Tb06

CHAPTER 6: ETHICS AND STAKEHOLDER SOCIAL RESPONSIBILITY

Test Correlation Table Question Types/Level of Difficulty

LEARNING OBJECTIVES Easy Moderate Difficult

1. State the importance of ethics for individual employees and organizations.

TF 1, 4 3, 6 2, 5

MC 4 1, 2 3, 5

ES 1 — —

2. Describe four forces that influence the ethical behavior of individuals and organizations.

TF 7, 12, 14 9, 10, 13, 16, 17, 18, 19, 20, 21

8, 11, 15

MC 6, 7, 8, 10, 14, 22, 23, 26

9, 12, 13, 16, 21, 24, 25

11, 15, 17, 19, 20

ES — 3 2

3. Discuss three approaches that people use when making ethical judgments.

TF 22, 30 23, 24, 27, 29, 31, 36 25, 26, 28, 29, 32, 33, 34, 35

MC 27, 37, 42, 44, 46, 48, 49, 51, 53, 57, 63, 67

28, 31, 34, 35, 38, 43, 45, 50, 52, 56, 59, 61,

70, 71, 72, 74

29, 30, 32, 33, 36, 38, 39, 40, 41, 47, 54, 55, 58, 60, 62, 64, 65, 66, 68, 69, 73

ES — 4, 6, 7 5

4. Explain stakeholder social responsibility and how it influences managers’ ethical decisions.

TF 41, 45, 47, 48 39, 40, 43, 44, 46 37, 38, 42, 43

MC 75, 76, 83, 98, 100, 101

78, 79, 80, 84, 85, 87, 88, 90, 92, 95, 99,

102, 103

77, 81, 82, 89, 91, 93, 94, 96, 97

ES — 8 —

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True/False Questions

Learning Objective 1

1. Nortel Networks aims its ethics training at managers, so that employees can follow a strong example.

ANSWER: F, Knowledge, Easy, p. 150

2. Hard and fast rules are inadequate to cover the dilemmas faced in our complex work environment.

ANSWER: T, Knowledge, Difficult, p. 150

3. Integrity means “honor of traditions.”

ANSWER: F, Knowledge, Moderate, p. 150

4. Dishonest executives can be prosecute as criminals in the U.S. court system.

ANSWER: T, Knowledge, Easy, p. 150

5. Although receiving a great deal of publicity, today’s unethical corporate conduct is limited to only a few top executives.

ANSWER: F, Knowledge, Difficult, pp. 150 - 151

6. Unfortunately, ethics programs for businesses are proving to be ineffective.



7. Ethics is a set of values and rules that define right and wrong conduct.


8. The Sarbanes-Oxley Act reforms corporate governance without creating any new employment rights.

ANSWER: F, Knowledge, Difficult, p. 153

9. What a society interprets as ethical or unethical frequently ends up being expressed through court decisions and the passage of laws within that society.

ANSWER: T, Application, Moderate, p. 152

10. Most companies do not ask their workers to engage in conduct that violates the stated ethical standards.

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ANSWER: T, Knowledge, Moderate, p. 154

11. Recent regulations are designed to give organizations more discretion in developing their own ethics policies.


12. Employment-at-will has not been significantly modified for nearly 30 years.


13. The Sarbanes-Oxley Act severely restricts the ability of corrupt managers to offer bribes to foreign officials.

ANSWER: F, Knowledge, Moderate, pp. 153–154

14. Sarbanes-Oxley affects the behavior of both organizations and individuals.


15. When behavior is clearly unethical and illegal, employees do not have difficulty in determining what is right and wrong.


16. Some actions by businesses may be defined as a violation of a legal rule by a regulatory agency but not be considered unethical by the broader society.

ANSWER: T, Application, Moderate, pp. 152–154

17. Whistle-blowing is the act of going over your supervisor’s head and directly to management with a complaint.


18. When a worker observes illegal activity by their employer, one appropriate response may be to report it.


19. Whistle-blowers often receive promotions or career enhancement as a result of their actions.

ANSWER: F, Knowledge, Moderate, p. 156-158

20. Whistle-blowers seem to be at a higher stage of moral development than most employees.


21. Whistle-blowers may experience retaliation that is not protected by law.

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22. The three ethical models used to develop an ethical framework in organizations are the utilitarian, moral rights, and justice approaches.

ANSWER: T, Knowledge, Easy, p. 158–164

23. Milton Friedman is one of the most outspoken critics of the utilitarian approach.


24. The utilitarian approach focuses on acts (behaviors) and not motives.


25. The CEO of Ford Motor Company argues that excessive environmental laws and regulations reduce the company’s profits and their ability to compete globally.


