Survey of Management: Chapter 4

When the Chicago-based Club Aluminum Company was facing bankruptcy, one of the changes its new CEO made was to create a(n) ____ for all employees to follow in their business and professional lives. It read, "Of the things we think, say, and do: (1) Is it the truth? (2) Is it fair to all concerned? (3) Will it build goodwill and better friendships? (4) Will it be beneficial to all concerned?"

code of ethics

Managers can use integrity tests to _____.

select and hire ethical employees

Which of the following organizations are covered by the U.S. Sentencing Commission Guidelines?

-all of these -Nearly all types of for-profit and nonprofit organizations are covered by these guidelines.

According to the U.S. Sentencing Commission Guidelines, what is one method used to determine the level of the offense (i.e., the seriousness of the problem)?

-examining the loss incurred by victims -The two factors considered when determining the level of offense are: (1) the loss incurred by victims; and (2) the extent of planning that went into the offense

The U.S. Sentencing Commission Guidelines impose smaller fines on companies that ____.

-have already established a specific type of compliance program The U.S. Sentencing Guidelines apply regardless of whether or not management was aware of the violations, past behavior, or established training programs. But fines may be smaller if the company has established a compliance program.

All of the following are important factors in the creation of an ethical business climate EXCEPT ____.

-official approval of the company's ethics code by government regulators -Regulation may influence ethical codes but typically do not cover all of the possible ethical dilemmas faced by a company's employees.

Doug has a low-paying job for a telecommunications company. Every day when he goes home from work, Doug puts a headset, a stapler, or something similar in his lunch box and takes it home with him. Doug sees nothing wrong with his behavior since he feels he is being paid less than he should. In terms of Kohlberg's stages of moral development, Doug is operating at which level?

-preconventional -People operating at the preconventional level act for selfish reasons.

Which of the following statements about whistleblowing is true?

All of these statements about whistleblowing are true.

____ are the expectations that a company will voluntarily serve a social role beyond its economic, legal, and ethical responsibilities.

Discretionary responsibilities

Which of the following statements about social responsibility is true?

Economic and legal responsibilities play a larger role in a company's social responsibility than do ethical and discretionary responsibilities.

Which of the following statements about ethics is true?

Ethics is the set of moral principles or values that defines right and wrong for a person or group

The basic model of ethical decision-making ____.

Is not accurately described by any of these.

What does it mean when the text says that the U.S. Sentencing Guidelines use a "carrot and stick" approach?

The Guidelines offer lower fines to companies that take proactive steps.

According to Milton Friedman, which of the following is a position opposing the stakeholder model of corporate social responsibility?

The time, money, and attention diverted to social causes undermine market efficiency.

The ____ determined that companies can be prosecuted and punished for the illegal or unethical actions of employees even if management didn't know about the unethical behavior.

U.S. Sentencing Commission Guidelines

What is social responsibility?

a business' obligation to pursue policies, make decisions, and take actions that benefit society

A company implementing a(n) ____ strategy would choose to accept responsibility for a problem and do all that society expects to solve problems.

accommodative

The Rainforest Action Network, a national advocacy group, launched a bruising PR campaign to stop Home Deport from selling old-growth lumber. After two years of bad publicity and resistance to new store locations, Home Depot surrendered. Today, its suppliers are working with environmental and forestry groups to certify that their wood products are not from endangered areas. Home Depot used a(n) ____ strategy to respond to demands that it be socially responsible.

accommodative

Which of the following is an objective of ethics training?

achieve all of these (develop employee awareness about ethics, push ethics training throughout the entire org., teach employees a practical model of ethical decision making, achieve credibility with employees)

The last step in the basic model of ethical decision making is to ____.

act

Due to ____ , the intentional pollution of a metropolitan water supply would have greater ethical intensity than insider trading in which a few participants netted less than $10,000.

all of these

To encourage more ethical decision making in an organization, its managers should ____.

all of these (carefully select and hire new employees, establish a specific code of ethics, create an ethical climate, train employees in how to make ethical decisions)

