Chapter 3 Managers and Society
1) Social responsibility is the managerial obligation to take action that protects and improves
both the welfare of society and the interests of the organization.
Answer: True
Rationale:
Social responsibility involves considering the impact of managerial decisions on society and the
organization. It encompasses actions that go beyond legal requirements to benefit society.
2) According to the concept of corporate social responsibility, a manager must strive to achieve
societal as well as organizational goals.
Answer: True
Rationale:
Corporate social responsibility emphasizes that managers should consider the impact of their
decisions on society, not just on the organization's bottom line. This approach aims to align
organizational goals with societal needs.
3) Although social responsibility is important for managers in developed economies, it is not
essential for managers in emerging economies.
Answer: False
Rationale:
Social responsibility is important for managers in all economies, as it helps build trust with
stakeholders, enhances reputation, and contributes to sustainable development.
4) Consumer affairs and community volunteerism are areas of social responsibility.
Answer: True
Rationale:
Consumer affairs involve ensuring fair treatment of consumers, while community volunteerism
involves contributing time and resources to benefit communities. Both are aspects of social
responsibility.
5) Empirical studies, conducted by various corporations in the United States, have demonstrated
a definitive relationship between social responsibility and profitability.
Answer: False
Rationale:
While some studies suggest a positive relationship between social responsibility and profitability,
the relationship is not definitive and can vary depending on the context and industry.
6) Adherence to legislated social responsibilities is the minimum standard of social responsibility
performance that business managers must achieve.
Answer: True
Rationale:
Adhering to legislated social responsibilities is the basic requirement for businesses, as laws are
established to ensure minimum standards of behavior and protect societal interests.
7) The primary function of the Equal Employment Opportunity Commission is to ensure that
employers holding federal contracts grant equal employment opportunity to people regardless of
their race or sex.
Answer: False
Rationale:
The primary function of the Equal Employment Opportunity Commission (EEOC) is to enforce
federal laws that prohibit employment discrimination based on race, color, religion, sex, national
origin, age, disability, or genetic information.
8) The primary function of the Consumer Product Safety Commission is the regulation of safety
and health conditions in nongovernment workplaces.
Answer: False
Rationale:
The primary function of the Consumer Product Safety Commission (CPSC) is to protect the
public against unreasonable risks of injury or death associated with consumer products.
9) The greater the degree of effectiveness and efficiency, the more socially responsive the
organization is said to be.
Answer: True
Rationale:
Effectiveness and efficiency in achieving organizational goals can indicate a higher level of
social responsibility, as resources are used wisely to achieve positive outcomes for both the
organization and society.
10) Any individual or group that is directly or indirectly affected by an organization's decisions
is called a stakeholder.
Answer: True
Rationale:
Stakeholders include not only shareholders but also employees, customers, suppliers,
communities, and other entities affected by or affecting the organization's actions.
11) The social obligation approach considers business as having both societal and economic
goals as well as the obligation to anticipate potential social problems and work actively toward
preventing their occurrence.
Answer: False
Rationale:
The social obligation approach focuses on businesses fulfilling their economic goals while
meeting legal requirements and responding to societal expectations. It does not emphasize
actively working to prevent social problems.
12) Organizations that do not take the social obligation approach usually achieve higher levels of
social responsiveness than organizations that take the social responsibility approach.
Answer: False
Rationale:
Organizations that take the social responsibility approach typically achieve higher levels of
social responsiveness because they actively consider and respond to societal expectations beyond
legal requirements.
13) Controlling in the area of social responsibility does not entail assessments or measurements.
Answer: False
Rationale:
Controlling in the area of social responsibility involves assessing and measuring the
organization's performance in fulfilling its social responsibilities to ensure that it meets its goals
and objectives.
14) A social audit is conducted to measure the present social responsibility activities of an
organization to assess its performance in this area.
Answer: True
Rationale:
A social audit is a systematic evaluation of an organization's social, ethical, and environmental
performance. It assesses the organization's social responsibility activities and helps identify areas
for improvement.
15) All companies should take social responsibility measurements in the quality-of-life area and
the economic function area.
Answer: True
Rationale:
Social responsibility measurements should cover a broad range of areas, including the quality of
life of stakeholders and the economic impact of the organization's activities, to ensure a
comprehensive assessment.
16) Ethical managers strive for success within the confines of sound management practices that
are characterized by fairness and justice.
Answer: True
Rationale:
Ethical managers adhere to principles of fairness and justice while striving for success. They
seek to achieve goals through ethical means and ensure that their actions are consistent with
moral principles.
17) A code of ethics is an informal statement that organizations release to help their customers
obtain a basic understanding of ethics.
Answer: False
Rationale:
A code of ethics is a formal statement that outlines an organization's values, principles, and rules
of conduct. It is intended to guide employees' behavior and decision-making processes.
18) The utilitarian standard advocates the view that people should act in a way they would expect
others to act toward them.
