Tb06

CHAPTER 6: ETHICS AND STAKEHOLDER SOCIAL RESPONSIBILITY
Test Correlation Table Question Types/Level of Difficulty

LEARNING OBJECTIVES Easy Moderate Difficult

1. State the importance of ethics TF 1, 4 3, 6 2, 5
for individual employees and
organizations.
MC 4 1, 2 3, 5

ES 1 — —

2. Describe four forces that TF 7, 12, 14 9, 10, 13, 16, 17, 18, 8, 11, 15
influence the ethical behavior of 19, 20, 21
individuals and organizations.
MC 6, 7, 8, 10, 14, 9, 12, 13, 16, 21, 24, 11, 15, 17, 19, 20
22, 23, 26 25

ES — 3 2

3. Discuss three approaches TF 22, 30 23, 24, 27, 29, 31, 36 25, 26, 28, 29, 32, 33, 34,
that people use when making 35
ethical judgments.
MC 27, 37, 42, 44, 28, 31, 34, 35, 38, 43, 29, 30, 32, 33, 36, 38, 39,
46, 48, 49, 51, 45, 50, 52, 56, 59, 61, 40, 41, 47, 54, 55, 58, 60,
53, 57, 63, 67 70, 71, 72, 74 62, 64, 65, 66, 68, 69, 73

ES — 4, 6, 7 5

4. Explain stakeholder social TF 41, 45, 47, 48 39, 40, 43, 44, 46 37, 38, 42, 43
responsibility and how it
influences managers’ ethical
decisions.
MC 75, 76, 83, 98, 78, 79, 80, 84, 85, 87, 77, 81, 82, 89, 91, 93, 94,
100, 101 88, 90, 92, 95, 99, 96, 97
102, 103

ES — 8 —

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True/False Questions
Learning Objective 1

1. Nortel Networks aims its ethics training at managers, so that employees can follow a
strong example.

ANSWER: F, Knowledge, Easy, p. 150

2. Hard and fast rules are inadequate to cover the dilemmas faced in our complex work
environment.

ANSWER: T, Knowledge, Difficult, p. 150

3. Integrity means “honor of traditions.”

ANSWER: F, Knowledge, Moderate, p. 150

4. Dishonest executives can be prosecute as criminals in the U.S. court system.

ANSWER: T, Knowledge, Easy, p. 150

5. Although receiving a great deal of publicity, today’s unethical corporate conduct is limited
to only a few top executives.

ANSWER: F, Knowledge, Difficult, pp. 150 - 151

6. Unfortunately, ethics programs for businesses are proving to be ineffective.



7. Ethics is a set of values and rules that define right and wrong conduct.


8. The Sarbanes-Oxley Act reforms corporate governance without creating any new
employment rights.

ANSWER: F, Knowledge, Difficult, p. 153

9. What a society interprets as ethical or unethical frequently ends up being expressed
through court decisions and the passage of laws within that society.

ANSWER: T, Application, Moderate, p. 152

10. Most companies do not ask their workers to engage in conduct that violates the stated
ethical standards.

ANSWER: T, Knowledge, Moderate, p. 154

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11. Recent regulations are designed to give organizations more discretion in developing
their own ethics policies.


12. Employment-at-will has not been significantly modified for nearly 30 years.


13. The Sarbanes-Oxley Act severely restricts the ability of corrupt managers to offer
bribes to foreign officials.

ANSWER: F, Knowledge, Moderate, pp. 153–154

14. Sarbanes-Oxley affects the behavior of both organizations and individuals.


15. When behavior is clearly unethical and illegal, employees do not have difficulty in
determining what is right and wrong.


16. Some actions by businesses may be defined as a violation of a legal rule by a
regulatory agency but not be considered unethical by the broader society.

ANSWER: T, Application, Moderate, pp. 152–154

17. Whistle-blowing is the act of going over your supervisor’s head and directly to
management with a complaint.


18. When a worker observes illegal activity by their employer, one appropriate response
may be to report it.


19. Whistle-blowers often receive promotions or career enhancement as a result of their
actions.

ANSWER: F, Knowledge, Moderate, p. 156-158

20. Whistle-blowers seem to be at a higher stage of moral development than most
employees.


21. Whistle-blowers may experience retaliation that is not protected by law.



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22. The three ethical models used to develop an ethical framework in organizations are
the utilitarian, moral rights, and justice approaches.

ANSWER: T, Knowledge, Easy, p. 158–164

23. Milton Friedman is one of the most outspoken critics of the utilitarian approach.


24. The utilitarian approach focuses on acts (behaviors) and not motives.


25. The CEO of Ford Motor Company argues that excessive environmental laws and
regulations reduce the company’s profits and their ability to compete globally.