Which of the following is an example of a stakeholder group that an organization must satisfy to assure long-term survival?

all of these (suppliers, customers, employees, governments)

According to the stakeholder model, which primary stakeholder group is theoretically most important to the company?

all primary stakeholders are of equal importance

Refer to Gap. Today it could be argued that Gap has become the most proactive retailer in the industry. This means Gap ____.

anticipates responsibility for a problem before it occurs and does more than society expects to address the problem

Why is it often difficult for an employee to assume the role of whistleblower?

because employees fear they will be punished

Video Arts Inc., a Chicago-based business training company, is currently marketing The Grapevine, a 30-minute training video designed to teach companies how to deal with and prevent damaging gossip. Which of the following is an example of a secondary stakeholder group for Video Arts?

business magazines that run ads for the training video

According to Kohlberg's model of moral development, people at the ____ make decisions that conform to societal expectations.

conventional level

In recent years Kowalski's Markets expanded by purchasing four existing stores. One of the stores was located in Minneapolis' Camden neighborhood, a lower-class community unlike the store's typical upscale customer demographic. Rather than sell the property, the owners decided they had an obligation to provide a neighborhood grocery store to that community. Which of the following is an example of a primary stakeholder group for Kowalski's markets?

customers in the Camden neighborhood

The social responsiveness strategy that could be considered essentially a public relations approach is the ____ strategy.

defensive

Companies are not considered unethical if they do not perform their ____ responsibilities.

discretionary

For some time now, GlaxoSmithKline (GSK) has been making anti-AIDS drugs like Retrovir and Epivir available in hard-hit areas of Africa at up to 75 percent off the global price. By providing the drugs at a fraction of their usual costs, GSK was acting at which level of social responsibility?

discretionary

Refer to Anglo American. Even though Anglo American would not have been considered unethical if it had not begun the fight against AIDS, it chose to assume a social role of ____, the highest level of social responsibility.

discretionary responsibility

To create a compliance program that is acceptable under the U.S. Sentencing Guidelines, a company should ____.

do all of these

For some time now, GlaxoSmithKline (GSK) has been making anti-AIDS drugs like Retrovir and Epivir available in hard-hit areas of Africa at up to 75 percent off the global price. But that wasn't enough for AIDS prevention groups, which were outraged by GSK's decision to use the World Trade Organization's (WTO's) patent protection rules to take action against governments importing lower-cost versions of these drugs. AIDS prevention groups saw GSK's use of WTO regulation as acting at which level of social responsibility?

economic

Historically, ____ responsibility means making a profit by producing a product valued by society. It has been the most basic social responsibility of a business.

economic

IBM has a long-standing "Reinventing Education" program, which involves intensive research into how educational institutions can use the fruits of new technologies to transform what they do and thereby improve education. In the process, the program is actually helping to shape a market of significant interest to IBM. IBM views the program as an investment rather than as a charitable contribution. This is an example of the positive relationship between social responsibility and ____.

economic performance

Lever's most successful product in India is Fair & Lovely, a skin whitening agent that is sold to dark-skinned women in India marketed to help the women find better husbands and better jobs. Lever is emphasizing its ____ responsibility to make a profit and ignoring its ____ responsibility to help women realize that their appearances are superficial.

economic; discretionary

A consumer advocacy group is critical of ads by the U.S. Postal Service (USPS) that claim its Priority Mail is a low-cost, two-day service while failing to disclose that first-class letters generally reach their destination just as quickly and for a tenth the cost. The consumer advocacy group wants the USPS to take ____ responsibility for its actions and do what is right.

ethical

What term describes the degree of concern people have about an ethical issue?

ethical intensity

When addressing issues of high ____ , managers are more aware of the impact their decisions have on others, they are more likely to view the decision as an ethical decision, and they are more likely to worry about doing the right thing.

ethical intensity

___ is strong when decisions have large, certain, immediate consequences and when we are physically or psychologically close to those affected by the decision.

