Chapter 10 - Business Ethics, Social Responsibility, and Environmental Sustainability

A recent Wall Street Journal article reported that 80 percent of all firms sampled had no restrictions on relationships between a supervisor and a subordinate.

false

According to a study by the Institute of Business Ethics, companies that do not display ethical conduct consistently outperform companies that show a clear commitment to ethical conduct.

false

After decades of debate and struggle, firms have finally definitively determined the appropriate social policies.

false

Bad ethics can derail all but the best strategic plans.

false

California is the nation's second-largest producer of solar energy.

false

Corporate social policy should be reaffirmed or changed during strategy implementation.

false

Good ethics is not a prerequisite for good strategic management.

false

Having a code of ethics ensures ethical business behavior.

false

History has proven that the lower the trust and confidence of people in the ethics of an institution or society, the greater its economic strength.

false

ISO, the world's largest developer of sustainability standards, is legally authorized to enforce their standards.

false

In Europe, romantic relationships at work are frowned upon, and most firms have policies prohibiting the practice.

false

In order to be considered bribery, the gift offered must be either money or a physical item.

false

It has gotten easier for firms to get away with placing "green" terminology on their products and labels because there are still no legal or generally accepted definitions of terms like "organic," "green," "safe," or "earth-friendly."

false

Like the United States, Japan is eager to rely on large-scale immigration to bolster its workforce.

false

Monitoring departmental and corporate performance regarding ethical issues can cause firms to misalign ethical and strategic decision making.

false

Most firms warn managers and employees that reporting an ethical violation by others, also known as whistle-blowing, could cause them to be discharged.

false

Primary responsibility for ensuring ethical behavior rests with middle- and low-level managers, since they are in a position to influence many employees.

false

Social responsibility refers to actions an organization takes that are legally required to protect or enhance the well-being of living things.

false

Workplace romance and sexual harassment are synonymous.

false

Some of the largest payouts for class-action legal fraud suits ever were against Enron ($7.16 billion) and WorldCom ($6.16 billion).

true

More and more firms believe that ethics training and an ethics culture A) are socially irresponsible. B) are admirable but damage a firm's competitive positioning. C) are costly and provide no practical benefit to the company. D) create strategic advantage. E) can tarnish the reputation of a firm.

D) create strategic advantage.

Environmental advocacy groups now have ________ Americans as members. A) approximately 100,000 B) just under a million C) close to 5 million D) over 20 million E) almost a billion

D) over 20 million

Which of the following is NOT a way that companies can help create an ethical culture in their organization? A) Outlining ethical expectations B) Giving examples of ethical situations that commonly occur in their businesses C) Providing code-of-conduct manuals D) Creating interactive exercises that pose hypothetical ethical dilemmas E) Discouraging whistle-blowing

E) Discouraging whistle-blowing

Bribery involves A) bestowing a gift to influence the recipient's conduct. B) requiring employees to report any unethical violations they discover or see in the firm. C) prohibiting love affairs between bosses and their subordinates. D) encouraging firms to play a role in curing society of its ills. E) forcing companies to take responsibility for the impact their actions have on society.

A) bestowing a gift to influence the recipient's conduct.

Social policy can best be defined as A) the responsibilities a firm has to employees, consumers, environmentalists, minorities, communities, shareholders, and other groups. B) a document providing behavioral guidelines that cover daily activities and decisions within a firm. C) an SEC mandate to report any unethical behavior. D) the legal requirement to reveal how a firm's operations impact the natural environment. E) mandatory technical standards that result in an environmental management system.

A) the responsibilities a firm has to employees, consumers, environmentalists, minorities, communities, shareholders, and other groups.

Which state generates the greatest number of megawatts of wind power? A) Texas B) Iowa C) California D) Minnesota E) New Jersey

A) Texas

________ are the individuals primarily responsible for ensuring that high ethical principles are espoused and practiced in an organization. A) Non-management employees B) Mid-level managers C) Shareholders D) Strategists such as CEOs and business owners E) Governmental regulatory bodies

D) Strategists such as CEOs and business owners

Special natural environment issues include all of the following EXCEPT A) ozone depletion. B) destruction of animal habitats. C) pollution control. D) spreading computer viruses. E) developing biodegradable products and packages.

