(Test Bank) Demanding Ethical and Socially Responsible Behavior

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Chapter 04 - Demanding Ethical and Socially Responsible Behavior Chapter 04 Demanding Ethical and Socially Responsible Behavior TEST PLANNING TABLE FOR CHAPTER 4 Learning GoalLL:1 Knows Basic Terms and FactsLL:2 Understands Concepts and PrinciplesLL:3 Applies Principles 1.Explain why obeying the law is only the first step in behaving ethically.1,2,3,4,5,6,7, 158,159,160,161,1628,9,10,11,12,13,14,15, 16,17~, 163,164,165,166,167, 168,169,170~,171~, 172~18,19,20~,21~,22~, 23~, 173,174,175,176,177 2.Ask the three questions to answer when faced with a potentially unethical action. 24,25,26,27,28,29,30,31, 32, 178,179,180,181,18233,34,35,36,37,38, 183,184,185,186,39,40,41,42,43,44~, 45~, 187~,188,189,190 3.Describe management’s role in setting ethical standards.46,47,48,49,50,51,52,53, 54,55,56,57,58,59, 191,192,193,19460,61,62,63,64,65,66, 67, 195,196,197,198,19968, 200,201,202,203 4.Distinguish between compliance-based and integrity-based ethics codes, and list the six steps in setting up a corporate ethics code.69,70,71,72,73,74,75,76, 77,78 204,205,206,207,208,209, 210,211,21279,80,81,82,83,84, 213,214,215,216,217, 281,283, 287*85,86,87,89, 218,219,220,221,222, 223 5.Define corporate social responsibility and compare corporations’ responsibilities to various stakeholders.90,91,92,93,94,95,96,97, 98,99,100,101,102,103, 104,105,106,107,108,109, 110,111,112,113,114~,115, 116,117,118,119, 224,225,226,227,228,229, 230,231,232,234,235,236, 237,238,239,240,241,242, 243120,121,122,123,124, 125,126,127,128,129, 244,245,246,247,248, 249,250,251,252,253, 254~,255~,256,257, 258, 291*130,131,132,133,134, 135,136, 259,260,261,262,263, 264,265,266~,267,268, 269, 285, 288* 6.Analyze the role of American businesses in influencing ethical behavior and social responsibility in global markets.137,138,139,140,141,142, 143,144,145,146, 270,271,272,273,274147,148,149,150,151, 152, 275,276, 282153,154,155~,156~, 157~, 277~,278~,279,280, 284,286, 289*,290* 4-1Chapter 04 - Demanding Ethical and Socially Responsible Behavior Total number of test items: 291 True/false questions are in plain text. Multiple choice questions are in bold text. Questions on boxed material are in bold text with a tilde~. Essay questions are in bold underlined text. Minicase questions are in bold with an asterisk*. 4-2Chapter 04 - Demanding Ethical and Socially Responsible Behavior True / False Questions 1. The Enron scandal illustrates the difference between unethical behavior and illegal behavior. True False 2. Ethical behavior requires more than following the law. True False 3. Legal behavior and ethical behavior are basically the same. True False 4. A society gets into trouble when people consider only what is illegal and not also what is ethical or unethical. True False 5. Ethical behavior refers to the standards that are accepted by society as right or wrong. True False 6. People should look at each situation individually and decide for themselves if it is right or wrong. True False 7. Given the level of diversity within the United States, agreement on common standards of ethical behavior is unachievable. True False 4-3Chapter 04 - Demanding Ethical and Socially Responsible Behavior 8. An accurate statement regarding this chapter is: "Business law establishes ethical behavior." True False 9. Legal behavior is directly related to our relationships with others, while ethical behavior is not. True False 10. Legal behavior is a first step toward ethical behavior. True False 11. Laws that protect us from fraud, theft and violence determine ethical behavior. True False 12. Moral behavior refers to behavior that is accepted by society as right versus wrong. True False 13. Ethical behavior focuses on treating others fairly. True False 14. Making accounting records more transparent may help restore trust in the free-market system and leaders in general. True False 15. Punishing business leaders who have broken the law may help restore trust in the free- market system and leaders in general. True False 4-4Chapter 04 - Demanding Ethical and Socially Responsible Behavior 16. Making businesspeople more accountable for company actions may help restore trust in the free-market system and leaders in general. True False 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. True False 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. True False 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. True False 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. True False 21. According to the Legal Briefcase box, "Paying the Price", the Enron case demonstrates the need for more accounting transparency. True False 4-5Chapter 04 - Demanding Ethical and Socially Responsible Behavior 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. True False 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. True False 24. Ethical behavior involves the clear and easy choice of right and wrong actions towards others. True False 25. Over two-thirds of the American population report never giving any time to the community. True False 26. Both managers and workers cite low managerial ethics as a major cause of American businesses' competitive woes. True False 27. A common form of cheating in schools today is plagiarizing material from the Internet. True False 28. Making ethical choices is always easy. True False 4-6Chapter 04 - Demanding Ethical and Socially Responsible Behavior 29. Two recent studies found a strong correlation between academic dishonesty among undergraduates and dishonesty at work. True False 30. The question "Is it legal?" establishes ethical behavior. True False 31. It can be very difficult to maintain a balance between ethics and goals such as pleasing stakeholders. True False 32. Trying to make decisions that will benefit all parties involved is consistent with the question "How will it make me feel about myself?" True False 33. While telling an abusive joke about an ethnic group may not be unlawful, it is unethical. True False 34. An ethical manager's decisions are based only on the following questions: "Is it legal?" and "Is it profitable?" True False 35. Behavior that is in conflict with your values and sense of right and wrong can damage your self esteem. True False 4-7Chapter 04 - Demanding Ethical and Socially Responsible Behavior 36. When facing an ethical dilemma, it is often helpful to discuss the situation with your supervisor because ethical decisions will always withstand scrutiny. True False 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. True False 38. Utilizing the phrase "the ends justify the means" as a corporate value system can negatively