BLAW Practice Ch 3
1. Ethics simply looks at whether a decision (or act) is legal or illegal. a. True b. False
False
10. When profit maximization alone is the goal, a company does not benefit by behaving ethically. a. True b. False
False
2. The Fraud Reduction and Data Analytics Act is used to identify and assess fraud risks in private companies. a. True b. False
False
20. Under the "stakeholder view," there is no group that ever has a greater stake in company decisions than the shareholders do. a. True b. False
False
22. An overemphasis on long-run profit maximization is a common reason for ethical problems that may occur in a business. a. True b. False
False
23. Because social media is so widespread, it is legal and ethical for a company to have social media policies limiting employees from criticizing the company. a. True b. False
False
24. Judging a job applicant based on what an online search reveals about the applicant's activities outside the workplace, or their social media posts is universally viewed as ethical. a. True b. False
False
26. Making ethical decisions is most often best done by analyzing objective standards (such as profit or number of people fired), instead of subjective impacts on stakeholders. a. True b. False
False
3. Company codes are the same as laws. a. True b. False
False
5. The triple bottom line is a measure that includes: a corporation's profit, its impact on people, and how the corporation feels about it. a. True b. False
False
7. The term moral minimum is best defined as the highest degree of ethical behavior expected of a firm. a. True b. False
False
65. In making a business decision, Jin Soo brainstorms possible solutions to his problem, and then considers what he should do. If Jin Soo is using the IDDR approach to decision making, he is in the: a. discussion step. b. decision step. c. inquiry step. d. review step.
a
33. The Fraud Reduction and Data Analytics Act was designed to: (choose all applicable answers) a. detect fraud. b. prevent fraud. c. punish companies for any fraud. d. assess fraud.
a, b, d
34. Ethics has to do with how a businessperson applies this(ese) in their business decisions: a. legal doctrine. b. moral principles. c. corporate policy. d. financial priorities.
b
35. This law was designed to help reduce corporate fraud and unethical management decisions, by requiring accountability measures for publicly traded companies: a. Fraud Reductions Data Analytics Act. b. Sarbanes-Oxley Act. c. the federal code of ethics. d. the American Bar Association code of ethics.
b
36. Ethics are important because laws may not always be easy to interpret or apply. This is because a. laws are very organized and structured, and are complicated to read. b. laws represent the will of the people, and that is often changing. c. laws are created by a political process, and are the result of compromise. d. laws often have definition provisions to explain the meaning of terms.
b
37. Cynthia is the chief financial officer of Digital Corporation. In that capacity, when she is unsure whether a certain business action is legal, she should act a. in her own best interest. b. honestly and responsibly. c. in the short-run interest of Digital. d. to maximize profit.
b
39. With respect to what society will tolerate, a company's compliance with the law, and no more, is a. the highest ethical level. b. the moral minimum. c. the only ethical level. d. irrelevant.
b
41. Many companies try and link ethics with law through creating: a. an external publicized code of conduct. b. an internal code of conduct. c. a legal code of ethics. d. a code that applies to the public.
b
47. Managers who set unrealistic production or sales goals increase the probability that employees will act: a. ethically b. unethically c. illegally d. not act at all
b
51. When adopting duty-based ethics, corporations often describe the values and duties they owe: a. through required government disclosure forms. b. in their mission statements and strategic plans. c. by adopting a corporate religion. d. in the biographies of corporate leaders.
b
53. When a business makes an unethical decision and then rationalizes it by saying it is only a small issue, is an example of: a. corporate social responsibility. b. categorical imperative. c. a duty-based ethics approach. d. a religious-based ethical approach.
b
59. ChemCo Inc. expends funds and takes steps to ensure that all employees are treated fairly, and that they are acting ethically and are accountable to society. This is the concept of: a. the moral minimum. b. corporate social responsibility. c. the categorical imperative. d. the triple bottom line.
b
61. According to the theory of corporate social responsibility, any decision by the management of Precision Processing Corporation should consider how a proposed action may affect only the a. firm's officers and shareholders. b. firm's officers, shareholders, and stakeholders. c. firm's shareholders only. d. firm's suppliers and local government.
b
62. An overemphasis on this, is the most common reason for ethical problems in the workplace: a. long-run profit maximization. b. short-run profit maximization. c. social responsibility. d. stakeholder analysis.
b
50. Duty-based ethical standards are most likely to derive from (choose all applicable answers) a. a corporate ethics code. b. a religious reasoning. c. philosophical reasoning. d. the law.
b, c
42. If a company strictly complies with existing laws, the firm will a. fulfill all business ethics obligations. b. fulfill no business ethics obligations. c. fulfill some business ethics obligations. d. not need to fulfill any business ethics obligations.
c
48. "Be honest and treat people fairly." With respect to business ethics, implementing this motto is a. not important. b. only important in democratic societies. c. very important. d. only important with large customers.
