Demanding Ethical And Socially Chapter 4 Complete Test Bank

Understanding Business, 12e (Nickels)

Chapter 04 Demanding Ethical and Socially Responsible Behavior

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 true or false.

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) 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.

18) Gary and his college friends often spend weekends hanging out at a small pub. Last weekend, after a few beers, one of his friends took the salt and pepper shakers from the table because they needed a set at their apartment. In this situation, this was not an unethical action because it was a restaurant and potential loss is figured into the prices.

19) Ethical behavior involves the clear and easy choice of right and wrong actions toward others.

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

21) A common form of cheating in schools today is plagiarizing online material.

22) Making ethical choices is always easy.

23) Two recent studies found no correlation between academic dishonesty among undergraduates and dishonesty at work.

24) The question "Is it legal?" establishes ethical behavior.

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

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

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

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

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

30) 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.

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

32) Micah often takes longer lunch breaks than allowed. Melissa chooses to use her work computer to check out her personal Twitter account instead of using up her phone's data. Louis misrepresents his product to a potential customer. All of these are examples of unethical behavior.

33) 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.

34) 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?"

35) You're working as a human resources director for a small company. Part of your job is to assess the company's benefits plan. There are several workers utilizing the company daycare facility. However, the daycare costs the company far more than another benefit might cost, like employing 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 daycare is a balanced decision.

36) Andrea owns a small online retail business. On her company website, she asks customers who fill orders to mark a box if they are willing to let her share their personal information with her suppliers. By asking this question, Andrea 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?"

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

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

39) Management can create an environment in which unethical behavior can develop.

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

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

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

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

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

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

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

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

48) Employees observe behavior and adopt standards of right and wrong.

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

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

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

52) "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.

53) Recently, Silky Soft Inc., a clothing and soft goods company agreed to adopt higher ethical standards with respect to contract manufacturers producing their goods. Company leadership agreed this was a good approach to avoid the U.S. government's intervening and creating new laws to force the entire industry to work only with foreign manufacturers who operate with high ethical standards. This was sensible strategy on the part of the clothing and soft goods industry.

54) Integrity-based ethics codes are based on avoiding legal punishment.

55) Compliance-based ethics codes are based on preventing unlawful behavior.

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

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

58) 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.

59) People who report illegal or unethical behavior are called whistleblowers.

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

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

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

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

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

65) To be effective, an organization's code of ethics should be kept in-house and not communicated to outsiders such as suppliers, subcontractors, and customers.

66) 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 ignoring these small problems and waiting for more convenient moments to address them.

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

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

69) Dewey Cheatsum urges his employees to find and use legal loopholes to gain a competitive advantage whenever they can. In keeping within the legal limits of the law, the employees are within their compliance-based ethics rights.

70) Beer brewers, both large and small, often encourage their customers to drink responsibly. This reflects a compliance-based approach to ethics.

71) Tobacco companies label their products with warnings of the potential health hazards that could occur from smoking. Due to the fact that this is a government-mandated disclosure, it is part of the industry's compliance-based ethics.

72) A large amount of retail theft is committed by employees; therefore, Suit Up, Inc., requires that managers personally unlock fitting rooms and count the number of items taken to the fitting rooms by not just customers but sales associates too. This policy is written in the company manual and breaking with the policy is grounds for dismissal. It is correct to say that this is part of Suit Up's compliance-based ethics.

73) At Fisher Financial Services, clients have a right to do business with whichever consultant they choose. It is not out of the ordinary for a financial consultant to lose a client to another consultant in the same office. If it is a high–net worth client, with the potential for high commissions on sales, the incentive to steal a fellow worker's client exists because the firm's culture has not established integrity-based ethics to deter this activity.

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

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

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

77) Business issues such as treating employees fairly and ethically are part of corporate responsibility.

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

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

80) Surveys show that students are willing to agree to lower salaries if they know their employer is participating in socially responsible activities.