D) spreading computer viruses.

Ethics training programs should contain which of the following? A) Messages from the CEO or business owner emphasizing ethical business practices B) The development and discussion of codes of ethics C) Procedures for discussing unethical behavior D) Procedures for reporting unethical behavior E) All of the above

E) All of the above

Employee wellness cannot be a part of sustainability.

False

Firms should strive to engage in social activities that have no economic benefits, to avoid their being viewed as public relations ploys.

False

Many people consider it unethical for a firm to be socially irresponsible.

True

A bribe is a gift bestowed to influence a recipient's conduct.

true

A new wave of ethics issues has accentuated the need for strategists to develop a clear code of business ethics.

true

A rising tide of consciousness about the importance of business ethics is sweeping the United States and the rest of the world.

true

The EEOC recovers about $500 million on behalf of office romance victims.

true

The percentage of persons age 65 or older exceeds 20 percent in Japan, Italy, and Germany.

true

Firms should strive to engage in social activities that A) have economic benefits. B) have no economic benefits. C) are detrimental to economic growth. D) drain financial resources. E) garner goodwill only, not profits.

A) have economic benefits.

A proactive environmental policy is likely to lead to A) higher cleanup costs. B) conservation of energy. C) reduced customer loyalty. D) numerous liability suits. E) higher medical costs.

B) conservation of energy.

All of the following statements are true EXCEPT A) ISO is the world's largest developer of sustainability standards. B) ISO standards are widely accepted all over the world. C) ISO has legal authority to enforce its regulations' implementation. D) ISO standards are voluntary. E) ISO itself does not regulate or legislate.

C) ISO has legal authority to enforce its regulations' implementation.

________ was socially responsible in the wake of the earthquake and tsunami that devastated Japan in 2011; it also was able to get supplies to people who needed them following Hurricane Katrina. A) China Railway Group B) GDF Suez C) Walmart D) RWE E) Marquard & Bahls

C) Walmart

Moving jobs overseas is not considered to be an unethical business practice.

false

The percentage of persons age 65 or older exceeds 20 percent in Japan, Italy, and A) Germany. B) the USA. C) France. D) China. E) All of the above

A) Germany.

The ________ is a network of the national standards institutes of 147 countries, one member per country. A) ISO B) EMS C) UN D) EPA E) IMF

A) ISO

ISO 14001 is a technical standard and as such replaces technical requirements embodied in statutes or regulations.

false

In some foreign countries, paying bribes and kickbacks is acceptable.

true

Sustainability reports reveal how a firm's operations impact the natural environment.

true

The first social responsibility of any business must be to make enough profit to cover the costs of the future because if this is not achieved, no other social responsibility can be met.

true

What challenge facing all organizations requires managers to formulate strategies that preserve and conserve natural resources and control pollution? A) Economic B) Ecological C) Compensational D) Benchmarking E) Sociological

B) Ecological

Managers and employees today must be careful not to ignore, conceal, or disregard a pollution problem or they could A) be fired. B) be demoted. C) be held indirectly responsible for their firm's pollution. D) have their firm turn on them in a quest for leniency. E) All of the above

E) All of the above

Which of the following business actions is considered to be unethical? A) Having satisfactory product or service safety B) Selling products in foreign markets C) Providing equal opportunities for women and minorities D) Filing expense accounts E) Misleading labeling

E) Misleading labeling

Companies such as Walmart are now monitoring not only the prices its vendors offer for products, but also how those products are made in terms of environmental practices, as well as safety and infrastructure soundness.

true

Corporate social policy should be designed and articulated during strategy formulation.

true

Dumping banned or flawed products in foreign markets is considered to be an unethical business practice.

true

European firms are increasingly adopting explicit, American-style sexual harassment laws.

true

In 2012, Chinese firms dominated Fortune magazine's list of the least admired companies from a social responsibility perspective.

true

In 2012, GDF Suez, Marquard & Bahls, and RWE were the three most admired socially responsible companies according to Fortune magazine.

