social responsibility.

121. Defining a socially responsible company is complicated. Businesses differ from other businesses, as well as the people they serve, on what we mean by "socially responsible."

122. Opponents of CSR (Corporate Social Responsibility) argue that firms who use their profits to promote social causes are not being fair to investors who provided the funds for the purpose of financial gain.

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123. A corporate policy should never make a value statement about the environment or other social and political issues, because it is doubtful the company can live up to the proclamation.

124. Corporate social responsibility covers all those social issues outside our businesses that affect customers and the environment, but not internal issues such as employee considerations and work safety. Internal issues are covered by business laws.

125. Some experts feel that corporate social responsibility means solely making money for stockholders.

126. As a response to the Enron scandal, the federal government now requires social audits of all U.S. businesses.

127. In a famous speech, former President John F. Kennedy proposed that businesses had four basic rights, and in his own words, he proclaimed that "each one of them leads us back to the right to keep the profits from one's business."

128. Often it is the threat of negative publicity that pressures businesses to enforce their corporate code of ethics.

129. Although the green movement is a social trend, it is difficult to predict its future contributions to society.

130. Out-Tel, a computer chip manufacturer, knowingly sold defective chips and failed to notify customers of the potential problems. When the problem became public knowledge, the firm's stock price fell dramatically. This illustrates the value that investors place on the ethical behavior of businesses.

131. At a recent town hall meeting, citizens expressed concern regarding the impact of a proposed new gambling casino. The owner of the proposed casino responded, "I don't know what all of this fuss is about. I'm just a businessman trying to earn a profit, provide new jobs, and pay taxes." His response reflects an overall commitment to corporate social responsibility.

132. Recently, a large insurance company in the Midwest made a public commitment toward corporate philanthropy when it dedicated 3% of its profits toward the cultural and environmental concerns of the large metropolitan area that houses its corporate headquarters. The CEO stated, "In honor of several hundred employees that come to work here everyday, we want to give something back." In light of the fact that this is only helping one metropolitan area, the donation falls outside the realm of corporate social responsibility.

133. Fresh Walls Paint Company promotes its products as nontoxic and made from natural, organic substances that are safe for all persons including those with asthma and other lung conditions. In order to live up to customer expectations, it must walk the walk and not just talk the talk! If consumers learn that Fresh Walls' paints do not meet their expectations, their reaction is likely to tarnish the company's image.

134. About 10 years ago, there were several bank mergers. Shortly after Big Bucks Bank bid on The Bank of Plenty, a story hit the local newspapers about the investigation into the purchase of several thousand shares of stock of the Bank of Plenty by three of its top executives, just prior to the announcement that Big Bucks Bank planned to buy Bank of Plenty. Upon close examination by the SEC (Securities and Exchange Commission) it was determined that the stock purchases were an illegal maneuver on the part of these executives. This is an example of insider trading. The executives were "banking" on the stock price rising sharply when the purchase announcement was made public.

135. Abby is a stock broker for a large financial services company. A client who works at Sixth Generation Software, Ltd., just called to purchase several thousand shares of his company's stock. He reveals to her that the company is about to announce the appointment of a new CEO. Abby asks her client if this information is public knowledge. The reason she asks is to make certain that her client, her company, and she remain in compliance with Regulation FD, the Fair Disclosure rule.

136. Recently, Bob was trying to choose between three mutual fund investments for his retirement account. As a socially conscious investor, he will prefer to invest in funds that hold the stocks of oil and coal companies, as opposed to wind-turbine and renewable energy companies.

137. U.S. businesses claim that unethical business practices are common outside the U.S.

138. The ethical standards by which international political leaders are judged are more lenient today than they were in years past.

139. Many U.S. companies are demanding socially responsible behavior from their international suppliers.

140. Due to the fact that American ethical standards are very clear-cut, international suppliers do not have difficulty adhering to them.

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141. The objective of the Inter-American Convention Against Corruption document formulated and signed by the Organization of American States (OAS) is to identify common global ethics.

142. The International Organization for Standardization (ISO) plans to publish a standard on social responsibility called ISO 26000.

143. American businesses can legally demand socially responsible behavior from their international suppliers.

144. U.S. businesses consider The Foreign Corrupt Practices Act as legislation that has helped increase their profits abroad.

145. Recent surveys indicate that U.S. customers are willing to pay a little more to purchase garments from companies who promote worker-friendly environments.

146. All U.S. companies practice the same ethical standards when dealing with suppliers and contract manufacturers abroad.

147. Due to their significant economic power, large multinational firms can ignore the ethical standards of a society without consequences.

148. U.S. businesses have little influence over the behavior of businesses from other countries.

149. Applying the ethical standards of the U.S. to foreign firms is a difficult process for U.S. firms.

150. "Hear no evil, see no evil, speak no evil" is the best policy for U.S. firms to follow in their dealings with corrupt foreign suppliers.

151. While "doing the right thing" is an admirable code of ethics, there are no international organizations dealing with global ethics and corruption.

152. Due to the complicated laws and ethical standards abroad, U.S. businesses are encouraged to adopt a, "don't ask, don't tell" policy.

153. A few years ago, several U.S. clothing manufacturers were sued in Los Angeles courts by watchdog groups who learned of poor working conditions in manufacturing plants on a U.S. territory known as the Marianas Islands. Customers are concerned with human rights abuses and other problems with supplier relationships abroad.

154. Olivia is ordering trendy necklaces and earrings made with semi-precious stones from a supplier in Belize, for her city boutique. Due to low paying wages in Belize, the supplier has promised an excellent wholesale price for these goods. You concur with Olivia when she explains to you that international business law is very clear-cut with these dealings. As long as the supplier is not breaking any labor laws in his country, Olivia's social responsibility is covered.

155. In the Reaching Beyond our Borders box titled, "Ethical Culture Clash", the story proves that a large multi-national company such as Motorola can ask its employees, and should expect them to follow the same ethical standards they would practice if living and working within the U.S. borders.

156. In the Reaching Beyond our Borders box titled, "Ethical Culture Clash", the story demonstrates the many ethical similarities between North and South American business. This is fortunate for Motorola and other large electronics firms who do business south of the U.S. border. They can depend on their subsidiary firms to have no problems when implementing U.S. company employee policies.

157. The Motorola story told in the Reaching Beyond our Borders box demonstrates how a corporation's perception of ethical behavior may not be everyone's reality.

158. The Enron scandal revealed ________ corporate behavior.

A. legal but unethicalB. predictableC. illegalD. ethical

159. Obeying the law is ________ ethical behavior.

A. essentially the same asB. the first step towardsC. the opposite ofD. unlikely to lead to

160. ________ refers to standards of moral behavior.

A. LegalityB. ResponsibilityC. IntegrityD. Ethics

161. A recent study revealed that most Americans have:

A. strong moral values.B. a strong desire to do what is right.C. few moral absolutes.D. a great desire to help their community.

162. Which of the following statements describes ethical behavior in the U.S.?

A. Due to the diverse cultures that make-up the U.S. it is difficult to identify common standards of ethical behavior.B. The only common standards of ethical behavior in the U.S. are reflected in religious teachings.C. We can find common moral values that many Americans uphold, including respect for human life, self-control, honesty, integrity, and courage.D. Americans will generally describe the golden rule as the only statement of value that they uphold.

163. The danger in writing new laws to correct behavior is that:

A. People may begin to think that any behavior that is legal is acceptable.B. People will see the difference between ethics and legality.C. Legal behavior will reflect the totality of people's relations with one another.D. There will not be enough jails to house those who break the law.

164. Given the ethical lapses that are prevalent today in our businesses, which of the following can be done to restore trust in the free-market system and leaders in general?

A. Business leaders that have broken the law should be given another chance.B. New laws making accounting records transparent may help restore trust.C. Making the government accountable for business leader behavior will restore trust.D. It's up to the government to pass laws requiring ethical behavior of all leaders, business and otherwise.

165. Laws represent the standards of ________ behavior.

A. ethicalB. legalC. moralD. socially responsible

166. Ethical behavior covers a ________ range of conduct than legal behavior.

A. widerB. more limitedC. smallerD. less demanding

167. Many individuals today believe that ethical behavior is determined by what is best for them at the time. This is an example of:

A. Situational ethics.B. Moral absolutes.C. The Golden Rule.D. New age realism.

168. Considering the potential impact on others prior to making a decision is consistent with ________ behavior.

A. legalB. anti-socialC. ethicalD. self-motivated

169. Many Americans define ethical behavior according to the situation in which they find themselves. This suggests that there may be situations where ________ to cheat, steal, or lie.

A. it is absolutely wrongB. it might be OKC. business people are expectedD. capitalism forces people

170. The Legal Briefcase box, "Paying the Price" describes situations where:

A. Company executives got in trouble and landed in jail because their ethical behavior, rather than their legal behavior was in question.B. A number of top executives of well-known corporations committed a range of crimes including stealing, securities fraud, and making false regulatory

filings.C. Clearly executives were following the letter of the law, but their ethical behavior brought down the firms.D. Large companies are forced to pay for their executives' incarceration in federal prison.

171. With respect to Arthur Anderson, a large and well-known public accounting and consulting firm, the Legal Briefcase box, "Paying the Price" explains:

A. how Arthur Anderson's connection with the Enron scandal was not enough to bring it down.

B. how as soon as Arthur Anderson cleared itself by paying fines to the federal government, it went back to "business as usual".C. that Arthur Anderson's prior conviction was overturned, but it never recovered.D. that Arthur Anderson's consulting arm always behaved ethically, so it was saved.

172. Upon reading the Legal Briefcase box, "Paying the Price", you should conclude that,

A. top executives of Enron, Arthur Anderson, Tyco, Adelphia, and WorldCom did not define the ethical behavior of the firms.B. top executives are figureheads that do not necessarily know the technical aspects of the business, so the courts will not hold them accountable.C. the Securities and Exchange Commission cannot control the private purchase or sale of company stock by top executives.D. top executives are closely intertwined with all aspects of their companies.

173. Purposefully understating your firm's income to avoid paying higher taxes is an example of:

A. An accepted business practice.B. Tax accountants doing their job.C. Illegal behavior.D. A firm's responsibility to its owners.

174. When WorldCom used intentional accounting irregularities to make the company look more profitable than it actually was, it:

A. Provided its stockholders profit through a tax-loophole.B. Acted in an acceptable business manner.C. Engaged in illegal behavior.D. Executed its responsibility to its owners.

175. Cigarette producers refused to voluntarily place health warnings on their packages. In response, the federal government passed laws requiring health warnings on all cigarette packages. With respect to ethical behavior, this sequence of events is:

A. The intended approach.B. The desired approach.C. Not the desired approach.D. Not really a concern.

176. When Angela graduated with a degree in computer science and started her software company, she posted a sign that read, "This company will always operate within the legal limits of the law." Posted where all employees could clearly see it each day, this demonstrated:

A. Her commitment to high ethical standards of behavior.B. Her commitment to respect the law.C. Her expectation that all employees follow the laws that apply to the business.D. Her aversion to cheating, stealing, and dishonesty.

177. After a few years of being in business, employees who worked for a start-up software company noticed that the owner overlooked certain questionable actions of high billing associates, versus other employees who worked hard but only brought in an average number of new clients each month. With respect to what you learned in this chapter about the ethical behavior of many Americans, which of the following statements applies here?

A. This story indicates that moral absolutes are very prevalent today in business settings.B. The owner will continue to operate this way until someone blows the whistle.C. We cannot expect people in the U.S. to all follow similar ethical patterns because there are too many cultures to deal with. Businesses are no different.D. As is often the case today, some leaders will look at each situation individually when making value judgments.

178. Which of the following questions will help individuals and organizations when deciding if their decisions are ethical?

A. Can I do this without getting caught?B. Is it balanced?C. Has it been done before?D. Is there a desirable alternative?

179. When discussing moral and ethical issues, it is helpful to remember that ethical behavior begins with ___________________.

A. schoolsB. religious institutionsC. law enforcement officersD. each of us

180. The first step when facing an ethical dilemma is to ask:

A. "Is it legal?"B. "Is it balanced?"C. "How will it make me feel about myself?"D. "Is it ethical?"

181. Which of the following questions can help us avoid a decision that would injure our self-esteem?

A. Is it legal?B. Is it balanced?C. How will it make me feel about myself?D. How can I avoid taking the blame?

182. Ethical dilemmas in business:

A. force us to make poor choices.B. always end up bringing out the best in us.C. often force us to choose between equally unsatisfactory alternatives.D. define us as being moral absolutists or moral situationalists.

183. Treating others unfairly can result in retaliation from the injured party. This will likely create a:

A. lose-win situation.

B. win-win situation.C. lose-lose situation.D. Golden Rule application.

184. Ethical behavior will result in which of the following?

A. Mistrust between employees and managers.B. Agreements that create benefits for only the shareholders.C. Negative publicity from the news media.D. Improved self-esteem - makes us feel good about our decision.

185. Business relationships often present ethical dilemmas that are:

A. not easily resolved.B. easily resolved by following the relevant laws.C. best resolved by creating a win-lose situation.D. irrelevant and therefore require no action.

186. An ethical dilemma refers to a situation where you must:

A. treat someone unfairly.B. choose between equally unsatisfactory alternatives.C. choose between a correct and an incorrect option.D. balance the concerns of profit and legality.

187. Which of the following describes the debate regarding video sharing in the boxed material Making Ethical Decisions, "To Tube or Not to Tube?"?

A. The debate is over whether it is legal and/or ethical for individuals to upload videos onto YouTube that they themselves did not create.B. The debate involves the unfair advantage that Viacom and other large corporations have when uploading videos onto YouTube, even though they are

operating within the law.C. The debate is over whether the Digital Millennium Copyright Act (DMCA) has outgrown its usefulness.D. The debate is about why Viacom is complaining to YouTube about illegal uploads when they have no support from other organizations.

188. A U.S. government official has indicated that for a generous contribution to his reelection fund, he would ignore your firm's apparent violation of several anti-pollution laws. Which of the following "ethics check questions" would you consider first?

A. Is it legal?B. Is it fair and balanced?C. How will it make me feel about myself?D. Is it a generous amount?

189. A friend offers to share with you a term paper previously prepared for her Introduction to Business class last semester. When you tell her that it wouldn't be fair, she reminds you of your habit of reading an entire Harry Potter book at the local bookstore without paying for the book. Which ethics-based question would be most helpful in evaluating these situations?

A. Is it legal?B. Is it balanced?C. Who wins and who loses?D. Will I get caught?

190. A high-level manager gathers his team of supervisors together to create a new office policy that will affect all employees at the company. After receiving a verbal nod from the supervisors, he then proceeds to pass around a written form of the new policy and asks all members of the team to initial it. He explains to the supervisors that the new policy will be posted in the break rooms on each floor of corporate headquarters. If you were a part of this work team, which question would you ultimately ask yourself before initialing your approval of this policy?

A. Is it legal?B. Is it balanced?C. How will it make me feel about myself?D. Is it a lose-lose situation?

191. The majority of CEOs blame unethical employee conduct on:

A. the breakdown of traditional religious institutions.B. a failure of leadership to establish ethical standards.C. the increase in lawsuits used to avoid personal responsibility.D. the nation's business schools that tolerate unethical behavior in students.

192. Ethical behavior at work is learned by:

A. Attending corporate responsibility seminars.B. Tracking the failures of those who are caught in business scandals.C. Reading about why others were fired from the job.D. Observing the actions of others.

193. Which of the following is a reason why a business should be managed ethically?

A. It is the right thing to do.B. Strict global regulations require it.C. It is the law in the U.S.D. Employees demand it.

194. Relationships between businesses and among nations,

A. should be based on international law, exclusively.B. should be based on fairness, honesty, openness, and moral integrity.C. should be scrutinized carefully to make some determination as to whether both sides have the same type of leader behavior when it comes to assigning

work.D. will be adversarial because seldom does either side believe in win-win situations.

195. Corporate values are:

A. a personal matter to be determined by each employee.B. taught by attending company-sponsored seminars.C. instilled by the leadership of outside consultants.D. learned by observing the actions of others in the organization.

196. When managers disregard ethical concerns, the likely result is:

A. a reduction in employee turnover.B. an improvement in overall manager morale.C. a reduction in lawsuits.D. a general mistrust between workers and management.

197. Creating competition between employees within the corporation:

A. can encourage employees to deceive customers.B. should focus on improving corporate profit.C. must be ignored when corporate ethics are developed.D. can bring out the best in employees.

198. Following an ethics-based approach to decision making will normally lead to higher:

A. profits.B. trust and cooperation.C. prices.D. employee turnover.

199. Following an ethics-based approach to decision making will normally lead to:

A. higher profits.B. lower employee turnover.C. lower prices.D. more competition.

200. The Hum-dinger Corporation recently instituted a corporate ethics code. The president of the company realizes that ethical relationships are based on:

A. fairness and honesty.B. strict penalties for illegal activities.C. a full-time compliance officer monitoring employee behavior.D. watchdogs and whistleblowers.