26. The utilitarian approach prescribes ethical standards for managers and employees in the areas of individual goals, efficiency, and common interests.

ANSWER: F, Knowledge, Difficult, p. 158–160

27. The U.S. Occupational Safety and Health Act (OSHA) of 1970 is a part of the utilitarian model.


28. Citizens have the right to control access to and use of personal information about themselves by government agencies, employers, and others. This moral right was the basis for the U.S. Privacy Act of 1974.


29. Individuals often do not have the legal right to refrain from carrying out orders that violate their moral or religious beliefs.


30. The utilitarian approach judges decisions and behavior by their consistency with an equitable, fair, and impartial distribution of benefits (rewards) and costs among individuals and groups.


31. United Freight Carriers has been guilty of paying different wages to women and men when their jobs require equal skill, effort, and responsibility and are performed under similar

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working conditions. The pay practices of this company violate the distributive justice principle.

ANSWER: T, Application, Moderate, p. 163

32. Wells Fargo requires employees to be present and on time because excessive absenteeism and tardiness can negatively affect fellow workers and the organization as a whole. This company policy illustrates the natural duty principle.

ANSWER: F, Application, Difficult, p. 164

33. The fairness principle requires that decisions and behavior be based on a variety of universal obligations.

ANSWER: F, Knowledge, Difficult, pp. 163–164

34. The moral rights model says more about what organizations should avoid doing, than it does about what to do.


35. The natural duty principle suggests that the obligation of an organization is to maximize returns for its shareholders.


36. ”To support and comply with just institutions” is one of the universal principles of natural duty.

ANSWER: T, Knowledge, Moderate, p. 164 Learning Objective 4

37. The stakeholder view of social responsibility is based primarily on the utilitarian approach.


38. There is no distinction between the concerns of primary stakeholders and those of secondary stakeholders.


39. Employees are part of the secondary stakeholder group.


40. Nortel Networks put high emphasis on it commitment to secondary stakeholders.

ANSWER: F, Application, Moderate, pp. 166–167

41. Customers, employees, and suppliers are of substantial importance to all businesses.

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42. The European Union’s Eco-Management and Audit Scheme (EMAS) and the International Organization for Standardization’s ISO 14000 standards are examples of environmental policy statements designed to provide guidance to multinational businesses.


43. Former Chrysler Chairman Robert Eaton was a strong advocate of corporate social responsibility.


44. Customer-oriented firms FedEx and Intel are twice as profitable as their competitors.


45. Proactive social responsibility includes responsiveness to social pressures.

ANSWER: T, Knowledge, Easy, pp. 169–170

46. Nortel Networks is notorious for abusing corporate power in attempting to influence public issues.


47. GM was the first automaker to conduct a social audit.


48. A social audit is an attempt to identify, measure, evaluate, report on, and monitor the effects the organization is having on its stakeholders and society as a whole.


49. Studies show that behaving ethically can be profitable.


Multiple Choice Questions

Preview1. Nortel Networks’ approach to ethical behavior is __________.

a. a top-down strategy of having management set a good example for everyone to follow

b. making every employee accountable for ethical decision makingc. to voluntarily admit when they make mistakesd. establishment of a special task force to monitor ethics throughout the

organization

ANSWER: B, Knowledge, Moderate, p. 150

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2. According to the preview reading, Nortel Networks has a code of business conduct that is intended to prevent all of the following except: a. loss of customers.b. damage to corporate reputation.c. FCC and SEC intervention. d. criminal prosecution.

ANSWER: C, Knowledge, Moderate, p. 150

3. Nortel Networks believes that their business ethics should be guided by __________.a. the best traditions of religion and educationb. legal cases that have identified the standards for corporate fraudc. personal values of its workersd. all of the above

ANSWER: C, Knowledge, Difficult, p. 150


Importance of Ethics 4. Seventy-two percent of those polled rated the moral and ethical standards of CEOs

of major corporations as __________.a. either fair or poorb. improving after the Enron crisisc. an international embarrassmentd. no different than the general public

ANSWER: A, Knowledge, Easy, p. 151

5. All of the following statements are supported by research except:a. 71% of poll respondents see typical CEOs as less ethical than the average

person.b. ethical standards of major corporate CEOs are rated as either fair or poor by

72% of the public.c. fraudulent activities cause close to 10 percent of U.S. businesses to fail.d. studies indicate that ethics programs can be effective



Shaping Ethical Conduct6. A set of values and rules that define right and wrong conduct is known as

_________.a. social mobilityb. ethicsc. natural dutyd. traditional responsibility

ANSWER: B, Knowledge, Easy, p. 151

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7. Which of the following is not considered a basic force from which ethical values and decisions are evaluated?a. culturalb. legalc. individuald. All are considered to be basic forces.