Answer: False
Rationale:
The utilitarian standard, based on the principle of utility, advocates that actions are right if they
promote the greatest happiness for the greatest number of people, regardless of personal
expectations.
19) Two practices that commonly inspire unethical behavior in organizations are to give
unusually high rewards for good performance and unusually severe punishments for poor
performance.
Answer: True
Rationale:
Unusually high rewards for good performance and unusually severe punishments for poor
performance can create pressure on employees to engage in unethical behavior to achieve or
maintain their positions.
20) A whistle-blower is an employee who performs quality reviews within an organization and
reports flaws in the processes.
Answer: False
Rationale:
A whistle-blower is an employee who exposes misconduct, dishonest, or illegal activities within
an organization. They typically report these activities to external authorities or the media.
21) Which of the following statements is true about social responsibility?
A) It is the managerial obligation to ensure the accountability of certain individuals in an
organization through mechanisms that try to reduce or eliminate the principal-agent problem.
B) It is the managerial obligation to cater to the needs of the stockholders, while abiding by the
laws of the society.
C) It is the managerial obligation to take action that protects and improves both the welfare of
society as a whole and the interests of the organization.
D) It is the managerial obligation to abide by societal laws when pursuing organizational goals.
E) It is the managerial obligation to ensure ethical decision making in an organization to benefit
its customers.
Answer: C
Rationale:
Social responsibility involves considering the impact of managerial decisions on society and
taking actions to benefit both society and the organization.
22) The areas in which business can act to protect and improve the welfare of society are
numerous and diverse. Which of the following is NOT an example of an area of social
responsibility?
A) employment practices
B) social media
C) urban affairs
D) community volunteerism
E) consumer affairs
Answer: B
Rationale:
Social responsibility encompasses various areas such as employment practices, urban affairs,
community volunteerism, and consumer affairs, but social media is not typically considered an
area of social responsibility.
23) Which of the following is an argument for business performing social responsibility
activities?
A) Business institutions, as citizens, have the responsibility to become involved in certain social
problems that are outside their normal areas of operation.
B) Social responsibility arises from social power.
C) The social costs and benefits of an activity, product, or service shall be thoroughly calculated
and considered in deciding whether to proceed with it.
D) Because business is such an influential member of society, it has the responsibility to help
maintain and improve the overall welfare of society.
E) Business shall operate as a two-way open system, with open receipt of inputs from society
and open disclosure of its operations to the public.
Answer: D
Rationale:
This argument suggests that because businesses have significant influence and impact on society,
they have a responsibility to contribute to its welfare.
24) Which of the following arguments provided by Milton Friedman suggests that corporate
social responsibility may be unethical?
A) Social responsibility compels managers to spend money on some individuals that rightfully
belongs to other individuals.
B) Social responsibility is not mandated by law, which means that it has to be done by will, not
by compulsion.
C) Empirical studies have not yet demonstrated a definitive relationship between corporate social
responsibility and profitability.
D) Profitability and growth go hand-in-hand with responsible treatment of employees,
customers, and the community.
E) Firms use social responsibility to increase their brand awareness.
Answer: A
Rationale:
Friedman argues that when businesses spend money on social responsibility activities, they are
essentially spending shareholders' money for purposes that may not directly benefit the
shareholders.
25) Which of the following is the primary function of the Equal Employment Opportunity
Commission?
A) It ensures that employers holding federal contracts grant equal employment opportunity to
people regardless of their race or sex.
B) It strives to reduce consumer misunderstanding of manufacturers' product design, labeling,
and so on, by promoting clarity of these messages.
C) It formulates and enforces environmental standards in such areas as water, air, and noise
pollution.
D) It regulates safety and health conditions in nongovernment workplaces.
E) It investigates and conciliates employment discrimination complaints that are based on race,
sex, or creed.
Answer: E
Rationale:
The EEOC is primarily responsible for enforcing federal laws that prohibit employment
discrimination based on race, color, religion, sex, national origin, age, disability, or genetic
information.
26) Lebron wants to file a complaint against EatFry, a fast-food restaurant, because he was
rejected in a job interview with the firm. Lebron believes that he was discriminated against
because of race. Which of the following federal agencies should he approach?
A) Consumer Product Safety Commission
B) Mining Enforcement and Safety Administration
C) Occupational Safety and Health Administration
D) Environmental Protection Agency
E) Equal Employment Opportunity Commission
Answer: E
Rationale:
The Equal Employment Opportunity Commission (EEOC) is responsible for investigating and
conciliating employment discrimination complaints based on race, sex, or creed.
27) The primary function of the Office of Federal Contract Compliance Programs is to ensure
that employers holding federal contracts ________.
A) abide by the safety and health regulations of the Occupational Safety and Health
Administration
B) improve safety conditions for workers by enforcing all safety and equipment standards
C) grant equal employment opportunity to people regardless of their race or sex
D) strive to reduce consumer misunderstanding of its products
E) abide by the environmental standards enforced by the Environment Protection Agency
Answer: C
Rationale:
The Office of Federal Contract Compliance Programs (OFCCP) ensures that employers holding
federal contracts provide equal employment opportunity to people regardless of their race or sex.
