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True/False
2. A business is any organization that is engaged in making a product or providing a service for a
profit.
Answer: T
Page: 4
4. The stakeholder theory of the firm argues that a firms sole purpose is to create value for its
shareholders.
Answer: F
Page: 6
5. The instrumental argument for the stakeholder theory of the firm says that companies perform
better if they consider the rights and concerns of multiple groups in society.
Answer: T
Page: 6
6. The normative argument for the stakeholder theory of the firm says that the stakeholder view is
simply a more realistic description of how companies really work.
Answer: F
Page: 7
7. Nonmarket stakeholders are those that engage in economic transactions with the company as it
carries out its primary purpose of providing society with goods and services.
Answer: F
Page: 8
11. Stakeholders involved with one part of a company often may have little or no involvement with
another part of the company.
Answer: T
12. Some scholars have suggested that managers pay the most attention to stakeholders possessing the
least salience.
Answer: F
Page: 16
13. Urgency refers to the extent to which a stakeholders actions are seen as proper or appropriate by
the broader society.
Answer: F
Page: 16
14. A stakeholder map is a useful tool, because it enables managers to see quickly how stakeholders
feel about an issue and whether salient stakeholders tend to be in favor or opposed.
Answer: T
Page: 17
Multiple Choice
17. Which of the following examples best illustrates the boundary exchanges a company would
encounter according to the general systems theory?
A. An industrial company installs new equipment in its plant to comply with environmental
regulations.
B. A software company develops an application for a client.
C. A purchasing department employee negotiates a price on parts from a supplier.
D. All of the above.
Answer: D
Difficulty: Hard
Page: 5
18. Which of the following is the result of an inseparable relationship between business and society?
A. All business decisions have a social impact.
B. The vitality of business depends on societys actions and attitudes.
C. The survival of business is independent of society.
19. Which of the following statements is not true about the interactive social
system?
A. Business and society need, as well as influence, each other.
B. The boundary between business and society is clear and distinct.
C. Business is a part of society, and society penetrates far and often into the
business.
D. Business and society are both separate and connected.
Answer: B
Difficulty: Hard
Page: 5
20. A firm subscribing to the ownership theory of the firm would mainly be
concerned with providing value for its:
A. Shareholders.
B. Customers.
C. Board of Directors.
D. Community.
Answer: A
Difficulty: Medium
Page: 6
21. Corporations that run their operations according to the stakeholder theory of
the firm create value by:
A. Innovating new products.
B. Increasing their stock price.
C. Developing their employees professional skills.
D. All of the above.
Answer: D
Difficulty: Medium
Page: 6
22. Which argument says that stakeholder management realistically depicts how
companies really work?
A. Descriptive argument.
Difficulty: Easy
Page: 6
Page: 8
29. All of the following are external stakeholders of the firm except:
A. Managers.
B. Customers.
C. Stockholders.
D. Suppliers.
Answer: A
Difficulty: Easy
Page: 9
32. The five types of stakeholders power recognized by most experts are:
A. Voting, economic, political, legal, and informational power.
B. Social, legal, environmental, economic, and political power.
C. Social, regulatory, voting, governance, and media power.
D. Economic, media, legal, stockholder, and political power.
Answer: A
Difficulty: Medium
Page: 12
36. When a community group sues a company for health effects caused by the
unsafe disposal of toxic chemicals, this is an exercise of a stakeholders:
A. Legal power.
B. Voting power.
C. Economic power.
D. Political power.
38. What kind of power might a local community use to influence a companys
decisions?
A. Publicizing an issue.
B. Lobbying government policy makers for regulations.
C. Challenging whether a business activity should continue to operate.
D. All of the above.
Answer: D
Difficulty: Hard
Page: 13
39. With the explosive growth of technologies that facilitate the sharing of
information, this kind of stakeholder power has become increasingly important:
A. Economic power.
B. Political power.
C. Informational power.
D. Legal power.
Answer: C
Difficulty: Medium
Page: 13
47. Supporters of the stakeholder theory of the firm make three core arguments
for their position. Define and provide examples of each.
Page: 6 7
48. Compare and contrast the relationships a firm may have with market and
non-market stakeholders.
Page: 8 11
50. Explain the process called stakeholder analysis. Include a description of its
four key questions.
Page: 1 16
52. Describe and give examples of the external forces that shape the
relationship between business and society.