26. The utilitarian approach prescribes ethical standards for managers and employees in
the areas of individual goals, efficiency, and common interests.

ANSWER: F, Knowledge, Difficult, p. 158–160

27. The U.S. Occupational Safety and Health Act (OSHA) of 1970 is a part of the utilitarian
model.


28. Citizens have the right to control access to and use of personal information about
themselves by government agencies, employers, and others. This moral right was the
basis for the U.S. Privacy Act of 1974.


29. Individuals often do not have the legal right to refrain from carrying out orders that violate
their moral or religious beliefs.


30. The utilitarian approach judges decisions and behavior by their consistency with an
equitable, fair, and impartial distribution of benefits (rewards) and costs among individuals
and groups.


31. United Freight Carriers has been guilty of paying different wages to women and men when
their jobs require equal skill, effort, and responsibility and are performed under similar
working conditions. The pay practices of this company violate the distributive justice
principle.

ANSWER: T, Application, Moderate, p. 163

32. Wells Fargo requires employees to be present and on time because excessive
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absenteeism and tardiness can negatively affect fellow workers and the organization as a
whole. This company policy illustrates the natural duty principle.

ANSWER: F, Application, Difficult, p. 164

33. The fairness principle requires that decisions and behavior be based on a variety of
universal obligations.

ANSWER: F, Knowledge, Difficult, pp. 163–164

34. The moral rights model says more about what organizations should avoid doing, than it
does about what to do.


35. The natural duty principle suggests that the obligation of an organization is to maximize
returns for its shareholders.


36. ”To support and comply with just institutions” is one of the universal principles of
natural duty.



37. The stakeholder view of social responsibility is based primarily on the utilitarian
approach.


38. There is no distinction between the concerns of primary stakeholders and those of
secondary stakeholders.


39. Employees are part of the secondary stakeholder group.


40. Nortel Networks put high emphasis on it commitment to secondary stakeholders.

ANSWER: F, Application, Moderate, pp. 166–167

41. Customers, employees, and suppliers are of substantial importance to all businesses.


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42. The European Union’s Eco-Management and Audit Scheme (EMAS) and the
International Organization for Standardization’s ISO 14000 standards are examples of
environmental policy statements designed to provide guidance to multinational
businesses.


43. Former Chrysler Chairman Robert Eaton was a strong advocate of corporate social
responsibility.


44. Customer-oriented firms FedEx and Intel are twice as profitable as their competitors.


45. Proactive social responsibility includes responsiveness to social pressures.

ANSWER: T, Knowledge, Easy, pp. 169–170

46. Nortel Networks is notorious for abusing corporate power in attempting to influence public
issues.


47. GM was the first automaker to conduct a social audit.


48. A social audit is an attempt to identify, measure, evaluate, report on, and monitor the effects
the organization is having on its stakeholders and society as a whole.


49. Studies show that behaving ethically can be profitable.


Multiple Choice Questions
Preview
1. Nortel Networks’ approach to ethical behavior is __________.
a. a top-down strategy of having management set a good example for everyone to
follow
b. making every employee accountable for ethical decision making
c. to voluntarily admit when they make mistakes
d. establishment of a special task force to monitor ethics throughout the
organization

ANSWER: B, Knowledge, Moderate, p. 150

2. According to the preview reading, Nortel Networks has a code of business conduct

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that is intended to prevent all of the following except:
a. loss of customers.
b. damage to corporate reputation.
c. FCC and SEC intervention.
d. criminal prosecution.

ANSWER: C, Knowledge, Moderate, p. 150

3. Nortel Networks believes that their business ethics should be guided by
__________.
a. the best traditions of religion and education
b. legal cases that have identified the standards for corporate fraud
c. personal values of its workers
d. all of the above

ANSWER: C, Knowledge, Difficult, p. 150


Importance of Ethics
4. Seventy-two percent of those polled rated the moral and ethical standards of CEOs
of major corporations as __________.
a. either fair or poor
b. improving after the Enron crisis
c. an international embarrassment
d. no different than the general public

ANSWER: A, Knowledge, Easy, p. 151

5. All of the following statements are supported by research except:
a. 71% of poll respondents see typical CEOs as less ethical than the average
person.
b. ethical standards of major corporate CEOs are rated as either fair or poor by
72% of the public.
c. fraudulent activities cause close to 10 percent of U.S. businesses to fail.
d. studies indicate that ethics programs can be effective



Shaping Ethical Conduct
6. A set of values and rules that define right and wrong conduct is known as
_________.
a. social mobility
b. ethics
c. natural duty
d. traditional responsibility

ANSWER: B, Knowledge, Easy, p. 151

7. Which of the following is not considered a basic force from which ethical values and
decisions are evaluated?
a. cultural
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b. legal
c. individual
d. All are considered to be basic forces.