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

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

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

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

85) Some investors believe it makes financial as well as moral sense to invest in companies whose practices promote sensitivity toward the environment.

86) "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.

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

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

89) Businesses have a social responsibility to create jobs.

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

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

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

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

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

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

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

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

98) Watchdogs (including customers, socially conscious investors, and environmentalists) monitor how well firms enforce their ethical and social responsibility policies.

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

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."

101) Opponents of corporate social responsibility argue that when companies use their profits to promote social causes, they are not being fair to investors who provided the funds for the purpose of financial gain.

102) 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.

103) 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.

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

105) 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."

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

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

108) As a response to various scandals, the federal government now requires social audits of all U.S. businesses.

109) Chip's CPUs, a computer chip manufacturer, knowingly sold flawed chips and decided not to tell its customers of the possible problems. When it became public knowledge, however, the firm's stock price fell dramatically. This demonstrates the value that investors place on the ethical behavior of businesses.

110) At a recent town hall meeting, citizens expressed concern regarding the impact of a proposed new 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.

111) Make it Better, Inc. is a large insurance company in the Midwest. Make it Better made its corporate philanthropy public when it announced 3% of its profits would be donated toward the cultural and environmental concerns of Des Moines, the home of Make it Better's corporate headquarters. The CEO stated, "In honor of several hundred employees that come to work here every day, we want to give something back." Since this is only helping one metropolitan area, the donation falls outside the realm of corporate social responsibility.

112) Fresh Coats Paint Co. promotes its products as nontoxic and made from natural, organic substances. The paints are safe for all persons, including those with asthma and other lung conditions. If consumers learn that Fresh Coats' paints do not meet their expectations, their reaction is likely to tarnish the company's image.

113) It's merger mania in the banking industry. Shortly after Bank of Bux bid on The Abundance Bank, a story hit the local news about the investigation into the purchase of several thousand shares of stock of the Abundance Bank by three of its top executives, just prior to the announcement that Bank of Bux planned to buy Abundance Bank. 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.

114) Anna is a stockbroker for Bank of Bux. A client who works at Game Guys, Ltd., just called to purchase thousands of shares of Game Guys' company's stock. He reveals to her that the company is soon announcing the appointment of a new superstar CEO. Anna 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.

115) Recently, Bob was trying to choose among 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.

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

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

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

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

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

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

122) U.S. businesses consider the Foreign Corrupt Practices Act as legislation that has helped increase their profits abroad.

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

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

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

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

127) "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.

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

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

130) According to the Reaching Beyond Our Borders box, corporate ethics can clash with cultural ethics, especially in global business.

131) In the Reaching Beyond Our Borders box, the story proves that a large multinational company can ask its employees to follow, and should expect them to follow, the same ethical standards they would practice if living and working within the U.S. borders.

132) In the Reaching Beyond Our Borders box, the story demonstrates the many ethical similarities between North and South American businesses. This is fortunate for large firms that 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.

133) American clothing manufacturer Simple Suits was sued in New York courts by watchdog groups that discovered the poor working conditions in manufacturing plants in a U.S. territory. Customers are typically concerned with human rights abuses and other problems with supplier relationships at home and abroad.

134) Christina owns a boutique and is ordering jewelry made using semi-precious stones from a supplier in Mexico. Due to low wages in Mexico, her supplier promised an excellent wholesale price for these goods. You agree with Christina 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, her social responsibility is covered.

135) Obeying the law is ________ ethical behavior.

A) essentially the same as

B) the first step toward

C) the opposite of

D) unlikely to lead to

136) ________ refers to standards of moral behavior.

A) Legality

B) Responsibility

C) Integrity

D) Ethics

137) 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.

138) Which of the following statements best 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.

139) The danger in writing new laws to correct behavior is that

A) people may begin to think that any behavior that is legal is ethically 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.

140) 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.

141) Laws represent the standards of ________ behavior.

A) ethical

B) legal

C) moral

D) socially responsible

142) Ethical behavior covers a ________ range of conduct than legal behavior.