true

Integrating ethical decision making into the performance appraisal process is one way that firms can align ethical and strategic decision making.

true

Japan is providing incentives for its elderly to work until ages 65-75.

true

More and more firms believe that ethics training and an ethics culture create strategic advantage.

true

New Jersey's goal is to obtain 3 percent of its electricity from the sun and 12 percent from offshore wind by 2020.

true

Orphan drugs offer pharmaceutical companies no economic incentive for profitable development and distribution.

true

Some ways in which firm's are working to be more environmentally responsible include using solar power and selling organic and environmentally friendly products.

true

Sustainability refers to the extent that an organization's operations and actions protect, mend, and preserve rather than harm or destroy the natural environment.

true

The ISO 14000 family of standards concerns the extent to which a firm minimizes harmful effects on the environment caused by its activities and continually monitors and improves its own environmental performance.

true

Unlike the USA, Japan has no law against discrimination based on age.

true

It is ________ for a business to provide a sustainability report annually to the public. A) good business B) irresponsible C) a decreasing trend D) unethical E) poor planning

A) good business

Business ethics, ________, and sustainability issues are interrelated and impact all areas of the comprehensive strategic-management model. A) social responsibility B) social networking C) fiscal irresponsibility D) cultural indifference E) None of the above

A) social responsibility

A code of business ethics is A) sorely needed in light of a new wave of ethical issues including product safety, employee health, and sexual harassment. B) concerned with what responsibilities the firm has to employees, consumers, environmentalists, minorities, communities, and other groups. C) a report that reveals how the firm's operations impact the natural environment. D) a set of strict regulations requiring firms to conserve energy. E) a series of voluntary standards in the environmental field.

A) sorely needed in light of a new wave of ethical issues including product safety, employee health, and sexual harassment.

Responsibility for encouraging ethical decision making and ensuring ethical behavior in a firm lies with A) only a firm's strategists. B) only a firm's managers. C) only a firm's shareholders. D) both a firm's strategists and its managers. E) neither a firm's strategists nor its managers.

D) both a firm's strategists and its managers.

Simply having a code of ethics A) will ensure ethical business behavior. B) eliminates the need for periodic ethics workshops. C) is all that is necessary to sensitize people to workplace circumstances in which ethics issues may arise. D) is insufficient to guarantee that employees behave in an ethical manner. E) secures an ethics culture in the workplace.

D) is insufficient to guarantee that employees behave in an ethical manner.

The United Kingdom's new Bribery Law A) is less stringent than the similar U.S. FCPA. B) carries a minimum 10-year prison sentence for those convicted of bribery. C) allows foreign companies doing business in the UK to bribe officials if that is their national convention. D) stipulates that failure to prevent bribery is an offense. E) All of the above

D) stipulates that failure to prevent bribery is an offense.

Sustainability refers to the extent that an organization's operations and actions ________ the natural environment. A) protect B) mend C) preserve D) reflect good stewardship of E) All of the above

E) All of the above

The Wall Street Journal article "America Gone Wild" A) reports an astonishing resurgence in wildlife populations in the USA. B) cites that deer-vehicle crashes in the USA cost $1.5 billion a year. C) describes damage done to U.S. infrastructure by the resurgence in wildlife. D) reveals that the total annual cost of wildlife damage in the USA exceeds $28 billion. E) All of the above

E) All of the above

According to the Convention on the International Trade in Endangered Species (CITES), more than 25,000 elephants are killed each year for their ivory—even though international trade in ivory has been outlawed since 1989.

true

Ralph Nader believes that big firms like ExxonMobil, which has more assets than most countries, have an obligation to help society cure its many ills.

true

Social policy concerns what responsibilities the firm has to employees, consumers, environmentalists, minorities, communities, shareholders, and other groups.

true

Whistle-blowing refers to policies that require employees to report any unethical violations they discover or see in the firm.

true

According to a recent Wall Street Journal article, ________ percent of all firms sampled had no restrictions on boss-subordinate love affairs at work. A) 5 B) 13 C) 24 D) 39 E) 80

A) 5

Which of the following companies ranks among those against whom some of the largest payouts for class-action legal fraud suits ever were judged? A) AOL Time Warner B) Walt Disney C) Starbucks D) Herman Miller E) Edison