ANSWER: D, Knowledge, Easy, p. 152

8. ________are society’s values and standards that are enforceable in the courts.
a. Culture
b. Ethics
c. Laws
d. Codes

ANSWER: C, Knowledge, Easy, p. 152

9. Personal values that shape American culture include all of the following except
__________.
a. reliability
b. uncertainty avoidance
c. respect for other people
d. self-respect

ANSWER: B, Application, Moderate, pp. 151–152

10. Capitalism is built on investor trust. Unimportant to this trust is __________.
a. stewardship
b. return on investment
c. antiretaliation
d. All are important elements of investor trust.


11. Mark Harvey has just been fired by his supervisor at the local plant where he has
worked for many years. Harvey has participated in all of the activities listed below,
but only one activity is classified as an acceptable reason for him being fired.
Which of the following is considered an acceptable reason for Harvey being fired?
a. engaging in an activity to protest wages
b. filing of unfair labor practice charges against the company
c. reporting a violation to OSHA
d. committing harassment, which is considered a civil rights violation

ANSWER: D, Application, Difficult, p. 153

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12. Foster Brooks is the Vice President of a publishing company and is about to fire the
marketing director who has been at the company for several years. All of the
following are considered permissible reasons for firing the director except:
a. drug activity on the job
b. theft
c. filing discrimination charges
d. All of the above are acceptable reasons.

ANSWER: C, Application, Moderate, p. 153

13. Enron, WorldCom, and Adelphia would be affected by the passage of __________.
a. Section 806
b. the Corporate and Criminal Fraud Accountability Act of 2002
c. the Sarbanes-Oxley Act
d. all of the above

ANSWER: D, Application, Moderate, pp. 153–154

14. Which of the following scandals would not be affected by the Corporate and
Criminal Fraud Accountability Act of 2002?
a. American Airlines
b. Enron
c. Tyco
d. Adelphia


15. Through Section 806 of the Sarbanes-Oxley Act, Federal law provides protection
to all of the following except __________.
a. whistle-blowers
b. shareholders
c. corporate officers
d. employees


16. Section 806 of the Sarbanes-Oxley Act directly protects __________.
a. investors
b. employees
c. accountants
d. auditors

ANSWER: B, Application, Moderate, pp. 153 - 154

17. The Sarbanes-Oxley Act is intended to __________.
a. break up monopolies
b. reform campaign financing
c. reform accounting practices
d. all of the above


18. Herschel Isenberg is the loan manager for a local bank. A publisher of a legal,
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pornographic magazine has asked for a loan. The local community has been
indifferent to the pornographic business. The loan will be beneficial to the bank in
terms of increasing business. The bank has a nondiscrimination policy. Isenberg
is personally very opposed to pornography and thinks all pornographic materials
should be illegal. Based on _________ source of guidance, Herschel refuses to
make the loan.
a. informal
b. formal
c. interpretive
d. code of ethics

ANSWER: A, Application, Moderate, p. 154

19. The Ethics Resource Center in Washington, D.C. furnishes all of the following
except __________.
a. legal representation
b. consulting
c. implementation
d. publications

ANSWER: A, Knowledge, Difficult, p. 154

20. Nortel Networks’ prohibition policy toward bribes must be modified for countries
where bribery is a “normal way of doing business” in which following way?
a. formal disclosure to the U.S. government
b. discretion
c. executive board exception procedure
d. none of the above

ANSWER: D, Knowledge, Difficult, pp. 155–156

21. At Nortel Networks where bribes or kickbacks are prohibited in their foreign
operations, what type of “facilitation payment” is considered permissible?
a. low level government workers such as immigration clerks
b. routine business services such as phone installations
c. fees to insure that shipments are not stolen
d. all of the above

ANSWER: B, Application, Moderate, pp. 155–156

22. Employees who report unethical or illegal actions of their employers to other
people or organizations that are capable of taking corrective action are referred to
as ________.
a. corporate watchdogs
b. whistle-blowers
c. rats


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23. Whistle-blowing may be an excellent strategy as a __________.
a. way to get recognition
b. initial response
c. last resort
d. way to avoid retaliation


24. Whistle-blowers need to believe __________.
a. their career will survive
b. they are doing the right thing
c. other actions can be taken later
d. the company will understand their motives

ANSWER: B, Knowledge, Moderate, pp. 156–157

25. Dee Dee Cantrell is aware of wrongdoing and unethical behavior within the
manufacturing company where she works. Before Cantrell blows the whistle she
would be wise to ask herself some very difficult questions. Which of the following
would not be helpful to the decision-making process she must complete before
blowing the whistle?
a. Should she resign from the company?
b. Does she have documentary evidence?
c. Is retaliation likely?
d. Will the jury award be worth it?

