Unit 3 - D080

Corporate social responsibility (CSR)

A company's obligations to society, including a wide range of stakeholders: people and places affected by company activities

Sweatshop

A factory that is guilty of some sort of labor abuse or violation such as unsafe working conditions, employment of children, mandatory overtime, unsafe working conditions, and so on

How is contract law structured as it applies to global business among nations?

A horizontal business structure means that no nation is in a legally dominant position over another.

Contracts

A legally enforceable promise

perfectly competitive market

A market in which no individual economic actor can affect the price of a good

ethical consumerism

A movement in which consumers make purchasing decisions based on a company's ethical profile

National Labor Committee

A nongovernmental organization involved in anti-sweatshop activities and the implementation of labor laws

whistleblower

A person who exposes any kind of information or activity that is deemed illegal, unethical, or not correct within an organization

vertical structure of law

A structure of law where those at the top govern those at the bottom

Intellectual Property

A work or invention that is the result of creativity to which one has rights and for which one may apply for a patent, copyright, or trademark

Discrepancies

Accounting errors that occur unintentionally

stakeholders

All parties who have a stake in the performance and output of the corporation

The Environmental Protection Agency (EPA)

American agency established in the 1970s with the goal of monitoring the environmental practices of industry

Deepwater Horizon oil spill

A 2010 industrial accident that is considered the largest oil spill in history

The Clean Water Act

A US federal law governing water pollution

TRIPS (Trade-Related Aspects of Intellectual Property Rights)

A WTO agreement that governs all IP laws and protects intellectual property rights for global businesses.

grease payments

A business practice of paying small inducements in order to expedite decisions and transactions

Which condition is part of a contract between international companies that are based in different nations?

A choice of law clause A choice of law clause specifies the laws and the jurisdiction under which international disputes will be settled. International businesses operating in different countries include such clauses in their contractual agreements to clarify ahead of time how disputes will be settled.

National Environmental Policy Act (NEPA)

American environmental act from the 1970s that requires federal agencies to prepare environmental impact statements for every recommendation or report

During a training session, the employees are asked to identify irregularities. Which activity should be identified?

An employee siphoning funds from the office account An irregularity occurs when an employee intentionally defrauds a company.

World Trade Organization (WTO)

An international organization that works at standardizing competitive market practices in conjunction with the internal laws of individual nations attempts to establish global standards in competitive markets in conjunction with the internal competitive laws that govern each nation individually.

Apple Inc. vs. Pepper

Antitrust court case in which a group of iPhone users have accused Apple of monopolistic practices via the App store

What is true regarding the ensuring of competitive markets?

Antitrust laws that promote free domestic markets tend to promote globalization.

United Nations Environment Programme (UNEP)

Branch of the United Nations that deals specifically with worldwide environmental problems

How should a company ensure that internal controls are effectively implemented?

By performing due diligence with procedures A company ensures that internal controls are effectively implemented by ensuring that procedures are clearly articulated and by consistently auditing employees to ensure compliance

A company sells products that many have reported on social media to be culturally insensitive, and sales have decreased significantly since the negative publicity began. How are consumers responding to the publicity?

By voting with their purchases Consumers who do not believe the product is made in alignment with their values may not buy the product. Not buying the product is considered voting with one's wallet.

open government information regulations

Chinese regulation (2008) that establishes limited rules for government information disclosure and public participation

A company is reviewing how ethical consumerism is being addressed in the organization. It is hoping to improve its awareness of this factor and how it will influence future business decisions. How does this factor affect business decisions?

Companies must remember that their consumers may care about more than just the final product. Nearly half of North American consumers report punishing a company by not purchasing a product if they disagree with its manufacturing or other business practices.

Antitrust laws

Consumer protection policy used to limit unfair business practices related to competition and control of prices aimed at regulating consumer affairs and safeguarding the market from anticompetitive practices, particularly from large companies that may hold a monopoly

Worst Forms of Child Labour Convention, 1999

Convention (1999) that aimed to eliminate all practices of child slavery or those similar to slavery

The Maritime Labour Convention (MLC), 2006

Convention (2006) that set out a bill of rights for all seafarers

Domestic Workers Convention, 2011

Convention (2011) aimed at protecting domestic workers from abuse and exploitation

A company is reviewing intangible assets that are covered by intellectual property laws. Which asset is being reviewed?