1. A public issue exists when there is agreement between the stakeholders' expectations of
what an institution should do and the actual performance of those businesses.
True False
4. Because the public issues that garner the most public attention change over time,
sometimes emerging with surprising suddenness, companies do not waste time tracking
them.
True False
9. Legal environment includes the structure, processes, and actions of government at the
local, state, national, and international levels.
True False
10. Competitive intelligence enables managers in companies of all sizes to make informed
decisions in all areas of the business.
True False
11. Identifying the issue in the issue management process involves anticipating emerging
issues.
True False
12. Financially sound companies do not need to understand how a public issue is likely to
evolve, and how it will affect.
True False
13. Dialogue between a single firm and its stakeholders is always sufficient to address an
issue effectively.
True False
14. For stakeholder engagement to occur, both the business and the stakeholder must be
motivated to work with one another to solve the problem.
True False
15. Companies are learning that it is important to take a strategic approach to the
management of public issues, both domestically and globally.
True False
19. According to a recent survey of top executives, the issue most likely to gain public and
political attention over the next five years is:
A. Pension and retirement benefits.
B. Environmental issues, including climate change.
C. Demand for more ethically produced products.
D. Affordable cost of products for poor consumers.
25. Because of the risks and opportunities public issues present, organization need.
A. A strong relationship with a lobbying firm or an in-house lobbying department.
B. Executives to be rewarded with substantial bonuses as part of total compensation.
C. A systematic way of identifying, monitoring, and selecting public issues.
D. Tougher government regulations and oversight by political action committees.
26. The role of special interest groups is an important element in acquiring intelligence from
the:
A. Customer environment.
B. Competitor environment.
C. Economic environment.
D. Social environment.
30. Once an issue has been identified, its implications must be:
A. Acted upon.
B. Analyzed.
C. Segmented.
D. Deleted
32. Once an organization has implemented the issue management program, it must:
A. Use trade associations or consultants to follow high priority issues.
B. Study the results and make necessary adjustments.
C. Not limit the number of public issues the firm can address.
D. Pick a selected number of issues to address immediately.
35. An effective way to learn what issues are important to people outside of the organization
is through:
A. Building ongoing, positive relationships with stakeholders.
B. Conducting public opinion polls.
C. Hiring individuals from outside the company for available positions rather than promoting
from within the organization.
D. All of the above.
37. Overtime, the nature of business's relationship with its stakeholders often:
A. Remains static.
B. Evolves through a series of stages.
C. Becomes more hostile.
D. None of the above.
38. Firms that believe they can make decisions unilaterally, without taking into consideration
their impact on others are:
A. Interactive companies.
B. Proactive companies.
C. Reactive companies.
D. Inactive companies.
39. Firms that generally act only when forced to do so, and then in a defensive manner are
A. Interactive companies.
B. Proactive companies
C. Reactive companies
D. Inactive companies.
44. A business and its stakeholders coming together for face-to-face conversations about
issues of common concern is:
A. Stakeholder networks.
B. Stakeholder motivation.
C. Stakeholder systems.
D. Stakeholder dialogue.
45. Corporations working collaboratively with other businesses and concerned persons and
organizations is an example of:
A. Stakeholder networks.
B. Stakeholder motivation.
C. Stakeholder systems.
D. Stakeholder dialogue.
46. What is a public issue and how do they impact modern firms?
47. Identify the eight strategic radar screens that enable public affairs managers to scan their
business environment. Briefly discuss the issues involved with each environment.
48. What is competitive intelligence? Why is it important to the public affairs function?
49. Identify and discuss the five steps to the Issues Management Process.
51. Engaging interactively with stakeholders carries a number of potential benefits. Discuss.
1. (p. 25) A public issue exists when there is agreement between the stakeholders' expectations
of what an institution should do and the actual performance of those businesses.
FALSE
3. (p. 26) Understanding and responding to changing societal expectations a business necessity.
TRUE
4. (p. 26) Because the public issues that garner the most public attention change over time,
sometimes emerging with surprising suddenness, companies do not waste time tracking
them.
FALSE
6. (p. 28) Environmental analysis is a method managers use to gather information about
external issues and trends.
TRUE
7. (p. 29) Environmental intelligence is the acquisition of information gained from analyzing
the multiple environments affecting organizations.
TRUE
8. (p. 29) According to management scholar Karl Albrecht, scanning to acquire environmental
intelligence should focus on four strategic radar screens.
