International Business Competing in the Global Marketplace 11th Edition By Charles -Thomas – Test Bank

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Chapter 05

Ethics, Corporate Social Responsibility, and Sustainability

 

True / False Questions

1. Ethical strategies are the accepted principles of right or wrong governing the conduct of businesspeople.

True    False

 

2. What is considered normal business practice in one country may be considered unethical in other countries.

True    False

 

3. The Sullivan principles mandated that GM could operate in South Africa as long as the company complied with the apartheid laws.

True    False

 

4. Corporations can contribute to the global tragedy of the commons by not pumping pollutants into the atmosphere or dumping them in oceans or rivers.

True    False

 

5. International businesses cannot gain economic advantages by making payments to corrupt government officials.

True    False

 

6. The Foreign Corrupt Practices Act originally allowed “facilitating payments” to secure contracts that would not otherwise be secured.

True    False

 

7. In a business setting, noblesse oblige is taken to mean benevolent behavior that is the responsibility of successful enterprises.

True    False

 

8. Social responsibility refers to the idea that businesspeople should favor decisions that have both good economic and social consequences.

True    False

 

9. The ethical obligations of a multinational corporation toward employment conditions, human rights, environmental pollution, and the use of power are always clear-cut.

True    False

 

10. Ethical dilemmas are situations in which none of the available alternatives seems ethically acceptable.

True    False

 

11. Societal business ethics are divorced from personal ethics.

True    False

 

12. An individual with a strong sense of personal ethics is less likely to behave in an unethical manner in a business setting.

True    False

 

13. A firm’s organizational culture refers to the values and norms that are shared among employees of an organization.

True    False

 

14. The utilitarian approach to ethics is a straw men approach to business ethics that has some inherent value, but is unsatisfactory in important ways.

True    False

 

15. Milton Friedman’s basic position is that the only social responsibility of business is to increase profits, so long as the company stays within the rules of law.

True    False

 

16. The Friedman doctrine is the belief that ethics are nothing more than a reflection of culture and therefore, a firm should adopt the ethics of the culture in which it is operating.

True    False

 

17. Cultural relativism suggests that even if slavery is culturally acceptable in a country, a foreign firm operating in that country should avoid using slave labor.

True    False

 

18. The righteous moralist approach to ethics is typically associated with managers from developing and under-developed nations.

True    False

 

19. Most moral philosophers see value in utilitarian and Kantian approaches to business ethics.

True    False

 

20. Utilitarian philosophy takes into consideration the principle of justice.

True    False

 

21. According to Rawls, inequalities are unjust even if the system that produces inequalities is to the advantage of everyone.

True    False

 

22. Building an organization culture that places a high value on ethical behavior requires incentive and reward systems.

True    False

 

23. To establish moral intent, managers need to stand in the shoes of a stakeholder and ask how a proposed decision might impact that stakeholder.

True    False

 

24. To foster ethical behavior, many businesses draft a code of ethics, which is an informal statement of the ethical priorities the company follows.

True    False

 

25. Ethics officers are hired by many businesses to make sure that all employees are trained to be ethically aware and that ethical considerations enter the business decision-making process at all levels of the organization.

True    False

 

 

Multiple Choice Questions

26. The _____ occurs when a resource held in common by all, but owned by no one, is overused by individuals, resulting in its degradation.

A. tragedy of the commons

 

B. moral ignorance

 

C. noblesse oblige

 

D. veil of ignorance

 

27. The _____ outlawed the paying of bribes to foreign government officials to gain business.

A. Convention on Combating Bribery of Foreign Public Officials

 

B. Foreign Corrupt Practices Act

 

C. Convention on International Business Transactions

 

D. Universal Declaration of Human Rights

 

28. Facilitating payments are also known as _____.

A. grease monkeying

 

B. pocket lining

 

C. speed money

 

D. sliding

 

29. _____ is a French term that refers to honorable and benevolent behavior considered the responsibility of people of high (noble) birth.

