Chapter 9

9) A company's strategy needs to be ethical because

a strategy that is unethical not only damages the company's reputation, but it can also have costly consequences.

3) The results of strategies that cannot pass the test of moral scrutiny often are not manifested in

increased customer loyalty.

14) The costs incurred when ethical wrongdoing occurs fall into three specific categories and include all except

intangible costs such as legal and investigative costs incurred by the company.

32) Which of the following is not generally on a company's menu of actions to consider in crafting a strategy of social responsibility?

Actions to look out exclusively for the best interests of shareholders

45) Which of the following statements regarding a company's CSR and sustainability strategies is false?

A company is not demonstrating an adequate degree of social responsibility or endeavoring to be a model corporate citizen unless it spends 5 percent (or more) of pretax profits on social responsibility initiatives.

33) Which of the following should not be on a company's menu of actions to consider in crafting a strategy of social responsibility?

Actions that place profits and returns to shareholders without respect to commitments to employees, communities, and the environment.

39) Which of the following is not something a company should usually consider in crafting a strategy of social responsibility?

Actions to benefit shareholders (such as raising the dividend to boost the stock price)

29) Which one of the following is not a part of the business case for why companies should act in a socially responsible manner?

Aggressive pursuit of market share, revenues, and profits

28) Which of the following is most likely to be morally valid from the perspective of ethical relativism?

Bribing a government official in an underdeveloped country to obtain a permit to build a hospital

12) Which of the following is considered to be a visible cost that companies may incur when ethical wrongdoing is discovered and punished?

Civil penalties

10) Which of the following is considered to be an internal administrative cost that companies may incur when ethical wrongdoing is discovered and punished?

Costs of taking corrective actions

43) Which one of the following is not a part of the business case for why companies should act in a socially responsible manner?

Every business has a moral duty to be a good corporate citizen.

8) Which one of the following is not one of the major drivers of unethical managerial behavior?

Intense competitive pressures

11) Which of the following is considered to be an intangible or less visible cost that companies may incur when ethical wrongdoing is discovered and punished?

Loss of reputation

4) Although exposing children to hazardous work and long work hours is unquestionably

Many child laborers come from poverty-stricken families.

30) In an attempt to fulfill its corporate social responsibility, which of the following is an activity that a company might consider to enhance the quality of life for its employees?

Providing work-at-home opportunities

44) Which one of the following is false as concerns the merits of why acting in a socially responsible manner is good business?

There is a high correlation between socially responsible behavior that addresses social issues and a firm's competitive advantage and financial performance.

26) A multinational automobile manufacturer issues a public statement that the company's vehicle emissions tests had been falsified to meet environmental compliance standards over recent years using software specifically designed for that purpose. Following the news, the company's CEO is replaced, vehicle sales plummet, and the company's stock price sharply declines. Which of the following has the company incurred?

Visible and intangible costs

27) A manufacturer and marketer of prescription pharmaceuticals decided to raise the price of its anti-malaria drug from $15.00 per dose to $750.00 per dose, a price increase of 5,000 percent. Following a public outcry, the CEO was forced to resign, the company was forced to retract the price hike, and the company's stock price sharply declined. Which of the following has the company incurred?

Visible and intangible costs

31) Corporate social responsibility (CSR) as it applies to businesses refers to

a company's duty to operate in an honorable manner, provide good working conditions for employees, encourage workforce diversity, be a good steward of the environment, and actively work to better the quality of life in the local communities where it operates and in society at large.

40) Which one of the following elements does not typically comprise a company's social responsibility strategy?

actions to keep prices low enough that the company's profits will not be viewed by the general public as obscenely high or exorbitant

24) According to integrative social contracts theory, the ethical standards a company should try to uphold

are governed both by (1) a limited number of universal ethical principles that are widely recognized as putting legitimate ethical boundaries on actions and behavior in all situations and (2) the circumstances of local cultures, traditions, and shared values that further prescribe what constitutes ethically permissible behavior and what does not—but universal norms always take precedence over local ethical norms.