A) AOL Time Warner

Which of the following was among the most admired companies for social responsibility in 2012 according to Fortune magazine? A) GDF Suez B) China Railway Group C) China Railway Construction D) China State Construction Engineering E) Kirin Holdings

A) GDF Suez

________ is a set of standards in fields such as environmental auditing, performance evaluation, and labeling, that is adopted by thousands of firms worldwide to certify to their constituencies that they are conducting business in an environmentally friendly manner. A) ISO 14001 B) EMS 14000 C) UN 5000 D) SEC 100 E) A sustainability report

A) ISO 14001

________ refers to policies that require employees to report any unethical violations they discover or see in the firm. A) Whistle-blowing B) Bribery C) Adultery D) Sustainability E) Stewardship

A) Whistle-blowing

Walmart encourages its employees to adopt "Personal Sustainability Projects" like weight-loss or smoking-cessation support groups, illustrating that A) employee wellness can be a part of sustainability. B) employee health issues have no business in the workplace. C) firms should crack down on employees' personal interests infringing upon business hours. D) the Global Reporting Initiative requires this of all U.S. companies. E) a company's interest in its employees should be restricted solely to their work duties.

A) employee wellness can be a part of sustainability.

Unethical activities that plague online commerce include all of the following EXCEPT A) inappropriate gifts. B) spreading viruses. C) identity theft. D) Internet fraud. E) hacking into company computers.

A) inappropriate gifts.

According to the text, the first social responsibility of any business is to A) make enough profit to cover the costs of the future, because if this is not achieved then no other social responsibility can be met. B) avoid laying off employees so as to protect the employees' livelihood, even if that decision may force the firm to liquidate. C) engage in social activities that have no economic benefits, to avoid the appearance of a public relations gimmick. D) offer courses and training in environmental management. E) None of the above

A) make enough profit to cover the costs of the future, because if this is not achieved then no other social responsibility can be met.

It has become ________, since uniform standards defining environmentally responsible company actions are rapidly being incorporated into our legal landscape. A) more and more difficult for firms to make "green" claims when their actions are not substantive or even true B) increasingly easy for firms to get away with placing "green" terminology on their products without any oversight C) customary for firms to use terms like "organic," "green," or "earth-friendly" when their products don't warrant it D) more common for consumers to be cynical about corporate environmental claims E) impossible for firms to omit "green" terminology from their labels

A) more and more difficult for firms to make "green" claims when their actions are not substantive or even true

In an effort to manage ecological challenges, many companies are A) moving environmental affairs from the staff side of the organization to the line side. B) moving environmental affairs from the line side of the organization to the staff side. C) making the chief operating officer report directly to the corporate environmental group. D) omitting an environmental representative from their board of directors. E) purging environmental values from their mission statements.

A) moving environmental affairs from the staff side of the organization to the line side.

A document that discloses to shareholders information about a firm's labor practices, product sourcing, energy efficiency, environmental impact, and business ethics practices is known as A) a code of ethics. B) a sustainability report. C) an EMS. D) ISO 14000. E) green terminology.

B) a sustainability report.

Alaska and oil companies contend that protections for polar bears ________. A) are not aggressive enough and must be strengthened B) are diminishing opportunities for Alaska energy development C) help push Alaskan companies to explore alternative energy sources D) are ineffective and actually have caused populations in Alaska to decrease E) are long overdue and must be enacted immediately

B) are diminishing opportunities for Alaska energy development

Bad ethics can ________ strategic plans. A) derail all but the best B) derail even the best C) derail only poorly-intentioned D) derail only ill-conceived E) never affect

B) derail even the best

The European Parliament in late 2012 voted with an overwhelming 566-47 margin to A) reinstate commercial whaling. B) eradicate the practice of shark finning. C) add polar bears to the list of endangered species. D) outlaw international trade in ivory. E) None of the above

B) eradicate the practice of shark finning.

All of the following business actions are considered to be unethical EXCEPT A) moving jobs overseas. B) preventing environmental harm. C) overpricing. D) sexual harassment. E) insider trading.