201. Which of the following would most likely involve ethical concerns?

A. Overstating an expense report.B. Forecasting sales for the next year.C. Developing the marketing plan for the next year.D. Improving working conditions.

202. With respect to business ethics, it can be said that "it takes two to tango." This indicates that:

A. dancing around issues should be part of a firm's code of ethics.B. an individual's behavior is influenced by the behavior of others.C. teamwork eliminates a need for personal ethics.D. management is insensitive to ethical issues.

203. Jake recently invested in a Hottie Potatee franchised business that serves potatoes with all the trimmings. The business needs lots of employees in order to operate effectively. He told you that if he calls the business once each day and tells the employees that he is on his way there, they will be on their best behavior. As he tells it, "It's okay if I really don't make it there, after all, I'm the owner and the business should be able to run without micromanagement." As a recent student of business ethics, you remind Jake that:

A. he should post a code of ethics that stipulates how each employee should work and how each employee should treat the customers.B. he should create a survey for customers to respond to, and then he will always know if his employees are productive.C. employees usually take-on the behavior of their leaders. If integrity is not important to the owner, it may not be important to employees.D. "No good deed goes unpunished." Even though he may think he is doing a good thing, his employees will not appreciate the fact that he is working

very hard on his business, off-site. Their expectations are that he should be there, working side by side with them.

204. Establishing a formal code of ethics is:

A. more common with small businesses than large businesses.B. unnecessary given the level of government regulation.C. growing in popularity.D. mandated by the Corporate and Criminal Fraud Accountability Act.

205. A(n) ________-based ethics code emphasizes the prevention of unlawful behavior by increasing control and penalizing wrongdoers.

A. legalB. corporate responsibilityC. complianceD. integrity

206. Which of the following terms describes someone who reports illegal or unethical behavior?

A. whistleblowerB. horn blowerC. watch tower sentinelD. integrity watchdog

207. A(n) ________-based ethics code defines corporate values; creates a supportive environment, and, stresses shared accountability among employees.

A. socialB. corporate responsibilityC. complianceD. integrity

208. Compliance-based ethics codes:

A. conform to laws and regulations.B. enable responsible employee conduct.C. use education, leadership, and accountability to reinforce the code.D. create a "do-it-right" climate that emphasizes core values.

209. To improve America's business ethics:

A. Congress must pass an ethics bill.B. ethics must be taught in every business school around the globe.C. a company's suppliers must be thoroughly investigated for ethical violations.D. company leaders should adopt and support a corporate code of ethics.

210. After developing a code of ethics, it should be communicated to:

A. everyone with whom the business has dealings.B. the Attorney General in jurisdictions where the business has operations.C. all levels of management.D. stockholders.

211. A whistleblower is a person who:

A. monitors employees who work overtime.B. reports illegal or unethical behavior in the corporation.C. reports health or other corporate emergencies to 911.D. works in the human resource department.

212. Which of the following is a characteristic of an effective ethics officer?

A. (S)he has a background in human resource management.B. (S)he is exceptionally organized.C. (S)he has a capacity to serve as a counselor and an investigator.D. (S)he communicates primarily via email.

213. Compliance based ethics codes typically:

A. rely on laws and regulations outside the firm for guidance.B. have a strong affinity for shared accountability among employees.C. promote a "do-it-right" climate.D. enable responsible employee conduct.

214. A very critical last step in the process of establishing an ethics code is __________.

A. middle management supportB. trainingC. enforcementD. identification of the organizational ethics officer

215. Which of the following would be a unique focus of an integrity-based ethics code?

A. Increased control over employee actions.B. Shared accountability among employees.C. Increased penalties for code violators.D. Improved awareness of the relevant laws.

216. Which of the following statements is not one of the six steps recommended by experts for improving ethical behavior at work?

A. Management should be trained to always consider the ethical implications of decisions.B. Top management should unconditionally support a company's corporate code of ethics.C. Whistleblowers should be protected from retaliation.D. Outsiders should be kept outside. There is no reason to share your firm's corporate code of ethics. It is an internal and private document.

217. What is the benefit of employing an ethics officer?

A. This professional serves as a law-enforcement officer, with the authority to arrest employees who do not abide by the ethics code.B. This individual writes the ethics code and keeps this document current. He has sole authority to change the document as he sees fit.C. This professional has the responsibility to make certain that the ethics code remains a private company document; however, since the position has very

little authority, it becomes a token job with high turnover.D. This individual's job is dedicated to objectively investigating ethics breaches. If necessary, employees feel comfortable with communicating

confidentially to this professional.

218. While speaking with his sales force, the director of sales explains, "Anyone caught violating a sales law will be fired." After studying business ethics, you recognize this remark as a reference to the firm's __________ ethics.

A. technology-basedB. personal responsibility-basedC. compliance-basedD. integrity-based

219. In an effort to promote the importance of a valuable education, the faculty and staff at the local community college are trained to ask each student about their career preferences, rather than suggest courses that may not benefit the student's future goals. Although it would be tempting to suggest courses just to increase the College's enrollment, employees know that it is more important to serve each student well, even if it means suggesting courses and/or degrees offered at other institutions. This approach is consistent with:

A. an integrity-based ethics code.B. a compliance-based ethics code.C. a response to a government mandate.D. a personal responsibility commitment.

220. Sharon, a CPA for a large firm noticed that the company's accounting records drastically overstated the amount of inventory on hand, which led to overstating the assets of the firm. Initially, she brought it to the attention of her supervisor, but when nothing was done to correct the mistake in a timely manner; she decided the best course of action was to report it to the appropriate government official. Although her actions took her outside the company, she was counting on current law, under the ____________ to protect her against company retaliation.

A. Cellar-Kefauver ActB. Sarbanes-Oxley ActC. Robinson-Patman ActD. Sherman Act

221. A phone call to a government official by an employee of the Enron Corporation disclosed the deception and dishonesty of the firm's accounting records. This employee played the role of a:

A. whistleblower.B. horn blower.C. cheerleader.D. moral policeman.

222. Zach spent several months developing a good relationship with a business client. The client is now buying a significant amount of product from Zach's company, resulting in high commissions for Zach, personally. After checking the sales records for the past six months, Ben (a sales colleague of Zach's) started visiting the same client in the hopes of capturing some of the client's business too. Although he considers it "legal and fair game", sales reps in his firm have begun to avoid him because they consider it a violation of:

A. company-based ethics.B. compliance-based ethics.C. integrity-based ethics.D. whistleblowing-based ethics.

223. John was recently hired by Backstreet Books, an eclectic bookstore in a large college town. At the beginning of the first day on the job, his store manager handed him a small booklet consisting of company rules. He was asked to read it and sign and submit the last page, before starting work. Among other things, the rules explicitly discussed reprimands for grievous behavior and dismissal if the firm could prove that the employee was stealing product from the store. This booklet represented the ___________ of the store.

A. company-based ethicsB. compliance-based ethicsC. integrity-based ethicsD. whistleblowing-based ethics

224. Corporate social responsibility describes the firm's:

A. exclusive responsibility to its stockholders.B. ability to plan for the unexpected.C. commitment to a management training program.D. concern for the welfare of society.

225. All else held equal, socially responsible firms:

A. are viewed more favorably by consumers.B. enjoy significantly higher profits.C. often experience customer loyalty problems.D. fail to earn sufficient profits for their owners.

226. We describe charitable donations by corporations to nonprofit organizations as __________.

A. corporate philanthropyB. corporate responsibilityC. corporate strategyD. structural commitment

227. The position a firm takes on issues that affect the corporation as well as society is known as its:

A. political philanthropy.B. corporate policy.C. target posturing.D. structural positioning.

228. In recent years, progressive firms have embarked upon ____________, where they will commit company resources and expertise toward helping-out in emergency type situations.

A. corporate philanthropyB. corporate social activismC. social civilityD. corporate social initiatives

229. Corporate ________ covers issues such as setting minority hiring practices, manufacturing safe products, and minimizing pollution.

A. responsibilityB. philanthropyC. diversityD. structure and strategy

230. Determining what is involved for a firm to be socially responsible:

A. is easy.B. varies even among those who are interested in corporate responsibility.

C. helps government officials develop appropriate legislation.D. varies from industry to industry due to different laws.

231. Which of the following is not a basic right proposed by former President John F. Kennedy?

A. The right to be heardB. The right to be informedC. The right to a discountD. The right to safety

232. A payoff for socially conscious behavior is:

A. new and loyal customers.B. a large pool of investors.C. a large pool of talented employees.D. longevity due to a stable external environment.

233. One strategy guaranteed to displease your customers is to:

A. provide a quality product at only a fair price.B. focus on cost and quality control systems within your organization.C. practice deception regarding product safety issues.D. shift the production of goods to foreign facilities and layoff U.S. workers.

234. Which of the following statements best describes a firm's commitment to its customers?

A. The firm is responsible for offering domestic products to foreign customer markets.B. One's social responsibility to customers is clear-cut.C. Customers will only support companies who make a visible effort to keep prices low.D. Firms that offer real value will develop a competitive advantage and gain customer trust.

235. Investors, today are realizing financial benefit by:

A. investing in companies who only operate in stable environments.B. investing in firms that have abundant resources for social initiatives.C. investing in companies who are committed to a better environment.D. investing in companies who are leaving a sizeable carbon footprint.

236. Insider trading involves:

A. an Internet activity that establishes a barter exchange system between businesses.B. investors using private company information to further their own fortunes.C. the exchange of assets between companies in the same industry.D. a payment or reward for socially conscious behavior.

237. If a business fails to meet its responsibilities to its employees, which of the following is likely to occur?

A. There is reduced employee turnover.B. Employees believe it is easier to get ahead.C. More jobs are created.D. Employees do the minimum needed to get by.

238. In order to avoid insider trading, the SEC (Securities and Exchange Commission) has adopted a new rule called _____________ that requires publicly traded companies to release information to everyone in a timely manner, rather than just to a few persons.

A. Insider Trading PhenomenonB. Regulation FD (Fair Disclosure)C. Red Herring RegulationD. PDI (Public Display of Information Act)

239. People need to make a living. Under this circumstance, one of the best social programs a firm can offer is:

A. a job.B. a commitment to programs that promote green living.C. a high-end product line.D. flexible work hours.

240. The difference between an organization's positive social contributions and its negative social impacts is called their:

A. social scorecard.B. responsibility impact report.C. net social contribution.D. community commitment level.

241. The purpose of a(n) ________ is to evaluate an organization's progress towards implementing programs that are socially responsible and responsive.

A. accountability reviewB. social auditC. federal disclosure statementD. annual report

242. Going green means:

A. increased global warming.B. increasing one's bottom line, before any other social considerations.C. increasing one's carbon footprintD. increasing one's initiatives toward a concern for the environment.

243. The Green Movement:

A. is not a good strategic consideration for contemporary firms.B. will never benefit a firm financially.C. is benefiting all firms financially.D. has created jobs.

244. Business is under pressure from society to be more socially responsible. However, even the strongest advocates for corporate responsibility can't seem to agree:

A. on what social responsibility involves.B. who should be policing business' behavior.C. if all businesses, large and small, should be held to the same standards.D. if politicians should be held to the same standards of behavior.

245. One factor causing businesses to vigorously enforce ethical standards is the:

A. desire to eliminate employee turnover.B. fear of negative publicity.C. focus on criminal penalties.D. evasion of social audit measurements.

246. When it comes to social responsibility, some people feel that "before you can do good, you must do well." This reflects a firm's primary responsibility to its:

A. customers.B. investors.C. employees.D. community.

247. Some critics of corporate social responsibility view spending money on CSR as:

A. a necessary evil.B. stealing from investors.C. important for America.D. moving toward capitalism.

248. Which of the following people would be most in favor of CSR (Corporate Social Responsibility)?

A. Milton FriedmanB. Adam SmithC. Bill GatesD. Kenneth Lay

249. When a firm undertakes corporate social initiatives it is:

A. Making donations that are directly related to a firm's corporate competency.B. Making long-term commitments to one cause.C. Hiring minority workers.D. Making safe products.

250. Although college graduates would prefer to work for socially responsible companies,

A. they would not consider less pay to do so.B. they are not interested in companies that spend resources are corporate social initiatives.C. they are not in agreement with what it means to be socially responsible.D. they favor Milton Friedman's philosophy on the subject.

251. Environmental quality is considered to be a public good. This means that:

A. ultimately it is the public that pays for environmental clean up.B. businesses have a responsibility to minimize their environmental pollution.C. everyone enjoys a cleaner environment regardless of who pays for it.D. society places a higher value on private goods and services.

252. Many businesses have developed internal procedures to enforce their ethical policies. Which of the following is an example of an outside group urging ethical behavior in businesses?

A. management teamsB. union officialsC. suppliersD. foreign trade representatives

253. A firm's carbon footprint is:

A. the number of employees it hires in a specific community.B. its legacy in terms of how much public good it dispersed over its lifetime.C. the amount of carbon it releases in its effort to do business.D. its participation in local fund-raising events.

254. Green washing:

A. is the most popular sub-movement of the green movement.B. clears the path for a firm to develop products and services that benefit society.C. is the appearance of being "green", when in fact the business is only making green claims without genuinely demonstrating a commitment to going

green.D. changing one's entire product line to only offering green products.

255. In order to combat "Green Washing",

A. various organizations are offering consumer information on this topic.

B. the government offers tax breaks to companies who deploy resources toward eradicating the problem.C. the government urges consumers to focus on getting the lowest price on products and services.D. everyone should adopt the late Milton Friedman's social policies.

256. One problem with conducting a social audit is:

A. that most businesses are really not very concerned with these issues.B. how to determine what should be measured and how to calculate the effect on society.C. that the primary focus of management is on the interests of stakeholders.D. governmental "red-tape."

257. The social audit is:

A. a company report that always include a net social contribution.B. a government mandated report required of all firms who have a business license.C. a company report that measures the firm's social contributions inside and outside of the firm.D. a recent development that creates a ratio to compare a firm's corporate philanthropy to its profits.

258. An important source of public scrutiny is "watchdogs". These are:

A. the efforts of a firm's competitors, including how often the competitors attack the firm's strategies.B. tax payer supported government agencies that limit a firm's ability to compete foreign markets.C. these are companies designated by the government to only produce products that support the government defense program.D. these are socially conscious groups that make it their mission to measure the social responsibility levels of businesses, and provide consumers with

their opinions about the level of corporate responsibility of various companies.

259. Top management at Big Bend Motorcycle Company is convinced that the company has a social responsibility to its community. Management believes that the firm can have the greatest impact in this area through cash contributions to nonprofit organizations. This is an example of:

A. graduated payments.B. corporate philanthropy.C. structure and strategy.D. short run profit maximization.

260. When Bagel Works employs in-store recycling, composting, and uses nontoxic cleaners, Bagel Works is participating in:

A. corporate philanthropy.B. corporate social initiatives.C. corporate responsibility.D. corporate policy.

261. Before it was publicly known that IBM was going to take over Lotus Development, an IBM secretary told her husband, who told two co-workers, who told friends, relatives, business associates, and even a pizza delivery man. A total of 25 people received the information and traded on this tip to make a profit. These people were:

A. really smart.B. insider trading.C. stealing from IBM.D. acting fairly.

262. Zorn Enterprises, a successful property management firm in Pennsylvania donates all reusable and recyclable goods left by past tenants. Besides these contributions, each year, Zorn sponsors a neighborhood clean-up day in the areas where it owns properties, complete with gardening tools that become prizes and a volunteer picnic. Zorn Enterprises is an example of how a small firm can demonstrate _________________.

A. socialism because it is not putting all the profits back into the businessB. corporate social responsibilityC. participative fundingD. stewardship toward its business partners

263. Management's philosophy at Apple, Inc. has often stated that a fit body contributes to more productivity at work. Apple provides exercise facilities at most of its sites across America, and permits employees to use a half-hour of work time each day to relieve stress through exercise. This serious position on physical fitness is part of Apple's ___________.

A. corporate philanthropyB. corporate policyC. community mediation servicesD. participative funding

264. Idle Time Gaming, Inc., would like its employees, customers, and the general public to be aware of the activities and programs it has achieved for the community over the past year. The company might consider performing a:

A. contributory analysis.B. responsibility review.C. social audit.D. annual payment report.

265. Several outside groups regularly monitor the activities of Metro Chemical Corporation. These groups are interested in the firm's involvement and enforcement of their ethical and social responsibility policies. Who of the following is the least likely to be among the "watchdog" groups?

A. The financial officer of a church with funds invested in the chemical company.B. Overseers from the World Trade Organization (WTO).C. A student in environmental engineering attending a local college.D. The president of the union representing the workers at the chemical company.

266. High Mountain Brewers has adopted the slogan, "Cool, Clean, and Green" to promote its product line of specialty beers and company image. However, upon closer inspection, a group of concerned citizens including some former employees are protesting that the company is anything but "green". According to the Thinking Green box, titled, "Green Greed", the group is accusing the brewer of __________.

