Business Chapter 4 review

Which of the following statements is true of an ethics code?

a. A written code is worthless if it does not reflect living principles.

In the context of an organization dedicated to promoting corporate social responsibility, which of the following statements is true of measuring a company's success by evaluating a double bottom line?

a. It accounts for traditional financial indicators, such as earnings.

In the context of a socially responsible organization, which of the following statements is true of consumerism?

a. It is a movement that suggests that customer rights should be the starting point of any business.

In the context of social responsibility, which of the following statements is true of benefit corporations?

a. They do not have profits as their first priority.

When companies promoting corporate social responsibility measure their success by evaluating a double bottom line, they:

a. account for social-responsibility indicators, such as community involvement.

Finoret, a petroleum company, was infamous for its wasteful production methods and continuous violation of the emission standards set by the Environmental Protection Agency. However, when the new CEO took over, the company completely changed its environmental philosophy and adopted an eco-friendly technology to minimize the emission of harmful gases. In the given scenario, the company took a step toward decreasing its _____.

a. carbon footprint

Homebound, a home decor company, annually donates blankets to various nonprofit organizations. These nonprofit organizations distribute the blankets among the poor. Given this information, Homebound's gesture is an example of:

a. corporate philanthropy.

Jessica Marshall, the CEO of ABD Oil Drilling Inc., decides to set aside an amount of $10,000 from the company's annual profits to donate to local nonprofit organizations although the company already meets the mandated government requirement of contributing 4 percent of the company's revenue for social benefits. This donation by ABD Oil Drilling Inc. is an example of:

a. corporate philanthropy.

Ethan, an employee in a corporate company, is asked to do a systematic evaluation of the company's adherence to its social and ethical standards. In this case, Ethan should first:

a. establish the ethics and social responsibility goals that the company seeks to achieve.

The government of Keiron, a South Asian country, noticed a visible decline in the country's natural resources. To counter this, it passed an act that mandated all businesses to reduce wastage and adopt more eco-friendly methods of production. In the given scenario, the government of Keiron most likely embraced the idea of _____.

a. sustainable development

The residents of North Barkminster, a suburb in the European country of Geratow, protest against a large corporation that is newly established in the area. They complain that there has been a rise in respiratory illnesses among the people because of the pollution caused by employee commute following the company's establishment. In this scenario, the residents of North Barkminster are protesting against the company's _____ emissions.

b. Scope 3

In the context of monitoring ethics and social responsibility, which of the following statements is true of a social audit?

b. The threat of government legislation keeps some industries motivated to self-regulate.

In the context of a company's responsibility to the environment, which of the following is the idea behind sustainable development?

b. To meet the needs of the current generation without harming the ability of future generations to meet their needs

In the context of ethics and social responsibility in the global arena, which of the following statements is true of a business's responsibility to workers abroad?

b. When deciding living wages, companies must bring together their own values with the laws of both the United States and their host countries.

Trotin Langdon Corp., a leading car dealer, operates in many countries. The company has a clearly written mandate for all its contractors abroad. According to this, all contractors must ensure that standardized safety measures are implemented in their factories and workers are made to work only for nine hours a day. In this scenario, Trotin Langdon Corp. has set _____ for its vendors.

b. a code of conduct

In the context of social responsibility, a corporation that does not have profits as a first priority is referred to as a B-Corp, which stands for _____.

b. benefit corporation

An American petroleum company is facing legal action because it discharges a significantly higher level of greenhouse gases than the level permitted by the Environmental Protection Agency. In this scenario, the company is guilty of increasing its _____.

b. carbon footprint

A Japanese company encourages its employees to participate in charitable activities. The company gives annual paid leave of ten days to its employees to volunteer at nonprofits or take part in activities that support environmental causes. Given this information, the company's initiative is an example of _____.

b. corporate philanthropy

In the context of the legal and ethical dimensions of business conduct, providing rock-bottom prices only to distributors in underserved areas is _____.

b. illegal but ethical

Aragon, a brand of inverters, provides products that work well in the first year of their use. The performance of the products, however, starts declining after the first year, and the products eventually become unusable within a short period of time. The pattern of breakdown is similar for all Aragon inverters. Reports suggest that Aragon intentionally creates inferior products to increase repurchases. In the given scenario, Aragon is guilty of _____.

b. planned obsolescence

Ethics refer to:

b. sets of beliefs about right and wrong.