ANSWER: D, Knowledge, Easy, p. 152

8. ________are society’s values and standards that are enforceable in the courts.a. Cultureb. Ethicsc. Lawsd. Codes

ANSWER: C, Knowledge, Easy, p. 152

9. Personal values that shape American culture include all of the following except __________.a. reliabilityb. uncertainty avoidancec. respect for other peopled. self-respect

ANSWER: B, Application, Moderate, pp. 151–152

10. Capitalism is built on investor trust. Unimportant to this trust is __________.a. stewardshipb. return on investmentc. antiretaliationd. All are important elements of investor trust.


11. Mark Harvey has just been fired by his supervisor at the local plant where he has worked for many years. Harvey has participated in all of the activities listed below, but only one activity is classified as an acceptable reason for him being fired. Which of the following is considered an acceptable reason for Harvey being fired?a. engaging in an activity to protest wagesb. filing of unfair labor practice charges against the companyc. reporting a violation to OSHAd. committing harassment, which is considered a civil rights violation

ANSWER: D, Application, Difficult, p. 153

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12. Foster Brooks is the Vice President of a publishing company and is about to fire the marketing director who has been at the company for several years. All of the following are considered permissible reasons for firing the director except:a. drug activity on the jobb. theftc. filing discrimination chargesd. All of the above are acceptable reasons.

ANSWER: C, Application, Moderate, p. 153

13. Enron, WorldCom, and Adelphia would be affected by the passage of __________.a. Section 806b. the Corporate and Criminal Fraud Accountability Act of 2002c. the Sarbanes-Oxley Actd. all of the above

ANSWER: D, Application, Moderate, pp. 153–154

14. Which of the following scandals would not be affected by the Corporate and Criminal Fraud Accountability Act of 2002?a. American Airlinesb. Enronc. Tycod. Adelphia


15. Through Section 806 of the Sarbanes-Oxley Act, Federal law provides protection to all of the following except __________.a. whistle-blowersb. shareholdersc. corporate officersd. employees


16. Section 806 of the Sarbanes-Oxley Act directly protects __________.a. investorsb. employeesc. accountantsd. auditors

ANSWER: B, Application, Moderate, pp. 153 - 154

17. The Sarbanes-Oxley Act is intended to __________.a. break up monopoliesb. reform campaign financing c. reform accounting practices d. all of the above


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18. Herschel Isenberg is the loan manager for a local bank. A publisher of a legal, pornographic magazine has asked for a loan. The local community has been indifferent to the pornographic business. The loan will be beneficial to the bank in terms of increasing business. The bank has a nondiscrimination policy. Isenberg is personally very opposed to pornography and thinks all pornographic materials should be illegal. Based on _________ source of guidance, Herschel refuses to make the loan.a. informalb. formalc. interpretived. code of ethics

ANSWER: A, Application, Moderate, p. 154

19. The Ethics Resource Center in Washington, D.C. furnishes all of the following except __________.a. legal representationb. consultingc. implementationd. publications

ANSWER: A, Knowledge, Difficult, p. 154

20. Nortel Networks’ prohibition policy toward bribes must be modified for countries where bribery is a “normal way of doing business” in which following way? a. formal disclosure to the U.S. governmentb. discretionc. executive board exception procedured. none of the above

ANSWER: D, Knowledge, Difficult, pp. 155–156

21. At Nortel Networks where bribes or kickbacks are prohibited in their foreign operations, what type of “facilitation payment” is considered permissible?a. low level government workers such as immigration clerksb. routine business services such as phone installationsc. fees to insure that shipments are not stolend. all of the above

ANSWER: B, Application, Moderate, pp. 155–156

22. Employees who report unethical or illegal actions of their employers to other people or organizations that are capable of taking corrective action are referred to as ________.a. corporate watchdogsb. whistle-blowersc. ratsd. none of the above


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23. Whistle-blowing may be an excellent strategy as a __________.a. way to get recognitionb. initial responsec. last resortd. way to avoid retaliation


24. Whistle-blowers need to believe __________.a. their career will surviveb. they are doing the right thingc. other actions can be taken laterd. the company will understand their motives

ANSWER: B, Knowledge, Moderate, pp. 156–157

25. Dee Dee Cantrell is aware of wrongdoing and unethical behavior within the manufacturing company where she works. Before Cantrell blows the whistle she would be wise to ask herself some very difficult questions. Which of the following would not be helpful to the decision-making process she must complete before blowing the whistle?a. Should she resign from the company?b. Does she have documentary evidence?c. Is retaliation likely?d. Will the jury award be worth it?