28) Which of the following is the primary function of the Consumer Product Safety
Commission?
A) It ensures that employers holding federal contracts abide by the product safety standards.
B) It strives to reduce consumer misunderstanding of manufacturers' product design, labeling,
and so on, by promoting clarity of these messages.
C) It formulates and enforces environmental standards in such areas as water, air, and noise
pollution.
D) It regulates safety and health conditions in nongovernment workplaces.
E) It investigates product safety concerns prior to the launch of a product.
Answer: B
Rationale:
The primary function of the Consumer Product Safety Commission (CPSC) is to protect the
public against unreasonable risks of injury or death associated with consumer products, including
promoting clarity of product design and labeling.
29) Social responsiveness can be defined as ________.
A) the speed at which an organization adapts to the changing societal culture
B) an organization's effectiveness in abiding by the laws of the society
C) the degree of effectiveness and efficiency with which an organization fulfills its stockholders'
needs while benefiting the stakeholders
D) the degree of effectiveness and efficiency an organization displays in pursuing its social
responsibilities
E) the degree of effectiveness with which an organization can predict the changes in a society,
such as the consumers changing preferences
Answer: D
Rationale:
Social responsiveness refers to the degree of effectiveness and efficiency with which an
organization fulfills its social responsibilities to various stakeholders.
30) Managers can fulfill their social obligation towards consumers by ________.
A) abiding by the laws
B) providing safe working environments
C) repaying debts
D) increasing the value of the organization
E) providing safe products
Answer: E
Rationale:
Fulfilling the social obligation towards consumers includes providing products that are safe,
reliable, and meet the expectations of consumers.
31) Managers who have successfully increased the value of the organization have fulfilled their
social obligation towards ________.
A) stockholders
B) consumers
C) government agencies
D) employees and unions
E) banks and other lenders
Answer: A
Rationale:
Increasing the value of the organization benefits stockholders by enhancing the value of their
investment, fulfilling the social obligation towards them.
32) Managers can fulfill their social obligation towards government agencies by ________.
A) providing safe products
B) repaying debts to banks
C) abiding by the laws
D) increasing the value of the organization
E) providing safe working environments
Answer: C
Rationale:
Fulfilling the social obligation towards government agencies involves abiding by laws and
regulations set by these agencies.
33) Tangarine, a detergent manufacturer, realizes that a malfunction of one of its automated
machines has significantly altered the composition of the detergent. Continued exposure to this
altered detergent can cause skin cancer in the long term. Tangarine is violating the obligation to
________.
A) suppliers
B) employees
C) stockholders
D) customers
E) unions
Answer: D
Rationale:
By producing a product that can harm consumers, Tangarine is violating its obligation to
customers to provide safe products.
34) The social responsibility approach views business as having ________.
A) the obligation to anticipate potential social problems
B) societal goals and the obligation to anticipate potential social problems, but lacking economic
goals
C) both societal and economic goals as well as the obligation to anticipate potential social
problems
D) primarily economic purposes and confines social responsibility activity mainly to existing
legislation
E) both economic and societal goals
Answer: E
Rationale:
The social responsibility approach views business as having both economic goals and the
obligation to consider societal well-being and potential social problems.
35) Which of the following statements is true about the social obligation approach?
A) It views business as having both economic and societal goals.
B) It considers business as having both societal and economic goals as well as the obligation to
anticipate potential social problems.
C) It views business as having societal goals and the obligation to anticipate potential social
problems, but lacking economic goals.
D) It considers business as having primarily economic purposes and confines social
responsibility activity mainly to existing legislation.
E) It considers business as having both societal and economic goals as well as the obligation to
anticipate potential social problems and work actively toward preventing their occurrence.
Answer: D
Rationale:
The social obligation approach views business as having primarily economic purposes and limits
social responsibility activity to complying with existing laws.
36) Which of the following statements is true about the social responsiveness approach?
A) It views business as having societal goals, but lacking economic goals.
B) It considers business as having both societal and economic goals as well as the obligation to
anticipate potential social problems and work actively toward preventing their occurrence.
C) It views business as having societal goals and the obligation to anticipate potential social
problems, but lacking economic goals.
D) It considers business as having primarily economic purposes and confines social
responsibility activity mainly to existing legislation.
E) It views business as having both economic and societal goals.
Answer: B
Rationale:
The social responsiveness approach considers business as having both societal and economic
goals, along with the obligation to actively work to prevent potential social problems.
37) Which of the following statements is true about a social audit?
A) It is the process of measuring the increase in a firm's brand awareness after it conducts social
responsibility activities.
B) It is the process of forecasting the impact of an organization's social responsibility activities
on society to decide its feasibility.
C) It is the process of measuring the increase in an organization's profits after it has conducted
social responsibility activities.