ANSWER: D, Application, Moderate, p. 157

26. As an observer and reporter of massive company fraud, Douglas Durand received
all of the following except:
a. exclusion from the “team.”
b. $77 million.
c. company recognition.
d. threats of imprisonment.



Making Ethical Judgments
27. Which of the following is not a model that helps describe the ethical framework
used in organizations?
a. utilitarian
b. moral rights
c. justice
d. All of the above are models.

ANSWER: D, Knowledge, Easy, pp. 158–164

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28. The __________ is designed to help managers identify the value premises that
guide their managerial actions. The results can be useful for people who wish to
better understand the determinants of their own actions, as well as those who
want to broaden their perspectives on managerial ethics.
a. Managerial values profile
b. Caux round table
c. Ethical management pool
d. Utilitarian values project

ANSWER: A, Knowledge, Moderate, p. 159

29. How could the results of the managerial values profile be useful?
a. It would be helpful to managers who wish to make sure they follow the laws.
b. It would identify the right ethical choice to make.
c. It would help determine which employees were not ethical.

ANSWER: D, Knowledge, Difficult, p. 159

30. The score from the managerial values profile you took in class reveals (1) you
believe in adhering to rules designed to maximize benefits to all, (2) you believe in
maintaining significant inequities among employees when the ultimate result
benefits all, and (3) you believe what is good is what helps the company attain
ends that benefit everyone. Your profile suggests you subscribe to what approach
to making ethical decisions?
a. moral rights
b. justice
c. utilitarian
d. a mix of all three approaches

ANSWER: C, Application, Difficult, p. 159

31. Individual preferences are selected in the Managerial Values Profile Questionnaire
on the basis of __________.
a. cultural expectations
b. risk and reward
c. lesser of two evils
d. all of the above


32. Choices you made on the Managerial Values Profile suggest you believe in an
individual’s right to private property, the right of employees to know about any
danger in the job setting, and the right of an individual to speak freely without fear
of being fired. What approach to making ethical judgements do you adopt?
a. managerial
b. justice
c. moral Rights


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33. Answers you gave on the Managerial Values Profile suggest you believe in helping
those in danger when doing so would not unduly endanger yourself, and in
minimizing inequities among employees in the job setting. What approach do you
take when making ethical judgements?
a. moral rights
b. utilitarian
c. justice


34. The __________ approach focuses on actions (behavior) and their results, not on
the motives for such actions.
a. utilitarian
b. moral rights
c. caveat emptor
d. fairness


35. A manager or employee guided by the __________ model considers the potential
effects of alternative actions on all involved.
a. utopian
b. network
c. matrix
d. utilitarian

ANSWER: D, Knowledge, Moderate, p. 158

36. Donny Escobar is sometimes known to make decisions that may help some
individuals, but harm others, as long as potentially positive results outweigh
potentially negative ones. This philosophy characterizes the __________
approach.
a. utilitarian
b. win–lose
c. fairness
d. dilemma resolution

ANSWER: A, Application, Difficult, p. 158

37. The __________ approach emphasizes the consequences of providing the
greatest good for the greatest number; that is, the end justifies the means.
a. universal
b. utilitarian
c. moral rights
d. means-end


150


38. Nobel Prize-winning economist Milton Friedman advocates which ethical approach
when making a decision?
a. moral rights
b. justice
c. utilitarian
d. law and order principle


39. The utilitarian approach is most consistent with all of the following values except
__________.
a. individualism
b. acceptance of uncertainty
c. masculinity
d. equality


40. The utilitarian approach prescribes ethical standards for managers and employees
in three areas. Which of the following is not one of the three key areas?
a. organizational goals
b. efficiency
c. environmental protection
d. All of the above are key areas.

