CH4 - Lecture notes 1,2,3 PDF

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CHAPTER 4; APPENDIX A Ethics & Social Responsibility & Business Law 1. Jerome is an HR (human resources) specialist for a major defense corporation. He is in the process of hiring two new management trainees in the maintenance and repair department of his company. Safety and employee break-times are important aspects of a manager’s responsibilities. He has provided each of the new hires with a booklet that describes the company’s policies and guidelines for safety preparedness and employee relations. Jerome has instructed these individuals to read and study the rules; take the online test that covers these policies, and then sign the associated required documents that pertain to their knowledge in these areas. This procedure which includes reading the booklet and taking the online test are part of Jerome’s company’s ____________________ A. Company promotion brochures C. Integrity based ethics B. Licensure exams D. Compliance based ethics 2. Last year, the McJellyBelly Corporation provided the American Red Cross $5 million targeted for the Boulder/Longmont/Lyons, Colorado area which will need funds to help this area recover from the natural disaster that struck there. From a Corporate social responsibility standpoint, we would consider these funds as ___________________. A. Corporate policy C. Taxation without representation B. Corporate philanthropy D. Compliance funds 3. In class, we viewed an Anheuser-Busch-In-Bev video where the production line in a brewery was switched from beer to water. The water was distributed by truck to several areas in the U.S. that experienced natural disasters. We also watched a video sponsored by McDonald’s that celebrated the legacy of Dr. Martin Luther King. These public relations campaigns were purposely provided to demonstrate the company’s ____________. A. Social responsibility awareness B. Divisive culture on social issues C. Philanthropic causes D. Stance on Capitalism 4. A secretary for the XYZ Banking Corporation mentioned to her good friend that she overheard a company executive discussing plans to sell the company to a very large, financially healthy conglomerate. The secretary’s company is publicly traded, and the future announcement of this sale will initially create a buy signal for investors who would like to make some money trading XYZ Banking Corporation. The secretary’s friend quickly purchased XYZ Banking Corporation stock, which was at a yearly low, in anticipation that the stock price will rise and she will realize a good return on her investment when she decides to sell. Since this information is not yet available to the general public, A. The friend is participating in a legal trade. B. The friend is participating in insider trading, but the source of her information is not liable. C. The friend is participating in insider trading, and the source of her information is also liable. D. The friend is participating in insider trading, but only the source of her information is liable. Once the secretary mentioned it to the friend, it became general public knowledge.

5. Two respective owners of large chicken egg operations in Utah have been talking by phone about business and the territories they serve. Both serve the general metropolitan area of Salt Lake City and Ogden, Utah, which includes 300-500 small, mid-size, and large grocery stores and quick shops. In their conversation, they agree to divide the stores between the two competitive operations. They share with each other the amount of egg sales they realize in each operation. This activity is __________ and it is called ______________. A. Legal, price discrimination C. Legal, price fixing B. Illegal; price discrimination D. Illegal; price fixing

6. A local shoe store runs sales each quarter. The large sign in the window reads, “1/2 OFF SALE.” The smaller print under these words reads, “Buy your first pair at regular price, and get the second pair of equal or lesser value for ½ off”. The size difference in these two lines is significant, which causes many patrons to take two pair of shoes to the check-out counter, to learn that both pairs are not 50%off the marked price. In fact, if you do the math, they are really getting two pair for 25% off (if both pair are the same price). A. This is a buyer beware situation, but totally legal and ethical. B. This can be construed as false advertising and questionably unethical. C. This can be construed as competitive advertising and definitely legal. D. The company does this so the sales reps will continue to point out the promotion to all consumers who approach the counter. 7. According to the Sarbanes-Oxley Act, which addresses questionable accounting and auditing practices in publicly traded firms, A. Whistleblowers may report their concerns anonymously. B. When cases go to court, the firm must always pay the whistleblower a bonus for their findings, and continue to provide them with employment at that level or higher. C. Whistleblowers may receive a bonus through the court system, but they are never provided back pay if they are dismissed without cause. D. Whistleblowers can make lots of different accounting accusations, but they can never accuse a company official of insider trading. This does not fall under Sarbanes-Oxley prevue.

8. GDY Care, Inc. is a social business. In that Respect, Muhammad Yunus would tell us: A. Its bottom line must always be a 15% return on equity. B. Its bottom line must be large enough to pay the salaries of the employees. C. Its bottom line must be large enough to pay the taxes for the organization. D. Its bottom line is about how many persons it has served, rather than how much money it made.

