Business Law Ch. 3 MindTap

7. Why is it important to monitor the employment practices of foreign suppliers? a. Because the governments of foreign nations often overlook unethical behavior by American companies, but not their own companies providing outsourced labor. b. Because foreign suppliers may be too lenient with their employees, allowing for employee theft, which causes higher prices for consumers. c. Because corporate watch groups will discover and publicize unethical behavior by suppliers, link it to the American company, and harm its reputation. d. Because foreign suppliers may be overpaying their employees, causing a higher price to an American company, which then is passed on to consumers.

. Because corporate watch groups will discover and publicize unethical behavior by suppliers, link it to the American company, and harm its reputation.

Bernard is the owner and manager of a small auto-parts store. He thinks that talking about business ethics with employees takes time that would be better spent paying attention to customers. He also does not believe that he has a right to tell other people how they should behave. Is Bernard likely to create an ethical workplace with this way of thinking? Why or why not? a. Bernard is unlikely to create an ethical workplace, because the attitude of top management influences employee ethics. b. Bernard is unlikely to create an ethical workplace and so is likely to get into legal trouble, because business laws require him to compel his employees to follow an ethical code. c. Bernard's attitude will have no particular effect on workplace ethics, because ethics is strictly a private matter best left to individual employees. d. Bernard's attitude will have no particular effect on workplace ethics, because management has no ability to affect employee behavior.

. Bernard is unlikely to create an ethical workplace, because the attitude of top management influences employee ethics.

To address the widespread and growing concern of contaminated food causing serious injury and death to individuals throughout the U.S., Congress passed a law stating that anyone intentionally distributing contaminated food is subject to criminal prosecution, civil fines, or both. Congress included a provision that any company with a corporate food-safety compliance policy approved by the FDA would avoid criminal prosecution, but not civil fines. To be approved, the company policy must require the company to report to the U.S. Food and Drug Administration any test results that indicate salmonella is present and consult with that agency before shipping any possibly contaminated food. 1. Using the Business Process Pragmatism procedure as part of his decision making process, Trevor first should perform a(n) to determine the legal and ethical issues related to implementing a corporate food safety compliance policy. 2. After the initial step, Trevor should list his possible actions related to the new law and evaluate each option using the different ethical theories in the phase. 3. Using the information from the first two steps, Trevor should work with his staff to come to a consensus and develop a plan of action in the step. 4. After the decision has been made an implemented, Trevor should evaluate the outcome to determine whether the decision made was effective. This is the stage. 5. Based on this situation, and the first four steps of the Business Process Pragmatism procedure, Trevor implement a corporate food-safety compliance policy.

1. inquiry 2. discussion 3. decision 4.review 5. should

Jason Trevor owns a commercial bakery in Blakely, Georgia that produces a variety of goods sold in grocery stores. Trevor is required by law to perform internal tests on food produced at his plant to check for contamination. During one three month period, three tests of food products containing peanut butter were positive for salmonella contamination. Trevor was not legally required to report the results to U.S. Food and Drug Administration officials, so he did not. Instead, Trevor instructed his employees to repeat the tests until the results were negative. Meanwhile, the products that had originally tested positive for salmonella were eventually shipped out to retailers. Five people who ate Trevor's baked goods that year became seriously ill, and one person died from a salmonella infection. 1. Ethics is the study of what is or . 2. According to the text, there are four different aspects of a decision that a business should evaluate in order to maximize profits and be a good corporate citizen. Those four items, in order, are the implications of the decision, the impact, the for consumers and employees, and the implications. 3. In evaluating the first of the four factors, Trevor should determine whether his failure to report the results to the Food and Drug Administration are a violation of . 4. In this case, Trevor have a legal duty to perform internal tests on food produced at his plant to check for contamination. Trevor have a legal duty to report the initial test results to the U.S. Food and Drug Administration. 5. Merely complying with the law is known as the . 6. In evaluating the second factor, Trevor should analyze what the might say if the shipped food caused sickness or death. 7. Knowingly or recklessly allowing someone to become sick from the food because the company continued to test the food until the salmonella test was negative be a public relations problem. 8. In evaluating the third factor, Trevor would look at the for consumers and employees. 9. Trevor's instructions to repeat the tests until the results were negative, in the best interest of the consumers or employees. 10. To assess the fourth factor, Trevor should evaluate how much it might the company to continue to test until the salmonella result is negative. 11. Trevor's approach to profits in making this decision seems to be profit maximization. 12. In this case, Trevor should project not just the of testing, but also the of potential lawsuits or settlements. 13. In evaluating the four factors, it seems that Trevor's decision was . 14. If Trevor had thought through his options as if all food manufacturers made the same decision, he would be applying . 15. If Trevor had analyzed his options using , he would have evaluated the costs and benefits of each option to determine the for the and most likely shipped the food.