ANSWER: C, Knowledge, Difficult, pp. 158–160

41. According to the utilitarian approach, managers and employees alike should try to
attain organizational goals as efficiently as possible. How is efficiency achieved?
a. maximizing inputs
b. producing goods and services at a high cost ratio
c. minimizing land, labor, and capital and produce maximum outputs
d. avoiding moving production overseas to obtain lower wages and fewer
regulations


42. Sheila Jones is a purchasing agent for Detroit County. She is known to have a
significant interest in one of the county’s major suppliers. This potential conflict of
interest characterizes the ethical standards found in the __________ approach.
a. utilitarian
b. fairness
c. win–lose
d. utopia-based

ANSWER: A, Application, Easy, p. 160

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43. Managers and employees alike should not have personal interests that conflict with
the organization’s achievement of its goals. Conflicts of interest, however, can
sometimes be difficult to judge. Which of the following is especially susceptible to
conflicts of interest?
a. A purchasing agent who has a significant financial interest in one of the firm’s
major suppliers.
b. Employees of an accounting firm who own stock in companies that the firm
audits.
c. American managers doing business with co-owners globally.
d. all of the above

ANSWER: D, Application, Moderate, p. 160

44. The __________ approach holds that decisions should be consistent with
fundamental rights and privileges.
a. moral rights
b. utilitarianism
c. fairness
d. social contract


45. Which of the following approaches addresses the fundamental rights and
privileges as set forth in the first 10 amendments to the U.S. Constitution?
a. bureaucratic approach
b. moral rights approach
c. legislative approach


46. Gilbert has implemented regulations restricting the use of various toxic chemicals
in the workplace. This regulation supports the fundamental right of __________.
a. property
b. free speech
c. privacy
d. life and safety

ANSWER: D, Application, Easy, p. 161

47. Employees, customers, and the general public have the right not to have their lives
and safety unknowingly and unnecessarily endangered. Which of the following is
not true concerning this right?
a. The U.S. Occupational Safety and Health Act of 1970 contained new safety
requirements.
b. Regulations were established restricting the use of asbestos and lead-based
paint.
c. OSHA requirements are applicable to all U.S. companies, including those with
factories in foreign countries.
d. All of the above statements are true.


152


48. General Motors established manufacturing operations in Mexico, where
environmental standards are much lower. Which of the following outcomes is true?
a. They saved money by avoiding expensive environmental protection.
b. They were forced by the government to furnish a safe work environment.
c. They voluntarily selected higher standards.
d. There were public accusations of worker exploitation.


49. “Caveat emptor“ means __________.
a. “safety first”
b. “let the buyer beware”
c. “do unto others”
d. “cheaters never prosper”


50. What legislation forbids retailers from disclosing video rental records without the
customer’s consent or a court order?
a. 1988 Video Privacy Protection Act
b. Fourth Amendment
c. Electronic Privacy Act
d. Freedom from Monitoring Standards


51. Invasions of privacy issues have included __________.
a. drug testing
b. video monitoring of employees and customers
c. medical and psychological counseling records
d. all of the above


52. State Farm Insurance offers a highly detailed __________.
a. privacy policy
b. customer information database
c. telemarketing agreement
d. all of the above


53. Customers receive an annual Notice of Privacy Policy from __________.
a. Citibank
b. Blue Cross
c. State Farm
d. Associated Credit Bureau


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54. As a client, State Farm Insurance gathers information on you from all of the
following sources except:
a. your credit history
b. your tax return
c. your driving record
d. your State Farm agent

ANSWER: B, Knowledge, Difficult, p. 162

55. Naveen Joshi feels that she has a moral obligation as a citizen to accept jury duty.
Her employer has threatened to fire her if she serves as a juror, knowing Naveen
can be released from jury duty. She has small children to care for. Naveen’s
belief supports the right of __________.
a. life and safety
b. truthfulness
c. freedom of conscience
d. privacy

ANSWER: C, Application, Difficult, pp. 162–163

56. The principle of __________ has been at the center of controversies associated
with new media, such as advertising on the Internet.
a. caveat emptor
b. private property
c. moral rights
d. free speech


57. The __________ approach evaluates decisions and behavior on how equitably
they distribute benefits and costs among individuals and groups.
a. fairness
b. moral rights
c. equity
d. justice


58. To ensure just decisions and behavior, the proponents of the justice approach
argue that key principles should be followed when designing management
systems and making organizational decisions. Which of the following is not
among these key principles?
a. distributive justice principle
b. procedural fairness principle
c. law and equality principle
d. All are principles of the justice approach.


