CH-3 Conducting Business Ethically and Responsibly – Business Essentials : Exam Guide

Chapter 3 Conducting Business Ethically and Responsibly MULTIPLE CHOICE QUESTIONS. Choose the one alternative that best completes the statement or answers the question. 1) Which of the following is correct regarding the Livent situation as described in the opening case? A) Founders Garth Drabinsky and Myron Gottlieb were never brought to trial because prosecutors couldn’t find enough evidence against them B) Livent continues to be financially successful company even though it received a lot of bad publicity about alleged financial manipulation at the company C) Drabinsky and Gottlieb were found guilty of unethical, but not illegal, behaviour D) the defence lawyers successfully attacked the credibility of the prosecution witnesses against Drabinsky and Gottlieb E) Drabinsky and Gottlieb were found guilty of fraud and forgery Answer: E 2) ________ are beliefs about what is right and wrong or good and bad. A) Motivators B) Ethics C) Cultures D) Emotional intelligence E) Mores Answer: B 3) Ethics are A) standards or moral values regarding what is right and wrong. B) avoiding doing things that, if everyone did it, we would have a real mess. C) believing what's right for one person is wrong for another. D) the command to love one another. E) standards by how we treat one another. Answer: A 4) Which of the following is accurate regarding the E-Business and Social Media Solutions boxed insert entitled "Ethics in the YouTube Age?" A) There is very little material on YouTube that does not meet legal requirements B) Students are often critical of the unethical behaviour of corporations, but many students have no qualms about illegally downloading songs and movies C) Downloading music is ethical because the artists that make the songs and movies make so much money D) Aspiring artists are hurt less by illegal downloading than established stars E) All of these are correct Answer: B 5) Behavior that individual beliefs and social norms define as being wrong and bad is called A) ethical behavior. B) business ethics. C) unethical behavior. D) price gouging. E) motivation. Answer: C 6) Behavior that conforms to individual beliefs and social norms about what is right and good is referred to as A) social reaction behaviour. B) ethical behaviour. C) generally accepted behaviour. D) collusional behaviour. E) motivational behaviour. Answer: B 7) ________ refers to ethical or unethical behaviors by a manager or employee of an organization. A) Social ethics B) Social responsibility C) Business ethics D) Collusion E) Cartelling Answer: C 8) The beliefs about what is right or wrong is termed A) social obligation. B) ethics. C) social responsibility. D) social consciousness. E) employee empowerment. Answer: B 9) Ethical and unethical behaviour is determined partly by the ___________ and partly by ___________. A) society; culture B) society; values C) individual; culture D) person; religion E) culture; society Answer: C 10) Beliefs about what is right or wrong are called A) social responsibility. B) social consciousness. C) employee empowerment. D) social obligation. E) ethics. Answer: E 11) People start to develop views about ethical behavior as A) infants. B) children. C) toddlers. D) young adults. E) adults. Answer: B 12) The practice of jeitinho is a hallmark of business activity in which country? A) Canada B) Japan C) Indonesia D) Brazil E) The Czech Republic Answer: D 13) Which of the following statements is correct with regard to the conflict of interest idea in business? A) Conflicts of interest exist only in peoples’ minds B) A conflict of interest occurs when an activity benefits an individual at the expense of the employer C) A conflict of interest occurs when employees of equal rank have a disagreement D) A conflict of interest occurs when a boss and a subordinate have a disagreement E) All of the statements are correct Answer: B 14) Mary is a purchasing agent who has been offered a gift by a supplier if she will order products from them for her company. Mary is facing a A) price gouging situation. B) conflict of interest. C) social responsibility situation. D) utility norm. E) none of these. Answer: B 15) If a politician sits on a board that grants money to companies and that executive owns a company that is applying for a grant from the board, he or she is most likely facing a(n) A) ethical dilemma. B) utility norm. C) illegal situation. D) conflict of interest. E) justice norm. Answer: D 16) If a politician rents an office from his sister at twice the going rate with taxpayers’ money he is most likely facing a(n) A) ethical dilemma. B) utility norm. C) illegal situation. D) conflict of interest. E) justice norm. Answer: D 17) Air Canada sued WestJet, claiming that WestJet had accessed an Air Canada website which contained confidential information. What was the outcome of the lawsuit? A) The court ruled that there was nothing unethical about a person from WestJet accessing the website if they could figure out how to do it B) WestJet admitted it had behaved in an unethical fashion, paid Air Canada $5 million dollars, and gave $10 million to children's charities C) Air Canada was able to show that it had lost a lot of business because of the incident, and WestJet had to reimburse Air Canada for the lost business D) The court declined to rule on the case E) The court ruled that this was merely a competitive squabble between two companies, and that no fine would be imposed Answer: B 18) Which of the following behaviors is likely to be considered unethical? A) Company executives encourage employees to invest in company stock while withholding information about financial problems B) A manager hires a friend rather than a more qualified applicant C) An employee accepts a gift from a supplier in return for a large order D) A manager underpays an employee, knowing that the employee can't afford to quit E) All of these situations would likely be considered unethical Answer: E 19) Which of the following behaviors is illegal? A) Company executives encourage employees to invest in company stock while withholding information about financial problems B) An employee accepts a gift from a supplier in return for a large order C) A manager refuses to hire or promote a visible minority, in spite of company policy D) A manager underpays an employee, knowing that the employee can't afford to quit E) All of these actions are illegal Answer: C 20) What is the difference between illegal behaviour and unethical behaviour? A) What is illegal varies from country to country, but what is unethical does not B) Illegal behaviour is that which breaks a country’s laws, but unethical behaviour may not break any laws C) It is not possible to say what the difference is between illegal and unethical behaviour D) Illegal behaviour covers a broader range of issues than unethical behaviour E) There is no real difference between illegal and unethical behaviour Answer: B 21) Joe paid his subordinate John less than John deserved because Joe knew that John needed the job badly. Joe's behavior is A) illegal but not unethical B) unethical but not illegal C) both illegal and unethical D) neither illegal nor unethical E) it is not possible to say without determining how John feels about his pay Answer: B 22) ________ is behaviour that individual beliefs and social norms define as wrong and bad. A) Immoral behaviour B) Unethical behaviour C) Ethics D) Business ethics E) Ethical behaviour Answer: B 23) Ethical behaviour is determined A) by the individual. B) by the government. C) partly by the individual and partly by the government. D) partly by the individual and partly by the culture. E) by the culture. Answer: D 24) Jennifer is about to start her first job. Which of the following is least likely to be an influence on her ethics and behaviour? A) Her past experiences B) The code of ethics in that firm C) Her family and friends D) Her peers at school E) Religious teaching she may have received Answer: B 25) Many times individuals face situations that may compromise their ethical positions. How should a person cope with situational factors for which there are ethical conflicts? A) Develop a personal set of ethical codes of conduct regarding what is right and what is wrong B) Use the "golden rule" C) Don't do anything D) Do what makes everyone else happy in the situation E) Act in the same manner as the individual has observed other people acting in similar situations Answer: A 26) The first step in the simplified three-step model for applying ethical judgments to situations that may arise during the course of business activities is to A) determine the norms that relate to the situation. B) determine the most appropriate moral values. C) determine the implications of breaching the activity or policy. D) gather the relevant factual information. E) make an ethical judgment based on the rightness or wrongness of the proposed activity or policy. Answer: D 27) While on a business trip, a manager takes some friends to dinner for a social evening and then charges the dinner to his company’s expense account. The ethical ___________ norm would ask “Does this optimize the satisfaction of all constituencies?” A) utility B) rights C) justice D) caring E) reciprocity Answer: A 28) While on a business trip, a manager takes some friends to dinner for a social evening and then charges the dinner to his company’s expense account. The __________ norm would ask “Is this fair”? A) utility B) rights C) justice D) caring E) reciprocity Answer: C 29) While on a business trip, a manager takes some friends to dinner for a social evening and then charges the dinner to his company’s expense account. The _________ norm would ask “Is it consistent with people’s responsibilities to each other”? A) utility B) rights C) justice D) caring E) reciprocity Answer: D 30) When evaluating a decision based on the ethical norm of rights, a manager will focus on which of the following questions? A) Does the decision optimize the satisfaction of all constituencies? B) Is the decision consistent with what we regard as fair? C) Does the decision respect the rights of the individuals involved? D) Is the decision consistent with people's responsibilities to each other? E) How much will the decision cost if it is wrong? Answer: C 31) When evaluating a decision based on the ethical norm of utility, a manager will focus on which of the following questions? A) Does the decision optimize the satisfaction of all constituencies? B) Is the decision consistent with what we regard as fair? C) Does the decision respect the rights of the individuals involved? D) Is the decision consistent with people's responsibilities to each other? E) How much will the decision cost if it is wrong? Answer: A 32) When evaluating a decision based on the ethical norm of justice, a manager will focus on which of the following questions? A) Does the decision optimize the satisfaction of all constituencies? B) Is the decision consistent with what we regard as fair? C) Does the decision respect the rights of the individuals involved? D) Is the decision consistent with people's responsibilities to each other? E) How much will the decision cost if it is wrong? Answer: B 33) When evaluating a decision based on the ethical norm of caring, a manager will focus on which of the following questions? A) Does the decision optimize the satisfaction of all constituencies? B) Is the decision consistent with what we regard as fair? C) Does the decision respect the rights of the individuals involved? D) Is the decision consistent with people's responsibilities to each other? E) How much will the decision cost if it is wrong? Answer: D 34) The first step in assessing ethical behavior is A) analyzing the facts to determine the most appropriate moral values. B) making an ethical judgment. C) gathering relevant factual information. D) performing a social audit. E) hiring an ethical ombudsman. Answer: C 35) The