A. Bienveillante

 

B. Honourable

 

C. Aristocratic

 

D. Noblesse oblige

 

30. Ethical dilemmas exist because many real-world decisions involve:

A. first-, second-, and third-order consequences that are hard to quantify.

 

B. people from different cultures.

 

C. employers and employees.

 

D. people from different multinational firms.

 

31. Employees in a business often take their cue from _____.

A. other employees

 

B. business leaders

 

C. their families

 

D. government leaders

 

32. _____ approaches to business ethics are raised by business ethics scholars primarily to demonstrate that they offer inappropriate ethical decision making in a multinational enterprise.

A. Cultural relativism

 

B. The righteous moralist

 

C. Straw men

 

D. The naive immoralist

 

33. _____ arguments suggest that improving working conditions beyond the level required by the law and necessary to maximize employee productivity will reduce profits and are therefore not appropriate.

A. Rawls’

 

B. Kantian

 

C. Sullivan’s

 

D. Friedman’s

 

34. According to the _____ point-of-view, a firm should adopt the ethics of the culture in which it is operating.

A. cultural relativism

 

B. righteous moralist

 

C. naïve immoralist

 

D. utilitarian approach

 

35. According to the _____, even if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should maintain the standards of the company’s home country.

A. cultural relativist

 

B. righteous moralist

 

C. utilitarian

 

D. naïve immoralist

 

36. An American firm that sets up production units in China is accused of releasing untreated chemical waste into water bodies. The manager of the firm defends the firm stating that, factories in China set up by French and British firms also release untreated chemical waste into water bodies. What approach to business ethics is the manager using?

A. Righteous moralist

 

B. Utilitarian

 

C. Naive immoralist

 

D. Cultural relativist

 

37. The _____ approaches to ethics hold that the moral worth of actions or practices is determined by their consequences.

A. naïve immoralist

 

B. cultural relativist

 

C. righteous moralist

 

D. utilitarian

 

38. _____ recognize that human beings have fundamental rights and privileges that transcend national boundaries and cultures.

A. Rights theories

 

B. Utilitarians

 

C. Cultural relativists

 

D. Kantian ethics

 

39. Talking with _____ is a good way to discern a potential employee’s ethical predisposition.

A. human resource personnel

 

B. prior employers regarding someone’s reputation

 

C. someone’s psychologists

 

D. someone’s family

 

40. A firm’s _____ include customers, suppliers, and lenders.

A. internal stakeholders

 

B. clients

 

C. external stakeholders

 

D. community

 

41. _____ enables managers to walk away from a decision that is profitable but unethical.

A. Utilitarianism

 

B. Righteousness

 

C. Just distribution

 

D. Moral courage

 

42. Companies can strengthen the _____ of employees by committing themselves to not retaliate against employees who complain about unethical actions.

A. moral courage

 

B. code of ethics

 

C. ethical strategies

 

D. organizational culture

 

43. It is in the best interest of prospective employees to find out all they can about the:

A. external stakeholders of an organization.

 

B. ethical climate in an organization.

 

C. internal stakeholders of an organization.

 

D. corporate social responsibility actions of an organization.

 

44. Which of the following was designed to allow GM to operate ethically in South Africa as long as the company did not obey the apartheid laws in its own South African operations?

A. Sullivan principles

 

B. The righteous moral system

 

C. Noblesse oblige

 

D. Cultural relativism

 

45. Identify the INCORRECT statement about environmental regulations.

A. Environmental regulations are often lacking in developing nations.

 

B. Environmental regulations are similar across developed and developing nations.

 

C. Developed nations have substantial regulations governing the emission of pollutants, the dumping of toxic chemicals, and so on.

 

D. Inferior environmental regulations in host nations, as compared to home nation, can lead to ethical issues.

 

46. The _____ occurs when a resource is shared by all, but owned by no one, is overused by individuals, resulting in its degradation.