A) broader

B) more limited

C) smaller

D) less demanding

143) 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.

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

A) legal

B) anti-social

C) ethical

D) self-motivated

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

A) it is absolutely wrong

B) it might be okay

C) business people are expected

D) capitalism forces people

146) 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.

147) When police set up sobriety checkpoints, they aim to lessen drunk driving and save lives. While not required, the makers of apps that help users navigate around the checkpoints have complied with the public request of several legislators and have obediently stopped operating. After studying about ethics and social responsibility, which of the following statements applies to this situation?

A) Laws represent the minimum guidelines that companies must follow, whereas a company's ethical stance may venture beyond the minimum level of compliance.

B) App developers that keep operating are showing corporate social responsibility because they demonstrate concern for their investors, which is exactly where their focus should be.

C) App developers no longer operating are acting philanthropically toward government.

D) App developers that keep operating are showing their distrust for big government, and their avoidance of contributing toward philanthropic causes.

148) GloboTech recently used intentional accounting irregularities to make the company look more profitable than it actually was. GloboTech ________.

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.

149) Tobacco companies initially 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.

150) When Kira graduated with a degree in computer science, she started her software company. On her first day of operations, 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.

151) Employees at GloboTech, a start-up software company, noticed that the owner overlooked certain questionable actions of high billing associates. Other employees, who worked hard but only brought in an average number of new clients each month, were highly scrutinized. After you read 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.

152) 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?

153) When discussing moral and ethical issues, it is helpful to remember that ethical behavior begins with

A) schools.

B) religious institutions.

C) law enforcement officers.

D) each of us.

154) 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?"

155) 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?

156) 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.

157) 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 making us feel good about our decision.

158) 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.

159) 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.

160) A U.S. senator has just told you that for a generous contribution to her reelection fund, she would ignore your company's apparent violation of several antipollution 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?

161) Your friend, Marco, offers to share with you a paper he wrote for his Introduction to Business class last semester. When you tell him that it wouldn't be fair, he reminds you of your habit of reading an entire book at Barnes & Noble 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?

162) 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 okay 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?

163) 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.

164) 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.

165) Which of the following is a reason why a business should be managed ethically?

A) It's the right thing to do.

B) There are strict global regulations require it.

C) It's the law in the U.S.

D) Your employees demand it.

166) 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.

167) 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.

168) When managers disregard the company's 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.

169) 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.

170) Following an ethics-based approach to decision making will normally lead to higher

A) profits.

B) trust and cooperation.

C) prices.

D) employee turnover.

171) 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.

172) The Irish Plastering Corporation recently instituted a corporate ethics code. The president of the company, Seamus McHale, realized 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.

173) 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

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

A) dancing around issues should be part of a company's code of ethics.

B) an individual's behavior is influenced by the behavior of others.

C) teamwork eliminates a need for one's personal ethics.

D) management is insensitive to ethical issues.

175) 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.

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

A) legal

B) corporate responsibility

C) compliance

D) integrity

177) Which of the following terms describes someone who reports illegal or unethical behavior?

A) Whistleblower

B) Hornblower

C) Watch tower sentinel

D) Integrity watchdog

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

A) social

B) corporate responsibility

C) compliance

D) integrity

179) Compliance-based ethics codes

A) conform to U.S. 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.

180) 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.

181) 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.

182) 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.

183) Which of the following is a characteristic of an effective ethics officer?

A) A background in human resource management

B) Exceptionally organized

C) Has a capacity to serve as a counselor and an investigator

D) Communicates primarily via e-mail

184) 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.

185) A very critical last step in the process of establishing an ethics code is

A) middle management support.

B) training.

C) enforcement.

D) identification of the organizational ethics officer.

186) 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

187) Whistleblowers have long been known as people with a universal moral calling. However, rarely did these individuals receive rewards for their efforts. In reality, they would often fall onto hard times. But in 2010, with the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, a provision permits whistleblowers to

A) remain at their jobs, after reporting a securities violation.