FALSE
9. (p. 30) Legal environment includes the structure, processes, and actions of government at the
local, state, national, and international levels.
FALSE
10. (p. 31) Competitive intelligence enables managers in companies of all sizes to make
informed decisions in all areas of the business.
TRUE
11. (p. 32) Identifying the issue in the issue management process involves anticipating
emerging issues.
TRUE
12. (p. 35) Financially sound companies do not need to understand how a public issue is likely
to evolve, and how it will affect.
FALSE
13. (p. 40) Dialogue between a single firm and its stakeholders is always sufficient to address
an issue effectively.
FALSE
14. (p. 40) For stakeholder engagement to occur, both the business and the stakeholder must be
motivated to work with one another to solve the problem.
TRUE
15. (p. 42) Companies are learning that it is important to take a strategic approach to the
management of public issues, both domestically and globally.
TRUE
Difficulty: Easy
Difficulty: Easy
18. (p. 26) Failure to understand the beliefs and expectations of stakeholders:
A. Causes company's profits to increase in the short run.
B. Causes company's profits to decrease in the short run.
C. Causes the performance-expectations gap to grow larger.
D. Increases the chance of a corporate buy-out.
Difficulty: Medium
19. (p. 28) According to a recent survey of top executives, the issue most likely to gain public
and political attention over the next five years is:
A. Pension and retirement benefits.
B. Environmental issues, including climate change.
C. Demand for more ethically produced products.
D. Affordable cost of products for poor consumers.
Difficulty: Medium
20. (p. 29) According to management scholar Karl Albrecht, scanning to acquire environmental
intelligence should focus on:
A. Eight strategic radar screens.
B. Six management templates.
C. Eight process improvement models.
D. Six ethical decision indicators.
Difficulty: Hard
Difficulty: Medium
Difficulty: Medium
23. (p. 30) An analysis of the stability or instability of a government is an example of scanning
the:
A. Social environment.
B. Legal environment.
C. Geophysical environment.
D. Political environment.
Difficulty: Easy
Difficulty: Medium
25. (p. 31) Because of the risks and opportunities public issues present, organization need.
A. A strong relationship with a lobbying firm or an in-house lobbying department.
B. Executives to be rewarded with substantial bonuses as part of total compensation.
C. A systematic way of identifying, monitoring, and selecting public issues.
D. Tougher government regulations and oversight by political action committees.
Difficulty: Hard
26. (p. 31) The role of special interest groups is an important element in acquiring intelligence
from the:
A. Customer environment.
B. Competitor environment.
C. Economic environment.
D. Social environment.
Difficulty: Medium
Difficulty: Hard
28. (p. 32) The issue management process has how may stages?
A. Three.
B. Four.
C. Five.
D. Six.
Difficulty: Easy
29. (p. 32) The components of a typical issues management process include:
A. Identify issue.
B. Generate options.
C. Take action.
D. All of the above.
Difficulty: Easy
30. (p. 33) Once an issue has been identified, its implications must be:
A. Acted upon.
B. Analyzed.
C. Segmented.
D. Deleted
Difficulty: Hard
Difficulty: Hard
32. (p. 34) Once an organization has implemented the issue management program, it must:
A. Use trade associations or consultants to follow high priority issues.
B. Study the results and make necessary adjustments.
C. Not limit the number of public issues the firm can address.
D. Pick a selected number of issues to address immediately.
Difficulty: Easy
33. (p. 35) When working well, the issue management process:
A. Is static and never pulls in additional information that would disturb the balance.
B. Generates two specific options for each issue.
C. Minimizes dialogue with the stakeholders and focuses on short-term survival.
D. Continuously cycles back to the beginning and repeats.
Difficulty: Medium
Difficulty: Medium
35. (p. 36) An effective way to learn what issues are important to people outside of the
organization is through:
A. Building ongoing, positive relationships with stakeholders.
B. Conducting public opinion polls.
C. Hiring individuals from outside the company for available positions rather than promoting
from within the organization.
D. All of the above.
Difficulty: Easy
36. (p. 36) A corporation's issue management activities are usually linked to.