D) It is the process of measuring the present social responsibility activities of an organization to
assess its performance in this area.
E) It is the process of measuring the impact of an organization's social responsibility activities on
society.
Answer: D
Rationale:
A social audit involves measuring an organization's current social responsibility activities to
assess its performance in this area.
38) The greater the amount of natural resources consumed by an organization, the greater the
organization's ________.
A) community area
B) community measurements
C) environmental footprint
D) wellness area
E) responsible buying area
Answer: C
Rationale:
The environmental footprint of an organization refers to the impact it has on the environment,
including the consumption of natural resources.
39) In which of the following areas does a company focus on promoting community service,
creating jobs, and supporting youth activities by issuing grants to enable youth activities in
communities?
A) community measurements
B) community area
C) environmental footprint
D) responsible buying area
E) wellness area
Answer: B
Rationale:
The community area of social responsibility involves activities that benefit the local community,
such as promoting community service and supporting youth activities.
40) ________ is the area where social audit measurements can focus on determining if adequate
and appropriate policies are being supported as well as finding out if health-conscious products
are being sufficiently offered to customers.
A) Community measurements
B) Community area
C) Environmental footprint
D) Wellness area
E) Responsible buying area
Answer: D
Rationale:
The wellness area of social responsibility focuses on health-related aspects, such as ensuring
health-conscious products are offered to customers and supporting employee wellness programs.
41) ________ is the degree to which a person or an entity can meet its present needs without
compromising the ability of other people or entities to meet their needs in the future.
A) Accountability
B) Reliability
C) Sustainability
D) Maintainability
E) Scalability
Answer: C
Rationale:
Sustainability refers to the ability to meet present needs without compromising the ability of
future generations to meet their own needs.
42) An organization decides to rid itself of contaminated waste by dumping it into a river. If this
dumping renders the river toxic and unusable for fishing or recreation, the entity would be
considered ________.
A) contaminated
B) responsible
C) acceptable
D) unsustainable
E) sustainable
Answer: D
Rationale:
Unsustainable actions, such as polluting a river to the point of rendering it toxic and unusable,
harm the environment and compromise the ability of future generations to meet their needs.
43) A sustainable organization is an organization that has the ability to ________.
A) be profitable during challenging economic periods
B) meet its present needs without compromising the ability of future generations to meet their
needs
C) produce high-quality products at reasonably low prices when the economy is unsupporting
D) increase its brand awareness by conducting social responsibility activities on a large scale
E) innovate continuously and produce high-quality innovative products on a consistent basis
Answer: B
Rationale:
A sustainable organization is one that can meet its present needs without compromising the
ability of future generations to meet their own needs, ensuring long-term viability.
44) In building a sustainable organization, management should strive to make the organization
sustainable in three areas — ________.
A) the economy, performance, and society
B) the business, the environment, and society
C) the economy, the environment, and business
D) the economy, business, and performance
E) the economy, the environment, and society
Answer: E
Rationale:
The three areas for building a sustainable organization are the economy (financial sustainability),
the environment (environmental sustainability), and society (social sustainability).
45) PepsiCo, a food and beverage manufacturer, began measuring the footprint of carbon
emissions of its orange juice brand, Tropicana, in an effort to become more sustainable. Which
of the following areas does this study focus on?
A) the economy
B) the environment
C) the society
D) the performance
E) the business
Answer: B
Rationale:
Measuring the carbon emissions of a product like orange juice focuses on environmental
sustainability, as it assesses the product's impact on the environment.
46) Which of the following areas does an organization focus on when it minimizes waste by not
overproducing goods and generating a fair profit for stakeholders?
A) the economy
B) the customer
C) the environment
D) the government
E) the society
Answer: A
Rationale:
Minimizing waste and generating fair profits for stakeholders focus on economic sustainability,
ensuring the organization's financial viability.
47) Which of the following areas does an organization focus on when it emphasizes performing
behavior akin to protecting natural resources like air, water, and land?
A) the economy
B) the customer
C) the environment
D) the government
E) the society
Answer: C
Rationale:
Protecting natural resources like air, water, and land falls under environmental sustainability, as
it ensures the conservation of resources for future generations.
48) Which of the following areas does an organization focus on when it maintains the wellbeing
and protection of the communities in which it does business?
A) the economy
B) the customer
C) the environment
D) the government
E) the society
Answer: E
Rationale:
Maintaining the wellbeing and protection of communities focuses on social sustainability,
ensuring that the organization contributes positively to society.
49) The three sustainability gauges for organizational development — economy, environment,
and society — considered collectively are commonly referred to as the ________.
A) triple bottom-line
B) triple threat
C) long-term tests
D) global best practices
E) protection areas
Answer: A
Rationale:
The triple bottom-line refers to the consideration of economic, environmental, and social factors
in organizational development, ensuring sustainability in all three areas.
50) ________ emphasizes that managers should focus on building organizations that are
sustainable in economic, environmental, and societal activities.