B) receive up to 30% of the penalty funds that exceed $1 million that the courts recover from companies proven to be in violation.

C) represent securities violations only in the companies where they are employed.

D) automatically receive up to a $1 million dollar reward for reporting a securities violation, as well as retain his/her job.

188) 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.

189) While speaking with your sales team, your manager explains, "Anyone caught breaking a sales law will be fired." After reading about business ethics, you quickly identify this remark as a reference to the firm's ________ ethics.

A) technology-based

B) personal responsibility-based

C) compliance-based

D) integrity-based

190) The faculty and administration staff at your local community college are trained to ask about your career preferences, instead of suggesting courses that may not benefit your future goals. Even though it would be tempting to advise students to take extra 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.

191) Enrico is a CPA for a large company. Recently, he noticed that the company's accounting records significantly overstated the amount of inventory on hand. This led to an overstatement of the assets the company holds. Initially, he brought it to the attention of his supervisor, but when nothing was done to correct the mistake in a timely manner, he decided the best course of action was to report it to the appropriate government official. Although his actions took him outside the company, Enrico was counting on current law, under the ________, to protect him against company retaliation.

A) Cellar-Kefauver Act

B) Sarbanes-Oxley Act

C) Robinson-Patman Act

D) Sherman Act

192) 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) ethics officer.

D) moral policeman.

193) After spending several months developing a good relationship with a business client, Rob's client is now purchasing substantial amounts of products from Rob's company, resulting in high commissions for him. After checking the sales records for the past six months, a colleague of Rob's started visiting the same client in the hopes of capturing some of that 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.

194) Colin is a recent hire at Bender's Book Stop. On his first day in his new 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 his work. Among other things, the rules explicitly discussed punishments for grievous behavior and firing if the firm could prove that the employee was stealing product from the store. This booklet represented the ________ of the store.

A) company-based ethics

B) compliance-based ethics

C) integrity-based ethics

D) whistleblowing-based ethics

195) 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.

196) All else being 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.

197) We describe charitable donations by corporations to nonprofit organizations as ________.

A) corporate philanthropy

B) corporate responsibility

C) corporate strategy

D) structural commitment

198) 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.

199) 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 philanthropy

B) corporate social activism

C) social civility

D) corporate social initiatives

200) Corporate ________ covers issues such as treating employees fairly and ethically.

A) responsibility

B) philanthropy

C) diversity

D) structure and strategy

201) 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.

202) 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.

203) 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.

204) Companies are using ________ to communicate their corporate social responsibility actions to their customers.

A) sales promotion

B) traditional advertising on television and radio

C) social media

D) their employees, word of mouth

205) Investors today are realizing financial benefit by investing in

A) companies that only operate in stable environments.

B) firms that have abundant resources for social initiatives.

C) companies that are committed to a better environment.

D) companies that are leaving a sizeable carbon footprint.

206) Insider trading involves

A) an online 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.

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

A) 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

208) 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 Phenomenon

B) Regulation FD (Fair Disclosure)

C) Red Herring Regulation

D) PDI (Public Display of Information Act)

209) 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.

210) 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.

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

A) accountability review

B) social audit

C) federal disclosure statement

D) annual report

212) Going green means

A) increased global warming.

B) increasing one's bottom line, before any other social considerations.

C) increasing one's carbon footprint.

D) increasing one's initiatives toward a concern for the environment.

213) 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.

214) Businesses are under more and more pressure from society to be 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 businesses' 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.

215) 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.

216) 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.

217) 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.

218) When a firm undertakes corporate social initiatives it is

A) making donations that are directly related to a company's competency.

B) making long-term commitments to one cause.

C) hiring a diverse workerforce.

D) making safe products.

219) 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 for corporate social initiatives.

C) they are not in agreement as to what it means to be socially responsible.

D) they favor Milton Friedman's philosophy on the subject.

220) 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.

