Final Exam, questions and answers PDF

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MODEL FINAL EXAM PAPER WITH SUGGESTED ANSWERS NOTE:  Generally, the level of difficulty and scope of these questions are of a comparable standing to that which you might expect in your final exam.  Section B contains suggested outlines of answers. Other relevant answers may be acceptable.

Faculty of Business Student to complete: Family name Other names Student number Table number

COMM101 Principles of Responsible Business Wollongong

Model Final Exam Questions with Answers Autumn 2018

Exam duration

3 hours

Items permitted by examiner

Nil

Aids supplied

Nil

Directions to students

1. This examination has TWO (02) sections.  Section A: Answer all TEN (10) multiple choice questions on the answer sheet provided.  Section B: Answer any FOUR (04) of the questions. 2. This examination is worth 50% of your total assessment grade for the subject. You must obtain at least 50% in the final exam to be eligible to pass the subject.

This exam paper must not be removed from the exam venue

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Section A: Multiple Choice Questions

(Total 10 marks)

Section A comprises questions 1 to 10. Indicate your answers on the multiple choice answer sheet. Choose the alternative that best answers the question. Each question is worth 1 mark for a correct response. No marks will be deducted for an incorrect response.

Question 1. The efficiency of capitalism was highlighted by __________________ a. Stuart Mill b. Adam Smith c. Kenneth Arrow d. Charles Ponzi Question 2. Which of the following is NOT a moral philosophy or ethical theory? a. Utilitarianism b. Kantianism c. Egoism d. Theory X and Y Question 3. Which of the following is the lowest stage in Lawrence Kholberg’s stages of moral development? a. Pre-conventional b. Right c. Good d. Principled Question 4. Externalities are ________________ a. always positive. b. always negative. c. positive and negative. d. harmful to society. Question 5. One major societal problem caused by the Dutch tulip bubble is that_____________ a. speculative manias always result in the collapse of the industry or sector involved. b. speculative manias distort incentives. c. speculative manias tend to result in economic collapse. d. speculative manias reduce national investment in the industry or sector involved. Question 6. According to Friedman, ____________________ a. social responsibility is likely to generate more profits. b. social responsibility is a very useful business activity. c. social responsibility is likely to result in less than maximum profit. d. social responsibility is likely to result in zero profit. 2018 04 16

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Question 7. In pre-1850s, the typical firm was _______________ a. small scale, single function and owner-managed b. large scale, single function and bureaucratic c. small scale and bureaucratic d. large scale and single function Question 8. The Fortune at the Bottom of the Pyramid was written by _______________ a. Milton Friedman b. Karl Marx c. Kenneth Arrow d. C. K. Prahalad Question 9. Kantianism is a ________________ a. consequentialist theory. b. non-consequentialist theory. c. management theory. d. business process theory. Question 10. Which of the following is NOT an alternative to capitalism? a. Creative Capitalism b. Socialism c. Egoism d. Communism

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Section B: Short Answer Questions

(Total 40 marks)

(NOTE: the final exam paper will give you an option of answering 4 out 6 questions).

Question 11. Identify and describe THREE moral issues of capitalism.

(10 marks)

An ideal response to this question would contain, and be structured like the following.  Brief definition and description of capitalism and its major perceived advantage; efficiency  Brief description of the Freidman doctrine; that firms should legally pursue profit maximisation  Brief description of the counter arguments cautioning against unrestrained (legal) profit maximisation, which is where the issue of morality arises Description of moral issues (any three of the following) 1. May lead to very uneven distribution of income which is likely to be inefficient as well as morally dubious. 2. Likely to discourage altruistic activities e.g. volunteering which are likely to enhance the social good 3. Many economic activities result in negative externalities i.e. costs imposed on ‘innocent’ locals not party to the market transaction, e.g. mining in the Hunter region of NSW and the negative effects on many locals. 4. The existence of asymmetric information i.e. uneven playing field, across different market participants may result in morally dubious as well as economically inefficient transactions. To sum, the (Adam) Smithian view of the baker or butcher looking after his own interests and in the process benefitting society is a powerful and valid argument in favour of capitalism, but we also need to be aware of the capacity for market based activities to result in inefficient and morally dubious behaviour/outcomes when inherent assumptions about the capitalist economy break down. Question 12. (10 marks) Identify and describe FOUR reasons for organisations to engage in corporate social responsibility. An ideal response to this question would contain, and be structured like the following.  Brief definition and description of corporate social responsibility Description of reasons 1. Organisations are governed by an implicit social contract that requires it to operate that in ways that benefit society. 2. Socially responsible corporate behaviour is positively correlated with long term financial success. 2018 04 16

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3. The great social and economic power of modern organisations 4. Organisations can thrive only if their external stakeholders are able to provide inputs and consume corporations’ products and services. Question 13. Identify and describe THREE factors contributing to corporate collapses.