Transparency International, a leading anticorruption organization, published its yearly index of "perceived corruption" across 168 countries in 2015. Its findings showed that:

b. the United States scored lesser than most of the European countries in the index of perceived corruption.

In the context of corruption, which of the following was a finding by Transparency International, a leading anticorruption organization, when it published its yearly index of "perceived corruption" across 168 countries in 2015?

c. Countries such as India and China had a lower score in the index of perceived corruption than the United States.

In the context of monitoring ethics and social responsibility, when firms monitor themselves, the process is referred to as ____.

c. a social audit

Trexlex, a sports retailer, employs Olympic hopefuls in its stores through the Olympic Job Opportunities Program. It offers athletes full-time pay and benefits for a flexible 20-hour workweek to accommodate their training schedules. In the context of a business's responsibility toward the community, this act by Trexlex exemplifies _____.

c. corporate responsibility

The Canadian government issues a legal notice to one of its coal manufacturing companies after the government learns that the heating equipment purchased by the company emits a higher level of gases than the level permitted by the Environmental Protection Agency. In this scenario, the coal manufacturing company is in violation of exceeding the level of its _____ emissions.

d. Scope 2

An automobile company is asked to recall 20 batches of its sports utility vehicle after it is found that a defect in the exhaust system of the car causes it to emit more smoke than the level permitted. In this scenario, the car manufacturing company is exceeding its _____ emissions.

d. Scope 3

In the context of research from the Ethics Resource Center (ERC), which of the following statements is true of companies facing economic difficulties?

d. The decisions and behaviors of company leaders are perceived by employees as a heightened commitment to ethics.

Which of the following statements is true of codes of conduct?

d. They work best with monitoring.

Crayon, a well-established beauty products company, partnered with the Lenora Birdstone Foundation, a nonprofit organization, to raise awareness about breast cancer and collect funds for setting up a cancer unit at a local hospital. The company accumulated a sum of $5 million by selling organic creams to more than 2,000 people. In this scenario, Crayon was most likely involved in _____.

d. cause-related marketing

Quinbeck Inc., a computer manufacturing company, annually donates 6% of its total profits to an orphanage. The company also provides free personal computers to children to promote learning among them. Given this information, Quinbeck Inc. most likely engages in _____.

d. corporate philanthropy

Broche Technologies, a brand of electronic appliances, develops a new range of refrigerators that do not release chlorofluorocarbons. The company promotes these products as the most eco-friendly refrigerators in the market. In this scenario, Broche Technologies is engaging in _____.

d. green marketing

A social audit is a systematic evaluation of the positive and negative views of the public about a business firm.

false

Socially responsible employers stick to the state laws and do not go beyond them when it comes to providing a good working environment to employees.

false

According to research from the Ethics Resource Center (ERC), organizational culture is most influential in shaping the ethical conduct of individual employees.

true

In the context of creating and maintaining an ethical organization, more-engaged employees are much less likely to behave badly.

true

In the context of creating and maintaining an ethical organization, when employees perceive more management commitment, they tend to be more fully engaged.

true

In the context of globalization, which of the following is the most challenging issue faced by companies and individuals that are involved in international business?

c. Bribery

Which of the following statements is true of green marketing?

c. The vast majority of people are not willing to sacrifice convenience to buy green products.

Rupert is an individual who believes in contributing to the community by using eco-friendly products. In the context of universal ethical standards, Rupert most likely possesses the core value of _____.

c. citizenship

Globalization has made ethics and social responsibility complicated for workers at every level.

true

When people view ethics as relative, their ethical standards shift depending on the situation.

true

Rene's boss asks her to perform a social audit of the company following mass media's harsh criticism of the company's ethical standards. In this case, Rene will first:

a. establish the goals required to conduct the social audit.

Lovine, a women-centric magazine, interviewed a victim of domestic violence. Although the magazine assured the victim that her name would not be mentioned in the article, it later published the article with the victim's real name. This scenario exemplifies a(n) _____.

a. ethical lapse

In the context of business ethics, _____ involves clear misconduct, unlike an ethical dilemma that involves a conflict of values.

b. an ethical lapse

The most socially responsible companies establish _____ for their vendors, setting clear policies for human rights, wages, safety, and environmental impact.

b. codes of conduct

In the context of the stakeholder approach to business, the federal government is a key stakeholder in:

c. pharmaceutical companies.