2) Ethical principles in business

are not materially different from ethical principles in general

5) As they apply to business conduct and business decisions, ethical principles

are not materially different from ethical principles in general.

15) Notions of right and wrong, fair and unfair, moral and immoral, ethical and unethical

are present in all societies, organizations, and individuals.

34) The essence of socially responsible business behavior is

balancing strategic actions to benefit shareholders against the duty to be a good corporate citizen.

6) The major drivers of unethical business behavior include

corporate cultures that put the bottom line ahead of ethics, heavy pressures on company managers to meet or beat performance targets, and overzealous or obsessive pursuit of wealth accumulation, power, status, and other selfish interests.

19) The contention that because different societies and cultures have divergent values and standards of right and wrong, it is appropriate to judge behavior as ethical or unethical in the light of local customs and social mores rather than according to a single set of ethical standards

defines what is meant by ethical relativism.

37) Environmental sustainability involves

deliberate actions to protect the environment, provide for the longevity of resources, maintain ecological support systems for future generations, and guard against the ultimate endangerment of the planet.

25) Integrative social contracts theory maintains that

first-order universal ethical norms always take precedence over second-order local ethical norms.

36) Good corporate citizens

go beyond meeting society's expectations for ethical strategies and business behavior by fostering social benefit and balancing the interests of all.

41) Good corporate citizens

go beyond meeting society's expectations for ethical strategies and business behavior by fostering social benefit and balancing the interests of all.

42) Good corporate citizens do not

identify up-and-coming managers who have a future in local- or state-level politics.

23) The contention that ethical standards should be governed both by (1) a limited number of universal ethical principles that are widely recognized as putting legitimate ethical boundaries on actions and behavior in all situations and (2) the circumstances of local cultures, traditions, and shared values that further prescribe what constitutes ethically permissible behavior and what does not are the basic principles of

integrative social contracts theory.

22) A company that adopts the principle of ethical relativism in providing guidance to company personnel

places itself in a perilous position if it is required to defend these activities to its stakeholders in countries with higher ethical expectations or standards because it has no ethical standards or principles of its own.

46) Sourcing a supply from a small, women-owned business is an example of a corporate social responsibility action to

promote workforce diversity.

35) Which of the following should a company not consider in crafting a strategy consistent with corporate social responsibility?

taking steps to provide suppliers, distributors, and other value chain partners with handsome profit margins

1) Business ethics concerns

the application of ethical principles and standards to business activities, behavior, and decisions.

13) A company's unethical behavior may result in the following except

the company will have to deal with the Sarbanes-Oxley Act of 2002, which requires the company remove the tarnished employees.

7) Unethical business behavior is unlikely to be to be driven by such factors as

the need to meet objectives associated with the triple bottom line

16) The contentions that (1) many of the same standards of what is ethical and what is unethical resonate with peoples of most cultures, societies, and religions, and (2) to the extent there is common moral agreement about right and wrong actions, there exists a set of common ethical standards to which organizations and individuals can be held accountable are defining beliefs of

the school of ethical universalism

17) According to the school of ethical universalism

to the extent there is common moral agreement about right and wrong actions and behaviors across multiple cultures and countries, there exists a set of universal ethical standards to which all societies, all companies, and all individuals can be held accountable.

38) Companies committed to environmental sustainability

undertake initiatives directed at improving the company's triple bottom line, which places importance on economic, environmental, and social metrics.

18) According to the school of ethical universalism,

universal ethical principles or norms put limits on what actions and behaviors fall inside the boundaries of what is right and which ones fall outside; such universal norms include honesty, trustworthiness, respecting the rights of others, practicing the Golden Rule, and avoiding unnecessary harm to workers or to the users of the company's product or service.

20) The school of ethical relativism holds that

when there are country or cross-cultural differences in what is considered ethical or unethical in business situations, it is appropriate for local moral standards to take precedence over what the ethical standards may be elsewhere.

21) A belief in ethical relativism leads to the conclusion that

whether the payment of bribes and kickbacks should be deemed ethical or unethical depends on the moral standards, values, beliefs, convictions, and business norms that prevail in particular cultures, societies, countries, or circumstances.