ethical intensity

After identifying the problem in the basic model of ethical decision-making, the next step is to ____.

identify the constituents

Refer to Gap. Gap was ignoring its discretionary responsibilities to society when it ____.

ignored the terrible treatment of overseas workers in the clothing industry

You decide to join Gap as its new CEO (Gap, Inc. runs Gap, Banana Republic, and Old Navy clothing stores). After you take the job, your teenage daughter immediately asks, "Doesn't Gap use sweatshops?" You aren't surprised by her question, as the company has received intense negative news coverage regarding the treatment of workers in the overseas factories from which it buys its clothes. For example, a worker for a Gap supplier in Lesotho, Africa, complained, "The factory is dusty. We can't escape breathing in the fibers. When we cough, if the t-shirt we were working on was made of blue fabric, then our mucus would be full of blue fibers." A worker in another Gap supplier's factory in Bangladesh said, "If we make simple mistakes, they beat us up. I made some small mistakes one time, so the supervisor came and slapped my head and pulled my ears. And if we make mistakes, they don't pay us for our work." In El Salvador, where workers complained about abuse and terrible working conditions, worker Maria Luz Panameno said, "I'm very proud to sew pants for Gap, but the board of directors should not be proud of what is happening to us. Gap has abandoned us." Some workers pointed out that wages were so low that they couldn't buy enough food for themselves and their families. Steve Weingarten, a union organizer who tries to unionize and represent factory workers, says, "We want Gap to stop exploiting sweatshop labor around the world. We want them to pay a wage that allows a decent standard of living and allow workers to organize unions to improve their conditions in factories." Is Gap the only company that relies on such suppliers? No, it isn't. According to Kirk Douglass of Pivot International, a manufacturing company that owns factories in the Philippines and does work with Chinese companies, "If you go into almost any plant in the nondeveloped countries of the Far East, you're going to see things that OSHA [Occupational Safety and Health Administration] or EPA [Environmental Protection Agency] would shut down tomorrow." For years, because of strong competition and price-conscious consumers, retailers like Gap have quickly switched orders from one factory or country to another whenever they could find a lower price. According to protest groups, that intense pressure to keep prices low has encouraged factory owners and managers to do everything they can to cut their costs, including mistreating workers. And with 4,000 factories in 50 countries supplying clothes for Gap, Banana Republic, and Old Navy stores, protest groups see Gap as a big part of the problem. With intense negative publicity, protest groups calling for worldwide boycotts of Gap products and stores, and the company losing money, you couldn't find a much tougher situation as a new CEO. On the one hand, because Gap is a publicly traded company, one of your most important responsibilities is to keep your stockholders happy by making sure the company is profitable. And that means your overseas suppliers have to keep their prices low. On the other hand, negative publicity and boycotts may lower sales and reduce profits. Refer to Gap. Who in the following list are the primary stakeholders for Gap?

its customers

Bayer AG, Syndial SpA, Crompton Corp., DuPont Dow Elastomers, and Zeon Chemicals are all international manufacturers of rubber chemicals. They have all been indicted as participants in a price-fixing scheme that drove up the costs of rubber chemicals used to make shoes, tires, and other products. These companies ignored their ____ responsibility to society.

legal

Ramin wood, which is used to make pool cues and picture frames, was declared an endangered species and its export is regulated by the government of Indonesia. In spite of attempts to control the sale of the wood, it is still being carried across Indonesia's national borders and sold in Malaysia where government officials pretend the wood was legally acquired. Companies that buy the illegally-acquired wood in Malaysia are ignoring their ____ responsibility to society.

legal

Shell Oil Company's plan to sink an abandoned offshore oil-storage buoy had a massive effect on employee motivation and recruitment. The number of qualified people applying for jobs at Shell plummeted, and many employees looked for positions in other companies. The plan caused much greater harm than Shell's managers had ever imagined it would. In other words, the plan had a much greater ____ than predicted.