A. green gaugingB. environmental stewardship

C. not adhering to government regulations which stipulate exactly what a firm must be able to prove in order to be greenD. green washing

267. Last week, the Local Citizens for a Greener America sent a formal document to Chipper's Golf Resort asking the private club to measure its carbon footprint and publicly disclose the amount of fertilizer and other carbon emitting substances that is uses on its two award winning golf courses. LCGA is an example of ___________.

A. an employee organization that has emerged at the resortB. a watchdog groupC. a disgruntled non-profit organization that has a beef against golfersD. a public interest group that is demonstrating social responsibility

268. Last year the Bank of Plenty, Inc. made an all-out-effort to go paperless. The bank's public relations arm promoted the strategy both internally and externally. Customers were strongly encouraged to utilize the bank's online banking for all their banking needs. Customers could sign up for local workshops where employees were dedicated to showing them how to navigate the bank's new website and find the information they required. The bank's initiative demonstrates:

A. a gimmick for cutting costs that watchdogs will soon uncover.B. an effort to not be left in the lurches by its competitors who are using state-of-the-art website technology.C. an area where the firm can contribute to the green effort, as well as cut costs.D. a costly effort because at least 50% of all customers still prefer a paper trail due to safety concerns such as identity theft, when it comes to online

banking.

269. Enrollment at Tradewinds College (a well-known private institution) has increased by about 3% each year for three years, even though tuition and fees have gone up to help defray the cost of new wind turbines installed on campus to generate enough power to serve the campus buildings and to sell to local business establishments. As a recent student of contemporary corporate social responsibility, you conclude:

A. new technology such as wind turbines is a huge capital investment for a college. The effort demonstrates the high cost of environmental programs.B. although it is a trendy social cause, this effort is not showing good long-term social responsibility toward the students who will end-up with sizeable

future debt.C. this is a demonstration of corporate philanthropy.D. students are willing to pay the extra tuition on the short-term because they believe that the means (the use of innovative technology) will justify the

end (a better environment).

270. Ethical problems and issues of social responsibility are:

A. unique to firms involved in global trade.B. unique to the United States.C. not unique to the United States.D. less important now than in the past.

271. When working with international firms, U.S. businesses:

A. tend to ignore the ethics of their international partners.B. expect socially responsible behavior from their business partners.C. feel that their responsibility is limited to the United States.D. try to avoid judging our international business partners by U.S. standards.

272. Top leaders in government and business today are:

A. held to higher ethical standards than in the past.B. held to less strict moral standards than in the past.C. less interested in social responsibility than in the past.D. at odds with the general public in regard to ethical issues.

273. Which of the following is an unresolved ethical issue that surrounds global trade?

A. Product qualityB. Labor standardsC. Transportation issuesD. Time to market issues

274. The Foreign Corrupt Practices Act deals with:

A. prison labor involved in international trade.B. high seas piracy that has had a resurgence in the past five years.C. bribery to obtain business.D. product safety concerns such as the dog food scare of 2008.

275. International issues of social responsibility and ethical behavior are:

A. the result of greed found in capitalist countries.B. found primarily in countries with a low standard of living.C. a concern only of business professors.D. difficult and not as clear-cut as U.S. firms would like them to be.

276. Which of the following indicates that U.S. businesses are demanding socially responsible behavior from their international suppliers?

A. The establishment of the Equal Opportunity Employment CommissionB. The decision of Wal-Mart to open stores globallyC. The decision of Phillips-Van Heusen to cancel orders from suppliers that violate its ethics codeD. The creation of the North American Free Trade Zone (NAFTA) between the U.S., Canada, and Mexico

277. According to the Reaching Beyond Our Borders box, titled "Ethical Culture Clash", which of the following is true?

A. Corporate ethics are intended to be consistent with cultural ethics.B. Corporate ethics have priority over corporate profit.C. Corporate profits have priority over corporate ethics.D. Corporate ethics can clash with cultural ethics.

278. The boxed material entitled "Reaching Beyond Our Borders" that told the story about Joe, the Motorola engineer, suggests that U.S. firms operating overseas are:

A. Not as flexible on social issues as local employees would like them to be.B. Exploiting employees by working them long hours at low pay.C. Complying with the ethical standards of the people they employ, in the countries in which they are operating.D. Responding to their stockholders desire for profits.

279. J. D. started working for an export trading company right out of college. His job took him to Asia on several occasions, where he interacted with manufacturers and got to practice his limited Chinese. He was amazed to see the difference in working conditions in the developing nations where he visited, compared to similar operations in the U.S. The expectations of workers were not the same. J.D.'s experience is an example of:

A. corporate philanthropy differences in different countries.B. social responsibility differences between similar firms, but in different countries.C. difference in corporate social initiatives in foreign nations.D. the need for whistleblowers abroad.

280. A few years ago, several U.S. retailers were sued in Los Angeles courts for human rights abuses associated with contract manufacturers located in the Marianas Islands, a territory of the U.S. government. The accusers wanted the retailers to stop outsourcing the manufacturing of soft goods to manufacturers on the islands that practiced inhumane labor standards. The activists who brought suit against the U.S. firms:

A. claimed that the retailers were breaking the law.B. were taking a corporate social initiative stance.C. were quoting the Foreign Corrupt Practices Act.D. wanted the courts to recognize the global ethical standards put in place by the International Convention Against Corruption.

281. Explain the difference between a compliance-based ethics code and an integrity-based ethics code.

282. Identify and discuss the four types of groups that serve as "watchdogs" regarding how well companies enforce their ethical and social responsibility policies.

283. Identify the six-step approach to achieve a long-term improvement of business ethics.

284. Identify the three questions that an ethics-based manager should ask when facing a potentially unethical action, and provide an example situation where you would use these questions to evaluate a decision.

285. Identify and discuss the social responsibilities of a firm, to three of the four stakeholder groups described in your textbook.

286. Provide examples that serve to explain the differences between the following terms: (1) corporate responsibility; (2) corporate social initiatives; (3) corporate philanthropy.

Mini-CaseHarry, Sirly, and Bo are in the midst of a heated discussion. As the chief operating officers of the U-Scream Ice Cream Corporation, they are reviewing the latest financial reports. Intense competition has resulted in deceased profits. Each of the three officers has their own view of how to reverse the current trend.Harry suggests cutting costs by firing union employees and hiring replacement workers at lower wages. He has directed the firm's attorney to find a loophole in the contract that will allow for this action. Sirly protests, stating that Harry's proposal is unethical and unfair. Sirly feels that every stakeholder should be treated equally, and that profiting at the expense of others is foolhardy.Bo, agreeing in part with Sirly, states, "We must be sensitive to all affected parties, but clearly our primary goal is to make a profit for our owners." In an attempt to resolve the conflict between Harry and Sirly, Bo offers an alternative suggestion: reduce the firm's charitable contributions until acceptable profit levels are realized. Sirly is outraged and reminds Bo of the social responsibilities that U-Scream Ice Cream has to the community, environment, suppliers, employees, and stockholders.

287. Harry is concerned about the legality of firing union workers in order to hire workers willing to work for less pay. Harry values ______________ ethics, but has little concern for other types.

A. integrity-basedB. compliance-based

C. socially-basedD. policy-based

288. If management adopts Bo's suggestion of reducing U-Scream Ice Cream's charitable donations until profits stabilize, the company will essentially reduce its ___________.

A. corporate citizenshipB. nonprofit volunteerismC. corporate philanthropyD. RF factor

289. Sirly recommends a marketing strategy aimed at increasing sales through the development of a positive corporate image. He suggests the first step towards this goal is to identify and evaluate the firm's programs for community involvement. Sirly is calling for a ________ to be completed.

A. strategic planB. social auditC. socialist reviewD. corporate contribution index

290. On which of the three "ethics check questions" would Harry primarily focus?

A. Is it legal?B. Is it fair and balanced?C. How will it make me feel about myself?D. Is this a win-win situation?

291. Bo's view tends to lean toward the concerns of investors, first and foremost. This is the view taken by __________________.

A. Corporate philanthropistsB. the view of Franklin D. RooseveltC. the late Milton Friedman, famous economistD. the view of a watchdog such as an environmentalist

4 KEY

FALSE

TRUE

FALSE

TRUE

TRUE

FALSE

FALSE

FALSE

The most basic step in ethical behavior is the law, but ethics go far beyond legality.

FALSE

Legal behavior and ethical behavior are directly related to our relationships with others.

TRUE

Ethical behavior requires more than following the law, but following the law is an important first step.

1. (p. 90) The Enron scandal illustrates the difference between unethical behavior and illegal behavior.

AACSB: EthicsBlooms: Knowledge

Learning Goal: 04-1Level of Learning 1: Knowledge of key terms

Nickels - Chapter 04 #1Topic: Ethics is More Than Legality

2. (p. 90) Ethical behavior requires more than following the law.




3. (p. 90) Legal behavior and ethical behavior are basically the same.

AACSB: Reflective ThinkingBlooms: Ethics



4. (p. 90) A society gets into trouble when people consider only what is illegal and not also what is ethical or unethical.




5. (p. 92) Ethical behavior refers to the standards that are accepted by society as right or wrong.



Nickels - Chapter 04 #5Topic: Ethical Standards Are Fundamental

6. (p. 92) People should look at each situation individually and decide for themselves if it is right or wrong.




7. (p. 92) Given the level of diversity within the United States, agreement on common standards of ethical behavior is unachievable.




8. (p. 90) An accurate statement regarding this chapter is: "Business law establishes ethical behavior."

AACSB: EthicsBlooms: Comprehension

Learning Goal: 04-1Level of Learning 2: Understanding of concepts and principles


9. (p. 90) Legal behavior is directly related to our relationships with others, while ethical behavior is not.




10. (p. 90) Legal behavior is a first step toward ethical behavior.

FALSE

Ethical behavior requires more than following the law, but following the law is an important first step. Legality is narrower.

TRUE

Ethics defines the standards of moral behavior, or the attempt to live by certain values and standards of conduct accepted by society as right rather than wrong.

TRUE

Ethical behavior focuses on proper relations with other people. An ethical person will treat others with honesty and sincerity. Perhaps the essence of this behavior is The Golden Rule, "do unto to others as you would have them do unto you."

TRUE

Given the ethical lapses that are so prevalent today, several things can be done to restore trust in the free-market system and leaders in general: (1) those who have broken the law need to be punished accordingly including religious people, government people, and businesspeople; (2) new laws making accounting records more transparent should be passed; and (3) making businesspeople and others more accountable may help.

TRUE


TRUE


FALSE

Many business leaders who have run afoul of the law are serving long sentences in prison. The most recent was Bernie Madoff who was sentenced to 150 years in prison for his illegal Ponzi scheme that bilked investors out of billions of dollars.




11. (p. 90) Laws that protect us from fraud, theft and violence determine ethical behavior.




12. (p. 92) Moral behavior refers to behavior that is accepted by society as right versus wrong.




13. (p. 92) Ethical behavior focuses on treating others fairly.




14. (p. 90) Making accounting records more transparent may help restore trust in the free-market system and leaders in general.




15. (p. 90) Punishing business leaders who have broken the law may help restore trust in the free-market system and leaders in general.




16. (p. 90) Making businesspeople more accountable for company actions may help restore trust in the free-market system and leaders in general.




17. (p. 91) According to the Legal Briefcase box, "Paying the Price", corporate executives who commit fraud, securities fraud, and other business crimes are sentenced to fines, but not to jail because these acts are not considered to be criminal convictions.

AACSB: EthicsBlooms: ApplicationLearning Goal: 04-1

Level of Learning 3: Application of principlesNickels - Chapter 04 #17

Topic: Legal Briefcase box

FALSE

Many immoral and unethical acts fall well within our laws, but "white collar" crime has not always been harshly punished.

FALSE

Ethical behavior should not be situationally based. If the act is appropriate behavior, then it is probably appropriate all of the time. This situation however is clearly inappropriate behavior.

FALSE

Enron's pension regulations prohibited regular employees from selling their stock, but executives had the privilege of selling whenever they saw fit. Clearly, this regulation did not benefit all employees.

TRUE

Top executives at Enron approved the removal of several billion dollars in debt from the company balance sheet in order to make the return on equity investment appear to be a higher percentage. Arthur Andersen, Enron's outside accounting firm that should have been providing company audits, did not appear to be serving the company in an honest, forthright, and transparent way.

FALSE

Although the conviction against Arthur Andersen was overturned, the company image was tarnished beyond repair. The company ceased to exist.

FALSE

Enron and WorldCom are no longer in business. Tyco International suffered a severe image problem. Investors pounded the stock price of all three companies. CEOs and other top executives that commit grievous acts can permanently affect the firm's operations and future.

FALSE

TRUE

18. (p. 90) People involved in business may be tempted to do something unethical in order to increase sales and profits, but rarely do because if they are caught, our legal system will deal harshly with them.



Topic: Ethics is More Than Legality

19. (p. 92) Jake and his college friends frequent a small pub on weekends. Last weekend, after a few beers, one of his friends decided to take the salt and pepper shaker from their table because they needed a set at their apartment. In this situation, this was not a particularly questionable activity because it was a restaurant where one pays for these extras.




20. (p. 91) According to the Legal Briefcase box, "Paying the Price", the Enron case was a landmark because it demonstrated clearly that company regulations and policies always represent the best interests of all employees, and not only those employees holding the highest company positions.




21. (p. 91) According to the Legal Briefcase box, "Paying the Price", the Enron case demonstrates the need for more accounting transparency.




22. (p. 91) According to the Legal Briefcase box, "Paying the Price", the fate of Arthur Anderson demonstrates that the law will protect your firm from problems due to the wrong-doings of other firms that you do business with.




23. (p. 91) The Legal Briefcase box, "Paying the Price" talks about illegal acts committed by executives at Enron, WorldCom, and Tyco International. This discussion demonstrates that business crimes are clearly illegal according to law, but seldom do they affect the operations of firms.




24. (p. 92) Ethical behavior involves the clear and easy choice of right and wrong actions towards others.

AACSB: Reflective ThinkingBlooms: Knowledge


Nickels - Chapter 04 #24Topic: Ethics Begins with Each of Us

25. (p. 92) Over two-thirds of the American population report never giving any time to the community.

AACSB: Reflective ThinkingBlooms: Knowledge

TRUE

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TRUE

Humor at someone else's expense is an example of unfair treatment of others.

FALSE

Ethics-based managers ask themselves the following questions when faced with a potentially ethical dilemma: "Is it legal?", "Is it balanced?", and "How will it make me feel about myself?"

TRUE



26. (p. 92) Both managers and workers cite low managerial ethics as a major cause of American businesses' competitive woes.




27. (p. 92) A common form of cheating in schools today is plagiarizing material from the Internet.




28. (p. 92) Making ethical choices is always easy.




29. (p. 92) Two recent studies found a strong correlation between academic dishonesty among undergraduates and dishonesty at work.




30. (p. 94) The question "Is it legal?" establishes ethical behavior.




31. (p. 93) It can be very difficult to maintain a balance between ethics and goals such as pleasing stakeholders.




32. (p. 94) Trying to make decisions that will benefit all parties involved is consistent with the question "How will it make me feel about myself?"




33. (p. 94) While telling an abusive joke about an ethnic group may not be unlawful, it is unethical.




34. (p. 94) An ethical manager's decisions are based only on the following questions: "Is it legal?" and "Is it profitable?"




35. (p. 94) Behavior that is in conflict with your values and sense of right and wrong can damage your self esteem.

Ethics-based managers do what is proper as well as what is profitable. Decisions that go against their sense of right and wrong corrode their self-esteem.

TRUE

The ethics check question "How will it make me feel about myself?" focuses our attention on the impact of decisions that go against our sense of right and wrong. Decisions that corrode our self-esteem will ultimately injure the organization.

FALSE

Ethical behavior begins with you and me. We cannot expect society to become more moral and ethical unless we as individuals commit to becoming more moral and ethical ourselves.

TRUE

In a recent study, both managers and workers cited low managerial ethics as a major cause of our competitive woes. Employees reported that they often violate safety standards and goof off as much as seven hours a week.

TRUE

All three situations violate the ethics-check questions of "Is it legal?", "Is it balanced?", and "How will it make me feel about myself?"

FALSE

Every situation cannot be completely balanced, but it is important to the health of our relationships that we avoid major imbalances over time. An ethics-based manager has a win-win attitude.

TRUE

By posting the decision on the company bulletin board, you are demonstrating that you stand behind the decision that was made; that you believe it is an ethical decision, and you do not need to hide your actions from your coworkers.

FALSE

Winning at the expense of others is not a balanced decision. The health of our relationships with our co-workers is very important. We should avoid major imbalances and strive to make decisions that benefit all employees.




36. (p. 94) When facing an ethical dilemma, it is often helpful to discuss the situation with your supervisor because ethical decisions will always withstand scrutiny.




37. (p. 92) Business behavior determines the ethics of society. We can improve society's moral and ethical behavior by first making a commitment to improving business's moral and ethical behavior.