A. The board of directors.
B. Top management.
C. Both the board of directors and top management levels.
D. The strategic governance committee.
Difficulty: Medium
37. (p. 37) Overtime, the nature of business's relationship with its stakeholders often:
A. Remains static.
B. Evolves through a series of stages.
C. Becomes more hostile.
D. None of the above.
Difficulty: Medium
38. (p. 38) Firms that believe they can make decisions unilaterally, without taking into
consideration their impact on others are:
A. Interactive companies.
B. Proactive companies.
C. Reactive companies.
D. Inactive companies.
Difficulty: Medium
39. (p. 38) Firms that generally act only when forced to do so, and then in a defensive manner
are
A. Interactive companies.
B. Proactive companies
C. Reactive companies
D. Inactive companies.
Difficulty: Hard
Difficulty: Medium
Difficulty: Medium
Difficulty: Medium
Difficulty: Medium
44. (p. 40) A business and its stakeholders coming together for face-to-face conversations about
issues of common concern is:
A. Stakeholder networks.
B. Stakeholder motivation.
C. Stakeholder systems.
D. Stakeholder dialogue.
Difficulty: Hard
45. (p. 41) Corporations working collaboratively with other businesses and concerned persons
and organizations is an example of:
A. Stakeholder networks.
B. Stakeholder motivation.
C. Stakeholder systems.
D. Stakeholder dialogue.
Difficulty: Hard
46. (p. 25) What is a public issue and how do they impact modern firms?
47. (p. 29) Identify the eight strategic radar screens that enable public affairs managers to scan
their business environment. Briefly discuss the issues involved with each environment.
49. (p. 31) Identify and discuss the five steps to the Issues Management Process.
50. (p. 37) What are the various stages of the business-stakeholder relationship?
51. (p. 41) Engaging interactively with stakeholders carries a number of potential benefits.
Discuss.
MULTIPLE CHOICE
4. Pierre takes a utilitarian viewpoint of ethics. He will therefore judge a business decision to be
ethical so long as
a. More good than bad results from the decision.
b. Everybody is treated fairly.
c. Certain rights are not violated.
d. He has good character and integrity.
ANS: A PTS: 1 DIF: M REF: p. 76
NAT: AACSB: Ethics, Individual Dynamics
5. Small-business owner Jason is thinking about giving a potential customer an expense paid
vacation to Las Vegas for her and her husband. When asked if he is being ethical, Jason
replies, "Look whatever works works." Which ethical principle is Jason most likely using?
a. focus on the rights of individuals
b. pragmatism
c. utilitarianism (consequences)
d. focus on integrity (virtue ethics)
ANS: B PTS: 1 DIF: M REF: p. 78
NAT: AACSB: Ethics, Strategy
12. Which one of the following is not recommended as a method for a company to protect itself
against sexual harassment charges?
a. Develop a zero-tolerance policy on harassment and communicate it to employees.
b. Retaliate swiftly against employees who bring forth charges of harassment.
c. Give swift and sure punishment to harassers.
d. Train managers at all levels on sexual harassment issues.
ANS: B PTS: 1 DIF: D REF: p. 85
NAT: AACSB: Ethics, Legal Responsibilities
13. Team leader Gary is scheduled to prepare a performance of Lisa, a team member who also
happens to be his wife's closest friend. The ethical temptation Gary faces is
14. Kate, the owner of a small telecommunications firm gives gifts of stock in her company to
telephone company mangers who purchase her equipment. Kate is giving in to the ethical
temptation of
a. kickbacks.
b. misuse of corporate resources.
c. sexual harassment.
d. treating people unfairly.
ANS: A PTS: 1 DIF: E REF: p. 86
NAT: AACSB: Ethics, Legal Responsibilities
15. Marvin has his own Website that carries ads for a dozen retailers. At night, Marvin spends
hours clicking on these sites so he can collect commissions from the advertisers. Marvin is
engaged in the scandal referred to as
a. click fraud.
b. work-at-home scam.
c. cyber squatting.
d. backdating Websites.
ANS: A PTS: 1 DIF: M REF: p. 89
NAT: AACSB: Technology, Information Technologies
16. The purpose of backdating stock options is to give the stock-option holder
a. large payout on his or her birthday.
b. tax-free investment.
c. chance to diversify his or her stock portfolio.
d. sure profit on the options.
ANS: D PTS: 1 DIF: M REF: p. 90
NAT: AACSB: Ethics, Legal Responsibilities
17. Which one of the following questions is not asked in six-question ethics test?
a. How does it smell?
b. Who gets hurt?
c. What can we possibly get away with?
d. Would you tell your child (or young relative) to do it?