second step in the simplified three-step model for applying ethical judgments to situations that may arise during the course of business activities is to A) gather the relevant factual information. B) determine the implications of breaching the activity or policy. C) determine the most appropriate moral values. D) make an ethical judgment based on the rightness or wrongness of the proposed activity or policy. E) determine how much the decision will cost if it is wrong. Answer: C 36) The third step in the simplified three-step model for applying ethical judgments to situations that may arise during the course of business activities is A) determine the norms that relate to the situation. B) gather the relevant factual information. C) determine the implications of violating company policy. D) determine the most appropriate moral values. E) make an ethical judgment based on the rightness or wrongness of the proposed activity or policy. Answer: E 37) Sam is applying the three-step model to help him decide whether a particular business decision is ethical or unethical. What is the first step? A) Reflect on his own ethical standards as background for the decision B) Gather the relevant factual information C) Consult with his boss about the situation D) Make an ethical judgment about the rightness or wrongness of the situation E) Determine the most appropriate moral values Answer: B 38) Marilyn has decided to use the three-step model discussed in the text to decide whether a particular business decision is ethical or unethical. What is the third step in the process? A) Reflect on her own ethical standards as background for the decision B) Gather the relevant factual information C) Consult with her boss about the situation D) Make an ethical judgment about the rightness or wrongness of the situation E) determine the most appropriate moral values Answer: D 39) The second step in the simplified three-step model for applying ethical judgments to situations that may arise during the course of business activities is to A) determine the implications of violating company policy. B) determine the norms that relate to the situation. C) determine the most appropriate moral values. D) gather the relevant factual information. E) make an ethical judgment based on the rightness or wrongness of the proposed activity or policy. Answer: C 40) The final step in the simplified three-step model for applying ethical judgments to situations that may arise during the course of business activities is A) determine the norms that relate to the situation. B) determine the implications of breaching the activity or policy. C) determine the most appropriate moral values. D) gather the relevant factual information. E) make an ethical judgment based on the rightness or wrongness of the proposed activity or policy. Answer: E 41) The four ethical norms include all of the following except A) utility. B) freedom. C) rights. D) justice. E) caring. Answer: B 42) All of the following are issues that affect the ethical norms except A) Is it consistent with people's responsibilities to each other? B) Does it consider all the factors involved? C) Does it respect the rights of the individuals involved? D) Is it consistent with what we regard to be fair? E) Does a particular act optimize what is best for those who are affected by it? Answer: B 43) John is a human resources manager who wants to establish an ethical policy for the company. You tell him that the best support for ethical behaviour by a business organization is A) the intention to behave ethically. B) top-level management directives. C) top-level management support. D) codes of conduct. E) social audits. Answer: C 44) Peter, the president of a small company, wants his employees to be aware that they should act ethically. Which of the following has proven to the most effective in improving ethical behaviour in a business firm? A) Reward managers who have secured an advantage for the firm, even if their behaviour might be seen by some people as unethical B) Demonstrate top management commitment to high ethical standards C) Do not publicly bring attention to unethical behaviour, but deal with it privately D) Fire all unethical employees E) Do nothing to reinforce the undesirable behaviour and it will not be repeated Answer: B 45) Faced with a number of possible actions to improve ethical behaviour, you need to develop an effective plan to ensure that the goals are met. What is the most effective step that a business firm can take to influence individual ethical behaviour? A) Demonstrate top management support for ethical behaviour B) Fire all unethical employees after their first offence C) Train employees in the code of ethics D) Publish a code of ethics E) Purchase material only from a company with a strong reputation for ethical behaviour Answer: A 46) Faced with a number of possible actions to improve ethical behaviour in your company, you need to develop an effective plan to ensure that this goal is met. What is the most effective step that you can take to influence individual ethical behaviour? A) Publish a code of ethics B) Purchase materials only from companies with a strong reputation for the highest level of ethical behaviour C) Fire all unethical employees D) Demonstrate top-management support for ethical behaviour E) Train employees to be more concerned about justice and caring Answer: D 47) The single most effective step that a company can take to ensure employees act ethically is to ________________. A) establish moral guidelines B) establish rules prohibiting certain behaviours C) establish a written code of conduct D) appoint an ethics team E) have top management demonstrate ethical commitment Answer: E 48) Ethics is both ________ and ________ defined. A) culturally; personally B) economically; politically C) technologically; politically D) economically; personally E) globally; domestically Answer: A 49) What is the difference between “ethics” and “business ethics”? A) The former refers to beliefs about what is right and wrong, while the latter doesn’t deal with right and wrong, only with economic issues B) The former refers to a restricted range of acceptable behaviours, while the latter refers to a much broader range of acceptable behaviours C) There are no differences between the two D) The former refers to beliefs about what is right or wrong, while the latter refers to behaviours by managers or employees E) None of these statements are accurate Answer: D 50) Which of the following is correct with regard to managerial ethics? A) A manager who discriminates against any ethnic minority in hiring is exhibiting illegal, but not unethical behaviour B) If a manager pays an employee less than he deserves because the manager knows the employee can’t afford to quit, the manager is clearly behaving unethically C) Ethics is not usually an issue when a firm deals with customers D) It is difficult to deal with ethical issues because there is much global variation in business practices E) All of the statements are correct Answer: D 51) Which of the following is the best description of ethics? A) The business firm's relationships with various parts of society B) The issues of insider trading and other related financial mismanagement C) Standards or moral values regarding what is right and wrong D) The manner in which a business firm behaves toward other businesses E) The need for business firms to take into account things other than profit when making decisions Answer: C 52) When a Canadian company is operating in a country where bribes are legal, the Canadian government expects the company to A) use their judgment, since Canadian laws are not applicable. B) not pay any bribes at all. C) notify Canadian authorities that they may have to pay a bribe in order to do business in the foreign country. D) match the bribes that other competitive firms are paying so they can get the business. E) none of the statements are accurate. Answer: B 53) After a hurricane hit Halifax a few years ago, local retailers increased the price of milk and gas by 50% in one day, even though all other stores in the province did not increase prices. These retailers are using A) conflict-of-interest pricing. B) sharp business practices. C) crisis-based pricing. D) price gouging. E) it is not possible to tell from the information that is given. Answer: D 54) Many times individuals face situations that may compromise their ethical positions. How should a person cope with situational factors for which there are ethical conflicts? A) Develop a personal set of ethical codes of conduct regarding what is right and what is wrong B) Let other people make the decision so you won’t be responsible C) Use the "golden rule" as a guide D) Do what makes everyone else happy in the situation E) Act in the same manner as other people act in similar situations Answer: A 55) To show the company's desire for ethical behaviour by its employees, many business firms have established A) an ethical review board. B) an office of ethical affairs. C) a whistleblower reward system. D) random ethical audits. E) codes of conduct. Answer: E 56) How should a person cope with situational factors for which there are ethical conflicts? A) Act in the same manner as the individual has observed other people acting in similar situations B) Develop a personal set of ethical codes of conduct regarding what is right and what is wrong C) Do what is easiest D) Use the "golden rule" E) Do what respected friends do Answer: B 57) All of the following are functions of codes of ethics except A) they increase public confidence in a firm or its industry. B) they ensure that unethical behaviour will not occur in the firm. C) they may help stem the tide of government regulation. D) they improve internal operations by providing consistent ethical standards. E) they help management respond to problems that arise as a result of unethical Behaviour. Answer: B 58) Which of the following has proven to be an effective method of improving ethical behaviour in business firms? A) Reward managers who do not get into ethical trouble B) Adopt a written code of ethics C) Reward ethical behaviour and ignore unethical behaviour D) Reward ethical behaviour and punish unethical behaviour E) All of these Answer: B 59) Approximately ___________ of Canadian firms have codes of ethics, while approximately __________ of U.S. firms have them. A) one-third; two-thirds B) two-thirds; nine-tenths C) one-fifth; one-fourth D) one-half; one-half E) one-half; three-quarters Answer: B 60) John wants his employees to be aware that they should act ethically. He should A) fire anyone who behaves unethically. B) do not draw public attention to any employee’s unethical behaviour, but instead deal with it privately. C) publicly reward ethical behaviour and ignore unethical behaviour. D) publicly discipline employees who behave unethically, but don’t fire them. E) adopt a written code of ethics. Answer: E 61) About ________ of Canada's largest corporations have codes of ethics. A) 1/2 B) 1/3 C) 75% D) 55% E) 2/3 Answer: E 62) ______ percent of large U.S. firms have a code of ethics. A) 90% B) 10% C) 1% D) 80% E) 25% Answer: A 63) ________ is the view that a company's only social responsibility is to make as much money as possible for its shareholders. A) Free market capitalism B) Managerial capitalism C) Globalization D) Mixed economy capitalism E) None of these terms are correct Answer: B 64) The view that business should balance its commitments to the stakeholders in its environment is known as A) managerial capitalism. B) social auditing. C) social responsibility. D) business ethics. E) stakeholder theory. Answer: C 65) Which of the following groups is NOT considered an organizational stakeholder? A) Employees B) Investors C) Customers D) Competitors E) All of these groups ARE organizational stakeholders Answer: D 66) Which of the following is correct regarding social consciousness? A) During the depression of the 1930s, laws controlling