38. (p. 94) Utilizing the phrase "the ends justify the means" as a corporate value system can negatively impact company morale and competitiveness.




39. (p. 92-93)

Barney extends his lunch break beyond the allotted time. Wilma uses the office telephone for unauthorized personal phone calls. Fred misrepresents his product to a potential customer. All of these are examples of unethical behavior.



Topic: Ethics Begins with Each of Us

40. (p. 94) In reality, ethical behavior depends on the situation. For example, in negotiating a contract with your employees, the way they win higher wages is by your losing the fight to hold down labor costs. You realize it is a win-lose relationship.




41. (p. 94) You are in a business meeting at work that requires your group to make an ethical decision. Your willingness to post the final decision on the bulletin board in the break room for all to see passes the test: "How will it make me feel about myself?"




42. (p. 94) As the human resources director for your company, it is your job to evaluate the company's benefits plan. Although several workers utilize the company day care facility, the facility costs the firm considerably more than another benefit might cost, such as having an on-site physician. The on-site physician services are supported by insurance, and the physician actually rents space from the company. Under these circumstances, eliminating the day care is a balanced decision.

TRUE

Asking the question, "Are my proposed actions legal?" is the first step toward addressing ethical concerns. By asking and answering this question, the business owner takes the first step in determining if the action is acceptable behavior.

FALSE

The box discusses the copyright violation that occurs when unauthorized individuals upload video streams from movies, TV shows, and even sporting events. The discussion centers around "who" is legally responsible - the individuals who are uploading the material or the website that is accepting the material? The real question is: Why do so many individuals continue to provide You Tube with copyrighted content when they know it is illegal to do so?

TRUE

YouTube is a relatively new concept. It permits individuals to upload user-generated content such as videos that individuals create on their own. Unfortunately, some persons illegally upload copyrighted material. The question becomes: Who is responsible and who should be held accountable for breaching the law? Is it the individual who loads the copyrighted material, or the website that accepts it; or, both?

TRUE

FALSE

TRUE

TRUE

TRUE




43. (p. 94) On her company website, Ali asks customers who fill orders to place a check-mark in a box if they are willing to let her share their information with her suppliers. By asking this question, Ali is addressing privacy issues, and covering her actions in case someone should try to sue her for sharing private information. She is responding to the question, "Are my proposed actions legal?"




44. (p. 93) In the Making Ethical Decisions box, "To Tube or Not to Tube?" about loading videos onto YouTube, the author makes the point that the dilemma facing all parties involved is legal, but not ethical.

AACSB: EthicsBlooms: Analysis

Learning Goal: 04-2Level of Learning 3: Application of principles

Nickels - Chapter 04 #44Topic: Making Ethical Decisions box

45. (p. 93) The Making Ethical Decisions box titled, "To Tube or Not to Tube?" demonstrates how new technology can change the landscape, and people's perspectives on what is legal and what is ethical.




46. (p. 96) Trust between workers and managers must be based on a foundation of fairness, honesty, openness, and moral integrity.



Nickels - Chapter 04 #46Topic: Managing Businesses Ethically and Responsibly

47. (p. 96) A growing number of people feel that an employee's ethics are a personal matter, and have nothing to do with management.




48. (p. 96) The majority of CEOs believe that employee misconduct results from the failure of organizational leadership to establish ethical standards.




49. (p. 96) Management can create an environment in which unethical behavior can develop.




50. (p. 96) Corporate values, like personal values, are learned by observing what others do.




51. (p. 96) Effective corporate values start with employees and develop throughout the organization to include top management.

FALSE

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TRUE

Increased pressure on employees to meet sales quotas can create an environment where management is insensitive to ethical considerations. The text presents an example of this issue with Sears, Roebuck & Company.




52. (p. 96) In order to maintain a good reputation, it is good strategy to manage your business ethically.




53. (p. 96) A business should be managed ethically to keep existing customers and attract new customers.




54. (p. 96) One good reason for managing a business ethically is to help reduce employee turnover.




55. (p. 96) In order to do the right thing for all stakeholders, a business should be managed ethically.




56. (p. 96) Overly ambitious business goals and employee incentives can lead to unethical behavior.




57. (p. 95) An ethic of justice is based on a sense of responsibility to reduce actual harm or suffering.



Nickels - Chapter 04 #57Topic: Figure 4.1

58. (p. 95) An ethic of care is based on a sense of responsibility to reduce actual harm or suffering.




59. (p. 95) An ethic of care is based on principles like justice, fairness, equality, or authority.




60. (p. 96) Employers should proceed cautiously when designing an employee incentive program that rewards employees strictly on increased sales.




61. (p. 96) "Do what I say, not what I do" can be an effective code of conduct to instill corporate values.

FALSE

People learn their standards and values from observing what others do. They seldom adopt values strictly from what others say.

TRUE

Firms with strong, effective, and ethical leadership can create a high value system. A corporate mission statement that is socially beneficial can favorably impact the value system of the firm's employees.

TRUE

People learn their standards of values from observing what others do, but not particularly from hearing what they say.

TRUE

People adopt values from observing what others do, not particularly from hearing what they say; making the actions of others more important in framing ethical behavior, than what people say.

TRUE

Individuals do not usually act alone. They need the implied, if not the direct, cooperation of others to behave unethically in a corporation.

TRUE

There are many reasons why a business should be managed ethically: (1) to maintain a good reputation; (2) to keep existing customers; (3) to attract new customers; (4) to avoid lawsuits; (5) to reduce turnover; (6) to avoid government intervention; (7) to please customers, employees, and society; and (8) because it is the right thing to do.

TRUE

When business is good, ethical decisions are less of a dilemma. When under pressure, however, managers may face more difficult decisions.

TRUE

A business should manage ethically for many reasons. Managers will often evaluate the cost of ignoring poor ethical behavior in light of the fact that government will often create laws that punish companies that misbehave.




62. (p. 96) Using the phrase: "Quality is job #1", as part of a corporate mission statement, can influence the ethical behavior of employees.




63. (p. 94) Employees, just like children, can observe behavior and adopt standards of right and wrong.




64. (p. 94) "Actions speak louder than words!", is an old saying that refers to the fact that people's actions - how they act as opposed to what they say - are often testament to their true ethical values.




65. (p. 96) As a manager, you have a responsibility for the unethical behavior of your employees.




66. (p. 96) In order to avoid the costly act of being sued in court, it makes good sense to manage your business ethically.




67. (p. 96) When faced with slow sales and low profits, even managers with strong ethical values may feel pressured to compromise those values.




68. (p. 96) Several years ago, the garment and soft goods industry agreed to adopt higher ethical standards with respect to contract manufacturers that produce their goods. The leadership agreed that this was a good approach in order to avoid the U.S. government from intervening and creating new laws to force the industry to only work with foreign manufacturers who operated with high ethical standards. This was sensible strategy on the part of the garment and soft goods industry.


Learning Goal: 04-3

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TRUE


Topic: Managing Businesses Ethically and Responsibly

69. (p. 96) Integrity-based ethics codes are based on avoiding legal punishment.



Nickels - Chapter 04 #69Topic: Setting Corporate Ethical Standards

70. (p. 96) Compliance-based ethics codes are based on preventing unlawful behavior.




71. (p. 96) Businesses with a formal code of ethics are less common now than in the past.




72. (p. 96) Compliance-based ethics codes focus on preventing unlawful behavior by increasing control and by penalizing wrongdoers.




73. (p. 96) In order to be successful, efforts to improve the ethical behavior of businesses must begin with top management's support of a corporate code of conduct.




74. (p. 97-98)

Businesses recognize that pressure to violate ethical standards can come from either inside or outside of the firm.




75. (p. 97) People who report illegal or unethical behavior are called whistleblowers.




76. (p. 97) As a result of pressure from business lobbyists, Congress failed to pass legislation protecting whistleblowers.




77. (p. 98) The job of an ethics officer is to serve as a counselor for employees and as an investigator for the company.




78. (p. 98) Enforcement is perhaps the most important step in an effective code of ethics.



Nickels - Chapter 04 #78

TRUE

Compliance-based ethics codes emphasize the prevention of unlawful behavior by increasing control and by penalizing wrongdoers.

TRUE

An integrity-based ethics code emphasizes ethically sound behavior, and shared accountability among employees.

TRUE

Often pressure to violate ethical standards comes from the outside. Communicating the organization's code of ethics to outsiders will help employees resist temptation.

FALSE

Ethics violations should be addressed in a timely manner, and with timely action. By enforcing the ethics code with timely action, leadership impresses upon all employees that the code is serious.

FALSE

Six steps can help improve America's business ethics: (1) top management must adopt and unconditionally support an explicit corporate code of conduct; (2) employees must understand that expectations for ethical behavior begin at the top and that senior management expects all employees to act accordingly; (3) managers and others must be trained to consider the ethical implications of all business decisions; (4) an ethics office must be set up; (5) outsiders must be told about the ethics program; (6) the ethics code must be enforced. Written contracts alone will not improve America's business ethics.

FALSE

Whistleblowers report illegal or unethical behavior. They are not purposefully hired by firms. However, legislation now protects employees who act as whistleblowers from corporate retaliation in the event that the company is convicted of illegal or harmful activity.

TRUE

The objective of a compliance-based ethics code is to avoid criminal misconduct.

FALSE

Topic: Setting Corporate Ethical Standards

79. (p. 96) A code of ethics designed to avoid criminal misconduct is an example of a compliance-based ethics code.




80. (p. 96) An integrity-based ethics code moves beyond legal compliance in order to create a "do-the-right-thing" climate.




81. (p. 97-98)

To be effective, an organization's code of ethics needs to be communicated to outsiders such as suppliers, subcontractors, and customers.




82. (p. 98) Since most ethics violations are small and rather insignificant in nature, employees need to understand that addressing these issues is secondary to making profits. CEOs may be justified in putting these on the back-burner, waiting for more convenient moments to address them.




83. (p. 96-97)

America's business ethics can improve simply by requiring written contracts with employees, customers, and owners. This alone will do the job!




84. (p. 97) An important step in improving U.S. business ethics is for companies to hire whistleblowers.




85. (p. 96) Dewy Cheatum encourages his employees to create and use legal loopholes to gain a competitive advantage. In keeping within the legal limits of the law, the employees are within their compliance-based ethics rights.




86. (p. 96) The brewers of Budweiser beer encourage their customers to drink responsibly and "know when to say when." This reflects a compliance-based approach to ethics.

A compliance-based approach focuses on avoiding criminal misconduct. It is an integrity-based code of ethics, on the other hand, that encourages social responsibility in the use of the firm's products.

TRUE

Compliance-based ethics emphasize preventing unlawful behavior. Government regulations require health warnings on cigarette packages and advertisements.

TRUE

Compliance-based ethics are internal rules and policies that govern the way a company operates. Non-compliant employees are breaking the law and subject to reprimand. In some cases they can lose their jobs.

TRUE

Integrity-based ethics refers to the organization's guiding values. These ethics create an environment of ethically sound behavior. By law, the client may do business and/or solicit the services of any consultant at the company, and overzealous consultants who want to increase their commissions may be tempted to convince others' clients that they have better ideas for making money.

TRUE

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TRUE




87. (p. 96) Cigarette producers label their products with warnings of potential health hazards. Due to the fact that this is a government mandated disclosure, it is part of the industry's compliance-based ethics.




88. (p. 96) In light of the fact that over 60% of all theft in retail stores is committed by employees, New Generations Clothier, Inc., requires that managers personally unlock fitting rooms for all sales associates and count the number of items associates take to the fitting rooms. This policy is written in the company manual. Breaking with the policy is grounds for dismissal. It is correct to say that this is part of New Generations' compliance-based ethics.




89. (p. 96) At Fast-Track Financial Services, it is not unusual for a financial consultant to lose a client to another consultant working out of the same office. Clients have a right to do business with whomever they choose. If it is a high net worth client, with the potential for high commissions on sales, the incentive to steal a fellow co-worker's client exists because the firm's culture has not established integrity based ethics to deter this activity.




90. (p. 98) Corporate social responsibility refers to the concern businesses have for the welfare of society.



Nickels - Chapter 04 #90Topic: Corporate Social Responsibility

91. (p. 99) Corporate philanthropy refers to the position a firm takes on issues that affect society.




92. (p. 99) A charitable donation contributed by a corporation is an example of corporate philanthropy.




93. (p. 100) Business issues such as minority hiring practices and pollution control fall under the umbrella of corporate responsibility.




94. (p. 100) As a show of corporate responsibility to your customers, your firm may elect to provide more information regarding your product than the law demands.

AACSB: Ethics

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Blooms: KnowledgeLearning Goal: 04-5

Level of Learning 1: Knowledge of key termsNickels - Chapter 04 #94

Topic: Corporate Social Responsibility

95. (p. 100) Corporate philanthropy refers to the position a firm takes on social and political issues.




96. (p. 100) When stating a firm position on various social and political issues, corporate policies often commit company profits to back these positions.




97. (p. 100) Recent surveys indicate that students are willing to agree to lower salaries if they know their employer is participating in socially responsible activities.




98. (p. 98-99)

In the discussion of corporate social responsibility, stakeholders and stockholders refer to the same group.




99. (p. 100) One responsibility of business is to satisfy customers by offering them goods and services with real value.



Nickels - Chapter 04 #99Topic: Responsibility to Customers

100. (p. 100-101)

Studies show that consumers are not concerned about the socially conscious behavior of the firms with which they do business.




101. (p. 100-101)

Customers learn to trust companies that consistently demonstrate good behavior. Those same companies can lose this position with one, socially irresponsible activity.




102. (p. 101) Some investors believe it makes financial as well as moral sense to invest in companies whose practices promote sensitivity towards the environment.



Nickels - Chapter 04 #102Topic: Responsibility to Investors

103. (p. 101) "Fair disclosure" refers to a Securities and Exchange Commission rule that states when a publicly traded firm discloses information, it must share it with everyone.




104. (p. 101) Insider trading occurs when employees of publicly traded companies use private company information to profit in the stock market.

TRUE

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105. (p. 101) Insider trading provides the information needed for the securities markets to operate fairly and efficiently.




106. (p. 102) Businesses have a social responsibility to create jobs.



Nickels - Chapter 04 #106Topic: Responsibility to Employees

107. (p. 103) Promoting social justice is a responsibility of society, but not business.



Nickels - Chapter 04 #107Topic: Responsibility to Society and the Environment

108. (p. 102) In the long run, a firm's loyalty to their employees can pay off financially.




109. (p. 102) Getting even is one of the most powerful incentives for good people to do bad things.




110. (p. 102) A recent study revealed that employee fraud causes 30% of all business failures.




111. (p. 103) The green movement has turned the heads of very few firms.




112. (p. 104) A social audit is a systematic evaluation of an organization's progress toward implementing programs that are profitable.



Nickels - Chapter 04 #112Topic: Social Auditing

113. (p. 103) The green movement has resulted in a positive impact on U.S. jobs.




114. (p. 104) "Greenwashed" companies have taken the green movement to the next level. These firms are so green, the U.S. government gives them a special designation.

TRUE

TRUE

TRUE

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TRUE

Corporate policy is one dimension of social responsibility. It refers to the position a firm takes on issues that affect the firm and society, including political issues.

TRUE

Two-thirds of the MBA students surveyed said that they would take a lower salary to work for a socially responsible company. But when asked to define a socially responsible company, things got complicated. It appears we want to be socially responsible; we just can't agree on what it involves.

TRUE

Critics, including the late Milton Friedman believe that a firm is first and foremost responsible to its owners (investors) who provided the funds for growth and financial gain. Some go so far as to say that the act is essentially "stealing from investors."



Nickels - Chapter 04 #114Topic: Thinking Green box

115. (p. 104) A firm's net social contribution is a company report that measures the difference between its positive social contributions and its negative social impact.




116. (p. 103) A public good is one that everyone gets to enjoy regardless of who pays for it.




117. (p. 105) When it comes to ethics and social responsibility, the public's perception of a firm is as important as what the firm does.




118. (p. 104) A social audit measures a firm's progress in the area of worker-management relations.




119. (p. 104-105)

A list of "watchdogs" (including customers, socially conscious investors, and environmentalists) monitor how well firms enforce their ethical and social responsibility policies.




120. (p. 98) A business that takes a public position on a political issue that affects the welfare of society is exercising corporate social responsibility.




121. (p. 100) Defining a socially responsible company is complicated. Businesses differ from other businesses, as well as the people they serve, on what we mean by "socially responsible."




122. (p. 98) Opponents of CSR (Corporate Social Responsibility) argue that firms who use their profits to promote social causes are not being fair to investors who provided the funds for the purpose of financial gain.




123. (p. 100) A corporate policy should never make a value statement about the environment or other social and political issues, because it is doubtful the company can live up to the proclamation.

FALSE

Corporate policies refer to the position a firm takes on social and political issues. As part of being socially responsible, firms make policy and commit to actively participating in activities that promote the welfare of society.

FALSE

Corporate responsibility includes everything from hiring minority workers to making safe products, minimizing pollution, using energy wisely, and providing a safe work environment.

