Chapter QuizThe correct answer for each question is indicated by a . 1 CORRECT Business ethics encompasses _______________ A) the application of ethical principles and standards to business activities, behavior, and decisions. B) a business commitment to safe products, high worker compensation, and protection of the environment. C) conducting oneself appropriately in a business setting. D) developing a special set of ethical standards for businesses to observe in conducting their affairs. E) picking and choosing among various ethical standards of society to arrive at a set of ethical standards that apply directly to operating a business. 2 CORRECT Ethical principles in business _______________ A) concern the behavioral guidelines a company’s top management and board of directors set for company personnel regarding “what is right” and “what is wrong” in conducting the company’s business. B) deal chiefly with the actions and behaviors required to operate companies in a socially responsible manner. C) are arrived at by picking and choosing among the consensus ethical standards of society to come up with a set of ethical standards that apply directly to operating a business. D) are not materially different from ethical principles in general and have to be judged in the context of society’s standards of right and wrong, not by a special set of rules that businesspeople decide to apply to their own conduct. E) involve behavioral guidelines for balancing the interests of nonowner stakeholders (customers, employees, suppliers, and the communities in which the company has operations) against the interests of company shareholders. 3 CORRECT Unethical managerial behavior tends to be driven by such factors as _______________ A) overzealous or obsessive pursuit of personal gain, wealth, and other self interests, a company culture that puts the profitability and good business performance ahead of ethical behavior, and heavy pressures on company managers to meet or beat performance targets. B) the lack of a company code of ethics. C) a lack of training in what is ethical and what is not. D) confusing differences between what is ethical behavior in one’s personal life and what is ethically permissible in business. E) All of the above factors. 4 CORRECT A company’s strategy needs to be ethical because _______________ A) of the potential for embarrassment to top management if the company’s unethical behavior is publicly exposed. B) unethical strategies are inconsistent with or else weaken the corporate culture. C) ethics watchdogs are sure to blow the whistle on the company’s unethical behavior. D) of the risks of prosecution by governmental authorities if an unethical strategy is disclosed. E) a strategy that is unethical not only damages the company’s reputation but it also can have costly consequences. 5 CORRECT Which of the following are consequences of pursuing a strategy that has unethical or shady components? A) Government fines and penalties. B) Legal and investigative costs incurred by the company. C) Customer defections. D) Adverse effects on employee productivity. E) All of these. 6 CORRECT Notions of right and wrong, fair and unfair, moral and immoral, ethical and unethical _______________ A) ultimately depend on a person’s own values and beliefs. B) ultimately depend on the circumstances—nothing is really black or white when it comes to ethical standards. C) are governed mainly by religious views held in different geographic regions of the world. D) are present in all societies, organizations, and individuals. E) vary enormously from country to country across the world. 7 CORRECT According to the school of ethical universalism, _______________ A) what behaviors are “ethically right” and “ethically wrong” vary across religions, but the boundaries of what is ethical or not are universal within religions. B) concepts of right and wrong universally apply to all business situations within a given country but can vary across countries or cultures. C) ethical guidelines exist only when there is universal agreement as to what behaviors are “ethically right” and “ethically wrong”, anything not universally viewed as unethical is thus within the bounds of what is ethically permissible. D) all societies and countries have some definition of what is ethically permissible (in this sense ethics are universal), however, the definitions of what is ethically permissible vary according to the prevailing religious doctrines in each country. E) many of the same standards of what’s ethical and what’s unethical resonate with peoples of most societies regardless of local traditions and cultural norms—hence, to the extent there is common moral agreement about right and wrong actions, common ethical standards can be used to judge the conduct of personnel at companies operating in a variety of country markets and cultural circumstances. 8 CORRECT The thesis that because different societies and cultures have divergent values and standards of what is “ethically right” and “ethically wrong” it is appropriate to judge behavior as ethical/unethical in the light of local customs and social mores _______________ A) is the basis for the theory of ethical variation. B) defines what is meant by “integrated social contracts theory. ” C) is a view that characterizes the school of ethical relativism. D) accounts for why there is no such thing as ethical standards for business enterprises. E) is the reason codes of ethical and social morality have been established country by country. 9 CORRECT If one adopts the thinking of the school of ethical relativism, then _______________ A) there are multiple sets of ethical standards because what is ethical or unethical depends on local customs and social mores and can vary from one culture or nation to another. B) there is a “one-size-fits-all” set of authentic ethical standards. C) the preferred set of ethical standards is the one that society at large has put in place in the form of laws and regulations. D) the prevailing ethical standards are the product of a system of “integrated social contracts. ” E) no ethical standards are ever truly “authentic”—they exist only to the extent that there is a temporary shared conviction among company managers and company personnel that a particular behavior is either ethically permissible or ethically impermissible. 10 CORRECT Companies that adopt the principle of ethical relativism in providing ethical guidance to company personnel _______________ A) are able to comply with the varying ethical standards of the world’s different cultures. B) have no fair way to judge the ethical correctness of the conduct of company personnel. C) quickly find themselves on a slippery slope with no ethical standards or principles of their own. D) have a uniform code of ethical standards that is applied globally. E) end up allowing each company employee to determine what set of ethical standards to observe. 