A) Restructured bottom-line
B) Safe harbor bottom-line
C) Bottom-line synergy
D) Triple bottom-line
E) Competitive bottom-line
Answer: D
Rationale:
The triple bottom-line approach emphasizes the importance of considering economic,
environmental, and social factors in organizational management, ensuring sustainability in all
aspects of the organization's activities.
51) Which of the following is the most often-used reason why managers should build sustainable
organizations?
A) Establishing orderly uses for resources increases the organization's profit.
B) Guiding the activities of organization members helps attain organizational objectives.
C) Determining the organization's objectives helps in attaining its goals.
D) Increased sustainability commonly results in more profitable organizations.
E) Determining the organization's actions leads to an increase in the profitability.
Answer: D
Rationale:
The most often-used reason for building sustainable organizations is that increased sustainability
commonly results in more profitable organizations, as sustainable practices can lead to cost
savings and improved efficiency.
52) Many management theorists and practitioners claim that the immediate payoff of
sustainability is usually ________.
A) increased labor productivity
B) higher energy costs
C) bigger social problems
D) improved business
E) increased value
Answer: A
Rationale:
Many management theorists and practitioners claim that the immediate payoff of sustainability is
usually increased labor productivity, as sustainable practices can lead to more efficient use of
resources and improved processes.
53) Sam's Club, a discount retail division of Wal-Mart, specializes in the sale of products like
jewelry, clothes, and food. The management at Sam's Club decided to increase sustainability by
decreasing energy costs. One solution to decrease energy costs was a new milk jug to increase
the shelf life of milk at stores, thereby reducing energy costs. This is an example of ________.
A) increased profit
B) increased quality-of-life
C) increased social investment
D) increased innovation
E) increased productivity
Answer: D
Rationale:
Introducing a new milk jug to increase the shelf life of milk and reduce energy costs
demonstrates innovation, a key aspect of sustainability efforts aimed at improving efficiency and
reducing environmental impact.
54) Remmington Steel Co. is a steel manufacturing company. In order to decrease work-related
injuries, Remmington replaced all of its old machinery and equipment, restricted workers' access
to dangerous machinery, and made safety costumes mandatory for workers at all times. By
performing these activities, Remmington aims to achieve sustainability by ________.
A) problem-solving
B) setting sustainability goals
C) problem-recognition
D) social investment
E) quality-of-life
Answer: B
Rationale:
By setting sustainability goals to reduce work-related injuries and implementing specific actions
to achieve those goals, Remmington is demonstrating its commitment to sustainability.
55) Manga, a fashion and apparel company, opens a new factory in India using eco-friendly
energy and materials during construction. This is an example of ________.
A) being successful across multicultural markets
B) improvement of the quality-of-life of the communities in which the organization exists
C) problem-recognition
D) hiring organization members to help the organization become more sustainable
E) problem-solving
Answer: D
Rationale:
By using eco-friendly energy and materials, Manga is taking steps to improve its sustainability
practices, which involves hiring organization members to help achieve sustainability goals.
56) ________ is an ecology-oriented certification program run by the U.S. Green Building
Business Council, that rates the ecology impact of buildings of all types.
A) Sustainability Market Programs
B) Green Initiative
C) Green Building = Green Money
D) Energy efficient
E) LEED (Leadership in Energy and Environmental Design)
Answer: E
Rationale:
LEED (Leadership in Energy and Environmental Design) is an ecology-oriented certification
program that rates the ecological impact of buildings, promoting sustainable building practices.
57) In the sustainability area, organization members who contribute to the accomplishment of
sustainability goals must be ________.
A) encouraged
B) refocused
C) rewarded
D) shunned
E) disciplined
Answer: C
Rationale:
Rewarding organization members who contribute to sustainability goals helps reinforce
sustainable behaviors and encourages further participation in sustainability efforts.
58) Setting sustainability goals is a critical component of an organization's sustainability effort.
Such goals set clear targets on which all organization members can focus. One main factor in
reaching sustainability goals is ________.
A) tracking progress
B) anticipating progress
C) conducting progress
D) ensuring progress
E) predicting progress
Answer: A
Rationale:
Tracking progress towards sustainability goals is essential for evaluating the effectiveness of
sustainability efforts and identifying areas for improvement.
59) ________, a popularly used component of social responsibility, is the promotion of welfare
of others through generous monetary donations to social causes.
A) Problem-solving
B) Economic function
C) Philanthropy
D) Problem-recognition
E) Quality-of-life
Answer: C
Rationale:
Philanthropy involves generous monetary donations to social causes, contributing to the welfare
of others and demonstrating social responsibility.
60) First Tee is a national not-for-profit organization based in St. Augustine, Florida, and is the
official charity of the PGA Tour. The goal of First Tee is to build character among youth through
the game of golf. Experiences in the program emphasize building core values like honesty,
integrity, and respect for others within youth. This is an example of ________.