impact company morale and competitiveness. True False 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. True False 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. True False 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 board in the break room for all to see passes the test: "How will it make me feel about myself?" True False 4-8Chapter 04 - Demanding Ethical and Socially Responsible Behavior 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. True False 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?" True False 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. True False 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. True False 46. Trust between workers and managers must be based on a foundation of fairness, honesty, openness, and moral integrity. True False 47. A growing number of people feel that an employee's ethics are a personal matter, and have nothing to do with management. True False 4-9Chapter 04 - Demanding Ethical and Socially Responsible Behavior 48. The majority of CEOs believe that employee misconduct results from the failure of organizational leadership to establish ethical standards. True False 49. Management can create an environment in which unethical behavior can develop. True False 50. Corporate values, like personal values, are learned by observing what others do. True False 51. Effective corporate values start with employees and develop throughout the organization to include top management. True False 52. In order to maintain a good reputation, it is good strategy to manage your business ethically. True False 53. A business should be managed ethically to keep existing customers and attract new customers. True False 54. One good reason for managing a business ethically is to help reduce employee turnover. True False 55. In order to do the right thing for all stakeholders, a business should be managed ethically. True False 4-10Chapter 04 - Demanding Ethical and Socially Responsible Behavior 56. Overly ambitious business goals and employee incentives can lead to unethical behavior. True False 57. An ethic of justice is based on a sense of responsibility to reduce actual harm or suffering. True False 58. An ethic of care is based on a sense of responsibility to reduce actual harm or suffering. True False 59. An ethic of care is based on principles like justice, fairness, equality, or authority. True False 60. Employers should proceed cautiously when designing an employee incentive program that rewards employees strictly on increased sales. True False 61. "Do what I say, not what I do" can be an effective code of conduct to instill corporate values. True False 62. Using the phrase: "Quality is job #1", as part of a corporate mission statement, can influence the ethical behavior of employees. True False 63. Employees, just like children, can observe behavior and adopt standards of right and wrong. True False 4-11Chapter 04 - Demanding Ethical and Socially Responsible Behavior 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. True False 65. As a manager, you have a responsibility for the unethical behavior of your employees. True False 66. In order to avoid the costly act of being sued in court, it makes good sense to manage your business ethically. True False 67. When faced with slow sales and low profits, even managers with strong ethical values may feel pressured to compromise those values. True False 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. True False 69. Integrity-based ethics codes are based on avoiding legal punishment. True False 70. Compliance-based ethics codes are based on preventing unlawful behavior. True False 4-12Chapter 04 - Demanding Ethical and Socially Responsible Behavior 71. Businesses with a formal code of ethics are less common now than in the past. True False 72. Compliance-based ethics codes focus on preventing unlawful behavior by increasing control and by penalizing wrongdoers. True False 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. True False 74. Businesses recognize that pressure to violate ethical standards can come from either inside or outside of the firm. True False 75. People who report illegal or unethical behavior are called whistleblowers. True False 76. As a result of pressure from business lobbyists, Congress failed to pass legislation protecting whistleblowers. True False 77. The job of an ethics officer is to serve as a counselor for employees and as an investigator for the company. True False 78. Enforcement is perhaps the most important step in an effective code of ethics. True False 4-13Chapter 04 - Demanding Ethical and Socially Responsible Behavior 79. A code of ethics designed to avoid criminal misconduct is an example of a compliance- based ethics code. True False 80. An integrity-based ethics code moves beyond legal compliance in order to create a "do- the-right-thing" climate. True False 81. To be effective, an organization's code of ethics needs to be communicated to outsiders such as suppliers, subcontractors, and customers. True False 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. True False 83. America's business ethics can improve simply by requiring written contracts with employees, customers, and owners. This alone will do the job! True False 84. An important step in improving U.S. business ethics is for companies to hire whistleblowers. True False 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. True False 4-14Chapter 04 - Demanding Ethical and Socially Responsible Behavior 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. True False 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. True False 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. True False 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. True False 90. Corporate social responsibility refers to the concern businesses have for the welfare of society. True False 91. Corporate philanthropy refers to the position a firm takes on issues that affect society. True False 4-15Chapter 04 - Demanding Ethical and Socially Responsible Behavior 92. A charitable donation contributed by a corporation is an example of corporate philanthropy. True False 93. Business issues such as minority hiring practices and pollution control fall under the umbrella of corporate responsibility. True False 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. True False 95. Corporate philanthropy refers to the position a firm takes on social and political issues. True False 96. When stating a firm position on various social and political issues, corporate policies often commit company profits to back these positions. True False 97. Recent surveys indicate that students are willing to agree to lower salaries if they know