BUS 100 Midterm Exam

One of the main reasons that American executives are paid so much is: a. Qualified individuals are scarce because most current CEOs were born during the "baby bust" years of the Great Depression. b. Most executives are paid based on their performance, and rising compensation reflects the excellent performance of their firms. c. High executive compensation in other nations puts upward pressure on the salaries of U.S. executives. d. Pay is set by the compensation committees of the board, largely comprised of other CEOs who have an interest in pushing compensation up.

d. Pay is set by the compensation committees of the board, largely comprised of other CEOs who have an interest in pushing compensation up.

A legal right of shareholders is: a. To publish annual financial reports. b. To receive interest, if declared. c. To vote on who will become chief executive officer (CEO). d. To vote on members for the board of directors.

d. To vote on members for the board of directors.

The emergence of a public issue indicates that: a. consumers are unaware of how an organization's actions affect them b. consumers are unaware of how an organization's actions affect them c. technology is forcing ethics and business strategy closer together d. a gap may be developing between what stakeholders expect and what an organization is actually doing

d. a gap may be developing between what stakeholders expect and what an organization is actually doing

Which statement is not correct about the business-society interdependence? a. business is a part of society b. business is separated from the rest of society by clear boundaries c. business activities impact other activities in society d. actions by governments rarely affect business

d. actions by governments rarely affect business

Corporations that run their operations according to the stakeholder theory of the firm create value by: a. innovating new products b. increasing their stock price c. developing their employees' professional skills d. all of these answers are correct

d. all of these answers are correct

Stakeholder groups can include: a. shareholders b. business support groups c. environmental activists d. all of thee answers are correct

d. all of these answers are correct

Which of the following is the result of the inseparable relationship between business and society? a. all business decisions have a social impact b. the vitality of business depends on society's actions and attitudes c. the survival of business is independent of society d. both of these answers are correct: All business decisions have a social impact and the vitality of business depends on society's actions and attitudes

d. both of these answers are correct: All business decisions have a social impact and the vitality of business depends on society's actions and attitudes

When working well, the issue management process: a. minimizes dialogue with the stakeholders and focuses on short-term survival b. generates two specific options for each issue c. is static and never pulls in additional information that would disturb the balance d. continuously cycles back to the beginning and repeats

d. continuously cycles back to the beginning and repeats

Contemporary issue management: a. was useful in the 197os, but not today b. is used by all government agencies c. is a linear process d. is an interactive, forward-thinking process

d. is an interactive, forward thinking process

An analysis of the stability or instability of a government is an example of scanning which environment? a. geophysical b. social c. legal d. political

d. political

Stakeholder engagement is, at its core, a: a. process b. systems model c. program d. relationship

d. relationship

Stakeholder engagement is: a. the acquisition of information gained form analyzing the multiple environments b. competitive intelligence being collected ethically and systematically c. any issue that is of mutual concern to an organization and one or more of its stakeholders d. the process of ongoing relationship building between a business and its stakeholders

d. the process of ongoing relationship building between a business and its stakeholders

Which of the following companies is being the most socially responsible? a. A company changing its product design to comply with regulatory mandates. b. A company trying to maximize its profits and then contributing to an environmental protection fund. c. A company halting its production of toxic gases after it discovered that people objected to this practice and threatened legal action. d. A company trying its best to operate in a way which will help local students get education and jobs.

d. A company trying its best to operate in a way which will help local students get education and jobs.

Public policies and government regulations are shaped by: a. Business b. Special interest groups. c. Government. d. All of these answers are correct.

d. All of these answers are correct.

The reason(s) behind the uncertainty of an ethical or unethical decision is (are) that different people and groups: a. May honestly and genuinely use different sources of information. b. May rank various rights in different ways. c. May not share the same meaning of justice. d. All of these answers are correct.

d. All of these answers are correct.

Proponents of business as a political participant argue: a. A pluralistic system invites many participants. b. It is business's constitutional right to be involved. c. Business is a vital stakeholder of government. d. Both of these answers are correct: A pluralistic system invites many participants; and business is a vital stakeholder of government.

d. Both of these answers are correct: A pluralistic system invites many participants; and business is a vital stakeholder of government.

The board committee that administers and approves salaries and benefits of high-level managers in a company is called: a. Nominating. b. Executive. c. Human resources. d. Compensation.

d. Compensation.

As business becomes increasingly global: a. It must turn to national laws for guidance. b. Ethical issues become issues of free trade. c. A global code of conduct will emerge for businesses. d. Cross-cultural contradictions will increase.

d. Cross-cultural contradictions will increase.

An argument that opposes the idea of high executive pay is: a. High salaries provide an incentive for innovation and risk-taking. b. Not many individuals are capable of running today's large, complex organizations. c. Top athletes and entertainers make a lot of money, so top executives should, too. d. High salaries divert resources that could be used to invest in the business.

d. High salaries divert resources that could be used to invest in the business.

An argument in support of high executive compensation is: a. There is currently a surplus of qualified executive candidates. b. High executive pay drives away talented middle managers who feel unfairly compensated. c. Inflated executive pay helps U.S. firms compete with foreign rivals. d. High salaries provide an incentive for innovation and risk-taking.

d. High salaries provide an incentive for innovation and risk-taking.

