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Chapter 5 Ethics, Corporate Social Responsibility, and Sustainability TRUE/FALSE 1) Ethical strategies are the accepted principles of right or wrong governing the conduct of businesspeople. FALSE 2) What is considered normal business practice in one country may be considered unethical in other countries. TRUE 3) The Sullivan principles mandated that GM could operate in South Africa as long as the company did not comply with and promoted the abolition of apartheid laws. TRUE 4) Corporations can contribute to the global tragedy of the commons by not pumping pollutants into the atmosphere or dumping them in oceans or rivers. FALSE 5) International businesses cannot gain economic advantages by making payments to corrupt government officials. FALSE 6) The Foreign Corrupt Practices Act was amended to allow "facilitating payments" to secure contracts that would not otherwise be secured. TRUE 7) The ethical obligations of a multinational corporation toward employment conditions, human rights, environmental pollution, and the use of power are always clear-cut. FALSE 8) Ethical dilemmas are situations in which none of the available alternatives seems ethically acceptable. TRUE 9) Societal business ethics are divorced from personal ethics. FALSE 10) An individual with a strong sense of personal ethics is less likely to behave in an unethical manner in a business setting. TRUE 11) A firm's organizational culture refers to the values and norms that are shared among employees of an organization and those outside the organization. FALSE 12) The utilitarian approach to ethics is a straw man approach to business ethics that has some inherent value, but is unsatisfactory in important ways. FALSE 13) Milton Friedman's basic position is that the only social responsibility of business is to increase profits, so long as the company stays within the rules of law. TRUE 14) The Friedman doctrine is the belief that ethics are nothing more than a reflection of culture and therefore, a firm should adopt the ethics of the culture in which it is operating. FALSE 15) Cultural relativism suggests that even if slavery is culturally acceptable in a country, a foreign firm operating in that country should avoid using slave labor. FALSE 16) A manager from the United States is sent to Nigeria to supervise the construction of a road. As a righteous moralist, he is likely to learn the ethics and values of Nigeria and follow them, even if they don't concur with his own. FALSE 17) Most moral philosophers see value in utilitarian and Kantian approaches to business ethics. TRUE 18) Utilitarian philosophy takes into consideration the principle of justice. FALSE 19) According to Rawls, inequalities are unjust even if the system that produces inequalities is to the advantage of everyone. FALSE 20) Building an organization culture that places a high value on ethical behavior requires incentive and reward systems. TRUE 21) Social responsibility refers to the idea that businesspeople should favor decisions that have both good economic and social consequences. TRUE 22) To establish moral intent, managers need to stand in the shoes of a stakeholder and ask how a proposed decision might impact that stakeholder. FALSE 23) To foster ethical behavior, many businesses draft a code of ethics, which is an informal statement of the ethical priorities the company follows. FALSE 24) In a business setting, noblesse oblige is taken to mean benevolent behavior that is the responsibility of successful enterprises. TRUE 25) Ethics officers are hired by many businesses to make sure that all employees are trained to be ethically aware and that ethical considerations enter the business decision-making process at all levels of the organization. TRUE MULTIPLE CHOICES 26) The ________ occurs when a resource held in common by all, but owned by no one, is overused by individuals, resulting in its degradation. A) tragedy of the commons B) moral ignorance C) noblesse oblige D) veil of ignorance 27) The ________ outlawed the paying of bribes to foreign government officials to gain business. A) Convention on Combating Bribery of Foreign Public Officials B) Foreign Corrupt Practices Act C) Convention on International Business Transactions D) Universal Declaration of Human Rights 28) Facilitating payments are also known as A) grease monkeying. B) pocket lining. C) speed money. D) sliding. 29) Which of the following was designed to allow GM to operate ethically in South Africa as long as the company did not obey the apartheid laws in its own South African operations? A) Sullivan principles B) the righteous moral system C) noblesse oblige D) cultural relativism 30) The ________ obliges member states to make the bribery of foreign public officials a criminal offense and excludes facilitating payments made to expedite routine government action from the convention. A) Convention on Combating Bribery of Foreign Public Officials B) Foreign Corrupt Practices Act C) Convention on International Business Transactions