Copyright Intellectual property law covers intangible assets like patents, trademarks, and copyrights

Which term describes the normative beliefs and practices passed from generation to generation that help define a group of people?

Cultural norms Shared and integrated systems of beliefs and practices that are passed down through generations and characterize a cultural group are cultural norms.

A new employee has recently transferred from the U.S. headquarters to a foreign office, and a coworker has been assigned to help the employee become acclimated to the new location. The coworker decides that the best place to start is with a description of the culture of the region since it is significantly different from the United States. Which piece of information is this coworker providing to this employee?

Details about how the community functions Culture describes a collective way of life and provides details on how the community functions in terms of their actions and beliefs.

Which action is used by companies wishing to avoid working with vendors who use sweatshops?

Developing and imposing a company internal code of conduct for vendor labor practices A code of conduct for vendors is contractually imposed, and often publicly posted, to ensure the reputation of the company is protected.

What does business ethics implicitly regulate?

Employee behavior Employers want employees to self-regulate so that when a stimulus appears they will take proper action in the interest of everyone involved, either directly or indirectly.

Which governmental entity was created to provide regulatory authority regarding pollution by industry?

Environmental Protection Agency The agency was created in 1970 to monitor industry and industry's environmental practices. The agency is not under any cabinet-level department

World Intellectual Property Organization (WIPO)

Established by the United Nations to implement global policy related to intellectual property (infrastructure)

conflict of interest (COI)

Ethical challenges in which multiple interests are at conflict with one another

What is the term for the concept that people should purchase goods and services from organizations that match their own values and beliefs?

Ethical consumerism There is an industry that exists to provide information about the ethical behaviors of organizations to allow consumers to support organizations that align with their own personal values and beliefs.

Ethics

Field of philosophy that deals with the morality of what is considered right and wrong

copyright

Form of protection provided by the laws of the United States to the authors of "original works of authorship," including literary, dramatic, musical, artistic, and certain other intellectual works

A global company has warned managers that the country involved in their current business venture typically expects small payments to be made to government officials to expedite decisions and transactions. The company has encouraged managers to avoid this type of unethical practice. Which form of activity is the company concerned about?

Grease payments When a business engages in making small payments to government officials to expedite activities, it is a grease payment.

A coffee company received international criticism for an employee negatively responding towards a customer. The response was said to be racially motivated. The company needs to take swift action to improve how all employees in the organization are viewed by ethical consumers. Which course of action should the company take to meet this goal?

Have employees attend sensitivity training This is a solution that addresses the entire company and does not cause harm to any employees for any mistakes.

A company that released a new vehicle marketed as being environmentally friendly is found to have cheated when testing the vehicle's total emissions. The company would like to repair damage from the negative publicity by changing its image and catering more to ethical consumers. Which action should the company take to reach this goal?

Hire a new leader to send the message that practices have changed Establishing a new image and leader can help consumers trust the company again after practices have changed.

What is the directional nature of contracts between international businesses?

Horizontal contracts with vertical legal structure The contracts between international companies are more like a treaty and are therefore horizontal in nature. However, since the parties choose which of the laws apply for resolution of disputes under the contract, the contracts also have vertical legal structure.

Organizational Ethics

How an organization ethically responds to an internal or external stimulus

A company is concerned about source code theft of digital property. The company is reviewing a law that governs this behavior. Which law is being reviewed by this company?

Intellectual property Intellectual property law applies to digital property.

trade secret

Intellectual property that is kept private

An American salesperson is attempting to do business in a Middle Eastern country. What is one of the major cultural issues the salesperson needs to understand about this part of the world?

It is more relationship-based than the United States. Compared to United States and other Western cultures, relationships, including those in business, are more important.

Sarbanes-Oxley Act

Law aimed at increasing level of ethical transparency within corporate America

Sarbanes-Oxley Act of 2002

Law aimed at increasing the level of ethical transparency within corporate America

horizontal laws

Laws that govern disputes in a horizontal structure

Which convention protects decent working hours for a cruise ship director who travels in international waters?

Maritime Labor Convention, 2006 The Maritime Labour Convention, sometimes called the "Seafarer's Bill of Rights," protects the rights of seafaring workers and is law for multiple countries. This convention protects decent working hours for a cruise ship director that travels in international waters

Monopoly

Market in which single producer is a price maker that can determine the price level by deciding what quantity of a good to produce

irregularities

Misrepresentations of accounting data with the intention to defraud

power distance

One of Hofstede's six dimensions of national culture. It describes how formal and authority-focused a society is.