Which of the following is a key feature of effective boards of directors? a. Ensure that no outside members are included on the board. b. Combine the duties of the board chairman and the chief executive. c. Fill all important positions on the board with managers with insider knowledge of the firm. d. Hold regular meetings without the CEO present.

d. Hold regular meetings without the CEO present.

All of the following are considered to be ethical issues for marketing professionals except: a. Fostering trust in the marketing system. b. Embracing ethical values. c. Doing no harm. d. Ignoring market fair dealing.

d. Ignoring market fair dealing.

The five types of stakeholders' power recognized by most experts are:

Voting, economic, political, legal, and informational power

An emerging business model that attempts to strategically balance the interests of all stakeholders to solve social and environmental problems is called: a. B Corporation. b. CSR Corporation. c. Balanced Corporation. d. B Lab.

a. B Corporation.

Government's role is to create and enforce laws that: a. Balance the relationship between business and society. b. Control businesses' actions in society. c. Protect society from business. d. Protect businesses' interest in society.

a. Balance the relationship between business and society.

Which of the following statements is true about corporate social responsibility? a. Both of these answers are correct: Businesses should monitor and prevent social problems in advance of their becoming major issues; and corporations should be accountable for any actions that affect people, their communities, and the environment. b. A company should seek maximum profits from its operations in order to provide the best for society. c. Corporations should be accountable for any actions that affect people, their communities, and the environment. d. Businesses should monitor and prevent social problems in advance of their becoming major issues.

a. Both of these answers are correct: Businesses should monitor and prevent social problems in advance of their becoming major issues; and corporations should be accountable for any actions that affect people, their communities, and the environment.

Some companies have created a department of corporate citizenship to: a. Centralize under common leadership wide-ranging corporate citizenship functions. b. Narrow the job of the public relations office. c. Adopt the United Nations' Global Compact Principles. d. Decentralize under common leadership wide-ranging corporate citizenship functions.

a. Centralize under common leadership wide-ranging corporate citizenship functions.

Which of the following is an example of fulfilling social objectives through stock ownership? a. Divesting from Chinese companies that made products using forced labor. b. Investing in Burmese companies that had been accused of human rights abuses. c. Selling stock of companies with a below-market rate of return. d. Selling stock of companies that refused to do business with nations that produced conflict minerals.

a. Divesting from Chinese companies that made products using forced labor.

Which of the following are examples of natural monopolies? a. Electric utilities and railroads. b. Cable television and the media. c. Internet services and trucking. d. None of these answers are correct.

a. Electric utilities and railroads.

A company that channels employee behavior in a lawful direction by emphasizing the threat of detection and punishment is: a. Operating under the compliance-based approach. b. Practicing "tone at the top." c. Operating under the integrity-based approach. d. Operating under the instrumental policy approach.

a. Operating under the compliance-based approach.

A common tactic in a financial-incentive political strategy is: a. Political contributions. b. Legal challenges. c. Lobbying d. Expert witness testimony.

a. Political contributions.

Around the world, government: a. Sometimes cooperates and sometimes is in conflict with business. b. Tends to be in conflict with business. c. Tends to cooperate with business. d. Tends to be controlled by business.

a. Sometimes cooperates and sometimes is in conflict with business.

Which of the following statements is not true about shareholders? a. They own equal shares of company assets. b. They are investors in the company. c. They are the legal owners of business corporations. d. Managers pay close attention to their needs and interests.

a. They own equal shares of company assets.

When the benefits of an action outweigh its costs, the action is considered ethically preferred according to: a. Utilitarian reasoning. b. Virtue ethics. c. Theological reasoning. d. Plato and Aristotle.

a. Utilitarian reasoning.

A firm subscribing to the ownership theory of the firm would mainly be concerned with providing value for its a. investors b. customers c. board of directors d. community

a. investors

All of the following are external stakeholders of the firm except: a. managers b. customers c. shareholders d. suppliers

a. managers

Investors may receive an economic benefit from the ownership of stock by receiving: a. Interest b. Both dividends and capital gains. c. Capital gains. d. Dividends

b. Both dividends and capital gains.

Companies demonstrate global corporate citizenship by: a. Integrating concern for both financial and social performance. b. Both of these answers are correct: Finding business opportunities that serve society and integrating concern for both financial and social performance. c. Finding business opportunities that serve society d. Building reactive stakeholder partnerships.

b. Both of these answers are correct: Finding business opportunities that serve society and integrating concern for both financial and social performance.

Which political action strategy seeks to gain support from other affected organizations to better influence policymakers? a. Information strategy. b. Constituency-building strategy. c. Financial-incentive strategy. d. Lobbying strategy.

b. Constituency-building strategy.

The directors of a company are a central factor in corporate governance because they: a. Have the highest stake in the performance of the company. b. Exercise formal legal authority over company policy. c. Have a moral responsibility to serve both the company's employees and customers d. Inherited the business from their predecessors.

b. Exercise formal legal authority over company policy.