31) Identify the incorrect statement about environmental regulations. A) Environmental regulations are often lacking in developing nations. B) Environmental regulations are similar across developed and developing nations. C) Developed nations have substantial regulations governing the emission of pollutants, th dumping of toxic chemicals, and so on. D) Inferior environmental regulations in host nations, as compared to the home nation, can lead to ethical issues. 32) The ________ occurs when a resource that is shared by all, but owned by no one, is overused by individuals, resulting in its degradation. A) Friedman effect B) noblesse oblige C) inequity aversion D) tragedy of the commons 33) An international U.S.-based company sets up a production unit in a developing country with poor environmental regulations. This contributes to the A) noblesse oblige situation. B) inequity aversion. C) global tragedy of the commons. D) Friedman effect. 34) Which of the following observations about the Foreign Corrupt Practices Act is true? A) The act outlawed the paying of bribes to foreign government officials to gain business. B) There is enough evidence that it put U.S. firms at a competitive disadvantage. C) The act originally allowed for "facilitating payments." D) The Nike case was the impetus for the 1977 passage of this act. 35) Facilitating payments are A) a direct violation of the Foreign Corrupt Practices Act. B) permitted so long as they are designed only to gain exclusive preferential treatment. C) used to secure contracts that would otherwise not be secured. D) permitted under the amended Foreign Corrupt Practices Act. 36) The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions excludes A) bribes made to secure contracts that would otherwise not be secured. B) grease payments to gain exclusive preferential treatment. C) facilitating payments made to expedite routine government action. D) payments to government officials for special privileges. 37) The idea that businesspeople should consider the social consequences of economic actions when making business decisions and that there should be a presumption in favor of decisions that have both good economic and social consequences is known as A) moral relativism. B) noblesse oblige. C) ethical dilemma. D) social responsibility. 38) Which of the following, in a business setting, is taken to mean benevolent behavior tha is the responsibility of successful enterprises? A) Sullivan's principles B) ethical dilemma C) tragedy of the commons D) noblesse oblige 39) BP, one of the world's largest oil companies, has made it part of the company policy to undertake "social investments" in the countries where it does business. There was no economic reason for BP to make this social investment, but the company believes it is morally obligated to give something back to the societies that have made its success possible. BP's actions are an example of A) cultural relativism. B) the Friedman doctrine. C) noblesse oblige. D) the tragedy of the commons. 40) ________ are the accepted principles of right or wrong governing the conduct of businesspeople. A) Sustainable strategies B) Business ethics C) Moral worth of actions D) Ethical strategies 41) In the international business setting, one of the most common ethical issues involves A) hiring practices. B) government deregulation. C) the moral obligation of multinational corporations. D) facilitating payments. 42) Ethical dilemmas exist because many real-world decisions involve A) first-, second-, and third-order consequences that are hard to quantify. B) people from different cultures. C) employers and employees. D) people from different multinational firms. 43) Josiah was managing a factory in India, and had a decision to make. The factory used child labor, which he disapproved of, but he knew the families of these children might starv without their income. This situation, in which none of the available alternatives seems morally acceptable, is called A) an ethical dilemma. B) noblesse oblige. C) the tragedy of the commons. D) the free rider problem.