TRUE

Milton Friedman, a Nobel laureate in economics said that corporate social responsibility means making money for your stockholders. He thought that doing anything else was moving dangerously toward socialism.

FALSE

A social audit is a response to an integrity-based approach to ethics, which goes beyond what is required by law. Firms voluntarily prepare a self-evaluation of the progress made in implementing socially responsible and responsive programs.

FALSE

Kennedy's four basic rights proposal was directed toward the rights of consumers. They are 1) the right to safety, 2) the right to be informed, 3) the right to choose, and 4) the right to be heard.

TRUE

One important thing to remember is that it isn't enough for a company to be right when it comes to ethics and social responsibility. It also has to convince its customers that it's right.

FALSE

Currently renewable-energy and energy-efficiency industries account for 8.5 million jobs and by 2030, the prediction is that this figure will jump to 40 million more jobs in engineering, manufacturing, construction, accounting, and management.

TRUE

The perception of unethical business practices will cause profit seeking, socially conscious investors to react to ethically unfavorable circumstances.




124. (p. 99-100)

Corporate social responsibility covers all those social issues outside our businesses that affect customers and the environment, but not internal issues such as employee considerations and work safety. Internal issues are covered by business laws.




125. (p. 98) Some experts feel that corporate social responsibility means solely making money for stockholders.




126. (p. 104) As a response to the Enron scandal, the federal government now requires social audits of all U.S. businesses.




127. (p. 100) In a famous speech, former President John F. Kennedy proposed that businesses had four basic rights, and in his own words, he proclaimed that "each one of them leads us back to the right to keep the profits from one's business."




128. (p. 100) Often it is the threat of negative publicity that pressures businesses to enforce their corporate code of ethics.




129. (p. 103) Although the green movement is a social trend, it is difficult to predict its future contributions to society.




130. (p. 101) Out-Tel, a computer chip manufacturer, knowingly sold defective chips and failed to notify customers of the potential problems. When the problem became public knowledge, the firm's stock price fell dramatically. This illustrates the value that investors place on the ethical behavior of businesses.

FALSE

Corporate social responsibility is the concern businesses have for the welfare of society. While a firm's primary orientation may be toward the interests of investors, the welfare of all stakeholders should be considered.

FALSE

This is clearly "corporate philanthropy", a form of corporate social responsibility. The firm is committed toward acting responsibly within society. These acts have no physical or political boundaries.

TRUE

It's not enough for companies to brag about their social responsibility efforts. They must live up to the expectations they raise or face the consequences. Customers want to do business with companies they can trust.

TRUE

Insider trading uses private company information to further insiders' own fortunes or those of family and friends. Regulation FD, the fair disclosure rule now stipulates that companies must provide the same information to everyone.

TRUE

The SEC (Securities and Exchange Commission), the organization that monitors all publicly traded companies created Regulation FD, the fair disclosure rule, which says that companies that release any information must share it with everyone, and not just a few. Everyone has the same opportunity to use the information to make financial decisions.

FALSE

Socially conscious investors make an effort to invest in companies who show high levels of social responsibility. One aspect of social responsibility deals with being green, or environmentally conscious. Companies involved with new and renewable energy sources, including the use of wind and solar energy are considered green companies.



Topic: Responsibility to Investors

131. (p. 98-99)

At a recent town hall meeting, citizens expressed concern regarding the impact of a proposed new gambling casino. The owner of the proposed casino responded, "I don't know what all of this fuss is about. I'm just a businessman trying to earn a profit, provide new jobs, and pay taxes." His response reflects an overall commitment to corporate social responsibility.




132. (p. 99) Recently, a large insurance company in the Midwest made a public commitment toward corporate philanthropy when it dedicated 3% of its profits toward the cultural and environmental concerns of the large metropolitan area that houses its corporate headquarters. The CEO stated, "In honor of several hundred employees that come to work here everyday, we want to give something back." In light of the fact that this is only helping one metropolitan area, the donation falls outside the realm of corporate social responsibility.




133. (p. 100-101)

Fresh Walls Paint Company promotes its products as nontoxic and made from natural, organic substances that are safe for all persons including those with asthma and other lung conditions. In order to live up to customer expectations, it must walk the walk and not just talk the talk! If consumers learn that Fresh Walls' paints do not meet their expectations, their reaction is likely to tarnish the company's image.



Topic: Responsibility to Customers

134. (p. 101) About 10 years ago, there were several bank mergers. Shortly after Big Bucks Bank bid on The Bank of Plenty, a story hit the local newspapers about the investigation into the purchase of several thousand shares of stock of the Bank of Plenty by three of its top executives, just prior to the announcement that Big Bucks Bank planned to buy Bank of Plenty. Upon close examination by the SEC (Securities and Exchange Commission) it was determined that the stock purchases were an illegal maneuver on the part of these executives. This is an example of insider trading. The executives were "banking" on the stock price rising sharply when the purchase announcement was made public.




135. (p. 101) Abby is a stock broker for a large financial services company. A client who works at Sixth Generation Software, Ltd., just called to purchase several thousand shares of his company's stock. He reveals to her that the company is about to announce the appointment of a new CEO. Abby asks her client if this information is public knowledge. The reason she asks is to make certain that her client, her company, and she remain in compliance with Regulation FD, the Fair Disclosure rule.




136. (p. 101-102)

Recently, Bob was trying to choose between three mutual fund investments for his retirement account. As a socially conscious investor, he will prefer to invest in funds that hold the stocks of oil and coal companies, as opposed to wind-turbine and renewable energy companies.



TRUE

FALSE

TRUE

FALSE

TRUE

TRUE

FALSE

FALSE

TRUE

FALSE


137. (p. 105) U.S. businesses claim that unethical business practices are common outside the U.S.



Nickels - Chapter 04 #137Topic: International Ethics and Social Responsibility

138. (p. 106) The ethical standards by which international political leaders are judged are more lenient today than they were in years past.




139. (p. 106) Many U.S. companies are demanding socially responsible behavior from their international suppliers.




140. (p. 106) Due to the fact that American ethical standards are very clear-cut, international suppliers do not have difficulty adhering to them.




141. (p. 108) The objective of the Inter-American Convention Against Corruption document formulated and signed by the Organization of American States (OAS) is to identify common global ethics.




142. (p. 108) The International Organization for Standardization (ISO) plans to publish a standard on social responsibility called ISO 26000.




143. (p. 107-108)

American businesses can legally demand socially responsible behavior from their international suppliers.




144. (p. 107) U.S. businesses consider The Foreign Corrupt Practices Act as legislation that has helped increase their profits abroad.




145. (p. 106) Recent surveys indicate that U.S. customers are willing to pay a little more to purchase garments from companies who promote worker-friendly environments.




146. (p. 106) All U.S. companies practice the same ethical standards when dealing with suppliers and contract manufacturers abroad.



FALSE

Nike and McDonald's are both international firms that have been criticized for actions that some view as unethical.

FALSE

American businesses are demanding socially responsible behavior of their international suppliers.

TRUE

Requiring international suppliers to adhere to American ethical standards is not as clear-cut as you might think. Is it always ethical for American companies to demand compliance with our moral standards? What about countries where child labor is an accepted part of their society?

FALSE

American businesses will be judged by the company they keep. Sears, for example, will not import products made by Chinese prison labor. To do so would tarnish the corporate image of Sears.

FALSE

Several international organizations have entered into agreements to identify common global ethics and to fight corruption. The Organization of American States, the European Union, and the Organization for Economic Cooperation and Development have entered into anti-corruption agreements.

FALSE

U.S. businesses are held to high ethical standards, whether they are dealing with customers in the U.S. or internationally. Large and small companies are scrutinized by "watch dog" groups. International bodies such as the Organization of American States, the European Union, and the Organization for Economic Cooperation and Development have adopted global ethical policies.

TRUE

Companies who contract manufacturing abroad are subject to watchdog groups and others who expect them to be socially responsible when partnering with low cost labor manufacturers abroad. These organizations are watching; the companies are starting to make ethical decisions about working conditions in third world countries before the government interferes.


147. (p. 106) Due to their significant economic power, large multinational firms can ignore the ethical standards of a society without consequences.




148. (p. 106) U.S. businesses have little influence over the behavior of businesses from other countries.




149. (p. 107) Applying the ethical standards of the U.S. to foreign firms is a difficult process for U.S. firms.




150. (p. 106) "Hear no evil, see no evil, speak no evil" is the best policy for U.S. firms to follow in their dealings with corrupt foreign suppliers.




151. (p. 108) While "doing the right thing" is an admirable code of ethics, there are no international organizations dealing with global ethics and corruption.




152. (p. 106-107)

Due to the complicated laws and ethical standards abroad, U.S. businesses are encouraged to adopt a, "don't ask, don't tell" policy.




153. (p. 106) A few years ago, several U.S. clothing manufacturers were sued in Los Angeles courts by watchdog groups who learned of poor working conditions in manufacturing plants on a U.S. territory known as the Marianas Islands. Customers are concerned with human rights abuses and other problems with supplier relationships abroad.



Topic: International Ethics and Social Responsibility

154. (p. 106-107)

Olivia is ordering trendy necklaces and earrings made with semi-precious stones from a supplier in Belize, for her city boutique. Due to low paying wages in Belize, the supplier has promised an excellent wholesale price for these goods. You concur with Olivia when she explains to you that international business law is very clear-cut with these dealings. As long as the supplier is not breaking any labor laws in his country,

FALSE

The fairness of requiring international suppliers to adhere to U.S. ethical standards is not as clear-cut as we would like it to be. U.S. businesses will be held to a higher standard by their customers and watch-dogs. Particularly, the issue of low wages and child-labor laws in foreign countries is of great concern to socially conscious investors and customers.

FALSE

The Motorola story demonstrates how one company's belief that their employee policies are reasonable may not span continents and across borders. The employee wanted the same housing allowance as other employees who live and work in South America, but did not want to spend the entire housing allowance on his living quarters, as stipulated by the employer, Motorola.

FALSE


TRUE


Olivia's social responsibility is covered.




155. (p. 107) In the Reaching Beyond our Borders box titled, "Ethical Culture Clash", the story proves that a large multi-national company such as Motorola can ask its employees, and should expect them to follow the same ethical standards they would practice if living and working within the U.S. borders.



Nickels - Chapter 04 #155Topic: Reaching Beyond our Borders box

156. (p. 107) In the Reaching Beyond our Borders box titled, "Ethical Culture Clash", the story demonstrates the many ethical similarities between North and South American business. This is fortunate for Motorola and other large electronics firms who do business south of the U.S. border. They can depend on their subsidiary firms to have no problems when implementing U.S. company employee policies.




157. (p. 107) The Motorola story told in the Reaching Beyond our Borders box demonstrates how a corporation's perception of ethical behavior may not be everyone's reality.




158. (p. 90) The Enron scandal revealed ________ corporate behavior.

A. legal but unethicalB. predictableC. illegalD. ethical




159. (p. 90) Obeying the law is ________ ethical behavior.

A. essentially the same asB. the first step towardsC. the opposite ofD. unlikely to lead to




160. (p. 92) ________ refers to standards of moral behavior.

A. LegalityB. ResponsibilityC. IntegrityD. Ethics




The danger in writing new laws to correct behavior is that people may think that any behavior that is within the law is acceptable. The measure of behavior, then, becomes "Is it legal?" Ethics and legality are two very different things.

Those that have broken the law need to be punished accordingly. New laws making accounting records more transparent (easy to read and understand) and making businesspeople and others more accountable may help restore trust in the free-market system. But laws don't make people honest, reliable, or truthful.

Laws are written to protect ourselves from fraud, theft, and violence. Ethics go beyond the law. Many immoral and unethical acts are well within the law.

Ethical behavior requires more than following the law, but following the law is an important first step. A society gets into trouble when people consider only what is illegal and not also what is unethical.

161. (p. 92) A recent study revealed that most Americans have:

A. strong moral values.B. a strong desire to do what is right.C. few moral absolutes.D. a great desire to help their community.




162. (p. 92) Which of the following statements describes ethical behavior in the U.S.?

A. Due to the diverse cultures that make-up the U.S. it is difficult to identify common standards of ethical behavior.B. The only common standards of ethical behavior in the U.S. are reflected in religious teachings.C. We can find common moral values that many Americans uphold, including respect for human life, self-control, honesty, integrity, and courage.D. Americans will generally describe the golden rule as the only statement of value that they uphold.




163. (p. 90) The danger in writing new laws to correct behavior is that:

A. People may begin to think that any behavior that is legal is acceptable.B. People will see the difference between ethics and legality.C. Legal behavior will reflect the totality of people's relations with one another.D. There will not be enough jails to house those who break the law.




164. (p. 90) Given the ethical lapses that are prevalent today in our businesses, which of the following can be done to restore trust in the free-market system and leaders in general?

A. Business leaders that have broken the law should be given another chance.B. New laws making accounting records transparent may help restore trust.C. Making the government accountable for business leader behavior will restore trust.D. It's up to the government to pass laws requiring ethical behavior of all leaders, business and otherwise.




165. (p. 90) Laws represent the standards of ________ behavior.

A. ethicalB. legalC. moralD. socially responsible




166. (p. 90) Ethical behavior covers a ________ range of conduct than legal behavior.

A. widerB. more limitedC. smallerD. less demanding




167. (p. 92) Many individuals today believe that ethical behavior is determined by what is best for them at the time. This is an example of:

A. Situational ethics.B. Moral absolutes.C. The Golden Rule.D. New age realism.

Many individuals look at each situation before deciding whether it's right to steal, lie, or drink and drive. They seem to think that what is right is whatever works best for the individual and that each person has to work out for him or herself the difference between right and wrong. That is the kind of thinking that has led to the recent scandals in government and business.

Ethics reflects people's proper relations with one another.

A recent study revealed that Americans have few moral absolutes. Depending upon the situation, many individuals decide whether it is right to steal, lie, cheat, or even drink and drive. They believe that each person should work out what is right or wrong for him/herself. This kind of thinking has led to recent scandals in government and business.

The Legal Briefcase box in this chapter summarizes a number of high-profile corporate scandals, where top executives committed crimes such as stealing from their firms, securities fraud, and making false regulatory filings. The executives were found guilty in the courts. Most are now serving time in federal prisons.

Even though Arthur Anderson's prior conviction associated with the grievous behavior of their former client, Enron was overturned in the courts, the firm was never able to recover. It is no longer in business.

As proven by the number of high-profile corporate scandals summarized in this Legal Briefcase, the actions (both legal and ethical behavior) of top executives can have a ripple effect throughout the organization. Several thousand employees lost their jobs when Arthur Anderson was involved with the Enron scandal. Thousands of employees lost their jobs and their life's savings when Enron executives committed accounting fraud and personally bankrupted the company.




168. (p. 92) Considering the potential impact on others prior to making a decision is consistent with ________ behavior.

A. legalB. anti-socialC. ethicalD. self-motivated




169. (p. 92) Many Americans define ethical behavior according to the situation in which they find themselves. This suggests that there may be situations where ________ to cheat, steal, or lie.

A. it is absolutely wrongB. it might be OKC. business people are expectedD. capitalism forces people




170. (p. 91) The Legal Briefcase box, "Paying the Price" describes situations where:

A. Company executives got in trouble and landed in jail because their ethical behavior, rather than their legal behavior was in question.B. A number of top executives of well-known corporations committed a range of crimes including stealing, securities fraud, and making false regulatory

filings.C. Clearly executives were following the letter of the law, but their ethical behavior brought down the firms.D. Large companies are forced to pay for their executives' incarceration in federal prison.



Nickels - Chapter 04 #170Topic: Legal Briefcase box

171. (p. 91) With respect to Arthur Anderson, a large and well-known public accounting and consulting firm, the Legal Briefcase box, "Paying the Price" explains:

A. how Arthur Anderson's connection with the Enron scandal was not enough to bring it down.B. how as soon as Arthur Anderson cleared itself by paying fines to the federal government, it went back to "business as usual".C. that Arthur Anderson's prior conviction was overturned, but it never recovered.D. that Arthur Anderson's consulting arm always behaved ethically, so it was saved.




172. (p. 91) Upon reading the Legal Briefcase box, "Paying the Price", you should conclude that,

A. top executives of Enron, Arthur Anderson, Tyco, Adelphia, and WorldCom did not define the ethical behavior of the firms.B. top executives are figureheads that do not necessarily know the technical aspects of the business, so the courts will not hold them accountable.C. the Securities and Exchange Commission cannot control the private purchase or sale of company stock by top executives.D. top executives are closely intertwined with all aspects of their companies.




173. (p. 90) Purposefully understating your firm's income to avoid paying higher taxes is an example of:

The first standard in business ethics is the legality of the activity. Tax evasion is illegal.

The first standard in business ethics is the legality of the activity. Engaging in accounting irregularities is illegal.