1. right; wrong 2.legal;public relations; safe risks; financial 3.the law 4.did; did not 5.moral minimum 6.media 7.would 8.safety risks 9.were not 10.cost 11.short-run 12.cost; cost 13.unethical 14.Kant's categorical imperative 15.utilitarianism; greatest good; greatest number; would not have

Patrick, the human resources manager at Acme Company, must decide how to cut personnel costs. This decision will harm employees who are laid off or fired. Patrick must balance the interests of employees who have been loyal to the firm for a long time against the interests of: a. Acme's competitors. b. the state courts. c. Acme's shareholders. d. the city council.

Acme's shareholders

12. All shareholders are stakeholders and all stakeholders are shareholders. a. True b. False

False

2. Abiding by a foreign country's cultural norms during an international business transaction means a company has met a minimum standard for acting ethically. a. True b. False

False

5. Every public corporation is required to have an ethical hotline for reporting violations within the company. a. True b. False

False

1. Under the IDDR ("I Desire to Do Right") approach of ethical decision making, decision makers should go through the following steps in order: First Step Second Step Third Step Fourth Step

First Step- Inquiry Second Step- Discussion Third Step- Decision Fourth Step- Review

3. Since the late 1970s, the has prohibited U.S. businesses from bribing foreign officials

Foreign Corrupt Practices Act(FCPA)

Al-Dabagh v. Case Western Reserve University Did the appellate court agree with the trial court's order that Case Western must issue a diploma to Amir Al-Dabagh? a. Yes b. No

No

Gamma corporation, an American company, signs a contract with Theta corporation, a corporation from another nation, where Theta will provide Gamma with certain raw materials. Because of the economy in its nation, there are many more people looking for jobs than there are jobs available. Theta hires employees at extremely low wages and does not maintain facilities up to American standards. Newspapers accuse Gamma of engaging in unethical behavior. Is Gamma's behavior ethical? a. Yes, because it is good business to maximize profits, and those foreign citizens are better off with a job than without one. b. Yes, because Gamma cannot be expected to investigate and oversee all of its suppliers, and Gamma is not doing anything wrong. c. No, because Gamma has an ethical obligation to make sure that people who work for the company, either directly or indirectly, are being treated fairly. d. No, because Gamma has a legal and ethical duty to make sure that foreign suppliers maintain working conditions that meet or exceed American standards.

No, because Gamma has an ethical obligation to make sure that people who work for the company, either directly or indirectly, are being treated fairly.

Marshall owns and operates a construction firm. He uses inexpensive and low-grade building products and accepts inferior carpentry work from his subcontractors. Nevertheless, Marshall complies with all the city building codes as well as all state and federal laws. Has he fulfilled all of his ethical obligations? a. .No, because legal compliance is regarded as the moral minimum. b. Yes, because legal standards are stricter than ethical standards. c. No, because ethics is too hard to define. d. Yes, because ethical obligations require only legal behavior.

No, because legal compliance is regarded as the moral minimum.