A) philanthropy
B) sporting events
C) social events
D) market relief
E) social challenge
Answer: A
Rationale:
First Tee's focus on building character and promoting core values among youth through golf
aligns with philanthropic efforts to support social causes and improve the welfare of others.
61) Making donations to causes that do not somehow protect and enhance the continuity of the
organization seems ________.
A) unfounded
B) socially irresponsible
C) fair
D) underdeveloped
E) competitive
Answer: B
Rationale:
Donations that do not contribute to the organization's continuity or social responsibility can be
seen as socially irresponsible, as they may not align with the organization's broader goals or
societal expectations.
62) The study of ethics in management can be approached from many different directions. A
practical approach is to view ethics as catalyzing managers to ________.
A) abide by the laws
B) fulfill stockholders needs
C) encourage workforce diversity
D) discourage whistle-blowing
E) take socially responsible actions
Answer: E
Rationale:
Viewing ethics as catalyzing managers to take socially responsible actions aligns with the
practical approach to ethics in management, emphasizing the importance of ethical behavior in
decision-making.
63) According to Albert Schweitzer, ________ is defined as "our concern for good behavior. We
feel an obligation to consider not only our own personal wellbeing, but also that of other human
beings."
A) ethics
B) management
C) social investment
D) problem-recognition
E) quality-of-life
Answer: A
Rationale:
Schweitzer's definition of ethics emphasizes the consideration of good behavior and the
wellbeing of others, highlighting the moral obligations inherent in ethical decision-making.
64) Which of the following actions suggests that an individual is following the golden rule?
A) a person treating others in a way he/she would expect to be treated
B) taking actions that would be viewed as proper by a disinterested panel of professional peers
C) acting in a way that results in the greatest good for the greatest number of people
D) taking actions that abide by the laws of the state
E) acting in a way that the action taken under the circumstances could be a universal law of
behavior
Answer: A
Rationale:
The golden rule states that one should treat others as one would like to be treated, reflecting a
principle of reciprocity and empathy in ethical behavior.
65) Roger believes in the statement, "what you give, you receive." He shows respect to everyone
he knows and meets every day and expects them to show him respect. Roger's behavior is
consistent with ________.
A) the utilitarian principle
B) the golden rule
C) the deontological principle
D) Kant's categorical imperative
E) the four-way test
Answer: B
Rationale:
Roger's behavior of showing respect to others and expecting respect in return aligns with the
golden rule, which emphasizes treating others as one would like to be treated.
66) In business, ethics can be defined as the capacity to reflect on ________ in the corporate
decision-making process.
A) customer preferences
B) competitive strategies
C) values
D) production bottlenecks
E) workforce diversity
Answer: C
Rationale:
Ethics in business involves reflecting on values and moral principles in the decision-making
process, ensuring that actions are aligned with ethical standards.
67) ________ can be categorized as "outside" stakeholders of an organization.
A) Stockholders
B) Managers
C) Employees
D) Customers
E) Shareholders
Answer: D
Rationale:
Customers are considered "outside" stakeholders of an organization as they are external to the
organization but have a significant impact on its operations and success.
68) Which of the following suggests that an organization is acting unethically?
A) The customers are unhappy with one of the products manufactured by the organization.
B) The public pressures legislators and other government officials to enforce existing
regulations.
C) The organization loses its customers to competitors due to lack of after-sale services for its
products.
D) The public pressures the organization to conduct social responsibility activities.
E) The union members of the organization declare a strike to demand a hike in salaries.
Answer: B
Rationale:
The public pressuring legislators to enforce existing regulations suggests that the organization
may be acting unethically and not meeting its social responsibilities.
69) ________ is a formal statement that acts as a guide for the ethics of how people within a
particular organization should act and make decisions.
A) A social audit
B) A whistle blower's policy
C) Corporate governance
D) A code of ethics
E) A mission statement
Answer: D
Rationale:
A code of ethics is a formal statement that provides guidelines for ethical behavior within an
organization, guiding employees on how to act and make decisions in ethical dilemmas.
70) ________ indicates that behavior can be considered ethical if it provides the most good for
the greatest number of people.
A) The golden rule
B) The deontological principle
C) The utilitarian standard
D) The virtue standard
E) The Kantian principle
Answer: C
Rationale:
The utilitarian standard suggests that behavior is ethical if it maximizes utility, or the greatest
good for the greatest number of people, emphasizing the consequences of actions in ethical
decision-making.
71) The Federal Reserve Board (Fed) examines the relevant economic data and makes a
judgment about the present and future state of the economy in order to set interest rates. If
economic activity seems to be slowing down, the Fed might decide to lower interest rates as a
means for stimulating economic growth. If the economy seems to be growing too fast and the
inflation rate is increasing, it might choose to raise interest rates. Lowering or raising interest
rates, in and of itself, is neither good nor bad; the rightness of the act depends on the
consequences. This action is consistent with the ________.