c
52. Flo, the manager of Grounds Maintenance Inc., must decide whether to use an herbicide that could be unhealthy to employees. They want to use it (as well as the public) once it is on the ground. Flo might lose the client if she refuses to use the herbicide. If Flo analyzes the importance of good health and the avoidance of disease as the rights of people in making her decision, she is likely using a. religious principles. b. the categorical imperative. c. the principle of rights theory. d. utilitarianism.
c
64. Caryn is faced with making a business decision. As she thinks about the problem, she feels that there is no easy answer. She continues to think about what is making her uncomfortable about the situation before brainstorming possible solutions. If Caryn is using the IDDR approach to decision making, she is engaged in which step? a. the discussion step. b. the decision step. c. the inquiry step. d. the review step.
c
66. To avoid unethical practices by a foreign supplier, an effective business practice is to a. pay foreign employees at U.S. pay rates. b. have suppliers sign contracts affirming that they will behave ethically. c. routinely monitor the foreign workplaces. d. obtain a legislative decree that the supplier is ethical.
c
46. The triple bottom line looks at all of the following except a. how decisions impact profits and revenue. b. how decisions impact sustainability and the planet. c. how decisions impact employees and consumers. d. how decisions impact relations with foreign nations.
d
54. Seafood Café Company makes products that can cause severe health problems to those with shellfish allergies. Seafood analyzes the cost of warning people of the risk (which they believe is obvious), and the risk of harm to people if no warning is included in advertising and on menus. This analysis most likely is part of a. a duty-based ethics approach. b. corporate social responsibility. c. religious ethical principles. d. an outcome-based ethics.
d
55. The utilitarian theory of ethics does not require a. a choice among alternatives to produce the maximum societal utility. b. a determination of whom an action will affect. c. an assessment of the effects of alternatives on those affected. d. the acquiring of the means of production by workers.
d
56. A cost-benefit analysis is part of a. a duty-based ethics approach. b. corporate social responsibility. c. the principle of rights theory. d. The utilitarian model
d
57. Hale, research manager for Investor Fund, Inc., adheres to utilitarian ethics in making business and ethical decisions that involve the actions of the firm. According to this standard, an action is morally correct when it produces the greatest good for a. Hale himself. b. Investor Fund Inc. c. the fewest people. d. the greatest number.
d
60. Under corporate social responsibility, which of these is not an activity that would qualify: a. environmental efforts to reduce the carbon footprint. b. charitable donations to local and worldwide causes. c. ethical labor practices, both local and internationally. d. paying all employees the same wage.
d
15. Under the rights theory, determining whether a business decision is unethical is to see how it affects others. a. True b. False
True
16. Outcome-based ethics deals with the consequences of an action, not the nature of the action itself, nor any religious or moral beliefs. a. True b. False
True
17. In the cost-benefit analysis utilitarian model, the focus is to always do the most amount of good for the most amount of people. a. True b. False
True
18. Corporate social responsibility links the responsibility of citizenship with the commitment to making ethical business decisions. a. True b. False
True
19. Corporate social responsibility may increase a business's reputation or goodwill. a. True b. False
True
21. Abnormally high profits and stock prices may lead to unethical business behavior. a. True b. False
True
25. Rationalization is the process of making a decision based simply on whether it is good for the company. a. True b. False
True
27. One common denominator identified by businesspersons who have faced ethical problems is the feeling of uncertainty. a. True b. False
True
28. As part of the IDDR approach as described in the text, it is important to list as many possible various alternatives, and identify strengths and weaknesses of any remaining alternatives. a. True b. False
True
29. Global businesses need to be conscious of the impact of different religious principles and cultural norms on ethics. a. True b. False
True
30. During any global outsourcing, a company should continue to monitor those suppliers to make sure those employers are treating their employees fairly. a. True b. False
True
4. Congress enacted the Sarbanes-Oxley Act (SOX) to help reduce unethical management decisions and risky behaviors. a. True b. False
True
6. Top management's behavior in a company sets the ethical tone for the workplace. a. True b. False
True
8. The effectiveness of an industry code of ethics is partly determined by the commitment of the industry, or company leadership to enforce it. a. True b. False
True
9. One view of the role of business in society is the perceived duty of a company to only generate revenue for its owners. a. True b. False
True
31. Artificial Intelligence Inc. sells to Beta Bots Corporation a promising idea for a technological innovation that is still being developed and that looks very promising. This is a. ethical and legal. b. unethical but legal. c. illegal and unethical. d. unethical and illegal.
a
32. Business ethics looks at whether the behavior of business decisions: a. are right or wrong. b. derive from well-known business principles. c. follow legal doctrine. d. align with corporate policy.
a
38. Compliance with the law is not always sufficient to determine if a decision or behavior is "right" because a. being legal does not necessarily mean it is ethical. b. company codes are also sources of law. c. business decisions can have negative impacts. d. ethical problems do not occur in business.
a
40. Viaduct Corporation used untested and risky construction techniques to build a bridge under budget. The techniques were legal but the bridge collapsed, killing several people. Viaduct's actions were a. unethical, and may result in legislation. b. ethical, because they were legal. c. dangerous, and therefore inherently illegal. d. legal under Sarbanes-Oxley, and with no penalties.