B) preventing environmental harm.

If a firm has a bad sustainability record this will A) help a firm in the market. B) improve a firm's standing in the community. C) cause investors to closely scrutinize the firm. D) deflect the scrutiny of a firm by environmentalists. E) release the firm from governmental reporting obligations.

C) cause investors to closely scrutinize the firm.

Japan's prescription for dealing with problems associated with an aging society includes A) relying on large-scale immigration. B) providing incentives for its elderly to retire at ages 55 to 60. C) reversing the old-fashioned trend of keeping women at home. D) enacting laws against discrimination based on age. E) phasing in a shift from age 60 to age 55 as the date when a person may begin receiving a pension.

C) reversing the old-fashioned trend of keeping women at home.

The U.S. Foreign Corrupt Practices Act and a new provision in the Dodd-Frank financial regulation-law allows company employees who bring cases of financial fraud, such as bribery, to the government's attention to receive ________ percent of any sum recovered. A) less than 10 B) exactly 20 C) up to 30 D) about 40 E) at least 50

C) up to 30

All of the following are reasons that workplace romance can be detrimental to workplace morale and productivity EXCEPT A) favoritism complaints can arise. B) personal arguments can lead to work arguments. C) whispering secrets can lead to tensions and hostilities among coworkers. D) increased quality and quantity of work can occur. E) sexual harassment charges may ensue, either by the involved female or a third party.

D) increased quality and quantity of work can occur.

Firms can align ethical and strategic decision making by A) omitting ethical considerations from long-term planning. B) excluding ethical decision making from the performance appraisal process. C) discouraging whistle-blowing. D) monitoring departmental and corporate performance regarding ethical issues. E) All of the above

D) monitoring departmental and corporate performance regarding ethical issues.

Workplace romance A) is defined as unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature. B) is defined as illegal by the Equal Employment Opportunity Commission. C) should be strictly forbidden by organizations. D) simply happens so organizations should determine how to best manage the phenomena. E) is an intimate relationship between two employees, one of whom is not consenting.

D) simply happens so organizations should determine how to best manage the phenomena.

Japan is suffering from a decline in overall economic production A) due to its growing population. B) related to the declining age of its workforce. C) because of a surge in the number of its taxpaying workers. D) since worker productivity increases are not able to offset declines in number of workers. E) because more and more women are working outside the home.

D) since worker productivity increases are not able to offset declines in number of workers.

Which is a rule from the Wall Street Journal article "The New Rules of Flirting"? A) Do not flirt within a relationship that you want to strengthen. B) Do flirt with someone you know is looking for a relationship if you are not interested in a new relationship. C) Do flirt to make your partner jealous. D) Flirting between power differences, such as boss and employee, is usually fine. E) Do not make physical contact with the person you are flirting with, unless it is within a desired relationship.

E) Do not make physical contact with the person you are flirting with, unless it is within a desired relationship.

Preserving the environment should be a permanent part of doing business for which of the following reasons? A) Consumer demand for environmentally safe products and packages is low. B) Public opinion demanding that firms conduct business in ways that preserve the natural environment is weak. C) Federal and state environmental regulations are fairly simple and static. D) Many consumers, suppliers, distributors, and investors shun doing business with environmentally strong firms. E) More lenders are examining the environmental liabilities of businesses seeking loans.

E) More lenders are examining the environmental liabilities of businesses seeking loans.

CEOs and business owners should delegate the responsibility for ensuring that high ethical principles are espoused and practiced in an organization.

false

Some strategists agree with Ralph Nader, who asserts that organizations have no obligation to do any more for society than is legally required.

false

The percentage of persons age 65 or older will reach 20 percent in the United States in 2018.

false

There is no country that favors or engages in commercial whaling today.

false

While it is socially responsible to be a good steward of the natural environment, doing so will not enable a firm to gain competitive advantage.

false

Avon Products is being investigated for bribery charges related to their winning the first direct-sales license awarded by China to a foreign company.

true

Business ethics can be defined as principles of conduct within organizations that guide decision making and behavior.

true

Periodic ethics workshops can help sensitize people to workplace circumstances in which ethics issues may arise.

true