What is one advantage of operating as a B corporation? a. Audits are not required. b. Government certifications are frequently conferred. c. They are tax-free organizations. d. Financial reporting is not required.

b. Government certifications are frequently conferred.

The iron law of responsibility says that: a. In the short run, sacrifice social goals for economic goals. b. In the long run, those who do not use power responsibly will lose it. c. In the long run, economic responsibility leads to social responsibility. d. Law is most important, more than social or economic responsibility.

b. In the long run, those who do not use power responsibly will lose it.

Under the U.S. Corporate Sentencing Guidelines, if a firm has developed a strong ethics program, corporate executives found guilty of criminal activity may have their sentence: a. Increased. b. Reduced. c. Unaffected. d. Decided by the company.

b. Reduced.

At the core of rights reasoning is the belief that: a. The company's right to a profit must be protected. b. Respecting others is the essence of human rights. c. The right to join a union is no longer universally accepted. d. Economic and political powers determine who is right.

b. Respecting others is the essence of human rights.

Which of the following is not an example of stakeholders' economic power: a. a sommelier halts shipments to a business customer that demanded very low prices b. a social group protests a government's decision to raise taxes c. a local community boycotts. grocery store suspected of inaccurate weight scales d. an equal rights group refuses to do business with a company that has a discriminatory hiring policy

b. a social group protests a government's decision to raise taxes

Over time, the nature of business's relationship with its stakeholders often: a. become more hostile b. evolves through a series of stages c. remain static d. none of these answers are correct

b. evolves through a series of stages

Proactive companies are: a. much more likely to be forced to defend themselves b. must less likely to be blindsided by crisis and negative surprises c. much more likely to be blindsided by crises and negative surprises d. just as likely to be blindsided by crises and negative surprises

b. much less likely to be blindsided by crises and negative surprises

Which one of the following is considered to be a non market stakeholder of business? a. customers b. nongovernmental organizations c. creditors d. shareholders

b. nongovernmental organizations

A just or fair ethical decision occurs when: a. The rights of all affected are considered. b. The greatest good for those with power is achieved. c. Benefits and burdens are distributed in fair proportions. d. Benefits exceed costs.

c. Benefits and burdens are distributed in fair proportions.

Proponents against corporate social responsibility feel that public officials, not business people, should solve societal problems because: a. The private sector is not mandated to solve these issues. b. Neither of these answers is correct. c. Business people do not have the skill set to solve societal problems. c. Both of these answers are correct.

c. Both of these answers are correct.

The capability of corporations to influence government, the economy, and society, based on their organizational resources is called: a. CEO power. b. Corporate media. c. Corporate power. d. Corporate citizenship.

c. Corporate power.

Cooperation between business and government often occurs with which of the following industries? a. Cable television and the media. b. None of these answers are correct. c. Electric utilities and railroads. d. Internet services and trucking.

c. Electric utilities and railroads.

Business managers need a set of ethical guidelines to help them: a. Understand the changing customs throughout the world. b. Justify the resolution which best helps them. c. Identify and analyze the nature of the ethical problem. d. None of these answers is correct.

c. Identify and analyze the nature of the ethical problem.

Building ethical safeguards into a company's everyday routines is called: a. Change management. b. Justifying ethics. c. Institutionalizing ethics. d. Ethical awareness.

c. Institutionalizing ethics.

Government regulations help balance negative externalities such as: a. Drug testing at private businesses. b. Gender controls over alcohol purchases and consumption. c. No smoking rules enforced to mitigate the effects of second-hand smoke. d. Age restrictions for Social Security recipients.

c. No smoking rules enforced to mitigate the effects of second-hand smoke.

A large sporting goods store that raised the age for purchase of some firearms in response to public concerns for gun control were seen by detractors as: a. Being too selfish to care about humanity. b. Trying to solve a problem they had no expertise in. c. Risking their reputation by engaging in politics. d. Being too small and weak to make a difference.

c. Risking their reputation by engaging in politics.

Failure to understand the beliefs and expectations of stakeholders: a. causes a company's profits to increase in the shorter run b. causes a company's profits to decrease in the shorter run c. causes the performance-expectations gap to grow larger d. decreases the change of a corporate buy-ou

c. causes the performance-expectations gap to grow larger

A stakeholder analysis: a. creates quality among all stakeholder interests b. allows managers to examine two primary questions c. involves understanding the nature of stakeholder interests d. actions by governments rarely affect business

c. involves understanding the nature of stakeholder interests

The issue management process is a: a. confusing process that is rarely used to help top management within an organization b. beneficial tool used only to minimize the negative effects of a public issue for the organization's advantage c. systematic process companies use when responding to public issues that are the greatest importance to the business d. beneficial tool used only to maximize the positive effects of a public issue for the organization's advantage

c. systematic process companies use when responding to public issues that are the greatest importance to the business

Which of the following examples does not show a company guided by enlightened self-interest? a. A company providing the best quality product at a fair price. b. A company providing assistance to employees who attend evening college. c. A company vice-president invited to attend a local community's town planning meeting. d. A company breaking past records by maximizing quarterly profits.

d. A company breaking past records by maximizing quarterly profits.