ANSWER: D, Application, Moderate, p. 157

26. As an observer and reporter of massive company fraud, Douglas Durand received all of the following except:a. exclusion from the “team.”b. $77 million.c. company recognition.d. threats of imprisonment.



Making Ethical Judgments27. Which of the following is not a model that helps describe the ethical framework

used in organizations?a. utilitarianb. moral rightsc. justiced. All of the above are models.

ANSWER: D, Knowledge, Easy, pp. 158–164

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28. The __________ is designed to help managers identify the value premises that guide their managerial actions. The results can be useful for people who wish to better understand the determinants of their own actions, as well as those who want to broaden their perspectives on managerial ethics.a. Managerial values profile b. Caux round tablec. Ethical management poold. Utilitarian values project

ANSWER: A, Knowledge, Moderate, p. 159

29. How could the results of the managerial values profile be useful?a. It would be helpful to managers who wish to make sure they follow the laws.b. It would identify the right ethical choice to make.c. It would help determine which employees were not ethical.d. none of the above

ANSWER: D, Knowledge, Difficult, p. 159

30. The score from the managerial values profile you took in class reveals (1) you believe in adhering to rules designed to maximize benefits to all, (2) you believe in maintaining significant inequities among employees when the ultimate result benefits all, and (3) you believe what is good is what helps the company attain ends that benefit everyone. Your profile suggests you subscribe to what approach to making ethical decisions?a. moral rightsb. justicec. utilitariand. a mix of all three approaches

ANSWER: C, Application, Difficult, p. 159

31. Individual preferences are selected in the Managerial Values Profile Questionnaire on the basis of __________.a. cultural expectationsb. risk and rewardc. lesser of two evilsd. all of the above


32. Choices you made on the Managerial Values Profile suggest you believe in an individual’s right to private property, the right of employees to know about any danger in the job setting, and the right of an individual to speak freely without fear of being fired. What approach to making ethical judgements do you adopt?a. managerialb. justicec. moral Rightsd. a mix of all three approaches


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33. Answers you gave on the Managerial Values Profile suggest you believe in helping those in danger when doing so would not unduly endanger yourself, and in minimizing inequities among employees in the job setting. What approach do you take when making ethical judgements?a. moral rightsb. utilitarianc. justiced. a mix of all three approaches


34. The __________ approach focuses on actions (behavior) and their results, not on the motives for such actions.a. utilitarianb. moral rightsc. caveat emptord. fairness


35. A manager or employee guided by the __________ model considers the potential effects of alternative actions on all involved.a. utopianb. networkc. matrixd. utilitarian

ANSWER: D, Knowledge, Moderate, p. 158

36. Donny Escobar is sometimes known to make decisions that may help some individuals, but harm others, as long as potentially positive results outweigh potentially negative ones. This philosophy characterizes the __________ approach.a. utilitarianb. win–losec. fairnessd. dilemma resolution

ANSWER: A, Application, Difficult, p. 158

37. The __________ approach emphasizes the consequences of providing the greatest good for the greatest number; that is, the end justifies the means.a. universalb. utilitarianc. moral rightsd. means-end


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38. Nobel Prize-winning economist Milton Friedman advocates which ethical approach when making a decision?a. moral rightsb. justicec. utilitariand. law and order principle


39. The utilitarian approach is most consistent with all of the following values except __________.a. individualismb. acceptance of uncertaintyc. masculinityd. equality


40. The utilitarian approach prescribes ethical standards for managers and employees in three areas. Which of the following is not one of the three key areas? a. organizational goalsb. efficiencyc. environmental protectiond. All of the above are key areas.