ANS: C PTS: 1 DIF: E REF: p. 91
NAT: AACSB: Ethics, HRM
19. The stakeholder view of social responsibility states that organizations must respond to the
needs of
a. employees and customers.
b. shareholders and owners.
c. all interested parties.
d. all those who might sue the organization.
ANS: C PTS: 1 DIF: M REF: p. 93
NAT: AACSB: Ethics, Ethical Responsibilities
22. A socially responsible mutual fund will only purchase stocks in companies that
a. have a no-smoking policy in place.
b. have a culturally diverse management team.
c. hire some job candidates who are HIV positive.
d. have good social performance.
ANS: D PTS: 1 DIF: M REF: p. 94
NAT: AACSB: Reflective Thinking, Operations Management
24. Which one of the following approaches to creating an ethical and socially responsible
workplace is likely to be the most powerful?
a. Passing out buttons with the statement "Just Say No to Bad Ethics"
b. Placing posters about ethics throughout the organization
c. Top management acting as models of the right behavior
d. Including a statement about ethics and social responsibility in the employee
handbook
ANS: C PTS: 1 DIF: M REF: p. 105
NAT: AACSB: Ethics, Leadership Principles
TRUE/FALSE
3. According to the concept of moral intensity, an intensely moral person will be equally ethical
in almost all situations.
4. According to the utilitarian view of ethics, what really counts is the net balance of good
consequences over bad.
5. According to the ethical philosophy of pragmatism, there are certain absolute principles or
standards, objective truth, and objective reality that one must follow in business.
6. Oscar, the meat department manager at a supermarket, follows a deontological view of ethics.
He therefore sees no ethical problem in selling rabbit meat and labeling it as chicken, so long
as no customer gets sick.
7. Lois is a sleazy individual who is out to manipulate and trick people. According to the virtue
ethics point of view, even when Lois's actions do not harm people, she is still unethical.
8. An ethically centered manager is more concerned about the completion dates of a project
than high quality, because he or she is primarily concerned about customer satisfaction.
9. According to a survey conducted by the Ethics Resource Center, a frequent ethical problem is
lying to employees, customers, vendors, or the public.
10. An individual driver of unethical behavior is unconscious biases that lead us to behave in
unjust ways toward others.
11. Violating software agreements is so widely practiced, it is now considered no more illegal
than an able-bodied person parking in a spaced reserved for physically disabled people.
13. Whether to use corporate resources for personal use is an ethical dilemma that falls into a
gray area for many people.
14. As a Website advertiser, you know that you have been the victim of click fraud when
thousands of people click on your ad with absolutely no interest in making a purchase--and
you are charged for all those clicks.
15. One of the ethical problems with backdating stock options is that it involves lying about
when the option was granted.
16. One of the questions in the guide to ethical decision making asks, "Who gets hurt?"
17. A study of Wal-Mart suggests that what constitutes being socially responsible is not so clear
cut.
18. The concept of social responsibility holds that business organizations have a legal obligation
to be good citizens.
19. Parties often disagree about what constitutes socially responsible behavior, such as selling
handguns in a retail store.
21. Organizations take a major social responsibility initiative when they establish programs that
help employees balance the demands of work and personal life.
22. Lincoln Electric Co., a Cleveland-based manufacturer of welding equipment, has become the
model of a company whose management has avoided downsizing.
23. Blowing the whistle on one's employer frequently leads to negative consequences for the
individual, such as no further promotions or low performance evaluations.
24. According to the concept of a virtuous cycle, corporate social performance and financial
performance enhance each other.
25. Economically viable refers to such financial benefits as attaining reduced costs from energy
savings, gaining governmental subsidies, and avoiding penalties..
ESSAY
1. A major corporate thrust toward ethical and socially responsible behavior to go green. How
can a company try to create a sustainable environment
ANS:
Going green means creating processes that are (1) environmentally friendly, (2) economically
viable, and (3) pragmatic. Environmentally friendly refers to reducing pollution.
Economically viable refers to reduced costs from energy savings. A pragmatic approach
means sustainability through a realistic approach.
2. Imagine that you are about to hire a relative or close friend over a more qualified outside
candidate. Take this problem through the ethical decision-making guide, and reach a decision
about whether to hire him or her.
ANS:
Is it right? No; Is it fair? No; Who gets hurt? The qualified candidate; Would you be
comfortable if the details of your decision were reported on the front page of your local
newspaper, on a popular Web site or blog, or through your companys e-mail system? No;
Would you tell your child to do it? No; How does it smell? Bad.