magnitude of consequences

South Africa is experiencing an AIDS epidemic. Life expectancy in that country is 48 years; life expectancy has not been that low in the United States since 1909. Thirty percent of the population is HIV positive. The largest employer by far in South Africa is Anglo American, a mining conglomerate. This company estimates that between 25 and 30 percent of its employees are HIV positive. Dr. Brian Brink, an employee of Anglo American, decided Anglo could help arrest the growth of AIDS by providing its 130,000 South African employees with free anti-AIDS medicine. Anglo American's executives agreed. The decision to provide the drug makes Anglo one of the largest customers for AIDS medicine in the world. Anglo provides clinics staffed with company-employed doctors and nurses to provide for the medical needs of its employees. Anglo not only had to pay for the medicine (which costs twice the salary of an average miner), it had to set up a system to dispense it and monitor treatment. Anglo also supplies education, counseling, and disease testing as well as condoms to all of its employees. Anglo's decision to fight AIDS has sent a palpable wave of relief, optimism, and hope throughout South Africa. Other companies have followed Anglo American's lead. Refer to Anglo American. The wave of relief, optimism, and hope throughout South Africa is a reflection of the ____ caused by Anglo's decision.

magnitude of consequences

The Department of Defense doesn't classify pilferage as a major problem, as its annual inventory losses run $1-2 billion a year. The intentional theft and sale of defense secrets would have greater ethical intensity than this pilferage due to ____.

magnitude of consequences

A(n) ____ is a written test that estimates employee honesty by directly asking job applicants what they think or feel about theft or about punishment of unethical behaviors.

overt integrity test

____ integrity tests indirectly estimate employee honesty by measuring psychological traits.

personality-based

According to Kohlberg's model of moral development, people at the ____ use internalized ethical principles to solve ethical dilemmas.

post conventional level

According to Kohlberg's model of moral development, people at the ____ make decisions that are based on selfish reasons.

preconventional level

The three stages of moral development identified by Kohlberg are ____.

preconventional level, conventional level, and postconventional level

____ stakeholders are groups, such as shareholders, employees, customers, suppliers, governments, and local communities, on which the organization depends for long-term survival.

primary

When media in India informed the public that Coca-Cola products bottled in India contained a high level of certain cancer-causing pesticides, the Indian government immediately ordered Coke to stop production. The Indian government served as a(n) ____

primary stakeholder

Refer to Anglo American. The miners who work for Anglo American are examples of ____.

primary stakeholders

The two general categories of stakeholders are ____ stakeholders and ____ stakeholders.

primary; secondary

A company implementing a(n) ____ strategy would demonstrate the greatest willingness on the part of the company to meet or exceed society's expectations.

proactive

BM has a long-standing "Reinventing Education" program, which involves intensive research into how educational institutions can use the fruits of new technologies to transform what they do and thereby improve education. IBM is using a(n) ____ strategy to show its social responsibility.

proactive

Refer to Anglo American. To meet its obligation for social responsibility, Anglo American used a progressive approach to doing what it could to solve the problems caused by the AIDS epidemic in South Africa. The mining conglomerate used a(n) ____ strategy.

proactive

A U.S. metals broker advertises "95 percent of orders shipped from stock" even though the company has no warehouses and no inventory. When questioned about the truth of the ad, the broker responded, "We do ship 95 percent of our orders from stock, but it is from suppliers' stocks, not ours." To respond to this ethical question, the broker used a(n) ____ strategy.

reactive

Bayer AG was indicted as a participant in an international price-fixing scheme that drove up the costs of rubber chemicals used to make shoes, tires, and other products. Bayer AG paid its fine but did not admit culpability. Instead, the company announced that paying the fine was less costly than litigation. Bayer AG implemented a(n) ____ strategy.

reactive

When media in India informed the public that Coca-Cola products bottled in India contained a high level of certain cancer-causing pesticides, Coke responded by saying that all of India's water was contaminated and that it was not doing anything wrong by using the local water supply. What kind of a strategy did Coke use to respond to its social responsibility problems?