A) utilitarian standard
B) golden rule
C) virtue standard
D) deontological principle
E) Kantian principle
Answer: A
Rationale:
The utilitarian standard focuses on the consequences of actions. In this scenario, the Fed's
decision to lower or raise interest rates is based on the expected outcomes for economic growth
and inflation, which aligns with the utilitarian approach of seeking the greatest good for the
greatest number.
72) Which of the following guidelines indicates that in order to be ethical, corporate behavior
must respect the dignity of human nature?
A) the Utilitarian standard
B) the Rights standard
C) the Virtue standard
D) the Markkula principle
E) the Behavioral standard
Answer: B
Rationale:
The Rights standard emphasizes the importance of respecting the dignity and rights of
individuals. It suggests that ethical corporate behavior should not infringe upon the fundamental
rights of people.
73) ________ is a guideline that determines behavior to be ethical if it reflects high moral values.
A) The utilitarian principle
B) The golden rule
C) The consequentialist principle
D) The virtue standard
E) The four-way test
Answer: D
Rationale:
The virtue standard focuses on the character traits or virtues that lead to ethical behavior. It
considers behavior ethical if it reflects virtues like honesty, fairness, and compassion.
74) Behavior where the actions reflect virtues like honesty, fairness, and compassion is an
example of the ________.
A) rights standard
B) virtue standard
C) four-way test
D) decision-making process
E) golden rule
Answer: B
Rationale:
The virtue standard emphasizes behavior that embodies moral virtues. Actions that reflect virtues
such as honesty, fairness, and compassion are considered ethical under this standard.
75) ________ must take responsibility for creating and sustaining conditions in which people are
likely to behave ethically and for minimizing conditions in which people might be tempted to
behave unethically.
A) Lawyers
B) Employees
C) Managers
D) Corporate
E) Businesses
Answer: C
Rationale:
Managers are responsible for creating and maintaining an ethical organizational culture. They
must establish policies and practices that encourage ethical behavior and discourage unethical
conduct.
76) Business behavior that reflects honesty in advertising about the worthiness of a product or
paying suppliers a fair price for their goods is an example of the ________.
A) Sarbanes-Oxley standard
B) Utilitarian standard
C) Virtue standard
D) Golden rule
E) Rights standard
Answer: C
Rationale:
The virtue standard emphasizes behavior that reflects moral virtues. Honest advertising and fair
dealings with suppliers demonstrate virtues like honesty and fairness.
77) Which of the following acts was passed amid outcries of public outrage over outrageous
management practices discovered at several companies including Enron, WorldCom, and Tyco?
A) Gramm–Leach–Bliley Act
B) Financial modernization Act
C) Sarbanes-Oxley Act
D) Patriot Act
E) Freedom of Information Act
Answer: C
Rationale:
The Sarbanes-Oxley Act was passed in response to corporate scandals involving companies like
Enron, WorldCom, and Tyco. It aimed to improve corporate governance and accountability.
78) Which of the following statements is true about the Sarbanes-Oxley Act of 2002?
A) It prohibits any one institution from acting as any combination of an investment bank, a
commercial bank, and an insurance company.
B) It allows for the full or partial disclosure of previously unreleased information and documents
controlled by any public enterprise.
C) Areas covered under this act require financial institutions to keep records of cash purchases of
negotiable instruments and to report suspicious activity that might signify money laundering, tax
evasion, or other criminal activities.
D) Areas covered under this act include maintaining generally accepted accounting practices and
ensuring company structure and processes that enhance integrity and reputation.
E) Commercial banks and savings associations are encouraged to help meet the needs of
borrowers in all segments of their communities, including low and moderate-income
neighborhoods.
Answer: D
Rationale:
The Sarbanes-Oxley Act focuses on improving corporate governance, accounting practices, and
transparency. It aims to enhance integrity and reputation by requiring companies to adhere to
generally accepted accounting principles and establish structures that promote ethical behavior.
79) ________ is supported by the Sarbanes-Oxley Act as a vehicle for both discouraging
deceptive management practices while encouraging ethical management practices.
A) Shoulder surfing
B) Whistle-blowing
C) Phishing
D) Crowdsourcing
E) Nearshoring
Answer: B
Rationale:
Whistle-blowing, the act of reporting misconduct within an organization, is supported by the
Sarbanes-Oxley Act. It is intended to discourage deceptive practices and promote ethical
behavior by providing protections for whistle-blowers.
80) ________ is the act of an employee reporting suspected misconduct or corruption believed to
exist within an organization.
A) Phishing
B) Crowdsourcing
C) Shoulder surfing
D) Pharming
E) Whistle-blowing
Answer: E
Rationale:
Whistle-blowing involves reporting suspected misconduct or corruption within an organization.
It is a mechanism for addressing unethical behavior and promoting accountability.
81) Brenda works as an accountant in a software firm. She notices that the company has inflated
its balance sheet to show profits, when in reality it is under loss. Brenda reports this
inconsistency to the CFO and then to the local authorities when the CFO refused to take action.
