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Chapter 3 Stakeholders and Corporate Social Responsibility 1. Fair trade can be defined as: a. Trade between two countries of similar size b. Trade between two countries of similar wealth c. Farmers receiving a fair wage for their work d. Farmers receiving a fair exchange for their goods Answer: c. Farmers receiving a fair wage for their work 2. From a farmer’s perspective, fair trade equals: a. fair access to crops b. fair access to markets c. fair wages for work d. fair consideration by the government Answer: c. fair wages for work 3. In 2006, which fast food chain distributed Fair Trade products? a. McDonalds b. Burger King c. Wendy’s d. Subway Answer: a. McDonalds 4. Which of the following has not been certified as a Fair Trade product? a. Rice b. Sugar c. Coca d. Wheat Answer: d. Wheat 5. In 2006, which company had 23 percent of its sales come from Fair Trade products? a. Starbucks b. Mountain People’s Co-Op c. Green Mountain Coffee Roasters d. Dunkin Donuts Answer: c. Green Mountain Coffee Roasters 6. In 2006, what percentage of Green Mountain Coffee Roasters’ sales comes from Fair Trade products? a. 12 percent b. 18 percent c. 23 percent d. 30 percent Answer: c. 23 percent 7. In the United States, what organization certifies companies that claim to have Fair Trade products? a. TransFair b. FairTrade c. WorldTrade d. WorldFair Answer: a. TransFair 8. Why is the case scenario titled “When Is Fair Trade Not Fair?” a. because the farmers are not getting fair access to their land b. because the farmers are not getting the right equipment to farm the land c. because the farmers may not be getting all the benefits of a fair wage d. because the farmers are not allowed to negotiate the price of the crops Answer: c. because the farmers may not be getting all the benefits of a fair wage 9. Which coffee retailer in Great Britain took advantage of the Fair Trade image? a. UK Coffee b. British Brewing c. Costa Coffee d. Great Britain Tea and Coffee Answer: c. Costa Coffee 10. Which of the following people did not have an impact on the definition of a stakeholder? a. Milton Friedman b. E. Merrick Dodd c. A. A. Berle d. Paul Rice Answer: d. Paul Rice 11. A stakeholder can be defined as: a. an individual who is part of a group whose support is necessary for the firm to survive b. an individual who has a financial interest in the firm c. an individual who has a financial or legal claim to money generated by the firm d. an individual who analyzes the financial performance of the firm. Answer: a. an individual who is part of a group whose support is necessary for the firm to survive 12. Which of the following is not considered a traditional stakeholder? a. suppliers b. employees c. customers d. competitors Answer: d. competitors 13. Milton Friedman would rate which traditional stakeholder as the most important to the firm? a. stockholders b. the government c. local community d. employees Answer: a. stockholders 14. Which of the following is not a classification of a type of manager based on moral values? a. immoral b. unmoral c. amoral d. moral Answer: b. unmoral 15. Ken Lay and Bernie Ebbers would be examples of what type of manager? a. immoral b. unmoral c. amoral d. moral Answer: a. immoral 16. A manager who is considered to be ethically neutral is what type of manager? a. immoral b. unmoral c. amoral d. moral Answer: c. amoral 17. What type of manager gives minimum attention to shareholders? a. immoral b. unmoral c. amoral d. moral Answer: a. immoral 18. What type of manager treats employees based on the legal standards and government requirements? a. immoral b. unmoral c. amoral d. moral Answer: c. amoral 19. What type of manager treats employees as human resources, not just a means of production? a. immoral b. unmoral c. amoral d. moral Answer: d. moral 20. Which of the following attributes does not help identify the importance of stakeholders? a. Influence b. Power c. Legitimacy d. Urgency Answer: a. Influence 21. In the Johnson & Johnson credo, who is the company’s first responsibility? a. stockholders b. government c. customers d. employees Answer: c. customers 22. In the Johnson & Johnson credo, who is the company’s final responsibility? a. stockholders b. government c. customers d. employees Answer: a. stockholders 23. Which of the following is not a guiding principle used by General Electric to establish dialogue with all its stakeholders? a. Make compliance a core operating principle b. Give back to communities through philanthropy and volunteerism c. Develop great leaders with the right incentives d. Never challenge what the customers tell us Answer: d. Never challenge what the customers tell us 24. Triple Bottom