ANS:
Values are closely related to ethics. Values can be considered clear statements of what is
critically important. Ethics become the vehicle for converting values into actions, or doing
the right thing. A persons values also influence which kind of behaviors he or she believes
are ethical.
4. Nestle India wants to produce its products locally. About half its 480 factories are located in
developing countries.The company has introduced a water education program, has bored
wells
for nearly 100 village schools for children, and teaches hygiene programs.
ANS:
1. The initiatives by Nestle India to create clean water supplies can considered socially
responsible because they are looking out for the welfare of society.
PTS: 1 DIF: D RE
CHAPTER 3ETHICS AND SOCIAL RESPONSIBILITY
MULTIPLE CHOICE
3. According to the concept of moral intensity, a worker is most likely to behave ethically and
legally when
a. A manager observes his or her behavior closely.
b. The worker has intense morals.
c. The consequences of the act are minor.
d. The consequences of the act are substantial.
ANS: D PTS: 1 DIF: D REF: p. 76
NAT: AACSB: Ethics, Legal Responsibilities
4. Pierre takes a utilitarian viewpoint of ethics. He will therefore judge a business decision to be
ethical so long as
a. More good than bad results from the decision.
b. Everybody is treated fairly.
c. Certain rights are not violated.
d. He has good character and integrity.
ANS: A PTS: 1 DIF: M REF: p. 76
NAT: AACSB: Ethics, Individual Dynamics
8. According to concept of moral laxity, workers will often behave unethically because
a. they have planned to be unethical.
b. they come from dysfunctional families.
c. other issues seem more important at the time.
d. management pressures them into unethical behavior.
ANS: C PTS: 1 DIF: E REF: p. 82
NAT: AACSB: Ethics, Ethical Responsibilities
12. Which one of the following is not recommended as a method for a company to protect itself
against sexual harassment charges?
a. Develop a zero-tolerance policy on harassment and communicate it to employees.
b. Retaliate swiftly against employees who bring forth charges of harassment.
c. Give swift and sure punishment to harassers.
d. Train managers at all levels on sexual harassment issues.
ANS: B PTS: 1 DIF: D REF: p. 85
NAT: AACSB: Ethics, Legal Responsibilities
13. Team leader Gary is scheduled to prepare a performance of Lisa, a team member who also
happens to be his wife's closest friend. The ethical temptation Gary faces is
a. sexual harassment.
b. misuse of corporate resources.
c. dealing with confidential information.
d. conflict of interest.
ANS: D PTS: 1 DIF: E REF: p. 86
NAT: AACSB: Analytic, HRM
14. Kate, the owner of a small telecommunications firm gives gifts of stock in her company to
telephone company mangers who purchase her equipment. Kate is giving in to the ethical
temptation of
a. kickbacks.
b. misuse of corporate resources.
c. sexual harassment.
d. treating people unfairly.
ANS: A PTS: 1 DIF: E REF: p. 86
NAT: AACSB: Ethics, Legal Responsibilities
16. The purpose of backdating stock options is to give the stock-option holder
a. large payout on his or her birthday.
b. tax-free investment.
c. chance to diversify his or her stock portfolio.
d. sure profit on the options.
ANS: D PTS: 1 DIF: M REF: p. 90
NAT: AACSB: Ethics, Legal Responsibilities
17. Which one of the following questions is not asked in six-question ethics test?
a. How does it smell?
b. Who gets hurt?
c. What can we possibly get away with?
d. Would you tell your child (or young relative) to do it?
ANS: C PTS: 1 DIF: E REF: p. 91
NAT: AACSB: Ethics, HRM
19. The stakeholder view of social responsibility states that organizations must respond to the
needs of
a. employees and customers.
b. shareholders and owners.
c. all interested parties.
d. all those who might sue the organization.
ANS: C PTS: 1 DIF: M REF: p. 93
NAT: AACSB: Ethics, Ethical Responsibilities
22. A socially responsible mutual fund will only purchase stocks in companies that
a. have a no-smoking policy in place.
b. have a culturally diverse management team.
c. hire some job candidates who are HIV positive.
d. have good social performance.