Which of the following explains Brenda's actions?
A) crowdsourcing
B) phishing
C) whistle-blowing
D) shoulder surfing
E) pharming
Answer: C
Rationale:
Brenda's actions of reporting the company's unethical behavior to the CFO and then to the local
authorities align with the definition of whistle-blowing, which involves exposing illegal or
unethical activities within an organization.
82) Which of the following is an example of whistle-blowing?
A) Niobi, an employee of Glesnt Co., complains to her project manager about the sexual
advances that Brent, her supervisor, makes on her.
B) Rupert files a product liability suit against SilkSmooth Co., a shampoo manufacturer, because
its use caused his hair to fall out.
C) Joan, an employee of Pierce International — a financial services firm, reports illegal
accounting practices to the Security and Exchange Commission.
D) Linda files a complaint to the Employee Equal Opportunity Commission against Jueruie Co.
after she was rejected in the interview based on her gender.
E) Noah, a customer of Cone Inc., complains about the bad customer service he received for the
products he bought.
Answer: C
Rationale:
Joan's action of reporting illegal accounting practices to the Security and Exchange Commission
represents whistle-blowing, as she is exposing unethical or illegal activities within her
organization.
83) A whistle-blower is ________.
A) the employee who reports the alleged activities of the firm
B) the customer who files a product liability suit against the firm
C) the business lawyer who protects the firm against lawsuits
D) the employee who performs the unethical or illegal activity in the firm
E) the manager who protects the employee who reports the alleged activities of the firm
Answer: A
Rationale:
A whistle-blower is an employee who reports the alleged activities of the firm, typically
involving unethical or illegal behavior, to authorities or the public in order to expose and address
the wrongdoing.
84) Do you agree with the view that businesses must be involved in social responsibility
activities? Explain your answer.
Answer: Student answers will vary for this question. Some of the possible arguments are given
below.
Arguments for business performing social responsibility activities: (1) Business, as a whole, is a
subset of society, one that exerts a significant impact on the way society exists. Because business
is such an influential member of society, it has the responsibility to help maintain and improve
the overall welfare of society. (2) Business should perform social responsibility activities
because profitability and growth go hand-in-hand with responsible treatment of employees,
customers, and the community.
Arguments against business performing social responsibility activities: Making business
managers simultaneously responsible to business owners for reaching profit objectives and to
society for enhancing societal welfare sets up a conflict of interest that could potentially cause
the demise of business as it is known today.
85) Name two federal agencies that enforce social responsibility legislation and explain their
primary roles.
Answer: Equal Employment Opportunity Commission: Investigates and conciliates employment
discrimination complaints that are based on race, sex, or creed.
Environmental Protection Agency: Formulates and enforces environmental standards in such
areas as water, air, and noise pollution.
86) Who are organizational stakeholders and what types of responsibilities does an organization
have to them?
Answer: Organizational stakeholders are all the individuals and groups, both internal and
external, which are directly or indirectly affected by an organization's decisions. Some examples
include: stockholders — to increase the value of the organization and provide a reasonable return
on investment; banks and other lenders — to repay the debts on time; consumers — to provide
safe products, to inform the consumer about the product; local communities — to avoid practices
that harm the environment and perform activities that benefit the community; government and
governmental agencies — to abide by the law.
87) Define the term "social audit." List the basic steps in conducting a social audit.
Answer: A social audit is the process of measuring the present social responsibility activities of
an organization to assess its performance in this area. The basic steps in conducting a social audit
are monitoring, measuring, and appraising all aspects of an organization's social responsibility
performance.
88) What is sustainability? Why is building sustainable organizations important?
Answer: Sustainability is the degree to which a person or entity can meet its present needs
without compromising the ability of other people or entities to meet their needs in the future.
Some of the reasons for building sustainable organizations are given below.
(1) Increased Profit: Increased sustainability commonly results in more profitable organizations.
(2) Increased Productivity: Sustainable organizations relate to employee productivity.
(3) Increased Innovation: A third common reason for managers to pursue sustainability is that
such a pursuit serves as a catalyst for innovation.
89) How do you define ethics in business?
Answer: In business, ethics can be defined as the capacity to reflect on values in the corporate
decision-making process, to determine how these values and decisions affect various stakeholder
groups, and to establish how managers can use these observations in day-to-day company
management.
90) What is a code of ethics? What are the issues that it commonly addresses?
Answer: A code of ethics is a formal statement that acts as a guide for the ethics of how people
within a particular organization should act and make decisions. Codes of ethics commonly
address such issues as conflict of interest, competitors, privacy of information, gift giving, and
giving and receiving political contributions or business. The development and distribution of a
code of ethics is perceived as an effective and efficient means of encouraging ethical practices
within organizations.
Test Bank for Modern Management: Concepts and Skills
Samuel C. Certo, S. Trevis Certo
9780133059922, 9780133254105, 9780135983546