154


59. The __________ principle of ethics requires that individuals not be treated
differently on the basis of arbitrarily defined characteristics.
a. fairness
b. distributive justice
c. equity
d. utilitarian


60. Benny Diaz discovered that he was being paid more than a female counterpart.
He knew their jobs required equal skill, effort, and responsibility and were
performed under similar working conditions. Benny was rightfully concerned,
knowing that the company was in direct violation of the __________ principle.
a. distributive justice
b. natural duty
c. individualism
d. collectivism

ANSWER: A, Application, Difficult, p. 163

61. What legal regulation supports the distributive justice principle making it illegal to
pay different wages to women and men when their jobs require equal skill, effort,
and responsibility and are performed under similar working conditions?
a. Title VII of the Civil Rights Act of 1964
b. Title IV of the Civil Rights Act of 1964
c. U.S. Equal Pay Act of 1963


62. Concerns are growing about the disparity between the compensation packages
that CEOs receive and the pay levels of everyone else. This disparity seems
directly contradictory to what principle of ethics?
a. natural duty principle
b. fairness principle
c. distributive justice principle


63. The __________ principle morally requires employees to support the rules of the
organization as long as the organization is just (or fair) and employees have
voluntarily accepted some benefits or opportunities in order to further their own
interests.
b. equality
c. natural duty
d. fairness


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64. Majestic Fabricators requires employees to take only their allotted 30 minute lunch
break. The company’s executives believe that longer breaks can negatively affect
fellow workers and the company as a whole. This belief supports what principle?
a. expectancy
b. fairness
c. comparable worth
d. natural duty

ANSWER: B, Application, Difficult, pp. 163–164

65. An organization and its employees have obligations (responsibilities) under the
fairness principle. These mutual obligations should satisfy all of the following
criteria except __________.
a. employees cannot be forced to work for a particular organization
b. employers should not be forced to hire a particular person
c. rules should specify what both the employee and the organization are required
to do
d. employees and employers share a common interest in the welfare of their
customers


66. Which of the following is an example of “procedural justice”?
a. Staff attorneys are available to respond to legal concerns.
b. Fairness in an organization is achieved in stages.
c. An acceptable process is in place for investigating employee grievances.
d. No penalties are taken against an employee for questioning management.


67. The __________ principle morally requires that decisions and behavior be based
on universal principles associated with being a responsible member of society.
b. fairness
c. social responsibility
d. natural duty


68. Which of the following is not a universal obligation of the natural duty principle?
a. To help others who are in need, provided that the help can be given without
excessive personal risk or loss.
b. Not to harm or injure another.
c. Not to cause unnecessary suffering.
d. To share with management a common interest in the survival of the
organization.


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69. Larry Liczbinski won a court case in which he claimed that he was fired for refusing
to lie in court about certain activities of his union. The court decision was
consistent with the ___________ principle.
a. empowerment accountability
b. comparable worth
c. natural duty
d. traditional accountability


70. Which ethical model is most compatible with the goals of efficiency, productivity,
and profit maximization?
a. fairness
b. moral rights
c. natural Duty
d. utilitarian


71. Which ethical approach is most applicable to American organizations?
a. natural duty
b. moral rights
c. utilitarian
d. fairness


72. Which ethical approach characterizes the principles adopted by most businesses in
the U.S.?
a. privacy
b. moral rights
c. justice
d. utilitarian


73. Which of the following is one of the universal duties of the natural duty principle?
a. Attain ends that benefit everyone.
b. Safety of individuals is a primary concern.
c. Do not cause unnecessary suffering.
d. Individuals must follow their own conscience.


74. Which ethical approach is most likely to be valued in European cultures?
a. utilitarian
b. moral rights
c. justice
d. both b and c are correct


157


Stakeholder Social Responsibility
75. Individuals or groups that have interests, rights, or ownership in an organization
and its activities are known as ___________.
a. profit sharers
b. stockholders
c. alliances
d. stakeholders


76. Stakeholders each have an interest in how organizations perform and are
interdependent with the organization. Which of the following are typical examples
of stakeholder groups?
a. customers
b. suppliers
c. regulatory agencies
d. all of the above


77. Which of the following are not secondary stakeholders?
a. employees
b. media
c. political action groups
d. All of the above are secondary stakeholders.

ANSWER: A, Knowledge, Difficult, p. 166

78. As primary stakeholders, customers expect the organization to provide
__________.
a. safety and health
b. concern for the environment
c. efficiency
d. met commitments


79. Which of the following is not an obligation to shareholders?
a. charitable contributions
b. ethical disclosure of financial information
c. viability
d. growth of investment


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80. All of the following except __________ are reasons management would believe
social responsibility has a positive effect on their company’s value.
a. sound investment
b. interference avoidance
c. enlightened self-interest
d. All of the above reasons would apply.