ANSWER: C, Knowledge, Difficult, pp. 158–160

41. According to the utilitarian approach, managers and employees alike should try to attain organizational goals as efficiently as possible. How is efficiency achieved?a. maximizing inputsb. producing goods and services at a high cost ratioc. minimizing land, labor, and capital and produce maximum outputsd. avoiding moving production overseas to obtain lower wages and fewer

regulations


42. Sheila Jones is a purchasing agent for Detroit County. She is known to have a significant interest in one of the county’s major suppliers. This potential conflict of interest characterizes the ethical standards found in the __________ approach.a. utilitarianb. fairnessc. win–losed. utopia-based

ANSWER: A, Application, Easy, p. 160

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43. Managers and employees alike should not have personal interests that conflict with the organization’s achievement of its goals. Conflicts of interest, however, can sometimes be difficult to judge. Which of the following is especially susceptible to conflicts of interest?a. A purchasing agent who has a significant financial interest in one of the firm’s

major suppliers.b. Employees of an accounting firm who own stock in companies that the firm

audits.c. American managers doing business with co-owners globally.d. all of the above

ANSWER: D, Application, Moderate, p. 160

44. The __________ approach holds that decisions should be consistent with fundamental rights and privileges.a. moral rightsb. utilitarianismc. fairnessd. social contract


45. Which of the following approaches addresses the fundamental rights and privileges as set forth in the first 10 amendments to the U.S. Constitution?a. bureaucratic approachb. moral rights approachc. legislative approachd. none of the above


46. Gilbert has implemented regulations restricting the use of various toxic chemicals in the workplace. This regulation supports the fundamental right of __________.a. propertyb. free speechc. privacyd. life and safety

ANSWER: D, Application, Easy, p. 161

47. Employees, customers, and the general public have the right not to have their lives and safety unknowingly and unnecessarily endangered. Which of the following is not true concerning this right?a. The U.S. Occupational Safety and Health Act of 1970 contained new safety

requirements.b. Regulations were established restricting the use of asbestos and lead-based

paint.c. OSHA requirements are applicable to all U.S. companies, including those with

factories in foreign countries.d. All of the above statements are true.

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48. General Motors established manufacturing operations in Mexico, where environmental standards are much lower. Which of the following outcomes is true?a. They saved money by avoiding expensive environmental protection.b. They were forced by the government to furnish a safe work environment.c. They voluntarily selected higher standards.d. There were public accusations of worker exploitation.


49. “Caveat emptor“ means __________.a. “safety first”b. “let the buyer beware”c. “do unto others”d. “cheaters never prosper”


50. What legislation forbids retailers from disclosing video rental records without the customer’s consent or a court order?a. 1988 Video Privacy Protection Actb. Fourth Amendmentc. Electronic Privacy Actd. Freedom from Monitoring Standards


51. Invasions of privacy issues have included __________.a. drug testingb. video monitoring of employees and customersc. medical and psychological counseling recordsd. all of the above


52. State Farm Insurance offers a highly detailed __________.a. privacy policyb. customer information databasec. telemarketing agreementd. all of the above


53. Customers receive an annual Notice of Privacy Policy from __________.a. Citibankb. Blue Crossc. State Farmd. Associated Credit Bureau


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54. As a client, State Farm Insurance gathers information on you from all of the following sources except:a. your credit historyb. your tax returnc. your driving recordd. your State Farm agent

ANSWER: B, Knowledge, Difficult, p. 162

55. Naveen Joshi feels that she has a moral obligation as a citizen to accept jury duty. Her employer has threatened to fire her if she serves as a juror, knowing Naveen can be released from jury duty. She has small children to care for. Naveen’s belief supports the right of __________.a. life and safetyb. truthfulnessc. freedom of conscienced. privacy

ANSWER: C, Application, Difficult, pp. 162–163

56. The principle of __________ has been at the center of controversies associated with new media, such as advertising on the Internet.a. caveat emptorb. private propertyc. moral rightsd. free speech


57. The __________ approach evaluates decisions and behavior on how equitably they distribute benefits and costs among individuals and groups.a. fairnessb. moral rights c. equityd. justice


58. To ensure just decisions and behavior, the proponents of the justice approach argue that key principles should be followed when designing management systems and making organizational decisions. Which of the following is not among these key principles?a. distributive justice principleb. procedural fairness principlec. law and equality principled. All are principles of the justice approach.