Which of the following statements is true of ethics?

d. Actions that are completely legal can still be unethical.

In the context of the code of ethics of a company, which of the following is a step that is virtually always included when experts advocate a forceful, integrated approach to ethics?

d. Communicating about the importance of ethics

Which of the following is a duty of a socially responsible organization toward its customers?

d. Following laws that prevent anticompetitive behavior such as predatory pricing

In the context of ethics and social responsibility in the global arena, U.S. corporations are forbidden to offer bribes since 1977 under the _____.

d. Foreign Corrupt Practices Act

The _____ limits conflict-of-interest issues by restricting the consulting services that accounting firms can provide for the companies they audit.

d. Sarbanes-Oxley Act

In the context of the legal and ethical dimensions of business conduct, rewarding integrity is an example of _____.

d. legal and ethical behavior

Universal ethical standards can solve the problem of too many people viewing ethics as _____.

d. relative

In the context of the core values identified by the Character Counts organization, being honest, not deceiving, cheating, or stealing, and doing what you say you'll do represent the universal ethical standard of _____.

d. trustworthiness

In the context of business behavior, producing products that you know will break before their time is illegal and unethical.

false

In the context of social responsibility, B-Corps receive special tax treatment.

false

In the context of ethical behavior, encouraging fraudulent accounting is illegal and unethical.

true

In the context of the three types of emissions tracked by corporations, Scope 1 emissions refer to direct emissions produced by corporate operations.

true

Andrew, an employee in a corporate company, is asked to conduct a systematic evaluation of how well the company is meeting its ethics and corporate responsibility goals. In the given scenario, Andrew is most likely asked to do a _____.

b. social audit

Adhering to a new act passed in 2002, the CEO of Pearsil & Pearsil, a real estate company, now personally certifies the validity of the company's financial statements. Given this information, the CEO most likely follows the_____.

c. Sarbanes-Oxley Act

Antonsen Inc., an accounting firm in Texas, follows certain guidelines while providing consulting services to a firm. One such guideline is to limit the services it provides to the firms it audits. The CEO of Antonsen Inc. is also required to certify the validity of the company's financial statements. In this scenario, Antonsen Inc. most likely abides by the requirements of the _____.

c. Sarbanes-Oxley Act

Heleus Oil & Gas Company routinely performs emission tests to keep a check on the emissions produced by its corporate operations and find new ways to reduce them significantly. In this scenario, Heleus Oil & Gas Company is tracking its:

c. Scope 1 emissions.

In the context of the legal and ethical dimensions of business conduct, it is illegal and unethical to:

c. engage in sexual harassment.

Anaida is an entrepreneur who believes in providing equal opportunity to people regardless of their age, gender, race, or religion. She is open-minded and detests the idea of taking advantage of others. In the context of universal ethical standards, Anaida most likely possesses the core value of _____.

c. fairness

The chairman of a welfare organization asks an employee to head a fundraising activity. The employee, however, embezzles $250,000 from the funds raised from the activity and falsifies financial records. In this scenario, the behavior of the employee is _____.

c. illegal and unethical

In the context of the legal and ethical dimensions of business conduct, embezzling money is:

c. illegal and unethical.

Cornell Health Care, a renowned American hospital, regularly collaborates with other health-care centers to provide small medical clinics in low-income countries drugs and medical services at lower than normal prices. In this scenario, this practice of collusion by Cornell Health Care is _____.

c. illegal but ethical

In the context of social responsibility, which of the following is a way of contributing to nonprofits?

d. Cause-related marketing

A cement company decided to modify its production methods to minimize the negative impact of the company's activities on the environment. The company also invested in the purchase of upgraded machinery to implement this plan. In the given scenario, the cement company most likely embraced the idea of _____.

d. sustainable development

David is the chief executive officer of Grand Rocks Mining Company. He has convinced the company's board of directors to implement a change in the mining procedure. According to the new procedure suggested by David, less resources will be exhausted. This will ensure that the ability of future generations to meet their needs is not harmed because of shortage of natural resources. By agreeing to David's suggestion, Grand Rocks has embraced the idea of _____.