4. Immanuel Kant is most associated with which theory for ethical behavior? a. The idea that moral behavior is based upon what is best for the largest number of people b. The idea that moral behavior derives strictly from religious texts c. The idea that moral behavior is aligned with whatever has been codified by the law d. The idea that moral behavior is based upon the fundamental nature of human beings

The idea that moral behavior is based upon the fundamental nature of human beings

Rupert and Cordelia own an American company that does business in foreign nations. Getting a license in a new country can be challenging. As they try to enter into business in a new country, Rupert fills out the license paperwork and takes it to the correct office. There he pays the front-desk person $100 to process the paperwork, as is the custom in that country. Cordelia, who has connections in that country, schedules an appointment with the minister of commerce, who has the authority to determine which foreign companies get licenses, and pays him $250 to approve their license. Which payment(s), if any, likely violated the Foreign Corrupt Practices Act?

The payment made by Cordelia but not the payment made by Rupert

Al-Dabagh v. Case Western Reserve University Under the utilitarian model of ethics, the following is true: a. Corporate decisions must create the greatest amount of good for the least numbers. b. The use of a cost-benefit analysis for alternative actions is undertaken. c. Ethical decisions involve producing the best outcome for managers.

The use of a cost-benefit analysis for alternative actions is undertaken.

2. The Dodd-Frank Wall Street Reform and Consumer Protection Act was passed in response to Wall Street's ethical lapses and abusive financial services practices.

True

4. The FCPA does not prohibit payments to low-level employees of foreign nations who exercise little (or no) discretion in their jobs, but merely process paperwork. a. True b. False

True

8. A company may be sanctioned by a regulatory body as a result of certain ethical breaches by one or more of its employees. a. True b. False

True

8. The utilitarian approach to decision making has been seen as problematic by some because even the greatest good to the greatest number may create unacceptable harm to the few. a. True b. False

True

9. Corporate social responsibility combines a commitment to good corporate citizenship with a commitment to making ethical decisions, improving society, and minimizing environmental impact. a. True b. False

True

Al-Dabagh v. Case Western Reserve University Before reading this case, you learned about stakeholders. Under what circumstances do stakeholders have a greater stake in company decisions than do shareholders? a. When shareholders are weak and therefore cannot force the board to do what is right. b. When the government determines it. c. When management perceives that a stakeholder group, such as the employee, have more at stake than the shareholders.

When management perceives that a stakeholder group, such as the employee, have more at stake than the shareholders.

Olivia makes a negative statement about her employer on her social media account. Her manager sees it and fires her for violating the company's social media policy, which prohibits employees posting anything about the company or colleagues on social media. Olivia claims that she has a right to state whatever she wants on her own site and that she cannot be fired for this kind of conduct. Does Olivia have a valid argument? a. No, because businesses can impose any social media policy they desire. b. Yes, because federal labor law protects employees' rights to engage in concerted activities. c. No, because it is reasonable for a business to prohibit employees from saying bad things about the company. d. Yes, because the right to free speech is absolute.

Yes, because federal labor law protects employees' rights to engage in concerted activities.

2. Under the concept of duty-based ethics, which of the following represent sources from which standards of behavior in society are derived? a. Philosophical reasoning b. Profit/Loss analysis c. Resource allocation analysis d. Religious authorities and texts

a. Philosophical reasoning d. Religious authorities and texts

3. The Sarbanes-Oxley Act was designed to do which of the following? a. Require accountability measures for publicly traded companies b. Reduce corporate fraud c. Create confidential systems for fraud reporting within a publicly traded company d. Regulate shareholder dividend maximums e. Regulate corporate profits f. Provide refunds to bank customers for overdraft fees

a. Require accountability measures for publicly traded companies b. Reduce corporate fraud c. Create confidential systems for fraud reporting within a publicly traded company

3. Under the Principle of Rights, or "rights theory", which of the following are groups whose rights a company should consider before making a decision? a. The consumers of the company's products or services b. The company's employees c. The company's suppliers d. The community in which the company does business e. The company's owners f. Society as a whole

a. The consumers of the company's products or services b. The company's employees c. The company's suppliers d. The community in which the company does business e. The company's owners f. Society as a whole

