Chapter 04 The Institutionalization of Business Ethics PDF

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Chapter 04 - The Institutionalization of Business Ethics 1. Which of the following is not an aspect of the institutionalization of social responsibility? a. Voluntary practices b. Legal responsibilities c. Core practices d. Familial responsibilities e. Strategic philanthropy ANSWER: d 2. Which of the following acts can be classified as procompetitive legislation? a. Equal Pay Act of 1963 b. Civil Rights Act of 1964 c. Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 d. Sherman Antitrust Act of 1890 e. Occupational Safety and Health Act of 1970 ANSWER: d 3. Which of the following acts exempted the insurance industry from antitrust legislation? a. Equal Pay Act of 1963 b. Civil Rights Act of 1964 c. McCarran-Ferguson Act of 1944 d. Sherman Antitrust Act of 1890 e. Occupational Safety and Health Act of 1970 ANSWER: c 4. Which of the following acts, passed in response to public outrage over conditions described in Upton Sinclair's The Jungle, was the first consumer protection legislation? a. Civil Rights Act of 1964 b. Sherman Antitrust Act of 1890 c. Magnuson-Moss Warranty Act of 1974 d. Consumer Product Safety Act of 1972 e. Pure Food and Drug Act of 1906 ANSWER: e 5. The _____ was established after the latest financial crisis, in response to a situation that caused many consumers to lose their homes. a. Environmental Protection Agency b. World Bank c. Consumer Financial Protection Bureau d. World Trade Organization e. Sarbanes-Oxley Act ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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Chapter 04 - The Institutionalization of Business Ethics 6. Which of the following is not a provision of the Sarbanes-Oxley Act? a. Strengthens penalties for corporate fraud b. Developed the Consumer Financial Protection Bureau c. Requires codes of ethics for financial reporting in corporations d. Makes fraudulent financial reporting a criminal offense e. Requires greater transparency in financial reporting ANSWER: b 7. The ________________ desires to find a solution to a social problem rather than to simply earn profits. a. CEO b. ethics officer c. social entrepreneur d. cause-related marketer e. Consumer Financial Protection Bureau ANSWER: c 8. The _____ regulates tobacco, dietary supplements, vaccines, veterinary drugs, medical devices, cosmetics, products that give off radiation, and biological products. a. World Trade Organization b. Consumer Financial Protection Agency c. Department of Justice d. Environmental Protection Agency e. The Food and Drug Administration ANSWER: e 9. Which of the following groups is not a group that receives special legal protections? a. The elderly b. Children c. Senior citizens d. The highly educated e. Young consumers ANSWER: d 10. The _____ was called “a sweeping overhaul of the financial regulatory system…on a scale not seen since the reforms that followed the Great Depression.” a. Equal Pay Act b. Americans with Disabilities Act c. Dodd-Frank Wall Street Reform and Consumer Protection Act d. Age Discrimination in Employment Act e. VII of the Civil Rights Act ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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Chapter 04 - The Institutionalization of Business Ethics 11. _____ law defines the rights and duties of individuals and organizations (including businesses). a. Civil b. Criminal c. Competitive d. Administrativ e e. Regulatory ANSWER: a 12. _____ law not only prohibits specific actions in business such as fraud, theft, or securities trading violations, but also imposes fines or imprisonment as punishment for breaking the law. a. Civil b. Criminal c. Competitive d. Administrativ e e. Regulatory ANSWER: b 13. Which of the following is not a provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act? a. Increases the accountability and transparency of financial institutions b. Creates a bureau to educate consumers in financial literacy c. Creates an organization to pay the bills of low-income consumers d. Create incentives for whistle-blowers to come forward e. Increases oversight of the financial industry ANSWER: c 14. _____ is the synergistic and mutually beneficial use of an organization’s core competencies and resources to deal with key stakeholders so as to bring about organizational and societal benefits. a. Social responsibility b. Business ethics c. Corporate philanthropy d. Strategic philanthropy e. Cause-related marketing ANSWER: d 15. Anticompetitive strategies that focus on weakening or destroying a competitor have spurred antitrust legislation and include all of the following except a. sustained price cuts. b. free samples. c. discriminatory pricing. d. price collusion. e. corporate espionage. Copyright Cengage Learning. Powered by Cognero.

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Chapter 04 - The Institutionalization of Business Ethics ANSWER: b 16. Which is not one of the four sources of criminal and civil laws? a. Judicial law b. Common law c. Constitutional law d. Administrative law e. Statutory law ANSWER: a 17. The _____ is an independent agency within the Federal Reserve System that “regulate[s] the offering and provision of consumer financial products or services under the Federal consumer financial laws.” a. Consumer Financial Protection Bureau b. Federal Reserve c. World Trade Organization d. Department of Justice e. Federal Trade Commission ANSWER: a 18. The primary objective of U.S. antitrust laws is to a. protect consumers from high prices and foreign products. b. protect domestic businesses. c. protect employees. d. promote strategies that enhance business welfare over consumer welfare. e. distinguish competitive strategies that enhance consumer welfare from those that reduce it. ANSWER: e 19. What is a primary reason why some small businesses resist the opening of large chain retailers like Walmart or Home Depot? a. Because the large size creates economies of scale and they can charge lower prices b. Because the selection in the stores is too large c. Because large retailers attract crime to neighborhoods in which they are based d. Because community leaders do not like the top management e. Because large retailers almost never hire local workers as employees ANSWER: a 20. _____ focus(es) on developing sound organizational practices and integrity for financial and nonfinancial performance measures, rather than on an individual’s morals. a. The Dodd-Frank Wall Street Reform and Consumer Protection Act b. Compliance c. Organizational ethics Copyright Cengage Learning. Powered by Cognero.