44) Which of the following is a reason managers working abroad in multinational firms may behave in a manner that is unethical? A) psychological and geographical distances of a foreign subsidiary from the home office B) pressure from an ethical leader C) confusion between personal ethics and business ethics D) incorporating ethical issues into strategic and operational decision making 45) Expatriate managers may experience more than the usual degree of pressure to violate their personal ethics because of which of the following? A) They are surrounded by their ordinary social context and supporting culture. B) They are psychologically and geographically closer to the parent company. C) They may be based in a culture that does not place the same value on ethical norms important in the manager's home country. D) They may be surrounded by local employees who have more rigorous ethical standards. 46) Which of the following refers to the values and norms that the employees of an organization share? A) vision statement B) cultural relativism C) organization culture D) power orientation 47) Grady works at a fast food restaurant. One day he noticed a co-worker giving free food to a friend. He was unsure about what to do. Grady most likely decided to follow the example of A) other employees. B) his supervisor. C) his family. D) government leaders. 48) ________ approaches to business ethics are raised by business ethics scholars primarily to demonstrate that they offer inappropriate ethical decision making in a multinational enterprise. A) Cultural relativism B) The righteous moralist C) Straw man D) The naive immoralist 49) ________ arguments suggest that improving working conditions beyond the level required by the law and necessary to maximize employee productivity will reduce profits and are therefore not appropriate. A) Rawls' B) Kantian C) Sullivan's D) Friedman's 50) According to the ________ point of view, a firm should adopt the ethics of the culture in which it is operating. A) cultural relativism B) righteous moralist C) naive immoralist D) utilitarian approach 51) According to the ________, even if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should maintain the standards of the company's home country. A) cultural relativist B) righteous moralist C) utilitarian D) naive immoralist 52) A British firm that sets up production units in China is accused of releasing untreated chemical waste into water bodies. The manager of the firm defends the firm stating that, factories in China set up by French and American firms also release untreated chemical waste into water bodies. What approach to business ethics is the manager using? A) righteous moralist B) utilitarian C) naive immoralist D) cultural relativist 53) Business ethics that either deny the value of business ethics or apply the concept in a very unsatisfactory way are termed A) straw man. B) the Sullivan principles. C) just distribution. D) rights theories. 54) The ________ approaches to ethics hold that the moral worth of actions or practices is determined by their consequences. A) naive immoralist B) cultural relativist C) righteous moralist D) utilitarian 55) ________ recognize that human beings have fundamental rights and privileges that transcend national boundaries and cultures. A) Rights theories B) Utilitarians C) Cultural relativists D) Kantian ethics 56) According to ________, the social responsibility of business is to increase profits, so long as the company stays within the rules of law. A) the naive immoralist B) the righteous moralist C) cultural relativism D) the Friedman doctrine

57) According to the Friedman doctrine, A) ethics are nothing more than the reflection of culture. B) a multinational's home-country standards of ethics are inappropriate to follow in foreign countries. C) businesses should not undertake social expenditures beyond those mandated by th law and required for the efficient running of a business. D) if a manager of a multinational sees that firms from other nations are not following environmental legislation in a host nation, that manager should not either. 58) Miranda is a cultural relativist, which means she likely believes A) a firm should adopt the ethics of the culture in which it is operating. B) the only social responsibility of a firm is to increase profits. C) a firm's ethical policies should remain the same in all cultures. D) a multinational should follow its home-country cultural practices in all the host countrie where it has operations. 59) Child labor is permitted and widely employed in Country X. A multinational company entering Country X decides to employ minors in its subsidiary, even though it is against the multinational's home-country ethics. Which of the following approaches to business ethics would justify the actions of the multinational company? A) righteous moralist B) cultural relativism C) the justice theory D) the rights theory 60) A multinational company is accused of paying bribes to the government of a host country to obtain permission to build a production factory. The public relations manager of the company defends the company's actions as being ethically sound; he states that in the host country, paying bribes to government officials is the accepted norm and is in keeping with the social practices in the host country. The public relations manager is using which o the following philosophical doctrines to defend the actions of the company? A) the Friedman doctrine B) righteous moralist C) noblesse oblige D) cultural relativism 61) In its extreme viewpoint, ________ suggests that if a culture supports slavery, it is all right to use slave labor in the country. A) the Friedman doctrine B) noblesse oblige C) righteous moralist D) cultural relativism 62) The righteous moralist suggests that A) ethics are nothing more than the reflection of culture. B) a multinational's home-country standards of ethics are the appropriate ones for companies to follow in foreign countries. C) the social responsibility of business is to increase profits, so long as the company stays within the rules of law. D) if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either. 