business declined because society wanted to return to the prosperity of the 1920s B) Current attitudes favour a greater social role for business C) In the 1800s, business was heavily regulated by government to protect consumers from overly aggressive businesspeople D) Current attitudes favour a strong emphasis on shareholders, but less emphasis on other stakeholders E) All of these are correct Answer: B 67) Today's views on a firm's social role indicate that its role is A) shrinking. B) expanding. C) staying about the same. D) unclear. E) none of these. Answer: B 68) Which of the following is the greatest challenge in meeting a firm's social responsibility? A) Determining when to conduct ethical training B) Determining the contents of the code of ethics C) Determining when to conduct a social audit D) Knowing what social responsibility is E) Determining how to respond to the interests of one part of society (e.g., investors) which conflict with the needs of another part of society (e.g., customers) Answer: E 69) Ian is the president of a medium-sized manufacturing company. He wants to ensure that his company behaves in a socially responsible way. Which of the following is the greatest challenge facing Ian? A) Determining how to respond to the interests of one part of society which conflicts with the needs of another part of society B) Determining the contents of the code of ethics and what takes priority C) Determining when to conduct a social audit D) Knowing what social responsibility is E) Determining when to conduct ethical training for employees Answer: A 70) Which of the following has the biggest influence on the social responsibility of a business firm? A) Government legislation B) Ethical values of the top-level management C) Interests of the investors D) Ethical values of the employees E) Demands by society Answer: B 71) Organizational stakeholders can best be defined as A) competitors. B) individuals and businesses that own stock in a company. C) government regulators who oversee an industry. D) the officers and key employees of an organization. E) individuals and groups that are directly affected by the practices of an organization. Answer: E 72) Which of the following terms is used to describe how a business firm behaves towards other firms, customers, investors, and society at large? A) business ethics B) Code of ethics C) Social responsibility D) Ethical principles E) social audits Answer: C 73) _________________ is the view that says that a company’s only responsibility is to make as much money as possible for shareholders. A) Social responsibility B) Contemporary social consciousness C) Managerial capitalism D) Socialism E) Ethical management Answer: C 74) Which of the following statements is correct with regard to the box entitled “This is One Green (and Socially Responsible) Company?” A) MEC does not try to maximize profits B) MEC contributes 5 percent of its profits to charity C) MEC got some bad publicity after it was alleged that MEC employed people in sweat shop conditions in Southeast Asia D) MEC’s social responsibility activities focus largely on giving money to charitable causes E) All of the statements are correct Answer: A 75) The four basic areas of social responsibility include all of the following except A) responsibility towards the environment. B) responsibility towards customers. C) responsibility towards investors. D) responsibility towards employees. E) responsibility towards the community. Answer: E 76) ________ are waste industrial gases that trap heat in the atmosphere. A) Greenhouse emissions B) Byproducts C) Energy supplies D) Acid rain E) Exajoules Answer: A 77) Which country is the world’s worst greenhouse gas emitter per capita? A) China B) Australia C) Canada D) The United States E) Russia Answer: B 78) Which three countries are the worst greenhouse gas emitters per capita? A) China, India, and Russia B) the United States, Canada, and Australia C) China, Russia, and the Australia D) China, the United States, and Canada E) Japan, China, and Russia Answer: B 79) What are carbon credits? A) Credits given to countries that produce more oil than they consume B) Credits given to countries that install the most pollution equipment per capita C) Credits which are purchased by countries that give them the right to pollute the atmosphere D) Credits which must be purchased by countries after they have been found guilty of polluting the atmosphere E) Credits that are given to countries for producing the carbon that is needed to make oil Answer: C 80) Which of the following is correct with regard to pollution? A) Noise pollution is now a greater concern than air or water pollution B) Developing countries like China have a good record on air pollution because as their industrialization proceeds, they can install effective pollution control devices on new installations C) There is a consensus that our climate is warming, and that warming is caused by human activity in the form of air pollution D) Global warming will hurt some people and benefit others E) All of these are correct Answer: D 81) Which of the following is correct regarding global warming? A) The idea is a hoax B) Global warming is occurring, but the rate is so slow that it will be hundreds of years before any significant problems arise C) There is agreement that global warming is caused by increased air pollution that is a result of human activity D) There is agreement that global warming is happening, but there is a debate about whether the warming is natural or caused by human activity E) Global warming will have a negative effect on everyone Answer: D 82) Water pollution is caused primarily by A) chemical and waste dumping. B) acid rain. C) smog condensation. D) fish with poor personal hygiene. E) poor water purification systems. Answer: A 83) Ensyn Corp. converts sawdust into liquid fuel by blasting wood waste with a sand-like substance that is heated. This use of plant waste to produce energy is known as A) recycling. B) biomass. C) green power. D) toxic waste conversion. E) exajoules. Answer: B 84) Which type of pollution contributes to the problem of acid rain? A) Air B) Land C) Noise D) Water E) All of these Answer: A 85) Damage to the environment by strip mining is associated with which of the following types of pollution? A) Noise B) Land C) Water D) Oil E) Air Answer: B 86) Which type of pollution has been the major concern to date? A) Land pollution B) Noise pollution in manufacturing jobs C) Air pollution caused by industry and transportation vehicles D) Hazardous materials pollution E) Visual pollution caused by unsightly junkyards along the highway Answer: C 87) A poll of 12,000 people in 11 different countries revealed that ________ percent of those polled were willing to spend extra money to fight climate change. A) 90 B) 75 C) 65 D) 45 E) 20 Answer: E 88) Which term is defined as the conversion of waste materials into useful products? A) Recycling B) Solid waste recovery C) Acid rain D) Biomass E) Toxic waste disposal Answer: A 89) Dangerous chemical and/or radioactive byproducts of various manufacturing processes are called ________. A) solid waste B) acid rain C) toxic waste D) incineration waste E) biomass Answer: C 90) Governments and businesses have to face the problem of dealing with toxic material. What is the biggest land pollution problem they face in dealing with toxic materials? A) Special safety equipment must be used for handling hazardous materials B) Vehicles which transport toxic materials must be clearly marked C) Toxic material usually cannot be processed into a harmless material or destroyed D) Toxic waste cannot be stored and must be destroyed E) Employees require special training in handling toxic materials Answer: C 91) Consumerism is A) the group of laws dealing with retail commercial transactions. B) the movement that seeks to protect and expand the rights of consumers in their dealings with businesses. C) the right to be informed about all aspects of a product. D) the right to choose the product. E) the right to safe products. Answer: B 92) Which of the following illustrates consumers' rights to safe products? A) Clothing must be labelled with information about its proper care B) A new vacuum cleaner must be free of electrical hazards to use in cleaning a consumer's home C) Open competition in the marketplace D) Procter & Gamble provides a toll-free telephone number for consumers to use for complaints or questions E) Food products must list their ingredients Answer: B 93) When a food company lists the ingredients that make up their products, which consumer right is it addressing? A) Right to choose B) Right to safe products C) Right to courteous service D) Right to be informed E) Right to be heard Answer: D 94) The right to ________ is not one of the basic rights of consumers. A) safe products B) be heard C) be informed D) choose what they buy E) low prices Answer: E 95) Social activism dedicated to protecting the rights of consumers in their dealings with businesses is called A) whistle-blowing. B) kiting. C) price gouging. D) consumerism. E) collusion. Answer: D 96) Which of the following is not a basic consumer right? A) The right to be heard B) The right to choose what they buy C) The right to high quality products at low prices D) The right to be informed about a product E) The right to safe products Answer: C 97) When two or more firms agree to collaborate on wrongful acts, it is referred to as A) consumerism. B) collusion. C) market segmentation. D) oligopoly. E) monopoly. Answer: B 98) Responding to increased demand with overly steep, and often unwarranted, price increases is called A) unit pricing. B) demand pricing. C) price fixing. D) price gouging. E) price leadership. Answer: D 99) The Canadian Competition Bureau investigated possible __________ by Hershey, Nestle, and Cadbury. A) unit pricing B) demand pricing C) price fixing D) price gouging E) price leadership Answer: C 100) Arctic Glacier Inc., a Canadian company, was one of several companies served with subpoenas by the U.S. government as it investigated possible _________. A) violation of monopoly rules B) insider trading C) cheque kiting D) unsafe products E) collusion Answer: E 101) Which consumer right is violated by a company that restricts and interferes with competition? A) Right to be heard B) Right to choose what they buy C) Right to good prices D) Right to safe products E) Right to be informed Answer: B 102) Atlas Corp. offers a money back guarantee on products and provides complaint hot lines for its customers. This is an example of which of the following consumer rights? A) Right to be informed B) Right to choose C) Right to be heard D) Right to health and safety E) Right to low prices Answer: C 103) The recent surge of products being called "light" led to an investigation by government agencies. This illustrates concerns about which of the basic consumer rights? A) Right to good prices B) Right to choose what they buy C) Right to safe products D) Right to be informed E) Right to be heard Answer: D 104) Five firms in the electrical equipment industry got together and divided up a market so that they did not have to truly compete against each other. Which consumer right did the firms violate? A) Right to a pension B) Right to be heard C) Right to choose what they buy D) Right to free government health care E) Right to low prices Answer: C 105) In the aftermath of natural disasters such as hurricanes, items such as water and plywood are in high demand. If a supplier responds with very high prices they would be accused of A) price fixing. B) price gouging. C) collusion. D) being a smart business. E) price lining. Answer: B 106) Save-a-Bunch Hardware doubled its prices on plywood one week before a hurricane was predicted to hit the Halifax area. Save-a-Bunch Hardware is likely guilty of A) price gouging. B) improper financial management. C) price fixing. D) collusion. E) proactive pricing. Answer: A 107) Because it