d. sustainable development

An ethical dilemma involves clear misconduct at the workplace.

false

Codes of conduct work best when people are given the freedom to choose whether they wish to follow them or not.

false

Corporate philanthropy includes all business donations to nonprofit groups except employee time.

false

In the context of carbon footprint, emissions that occur outside a company's boundary, but over which it has some control, are classified as Scope 2 emissions.

false

In the context of social responsibility, a corporation that does not have profits as a first priority is referred to as a D-Corp.

false

In the context of the legal and ethical dimensions of business conduct, practicing collusion with competitors is legal but unethical.

false

Stakeholders refer to groups of people who have a malicious intent toward an organization and who often resort to harmful actions.

false

In the context of consumerism, smart businesses view customer complaints as an opportunity to create better products and stronger relationships.

true

Sustainable development means weaving environmentalism throughout the business decision-making process.

true

The personal needs, the culture, and the family of an individual influence his or her ethical choices.

true

In the context of social responsibility, _____ are a new corporate structure that value profits, but not more than other priorities such as employees, suppliers, the community, and the environment.

a. B-Corps

In the context of monitoring ethics and social responsibility, which of the following is the starting point of a social audit?

a. Establishing goals

In the context of the frameworks developed by experts for reaching ethical decisions, which of the following is one of the key principles of most decision guides?

b. Are the alternative solutions legal?

In the context of globalization, one of the most challenging issues faced by companies and individuals that are involved in international business is _____.

b. corruption

Consumerism is a widely accepted social movement. Which of the following can be considered a consumer's right?

b. Expressing legitimate complaints easily

One of the ways by which companies can show their responsibility toward the environment is by reducing their _____.

b. carbon footprint

Which of the following is a difference between corporate philanthropy and corporate responsibility?

c. Unlike corporate philanthropy, corporate responsibility focuses on the actions of the business itself rather than donations.

The number-one goal of any business is to contribute to society.

false

Socially responsible firms support consumer choice by:

d. following laws that prevent anticompetitive behavior such as collusion.

In the context of the legal and ethical dimensions of business conduct, it is legal and ethical to:

d. lead by example.

In the context of bringing the code of ethics of a company to life, which of the following statements is true when experts try to advocate a forceful, integrated approach to ethics?

a. It should be ensured that the company's ethics code is both local and global in scope.

In the context of ethical choices, research results from the Ethics Resource Center (ERC) illustrate that:

b. misconduct by employees rose when they felt that the Great Recession negatively impacted the ethical culture of their company.

In the context of codes of ethics, the Johnson & Johnson Credo refrains from:

b. overpromising financial rewards.

Krempe Foods, a fast-food chain in Dallas, gives paramount importance to consumer feedback and has a well-established consumer feedback system. Given this information, it can be said that Krempe Foods supports _____.

c. consumerism

Planned obsolescence represents a clear violation of social responsibility.

true

Crumbie, a cereal company, not only provides nutritional information on the packaging box of its product but also goes a step ahead by providing a pamphlet that gives a detailed description of the production process. Given this information, it can be deduced that Crumbie is an advocate of _____.

b. consumerism

Yanmei, an employee at a news agency, learns that the reason her colleague was asked not to pursue a news story further was because the editor of the newspaper was bribed by the concerned party to suppress the matter. Yanmei reveals this information to the chief editor and her colleagues and also reports it to the media. In this scenario, Yanmei is a _____.

a. whistle-blower

Walid, an IT professional, is known for his perseverance, his self-discipline, and taking accountability for his actions. In the context of universal ethical standards, Walid most likely possesses the core value of _____.

c. responsibility

In the context of codes of ethics, the best-known code is the Johnson & Johnson Credo, which has guided the company profitably through a number of crises. One of the striking elements of the credo is the firm focus on:

d. fairness.

In the context of the legal and ethical dimensions of business conduct, it is illegal but ethical to:

c. collaborate with other medical clinics to guarantee low prices in low-income counties.

The employees of a multinational company follow a standardized and formal set of written guidelines that help them make right decisions in various situations. These guidelines have been translated into 20 languages and are followed by employees across all branches of the company. One of the guidelines is to include all supervisors in discussions regarding instances of violation of rules. In this scenario, the multinational company has:

c. created a code of ethics for its members.