221) 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 teams

B) Union officials

C) Suppliers

D) Foreign trade representatives

222) 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.

223) 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."

224) The social audit is

A) a company report that always includes a net social contribution.

B) a government-mandated report required of all firms that have a business license.

C) a company evaluation 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.

225) 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) taxpayer-supported government agencies that limit a firm's ability to compete in foreign markets.

C) companies designated by the government to only produce products that support the government defense program.

D) 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.

226) When Delish Donuts uses in-store recycling and composting, and cleans with nontoxic detergents, Delish Donuts is participating in corporate

A) philanthropy.

B) social initiatives.

C) responsibility.

D) policy.

227) The management staff at Doc's Motorcycles believes the company has a social responsibility to its community. They believe that the company can have the greatest impact in this area through cash contributions to local nonprofit organizations. This is an example of

A) graduated payments.

B) corporate philanthropy.

C) structure and strategy.

D) short-run profit maximization.

228) Henderson HVAC Pros is a heating and cooling company in Kansas City, Kansas. Henderson allows its employees paid time off to volunteer for nonprofit organizations. Which of the following statements best explains this company's action?

A) Several smaller firms do not have enough work to keep employees busy. They fear that employees will quit and go to work elsewhere during a time of low unemployment. They protect their pool of skilled labor.

B) Employers are learning that millennial employees are physically stronger. They would rather permit them to work on nonprofit construction sites and other laborious projects, than build them a gym at the company site.

C) Companies find it less costly to permit employees to volunteer for food pantries and other nonprofit organizations in their area of operation, rather than make large philanthropic contributions.

D) Employee time is measured as going further for social causes than monetary contributions.

229) 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) acting really smart.

B) participating in insider trading.

C) stealing from IBM.

D) acting fairly.

230) When Blake Mycoskie started TOMS, he took the concept of ________ to a new level. With its well-known "one for one" shoe giving program, TOMS social causes are directly related to the firm's expertise of selling shoes.

A) social auditing

B) corporate social initiative

C) corporate policy

D) corporate philanthropy

231) Management's philosophy at Nike has often been that a fit body contributes to more productivity at work. Nike provides exercise facilities at its headquarters in Beaverton, Oregon, and lets employees use work time each day to relieve stress through exercise. This serious position on physical fitness is part of Nike's

A) corporate philanthropy.

B) corporate policy.

C) community mediation services.

D) participative funding.

232) Game Guys, Inc., is interested in keeping employees, customers, and the general public aware of the activities and programs it has accomplished within the community this past year. The company might consider performing a

A) contributory analysis.

B) responsibility review.

C) social audit.

D) annual payment report.

233) Last week, the Citizens for a Greener America sent a formal letter to Tee Time Golf Resort requesting that the private club measure its carbon footprint and thusly publicly disclose the amount of fertilizer and other carbon-emitting substances it's using on its two award-winning golf courses. Citizens for a Greener America is an example of

A) an employee organization that has emerged at the resort.

B) a watchdog group.

C) a disgruntled nonprofit organization that has a beef against golfers.

D) a public interest group that is demonstrating social responsibility.

234) After years of customer feedback, Bank of Bux is finally going paperless. The bank's communications team promoted the strategy both internally and externally. Customers were strongly encouraged to utilize the bank's website and mobile system for all their banking needs. Customers unfamiliar or uncomfortable with online banking could sign up for workshops where employees show them how to navigate both the bank's new website and mobile app. 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.

235) Enrollment at Bayside College keeps going up, despite tuition and fee hikes to help cover the cost of new wind turbines installed on campus. These turbines generate enough power to serve the campus buildings and to sell to local business establishments. After reading about 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 in the short term because they believe that the means (the use of innovative technology) will justify the end (a better environment).

236) 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.

237) 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.

238) 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.

239) Which of the following is an unresolved ethical issue that surrounds global trade?

A) Product quality

B) Labor standards

C) Transportation issues

D) Time to market issues

240) 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.