was the initial year of production, only 3000 units of a new model car were built. Some auto dealers got together and agreed that they would sell the cars only if the customer was willing to pay several thousand dollars over the sticker price. This is an example of A) price gouging. B) smart business practice. C) price fixing. D) collusion. E) price lining. Answer: D 108) Sussex Co. is developing a policy so it will be more environmentally responsible. A problem that it will face will be A) dealing with various environmental organizations which have different views on environmental issues. B) in some cases dealing with the pressure to discontinue manufacturing profitable, but hazardous, products. C) the difficulty in getting government, business, environmentalists, and suppliers to agree on what actions are environmentally responsible. D) the costs of being more environmentally responsible. E) it will have to deal with all of these issues. Answer: E 109) Dangerous chemical and/or radioactive byproducts of manufacturing processes are known as A) hazardous residue. B) recycled contaminants. C) fast food. D) toxic wastes. E) non-treated sludge. Answer: D 110) Under the Canadian and Ontario Environmental Protection Act, liability for a business firm can run as high as ________ per day. A) $10,000 B) $500,000 C) $25,000 D) $2,000,000 E) $5,000,000 Answer: D 111) Which of the following illustrates consumers' rights to safe products? A) Food products must list their ingredients B) Open competition in the marketplace C) A new vacuum cleaner must be free of electrical hazards D) Procter & Gamble provides a toll-free telephone number for consumers to use for complaints or questions E) Clothing must be labelled with information about its proper care Answer: C 112) Several local video rental stores got together and agreed on what to charge customers for various rentals. This is a case of A) good business practices. B) the right to be informed. C) collusion. D) price lining. E) price gouging. Answer: C 113) When Zellers offers a money-back guarantee if consumers aren’t satisfied, this is an example of A) the right to be heard. B) the right to be informed. C) the right to health and safety. D) the right to choose. E) the right to everyday low prices. Answer: A 114) By adding flammable labels on spray cans and instructions on how to use it, which consumer right is being met? A) Right to be informed B) Right to safe products C) Right to be heard D) Right to choose E) No consumer right is being satisfied Answer: B 115) When Procter & Gamble puts a toll-free number on its products so that consumers can call if they have questions or complaints, this is an example of A) the right to choose. B) the right to be informed. C) the right to health and safety. D) the right to be heard. E) the right to everyday low prices. Answer: D 116) When DaimlerChrysler introduced the PT Cruiser, demand was so strong that some dealers would sell one only if the customer was willing to pay several thousand dollars over the sticker price. This is an example of A) effective business practice. B) price gouging. C) collusion. D) profit maximization. E) price lining. Answer: B 117) Which consumer right is being met by the firm that lists the ingredients of food products and by the firm that labels clothing with proper care instructions? A) The right to be heard B) The right to choose what they buy C) The right to be informed D) The right to safe products E) The right to low prices Answer: C 118) Which consumer right is violated by a company that restricts and interferes with competition? A) The right to be informed B) The right to choose what they buy C) The right to be heard D) The right to good prices E) The right to safe products Answer: B 119) In the past, “gentlemen's agreements” were often used to avoid competition or to divide up a market so that firms did not have to truly compete against each other. Which consumer right is being violated when companies block competition? A) Right to be heard B) Right to choose C) Right of consumers D) Right to safety E) Right to competition Answer: B 120) There are four areas of concern regarding ethics in advertising. They are A) truth-in-advertising, misleading pricing, and bait-and-switch advertising, stealth advertising. B) advertising of counterfeit brands, stealth advertising, morally objectionable advertising, and truth-in-advertising. C) bait-and-switch advertising, advertising of counterfeit brands, stealth advertising, and morally objectionable advertising. D) truth-in-advertising, misleading price advertising, celebrity advertising, and morally objectionable advertising. E) misleading price advertising, truth-in-advertising, celebrity advertising, and advertising claims about product performance that are not true. Answer: B 121) When Procter & Gamble claimed that its Pantene shampoo made hair “10 times stronger,” the Chinese government decided that this constituted A) advertising of a counterfeit brand. B) morally objectionable advertising. C) lack of truth-in-advertising. D) misleading price advertising. E) stealth advertising. Answer: C 122) When all of the video store owners in Cape Breton met and decided to increase the charge of renting a movie to $6.00 in every video store they were engaging in ________. A) ethical but unfair actions B) collusion C) unethical but not illegal actions D) normal business practices E) a legal cartel Answer: B 123) Canadians who buy products from vendors on Canal Street in New York City often encounter what type of advertising? A) Advertising of a counterfeit brand B) Morally objectionable advertising C) Lack of truth-in-advertising D) Misleading price advertising E) Stealth advertising Answer: A 124) Which of the following statements is correct with regard to the box entitled Counterfeit Products: Who’s Accountable?” A) The problem of counterfeit products is gradually becoming less important as enforcement improves B) Counterfeit products are common for things like handbags and designer clothing, but not for specialty products like expensive wine C) Organized crime groups and terrorists have gotten into the business of counterfeiting goods because it is just as lucrative as the illegal drug trade D) While China is the source of many counterfeit goods, shopping for knock-offs in China is rare E) Canada is seen as a country that has strong and effective rules against counterfeit goods Answer: C 125) When Sony Ericsson hired models to pose as “tourists” who asked real tourists if they would take their picture with Sony’s new camera cell phone, this was an example of A) advertising of a counterfeit brand. B) morally objectionable advertising. C) lack of truth-in-advertising. D) misleading price advertising. E) stealth advertising. Answer: E 126) All of the following are examples of morally objectionable advertising except A) an advertisement showing models in skimpy underwear. B) alcohol companies giving out coupons at a school. C) a tobacco advertisement targeted at youth. D) an advertisement of inmates on death row. E) a celebrity endorsement of a product that the celebrity doesn’t actually use. Answer: E 127) Sam has noticed that the safety mechanism on the piece of equipment that he operates is not working. After repeatedly telling management about the defect but getting no response, he decides to report it to the provincial agency responsible for workplace safety. This is an example of A) collusion. B) insider trading. C) stealth advertising. D) violating the line of reporting. E) whistle-blowing. Answer: E 128) When Melvin Crothers, a WestJet employee, discovered that another WestJet employee was accessing a restricted Air Canada website, he called a person at Air Canada and told that person what was going on. When Crothers did this, he was engaged in A) betrayal of company loyalty. B) collusion. C) whistle-blowing. D) trading on inside information. E) industrial espionage. Answer: C 129) Jane is a whistle-blower because she has concerns about some of the actions of her company. Whistle-blowers A) tend to be employees who have just come to work for the firm. B) are promoted by top management as a reward for pointing out activities that might hurt the company. C) tend to be younger than other employees and would like to be promoted. D) often find themselves demoted or even fired for blowing the whistle on the company. E) are hired away by other firms because of their high ethical values. Answer: D 130) When Phillip Adams worked in the computer industry, he discovered a flaw in the chip-making process that, under certain circumstances, could lead to data randomly being deleted or altered. He reported the flaw to manufacturers, but several years later found that one company ignored the problem and continued to make the chips. As a result of ________, he was part of a class-action lawsuit based heavily on his research. A) the rollover B) the triangulation C) greenmail D) whistle blowing E) insider trading Answer: D 131) Which of the following is the best means of showing responsibility toward employees? A) Provide employees with equal opportunities without regard to race, sex, or other irrelevant factors B) Provide rewards for employees who go beyond the call of duty C) Provide a stock ownership plan for employees D) Provide a grievance system for employees E) Recruit employees from minority groups Answer: A 132) Which of the following terms is used to describe an employee who discovers an unethical, illegal, or socially irresponsible action and attempts to stop it? A) Consumer advocate B) Inside trader C) Recycler D) Whistle-blower E) Collusion Answer: D 133) Responsibility towards investors includes A) improper financial management. B) writing cheques against money that has not yet arrived at the bank. C) insider trading. D) requiring financial statements to conform to generally accepted accounting principles. E) misrepresenting finances. Answer: D 134) In the case of irresponsibility toward investors, stockholders may be reluctant to take action because A) a management change may drive the stock price down. B) it's too much trouble. C) the creditors probably wouldn't support them. D) the board of directors will overrule them. E) company management will retaliate. Answer: A 135) The president of a company has paid himself a large salary, a handsome bonus, received a large number of lucrative stock options, and hired his family members at high salaries. The president is probably guilty of A) collusion. B) improper financial management. C) cheque kiting. D) misrepresentation of finances. E) insider trading. Answer: B 136) The illegal practice of writing cheques against money that has not yet arrived at the bank on which the cheque has been drawn is called A) insider trading. B) whistle blowing. C) managing the monetary float. D) kickbacks. E) cheque kiting. Answer: E 137) Your friend Bob works for an investment firm that is helping Computers-B-Us merge with Mega Computers. The news won't be released until next week. If you decide to act upon this information and make some stock purchases intending to split the profits with Bob, what can be said about your actions? A) They are unethical and illegal B) They are ethical and legal C) It is not possible to tell from the information given D) They are ethical and illegal E) They are unethical and legal Answer: A 138) At a press conference, CEO I.R.D. Boss states that profits are going to be very good next year when he knows that they will likely be bad. What can be said about his actions? A) They are ethical and legal B) They are unethical and illegal C) They are ethical and illegal D) They are unethical and legal E) It is not possible to tell from the information that is given Answer: B 139) Which term describes the process of using confidential information to gain from the purchase or sale of stocks? A) Generally accepted investment practice (GAIP) B) Cheque kiting C) Whistle blowing D) Insider trading E) General consensus on unethical business