Research from the Ethics Resource Center suggests that _____ has more influence than any other variable on the ethical conduct of individual employees.

c. organizational culture

Spacein, a hard drive manufacturer, is accused of deliberately creating flaws in its product design. News reports hint that the company has been doing this for years to reduce the time between consumer repurchases. In the context of social responsibility, Spacein has been accused of _____.

c. planned obsolescence

The trade union members of a wool manufacturing company are the company's _____.

c. stakeholders

In the context of business ethics, _____ refers to a decision that involves a conflict of values.

d. an ethical dilemma

A chocolate manufacturing company promoted a high-calorie product without providing complete information about the risks involved in its consumption. In the context of business behavior, the company's business conduct was:

d. legal but unethical.

Anderson invested $1 million in a company called Ladmen Corp. He, therefore, has a personal interest in the company's profits and its new ventures. Given this information, Anderson is a _____ in Ladmen Corp.

d. stakeholder

Mark and Augustine are employees of an advertising firm. Following a personal disagreement, Augustine steals Mark's idea for an advertisement and presents it as his own in a meeting. In this scenario, Augustine is guilty of _____.

a. an ethical lapse

In the context of codes of ethics, the Johnson & Johnson Credo has guided the company profitably through a number of crises. This is considered the best-known code because it:

a. carefully refrains from overpromising financial rewards.

Five individuals get food poisoning after consuming aerated drinks of a well-known company. Following this incident, the public demands an inquiry into the company's manufacturing processes. This demand by the public represents _____.

a. consumerism

In the context of universal ethical standards, being open-minded and not taking advantage of others exemplifies the core value of _____.

a. fairness

In the context of codes of ethics, the purpose of a written code is to:

a. give employees the information they need to make ethical decisions across a range of situations.

Promoting high-calorie/low-nutrient foods with inadequate information about the risks is a(n) _____ practice.

a. legal but unethical

Vandium, a high-end smartphone, is known for its excellent audio quality and processing speed. However, most of its users complain of certain technical issues after a period of five months. The company, however, is well aware of these issues because it deliberately designs these products to fail after a certain period—a strategy to generate revenue through service charges. In the context of business behavior, Vandium's business conduct is:

a. legal but unethical.

Peter, the CEO of a multinational company, has a deep understanding of other people's needs and behaviors. He easily relates to another's situation, feelings, and motives—all qualities that strongly predict a high level of ethical leadership. Given this information, Peter most likely possesses _____.

a. personal empathy

Janet reasons, "It is wrong to lie. However, it is okay to overstate my expense account on my recent business trip because I need the money, and my company has not given me a raise in the past year." In this scenario, Janet is an employee who views ethics as _____.

a. relative

Rudolf, a Polish manager in a company based in China, is admired by his colleagues for the way he interacts with people, his considerate nature, and his tolerance toward other cultures. In the context of universal ethical standards, Rudolf possesses the core value of _____.

a. respect

Fritzman Inc., a market research company, stocks its office pantry with an array of organic drinks and snacks to promote healthy eating habits among its employees. It also provides all its employees a free membership to a local gym. These gestures are Fritzman Inc.'s idea of _____.

a. social responsibility

Companies that step in with on-site day care programs for employees facing challenges such as caring for elderly parents are fulfilling their:

a. social responsibility.

Alfred, a human resource manager at an IT firm, reasons, "Although everyone should be given an equal opportunity, but for once it is fine to give my friend the first shot at the opening in my company because I know he really needs the job." In this context, which of the following statements is most likely true of Alfred?

b. He views ethics as relative.

One core responsibility of business is to deliver consumer value by providing quality products at fair prices. _____ are critical components of this equation.

b. Honesty and communication

Research from the Ethics Resource Center (ERC) showed that companies behave differently during economic difficulties. When employees perceive the decisions and behaviors of their leaders as a heightened commitment to ethics, they are most likely to:

b. adopt a higher standard of conduct for themselves.