(10 marks)

An ideal response to this question would contain, and be structured like the following.  Brief description of corporate collapses and its effect on individuals, organisations and society Description of factors (any three of the following) 1. Poor leadership and inept management 2. Ethical or social issues as matters for somebody else to resolve. 3. Leaders talk to the same circle of people and information sources all the time and avoid people or organisations who disagree with them or criticise them. 4. They discourage employees from thinking about their work as whole people, from using their moral and social intelligence as well as their business intelligence. 5. They focus exclusively on financial measures of performance. Question 14. (10 marks) Critically examine at least THREE arguments for and against globalisation. Outline of answer: “Globalisation refers to the social, cultural, political and economic aspects of an interconnected world in which distance, communication, technology, culture and ideas have become universal instead of localised” (Shaw et al. 2007, p.345). There are arguments both in favour of globalisation, and also arguments that acknowledge its limitations. Arguments in favour: 1. It continues to generate economic returns for capital. One positive effect of globalisation is that it supports capitalism and reinvigorates ways of generating economic returns for capital. The benefits of capital investment can now be shared throughout the globe. If the efficient market hypothesis is relied upon, the market mechanism permits the benefits of such wealth to trickle through the markets to be of benefit to all society through the generation of profits, investment and employment. To this end, globalisation has lead to the development of global institutions to act in the public interest such as the World Bank and the International Monetary Fund (IMF). However, if we critically examine this argument, we can challenge the underlying assumption of market efficiency. Individual nations must regulate markets to protect weaker players implying economic returns for capital do not produce equal or desirable benefits for everyone in society. 2. It improves communications, transport and technology.

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Globalisation has been shown to improve communications, transport and technology around the globe. Large multinational corporations (MNC) have greater financial resources than some countries, and so are able to bring with them infrastructure to support economic development at a local level. An example of this is the BHP’s OK Tedi mine development in Papua New Guinea. To support the local community they built roads, a hospital and a local school. However, this can be problematic because if a MNC leaves an area, the infrastructure often either leaves with them or is abandoned as it cannot always be maintained by government. 3. It expands choices available to individuals. It is argued that globalisation expands the choice available to individuals, as it allows them to develop skills and qualifications that support an internationally mobilized work force. This enriches both individuals and communities, promoting cultural awareness and opportunities. This can be critiqued in that it also can lead to cultural homogenisation. Arguments against globalisation: 1. It undermines democratic institutions. Lehman argues that the process of globalisation undermines democratic institutions because democracy does not provide for civil control over global institutions or corporations. The power of corporations rivals or exceeds that of nations. The negative aspects of globalised trade tend to be concentrated on poorer countries and may require a loss of national sovereignty over internal policies to access the benefits of a MNC. 2. It creates distributive injustice. Most of the world’s resources are sourced from poorer nations, but the benefits of them are enjoyed by a small percentage of the world’s population in the west. We see examples of child labour and sweat shops, and a lack of regulations in some emerging economies that allows for the exploitation of workers, and tolerance of harmful products and work practices. It is acknowledged that there is still some economic benefit brought to these economies. 3. It accelerates and magnifies corruption of multinational corporations. Globalisation provides conditions that facilitate the acceleration and magnification of corruption. MNCs and the technology they use enable the mobilisation of capital around the globe in a timeless and non-transparent manner. This has seen the rapid emergence of offshore financial centres (tax havens) as an integral part of globalisation, that facilitate the mobility of finance by providing no or low tax and no or low regulation, secrecy and anonymity to footloose capital. This creates tax avoidance which is not in the public interest of hosting nations. Such a propensity undermines the potential of globalisation to realise the economic potential and rights of citizens. End of Exam

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