behaviour (GCUBB) Answer: D 140) Bob Crawford sold his shares in Texon Company after finding out from Texon's CEO that its stock was about to drop in price because its soon-to-be-released quarterly financial update was going to show that earnings were lower than expected. Bob engaged in A) whistle-blowing. B) misrepresentation of finances. C) insider trading. D) an obstructionist stance to social responsibility. E) cheque kiting. Answer: D 141) Which of the following is an example of a company acting irresponsibly toward its investors? A) The board of directors does not declare a dividend B) Retained earnings are used to expand research and development instead of paying a dividend C) Top management misrepresents the firm's financial situation D) The firm does not allow insider trading E) The firm uses retained earnings to finance growth Answer: C 142) Brandon Ltd. is accused of paying excessive salaries and providing excessive "perks" to top managers. The company may be engaging in A) insider trading. B) collusion. C) cheque kiting. D) improper financial management. E) price fixing Answer: D 143) Ken is using confidential information to gain from the purchase of sale of stocks. Ken is guilty of A) greenmail. B) cheque kiting. C) misrepresentation of finances. D) a rollover. E) insider trading. Answer: E 144) In the case of irresponsibility toward investors, stockholders may be reluctant to take action because A) company management will confiscate their shares. B) it's too much trouble. C) a management change may drive the stock price down. D) the creditors will sue them. E) the board of directors will use their influence to get the stockholders’ relatives who work at other companies fired. Answer: C 145) Which of the following is an example of a company acting irresponsibly toward its investors? A) Retained earnings are used to expand research and development instead of paying a dividend B) Top management misrepresents the firm's financial situation C) The firm uses retained earnings to finance growth D) The board of directors does not declare a dividend E) All of these Answer: B 146) Which of the following illustrates how a company could be irresponsible with respect to its investors? A) Use profits to fund research and development B) The president overstates the positive impact of a new contract C) The board of directors declares a stock split D) Management accepts a takeover bid from another company E) No dividends are declared even though the company made a profit Answer: B 147) Which of the following is not an argument against a socially responsible role by a business firm? A) Some individuals believe that business involvement will increase business control and power in addressing solutions for problems B) Business should help solve the problems because business contributed to the problem C) Some people oppose any business activity that cuts into profits to investors D) Companies lack the expertise to deal with many of the problems in society; therefore, business should let experts handle those matters E) Many businesses have been able to influence government agencies that are supposed to regulate their industries Answer: B 148) Which of the following approaches to social responsibility is consistent with the argument that profits should not be spent on solving social problems? A) Neutral stance B) Accommodative stance C) Obstructionist stance D) Defensive stance E) Proactive stance Answer: D 149) Which of the following illustrates the defensive stance to social responsibility? A) Sears has started to support artists and performers B) Many firms sponsor youth athletic teams C) Tobacco companies place health warning labels on their products because they are required to do so by the government D) Many organizations respond to requests for donations to community hockey teams, Girl Guides and youth soccer programs E) Many companies match employee contributions to approved causes Answer: C 150) If a company takes the position that profits should not be spent on social programs, the company has adopted the ____________ stance to social responsibility. A) obstructionist B) proactive C) accommodative D) charitable E) defensive Answer: E 151) In Canada and the United States, tobacco companies are required to include warnings to smokers on their products and to limit advertising to prescribed media. Within Canada and the U.S., they follow these rules but often use more aggressive methods in countries with no such rules. As such, tobacco companies typically adopt a(n) ____________ stance to social responsibility in marketing their products. A) accommodative B) obstructionist C) proactive D) defensive E) none of these Answer: D 152) IBP, a large meat processing firm, has a record of violating environmental regulations, labour laws, and food processing laws, and then trying to cover up its offenses. IBP has adopted a(n) ___________ stance to social responsibility. A) accommodative B) obstructionist C) proactive D) defensive E) financial maximization Answer: B 153) Hi-Fly, Inc. was accused of discharging residue from its production processes into a nearby pond on the company's premises. When challenged about this, the owner said, "We own the pond, and we can do whatever we want on our private property." Which of the following approaches to social responsibility does this attitude indicate? A) obstructionist B) accommodative C) defensive D) proactive E) private property rights Answer: A 154) Wilson Products installed a low-quality fire alarm in its facility in compliance with local regulations. The owner stated, "We've never had a fire and we don't actually need such a system, but I am forced to install it because of local regulations. I therefore didn't want to pay too much for the system." Which of the following stances toward social responsibility is evident here? A) obstructionist B) accommodative C) defensive D) proactive E) conservative financial management Answer: C 155) Acme Inc. meets its legal and ethical requirements. In addition, Acme donates $50,000 each year to local charities, but only when a request is made. Which of the following approaches to social responsibility is evident here? A) obstructionist B) accommodative C) defensive D) proactive E) it is not possible to tell from the information that is provided Answer: B 156) The CEO of TRA Corp. has stated publicly that his company will do everything that is legally required of it, but it will not contribute to charitable causes. TRA Corp.’s position is consistent with which stance to social responsibility? A) Proactive B) Non-charitable C) Obstructionist D) Defensive E) Accommodative Answer: D 157) A(n) _____________ stance to social responsibility involves denying or covering up violations. A) obstructionist B) proactive C) defensive D) accommodative E) societal Answer: A 158) Estevan Wire and Cable has taken a defensive stance towards social responsibility. This means that A) it should take a proactive position on social issues. B) it should respond to social concerns but only after it is asked. C) it should take care only of its profitability, even if it means breaking the law. D) it should take on only the minimal amount of responsibility required by law and standard business practice. E) it should seek out opportunities to contribute to the well-being of society. Answer: D 159) McDonald's established Ronald McDonald house to provide lodging for families of children who are hospitalized away from home. This approach to social responsibility would best be classified as a(n) A) defensive stance. B) obstructionist stance. C) accommodative stance. D) charitable stance. E) proactive stance. Answer: E 160) Exxon's response to the Valdez oil spill in Alaska some years ago has been criticized on several fronts. Some say the company waited too long to respond, and that when the response came it was very weak. But Exxon points out that they cleaned up the spill and that they have gone out of their way to bring the area back to conditions that existed before the spill. This stance to social responsibility would best be classified as A) defensive. B) obstructionist. C) charitable. D) accommodative. E) proactive. Answer: D 161) Yorkton Electric has taken an accommodative stance towards social responsibility. This means that A) it will take care only of its profitability, even if it means breaking the law. B) it will seek out opportunities to contribute to the well-being of society. C) it will take a proactive position on social issues. D) it will respond to social concerns beyond the bare minimum if specifically asked. E) it will take on only the minimal amount of responsibility required by law and standard business practice. Answer: D 162) Mandex corporation usually covers up mistakes made by its employees rather than fixing them. This company is taking a(n) ________ approach to social responsibility. A) accommodative B) social audit C) proactive D) defensive E) obstructionist Answer: E 163) Biggar Foods wants to take a proactive stance towards ethics. This means that A) it should cover up any wrongdoing by its employees. B) it should take care only of its profitability, even if it means breaking the law. C) it should seek out opportunities to contribute to the well-being of society. D) it should respond to social concerns if it is asked. E) it should take on only the minimal amount of responsibility required by law and standard business practice. Answer: C 164) The _________ stance to social responsibility means that a firm actively seeks opportunity to contribute to the well-being of society. A) defensive B) accommodative C) proactive D) charitable E) obstructionist Answer: C 165) The _________ stance to social responsibility means that a business firm goes beyond the bare minimum expectations of the law if asked. A) charitable B) defensive C) obstructionist D) proactive E) accommodative Answer: E 166) Which of the following social responsibility strategies is typically being used by a business firm which supports the Girl Guides, hockey teams, and youth soccer? A) Accommodative stance B) Defensive stance C) Reactive stance D) Obstructionist stance E) Proactive stance Answer: A 167) Jays Inc. dumped toxic chemicals in the river next to their factory. Upon being caught, Jays Inc. not only denied their wrongdoings, they went to great lengths to hide their behavior. Jays Inc. is taking a(n) ________ stance to social responsibility. A) defensive B) accommodative C) proactive D) obstructionist E) reactive Answer: D 168) Cartier Partners Financial Services Inc. provides the local swim team with a cash donation to help pay for the swim meet each year, but the team has to make its case to the company each year. Cartier’s stance to social responsibility is A) defensive. B) obstructionist. C) accommodative. D) proactive. E) responsive. Answer: C 169) Which of the following social responsibility strategies is used by the Trillium Foundation, which request proposals from charity organizations who require financial support? A) Reactive B) Adaptive C) Proactive D) Accommodative E) Obstructionist Answer: C 170) A 2008 survey of Canadian companies found that ___________ percent made a charitable contribution of some sort, and that the median value of their contributions was $________. A) 40; $100,000 B) 30; $20,000 C) 50; $80,000 D) 70; $200,000 E) 97; $340,000 Answer: E 171) A survey conducted by the Centre for Philanthropy, found that Canadians think that corporations give about ___________ percent of the total amount given to charity and that the figure should be ___________ percent. A) 20; 30 B) 10; 30 C) 40; 50 D) 5; 10 E) 1; 2 Answer: A 172) Imagine Canada’s “Caring Company” program recommends that corporations give ___________ percent of pre-tax profits to charity, but only ___________ percent of the corporations met that goal in 2008. A) 2; 30 B) 2; 30 C) 3; 50 D) 1; 50 E) 1; 20 Answer: D 173) The four basic steps to establishing a social responsibility program, in order from first to