A business has experienced significant internal and external events, and the owner decides to respond effectively while maintaining the rules of behavior the company has always vocalized as being appropriate. Which component has guided this owner's response?

Organizational ethics Organizational ethics is how a business responds to stimuli in an ethical manner.

Which of these agreements or treaties was to combat increased temperatures of global climate change?

Paris Agreement This agreement was completed in 2016 to stop or at least slow global warming. Not all countries agreed to these goals.

Which intellectual property right describes a chemical company's filing on their innovative industrial process invention?

Patent A patent is filed to protect the right to an innovative invention, which must be a manufactured product, an apparatus, chemical composition, or a manufacturing process.

A farmers market has many vendors and consumers who all sell and buy the same produce at the same price. Which type of market is represented?

Perfect competition Since vendors can enter and exit the market freely with no barriers and the products are homogenous, it is a pure competition.

Which of the following will cause shrinkage in accounting?

Petty theft Discrepancies are unintentional accounting errors due to reasons such as incorrectly entered data and shrinkage. Petty theft, mismanaged inventory, and perishable goods going unrecorded can cause accounting shrinkage.

trademarks

Protection for any word, name, symbol, device, or any combination used in commerce to identify and distinguish the goods of one manufacturer or seller from goods manufactured or sold by others

patents

Protects inventions and improvements to existing inventions for a limited period of time in exchange for detailed public disclosure of those inventions

Damages

Recompense for the injured party by the party that breached the contract

A sole, national telephone company was found violating antitrust laws and was forced to separate into regional companies. What caused the violation of the antitrust laws?

Reduced competition Antitrust laws are enacted to protect consumer's rights to competition in the marketplace. The sole, national company was a monopoly, and no competition occurred.

Which action should a company take to change consumer perceptions of the company's ethical standards due to a recent scandal?

Remedy negative events immediately with change When the actions of employees become the center point of an organization, it is critical to respond with change to address and remedy the error in order to recover from a negative and unfortunate event.

An American employee is working in a Chinese firm in China and notices an ethical violation. The employee tells a colleague, who is Chinese, and the colleague advises the American employee to save face. What does the Chinese colleague mean by this advice?

Report only if directly asked if a violation occurred For Chinese, saving face means that the employee should not reveal information that may harm another unless directly asked a specific question

A major footwear brand company is contracting the manufacturing of its products to a contractor's manufacturing plant overseas. The footwear company has been accused of turning a blind eye to sweatshop practices at other overseas contract locations before. How should the footwear company ensure that the contractor will comply with the standards set forth in the code of conduct that explicitly prohibit this practice?

Require that the factories be available for inspections Making the factories available for inspections and audits, sometimes unannounced, is a best practice to ensure compliance with the code of conduct.

Which legislation is aimed at increasing ethical financial transparency in corporate America and affects foreign businesses that want to be listed on a U.S. stock exchange?

SOX The Sarbanes-Oxley Act (SOX) is legislation aimed at increasing ethical transparency in corporate America and applies to foreign businesses that want to be listed on a U.S. stock exchange.

An employee at the U.S. Patent and Trademark Office was casually talking to a friend who worked at Company XYZ. The patent office employee mentioned that a pending patent application for Company XYZ was about to be denied, and the decision would become public in a few days. The public release of the report was likely to result in a severe reduction in the stock price of the company. The friend who worked at Company XYZ then placed an online trade transaction to sell all shares of stock they owned in Company XYZ the next day. Which specific law passed by the U.S. Congress did the Company XYZ employee violate?

Sarbanes-Oxley Act (SOX) The Sarbanes-Oxley Act (SOX), legislation passed by the U.S. Congress, is designed to address a lack of trust in corporate America by the investing public. SOX specifically prevents an employee from selling stock based on information not known by the public.

A company requires one employee to be responsible for maintaining a machine. Another employee is responsible for maintaining accounting records for that machine. Which internal control has the company implemented?

Segregating duties Irregularities are intentional accounting errors with the purpose to defraud, and this action is used as an internal control to prevent irregularities.

Which type of duty is required to take care of the collective environment across the nation?

Shared Nation states and industry have a shared responsibility to take care of the collective environment of the nation. Collectively, both can accomplish more.