their employer is participating in socially responsible activities. True False 98. In the discussion of corporate social responsibility, stakeholders and stockholders refer to the same group. True False 4-16Chapter 04 - Demanding Ethical and Socially Responsible Behavior 99. One responsibility of business is to satisfy customers by offering them goods and services with real value. True False 100. Studies show that consumers are not concerned about the socially conscious behavior of the firms with which they do business. True False 101. Customers learn to trust companies that consistently demonstrate good behavior. Those same companies can lose this position with one, socially irresponsible activity. True False 102. Some investors believe it makes financial as well as moral sense to invest in companies whose practices promote sensitivity towards the environment. True False 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. True False 104. Insider trading occurs when employees of publicly traded companies use private company information to profit in the stock market. True False 105. Insider trading provides the information needed for the securities markets to operate fairly and efficiently. True False 4-17Chapter 04 - Demanding Ethical and Socially Responsible Behavior 106. Businesses have a social responsibility to create jobs. True False 107. Promoting social justice is a responsibility of society, but not business. True False 108. In the long run, a firm's loyalty to their employees can pay off financially. True False 109. Getting even is one of the most powerful incentives for good people to do bad things. True False 110. A recent study revealed that employee fraud causes 30% of all business failures. True False 111. The green movement has turned the heads of very few firms. True False 112. A social audit is a systematic evaluation of an organization's progress toward implementing programs that are profitable. True False 113. The green movement has resulted in a positive impact on U.S. jobs. True False 4-18Chapter 04 - Demanding Ethical and Socially Responsible Behavior 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. True False 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. True False 116. A public good is one that everyone gets to enjoy regardless of who pays for it. True False 117. When it comes to ethics and social responsibility, the public's perception of a firm is as important as what the firm does. True False 118. A social audit measures a firm's progress in the area of worker-management relations. True False 119. A list of "watchdogs" (including customers, socially conscious investors, and environmentalists) monitor how well firms enforce their ethical and social responsibility policies. True False 120. A business that takes a public position on a political issue that affects the welfare of society is exercising corporate social responsibility. True False 4-19Chapter 04 - Demanding Ethical and Socially Responsible Behavior 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." True False 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. True False 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. True False 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. True False 125. Some experts feel that corporate social responsibility means solely making money for stockholders. True False 126. As a response to the Enron scandal, the federal government now requires social audits of all U.S. businesses. True False 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." True False 4-20Chapter 04 - Demanding Ethical and Socially Responsible Behavior 128. Often it is the threat of negative publicity that pressures businesses to enforce their corporate code of ethics. True False 129. Although the green movement is a social trend, it is difficult to predict its future contributions to society. True False 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. True False 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. True False 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. True False 4-21Chapter 04 - Demanding Ethical and Socially Responsible Behavior 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. True False 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. True False 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. True False 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. True False 137. U.S. businesses claim that unethical business practices are common outside the U.S. True False 4-22Chapter 04 - Demanding Ethical and Socially Responsible Behavior 138. The ethical standards by which international political leaders are judged are more lenient today than they were in years past. True False 139. Many U.S. companies are demanding socially responsible behavior from their international suppliers. True False 140. Due to the fact that American ethical standards are very clear-cut, international suppliers do not have difficulty adhering to them. True False 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. True False 142. The International Organization for Standardization (ISO) plans to publish a standard on social responsibility called ISO 26000. True False 143. American businesses can legally demand socially responsible behavior from their international suppliers. True False 144. U.S. businesses consider The Foreign Corrupt Practices Act as legislation that has helped increase their profits abroad. True False 4-23Chapter 04 - Demanding Ethical and Socially Responsible Behavior 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. True False 146. All U.S. companies practice the same ethical standards when dealing with suppliers and contract manufacturers abroad. True False 147. Due to their significant economic power, large multinational firms can ignore the ethical standards of a society without consequences. True False 148. U.S. businesses have little influence over the behavior of businesses from other countries. True False 149. Applying the ethical standards of the U.S. to foreign firms is a difficult process for U.S. firms. True False 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. True False 151. While "doing the right thing" is an admirable code of ethics, there are no international organizations dealing with global ethics and corruption. True False 4-24Chapter 04 - Demanding Ethical and Socially Responsible Behavior 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. True False 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. True False 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. True False 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. True False 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. True False 4-25