last are A) strategic planning, social audit, appointment of a director, and top management support. B) top management support, strategic planning, appointment of a director, and a social audit. C) strategic planning, top management support, social audit, and appointment of a director. D) top management support, social audit, strategic planning, and appointment of a director. E) appointment of a director, social audit, strategic planning, and top management support. Answer: B 174) Battleford Corp. is in the processes of setting up a system to manage its social responsibility program. What should they do first? A) A social audit must be conducted B) The government must identify specific things the company is doing that need to be corrected C) Make sure that support is evident from top management D) A director of the firm's social agenda must be appointed E) A committee of top managers must develop a strategic plan for social responsibility Answer: C 175) The top management level at Brown Corp. has already publicly stated its commitment to being socially responsible. What is the next action that Brown Corp. needs to take if it wants to follow the four-step process for managing social responsibility programs? A) A social audit must be conducted B) The government must identify specific things the company is doing that need to be corrected C) Make sure that support must is evident from top management D) A director of the firm's social agenda must be appointed E) A committee of top managers must develop a strategic plan for social responsibility Answer: E 176) Bendix Corp.’s Board of Directors has just received a detailed plan regarding social responsibility activities that was developed by a committee of top managers at the company. What is the next step Bendix Corp. should take if it wants to follow the four-step process for managing social responsibility programs? A) A social audit must be conducted B) The government must identify specific things the company is doing that need to be corrected C) Make sure that support must is evident from top management D) A director of the firm's social agenda must be appointed E) A committee of top managers must develop a strategic plan for social responsibility Answer: D 177) The _________ describes the systematic analysis of a firm's success in using funds that it has earmarked for its social responsibility goals. A) charitable giving summary B) social audit C) social responsibility policy D) whistle blowing summary E) strategic planning summary Answer: B 178) What is the purpose of a social audit? A) To conduct a systematic analysis of how a firm has used funds that are earmarked for social programs B) To determine the impact of a company's social involvement on the local community C) To determine the specific area of need for a firm's social responsibility actions D) To determine the anticipated costs and benefits of dealing with a social concern E) To audit the social functions the firm puts on for employees Answer: A 179) Which of the following is a reason for businesses to assume a socially responsible role? A) Business controls vast resources of money and talent which can be used to help society B) Business helped to create many of society's problems and therefore should help to solve these problems C) Statistics show that businesses that support social responsibility projects have higher return on investments. D) Corporations have civic responsibilities just like other citizens and should help to better our lives E) All of these are reasons Answer: E 180) Russel Mokhiber and Robert Weissman report ethical behaviours of large corporations in the Multinational Monitor. A CEO who uses the ________ would no doubt appreciate being reported in the Multinational Monitor. A) accommodative stance B) defensive stance C) obstructionist stance D) proactive stance E) reactive stance Answer: D 181) The final step in managing a social responsibility program is to A) conduct a social audit. B) survey the various causes that might be supported. C) select an individual to run the program. D) develop a policy statement outlining the firm's commitment. E) form a committee to develop a detailed plan. Answer: A 182) Brantford Corp. has decided to commit to an active social responsibility program. Top management has already developed and published a policy statement outlining the company’s commitment. What does Brantford need to do next? A) Conduct a social audit B) Survey the various causes that might be supported C) Select an individual to run the program D) Develop a policy statement outlining the firm's commitment E) Form a committee of top managers to develop a detailed plan Answer: E 183) Clarion Corp. has just established a committee of top managers to develop a plan detailing the level of support they will give to various social programs. What do they need to do next? A) Conduct a social audit B) Survey the various causes that might be supported C) Give authority to one specific person to act as director of the firm’s social agenda D) Develop a policy statement outlining the firm's commitment E) Form a committee of top managers to develop a detailed plan Answer: C 184) What is the purpose of a social audit? A) To determine what potential programs are available for the company to support B) To understand the potential impact a specific program may have C) To conduct a detailed analysis of potential social programs D) To determine the success of using company funds earmarked for social programs E) To determine how much a firm has impacted the community Answer: D 185) Owners of small business firms face the same type of social concerns as do larger firms, but A) with more demands on the owner. B) on a smaller scale. C) with more regulation. D) with less regulation. E) with more complexity. Answer: B 186) Which of the following statements is correct with regard to the box entitled “How Green Is That Orange?” A) Arthur’s Fresh, an Ontario producer of fruit juices, has successfully met consumer demand for wholesome foods, but it has had some difficulty meeting environmental expectations B) Arthur’s Fresh strategy has been to increase the amount of packaging around its products to more effectively protect them and provide the consumer with a higher quality product C) The Packaging Association of Canada recognized Arthur’s Fresh with an award for sustainable packaging leadership D) Arthur’s Fresh gives 20 percent of its after-tax profits back to the community for “kid-oriented” programs E) All of the statements are correct Answer: C TRUE/FALSE QUESTIONS. Write 'T' if the statement is true and 'F' if the statement is false. 187) Ethics are individual standards regarding what is right and wrong. Answer: True 188) Ethical behaviour is behaviour that conforms to individual beliefs and social norms about what is right and good. Answer: True 189) Business ethics is a term often used to refer to the ethical behaviour of a manager or employee of an organization. Answer: False 190) Ethics are based both on individual beliefs and social concepts. Answer: True 191) Because ethics are based on both individual beliefs and social concepts, they do not vary from person to person. Answer: False 192) What constitutes ethical behavior is determined entirely by the individual. Answer: False 193) What constitutes ethical and unethical behavior is determined partly by the individual and partly by culture. Answer: True 194) Though an individual feels that his behavior is ethical, that behaviour may still be considered unethical if social norms consider it to be so. Answer: True 195) An individual's peers have only limited influence on the development of ethical values. Answer: False 196) A business firm's influence on the ethical behaviour of its employees is very limited because their family and friends influenced their beliefs about right and wrong long before they joined the business firm. Answer: False 197) Personal experiences can increase or decrease certain types of ethical behaviour and beliefs about what is right and wrong. Answer: True 198) What distinguishes ethical behaviour from unethical behaviour is often subjective and influenced by differences of opinion. Answer: True 199) In Canada, a manager who discriminates against minorities in hiring exhibits both unethical and illegal behavior. Answer: True 200) Some actions, such as stealing during a natural disaster, may be illegal yet considered by many people to be ethical. Answer: True 201) Ethical standards relating to business practices are fairly consistent around the world. Answer: False 202) The ethical norm of utility evaluates whether the decision is consistent with cultural standards of fairness. Answer: False 203) The ethical norm of justice evaluates whether the decision is consistent with cultural standards of fairness. Answer: True 204) The ethical norm of caring evaluates whether the decision is consistent with people's responsibilities to each other. Answer: True 205) Applying the ethical standard of utility, it may be acceptable to allow inflated expense reports. Answer: False 206) There are four ethical norms: utility, rights, justice and caring. Answer: True 207) A business firm can influence an individual's ethical behaviour through development of a written code of ethics. Answer: True 208) In Brazil, the term “jeitinho” is used to denote strict adherence to the rules. Answer: False 209) Business schools must take the chief responsibility for educating people about business ethics. Answer: False 210) A conflict of interest occurs when an activity may benefit the individual to the detriment of his/her employer. Answer: True 211) A conflict of interest occurs when two employees disagree about what course of action is best for the company. Answer: False 212) The first step in the determination of whether a decision is ethical is to determine the most appropriate moral values. Answer: False 213) Publication of a company's code of ethics ensures that employees perform their duties in an ethical manner. Answer: False 214) About two-thirds of Canada’s largest corporations have codes of ethics. Answer: True 215) Social responsibility refers to a business's obligation to make decisions that benefit consumers. Answer: False 216) Social responsibility is an attempt by a business to balance its commitments to groups and individuals in its environment, including customers, other businesses, employees, and investors. Answer: True 217) Organizational stakeholders are those groups, individuals, and organizations that are directly affected by the practices of an organization and that therefore have a stake in its performance. Answer: True 218) Most companies that strive to be responsible to their stakeholders concentrate on five main groups: customers, employees, investors, suppliers and creditors. Answer: False 219) Society's view of business practices has often resulted in constraints being placed upon the manner in which business is conducted. Answer: True 220) There is general consensus in Canada that social responsibility must take precedence over profits. Answer: False 221) There is general agreement on the proper role businesses should take in executing their social responsibilities. Answer: False 222) Because the CEO of Xanadu Corp. believes very strongly that the purpose of a business firm is to make as much money as possible as long as it doesn’t break the law while doing so, she reflects the view called managerial capitalism. Answer: True 223) A sense of social responsibility affects the manner in which a business firm behaves toward society at large, and with its suppliers and customers in particular. Answer: True 224) Today's attitudes seem to be moving toward an enlightened view stressing the need for a greater social role in business. Answer: True 225) A business firm's responsibility to its customers is to ensure that the firm makes a profit so that money can be channelled into research and development of new products. Answer: False 226) Consumer rights