Line reporting refers to: a. using a low, medium and high estimates for profitability forecasts b. measuring the impact of the firm on stockholders, customers and employees c. measuring the social, economic, and financial performance of the firm d. measuring the impact of local, state, and federal governments on the firm Answer: c. measuring the social, economic, and financial performance of the firm 25. The Triple Bottom Line concept was developed by: a. Frederick Young b. Albert Mason c. Stephen Rout d. John Elkington Answer: d. John Elkington 26. The name of the book that introduced the concept of Triple Bottom Line was called: a. The Benefits of Triple Bottom Line Reporting b. How to Triple Performance Easily c. Cannibals with Forks d. Stakeholders and performance: A Triple Bottom Line approach Answer: c. Cannibals with Forks 27. Which company was recently involved in having an employee attempting to sell trade secrets? a. McDonalds b. Coke c. Apple Computer d. Ford Answer: b. Coke 28. Based on previous research, what type of employee is more likely to engage in unethical behavior a. uninterested b. unmotivated c. dissatisfied d. unhappy Answer: c. dissatisfied 29. Which of the following is not an inconsistent message sent to employees about what the firm considers to be appropriate behavior? a. Avoiding taxes by using creative accounting techniques b. Making campaign contributions to gain access to decision makers c. Excessively compensating executives d. Developing a training program in which a majority of the applicants will fail Answer: d. Developing a training program in which a majority of the applicants will fail 30. Which of the following was not legislation that was passed to help the treatment of employees in the United States? a. Civil Rights Act b. Equal Pay Act c. Age Discrimination Act d. Equal Training Act Answer: d. Equal Training Act 31. Which of the following is not an action a firm should have in place to help protect against retaliation if an employee files a sexual discrimination lawsuit? a. review management training programs b. establish strong consequences if another employee retaliates c. keeping the name of the employee filing the lawsuit anonymous as long as possible d. move the employee filing the lawsuit to another job position Answer: d. move the employee filing the lawsuit to another job position 32. What government agency was accused of having a hostile work environment? a. U.S. Post Office b. Department of Defense c. U.S. Mint d. FBI Answer: c. U.S. Mint 33. “Ministerial exception” refers to: a. Allowing managers the ability to interpret “equal pay for equal work” b. Allowing managers to be exempted for ongoing employee based training c. Allowing religious organization the ability to “discriminate” in their selection practices d. Allowing firms under 10 employees to be exempt from yearly employee training Answer: c. Allowing religious organization the ability to “discriminate” in their selection practices 34. The Age Discrimination Act example given in the textbook was based on what type of firm? a. law b. doctor c. accounting d. brokerage Answer: a. law 35. The Americans with Disabilities Act example in the textbook referred to which firm? a. General Electric b. Merrill Lynch c. Wal-Mart d. Exxon Answer: c. Wal-Mart 36. Which country requires that companies hire mentally and physically challenged employees? a. Mexico b. Costa Rica c. Brazil d. Venezuela Answer: c. Brazil 37. Which university was accused of “image” discrimination in one of its sororities in the textbook? a. DePaul b. DePauw c. Indiana d. Indiana State Answer: b. DePauw 38. Which of the following was not a company that used an electronics industry code of ethics to validate their level of corporate social responsibility? a. Apple b. Hewlett-Packard c. Dell Computer d. IBM Answer: a. Apple 39. Which of the following is not part of Intel’s Supplier Ethics Expectations? a. suppliers must be in strict compliance with the law b. suppliers must have respect for competition c. suppliers must have mandatory safety training programs d. suppliers must not have any actual or perceived conflicts of interest Answer: c. suppliers must have mandatory safety training programs 40. A function or task that was previously done within a company to an external third party is called: a. External Transfer b. Third party allocation c. Outsourcing d. Task Re-direction Answer: c. Outsourcing 41. Which of the following was not a country that was mentioned in the textbook which had ethical outsourcing issues? a. Peru b. South Africa c. Sri Lanka d. Chile Answer: d. Chile 42. Which country has a “caste” system in which the people in the lowest “caste” level would only do the most menial tasks? a. China