Cultural norms

Shared, sanctioned, and integrated systems of beliefs and practices that are passed down through generations and characterize a cultural group

Uniform Commercial Code (UCC)

Source of contract law in the United States

What makes the enforcement of United Nations Environmental Program regulations difficult?

Sovereign rights of nations The sovereign rights of nations preclude the United Nations from enforcing the regulations. United Nations compliance is normally voluntary and agreements tend to be nonbinding.

horizontal structure

Structure of law where neither party is in a legally dominant position over the other

A cruise ship employs over 200 workers over the course of 18 years. One worker describes terrible living conditions and the limited amount of food that employees are given to eat. Which labor convention is being violated by the employer?

The Maritime Labour This convention sets out seafarers' rights to decent working conditions.

What did the Worst Forms of Child Labor Convention, 1999 define?

The age at which a person becomes an adult The Worst Forms of Child Labor Convention defines a child as an individual younger than 18 years old.

A global buyer reviews a company's ethical profile and the social responsibility section of its annual report. Understanding that the company's values match the buyer's principles, the buyer purchases the company's products. Which action did the buyer perform regarding the purchase of the company's products?

The buyer practiced ethical consumerism. When a person evaluates a company's values and then makes purchases from the company based on the person and company's matched values, this is ethical consumerism.

Which two primary sources of law govern contracts in the United States?

The common law and the Uniform Commercial Code Common law comes from custom and from precedents set by other court decisions. The Uniform Commercial Code provides some a standardized laws and regulations for commercial transactions such as sales. They are the two primary sources of law that govern contracts in the United States.

business ethics

The contemporary standards or sets of values that govern the actions and behavior of individuals in the business organization and the actions of the business itself

Sherman Antitrust Act

The first American antitrust policy. Established in 1890, it dealt with limiting the power of price-controlling cartels

intellectual property rights

The legal protections for creations of the mind

Which result occurs when a legally enforceable contract between two businesses from different countries is broken?

The party who has been affected can seek damages. When a legally enforceable contract is broken, the party who has been affected can seek damages so the business can be made whole as if the breach of contract did not occur

Internal controls

The redundancies that are build into a system to make certain that it accurately maintains material statements

What does Article 2 of the Uniform Commercial Code (UCC) govern?

The required conduct of both parties in accordance with the contract Article 2 of the UCC governs the obligations of the two parties, specifically with respect to the offer.

What is the purpose of internal controls?

To ensure the accuracy of a system's performance Internal controls are built into a system to help guarantee the accuracy and reliability of the financial and accounting information. Internal controls should ensure systems run efficiently, effectively, and accurately and that they reduce accounting misstatements.

What is the agreement that the World Trade Organization has between its member nations that governs all intellectual property laws?

Trade-Related Aspects of Intellectual Property Rights (TRIPS) This agreement by the WTO governs all IP laws

Oil Pollution Act of 1990

U.S. law that strengthened the Environmental Protection Agency's ability to prevent and respond to oil spills

collective environment

Understanding that the environment not only belongs to everyone to enjoy but is also everyone's shared responsibility

UN Convention on Contracts for the International Sale of Goods (CISG)

United Nations treaty that applies to the international sales of commercial goods

Paris Agreement

Universal global climate deal aimed at keeping long-term global temperature increase at below 2°C

Which organization aims to develop a global intellectual property infrastructure?

WIPO This stands for World Intellectual Property Organization. Its goal is to develop a global IP infrastructure, build international respect for IP, and implement global policy related to IP.

Many countries from several geographic regions are accused of dumping steel into the U.S. market at unfairly low prices. Which entity can the United States appeal to in order to correct this apparent market manipulation?

World Trade Organization The World Trade Organization is designed to judge potential market manipulations of its members. The United States has accused several countries around the world of dumping steel.

Globalization

Worldwide interconnections in virtually every sphere of activity including the spread of products, technology, information, and job opportunities. Globalization can result in blurred boundaries between nations, organizations, and investors

consumer

a person who needs, uses, or has used a particular service or product. Consumers are vulnerable when there is little market competition because corporations can control prices

antimonopoly laws

the same as anti trust law Consumer protection policy used to limit unfair business practices related to competition and control of prices

competition laws

the same as anti trust law Consumer protection policy used to limit unfair business practices related to competition and control of prices