11 CORRECT According to integrated social contracts theory, _______________ A) the views and principles of the school of ethical universalism are definitely wrong, the correct view is that ethics is a matter of personal responsibility not a matter of management concern. B) the ethical standards a company should try to uphold are governed both by (1) a limited number of universal ethical principles that are widely recognized as putting legitimate ethical boundaries on actions and behavior in all situations and (2) the circumstances of local cultures, traditions, and shared values that further prescribe what constitutes ethically permissible behavior and what does not—however, universal ethical norms take precedence over local ethical norms. C) the standards of what is ethically permissible and what is not should be based on a code of ethical and moral conduct that each society/country/culture adopts and then enacts into law. D) the standards of what is ethically permissible should be determined by the terms of an “ethics contract” that each company employee signs as a condition of employment. E) the only valid ethical standards are those that are universal—and then only if the standards are not absolute and provide some wiggle room according to the circumstances of the each situation. 12 CORRECT Integrated social contracts theory maintains that _______________ A) all ethical standards are determined by societal norms and individuals have an implied social contract to live up to these standards. B) “first order” universal ethical norms always take precedence over “second order” local ethical norms. C) there should be no absolute limits put on what is ethically or morally right. D) few nations or cultures have common moral agreement on what is ethically right and wrong. E) each country/culture/society has commonly held views about what constitutes ethically appropriate actions/behaviors that all individuals in that country/culture/society are obligated to observe. 13 CORRECT The costs companies incur when ethical wrongdoing is discovered and punished do not primarily include_______________ A) the costs to shareholders in the form of a lower stock price (and possibly lower dividends). B) the costs of providing remedial education and ethics training to company personnel. C) lost employee morale and higher degrees of employee cynicism. D) civil penalties arising from class-action lawsuits and other litigation aimed at punishing the company for its offense and the harm done to others. E) increased dividend pay-out to restore the trust of its shareholders. 14 CORRECT The theory of corporate social responsibility concerns _______________ A) a company’s duty to maximize shareholder value. B) the blending of shareholder interests and employee interests. C) a company’s duty to establish socially acceptable core values and to have a strictly enforced code of ethical conduct. D) the responsibility that top management has for ensuring that the company’s actions and decisions are in the best interest of society at large. E) The company’s responsibility to balance between strategic actions to benefit shareholders against the duty to be a good corporate citizen. 15 CORRECT Which of the following is not generally on a company’s menu of actions to consider in crafting a strategy of social responsibility? A) Efforts to employ an ethical strategy and observe ethical principles in operating the business. B) Actions to provide suppliers, distributors, and other value chain partners with handsome profit margins. C) Making charitable contributions, supporting community service endeavors, engaging in broader philanthropic initiatives, and reaching out to make a difference in the lives of the disadvantaged. D) Actions to build a workforce that is diverse with respect to gender, race, national origin, and other aspects that different people bring to the workplace. E) Actions to protect the environment and, in particular, to minimize or eliminate any adverse impact on the environment stemming from the company’s own business activities. 16 CORRECT The business case for an ethical strategy _______________ A) focuses primarily on costs that are difficult to quantify (for example, customer defections and adverse effects on employee productivity) but can often be the most devastating. B) emphasizes that pursuing unethical strategies not only damages a company’s reputation but can also have costly, wide-ranging consequences. C) starts with numerous ethical rules and guidelines and an environment where employees rely on these rules for moral guidance. D) starts with managers who understand there is big difference between adopting values statements and codes of ethics that serve merely as window dressing and those that truly paint the white lines for a company’s actual strategy and business conduct. E) begins with ethical guidelines that help send the message that management takes the observance of ethical norms seriously and that behavior falling outside ethical boundaries will have negative consequences. 17 CORRECT Environmental sustainability involves _______________ A) a corporate commitment to address the unmet noneconomic needs of society. B) deliberate actions to protect the environment, provide for the longevity of natural resources, maintain ecological support systems for future generations, and guard against the ultimate endangerment of the planet. C) striking a balance between (1) the economic responsibility to reward shareholders with profits, (2) the legal responsibility by the company to laws in countries where it operates, (3) the ethical responsibility to abide by society’s moral norms, and (4) the discretionary philanthropic responsibility to contribute to the noneconomic needs of society. D) developing the resource strengths necessary to develop a sustainable competitive advantage. E) All of these. 18 CORRECT Companies committed to environmental sustainability _______________ A) make major contributions to local civic and charitable organizations. B) consider the commitment to the environment as a “first order” priority, commitment to employees as a “second order” priority, and commitment to shareholders as a “third order” commitment. C) believe it is essential to strike a balance between shareholder interests and the interests of stakeholders such as suppliers, customers, employees, and the communities in which they operate. D) develop and market only products that are “environmentally friendly. ” E) adopt sustainable business practices that meet the needs of the present without compromising the ability to meet the needs of the future. 19 CORRECT Which one of the following is not a part of the business case for why companies should act in a socially responsible manner? A) A strong commitment to socially responsible behavior reduces the risk of reputation-damaging incidents. B) The aggressive pursuit of market share, revenues, and profits always puts the company in jeopardy of violating society’s social responsibility expectations. C) Conceived social responsibility strategies work to the advantage of shareholders. D) Socially responsible actions yield internal benefits (particularly for employee recruiting, workforce retention, and training costs) and can improve operational efficiency. E) Social responsibility actions can lead to increased buyer patronage. 20 CORRECT The business case for why companies should act in a socially responsible manner includes such reasons as _______________ A) improving operational efficiency. B) avoiding criticism from consumer, environmental, and human rights activist groups. C) contributing to lower employee turnover and better worker productivity. D) the potential for increased buyer patronage. E) All of these.