b. Mexico c. Indonesia d. India Answer: d. India 43. What is the estimated number of part time workers in India who are children? a. 25 million b. 50 million c. 75 million d. 100 million Answer: d. 100 million 44. What is the injury rate for spice mill workers in Sri Lanka? a. 20 percent b. 30 percent c. 50 percent d. 60 percent Answer: d. 60 percent 45. Which of the following is not an ethical issue in the manufacturing process? a. safety b. quality c. price competitive d. authentic Answer: c. price competitive 46. When a firm pays people who use word of mouth to artificially endorse a product, it is called: a. False marketing b. Secretive marketing c. Stealth marketing d. Word of mouth marketing Answer: c. Stealth marketing 47. The obligation companies have to develop and implement courses of action that aid in social issues is called: a. Corporate social obligation b. Corporate social responsibility c. Corporate social action d. Corporate social performance Answer: b. Corporate social responsibility 48. Who described social responsibility as fundamentally subversive? a. Milton Friedman b. Howard Bowen c. Archie Carroll d. E. Merrick Dodd Answer: a. Milton Friedman 49. Which of the following is not considered a component of corporate social responsibility? a. economic b. moral c. legal d. discretionary Answer: b. moral 50. In Carroll’s pyramid of corporate social responsibility, what responsibility is at the top of the pyramid? a. ethical b. legal c. economic d. philanthropic Answer: d. philanthropic 51. In Carroll’s pyramid of corporate social responsibility, what responsibility is at the bottom of the pyramid? a. ethical b. legal c. economic d. philanthropic Answer: c. economic 52. Which of the following is not a social responsiveness category? a. accommodation b. defense c. offense d. reaction Answer: c. offense 53. Which of the following is not one of the overall areas of corporate social responsibility according to Richard Welford? a. accountability b. transparency c. citizenship d. internal aspects Answer: b. transparency 54. According to the textbook, which of the following is not one of the 10 Commandments of Social Responsibility? a. Thou shalt treat employees equally around the world b. Thou shalt admit to the public when mistakes have taken place c. Thou shalt be profitable to financially support the company’s social responsibility agenda d. Thou shalt be committed to publicly supporting social causes Answer: a. Thou shalt treat employees equally around the world 55. Which oil company was used as an example of protecting human rights? a. Exxon b. Shell c. BP d. Mobil Answer: c. BP 56. Which of the following areas is not included in the Social Accountability 8000 certification process for human rights? a. Child labor b. Performance appraisal c. Working hours d. Management systems Answer: b. Performance appraisal 57. Fair trade issues focus on fair wages for farmers. a. True b. False Answer: a. True 58. Local government agencies monitor fair trade activities. a. True b. False Answer: b. False 59. The origins of stakeholder theory can be traced back to the early 1930s. a. True b. False Answer: a. True 60. Milton Friedman is considered the “father” of stakeholder theory a. True b. False Answer: b. False 61. Political groups are considered to be stakeholders a. True b. False Answer: a. True 62. Dennis Kozlowski would be considered to be an amoral manager. a. True b. False Answer: b. False 63. Legitimacy is considered a concept that is needed in order to identify which stakeholders are more important. a. True b. False Answer: a. True 64. The Johnson & Johnson credo is considered to be one of the oldest code of ethics. a. True b. False Answer: a. True 65. Environmental performance is included in the firm’s triple bottom line evaluation. a. True b. False Answer: a. True 66. Receiving “equal pay for equal work” is protected under the Civil Rights Act. a. True b. False Answer: b. False 67. A firm must have at least 50 employees before they must follow the regulations of the Americans with Disabilities Act. a. True b. False Answer: b. False 68. Outsourcing always results in difficult ethical decisions. a. True b. False Answer: b. False 69. Legal responsibilities are at the bottom of the Corporate Social Responsibility. pyramid. a. True b. False Answer: b. False 70. Transparency is one of the four social responsiveness categories a. True b. False Answer: b. False 71. Every worker in the workplace has been guaranteed certain human rights a. True b. False Answer: b. False 72. Even though stakeholder theory has been discussed since the 1930s, why has it only become a popular discussion point with firms since the 1980s? Answer: There is a two part response to this