a
43. An internal business code of conduct is not a. legally binding law. b. a set of rules the company can enforce. c. an outline of the company's policies. d. a guide for decision makers with ethical questions.
a
44. The National Restaurant Association announces a new industry code of ethics. The effectiveness of this code will be determined by a. the commitment of management to enforcing the code. b. the similarity of the code to the employees' personal values. c. the success of the campaign publicizing the code. d. the relationship between the code and the law.
a
45. Product Sales Inc. adheres strictly to the goal of maximizing profits. Even so, Product Sales will benefit by also using ethical behavior: a. if customer service and reviews are good. b. if its owners are happy with the revenue. c. under no circumstances. d. if it efficiently allocates its scarce resources.
a
49. Owen and other managers employed by Pastry Bakeries are most likely to find that unethical behavior in the workplace can be deterred by a. taking immediate action in response to unethical conduct. b. imposing sanctions disproportionate to misconduct. c. distributing rewards without regard to ethics. d. ignoring small breaches of company rules.
a
58. When deciding to engage in corporate social responsibility, a key factor when selecting activities is a. how the social activity relates to the business activities of the corporation. b. how much free publicity the corporation will get from the social activity. c. whether the corporation is required to do the social activity by law. d. whether the activity will result in short-term profit increases.
a
68. Bob has started his new coffee company, Bob's Java, and is looking into costs for his supplies. He notices that the cost of the coffee beans is drastically less expensive from a local distributor. He keeps researching and finds a wider array of roasts and flavors of beans from an international vendor, but the cost is much higher. Bob wants to be socially responsible, so he investigates the sustainability and economic impact each company has on the environment. He notices the international vendor pays their workers a fair wage, and uses fair trade ingredients. He cannot find that information about the local vendor. He is wondering if the greater cost is worth it. Discuss what things he should think about when looking at the Corporate Social Responsibility issue.
CSR is a relatively new concept in the history of business, but it is a concept that becomes more important every year. A survey of U.S. executives undertaken by the Boston College Center for Corporate Citizenship found that more than 70 percent of those polled agreed that corporate citizenship must be treated as a priority. More than 60 percent said that good corporate citizenship added to their companies' profits. CSR can be a successful strategy for companies, but corporate decision makers must not lose track of the two descriptors in the title: corporate and social. The company must link the responsibility of citizenship with the strategy and key principles of the business. Incorporating both the social and the corporate components of CSR, and making ethical decisions can help companies grow and prosper. CSR is most successful when a company prioritizes on objectives that may not be immediately beneficial. For example, it may cost more initially to construct a new plant that meets the high standards necessary to be certified as environmentally friendly by the LEED program, but in the long run it will be beneficial. Surveys of college students about to enter the job market confirm that young people are looking for socially responsible employers. While socially responsible activities may cost a corporation now, they may also lead to more talented and more committed employees.
63. Cody makes a business decision based on financial outcomes alone, and then attempts to argue that it is ethical as well. Cody is a. rationalizing his decision. b. questioning his decision. c. using the utilitarian approach. d. using the stakeholder approach.
a
67. Recreation & Sports Equipment Corporation sells a profit-generating product that is capable of seriously injuring consumers who misuse it in a foreseeable way. They are contemplating adding a warning to the product, but that warning will increase the cost of the product, and they are worried that it may scare off some potential customers who might not buy the product. Thinking about the different theories of the role of business in society, discuss whether Recreation & Sports Equipment Corporation behaves ethically by continuing to sell the product without a warning by discussing at least two of the theories.
There are two primary theories of the role of business in society. First, the historical role of business was to maximize profits. The second theory is that business should behave as a corporate citizen. As a profit maximizer, Recreation & Sports Equipment Corporation should evaluate this decision to minimize costs and maximize profit to the company. Adding a warning would increase the cost (and decrease the profits) of the product. At the same time, a lawsuit because of injury could be very expensive. It is unclear whether the addition of a warning would result in decreased sales. The decision maker should have a professional analysis done of the financial impacts of the lawsuit, as well as lost sales caused by either a lawsuit or the addition of a warning. As a corporate citizen, the company may consider the triple bottom line. The "profit" analysis will be similar to that in the prior paragraph. The "people" analysis would include the impact on the consumers who might be injured by the foreseeable misuse. Because a warning could prevent this injury (either through more responsible use, or by elimination of a sale to the consumer who might misuse the product), the corporate citizen model is likely to result in the addition of a warning. The principle of rights theory determines whether a business decision is ethical by how the decision affects the rights of others. Under a utilitarian model of ethics, an action is morally correct, or "right," when among the people it affects, it produces the greatest amount of good for the greatest number (or creates the least amount of harm).
11. Corporate "citizenship" involves making decisions beyond just maximizing profits and dividends. a. True b. False
True
12. When making ethical decisions, a business should evaluate the financial implications. a. True b. False
True
13. One of the ways that a business can create an ethical workplace is for the top management to demonstrate its commitment to ethical decision making. a. True b. False
True
14. Duty-based ethics is based on the idea that every business has certain duties to others and the planet. a. True b. False
True