6. Which of the following represent a potential ethical issue for a U.S. company doing business in a foreign country? a. The country permits payments made to government officials to secure government contract approval. b. The country does not regulate child labor. c. The country does not permit women to sign contracts without a male co-signatory. d. The country does not mandate a minimum livable wage for its workers

a. The country permits payments made to government officials to secure government contract approval. b. The country does not regulate child labor. c. The country does not permit women to sign contracts without a male co-signatory. d. The country does not mandate a minimum livable wage for its workers

5. The idea that individuals should evaluate their actions in light of the consequences that would follow if everyone in society acted in the same way is known as the: a. categorical imperative. b. equal behavior principle. c. conflictual imperative. d. ethical theory of rights.

categorical imperative.

Carly is a manager at a business. When she has a job opening, she regularly does Internet searches on the applicants to see if they have social media accounts. If so, she reviews whatever she can access. Her findings, or lack of findings, go into her notes and may influence whether she interviews and ultimately hires an applicant. Carly's actions are: a. legally uncertain but clearly ethical. b. clearly illegal and clearly unethical. c. clearly legal and clearly ethical. d. clearly legal but ethically uncertain.

clearly legal but ethically uncertain

Regan owns and manages The Coffee Shoppe. She likes to experiment with different management styles and life philosophies. She recently studied Kantian ethics and asks her employees to begin following Kant's categorical imperative at work. This means that the employees should: a. treat others as the employees themselves wished to be treated. b. consider or weigh all of the costs and all of the benefits of their actions before making decisions. c. follow all city ordinances as well as state and federal law, and no more. d. consider their actions in light of the consequences if everyone in society acted the same way.

consider their actions in light of the consequences if everyone in society acted the same way.

10. Under the theory of corporate social responsibility, many corporations publish reports outlining how they comply with this theory. These are often called: a. corporate rights reports. b. corporate profit reports. c. corporate ethics reports. d. corporate sustainability reports.

corporate sustainability reports.

Duane and Elizabeth start a business manufacturing pencil holders out of recycled materials. They draft a mission statement where they declare that they are committed to environmentalism and to using their profits to improve the quality of life of the homeless. The declaration of beliefs in a mission statement is most often associated with: a. cost-benefit analyses. b. outcome-based ethics. c. duty-based ethics. d. utilitarian ethics.

duty-based ethics.

Ted is the owner and chief executive officer of a business. He recently began an advertising campaign to promote a new product that is regulated by state law. The law is somewhat unclear. Before launching the campaign, he researched the relevant law and consulted with his attorney in an effort to comply with the law. Nevertheless, the attorney general of his state has filed a lawsuit against him for deceptive advertising. Ted's best defense is that: a. his attorney was incompetent and he should not be held liable for bad advice. b. the law is unfair. c. his firm made a profit on the product which shows that consumers were happy with their purchase. d. he acted in good faith by conducting due diligence and acting accordingly, under an unclear law.

he acted in good faith by conducting due diligence and acting accordingly, under an unclear law.

Jeff believes in the principle of rights theory and uses it to make ethical decisions for his business. He must decide whether to expand his business into Asia. Several key employees do not want the business to expand overseas and have threatened to quit if Jeff makes this move. Under the principle of rights theory, he will make this decision by considering: a. whether the expansion violates his employees' principles. b. the cost of losing employees and the benefit of the profit he could earn. c. how society would be affected if everyone expanded their businesses against the advice of their employees. d. how his decision will affect the rights of his employees, his consumers, and others.

how his decision will affect the rights of his employees, his consumers, and others

5. If a U.S. company decided to outsource production of alcohol to Saudi Arabia, a country which prohibits the consumption of alcohol for moral reasons, it would likely be: a. illegal and unethical. b. illegal and ethical. c. legal but unethical. d. legal and ethical.

illegal and unethical

7. To apply the utilitarian theory to a business decision, a company should consider: a determination of which will be affected by the action in question, a analysis of the positive and negative effects of all alternate options, and the selection of a choice of action that will produce the .

individuals; cost-benefit; maximum; societal utility

Al-Dabagh v. Case Western Reserve University Corporate social responsibility (CSR) is: a. does not relate to the intent of the law. b. imposed by the law. c. involves a commitment to self-regulation by businesses.

involves a commitment to self-regulation by businesses.