A. Friedman effect

 

B. noblesse oblige

 

C. inequity aversion

 

D. tragedy of the commons

 

47. An international U.S.-based company sets up a production unit in a developing country with poor environmental regulations. This contributes to the:

A. noblesse oblige situation.

 

B. inequity aversion.

 

C. global tragedy of the commons.

 

D. Friedman effect.

 

48. Which of the following observations about the Foreign Corrupt Practices Act is true?

A. The act outlawed the paying of bribes to foreign government officials to gain business.

 

B. There is enough evidence that it put U.S. firms at a competitive disadvantage.

 

C. The act originally allowed for “facilitating payments.”

 

D. The Nike case was the impetus for the 1977 passage of this act.

 

49. Facilitating payments are:

A. a direct violation of the Foreign Corrupt Practices Act.

 

B. permitted so long as they designed only to gain exclusive preferential treatment.

 

C. used to secure contracts that would otherwise not be secured.

 

D. permitted under the amended Foreign Corrupt Practices Act.

 

50. The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions excludes:

A. bribes made to secure contracts that would otherwise not be secured.

 

B. grease payments to gain exclusive preferential treatment.

 

C. facilitating payments made to expedite routine government action.

 

D. payments to government officials for special privileges.

 

51. The idea that businesspeople should consider the social consequences of economic actions when making business decisions and that there should be a presumption in favor of decisions that have both good economic and social consequences is known as:

A. moral relativism.

 

B. noblesse oblige.

 

C. ethical dilemma.

 

D. social responsibility.

 

52. Which of the following, in a business setting, is taken to mean benevolent behavior that is the responsibility of successful enterprises?

A. Sullivan’s principles

 

B. Ethical dilemma

 

C. Tragedy of the commons

 

D. Noblesse oblige

 

53. BP, one of the world’s largest oil companies, has made it part of the company policy to undertake “social investments” in the countries where it does business. There was no economic reason for BP to make this social investment, but the company believes it is morally obligated to give something back to the societies that have made their success possible. BP’s actions are an example of:

A. cultural relativism.

 

B. the Friedman doctrine.

 

C. noblesse oblige.

 

D. the tragedy of the commons.

 

54. A situation in which none of the available alternatives seems morally acceptable is called:

A. an ethical dilemma.

 

B. noblesse oblige.

 

C. the tragedy of the commons.

 

D. the free rider problem.

 

55. Expatriate managers may experience more than the usual degree of pressure to violate their personal ethics because of which of the following?

A. They are surrounded by their ordinary social context and supporting culture.

 

B. They are psychologically and geographically closer to the parent company.

 

C. They may be based in a culture that does not place the same value on ethical norms important in the manager’s home country.

 

D. They may be surrounded by local employees who have more rigorous ethical standards.

 

56. Which of the following refers to the values and norms that the employees of an organization share?

A. Vision statement

 

B. Cultural relativism

 

C. Organization culture

 

D. Power orientation

 

57. According to _____, the social responsibility of business is to increase profits, so long as the company stays within the rules of law.

A. the naive immoralist

 

B. the righteous moralist

 

C. cultural relativism

 

D. the Friedman doctrine

 

58. According to the Friedman doctrine:

A. ethics are nothing more than the reflection of culture.

 

B. a multinational’s home-country standards of ethics are inappropriate to follow in foreign countries.

 

C. businesses should not undertake social expenditures beyond those mandated by the law and required for the efficient running of a business.

 

D. if a manager of a multinational sees that firms from other nations are not following environmental legislation in a host nation, that manager should not either.

 

59. Cultural relativism suggests that:

A. a firm should adopt the ethics of the culture in which it is operating.

 

B. the only social responsibility of a firm is to increase profits.

 

C. a firm’s ethical policies should remain the same in all cultures.

 

D. a multinational should follow its home-country cultural practices in all the host-countries where it has operations.

 

60. Child labor is permitted and widely employed in Country X. A multinational company entering Country X decides to employ minors in its subsidiary, even though it is against the multinational’s home-country ethics. Which of the following approaches to business ethics would justify the actions of the multinational company?