Ethical behavior by businesses is a reflection of a concern for the welfare of society as a whole. Many different sources give the following statements of basic moral values: integrity, respect for human life, self-control, honesty, courage, and self-sacrifice are right; cheating, cowardice, and cruelty are wrong.

Following the laws that apply to her business, and expecting employees to do the same will protect the firm from paying the price of convictions for crimes that are clearly against the law; however, operating within a legal framework is only the first step towards behaving as an ethical company.

Although not recommended, some leaders will evaluate each action situationally. This has dramatically decreased moral absolutes.

A. An accepted business practice.B. Tax accountants doing their job.C. Illegal behavior.D. A firm's responsibility to its owners.




174. (p. 90) When WorldCom used intentional accounting irregularities to make the company look more profitable than it actually was, it:

A. Provided its stockholders profit through a tax-loophole.B. Acted in an acceptable business manner.C. Engaged in illegal behavior.D. Executed its responsibility to its owners.




175. (p. 92) Cigarette producers refused to voluntarily place health warnings on their packages. In response, the federal government passed laws requiring health warnings on all cigarette packages. With respect to ethical behavior, this sequence of events is:

A. The intended approach.B. The desired approach.C. Not the desired approach.D. Not really a concern.



Topic: Ethical Standards Are Fundamental

176. (p. 90) When Angela graduated with a degree in computer science and started her software company, she posted a sign that read, "This company will always operate within the legal limits of the law." Posted where all employees could clearly see it each day, this demonstrated:

A. Her commitment to high ethical standards of behavior.B. Her commitment to respect the law.C. Her expectation that all employees follow the laws that apply to the business.D. Her aversion to cheating, stealing, and dishonesty.




177. (p. 92) After a few years of being in business, employees who worked for a start-up software company noticed that the owner overlooked certain questionable actions of high billing associates, versus other employees who worked hard but only brought in an average number of new clients each month. With respect to what you learned in this chapter about the ethical behavior of many Americans, which of the following statements applies here?

A. This story indicates that moral absolutes are very prevalent today in business settings.B. The owner will continue to operate this way until someone blows the whistle.C. We cannot expect people in the U.S. to all follow similar ethical patterns because there are too many cultures to deal with. Businesses are no different.D. As is often the case today, some leaders will look at each situation individually when making value judgments.



Topic: Ethical Standards Are Fundamental

178. (p. 94) Which of the following questions will help individuals and organizations when deciding if their decisions are ethical?

A. Can I do this without getting caught?B. Is it balanced?C. Has it been done before?D. Is there a desirable alternative?




179. (p. 92) When discussing moral and ethical issues, it is helpful to remember that ethical behavior begins with ___________________.

A. schoolsB. religious institutions

There is nothing like a major loss to generate retaliation from the loser. This can eventually lead to a resource-consuming effort to combat the competition, rather than focus on the customer. The result is that everybody loses.

Decisions that go against our sense of right and wrong make us feel bad—they corrode our self-esteem. Following an ethics-based approach to decision making will result in improved self-esteem.

The textbook describes an ethical dilemma as a problem without a satisfactory solution. Sometimes you must choose between equally unsatisfactory alternatives. Even for companies and individuals with a strong code of ethics, there are still no easy solutions to ethical problems.

C. law enforcement officersD. each of us




180. (p. 94) The first step when facing an ethical dilemma is to ask:

A. "Is it legal?"B. "Is it balanced?"C. "How will it make me feel about myself?"D. "Is it ethical?"




181. (p. 94) Which of the following questions can help us avoid a decision that would injure our self-esteem?

A. Is it legal?B. Is it balanced?C. How will it make me feel about myself?D. How can I avoid taking the blame?




182. (p. 93) Ethical dilemmas in business:

A. force us to make poor choices.B. always end up bringing out the best in us.C. often force us to choose between equally unsatisfactory alternatives.D. define us as being moral absolutists or moral situationalists.




183. (p. 94) Treating others unfairly can result in retaliation from the injured party. This will likely create a:

A. lose-win situation.B. win-win situation.C. lose-lose situation.D. Golden Rule application.




184. (p. 94) Ethical behavior will result in which of the following?

A. Mistrust between employees and managers.B. Agreements that create benefits for only the shareholders.C. Negative publicity from the news media.D. Improved self-esteem - makes us feel good about our decision.




185. (p. 93) Business relationships often present ethical dilemmas that are:

A. not easily resolved.B. easily resolved by following the relevant laws.C. best resolved by creating a win-lose situation.D. irrelevant and therefore require no action.




186. (p. 93) An ethical dilemma refers to a situation where you must:

A. treat someone unfairly.

Sometimes situations leave no desirable alternative. It can be very difficult to maintain a balance between ethics and other factors such as pleasing stakeholders.

Although YouTube is making an effort to delete videos that generate complaints from copyright owners, it is difficult to catch all of them. The box explains that even though uploading videos that individuals did not create themselves is illegal, people continue to do it. It leads one to debate the notion that even though it is illegal, some may not feel it is not unethical.

Agreeing to this offer would be (1) illegal, (2) unfair to other involved parties, and (3) damaging to your self-esteem. However, the most basic ethics check question is "Is it legal?"

The question in these situations is one of fairness rather than legality. Balancing self interests with the interests of others creates a win-win environment.

By initialing this document, the supervisor is confident that it is the right decision and is proud to share the decision with friends and co-workers. He/she is willing to show everyone that he/she believes it is the ethical way to operate.

B. choose between equally unsatisfactory alternatives.C. choose between a correct and an incorrect option.D. balance the concerns of profit and legality.




187. (p. 93) Which of the following describes the debate regarding video sharing in the boxed material Making Ethical Decisions, "To Tube or Not to Tube?"?

A. The debate is over whether it is legal and/or ethical for individuals to upload videos onto YouTube that they themselves did not create.B. The debate involves the unfair advantage that Viacom and other large corporations have when uploading videos onto YouTube, even though they are

operating within the law.C. The debate is over whether the Digital Millennium Copyright Act (DMCA) has outgrown its usefulness.D. The debate is about why Viacom is complaining to YouTube about illegal uploads when they have no support from other organizations.




188. (p. 94) A U.S. government official has indicated that for a generous contribution to his reelection fund, he would ignore your firm's apparent violation of several anti-pollution laws. Which of the following "ethics check questions" would you consider first?

A. Is it legal?B. Is it fair and balanced?C. How will it make me feel about myself?D. Is it a generous amount?




189. (p. 94) A friend offers to share with you a term paper previously prepared for her Introduction to Business class last semester. When you tell her that it wouldn't be fair, she reminds you of your habit of reading an entire Harry Potter book at the local bookstore without paying for the book. Which ethics-based question would be most helpful in evaluating these situations?

A. Is it legal?B. Is it balanced?C. Who wins and who loses?D. Will I get caught?




190. (p. 94) A high-level manager gathers his team of supervisors together to create a new office policy that will affect all employees at the company. After receiving a verbal nod from the supervisors, he then proceeds to pass around a written form of the new policy and asks all members of the team to initial it. He explains to the supervisors that the new policy will be posted in the break rooms on each floor of corporate headquarters. If you were a part of this work team, which question would you ultimately ask yourself before initialing your approval of this policy?

A. Is it legal?B. Is it balanced?C. How will it make me feel about myself?D. Is it a lose-lose situation?




191. (p. 94-96)

The majority of CEOs blame unethical employee conduct on:

A. the breakdown of traditional religious institutions.B. a failure of leadership to establish ethical standards.C. the increase in lawsuits used to avoid personal responsibility.D. the nation's business schools that tolerate unethical behavior in students.




Ethics is caught more than it is taught. That is, people learn their standards and values from observing what others do, not what they say.

Corporate standards demonstrated by top management impact the values of the rest of the organization. People learn their standards and values from observing others. Any trust and cooperation between workers and managers must be based on fairness, honesty, openness, and moral integrity.

The text refers to the Sears experience in automotive repairs. The emphasis on meeting sales quotas created an environment that led employees to deceive their customers.

Trust and cooperation must be based on a foundation of fairness, honesty, openness, and moral integrity. These are the characteristics of an ethics-based approach to decision making.

192. (p. 94) Ethical behavior at work is learned by:

A. Attending corporate responsibility seminars.B. Tracking the failures of those who are caught in business scandals.C. Reading about why others were fired from the job.D. Observing the actions of others.




193. (p. 96) Which of the following is a reason why a business should be managed ethically?

A. It is the right thing to do.B. Strict global regulations require it.C. It is the law in the U.S.D. Employees demand it.




194. (p. 96) Relationships between businesses and among nations,

A. should be based on international law, exclusively.B. should be based on fairness, honesty, openness, and moral integrity.C. should be scrutinized carefully to make some determination as to whether both sides have the same type of leader behavior when it comes to assigning

work.D. will be adversarial because seldom does either side believe in win-win situations.




195. (p. 94) Corporate values are:

A. a personal matter to be determined by each employee.B. taught by attending company-sponsored seminars.C. instilled by the leadership of outside consultants.D. learned by observing the actions of others in the organization.




196. (p. 96) When managers disregard ethical concerns, the likely result is:

A. a reduction in employee turnover.B. an improvement in overall manager morale.C. a reduction in lawsuits.D. a general mistrust between workers and management.




197. (p. 96) Creating competition between employees within the corporation:

A. can encourage employees to deceive customers.B. should focus on improving corporate profit.C. must be ignored when corporate ethics are developed.D. can bring out the best in employees.




198. (p. 96) Following an ethics-based approach to decision making will normally lead to higher:

A. profits.B. trust and cooperation.C. prices.D. employee turnover.

Trust and cooperation must be based on a foundation of fairness, honesty, openness, and moral integrity. A business should be managed ethically for many reasons: to maintain a good reputation; to keep existing customers; to attract new customers; to avoid lawsuits; to reduce employee turnover; to avoid government intervention; to please customers, employees and society; and simply to do the right thing.

Ethical relationships with a spirit of trust and cooperation are based on fairness, honesty, openness, and moral integrity.

Ethics reflects proper relations with one another. Overstating an expense report is not honest.

Individuals do not usually act alone. They need the implied, if not the direct, cooperation of others to behave unethically in a corporation. In addition, the leadership and example of strong top managers instill positive corporate values.

As reported in Chapter 4, a recent survey of company CEOs indicated that unethical employee conduct is often the result of leadership's failure to establish ethical standards and culture. Trust and cooperation between workers and managers must be based on moral integrity. The manager should do what he says he is going to do.




199. (p. 96) Following an ethics-based approach to decision making will normally lead to:

A. higher profits.B. lower employee turnover.C. lower prices.D. more competition.




200. (p. 96) The Hum-dinger Corporation recently instituted a corporate ethics code. The president of the company realizes that ethical relationships are based on:

A. fairness and honesty.B. strict penalties for illegal activities.C. a full-time compliance officer monitoring employee behavior.D. watchdogs and whistleblowers.




201. (p. 96) Which of the following would most likely involve ethical concerns?

A. Overstating an expense report.B. Forecasting sales for the next year.C. Developing the marketing plan for the next year.D. Improving working conditions.




202. (p. 94-96)

With respect to business ethics, it can be said that "it takes two to tango." This indicates that:

A. dancing around issues should be part of a firm's code of ethics.B. an individual's behavior is influenced by the behavior of others.C. teamwork eliminates a need for personal ethics.D. management is insensitive to ethical issues.




203. (p. 94) Jake recently invested in a Hottie Potatee franchised business that serves potatoes with all the trimmings. The business needs lots of employees in order to operate effectively. He told you that if he calls the business once each day and tells the employees that he is on his way there, they will be on their best behavior. As he tells it, "It's okay if I really don't make it there, after all, I'm the owner and the business should be able to run without micromanagement." As a recent student of business ethics, you remind Jake that:

A. he should post a code of ethics that stipulates how each employee should work and how each employee should treat the customers.B. he should create a survey for customers to respond to, and then he will always know if his employees are productive.C. employees usually take-on the behavior of their leaders. If integrity is not important to the owner, it may not be important to employees.D. "No good deed goes unpunished." Even though he may think he is doing a good thing, his employees will not appreciate the fact that he is working

very hard on his business, off-site. Their expectations are that he should be there, working side by side with them.




204. (p. 96) Establishing a formal code of ethics is:

A. more common with small businesses than large businesses.B. unnecessary given the level of government regulation.C. growing in popularity.D. mandated by the Corporate and Criminal Fraud Accountability Act.




205. (p. 96) A(n) ________-based ethics code emphasizes the prevention of unlawful behavior by increasing control and penalizing wrongdoers.

A. legalB. corporate responsibilityC. complianceD. integrity




206. (p. 97) Which of the following terms describes someone who reports illegal or unethical behavior?

A. whistleblowerB. horn blowerC. watch tower sentinelD. integrity watchdog




207. (p. 96) A(n) ________-based ethics code defines corporate values; creates a supportive environment, and, stresses shared accountability among employees.

A. socialB. corporate responsibilityC. complianceD. integrity




208. (p. 96) Compliance-based ethics codes:

A. conform to laws and regulations.B. enable responsible employee conduct.C. use education, leadership, and accountability to reinforce the code.D. create a "do-it-right" climate that emphasizes core values.




209. (p. 96) To improve America's business ethics:

A. Congress must pass an ethics bill.B. ethics must be taught in every business school around the globe.C. a company's suppliers must be thoroughly investigated for ethical violations.D. company leaders should adopt and support a corporate code of ethics.




210. (p. 97-98)

After developing a code of ethics, it should be communicated to:

A. everyone with whom the business has dealings.B. the Attorney General in jurisdictions where the business has operations.C. all levels of management.D. stockholders.




211. (p. 97) A whistleblower is a person who:

A. monitors employees who work overtime.B. reports illegal or unethical behavior in the corporation.C. reports health or other corporate emergencies to 911.D. works in the human resource department.




212. (p. 98) Which of the following is a characteristic of an effective ethics officer?

Compliance-based ethics codes prevent unlawful behavior by increasing control and by penalizing wrongdoers.

Enforcement of the ethics code is critical and timely. When management ignores a written code of ethics, it becomes a worthless, shelf document.

Integrity-based ethics codes define the organization's core values, create an environment that supports ethical behavior, and stress a shared accountability among employees.

In addition to (1) the training of management, (2) the unconditional support of top management, and (3) the protection of whistleblowers, (4) ethics codes should be publicized to all business partners including suppliers and customers. (5) Employees should always understand that management takes the firm's ethics code very seriously, and (6) enforcement of the code should be timely.

An ethics officer is equally comfortable with serving as a counselor or an ethics investigator for the firm. It requires a person who can maintain a high level of confidentiality and carry-out an objective investigation.

A. (S)he has a background in human resource management.B. (S)he is exceptionally organized.C. (S)he has a capacity to serve as a counselor and an investigator.D. (S)he communicates primarily via email.




213. (p. 96; 97)

Compliance based ethics codes typically:

A. rely on laws and regulations outside the firm for guidance.B. have a strong affinity for shared accountability among employees.C. promote a "do-it-right" climate.D. enable responsible employee conduct.



Nickels - Chapter 04 #213Topic: Setting Corporate Ethical Standards; Figure 4.3

214. (p. 98) A very critical last step in the process of establishing an ethics code is __________.

A. middle management supportB. trainingC. enforcementD. identification of the organizational ethics officer




215. (p. 96) Which of the following would be a unique focus of an integrity-based ethics code?

A. Increased control over employee actions.B. Shared accountability among employees.C. Increased penalties for code violators.D. Improved awareness of the relevant laws.




216. (p. 96-98)

Which of the following statements is not one of the six steps recommended by experts for improving ethical behavior at work?

A. Management should be trained to always consider the ethical implications of decisions.B. Top management should unconditionally support a company's corporate code of ethics.C. Whistleblowers should be protected from retaliation.D. Outsiders should be kept outside. There is no reason to share your firm's corporate code of ethics. It is an internal and private document.




217. (p. 98) What is the benefit of employing an ethics officer?

A. This professional serves as a law-enforcement officer, with the authority to arrest employees who do not abide by the ethics code.B. This individual writes the ethics code and keeps this document current. He has sole authority to change the document as he sees fit.C. This professional has the responsibility to make certain that the ethics code remains a private company document; however, since the position has very

little authority, it becomes a token job with high turnover.D. This individual's job is dedicated to objectively investigating ethics breaches. If necessary, employees feel comfortable with communicating

confidentially to this professional.




218. (p. 96) While speaking with his sales force, the director of sales explains, "Anyone caught violating a sales law will be fired." After studying business ethics, you recognize this remark as a reference to the firm's __________ ethics.

A. technology-basedB. personal responsibility-based

A compliance-based ethics code emphasizes the prevention of unlawful behavior by penalizing wrongdoers.

An integrity-based ethics code defines and communicates the organization's guiding values and creates an environment supportive of ethically sound behavior.

The Sarbanes-Oxley Act was passed in 2002 to protect whistleblowers from intentional company retaliation when reporting illegal and/or unethical accounting concerns to government authorities. Also known as the Corporate and Criminal Fraud Accountability act, it protects employees who report accounting and auditing concerns to the government from being discriminated against by their firms.