Finwes is an advertising company. Because of certain untoward incidents in the company, the management decides to create a formal written document that would guide the employees in making right decisions in various professional situations. In this scenario, the management wants to create a _____.

b. code of ethics

Angorasia, an Asian country, supports a free market system. The flexible economy of the country makes it fairly easy for new sellers to enter the market, which in turn gives buyers a variety of choices in terms of products and services. Given this information, it can be said that Angorasia supports _____.

b. consumerism

In the context of creating and maintaining an ethical organization, Robert Lane, former CEO of Deere, a highly performing, highly ethical corporation, declares that to establish an ethical culture, _____.

b. ethical words must be backed up with documented practices, processes, and procedures, all understood around the globe

Gander, an apparel company, is known to be a profit-hungry company. It lands in a controversy when it comes to light that the company pays almost nonliving wages to the workers in its manufacturing subsidiaries based in developing countries. In the context of business behavior, Gander's business conduct is:

b. legal but unethical.

In the United States, people come from such diverse backgrounds that establishing broad agreement on specific ethical standards can be daunting. In this situation, a given country's _____ provides a solid starting point for examining ethical standards.

b. legal system

A clothing company, Clendtine Fashions, pledges five percent of its annual revenue to environmental causes around the world. Being one of the top international companies, the founders of the company have an obligation to contribute toward the betterment of the world. This scenario is an example of Clendtine Fashions's participation in _____.

b. social responsibility

With an increasing number of workers facing challenges such as raising kids and caring for elderly parents, responsible companies are stepping in with programs such as on-site day care, company-sponsored day camp, and referral services for elder care. These actions show that these companies are fulfilling their _____.

b. social responsibility

Robert Lane, former CEO of Deere, a highly performing, highly ethical corporation, believes in the importance of senior management commitment to ethics, but he points out that the "tone at the top" must be reinforced by the actual behavior observed by suppliers, dealers, customers, and employees. At Deere, this is summed up in highly visible, frequently referenced shorthand known as:

b. the how.

_____ is a widely accepted social movement that supports a buyer's right to be informed, to be safe, to choose, and to be heard.

c. Consumerism

After being stagnant for a few years, a clothing company started making profits consistently. Following this, the CEO of the company decided to contribute to the growth of the community by starting an apprenticeship program in tailoring. The program involved providing training to a batch of 10 uneducated, underprivileged people free of cost every year. In this scenario, the company's gesture exemplifies _____.

c. social responsibility

The obligation of a business to contribute to society is referred to as _____.

c. social responsibility

FreshBean is an online grocery delivery service. Its employees and customers, the farmers from whom the company obtains its products, and the people who live in the community where the company operates are FreshBean's _____.

c. stakeholders

In the context of social responsibility, _____ include employees and investors who have a personal interest in the performance and actions of an organization.

c. stakeholders

CappaStreet is a company that produces gourmet coffee. The company's employees, the coffee bean growers who supply raw materials to the company, the people who purchase its coffee, and the people who live in the community where the company has its production unit are CappaStreet's:

c. stakeholders.

To bring a code of ethics to life, experts advocate a forceful, integrated approach to ethics. According to this, _____.

c. when people violate ethical norms, companies must respond publicly to retain employee trust

Lily, a salesperson at a clothing store, observes the department head misbehaving with a customer. She brings the issue to the notice of the store manager, and the offender is immediately dismissed from his job. In this scenario, Lily is a _____.

c. whistle-blower

Jordon, a senior executive at a marketing firm, used to regularly meet international clients to discuss future projects. After one of his recent meetings went wrong, Jordan, in a fit of rage, threw a paper weight at his junior associate. The firm's management immediately terminated Jordan for this act. In the context of business ethics, Jordon was guilty of _____ in this scenario.

d. an ethical lapse

The nonprofit, nonpartisan Character Counts organization has worked with various group of educators and community leaders to establish a set of:

d. core ethical values that transcend political, religious, class, and ethnic divisions.

The management of a steel manufacturing company decides to set up a new plant in a rural area. However, this would create waste management issues for the company. On the other hand, the company would incur higher costs if it sets up the plant in another area. The management thus finds itself in a situation where both the actions will have a negative consequence. This scenario exemplifies a(n) _____.

d. ethical dilemma

Flickczar, a film production company in the United States, sells the distribution rights of a film to its distributors in underserved areas at rock-bottom prices, while it sells the rights of the same film to distributors in other areas at normal prices. In the context of business behavior, Flickczar's business practice is _____.

d. illegal but ethical

Corporate etiquette is the obligation of a business to contribute to society.

false

In the context of business ethics, in an ethical dilemma, every potential course of action has some significant negative consequences.

true