81. Which secondary stakeholders are directly addressed in Nortel’s “Commitments to
Stakeholders”?
a. suppliers
b. customers
c. labor unions

ANSWER: D, Knowledge, Difficult, pp. 166–167

82. Nortel Networks believes that shareholder value is delivered through __________.
a. continuing professional development
b. satisfied and loyal customers
c. teamwork competency
d. lobbying of governmental agencies

ANSWER: B, Knowledge, Difficult, p. 166–167

83. Safe and environmentally responsible products are a commitment Nortel makes to
its __________.
a. suppliers
b. customers
c. employees
d. shareholders


84. Which of the following has a primary stake in Nortel Networks?
a. shareholders
b. suppliers
c. employees
d. all of the above

ANSWER: D, Knowledge, Moderate, pp. 166–167

85. Suppliers apply which of the following types of pressure to organizations?
a. meet commitments
b. ethical disclosure of financial information
c. demands for efficiency
d. both A and C


159


86. Sustainable development refers to the organization’s __________.
a. environmental policy
b. profitability
c. human resources
d. debt burden


87. Conducting business in a way that protects the natural environment while making
economic progress is referred to as __________.
a. environmental policy
b. sustainable development
c. waste management
d. global sensitivity


88. ISO 14000 refers to __________.
a. safety in the workplace
b. quality manufacturing processes
c. voluntary environmental standards
d. ethical hiring standards


89. Local laws and regulations govern business actions related to pollution and the
use of natural resources. What international standards for environmental
management have also been developed?
a. European Union’s Eco-Management and Audit Scheme
b. International Organization for Standardization’s 14000
c. Material Safety Data Sheets
d. all of the above


90. Which of the following is not a company that has voluntarily met ISO 14000
standards?
a. Lear Corporation
b. Volvo of North America
c. Brinker International


91. According to _________, “The idea of corporations taking on social responsibility
is ridiculous.”
a. Kenneth Lay, CEO of Enron
b. Robert Eaton, Chrysler Chairman
c. Dick Cheney, CEO of Halliburton
d. Warren Buffet of Berkshire Hathaway


160


92. During a five-year period, the revenues of 13 well-known customer-oriented firms
such as FedEx, when compared to their competitors, __________.
a. failed to keep up
b. maintained an equal performance
c. grew 3 times faster
d. grew nearly 10 times faster


93. Many stakeholders are pressuring business leaders to __________.
a. support the proven, traditional utilitarian style business
b. adopt a more legalistic approach
c. eliminate fraud and scandals
d. actively contribute to society


94. A proactive approach to social responsibility involves accepting five categories of
obligations. Which of the following is not among these categories?
a. Managers and employees must consider and accept more narrow criteria for
measuring the organization’s performance and social role than those required
by law.
b. Managers and employees should maintain or improve the current standards of
the physical and social environment.
c. Managers and employees should accept responsibility for solving current
problems.
d. Managers must show a willingness to work with outside stakeholders for
enactment of environmental protection laws.

ANSWER: A, Knowledge, Difficult, pp. 169–170

95. The __________ social responsibility concept holds that managers and other
employees should be able to anticipate negative effects of the organization’s plans
on other stakeholders and then reduce those effects before implementing the plan.
a. traditional
b. affirmative
c. proactive
d. communal


96. In addressing ethical concerns, the proactive stakeholder social responsibility
approach involves all of the following except:
a. legislative and political activities
b. legal defense initiatives
c. response to social pressures
d. operating strategy

ANSWER: B, Knowledge, Difficult, pp. 169–170

161


97. Nortel Networks is opposed to taking part in which of the following activities?
a. corporate contributions to politicians
b. employee reimbursement for campaign donations
c. publicly expressing its political corporate views
d. Nortel refuses to take part in all of the above.


98. Which of the following is true about Nortel Networks’ political behavior?
a. They contribute to political campaigns.
b. They allow employees to campaign on company property.
c. They abuse corporate power to influence public issues.
d. They reimburse employees who contribute to political parties or candidates.


99. A __________ identifies, monitors, and evaluates the effects that the organization
is having on its stakeholders and society as a whole.
a. sustainable development evaluation
b. strategic action survey
c. stakeholder audit
d. social audit


100. A(n) __________ audit identifies, monitors, and evaluates the effects that the
organization is having on its stakeholders and society as a whole.
a. financial
b. management
c. organizational
d. social


101. General Motors publishes an annual __________ report that documents the
integration of economic, environmental, and social objectives into daily business
activities.
a. social audit
b. social compliance
c. social responsibility
d. social development


102. Since 1995, General Motors has reduced worker injuries in its global operations by
__________.
a. 90%
b. 75%
c. 40%
d. 15%

ANSWER: B, Knowledge, Moderate, pp. 170–171

162


103. General Motors met and exceeded their five-year goal to reduce nonrecycled
waste by __________.

a. 10%
b. 25%
c. 33%
d. 50%


Essay Questions

1. Why are ethics important for organizations and their employees?

An explicit concern with ethical issues and guidelines represents a positive strategy to
minimize ethical problems and to react quickly and effectively when they do occur.