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Chapter 04 - The Institutionalization of Business Ethics d. Core practices e. The Sarbanes Oxley Act ANSWER: d 21. Which of the following is one of the seven steps that the U.S. Sentencing Commission requires for an effective compliance program? a. Engage in cause-related marketing b. Provide oversight by high-ranking personnel c. Develop a system of voluntary practices d. Submit to periodic privacy audits e. Comply with ISO 14000 guidelines ANSWER: b 22. The Sarbanes-Oxley Act created the _____ to oversee the accounting firms that audit public corporations and to establish rules and standards for auditing. a. Public Company Accounting Oversight Board b. Corporate Accounting Oversight Commission c. Consumer Financial Protection Bureau d. Occupational Health and Safety Administration e. Equal Employment Opportunity Commission ANSWER: a 23. _____ responsibilities relate to a business’s contributions to stakeholders. a. Economic b. Legal c. Ethical d. Voluntary e. Social responsiveness ANSWER: d 24. Passed by Congress in 1991, the _____ created incentives for organizations to develop and implement ethical compliance programs. a. Sarbanes-Oxley Act b. U.S. Sentencing Commission's Guidelines for Ethical Compliance c. Ethical Compliance Act d. Social Responsiveness Compliance Act e. Federal Sentencing Guidelines for Organizations ANSWER: e 25. Donation of computer equipment to schools by Toshiba would be associated with _____ responsibilities. a. economic Copyright Cengage Learning. Powered by Cognero.

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Chapter 04 - The Institutionalization of Business Ethics b. voluntary c. legal d. ethical e. minimum ANSWER: b 26. By prohibiting accounting firms from providing both auditing and consulting services to the same corporate clients without permission, the Sarbanes-Oxley Act is attempting to eliminate a. conflicts of interest. b. cronyism. c. reporting transparency. d. corporate espionage. e. dual reporting. ANSWER: a 27. How do violations of the law usually start? a. When businesspeople blatantly engage in misconduct b. When organizational stakeholders are not prioritized c. When the organization lacks an code of ethics d. When businesspeople stretch the limits of ethical standards e. When organizations engage in activities that are clearly illegal ANSWER: d 28. Companies that _____ will most likely be found in violation of procompetitive legislation. a. pollute waterways b. knowingly harm consumers c. contract with sweatshops d. establish monopolies e. help consumers ANSWER: d 29. _____ tie(s) an organization’s product(s) directly to a social concern through a marketing program. a. Voluntary contributions b. Cause-related marketing c. Strategic philanthropy d. Corporate giving e. Employee benefits ANSWER: b 30. Title VII of the Civil Rights Act of 1964 a. prohibits discrimination on the basis of race, color, sex, religion, or national origin. b. penalizes the top executives in an organization for misconduct. c. is basically the same as the Sarbanes-Oxley Act. Copyright Cengage Learning. Powered by Cognero.

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Chapter 04 - The Institutionalization of Business Ethics d. discourages whistle-blowers from reporting misconduct. e. prohibits pay discrimination on the basis of gender. ANSWER: a 31. Cause related marketing can affect consumer _____, if consumers are sympathetic to the cause and the brand and cause are seen as a good fit. a. individual ethics b. tastes c. attitudes d. budgets e. buying patterns ANSWER: e 32. ____________ must be trusted to make business work properly and includes accountants. a. Gatekeepers b. Federal regulators c. Ethics officers d. The buying center e. The legal department ANSWER: a 33. The _____ of ethics involves embedding values, norms, and artifacts in organizations, industries, and society. a. institutionalizatio n b. rationalization c. commercialization d. mobilization e. enforcement ANSWER: a 34. Which of the following is not a reason why the institutionalization of business ethics has progressed in recent decades? a. Institutionalization of ethics is now mandated for all organizations by governments around the world b. Stakeholders have recognized the need for improving business ethics c. The government has stepped in when scandals and misconduct have damaged key constituents of businesses d. Gatekeepers have been questioned as to their contributions to major scandals e. Highly ethical companies tend to be more profitable than those suffering from misconduct issues ANSWER: a 35. A major purpose of the Federal Sentencing Guidelines for Organizations, the Sarbanes-Oxley Act, and the Dodd-Frank Copyright Cengage Learning. Powered by Cognero.