9. A U.S. Corporation decides to outsource its product manufacturing to Country Z, where the minimum wage for workers is below the minimum wage requirements in the United States. If the company pays the workers based on the minimum wage required in Country Z, this is: .

legal; and possibly ethical and unethical

6. To make a decision resulting in good corporate citizenship, a business should evaluate the decision based on: the implications of each decision; the impact; the safety risks for and employees; and the financial .

legal;public relations ; consumers; implications

10. has been shown to be the most influential in setting an ethical tone for a business.

management's behavior

4. Compliance with the law is sometimes called the

moral minimum

Cora owns a Christian bookstore and tries to run it in accordance with Judeo-Christian values, which promotes charity among the poor and also strictly prohibits theft. Cora learns that Margo, one of her employees, has been taking money from the cash register and giving it to homeless people who come into the store. Under an analysis of duty-based ethics with a Judeo-Christian religious foundation, Margo's behavior is: a. acceptable because it is compassionate. b. acceptable because stealing is sometimes justifiable. c. not acceptable because stealing is never justifiable. d. not acceptable because of the categorical imperative.

not acceptable because stealing is never justifiable

8. The inquiry analysis step of the IDDR Approach to ethical analysis of business decisions involves identifying the and collecting the relevant .

parties;facts

Bribery is acceptable in certain foreign countries. Indeed, U.S. Development, Inc., has found that the only way it can ensure delivery on certain contracts in these countries is to bribe the officials. This is a. permitted by U.S. law if the payment is made to a minor official to speed up administrative procedures. b. permitted by U.S. law if the payment is made to government officials for the purpose of securing advantageous contracts. c. prohibited by U.S. law if the contract price exceeds $20,000. d. prohibited by U.S. law under all circumstances.

permitted by U.S. law if the payment is made to a minor official to speed up administrative procedures.

1. The application of moral and ethical analysis to a situation is usually called ethical . ethics is rooted in the idea that every person owes certain responsibilities to others and the planet. ethics focuses on the consequences of a decision.

reasoning; Duty-based; Outcome-based

11. Customers, creditors, suppliers, employees, and the community in which a business operates are all: a. stakeholders. b. managers. c. partners. d. shareholders.

stakeholders

7. A triple bottom line considers each of the following, except: a. the corporation's impact on the planet. b. the corporation's impact on people. c. the corporation's profits. d. the corporation's resource allocation.

the corporation's resource allocation

The upper-level management of Nationwide Sales Corporation wants to fire Andy because he is a nonproductive employee. Using a utilitarian approach to business ethics, management would probably consider: a. Andy's fundamental rights. b. how Andy and his family might suffer if Andy were to lose his job. c. how all other employees in the company would feel about Andy's firing. d. the costs and benefits of retaining a nonproductive employee.

the costs and benefits of retaining a nonproductive employee

Sanderson worked in a travel-service office and had access to the reservation systems of several airlines. Sanderson accessed the system and replaced the names of passengers with fictitious names. She also enrolled the fake names in the airlines' frequent-flyer programs. Her husband set up mailboxes under those names for the delivery of free airline tickets "earned" under the frequent-flyer programs. Real passengers were not harmed by and did not complain of the deception. The Sandersons' behavior was: a. unethical but legal. b. unethical and illegal, because their actions constituted theft from the airlines. c. ethical, because no passengers complained. d. ethical, because the other passengers did not suffer monetary damages.

unethical and illegal, because their actions constituted theft from the airlines

6. is a philosophical theory developed by two British philosophers, Bentham and Mill, whose major premise is "the greatest good for the greatest number of people".

utilitarianism

1. Ethics can be defined as the study of

what constitutes right and wrong behavior