Stakeholders, such as customers, are increasingly holding organizations responsible
for ethical decision making and conduct. However, there are conflicting perspectives
on what being ethical and socially responsible means.

Easy, pp. 150–151


2. Describe four forces that influence the ethical behavior of individuals and corporate
social responsibility.

The four forces that influence a person’s ethical conduct are cultural forces, legal and
regulatory forces, organizational forces, and individual forces. All four forces act
together to influence ethical conduct. Cultural forces comprise shared values and
norms that underlie standards for acceptable behavior. Legal and regulatory forces
reflect societal standards that are enforceable in the courts. Organizational forces
include both formal policies, such as a code of ethics, and cultural norms, such as how
managers define acceptable employee performance. Finally, an individual’s own
perspective on what is right and wrong can influence how that personal responds to the
other three forces.

Difficult, pp. 151–157

163


3. Explain some of the recommendations from the Ethics Resource Center in Washington,
D.C. that assist in the development of an ethical culture.

Four ideas are relevant. The organization should create a formal ethics system that
explicitly defines ethical expectations. Examples include codes, policies, rules,
committees, surveys, and other ethics management mechanisms. Then
communication of ethical expectations needs to take place at all levels of the
organization. Importantly, ethical conduct needs to be included as a measure on
performance evaluations. People will do what is rewarded or measured. Finally, make
it acceptable to talk about ethics. Too often, recognition is never made of good ethical
conduct. Managers must make time in staff meetings as well as with individuals to
communicate in depth about ethical issues.

Moderate, pp. 154–155


4. Identify and briefly define the three ethical approaches used in individual decision
making and behavior.

The utilitarian approach focuses on decisions or behavior that are likely to affect an
organization’s profitability. It judges the effect of decisions and behaviors on others,
with the primary goal of providing the greatest good for the greatest number of people.

The moral rights approach upholds a member of society’s fundamental rights to life and
safety, truthfulness, privacy, freedom of conscience, free speech, and private property.
It judges decisions and behavior by their consistency with fundamental personal and
group liberties and privileges.

The justice approach advocates impartial, equitable distribution of benefits and costs
among individuals and groups, according to three principles: distributive justice,
fairness, and natural duty. It judges decisions and behavior by their consistency with
an equitable, fair, and impartial distribution of benefits (rewards) and costs among
individuals and groups.


164


5. What are four of the ethical standards found within the utilitarian model?

a. Managers should attempt to satisfy the needs of customers, suppliers, lenders,
employees, and shareholders.
b. Providing the greatest good for the greatest number in a competitive market system
means focusing on maximizing profits.
c. Achieving high profits is thought to result in the highest quality products and the
lowest prices for consumers.
d. Profits are seen as the reward for satisfying customers.
e. Managers and other employees should try to attain organizational goals as
efficiently as possible.
f. Efficiency is achieved by minimizing both inputs (e.g., land, labor, and capital) and
maximizing outputs.
g. Managers and other employees should not have personal interests that conflict with
the organization’s achievement of its goals.

Difficult, pp. 159–160

6. Describe the fairness principle.

Employees are expected to support the rules of the organization to the extent that the
organization is fair and employees have voluntarily accepted benefits or opportunities
in furthering their own interests. Rules are meant to be followed, even when the rules
restrict individual choice. Mutual obligations exist, including management’s obligation
toward procedural justice to formally address grievances and take remedial actions.


7. What are two of the components of the natural duty principle?

a. To help others who are in need or in jeopardy, provided that the help can given
without excessive personal risk or loss.
b. Not to harm or injure another.
c. Not to cause unnecessary suffering.
d. To support and comply with just institutions.

Moderate, p. 164

165



8. Explain the ways that Nortel Networks deployed a comprehensive corporate ethics
program addressed to its primary stakeholders.

Nortel’s employees, shareholders, customers, and suppliers have the most direct stake
in the organization. The commitment from management is to treat every individual with
respect. This includes full and prompt notification of important issues. Employees are
promised a safe and satisfying work environment. The hiring practices will be fair.
Diversity will be respected.

The firm promises to act in the shareholders’ best interest, always keeping them fully
informed. Profits are essential to shareholders. Nortel Networks believes that this is
delivered through satisfied and loyal customers.

Customers are assured of receiving safe, high quality, and environmentally responsible
products. The Core Value is, “We fulfill our commitments and act with integrity.”

Suppliers are offered the objectives of ethical standards in procuring materials and
services which contribute most to product quality and long-term benefit to the
corporation.


166

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