People who report illegal or unethical behavior are known as whistleblowers.

Integrity-based ethics define the organization's guiding values and standards of conduct. These create an environment that supports sound ethical behavior.

Compliance-based ethics represent unlawful standards that may justify a company in reprimanding the employee or even dismissing the employee. These standards indicate that the employer has the right to punish the employee for wrongful acts.

C. compliance-basedD. integrity-based




219. (p. 96) In an effort to promote the importance of a valuable education, the faculty and staff at the local community college are trained to ask each student about their career preferences, rather than suggest courses that may not benefit the student's future goals. Although it would be tempting to suggest courses just to increase the College's enrollment, employees know that it is more important to serve each student well, even if it means suggesting courses and/or degrees offered at other institutions. This approach is consistent with:

A. an integrity-based ethics code.B. a compliance-based ethics code.C. a response to a government mandate.D. a personal responsibility commitment.




220. (p. 97) Sharon, a CPA for a large firm noticed that the company's accounting records drastically overstated the amount of inventory on hand, which led to overstating the assets of the firm. Initially, she brought it to the attention of her supervisor, but when nothing was done to correct the mistake in a timely manner; she decided the best course of action was to report it to the appropriate government official. Although her actions took her outside the company, she was counting on current law, under the ____________ to protect her against company retaliation.

A. Cellar-Kefauver ActB. Sarbanes-Oxley ActC. Robinson-Patman ActD. Sherman Act




221. (p. 97) A phone call to a government official by an employee of the Enron Corporation disclosed the deception and dishonesty of the firm's accounting records. This employee played the role of a:

A. whistleblower.B. horn blower.C. cheerleader.D. moral policeman.




222. (p. 96) Zach spent several months developing a good relationship with a business client. The client is now buying a significant amount of product from Zach's company, resulting in high commissions for Zach, personally. After checking the sales records for the past six months, Ben (a sales colleague of Zach's) started visiting the same client in the hopes of capturing some of the client's business too. Although he considers it "legal and fair game", sales reps in his firm have begun to avoid him because they consider it a violation of:

A. company-based ethics.B. compliance-based ethics.C. integrity-based ethics.D. whistleblowing-based ethics.




223. (p. 96) John was recently hired by Backstreet Books, an eclectic bookstore in a large college town. At the beginning of the first day on the job, his store manager handed him a small booklet consisting of company rules. He was asked to read it and sign and submit the last page, before starting work. Among other things, the rules explicitly discussed reprimands for grievous behavior and dismissal if the firm could prove that the employee was stealing product from the store. This booklet represented the ___________ of the store.

A. company-based ethicsB. compliance-based ethicsC. integrity-based ethicsD. whistleblowing-based ethics




224. (p. 98) Corporate social responsibility describes the firm's:

A. exclusive responsibility to its stockholders.B. ability to plan for the unexpected.C. commitment to a management training program.D. concern for the welfare of society.




225. (p. 99) All else held equal, socially responsible firms:

A. are viewed more favorably by consumers.B. enjoy significantly higher profits.C. often experience customer loyalty problems.D. fail to earn sufficient profits for their owners.




226. (p. 99) We describe charitable donations by corporations to nonprofit organizations as __________.

A. corporate philanthropyB. corporate responsibilityC. corporate strategyD. structural commitment




227. (p. 100) The position a firm takes on issues that affect the corporation as well as society is known as its:

A. political philanthropy.B. corporate policy.C. target posturing.D. structural positioning.




228. (p. 99) In recent years, progressive firms have embarked upon ____________, where they will commit company resources and expertise toward helping-out in emergency type situations.

A. corporate philanthropyB. corporate social activismC. social civilityD. corporate social initiatives




229. (p. 100) Corporate ________ covers issues such as setting minority hiring practices, manufacturing safe products, and minimizing pollution.

A. responsibilityB. philanthropyC. diversityD. structure and strategy




230. (p. 100) Determining what is involved for a firm to be socially responsible:

A. is easy.B. varies even among those who are interested in corporate responsibility.C. helps government officials develop appropriate legislation.D. varies from industry to industry due to different laws.




231. (p. 100) Which of the following is not a basic right proposed by former President John F. Kennedy?

A. The right to be heard

B. The right to be informedC. The right to a discountD. The right to safety




232. (p. 100) A payoff for socially conscious behavior is:

A. new and loyal customers.B. a large pool of investors.C. a large pool of talented employees.D. longevity due to a stable external environment.




233. (p. 101) One strategy guaranteed to displease your customers is to:

A. provide a quality product at only a fair price.B. focus on cost and quality control systems within your organization.C. practice deception regarding product safety issues.D. shift the production of goods to foreign facilities and layoff U.S. workers.




234. (p. 100) Which of the following statements best describes a firm's commitment to its customers?

A. The firm is responsible for offering domestic products to foreign customer markets.B. One's social responsibility to customers is clear-cut.C. Customers will only support companies who make a visible effort to keep prices low.D. Firms that offer real value will develop a competitive advantage and gain customer trust.




235. (p. 101) Investors, today are realizing financial benefit by:

A. investing in companies who only operate in stable environments.B. investing in firms that have abundant resources for social initiatives.C. investing in companies who are committed to a better environment.D. investing in companies who are leaving a sizeable carbon footprint.




236. (p. 101) Insider trading involves:

A. an Internet activity that establishes a barter exchange system between businesses.B. investors using private company information to further their own fortunes.C. the exchange of assets between companies in the same industry.D. a payment or reward for socially conscious behavior.




237. (p. 102) If a business fails to meet its responsibilities to its employees, which of the following is likely to occur?

A. There is reduced employee turnover.B. Employees believe it is easier to get ahead.C. More jobs are created.D. Employees do the minimum needed to get by.




238. (p. 101) In order to avoid insider trading, the SEC (Securities and Exchange Commission) has adopted a new rule called _____________ that requires publicly traded companies to release information to everyone in a timely manner, rather than just to a few persons.

A. Insider Trading PhenomenonB. Regulation FD (Fair Disclosure)C. Red Herring RegulationD. PDI (Public Display of Information Act)



Nickels - Chapter 04 #238

Society is demanding more ethical and moral leadership from business. However, there is uncertainty as to what being socially responsible involves.

Union officials, environmentalists, and socially conscious investors put pressure on companies to comply with ethical guidelines or face negative publicity.


239. (p. 102) People need to make a living. Under this circumstance, one of the best social programs a firm can offer is:

A. a job.B. a commitment to programs that promote green living.C. a high-end product line.D. flexible work hours.




240. (p. 104) The difference between an organization's positive social contributions and its negative social impacts is called their:

A. social scorecard.B. responsibility impact report.C. net social contribution.D. community commitment level.




241. (p. 104) The purpose of a(n) ________ is to evaluate an organization's progress towards implementing programs that are socially responsible and responsive.

A. accountability reviewB. social auditC. federal disclosure statementD. annual report




242. (p. 103) Going green means:

A. increased global warming.B. increasing one's bottom line, before any other social considerations.C. increasing one's carbon footprintD. increasing one's initiatives toward a concern for the environment.




243. (p. 103) The Green Movement:

A. is not a good strategic consideration for contemporary firms.B. will never benefit a firm financially.C. is benefiting all firms financially.D. has created jobs.




244. (p. 100) Business is under pressure from society to be more socially responsible. However, even the strongest advocates for corporate responsibility can't seem to agree:

A. on what social responsibility involves.B. who should be policing business' behavior.C. if all businesses, large and small, should be held to the same standards.D. if politicians should be held to the same standards of behavior.




245. (p. 100) One factor causing businesses to vigorously enforce ethical standards is the:

A. desire to eliminate employee turnover.B. fear of negative publicity.C. focus on criminal penalties.D. evasion of social audit measurements.




Milton Friedman made a classic statement when he said that corporate social responsibility means making money for stockholders.

CSR critics believe that managers who pursue CSR are doing so with other people's money—money they invested to make more money, not to improve society. They view spending money on CSR activities as stealing from their investors.

The Bill & Melinda Gates Foundation is by far the nation's largest philanthropic foundation, with assets of more than $37 billion. While Adam Smith believed that self-interested pursuit of profit was wrong, and that benevolence was the highest virtue, Bill Gates has demonstrated CSR with his very real contribution to social responsibility in the world.

Corporate social initiatives are actions where a company offers its distinctive competencies and deploys resources to help in emergency situations. Some companies maintain emergency response teams that are ready for deployment when global crises call for quick action.

Recent graduates with MBA degrees were surveyed about working for socially responsible companies. While they were willing to consider lower salaries in order to associate themselves with socially responsible businesses, they were not in agreement with a clear-cut definition of what it meant.

Environmental quality is a public good; that is, everyone gets to enjoy it regardless of who pays for it. The trick for companies is to find the right public good that will appeal to their customers.

246. (p. 98) When it comes to social responsibility, some people feel that "before you can do good, you must do well." This reflects a firm's primary responsibility to its:

A. customers.B. investors.C. employees.D. community.




247. (p. 98) Some critics of corporate social responsibility view spending money on CSR as:

A. a necessary evil.B. stealing from investors.C. important for America.D. moving toward capitalism.




248. (p. 99) Which of the following people would be most in favor of CSR (Corporate Social Responsibility)?

A. Milton FriedmanB. Adam SmithC. Bill GatesD. Kenneth Lay




249. (p. 99) When a firm undertakes corporate social initiatives it is:

A. Making donations that are directly related to a firm's corporate competency.B. Making long-term commitments to one cause.C. Hiring minority workers.D. Making safe products.




250. (p. 100) Although college graduates would prefer to work for socially responsible companies,

A. they would not consider less pay to do so.B. they are not interested in companies that spend resources are corporate social initiatives.C. they are not in agreement with what it means to be socially responsible.D. they favor Milton Friedman's philosophy on the subject.




251. (p. 103) Environmental quality is considered to be a public good. This means that:

A. ultimately it is the public that pays for environmental clean up.B. businesses have a responsibility to minimize their environmental pollution.C. everyone enjoys a cleaner environment regardless of who pays for it.D. society places a higher value on private goods and services.




252. (p. 105 Many businesses have developed internal procedures to enforce their ethical policies. Which of the following is an example of an outside group

Investors, environmentalists, customers and union officials apply pressure to firms via a threat of negative publicity.

A firm's carbon footprint is the amount of carbon it releases during production, distribution, consumption, and disposal, as it goes about creating products and services.

According to the Thinking Green box, "Green Greed", companies who promote themselves as participants in the green movement, but whose products and services, and efforts fall short of demonstrating a concern for the environment are "green washing". These firms are using deceptive advertising practices.

Independent organization such as "Consumer Reports" and www.greenwashingindex.com are offering consumer information on this subject.

One of the more difficult problems with social auditing is how to define and measure what is meant exactly by "socially responsible and responsive."

A social audit is a firm's systematic evaluation of its progress toward socially responsible and responsive programs.

-106)

urging ethical behavior in businesses?

A. management teamsB. union officialsC. suppliersD. foreign trade representatives




253. (p. 104-105)

A firm's carbon footprint is:

A. the number of employees it hires in a specific community.B. its legacy in terms of how much public good it dispersed over its lifetime.C. the amount of carbon it releases in its effort to do business.D. its participation in local fund-raising events.




254. (p. 104) Green washing:

A. is the most popular sub-movement of the green movement.B. clears the path for a firm to develop products and services that benefit society.C. is the appearance of being "green", when in fact the business is only making green claims without genuinely demonstrating a commitment to going

green.D. changing one's entire product line to only offering green products.




255. (p. 104) In order to combat "Green Washing",

A. various organizations are offering consumer information on this topic.B. the government offers tax breaks to companies who deploy resources toward eradicating the problem.C. the government urges consumers to focus on getting the lowest price on products and services.D. everyone should adopt the late Milton Friedman's social policies.




256. (p. 104) One problem with conducting a social audit is:

A. that most businesses are really not very concerned with these issues.B. how to determine what should be measured and how to calculate the effect on society.C. that the primary focus of management is on the interests of stakeholders.D. governmental "red-tape."




257. (p. 104) The social audit is:

A. a company report that always include a net social contribution.B. a government mandated report required of all firms who have a business license.C. a company report that measures the firm's social contributions inside and outside of the firm.D. a recent development that creates a ratio to compare a firm's corporate philanthropy to its profits.




258. (p. 104-105)

An important source of public scrutiny is "watchdogs". These are:

Groups serve as watchdogs to monitor how well companies enforce their ethical and social responsibility policies.

Corporate philanthropy includes charitable donations to nonprofit groups of all kinds.

Corporate responsibility includes everything from hiring minority workers to making safe products, minimizing pollution, using energy wisely, and providing a safe work environment—essentially everything that has to do with acting responsibly within society.

Insider trading involves insiders (such as the secretary) using private company information to further their own fortunes or those of their family and friends.

Corporate social responsibility is the concern businesses have for the welfare of society. Zorn is participating in community related activities and showing a concern for the environment within the community where it earns its profits.

Corporate policy is the dimension of social responsibility that refers to a firm's position on a social and/or political issue.

A. the efforts of a firm's competitors, including how often the competitors attack the firm's strategies.B. tax payer supported government agencies that limit a firm's ability to compete foreign markets.C. these are companies designated by the government to only produce products that support the government defense program.D. these are socially conscious groups that make it their mission to measure the social responsibility levels of businesses, and provide consumers with

their opinions about the level of corporate responsibility of various companies.




259. (p. 99) Top management at Big Bend Motorcycle Company is convinced that the company has a social responsibility to its community. Management believes that the firm can have the greatest impact in this area through cash contributions to nonprofit organizations. This is an example of:

A. graduated payments.B. corporate philanthropy.C. structure and strategy.D. short run profit maximization.




260. (p. 100) When Bagel Works employs in-store recycling, composting, and uses nontoxic cleaners, Bagel Works is participating in:

A. corporate philanthropy.B. corporate social initiatives.C. corporate responsibility.D. corporate policy.




261. (p. 101) Before it was publicly known that IBM was going to take over Lotus Development, an IBM secretary told her husband, who told two co-workers, who told friends, relatives, business associates, and even a pizza delivery man. A total of 25 people received the information and traded on this tip to make a profit. These people were:

A. really smart.B. insider trading.C. stealing from IBM.D. acting fairly.




262. (p. 98) Zorn Enterprises, a successful property management firm in Pennsylvania donates all reusable and recyclable goods left by past tenants. Besides these contributions, each year, Zorn sponsors a neighborhood clean-up day in the areas where it owns properties, complete with gardening tools that become prizes and a volunteer picnic. Zorn Enterprises is an example of how a small firm can demonstrate _________________.

A. socialism because it is not putting all the profits back into the businessB. corporate social responsibilityC. participative fundingD. stewardship toward its business partners




263. (p. 100) Management's philosophy at Apple, Inc. has often stated that a fit body contributes to more productivity at work. Apple provides exercise facilities at most of its sites across America, and permits employees to use a half-hour of work time each day to relieve stress through exercise. This serious position on physical fitness is part of Apple's ___________.

A. corporate philanthropyB. corporate policyC. community mediation servicesD. participative funding




A social audit is a systematic evaluation of an organization's progress toward implementing programs that are socially responsible and responsive.

The four types of groups that serve as "watchdogs" are (1) socially conscious investors, (2) environmentalists, (3) union officials, and (4) customers.

This firm is "green washing", using deceptive practices of marketing and advertising so as to position the firm as green, when it is not really performing environmental stewardship.

A watchdog groups monitor how well businesses enforce their ethical and social responsibilities. Environmentalist groups are one type of watchdog group that is gaining in popularity.

Socially conscious companies realize that the green movement is a serious social issue that needs everyone's attention. Both product intensive and service oriented firms are looking for ways to increase profits through green initiatives. Customers appreciate companies who demonstrate a concern for natural resources. The bank's efforts emphasize the need to protect the growth of trees and all things green. It is also a cost cutting measure because in the past, the cost of paper and mailings for banking institutions was a sizeable expense.

264. (p. 104) Idle Time Gaming, Inc., would like its employees, customers, and the general public to be aware of the activities and programs it has achieved for the community over the past year. The company might consider performing a:

A. contributory analysis.B. responsibility review.C. social audit.D. annual payment report.



Topic: Social Auditing

265. (p. 104-105)

Several outside groups regularly monitor the activities of Metro Chemical Corporation. These groups are interested in the firm's involvement and enforcement of their ethical and social responsibility policies. Who of the following is the least likely to be among the "watchdog" groups?

A. The financial officer of a church with funds invested in the chemical company.B. Overseers from the World Trade Organization (WTO).C. A student in environmental engineering attending a local college.D. The president of the union representing the workers at the chemical company.




266. (p. 104) High Mountain Brewers has adopted the slogan, "Cool, Clean, and Green" to promote its product line of specialty beers and company image. However, upon closer inspection, a group of concerned citizens including some former employees are protesting that the company is anything but "green". According to the Thinking Green box, titled, "Green Greed", the group is accusing the brewer of __________.