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59. The __________ principle of ethics requires that individuals not be treated differently on the basis of arbitrarily defined characteristics.a. fairness b. distributive justice c. equityd. utilitarian


60. Benny Diaz discovered that he was being paid more than a female counterpart. He knew their jobs required equal skill, effort, and responsibility and were performed under similar working conditions. Benny was rightfully concerned, knowing that the company was in direct violation of the __________ principle.a. distributive justiceb. natural dutyc. individualismd. collectivism

ANSWER: A, Application, Difficult, p. 163

61. What legal regulation supports the distributive justice principle making it illegal to pay different wages to women and men when their jobs require equal skill, effort, and responsibility and are performed under similar working conditions?a. Title VII of the Civil Rights Act of 1964b. Title IV of the Civil Rights Act of 1964c. U.S. Equal Pay Act of 1963d. none of the above


62. Concerns are growing about the disparity between the compensation packages that CEOs receive and the pay levels of everyone else. This disparity seems directly contradictory to what principle of ethics?a. natural duty principleb. fairness principlec. distributive justice principled. none of the above


63. The __________ principle morally requires employees to support the rules of the organization as long as the organization is just (or fair) and employees have voluntarily accepted some benefits or opportunities in order to further their own interests.a. distributive justiceb. equalityc. natural dutyd. fairness


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64. Majestic Fabricators requires employees to take only their allotted 30 minute lunch break. The company’s executives believe that longer breaks can negatively affect fellow workers and the company as a whole. This belief supports what principle?a. expectancyb. fairnessc. comparable worthd. natural duty

ANSWER: B, Application, Difficult, pp. 163–164

65. An organization and its employees have obligations (responsibilities) under the fairness principle. These mutual obligations should satisfy all of the following criteria except __________.a. employees cannot be forced to work for a particular organizationb. employers should not be forced to hire a particular personc. rules should specify what both the employee and the organization are required

to dod. employees and employers share a common interest in the welfare of their

customers


66. Which of the following is an example of “procedural justice”?a. Staff attorneys are available to respond to legal concerns.b. Fairness in an organization is achieved in stages.c. An acceptable process is in place for investigating employee grievances.d. No penalties are taken against an employee for questioning management.


67. The __________ principle morally requires that decisions and behavior be based on universal principles associated with being a responsible member of society.a. distributive justiceb. fairnessc. social responsibilityd. natural duty


68. Which of the following is not a universal obligation of the natural duty principle?a. To help others who are in need, provided that the help can be given without

excessive personal risk or loss.b. Not to harm or injure another.c. Not to cause unnecessary suffering.d. To share with management a common interest in the survival of the

organization.


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69. Larry Liczbinski won a court case in which he claimed that he was fired for refusing to lie in court about certain activities of his union. The court decision was consistent with the ___________ principle.a. empowerment accountabilityb. comparable worthc. natural dutyd. traditional accountability


70. Which ethical model is most compatible with the goals of efficiency, productivity, and profit maximization?a. fairnessb. moral rightsc. natural Dutyd. utilitarian


71. Which ethical approach is most applicable to American organizations?a. natural dutyb. moral rightsc. utilitariand. fairness


72. Which ethical approach characterizes the principles adopted by most businesses in the U.S.?a. privacyb. moral rightsc. justiced. utilitarian


73. Which of the following is one of the universal duties of the natural duty principle?a. Attain ends that benefit everyone.b. Safety of individuals is a primary concern.c. Do not cause unnecessary suffering.d. Individuals must follow their own conscience.


74. Which ethical approach is most likely to be valued in European cultures?a. utilitarianb. moral rightsc. justiced. both b and c are correct


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Stakeholder Social Responsibility75. Individuals or groups that have interests, rights, or ownership in an organization

and its activities are known as ___________.a. profit sharersb. stockholdersc. alliancesd. stakeholders


76. Stakeholders each have an interest in how organizations perform and are interdependent with the organization. Which of the following are typical examples of stakeholder groups?a. customersb. suppliersc. regulatory agenciesd. all of the above


77. Which of the following are not secondary stakeholders?a. employeesb. mediac. political action groupsd. All of the above are secondary stakeholders.

ANSWER: A, Knowledge, Difficult, p. 166

78. As primary stakeholders, customers expect the organization to provide __________.a. safety and healthb. concern for the environmentc. efficiencyd. met commitments


79. Which of the following is not an obligation to shareholders?a. charitable contributionsb. ethical disclosure of financial informationc. viabilityd. growth of investment


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80. All of the following except __________ are reasons management would believe social responsibility has a positive effect on their company’s value.a. sound investmentb. interference avoidancec. enlightened self-interestd. All of the above reasons would apply.