include the right to safe products, the right to be informed, the right to be heard, and the right to a refund. Answer: False 227) Business firms can show their social responsibility toward employees by providing a safe workplace with equal employment opportunities. Answer: True 228) In a socially responsible company, whistle-blowers can report their findings to higher level managers without fear of retaliation by other members of the organization. Answer: True 229) Pollution is the injection of harmful substances into the environment. Answer: True 230) There is currently a strong consensus that global warming is caused largely by human activity. Answer: False 231) Australia, Canada, and the U.S. are the world’s largest greenhouse gas emitters on a per capita basis. Answer: True 232) Europol's Criminal Finances and Technology section estimates that up to 90 percent of all carbon market volume in certain EU nations is fraudulent. Answer: True 233) The right to low prices is one of the most fundamental consumer rights. Answer: False 234) Stealth advertising is unethical and illegal. Answer: False 235) Collusion occurs when two or more firms agree to collaborate on such wrongful acts as price fixing. Answer: True 236) A company that provides its employees with equal opportunities without regard to race, sex, or other irrelevant factors is meeting its social responsibilities to employees. Answer: True 237) Business firms can show their social responsibility toward employees by providing a safe workplace that provides equal employment opportunities and is free of harassment. Answer: True 238) Whistleblowers are employees who detect and try to put an end to a company's unethical, illegal, and/or socially irresponsible actions by publicizing them. Answer: True 239) In a socially responsible company, whistleblowers can report their findings to higher level managers without fear of retaliation by other members of the organization. Answer: True 240) Insider trading occurs when someone uses confidential information to gain from the purchase or sale of stocks. Answer: True 241) Cheque kiting is unethical but not illegal. Answer: False 242) Business firms which engage in cheque kiting are acting in a socially responsible manner because such financial techniques result in higher profits, higher dividends, and higher stock prices, and these benefit stockholders. Answer: False 243) A firm that misrepresents its financial transactions is not responsive to the needs of society because society has established the laws against such practices. Answer: True 244) The defensive stance to social responsibility acknowledges that business has contributed to many of society's problems and, therefore, business has a social obligation to correct those problems. Answer: False 245) Some individuals oppose any business activity involving social responsibility because it cuts into profits for investors. Answer: True 246) The proactive stance is used by firms who actively seek opportunities to contribute to the well-being of society. Answer: True 247) The most conservative approach to social responsibility for a firm is the accommodative stance. Answer: False 248) In a social audit, an independent group of examiners evaluate a company's compliance with Generally Accepted Accounting Principles. Answer: False 249) The social-duty approach to a firm's social responsibilities states that profits should never be spent on social programs or if forced to, only to meet the minimum. Answer: False 250) After Max Clarkson designed and applied a social responsibility rating system for companies, he found that companies that had the highest marks on questions of ethics and social responsibility also had the highest financial performance. Answer: True 251) Xanex Corp. will respond to requests for donations from certain charitable organizations, but it will not seek them out. Xanex has adopted a defensive stance to social responsibility. Answer: False 252) The accommodative stance acknowledges that business has contributed to many of society's problems and, therefore, business has a social obligation to correct those problems. Answer: False 253) The obstructionist stance to a firm's social responsibilities states that a firm should wait until asked to participate and then respond a bit above the minimum legal requirement. Answer: False 254) The most aggressive approach to social responsibility for a firm is the accommodative stance. Answer: False 255) A social audit should be conducted prior to setting up any social responsibility program. Answer: False 256) Making a company into a truly socially responsible firm requires that the top-level manager personally direct the planning and implementation of this program, just as if he or she were introducing a new product. Answer: False 257) A social audit is a systematic analysis of how a firm is using funds earmarked for its social-responsibility goals. Answer: True 258) Triple bottom line reporting means measuring the financial, marketing, and production performance of a company. Answer: False 259) Mars Canada sets aside four days each year for employees to volunteer. Answer: False 260) The top three companies in the 2009 Corporate Knights "Best Corporate Citizen" list were Hydro One, Petro-Canada, and CN. Answer: True 261) A major concern for the small business owner is whether he or she can afford to have a social agenda. Answer: True 262) Because Joan owns a small company, the concept of socially responsible behaviour does not apply to her. Answer: False SHORT ANSWER QUESTIONS. Write the word or phrase that best completes each statement or answers the question. 263) What is ethical behavior? Answer: Ethical behavior is behavior that conforms to individual beliefs and social norms about what is right and good. 264) What is unethical behavior? Answer: Unethical behavior is behavior that individual beliefs and social norms define as being wrong and bad. 265) What are managerial ethics? Answer: Managerial ethics are the standards of behavior that guide individual managers at work. 266) Briefly describe an issue of managerial ethics relating to behavior toward employees. Answer: Answers will vary; however, many answers will include matters such as hiring, firing, wages, working conditions, privacy, and respect. Managerial ethics issue: Failing to provide fair compensation or benefits to employees despite profitability, leading to dissatisfaction and high turnover rates. An issue of managerial ethics could involve favoritism in promotions or assignments, which undermines fairness and morale among employees, leading to dissatisfaction and decreased productivity. 267) What is the first step in making ethical judgments? Answer: The first step in making ethical judgments is to gather the relevant factual information. 268) List four ethical norms. Answer: Utility, rights, justice, and caring. 269) List two ways that a company can formalize top management commitment to ethical business practices. Answer: Companies can formalize their commitment to ethical business practices through adopting written codes of ethics and ethics training programs. 270) What is social responsibility? Answer: Social responsibility is the attempt of a business to balance its commitments to groups and individuals in its environment, including customers, other businesses, employees, investors, and local communities. 271) List five general categories of organizational stakeholders. Answer: Customers, employees, investors, suppliers, and local communities. 272) In one sentence, summarize the debate about global warming. Answer: There is a fairly strong consensus that global warming is occurring, but there is debate about whether human activity is causing it. 273) What are carbon credits? Answer: Carbon credits, when purchased by companies, essentially give them the right to pollute the atmosphere. The money that is collected is then used to help fund clean-air projects in developing countries. 274) What is recycling? Answer: It is the conversion of certain waste materials into useful products. 275) What is price fixing? Answer: Price fixing is the illegal practice of collusion between two or more firms in the setting of prices. 276) What is a whistle-blower? Answer: A whistle-blower is an employee who detects and tries to put an end to a company's unethical, illegal, or socially irresponsible actions by publicizing them. 277) Identify four issues of ethics in advertising. Answer: (1) truth-in-advertising, advertising of counterfeit brands, stealth advertising, and morally objectionable advertising. 278) What is cheque kiting? Answer: Cheque kiting is the illegal practice of writing cheque against money that has not yet been credited at the bank on which the cheques are drawn. 279) What is insider trading? Answer: Insider trading is the illegal practice of using confidential information to gain from the purchase or sale of stocks. 280) What is a social audit? Answer: A social audit is a systematic analysis of a firm's success in using funds earmarked for meeting its social responsibility goals. 281) What is a social audit designed to reveal? Answer: A social audit is designed to show how successful a company's intended social program has been. The audit will determine whether a company fell short on its social intentions. 282) List the four general approaches to social responsibility. Answer: Obstructionist, defensive, accommodative, and proactive. ESSAY QUESTIONS. Write your answer in the space provided or on a separate sheet of paper. 283) What are ethics? What influences the development of ethics? How can ethical values vary significantly from one person to another? Answer: • ethics are the individual standards or moral values regarding what is right and wrong or good and bad • most common influences include family, which have the first chance to influence a child's ethics, and the work ethic (the belief and practice that hard work brings rewards) is learned in the home • peers who influence ethical behaviour later in life and experiences can increase or decrease certain types of ethical behaviour • ethical values vary significantly based on the degrees of influence in a person's life 284) What is the simplified three-step model for applying ethical judgments to situations that may arise during the course of business activities? Answer: • Three-step model: • Gather the relevant factual information • Determine the most appropriate moral values • Make an ethical judgment based on the rightness or wrongness of the proposed activity or policy 285) Are ethics influenced by a business firm's policies? Are business firms influenced by a person's ethical values? Explain. Answer: • Yes, ethics are influenced by a business firm's policies • the most significant thing a company can do is to demonstrate top management's support for ethical behaviour • most companies adopt written codes of ethics and two-thirds of Canada's largest corporations have codes of ethics • as well a firm can be influenced by a person's ethical value if he/she are top management and therefore make decisions that will affect the company 286) Is downloading music ethical or unethical? Is it illegal or legal? Why? Answer: Answers will vary because different individuals have different beliefs about what is right or wrong. Downloading music can be seen as unethical if done without permission from the copyright holder, and it is often illegal due to copyright infringement laws that protect intellectual property rights. Downloading music without proper authorization is generally considered unethical due to potential copyright infringement, which is illegal and violates intellectual property rights protected by law. 287) You are managing a company that is being asked to pay a bribe. If you do not pay the bribe you will have to lay off 500 people and risk a chance of going out of business. What do you do and why? Answer: Answers will vary, depending on individual beliefs. Refusing to pay the bribe is the ethical choice despite the consequences, as bribery is illegal and unethical. Exploring alternative solutions, such as seeking legal assistance or negotiating transparently, is crucial to uphold integrity and avoid legal repercussions. I would refuse to pay the bribe, prioritizing ethical integrity and legal compliance. Instead, I would seek alternative solutions to save the company and its employees. 