241) 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.

242) 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 Commission

B) The decision of Walmart to open stores worldwide

C) The decision of Nike to cancel orders from suppliers that violate its ethics code

D) The creation of the North American Free Trade Zone (NAFTA) between the U.S., Canada, and Mexico

243) According to the Reaching Beyond Our Borders box, 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.

244) The boxed material entitled Reaching Beyond Our Borders that told the story about Joe, the telecommunication employee, 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.

245) As a recent college graduate, Jonah started working for an export trading company. His job has already taken him around the globe, including Asia on several occasions. He was amazed to see the difference in working conditions in the developing nations he visited, as opposed to similar operations in the United States. The expectations of workers were not the same. Jonah'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) differences in corporate social initiatives in foreign nations.

D) the need for whistleblowers abroad.

246) As the number of multinational corporations continues to grow, we are experiencing a greater number of international ethical dilemmas. One very real concern has been the human rights abuses in sweatshops in exchange for cheap labor. Several retailers have now banded together to set ethical standards in foreign factories. Which of the following statements summarizes the challenges of companies doing business in developing countries and the concerns of their customers?

A) Multinationals must subjectively determine the local living wage, which is usually more than the local legal wage in developing countries. Customers surveyed say they are willing to pay a few dollars more to improve working conditions in sweatshops.

B) Economically sensitive customers want companies to pass along cost savings to them, at all costs, even if the products are made through offshore outsourcing. Companies want to please customers, first!

C) Most multinational corporations have made no attempt to improve working standards at sweatshop factories. They will turn a blind eye to the problem unless U.S. law is passed to force the issue. Customers understand that legal limits come before ethical standards.

D) Multinationals cannot be expected to demand socially responsible behavior from their supplier, including foreign sweatshops. When doing business abroad, the U.S. company need not comply with U.S. law when its supplier(s) is not in the U.S. or on U.S. territory.

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

248) Identify and discuss the five types of groups that serve as watchdogs. Also discuss how well companies enforce their ethical and social responsibility policies.

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

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

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

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

Mini-Case

Megan, Erin, and Ryan are in the middle of a heated discussion. The trio are the chief operating officers of the Frozen Fun Ice Cream Corporation and are reviewing the latest financial reports. Intense competition has resulted in deceased profits. Each of the three officers has his or her own view of how to help the company turn around.

     Megan suggests cutting costs by firing union workers and hiring replacement employees at lower wages. She has asked the firm's attorney to find a loophole in the contract that will allow for this action. Erin protests, stating that Megan's proposal is unethical and unfair. Erin believes that every stakeholder should be treated equally, and that profiting at the expense of others is reckless.

      Ryan, agreeing in part with Erin, states, "We must be sensitive to all affected parties, but clearly our primary goal is to make a profit for our investors." In an attempt to resolve the conflict between Megan and Erin, Ryan offers an alternative suggestion: reduce the firm's charitable contributions until acceptable profit levels rise. Erin is outraged and reminds Ryan of the social responsibilities that Frozen Fun Ice Cream has to the community, environment, suppliers, employees, and investors.

253) Megan is concerned about the legality of her idea of firing union workers in order to hire employees willing to work for less pay. Megan values ________ ethics, but has little concern for other types.

A) integrity-based

B) compliance-based

C) socially based

D) policy-based

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

A) strategic plan

B) social audit

C) socialist review

D) corporate contribution index

255) On which of the three ethics check questions would Megan 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?

256) Ryan's view tends to lean toward the concerns of investors, first and foremost. This is the view taken by

A) corporate philanthropists.

B) Franklin D. Roosevelt.

C) the late Milton Friedman, famous economist.

D) a watchdog such as an environmentalist.

257) If management adopts Ryan's suggestion of reducing Frozen Fun Ice Cream's charitable donations until profits grow, the company will essentially reduce its

A) corporate citizenship.

B) nonprofit volunteerism.

C) corporate philanthropy.

D) RF factor.