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Chapter 04 - The Institutionalization of Business Ethics Act is to a. guard against anticompetitive behaviors. b. create synergy among businesses to improve the economy. c. encourage employees to report misconduct. d. discourage businesses from taking risks. e. mandate that companies engage in self-regulation. ANSWER: c 36. Which of the following laws instituted a whistle-blower bounty program in which whistle-blowers are eligible to receive 10 to 30 percent of fines if their reports result in convictions of more than $1 million in penalties? a. Title VII of the Civil Rights Act. b. The Sherman Antitrust Act. c. The Federal Sentencing Guidelines for Organizations. d. The Sarbanes-Oxley Act. e. The Dodd-Frank Act. ANSWER: e 37. Some, especially those in business, complain that the Sarbanes-Oxley Act and similar legislation a. is excessively complex and financially burdensome. b. is not necessary. c. is fair to all firms. d. has reduced restatements of financial reports. e. is too simplistic. ANSWER: a 38. An ethical organizational culture creates an environment in which to structure behavior that is then evaluated by stakeholders. The key elements of an organizational culture include all of the following except a. values. b. norms. c. artifacts. d. behavior. e. employee compensation ANSWER: e 39. Which of the following provide incentives for developing core practices within a firm that could help ensure ethical and legal compliance? a. Department of Justice, Sarbanes-Oxley Act, and Open Compliance Ethics Group b. Department of Justice, Dodd-Frank Act, and Sarbanes-Oxley Act c. Federal Sentencing Guidelines for Organizations, tSarbanes-Oxley Act, and DoddFrank Act d. Food and Drug Administration, Federal Sentencing Guidelines for Organizations, and Sarbanes-Oxley Act Copyright Cengage Learning. Powered by Cognero.

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Chapter 04 - The Institutionalization of Business Ethics e. Securities and Exchange Commission and Sarbanes-Oxley Act ANSWER: c 40. Laws and regulations change over time; however, in the United States the thrust of most business legislation can be summed up as a. any practice is permitted. b.any practice is permitted that does not substantially reduce competition and harm consumers or society. c. any practice is permitted that does not substantially harm consumers or society, but this applies only within the United States. d.any practice is permitted that does not harm the environment. e. any practice is permitted that does not break the law. ANSWER: b 41. Why do you think the costs of compliance with Sarbanes Oxley go down over time? ANSWER Companies have reported their compliance costs decreasing by 50% since : implementation. One reason could be experience with the systems and regulations makes compliance go more swiftly, decreasing costs. Another could be initial costs of establishing internal systems for compliance decrease after implementation. 42. According to the text, the opinions of society, as expressed through legislation, can change over time, and different courts and government legislatures may take different views about the acceptability of specific business activities. Why is this so? ANSWER The role of laws is not so much to determine what is ethical or unethical as to : determine the appropriateness of specific activities or situations. In other words, laws establish the basic ground rules for responsible business activities. Laws, or public policy, is dynamic and changes in response to business abuses and consumer demands for safety and equality. 43. What ethical issues affecting consumers and society as a whole are created by unfair competition? ANSWER When businesses compete unfairly, legal and social responsibility issues can result. : Competing to harm a competitor results in reduced product choices for consumers. Price collusion by large companies results in higher prices for consumers. 44. Society often expects a lot from business. Do you think that it is possible to balance profit and other business objectives with the goals and desires of society? Why or why not? ANSWER: Students can draw from the entire chapter to answer this question. 45. This is a leading self-regulatory body that provides directions for managing customer disputes and reviews advertising cases. a. Consumer Financial Protection Bureau b. Federal Trade Commission c. Better Business Bureau d. Open Compliance Ethics Group e. Occupational Safety and Health Administration Copyright Cengage Learning. Powered by Cognero.

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Chapter 04 - The Institutionalization of Business Ethics ANSWER: c 46. Externally imposed boundaries of conduct, such as laws, rules, regulations, and other requirements are known as a. Mandated boundaries b. Core practices c. Voluntary boundaries d. Civil law e. Philanthropy ANSWER: a 47. One of the steps the U.S. Sentencing Commission delineated companies must implement to demonstrate due diligence is that a firm must develop and disseminate a code of conduct that communicates required standards and identifies key risk areas for the organization. a. True b. Fals e ANSWER: True 48. In 2005 the Supreme Court ruled that the federal sentencing guidelines were not mandatory but should serve only as recommendations judges should use in their decisions. a. True b. Fals e ANSWER: True 49. Sarbanes-Oxley is considered to be the most sweeping financial overhaul of the regulatory system since the Great Depression. a. True b. Fals e ANSWER: Fals e 50. The primary method for resolving conflicts and serious business disputes is through the use of self-regulation. a. True b. Fals e ANSWER: Fals e 51. Cause-related marketing is the synergistic and mutually beneficial use of an organization's core competencies and resources to deal with key stakeholders so as to bring about organizational and societal benefits. a. True b. Fals e Copyright Cengage Learning. Powered by Cognero.

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Chapter 04 - The Institutionalization of Business Ethics ANSWER: Fals e

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