reactive strategy

Shell's efforts to sink an abandoned offshore oil-storage buoy, were derailed by Greenpeace in Germany, which mounted a well-orchestrated public relations blitz that caused Shell's gasoline sales to plunge by 50 percent at some German stations. This is an example of how ____ stakeholders can influence organizational strategy.

secondary

____ stakeholders are any groups that can influence or be influenced by the company and can affect public perceptions about its socially responsible behavior.

secondary

When media in India informed the public that Coca-Cola products bottled in India contained a high level of certain cancer-causing pesticides, they were acting in the role of ____.

secondary stakeholders

Bayer AG, Syndial SpA, Crompton Corp., DuPont Dow Elastomers, and Zeon Chemicals are all international manufacturers of rubber chemicals. They have all been indicted as participants in a price-fixing scheme that drove up the costs of chemicals used to make shoes, tires, and other products. They would be most likely to use the ____ model to justify their actions.

shareholder

The ____ model holds that the only social responsibility that businesses have is to maximize profit.

shareholder

Ethical intensity depends on all of the following EXCEPT ____.

social commitment

In an article about BP Amoco, its CEO said that the company's commitment to ____ is all about trying to align its policies, values, and behavior with those of the societies in which it operates because, ultimately, superior performance means being in touch.

social responsibility

Kowalski's Markets, a local supermarket chain in Minneapolis, expanded by purchasing four existing stores. One of the stores was located in Minneapolis' Camden neighborhood, a lower-class community unlike the store's typical upscale customer demographic. Rather than sell the property, the owners decided they had a(n) ____ to provide a neighborhood grocery store to that community.

social responsibility

Refer to Anglo American. ____ is the term used to describe the obligation Anglo American had to take actions that benefit society.

social responsibility

Which of the following statements about social responsibility and economic performance is true?

social responsibility can sometimes create significant costs for a company.

According to the ____ model, management's most important responsibility is long-term survival (not just maximizing profits). Long-term survival, according to this model, is achieved by satisfying the interests of multiple corporate stakeholders.

stakeholder

Various persons or groups with a legitimate interest in a company's actions are called ____.

stakeholders

Ethical intensity depends in part upon ____.

temporal immediacy

IAG (Individualized Apparel Group) formally closed its H. Freeman factory in Philadelphia in May. Jim Brubaker, IAG's division president of clothing, informed the workers of this closing one month earlier, in April. Due to ____, this decision produced strong ethical intensity.

temporal immediacy

If a catalog retailer promised customers it would not sell their personal information (addresses, phone numbers, e-mail addresses, etc.) to another direct marketing company, and it did, the catalog retailer would be found guilty of invasion of privacy. Its sentence would be determined by ____.

the U.S. Sentencing Commission Guidelines

Under the stakeholder model, ____ would be an example of a stakeholder group that does not engage in regular transactions with the company and is not critical to its long-term survival but can still affect public perceptions and opinions about the company's socially responsible behavior.

the media

Which of the following is NOT an example of a stakeholder group that an organization must satisfy to assure long-term survival?

the media

Which of the following is a secondary stakeholder group?

the media

Secondary stakeholders are important to a company because ____.

they can affect public perceptions and opinions

In May 2005, U.S. Attorney Michael J. Sullivan announced that the United States had settled civil claims arising out of a suit that alleged Oracle Corporation had violated the False Claims Act in connection with billing the federal government for software training services. The U.S. government learned about the overcharging from a former Oracle vice president. The vice president acted as a(n) ____.

whistleblower

Mark Graf, a security specialist at the Rocky Flats nuclear facility outside Denver, became alarmed about the temporary removal of 450 kilograms of plutonium oxide from a vault-like room to a "soft room" protected by drywall that you could punch a hole through. Graf eventually had to take his concerns to the media before the plutonium was stored once again in a safe location. Graf actions can be described as a(n) ____.

whistleblower