9. The Motorola story in Chapter 4, titled, “Culture Clash”, A. Reflects the differences in cultural values, which can lead to differences in ethical values. B. Reflects the need for firms doing business abroad to run a tight ship and require employees to be in compliance with company policies that originate in the firm’s country of origin. C. Reflects the need for an international policy that works in every country. D. Reflects the similarities of cultural values in employees, and how these values need to be understood and respected.

10. George, owner of George’s Gadgetry, Inc., holds a patent for a product idea he recently invented. He recently learned that Frank, who owns Frank’s Favorite Things, Inc., has created and started selling a product which appears identical to George’s patented product. George’s patent protection gives him the right to sue Frank in a court of law. He has contacted his lawyer, who will proceed with the legal documents to go to court. George’s actions constitute: A. Statutory law B. Common law C. Basic Law D. Tort Law

11. There are two movie theatre companies in a southern city. “Imagination, Inc.” and “Excellent Entertainment, LLC”. Both establishments will often show the same blockbuster movies, at the same time. Suspiciously, “imagination, Inc.” reduces ticket prices during the first two weeks each month; and, “Excellent Entertainment” reduces ticket prices during the third and fourth weeks of each month. Recently, a local activist group has asked the FTC (Federal Trade Commission) for an investigation of the promotional actions of these movie theatre companies. They suspect: A. Price discrimination B. Tying contracts C. False advertising D. Price fixing

12. Similar to Mylan Pharmaceuticals that makes the EpiPen, there is a vocabulary concept called _____________. This is a situation where a company who was headquartered domestically (say, in the U.S.) decides to relocate its headquarters in another country to avoid the tax obligation in the country where it originated. This is ___________. A. Expatriotic; illegal B. Expatriot; legal C. Inversion; illegal D. Inversion; legal 13. As is the case with the EpiPen brand and other prescription drugs, pharmaceutical companies enjoy the patent protection afforded by the U.S. government. Which of the following was the reason provided for this need? A. Pharmaceutical companies want to price gouge at every opportunity. B. Pharmaceutical companies seldom produce and market more than 10 prescription products. The prescription product line is particularly vulnerable to the replication by competitors. C. Pharmaceutical companies spend on average upwards of $2 billion developing products. They desire a payback window. D. Pharmaceutical companies who produce prescription drugs always use penetration pricing strategy. They penetrate the market with undercutting the competition, and, therefore need a cushion that patent protection provides. 14. The agency that approves pharmaceuticals for distribution in the U.S. is __________________. A. The FTC (Federal Trade Commission) B. The Treasury Department’s Anti-Trust Division C. The FDA (Food and Drug Administration) D. The Clayton Commission on Fair and Safe Trade

15. Deregulation refers to: A. The act of limiting companies from producing harmful products. B. The government stepping in and structurally breaking-up a company whose size it believes is limiting competition. C. The government seizing the property of large companies who are not committed to pay their creditors in an expedient manner. D. The government eliminating regulatory action in certain industries.

16. In the case of bankruptcy, the court filings may be started by: A. The debtor (the company that went bankrupt) or the creditor (the company owed money) B. The debtor only because the company must admit that it has exhausted its funding and ability to pay its bills. C. The creditor because this is always a lawsuit. D. The customers of the company without funding will initiate the bankruptcy because they are the market maker. 17. Understanding contract law is very important because lots of business is created through contracts. Which of the following is not a condition of a contract? A. Consideration is given by both parties. B. The acceptance of the offer by both parties is voluntary. C. A contract of $1,000 to $5,000 may be a verbal handshake. D. Both parties in the contract are competent.

18. A young boy, age 12 decided to trade his eBike [RadCity Electro mission bike] that he got for his birthday for a new Nintendo Switch Console with neon blue/red. The boy’s parents paid over $1,000 for the bike, but they knew he would need to ride it to school on most days and they wanted something easy and safe. The Nintendo hardware would set them back about $300. Is this a legal contractual sale? A. It is a legal contractual sale because both parties voluntary entered into this sale and both gave consideration. B. The contract entered in this case is not legal and questions competence due to the age of the person trying to trade the eBike. C. This is not legal because there is no evaluation of price of goods. D. This is totally legal because both parties made an offer. 19. Antitrust legislation is about: A. Companies within one industry that cannot be trusted because they continue to do illegal things. B. Making certain that at least one competing company within an industry has the lion’s share of the market. C. One competing company breaking up another competing company D. The government stepping in to promote fair competition. 20. Alfred was the victim of a tragic accident at an amusement park. While riding the roller coaster, part of the coaster jumped the track and Alfred and others were thrown to the ground. Although Alfred fortunately recovered, one could use the term _____________ to describe this unintentional harm or injury. A. negligence B. strict product liability C. strict warranty D. discharge of obligation...