81. Which secondary stakeholders are directly addressed in Nortel’s “Commitments to Stakeholders”?a. suppliersb. customersc. labor unionsd. none of the above

ANSWER: D, Knowledge, Difficult, pp. 166–167

82. Nortel Networks believes that shareholder value is delivered through __________.a. continuing professional developmentb. satisfied and loyal customersc. teamwork competencyd. lobbying of governmental agencies

ANSWER: B, Knowledge, Difficult, p. 166–167

83. Safe and environmentally responsible products are a commitment Nortel makes to its __________.a. suppliersb. customers c. employeesd. shareholders


84. Which of the following has a primary stake in Nortel Networks?a. shareholdersb. suppliers c. employeesd. all of the above

ANSWER: D, Knowledge, Moderate, pp. 166–167

85. Suppliers apply which of the following types of pressure to organizations?a. meet commitmentsb. ethical disclosure of financial informationc. demands for efficiencyd. both A and C


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86. Sustainable development refers to the organization’s __________.a. environmental policyb. profitabilityc. human resourcesd. debt burden


87. Conducting business in a way that protects the natural environment while making economic progress is referred to as __________.a. environmental policyb. sustainable developmentc. waste managementd. global sensitivity


88. ISO 14000 refers to __________.a. safety in the workplaceb. quality manufacturing processesc. voluntary environmental standardsd. ethical hiring standards


89. Local laws and regulations govern business actions related to pollution and the use of natural resources. What international standards for environmental management have also been developed?a. European Union’s Eco-Management and Audit Schemeb. International Organization for Standardization’s 14000c. Material Safety Data Sheetsd. all of the above


90. Which of the following is not a company that has voluntarily met ISO 14000 standards?a. Lear Corporationb. Volvo of North Americac. Brinker Internationald. none of the above


91. According to _________, “The idea of corporations taking on social responsibility is ridiculous.”a. Kenneth Lay, CEO of Enronb. Robert Eaton, Chrysler Chairmanc. Dick Cheney, CEO of Halliburtond. Warren Buffet of Berkshire Hathaway

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92. During a five-year period, the revenues of 13 well-known customer-oriented firms such as FedEx, when compared to their competitors, __________.a. failed to keep upb. maintained an equal performancec. grew 3 times fasterd. grew nearly 10 times faster


93. Many stakeholders are pressuring business leaders to __________.a. support the proven, traditional utilitarian style business b. adopt a more legalistic approachc. eliminate fraud and scandalsd. actively contribute to society


94. A proactive approach to social responsibility involves accepting five categories of obligations. Which of the following is not among these categories?a. Managers and employees must consider and accept more narrow criteria for

measuring the organization’s performance and social role than those required by law.

b. Managers and employees should maintain or improve the current standards of the physical and social environment.

c. Managers and employees should accept responsibility for solving current problems.

d. Managers must show a willingness to work with outside stakeholders for enactment of environmental protection laws.

ANSWER: A, Knowledge, Difficult, pp. 169–170

95. The __________ social responsibility concept holds that managers and other employees should be able to anticipate negative effects of the organization’s plans on other stakeholders and then reduce those effects before implementing the plan. a. traditionalb. affirmativec. proactived. communal


96. In addressing ethical concerns, the proactive stakeholder social responsibility approach involves all of the following except:a. legislative and political activitiesb. legal defense initiativesc. response to social pressuresd. operating strategy

ANSWER: B, Knowledge, Difficult, pp. 169–170

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97. Nortel Networks is opposed to taking part in which of the following activities?a. corporate contributions to politiciansb. employee reimbursement for campaign donationsc. publicly expressing its political corporate viewsd. Nortel refuses to take part in all of the above.


98. Which of the following is true about Nortel Networks’ political behavior?a. They contribute to political campaigns.b. They allow employees to campaign on company property.c. They abuse corporate power to influence public issues.d. They reimburse employees who contribute to political parties or candidates.


99. A __________ identifies, monitors, and evaluates the effects that the organization is having on its stakeholders and society as a whole.a. sustainable development evaluationb. strategic action surveyc. stakeholder auditd. social audit


100. A(n) __________ audit identifies, monitors, and evaluates the effects that the organization is having on its stakeholders and society as a whole.a. financialb. managementc. organizationald. social


101. General Motors publishes an annual __________ report that documents the integration of economic, environmental, and social objectives into daily business activities.a. social auditb. social compliancec. social responsibilityd. social development


102. Since 1995, General Motors has reduced worker injuries in its global operations by __________.a. 90%b. 75%c. 40%d. 15%

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ANSWER: B, Knowledge, Moderate, pp. 170–171

103. General Motors met and exceeded their five-year goal to reduce nonrecycled waste by __________.

a. 10%b. 25%c. 33%d. 50%


Essay Questions


1. Why are ethics important for organizations and their employees?

An explicit concern with ethical issues and guidelines represents a positive strategy to minimize ethical problems and to react quickly and effectively when they do occur.