ANS: D PTS: 1 DIF: M REF: p. 94
NAT: AACSB: Reflective Thinking, Operations Management
24. Which one of the following approaches to creating an ethical and socially responsible
workplace is likely to be the most powerful?
a. Passing out buttons with the statement "Just Say No to Bad Ethics"
b. Placing posters about ethics throughout the organization
c. Top management acting as models of the right behavior
d. Including a statement about ethics and social responsibility in the employee
handbook
ANS: C PTS: 1 DIF: M REF: p. 105
NAT: AACSB: Ethics, Leadership Principles
TRUE/FALSE
3. According to the concept of moral intensity, an intensely moral person will be equally ethical
in almost all situations.
4. According to the utilitarian view of ethics, what really counts is the net balance of good
consequences over bad.
5. According to the ethical philosophy of pragmatism, there are certain absolute principles or
standards, objective truth, and objective reality that one must follow in business.
6. Oscar, the meat department manager at a supermarket, follows a deontological view of ethics.
He therefore sees no ethical problem in selling rabbit meat and labeling it as chicken, so long
as no customer gets sick.
8. An ethically centered manager is more concerned about the completion dates of a project
than high quality, because he or she is primarily concerned about customer satisfaction.
9. According to a survey conducted by the Ethics Resource Center, a frequent ethical problem is
lying to employees, customers, vendors, or the public.
10. An individual driver of unethical behavior is unconscious biases that lead us to behave in
unjust ways toward others.
11. Violating software agreements is so widely practiced, it is now considered no more illegal
than an able-bodied person parking in a spaced reserved for physically disabled people.
12. Dhani is the human resources manager for a government agency. He faces a conflict of
interest when his girlfriend's mother applies to the agency and he must provide input on
whether the woman should be hired.
13. Whether to use corporate resources for personal use is an ethical dilemma that falls into a
gray area for many people.
14. As a Website advertiser, you know that you have been the victim of click fraud when
thousands of people click on your ad with absolutely no interest in making a purchase--and
you are charged for all those clicks.
15. One of the ethical problems with backdating stock options is that it involves lying about
when the option was granted.
16. One of the questions in the guide to ethical decision making asks, "Who gets hurt?"
17. A study of Wal-Mart suggests that what constitutes being socially responsible is not so clear
cut.
18. The concept of social responsibility holds that business organizations have a legal obligation
to be good citizens.
19. Parties often disagree about what constitutes socially responsible behavior, such as selling
handguns in a retail store.
20. The stakeholder viewpoint is the traditional perspective on social responsibility that a
business organization is responsible only to its owners and stockholders
21. Organizations take a major social responsibility initiative when they establish programs that
help employees balance the demands of work and personal life.
22. Lincoln Electric Co., a Cleveland-based manufacturer of welding equipment, has become the
model of a company whose management has avoided downsizing.
24. According to the concept of a virtuous cycle, corporate social performance and financial
performance enhance each other.
25. Economically viable refers to such financial benefits as attaining reduced costs from energy
savings, gaining governmental subsidies, and avoiding penalties..
ESSAY
1. A major corporate thrust toward ethical and socially responsible behavior to go green. How
can a company try to create a sustainable environment
ANS:
Going green means creating processes that are (1) environmentally friendly, (2) economically
viable, and (3) pragmatic. Environmentally friendly refers to reducing pollution.
Economically viable refers to reduced costs from energy savings. A pragmatic approach
means sustainability through a realistic approach.
2. Imagine that you are about to hire a relative or close friend over a more qualified outside
candidate. Take this problem through the ethical decision-making guide, and reach a decision
about whether to hire him or her.
ANS:
Is it right? No; Is it fair? No; Who gets hurt? The qualified candidate; Would you be
comfortable if the details of your decision were reported on the front page of your local
newspaper, on a popular Web site or blog, or through your companys e-mail system? No;
Would you tell your child to do it? No; How does it smell? Bad.
ANS:
Values are closely related to ethics. Values can be considered clear statements of what is
critically important. Ethics become the vehicle for converting values into actions, or doing
the right thing. A persons values also influence which kind of behaviors he or she believes
are ethical.
4. Nestle India wants to produce its products locally. About half its 480 factories are located in
developing countries.The company has introduced a water education program, has bored
wells
for nearly 100 village schools for children, and teaches hygiene programs.
ANS:
1. The initiatives by Nestle India to create clean water supplies can considered socially
responsible because they are looking out for the welfare of society.
2. Being socially responsible leads to increased profits for Nestle because without clean
water
available locally, the company cannot operate successfully.