question. After World War II, the world and the United States in particular experienced phenomenal growth in the economy. During this time period, individuals focused on self improvements due to the severe limitations that they had experienced during the Great Depression and World War II. As a result, people were interested in accumulating wealth and material goods to help them improve their standard of living. As the “me” decade of the 1980s evolved, the focus moved to not only material rewards but also social rewards. As a result, people realized that is was in their own self interests to become involved in social programs. The advent of the internet now allowed for real time communications with firms. As a result, individuals asked for transparency and asked for immediate adjustments to actions they did not agree with. It was during this same period that the Internet bubble continued to grow which reinforced the protection of self interests and the disregard of the interests of stakeholders by managers. As a result, the large increase in corporate scandals since a number of CEOs wanted “their piece of the pie”. As a result, both stockholders and other stakeholders demanded more accountability of management which led to the current intense interest in stakeholder theory. 73. Do you really believe that some stakeholders are more important? Answer: The simple response to this question is that it all depends on the current set of circumstances. The increased and decreased level of importance of certain stakeholders relates directly to the issues which management is considering. As a result, if the employees are on strike, obviously the employees have become the number one priority. If there are problems with the quality of the firm’s products, the customers become the number one priority. Within this framework, it would be safe to say that even is a crisis scenario; stockholders are usually near the top of the stakeholder priority list. 74. After reviewing the conditions of the work environments in those countries that accept outsourced work, what is your reaction? Answer: The first reaction should be one of shock and horror. A question that you could ask your students is whether firms that provide work in these environments are also outsourcing their ethics. It appears that even though firms may make a number of claims on their holistic approach to stakeholder theory, it is still the stockholders that will win priority. If only costs drive the decision making process, then there is no more discussion needed for firms that support these working conditions. However, if the firm truly believes in the value of stakeholders’ needs and expectations and believes that each human life is valuable and should be protected, there is a disconnect between their words and their actions. In actuality, the firms should view those children in India and Mexico not just as a means of production but a viable and important employee of the company. Even though they technically do not work for the firm, they indirectly work for the firm by providing goods and services for the firm. Isn’t that a standard description of an employee’s responsibilities? 75. Do you agree with Carroll’s pyramid of Corporate Social Responsibility? Explain your answer. Answer: The foundation of economic responsibilities could lead to some interesting discussion by your students if you ask the “chicken and the egg” question. What comes first, financial profitability or legal or ethical responsibilities? On the surface, it appears that Carroll is justifying the actions of the firm first based on the end result of being financially rewarding without regard of the means to achieve this end result. If that is the case, it certainly would open up new discussions pertaining to corporate social responsibility. As a result, it could be argued that the pyramid “ranking” of corporate social responsibility, while appealing visually, does not truly represent the complex interrelationships that occurred among those 4 components. 76. What is a good example of the inequitable level of human rights that are achieved throughout the world? Answer: The example of the countries which use outsourcing as a main source of revenue highlight the challenges to human rights in other countries. Many students may not realize how unique government protection of human rights truly is. It appears that in some countries the government encourages the exploitation of its citizens by not only allowing these working conditions but also allowing the managers to “manage” their workers in such inhuman conditions. Test Bank For Understanding Business Ethics Peter Allen Stanwick, Sarah D. Stanwick 9780131735422, 9788131755365, 9781506303239, 9781452256559