A. Righteous moralist

 

B. Cultural relativism

 

C. The justice theory

 

D. The rights theory

 

61. A multinational company is accused of paying bribes to the government of a host country to obtain permission to build a production factory. The public relations manager of the company defends the company’s actions as being ethically sound; he states that in the host country, paying bribes to government officials is the accepted norm and is in keeping with the social practices in the host country. The public relations manager is using which of the following philosophical doctrines to defend the actions of the company?

A. The Friedman doctrine

 

B. Righteous moralist

 

C. Noblesse oblige

 

D. Cultural relativism

 

62. In its extreme viewpoint, _____ suggests that if a culture supports slavery, it is all right to use slave labor in the country.

A. the Friedman doctrine

 

B. noblesse oblige

 

C. righteous moralist

 

D. cultural relativism

 

63. The righteous moralist suggests that:

A. ethics are nothing more than the reflection of culture.

 

B. a multinational’s home-country standards of ethics are the appropriate ones for companies to follow in foreign countries.

 

C. the social responsibility of business is to increase profits, so long as the company stays within the rules of law.

 

D. if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either.

 

64. According to the naive immoralist,

A. a multinational’s home-country standards of ethics are the appropriate ones for companies to follow in foreign countries.

 

B. the social responsibility of business is to increase profits, so long as the company stays within the rules of law.

 

C. ethics are nothing more than the reflection of a culture.

 

D. if firms in a host nation do not follow ethical norms then the manager of a multinational should also not follow ethical norms there.

 

65. An American manager in Colombia routinely pays off the local drug lord to guarantee that his plant will not be bombed and that none of his employees will be kidnapped. The manager argues that such payments are ethically defensible because everyone is doing it. The manager’s argument exemplifies which of the following ethical approaches?

A. Naive immoralist

 

B. Kantian ethics

 

C. Righteous moralist

 

D. Noblesse oblige

 

66. The utilitarian approach to business ethics suggests that:

A. people should be treated as ends and never purely as means to the ends of others.

 

B. the moral worth of actions or practices is determined by their consequences.

 

C. people have dignity and need to be treated as such.

 

D. human beings have fundamental rights and privileges that transcend national cultures.

 

67. According to the _____ approach, the best decisions are those that produce the greatest good for the greatest number of people.

A. naive immoralist

 

B. Friedman doctrine

 

C. Kantian ethics

 

D. utilitarian

 

68. The products of Carmen Stores, an international sports apparel chain, are manufactured in sweat factories in China. According to the company president, using sweatshop labor offers a means of livelihood to children and young adults, as well as supplies good quality apparel to customers at a lower cost. She asserts that the actions of the company are justified because it results in the benefit of the maximum number of people. The company president’s argument is based on which of the following ethical viewpoints?

A. The righteous moralist

 

B. The Friedman doctrine

 

C. Kantian approach to business ethics

 

D. Utilitarian approach to business ethics

 

69. The Kantian approach to ethics suggests that:

A. human beings have fundamental rights and privileges that transcend national boundaries.

 

B. the moral worth of actions or practices is determined by their consequences.

 

C. people should be treated as ends and never purely as means to the ends of others.

 

D. ethics are nothing more than the reflection of culture.

 

70. Identify the correct statement about the rights theories.

A. Human beings have fundamental rights and privileges that transcend national boundaries.

 

B. The moral worth of actions or practices is determined by their consequences.

 

C. People should be treated as ends never purely as means to the ends of others.

 

D. The only social responsibility of business is to increase profits, so long as the company stays within the rules of law.

 

71. Which of the following persons believed that people should be treated as ends and never purely as means to the ends of others?