Stakeholders, such as customers, are increasingly holding organizations responsible for ethical decision making and conduct. However, there are conflicting perspectives on what being ethical and socially responsible means.

Easy, pp. 150–151


2. Describe four forces that influence the ethical behavior of individuals and corporate social responsibility.

The four forces that influence a person’s ethical conduct are cultural forces, legal and regulatory forces, organizational forces, and individual forces. All four forces act together to influence ethical conduct. Cultural forces comprise shared values and norms that underlie standards for acceptable behavior. Legal and regulatory forces reflect societal standards that are enforceable in the courts. Organizational forces include both formal policies, such as a code of ethics, and cultural norms, such as how managers define acceptable employee performance. Finally, an individual’s own perspective on what is right and wrong can influence how that personal responds to the other three forces.

Difficult, pp. 151–157

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3. Explain some of the recommendations from the Ethics Resource Center in Washington, D.C. that assist in the development of an ethical culture.

Four ideas are relevant. The organization should create a formal ethics system that explicitly defines ethical expectations. Examples include codes, policies, rules, committees, surveys, and other ethics management mechanisms. Then communication of ethical expectations needs to take place at all levels of the organization. Importantly, ethical conduct needs to be included as a measure on performance evaluations. People will do what is rewarded or measured. Finally, make it acceptable to talk about ethics. Too often, recognition is never made of good ethical conduct. Managers must make time in staff meetings as well as with individuals to communicate in depth about ethical issues.

Moderate, pp. 154–155


4. Identify and briefly define the three ethical approaches used in individual decision making and behavior.

The utilitarian approach focuses on decisions or behavior that are likely to affect an organization’s profitability. It judges the effect of decisions and behaviors on others, with the primary goal of providing the greatest good for the greatest number of people.

The moral rights approach upholds a member of society’s fundamental rights to life and safety, truthfulness, privacy, freedom of conscience, free speech, and private property. It judges decisions and behavior by their consistency with fundamental personal and group liberties and privileges.

The justice approach advocates impartial, equitable distribution of benefits and costs among individuals and groups, according to three principles: distributive justice, fairness, and natural duty. It judges decisions and behavior by their consistency with an equitable, fair, and impartial distribution of benefits (rewards) and costs among individuals and groups.


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5. What are four of the ethical standards found within the utilitarian model?

a. Managers should attempt to satisfy the needs of customers, suppliers, lenders, employees, and shareholders.

b. Providing the greatest good for the greatest number in a competitive market system means focusing on maximizing profits.

c. Achieving high profits is thought to result in the highest quality products and the lowest prices for consumers.

d. Profits are seen as the reward for satisfying customers.e. Managers and other employees should try to attain organizational goals as

efficiently as possible.f. Efficiency is achieved by minimizing both inputs (e.g., land, labor, and capital) and

maximizing outputs.g. Managers and other employees should not have personal interests that conflict with

the organization’s achievement of its goals.

Difficult, pp. 159–160

6. Describe the fairness principle.

Employees are expected to support the rules of the organization to the extent that the organization is fair and employees have voluntarily accepted benefits or opportunities in furthering their own interests. Rules are meant to be followed, even when the rules restrict individual choice. Mutual obligations exist, including management’s obligation toward procedural justice to formally address grievances and take remedial actions.


7. What are two of the components of the natural duty principle?

a. To help others who are in need or in jeopardy, provided that the help can given without excessive personal risk or loss.

b. Not to harm or injure another.c. Not to cause unnecessary suffering.d. To support and comply with just institutions.

Moderate, p. 164

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8. Explain the ways that Nortel Networks deployed a comprehensive corporate ethics program addressed to its primary stakeholders.

Nortel’s employees, shareholders, customers, and suppliers have the most direct stake in the organization. The commitment from management is to treat every individual with respect. This includes full and prompt notification of important issues. Employees are promised a safe and satisfying work environment. The hiring practices will be fair. Diversity will be respected.

The firm promises to act in the shareholders’ best interest, always keeping them fully informed. Profits are essential to shareholders. Nortel Networks believes that this is delivered through satisfied and loyal customers.

Customers are assured of receiving safe, high quality, and environmentally responsible products. The Core Value is, “We fulfill our commitments and act with integrity.”

Suppliers are offered the objectives of ethical standards in procuring materials and services which contribute most to product quality and long-term benefit to the corporation.


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Technology

ethical behavior

ethics training

ethics policies

ethics programs

managers ethical decisions

ethical framework

ethical models

ethical judgments