288) What are the four ethical norms and the issues that they deal with? Answer: • Utility: Does a particular act optimize what is best for those who are affected by it? • Rights: Does it respect the rights of the individuals involved? • Justice: Is it consistent with what we regard to be fair? • Caring: Is it consistent with people's responsibilities to each other? 289) "The purpose of any company is to make a good product, provide good jobs, and make a profit. Any social responsibilities that take away from that are not the role of business." Agree or disagree with this statement, and support your position. Answer: These will vary. An example of the “disagree” arguments: • consumers support businesses that implement social responsibility programs more often • consumers support businesses that take special care of the environment • suppliers who pollute attract a large amount of negative media attention Disagree. Companies should balance making good products and profits with social responsibilities, as sustainable practices and positive community impact can enhance long-term success and reputation. 290) What is the relationship between social responsibility and ethics? Answer: Ethics affect individual behavior in the workplace, while social responsibility refers to the overall way in which a business attempts to balance its commitments to relevant groups and individuals in its social environment. 291) You are managing a company that either has to cut the dividend or cut 10% of the company's workforce. What do you do? Why? Answer: Answers will vary, depending on individual values and beliefs. I would choose to cut the dividend because reducing the workforce impacts employees' livelihoods and morale more significantly, potentially damaging the company's long-term productivity and reputation. I would cut the dividend to preserve the workforce, prioritizing the stability and morale of employees over short-term shareholder returns. 292) Describe the stakeholder model of social responsibility. Answer: Companies that strive to be responsible to their stakeholders concentrate on five main groups: customers, employees, investors, suppliers, and the local communities where they do business. To be responsible toward their customers, businesses strive to be fair in their pricing, honour warranties, meet delivery commitments, and stand behind the quality of their products. Businesses that are socially responsible toward their employees treat them fairly, make them a part of the team, and respect their dignity and basic human needs. To be responsible toward investors, businesses follow proper accounting procedures, provide appropriate information to shareholders about financial performance, and manage the organization to protect shareholders' rights and investments. Businesses are responsible toward suppliers when they provide realistic delivery schedules and reduced profit margins; many businesses keep their suppliers informed about future plans and work to partner with them. To be responsible toward communities, businesses often give back through charitable programs and local causes. 293) What are the four major areas of social responsibility? Provide an example of each. Answer: • The four areas of social responsibility are an organization's responsibility toward: • its environment • its customers • its employees • its investors • a company has a responsibility towards the environment in terms of air, water and land pollution • towards customers—the rights of customers, unfair pricing • towards its employees—fair and equitable practices with recruiting, hiring, training, promoting and compensating • towards its investors—earnings, dividends or capital appreciation, not guilty of improper financial management 294) Discuss the problem of land pollution. Include in your response the sources of land pollution and a recommended solution for dealing with that problem. Answer: • two key issues are how to restore the quality of land damaged and abused in the past and how to prevent such problems in the future • sources of land pollution include mining, solid waste disposal, toxic waste • new solutions include recycling/reconversion of waste materials into useful products and toxic waste disposal 295) Identify and explain the rights of consumers. How did these rights originate? What can business firms do to deal with these rights? Answer: • rights of consumers are: • right to safe products • right to be informed • right to be heard • right to choose what they buy • right to be educated about purchases • right to courteous service • these rights originated from unfair pricing and companies breaking the laws regarding consumer rights such as food products not labeled properly therefore consumers would get sick • business firms can deal with these rights by providing instructions on how to use their products, listing ingredients, and providing a toll-free number that consumers can call if they have questions or complaints 296) How may a business firm show that it is socially responsible in dealing with its employees? Explain your response. Answer: ∙a business firm can: • make sure that the workplace is safe, both physically and emotionally • the management would no more tolerate an abusive manager than they would a gas leak • a company can also provide its employees with equal opportunities for rewards and advancements without regard to race, sex, or other relevant factors • firms have a responsibility to respect the privacy of their employees • respecting employees as people means encouraging ethical behaviour 297) How do organizations exercise social responsibility toward the environment? Answer: Many organizations adopt methods that will reduce greenhouse emissions and control pollution. Although noise pollution is now attracting increased concern, air, water, and land pollution remain the greatest problems in need of solutions from businesses. Companies often install pollution-controlling devices that prevent eventual buildup of acid rain. Businesses are also taking advantage of new forms of solid-waste disposal; further, they are working to limit toxic wastes left over from their production processes. Recycling has received increased attention from businesses in recent years; some controversy exists regarding proper recycling since some materials and products do not recycle well. 298) How do organizations exercise social responsibility toward customers? Answer: Much of what organizations do to act responsibly toward customers is driven by the laws that protect consumers. Consumers have the right to safe products, a right to be informed about relevant aspects of a product, a right to be heard, a right to choose what they buy, a right to be educated about purchases, and a right to courteous service. Businesses acting responsibly prevent unfair pricing, which comes in the form of price fixing and/or price gouging. In addition, businesses work to promote ethics in advertising. Increased attention is given to proper wording in advertisements, to whom ads are directed, contents of packages, proper labeling, as well as to avoiding morally objectionable advertisements. 299) Social responsibility to investors requires firms to manage their resources and to represent their financial status honestly. Provide some examples of irresponsible behaviour taken by business firms. Answer: ∙improper financial management • cheque kiting the illegal practice of writing cheques against money that has not yet arrived at the bank on which the cheque has been written, relying on that money arriving before the cheque clears • insider trading the use of confidential information to gain from the purchase or sale of stock • misrepresentation of finances 300) What are the three major types of pollution? Give an example of each. Answer: Air: acid rain, smog. Water: chemical & waste dumping. Land: toxic wastes. 301) "The only way recycling will ever work is if customers demand it and are willing to pay the higher prices for it." Agree or disagree with this statement, and support your position. Answer: These will vary. An example of the “agree” argument: Consumers who have a concern for the environment will be willing to put up with the increased time and money they have to spend to make recycling work 302) What is consumerism? Answer: social activism protecting consumers' rights in their dealings with business 303) Shareholders are owners of the company. How can a company act irresponsibly toward its owners? Answer: abuse of financial resources, improper use of company assets, insider trading, misrepresentation of finances 304) How does insider trading benefit the person who does it? Answer: Confidential information is information that is not available to the general public but that is available to a few people because of their position within a company. Individuals with insider information are able to sell a stock at a high price just before a piece of negative information becomes public and the price plummets, thus preventing a big loss. Similarly, an individual with insider information may buy stock at a low price, just before a piece of favourable information becomes public and the price of the stock increases. The individual can then sell the stock at a profit. 305) Give examples of the types of actions a business can take to meet its social responsibility. Answer: Possible Answers: • training disadvantaged employees • subsidizing day care • installing anti-pollution equipment • reducing waste • opening plants in poverty-stricken areas • financial assistance to the arts and schools • effective utilization of natural resources Examples include implementing sustainable practices, supporting local communities through charitable initiatives, promoting diversity and inclusion in the workplace, and ensuring ethical sourcing and fair labor practices throughout the supply chain. 306) Give three arguments in favour and three arguments against the social responsibility of business. Answer: ∙in favour: corporations need to help improve our lives; should help alleviate the problems they created; it pays off for the firm; and high financial performance ∙against: cost and loss of profit; businesses may gain too much control over how social concerns are addressed; they lack the expertise needed; and dilution of primary mission 307) List and describe the four stances an organization can take concerning its obligations to society. Answer: • obstructionist stance: a company does as little as possible to solve social or environmental problems • defensive stance: an organization does only what is legally required and nothing more • accommodative stance: a company meets all of its legal and ethical requirements, and in some cases even goes beyond what is required • proactive stance: an organization actively seeks opportunities to be socially responsible (e.g., McDonald's with children's hospitals) 308) What are the four steps that must be taken when a firm decides that it wants to become socially responsible? Explain. Answer: Four steps to becoming socially responsible include • social responsibility must start at the top with top management support in which they develop a policy statement outlining their commitment • a strategic plan to view the level of support to be directed towards social responsibility • one specific executive needs to be given the authority to act as director of the firm's social agenda • the organization needs to conduct occasional social audits Test Bank for Business Essentials Ronald J. Ebert, Ricky W. Griffin, Frederick A. Starke, George Dracopoulos 9780132479769, 9780134384733