A. green gaugingB. environmental stewardshipC. not adhering to government regulations which stipulate exactly what a firm must be able to prove in order to be greenD. green washing



Topic: Thinking Green box

267. (p. 104-105)

Last week, the Local Citizens for a Greener America sent a formal document to Chipper's Golf Resort asking the private club to measure its carbon footprint and publicly disclose the amount of fertilizer and other carbon emitting substances that is uses on its two award winning golf courses. LCGA is an example of ___________.

A. an employee organization that has emerged at the resortB. a watchdog groupC. a disgruntled non-profit organization that has a beef against golfersD. a public interest group that is demonstrating social responsibility




268. (p. 103) Last year the Bank of Plenty, Inc. made an all-out-effort to go paperless. The bank's public relations arm promoted the strategy both internally and externally. Customers were strongly encouraged to utilize the bank's online banking for all their banking needs. Customers could sign up for local workshops where employees were dedicated to showing them how to navigate the bank's new website and find the information they required. The bank's initiative demonstrates:

A. a gimmick for cutting costs that watchdogs will soon uncover.B. an effort to not be left in the lurches by its competitors who are using state-of-the-art website technology.C. an area where the firm can contribute to the green effort, as well as cut costs.D. a costly effort because at least 50% of all customers still prefer a paper trail due to safety concerns such as identity theft, when it comes to online

banking.



Topic: Responsibility to Society and the Environment

269. (p. 103) Enrollment at Tradewinds College (a well-known private institution) has increased by about 3% each year for three years, even though tuition and fees have gone up to help defray the cost of new wind turbines installed on campus to generate enough power to serve the campus buildings and to sell to local business establishments. As a recent student of contemporary corporate social responsibility, you conclude:

A. new technology such as wind turbines is a huge capital investment for a college. The effort demonstrates the high cost of environmental programs.B. although it is a trendy social cause, this effort is not showing good long-term social responsibility toward the students who will end-up with sizeable

Environmental quality is a public good that everyone gets to enjoy regardless of who pays for it. The challenge is for companies and institutions to find the public good that appeals to their constituents (customers, students, patients, clients).

Ethical problems and issues of social responsibility are not unique to an economic system or level of income. Although U.S. businesses demand socially responsible behavior from their international suppliers, ethical standards are not as clear-cut as they would like them to be. Some question whether U.S. businesses should expect or require international suppliers to adhere to U.S. law.

future debt.C. this is a demonstration of corporate philanthropy.D. students are willing to pay the extra tuition on the short-term because they believe that the means (the use of innovative technology) will justify the

end (a better environment).



Topic: Responsibility to Society and the Environment

270. (p. 105) Ethical problems and issues of social responsibility are:

A. unique to firms involved in global trade.B. unique to the United States.C. not unique to the United States.D. less important now than in the past.




271. (p. 106) When working with international firms, U.S. businesses:

A. tend to ignore the ethics of their international partners.B. expect socially responsible behavior from their business partners.C. feel that their responsibility is limited to the United States.D. try to avoid judging our international business partners by U.S. standards.




272. (p. 105) Top leaders in government and business today are:

A. held to higher ethical standards than in the past.B. held to less strict moral standards than in the past.C. less interested in social responsibility than in the past.D. at odds with the general public in regard to ethical issues.




273. (p. 106) Which of the following is an unresolved ethical issue that surrounds global trade?

A. Product qualityB. Labor standardsC. Transportation issuesD. Time to market issues




274. (p. 107) The Foreign Corrupt Practices Act deals with:

A. prison labor involved in international trade.B. high seas piracy that has had a resurgence in the past five years.C. bribery to obtain business.D. product safety concerns such as the dog food scare of 2008.




275. (p. 105-106)

International issues of social responsibility and ethical behavior are:

A. the result of greed found in capitalist countries.B. found primarily in countries with a low standard of living.C. a concern only of business professors.D. difficult and not as clear-cut as U.S. firms would like them to be.




276. (p. 106) Which of the following indicates that U.S. businesses are demanding socially responsible behavior from their international suppliers?

U.S. businesses are demanding that their international suppliers not violate human rights and environmental standards. Sears, Nike, Dow Chemical, and McDonald's have all had social responsibility issues with their international suppliers.

Joe, an employee of Motorola, falsified receipts for living expenses in order to be able to provide money for his family's education. Joe felt that this was necessary to honor the memory of his late father. Motorola was concerned about Joe's apparent lack of integrity.

The story demonstrates a culture clash between business ethics abroad and business ethics practiced in the U.S. Joe, an engineer with Motorola used the housing allowance provided by his employer (Motorola) for other expenses that did not fall under the area of living accommodations. If Joe worked in the U.S., it would be highly unethical to falsify expense reports in order to receive the housing stipend. Joe did not consider it an offense in South America.

Developing nations do not have the same labor standards as well-developed nations. In order to get ahead, employees in developing nations are willing to work in what is often considered poor working conditions to workers in the U.S. Job choices are meager. Workers are willing to work for long hours, in poor conditions, for a few cents more each hour.

The Marianas Islands is a territory of the U.S., and as such U.S. law should apply. However, the manufacturers that operate on the islands are not U.S. businesses. They are foreign manufacturers. Since the clothing was being manufactured for U.S. retailers, on U.S. soil, and with labels indicating the product was made in the U.S.A., the claimants believed they had a good case against the retailers.

Compliance-based ethics codes emphasize preventing unlawful behavior by increasing control and penalizing wrongdoers. The primary focus is to conform to outside standards (laws and regulations), and avoid criminal misconduct.An integrity-based code of ethics defines the organization's guiding values, creates an environment that supports ethically sound behavior, and stresses a shared accountability among employees. There is still a requirement to conform to outside standards, but that is just a starting point. Integrity-based ethics codes move beyond legal compliance to create a "do-it-right" climate that emphasizes core values, such as honesty and fair play.

A. The establishment of the Equal Opportunity Employment CommissionB. The decision of Wal-Mart to open stores globallyC. The decision of Phillips-Van Heusen to cancel orders from suppliers that violate its ethics codeD. The creation of the North American Free Trade Zone (NAFTA) between the U.S., Canada, and Mexico




277. (p. 107) According to the Reaching Beyond Our Borders box, titled "Ethical Culture Clash", which of the following is true?

A. Corporate ethics are intended to be consistent with cultural ethics.B. Corporate ethics have priority over corporate profit.C. Corporate profits have priority over corporate ethics.D. Corporate ethics can clash with cultural ethics.



Topic: Reaching Beyond our Borders box

278. (p. 107) The boxed material entitled "Reaching Beyond Our Borders" that told the story about Joe, the Motorola engineer, suggests that U.S. firms operating overseas are:

A. Not as flexible on social issues as local employees would like them to be.B. Exploiting employees by working them long hours at low pay.C. Complying with the ethical standards of the people they employ, in the countries in which they are operating.D. Responding to their stockholders desire for profits.



Topic: Reaching Beyond our Borders box

279. (p. 106) J. D. started working for an export trading company right out of college. His job took him to Asia on several occasions, where he interacted with manufacturers and got to practice his limited Chinese. He was amazed to see the difference in working conditions in the developing nations where he visited, compared to similar operations in the U.S. The expectations of workers were not the same. J.D.'s experience is an example of:

A. corporate philanthropy differences in different countries.B. social responsibility differences between similar firms, but in different countries.C. difference in corporate social initiatives in foreign nations.D. the need for whistleblowers abroad.




280. (p. 108) A few years ago, several U.S. retailers were sued in Los Angeles courts for human rights abuses associated with contract manufacturers located in the Marianas Islands, a territory of the U.S. government. The accusers wanted the retailers to stop outsourcing the manufacturing of soft goods to manufacturers on the islands that practiced inhumane labor standards. The activists who brought suit against the U.S. firms:

A. claimed that the retailers were breaking the law.B. were taking a corporate social initiative stance.C. were quoting the Foreign Corrupt Practices Act.D. wanted the courts to recognize the global ethical standards put in place by the International Convention Against Corruption.




281. (p. 96) Explain the difference between a compliance-based ethics code and an integrity-based ethics code.


Learning Goal: 04-4

1) Socially conscious investors who insist that a company extend the firm's own high standards to all its suppliers.2) Environmentalists who apply pressure by naming names of companies that don't abide by the environmentalists' standards.3) Union officials who hunt down violations and force companies to comply to avoid negative publicity.4) Customers who take their business elsewhere if a company demonstrates unethical and socially irresponsible practices.

1) Top management must adopt and unconditionally support an explicit corporate code of conduct.2) Employees must understand that expectations for ethical behavior begin at the top and that senior management expects all employees to act accordingly.3) Managers and others must be trained to consider the ethical implications of all business decisions.4) An ethics office must be set up with phone lines to allow employees to report questionable activities.5) Suppliers, subcontractors, distributors, and customers must be told about the ethics program. Often pressure to put aside ethical considerations comes from outsiders, and it helps employees resist such pressure when everyone knows what the ethical standards are.6) The ethics must be strictly enforced with timely action if any rules are broken.

Is it legal? Am I violating any law or company policy? Regardless of the situation, this is the most basic step in an ethics-based management system.Is it balanced? Am I acting fairly? Would I want to be treated this way? If a situation arises where one party wins everything at the expense of another party, the future may bring retaliation from the loser. While every situation cannot be completely balanced, it is important for the health of business relationships that we avoid major imbalances over time. An ethics-based manager maintains a win-win attitude.How will it make me feel about myself? Will I feel proud when my family learns of my decision? Decisions that go against our sense of right and wrong make us feel bad and cause us to lose our self-esteem.The examples will vary but should include a discussion of the legality of the situation, for starters. Then proceed with determining if the decision is balanced. Do both sides stand to gain something, or is it a lose situation for only one side? Do you feel good about the decision? Will others believe that you did the best you could in this situation?

Customers: Businesses are responsible for satisfying customers by offering them goods and services of real value. One of the surest ways of failing to please customers is to be less than totally honest with them.Investors: According to Milton Friedman, businesses are responsible for generating profits for their owners and investors. Some people believe that before "you can do good, you must do well;" others believe that by doing good, you can also do well. Many people believe that it makes financial as well as moral sense to invest in companies that are planning ahead to create a better environment. By choosing to put their money into companies whose goods and services benefit the community and the environment, investors can improve their own financial health while improving society's health.Employees: Firms have several responsibilities to employees. First, they have a responsibility to create jobs if they want to grow. Once a company creates jobs, it has the responsibility to see to it that hard work and talent are respected and fairly rewarded. Employees need realistic hope of a better future, which comes only through a chance for upward mobility. Companies can demonstrate commitment and caring by giving employees salaries and benefits that help them reach their personal goals.Society and the Environment: One of business's major responsibilities to society is to create new wealth. Businesses are also partly responsible for promoting social justice. Businesses are also taking responsibility for helping to make their own environment a better place. Environmental efforts may increase the company's costs, but they also may allow the company to charge higher prices, to increase market share, or both. The environmental movement is a social trend that all generations have embraced. Businesses who show a concern for the environment may increase their costs, but customers are willing to pay higher prices if they know that the business is environmentally conscious.

Corporate responsibility refers to a firm's commitment toward a number of social issues that range from the hiring of minorities to making safe products. Examples will vary, however, students may discuss hiring a diverse workforce, or making the recent problem with dog food imported from China or other responsibility issues.Corporate social initiatives refer to a firm taking its distinct competencies and using them in a socially responsible way. For example, when Hurricane Katrina hit Louisiana, Wal Mart moved lots of product to New Orleans that was badly needed by the victims. Wal Mart's transportation operations could efficiently do the job. Hospitals sent emergency care experts to help the Red Cross.Corporate philanthropy is the donating of important resources to a cause - usually donations of money and time. Providing money for local youth programs and then asking employees to utilize an hour each week to work with local youth are examples of corporate philanthropy.

Level of Learning 2: Understanding of concepts and principlesNickels - Chapter 04 #281


282. (p. 104-105)

Identify and discuss the four types of groups that serve as "watchdogs" regarding how well companies enforce their ethical and social responsibility policies.




283. (p. 96-98)

Identify the six-step approach to achieve a long-term improvement of business ethics.




284. (p. 94) Identify the three questions that an ethics-based manager should ask when facing a potentially unethical action, and provide an example situation where you would use these questions to evaluate a decision.

AACSB: EthicsBlooms: Analysis and Application



285. (p. 100-104)

Identify and discuss the social responsibilities of a firm, to three of the four stakeholder groups described in your textbook.



Topic: Responsibility to Customers; Responsibility to Investors; Responsibility to Employees; Responsibility to Society and the Environment

286. (p. 99-100)

Provide examples that serve to explain the differences between the following terms: (1) corporate responsibility; (2) corporate social initiatives; (3) corporate philanthropy.




A compliance-based ethics code emphasizes preventing unlawful behavior by seeking legal advice and following the letter of the law.

Corporate philanthropy involves charitable donations to nonprofit groups.

A social audit is a systematic evaluation of an organization's progress toward implementing programs that are socially responsible and responsive.

Harry's concern is compliance with the law.

The late Milton Friedman, famous economist, proclaimed in a well-known speech that the only social responsibility of business was to make money for stockholders.

Mini-CaseHarry, Sirly, and Bo are in the midst of a heated discussion. As the chief operating officers of the U-Scream Ice Cream Corporation, they are reviewing the latest financial reports. Intense competition has resulted in deceased profits. Each of the three officers has their own view of how to reverse the current trend.Harry suggests cutting costs by firing union employees and hiring replacement workers at lower wages. He has directed the firm's attorney to find a loophole in the contract that will allow for this action. Sirly protests, stating that Harry's proposal is unethical and unfair. Sirly feels that every stakeholder should be treated equally, and that profiting at the expense of others is foolhardy.Bo, agreeing in part with Sirly, states, "We must be sensitive to all affected parties, but clearly our primary goal is to make a profit for our owners." In an attempt to resolve the conflict between Harry and Sirly, Bo offers an alternative suggestion: reduce the firm's charitable contributions until acceptable profit levels are realized. Sirly is outraged and reminds Bo of the social responsibilities that U-Scream Ice Cream has to the community, environment, suppliers, employees, and stockholders.

Nickels - Chapter 04

287. (p. 96) Harry is concerned about the legality of firing union workers in order to hire workers willing to work for less pay. Harry values ______________ ethics, but has little concern for other types.

A. integrity-basedB. compliance-basedC. socially-basedD. policy-based




288. (p. 99) If management adopts Bo's suggestion of reducing U-Scream Ice Cream's charitable donations until profits stabilize, the company will essentially reduce its ___________.

A. corporate citizenshipB. nonprofit volunteerismC. corporate philanthropyD. RF factor




289. (p. 104) Sirly recommends a marketing strategy aimed at increasing sales through the development of a positive corporate image. He suggests the first step towards this goal is to identify and evaluate the firm's programs for community involvement. Sirly is calling for a ________ to be completed.

A. strategic planB. social auditC. socialist reviewD. corporate contribution index




290. (p. 94) On which of the three "ethics check questions" would Harry primarily focus?

A. Is it legal?B. Is it fair and balanced?C. How will it make me feel about myself?D. Is this a win-win situation?




291. (p. 98) Bo's view tends to lean toward the concerns of investors, first and foremost. This is the view taken by __________________.

A. Corporate philanthropistsB. the view of Franklin D. RooseveltC. the late Milton Friedman, famous economistD. the view of a watchdog such as an environmentalist




4 SummaryCategory # of Questions

AACSB: Ethics 288AACSB: Reflective Thinking 3Blooms: Analysis 7Blooms: Analysis and Application 1Blooms: Application 59Blooms: Comprehension 93Blooms: Ethics 1Blooms: Knowledge 130Learning Goal: 04-1 43Learning Goal: 04-2 35Learning Goal: 04-3 36Learning Goal: 04-4 44Learning Goal: 04-5 96Learning Goal: 04-6 37Level of Learning 1: Knowledge of key terms 128Level of Learning 2: Understanding of concepts and principles 92Level of Learning 3: Application of principles 71Nickels - Chapter 04 292Topic: Corporate Social Responsibility 40Topic: Ethical Standards Are Fundamental 13Topic: Ethics Begins with Each of Us 33Topic: Ethics is More Than Legality 23Topic: Figure 4.1 3Topic: International Ethics and Social Responsibility 25Topic: Legal Briefcase box 8Topic: Making Ethical Decisions box 3Topic: Managing Businesses Ethically and Responsibly 33Topic: Reaching Beyond our Borders box 5Topic: Responsibility to Customers 10Topic: Responsibility to Customers; Responsibility to Investors; Responsibility to Employees; Responsibility to Society and the Environment 1Topic: Responsibility to Employees 6Topic: Responsibility to Investors 11Topic: Responsibility to Society and the Environment 12Topic: Setting Corporate Ethical Standards 43Topic: Setting Corporate Ethical Standards; Figure 4.3 1Topic: Social Auditing 17Topic: Thinking Green box 4

Bus Chapter 4

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