63) According to the naive immoralist, A) a multinational's home-country standards of ethics are the appropriate ones for companies to follow in foreign countries. B) the social responsibility of business is to increase profits, so long as the company stays within the rules of law. C) ethics are nothing more than the reflection of a culture. D) if firms in a host nation do not follow ethical norms then the manager of a multinational should not follow ethical norms there either. 64) An American manager in Colombia routinely pays off the local drug lord to guarantee that his plant will not be bombed and that none of his employees will be kidnapped. The manager argues that such payments are ethically defensible because everyone is doing it. The manager's argument exemplifies which of the following ethical approaches? A) naive immoralist B) Kantian ethics C) righteous moralist D) noblesse oblige 65) The utilitarian approach to business ethics suggests that A) people should be treated as ends and never purely as means to the ends of others. B) the moral worth of actions or practices is determined by their consequences. C) people have dignity and need to be treated as such. D) human beings have fundamental rights and privileges that transcend national cultures. 66) Mahatma Gandhi felt the best decisions are those that produce the greatest good for the greatest number of people. This demonstrates the ________ perspective. A) naive immoralist B) Friedman doctrine C) Kantian ethics D) utilitarian 67) The products of Carmen Stores, an international sports apparel chain, are manufactured in sweatshop factories in China. According to the company president, using sweatshop labo offers a means of livelihood to children and young adults, as well as supplies good quality apparel to customers at a lower cost. She asserts that the actions of the company are justifie because it results in the benefit of the maximum number of people. The company president argument is based on which of the following ethical viewpoints? A) the righteous moralist B) the Friedman doctrine C) Kantian approach to business ethics D) utilitarian approach to business ethics

68) The Kantian approach to ethics suggests that A) human beings have fundamental rights and privileges that transcend national boundaries. B) the moral worth of actions or practices is determined by their consequences. C) people should be treated as ends and never purely as means to the ends of others. D) ethics are nothing more than the reflection of culture. 69) Identify the correct statement about the rights theories. A) Human beings have fundamental rights and privileges that transcend national boundaries. B) The moral worth of actions or practices is determined by their consequences. C) People should be treated as ends never purely as means to the ends of others. D) The only social responsibility of business is to increase profits, so long as the company stays within the rules of law. 70) Which of the following persons believed that people should be treated as ends and never purely as means to the ends of others? A) John Stuart Mill B) Immanuel Kant C) Milton Friedman D) David Hume 71) The United Nations Universal Declaration of Human Rights, related to employment, upholds which of the following? A) the requirement for the formation of trade unions B) a sliding pay scale based upon need C) prohibition of trade unions D) protection against unemployment 72) Article 1 of the United Nations Universal Declaration of Human Rights states: All human beings are born free and equal in dignity and rights. This best echoes A) cultural relativism. B) the Friedman doctrine. C) the righteous moralist approach. D) Kantian ethics. 73) Which of the following statements is true about the United Nations Universal Declaration of Human Rights? A) It transcends national borders. B) It states that human rights are culturally determined. C) It states that an action is judged desirable if it leads to the best possible balance of good consequences over bad consequences. D) It states that the only social responsibility of business is to increase profits, so long as the company stays within the rules of law. 74) Justice theories of business ethics focus on A) the moral worth of actions or practices. B) minimum levels of morally acceptable behavior. C) fundamental rights and privileges that transcend national boundaries. D) the attainment of an equitable distribution of goods and services. 75) According to John Rawls, A) each person should be permitted the maximum amount of basic liberty compatible with a similar liberty for others. B) freedom of speech and assembly is the single most important component in a justice system. C) equal basic liberty is impossible in a pure market economy. D) ethics is culturally determined. 76) Rawls' philosophy that inequalities are justified if they benefit the position of the...