A. John Stuart Mill

 

B. Immanuel Kant

 

C. Milton Friedman

 

D. David Hume

 

72. The United Nations Universal Declaration of Human Rights, related to employment, upholds which of the following?

A. The requirement for the formation of trade unions.

 

B. A sliding pay scale based upon need.

 

C. Prohibition of trade unions.

 

D. Protection against unemployment.

 

73. Article 1 of the United Nations Universal Declaration of Human Rights states: All human beings are born free and equal in dignity and rights. This best echoes:

A. cultural relativism.

 

B. Friedman doctrine.

 

C. the righteous moralist approach.

 

D. Kantian ethics.

 

74. Which of the following statements is true about the United Nations Universal Declaration of Human Rights?

A. It transcends national borders.

 

B. It states that human rights are culturally determined.

 

C. It states that an action is judged desirable if it leads to the best possible balance of good consequences over bad consequences.

 

D. It states that the only social responsibility of business is to increase profits, so long as the company stays within the rules of law.

 

75. Justice theories of business ethics focus on:

A. the moral worth of actions or practices.

 

B. minimum levels of morally acceptable behavior.

 

C. fundamental rights and privileges that transcend national boundaries.

 

D. the attainment of an equitable distribution of goods and services.

 

76. According to John Rawls:

A. each person should be permitted the maximum amount of basic liberty compatible with a similar liberty for others.

 

B. freedom of speech and assembly is the single most important component in a justice system.

 

C. equal basic liberty is impossible in a pure market economy.

 

D. ethics is culturally determined.

 

77. Rawls’ philosophy that inequalities are justified if they benefit the position of the least-advantaged person is known as the:

A. inequality principle.

 

B. equity principle.

 

C. difference principle.

 

D. ignorance veil principle.

 

78. According to John Rawls’s difference principle,

A. certain people or institutions are obligated to provide benefits or services that secure the rights of others.

 

B. fundamental human rights should transcend national borders and cultures.

 

C. the best decisions are those that produce the greatest good for the greatest number of people.

 

D. inequalities are justified if they benefit the position of the least-advantaged person.

 

79. External stakeholders:

A. are individuals or groups who own the business.

 

B. include all employees, the board of directors, and stockholders.

 

C. typically comprise customers, suppliers, lenders, etc.

 

D. are individuals or groups who work for the business.

 

80. Which of the following is an example of an external stakeholder?

A. Employees

 

B. Customers

 

C. Stockholders

 

D. The board of directors

 

81. _____ means standing in the shoes of a stakeholder and asking how a proposed decision might impact that stakeholder.

A. Veil of ignorance

 

B. Difference principle

 

C. Moral imagination

 

D. Noblesse oblige

 

82. Establishing _____ involves a business to resolve to place moral concerns ahead of other concerns in cases where either the fundamental rights of stakeholders or key moral principles have been violated.

A. a veil of ignorance

 

B. a difference principle

 

C. moral imagination

 

D. moral intent

 

83. Which of the following enables managers to walk away from a decision that is profitable, but unethical?

A. Noblesse oblige

 

B. Moral courage

 

C. The difference principle

 

D. The Friedman doctrine

 

84. What is the term for a company’s formal statement of the ethical priorities it expects all of its employees to follow?

A. Code of ethics

 

B. Stakeholders pledge

 

C. Moral courage

 

D. Difference principle

 

85. Business ethics that either deny the value of business ethics or apply the concept in a very unsatisfactory way are termed _____.

A. straw men

 

B. the Sullivan principles

 

C. just distribution

 

D. rights theories

 

86. Which of the following ethical theories explicitly rejects the idea that businesses should undertake social expenditures beyond those mandated by the law and required for the efficient running of a business?

A. The naive immoralist

 

B. The Friedman doctrine

 

C. Cultural relativism

 

D. The righteous moralist

 

87. A(n) _____ asserts that if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either.

A. Kantian ethicist

 

B. righteous moralist

 

C. naive immoralist

 

D. utilitarian ethicist

 

88. Any person or institution that is capable of moral action such as a government or corporation is a(n) _____.

A. moral agent

 

B. utilitarian

 

C. righteous moralist

 

D. naive immoralist

 

89. Under the veil of ignorance, everyone is imagined to be ignorant of:

A. all of his/her particular characteristics.

 

B. fundamental rights and privileges.

 

C. the moral worth of actions or practices.

 

D. the minimum levels of morally acceptable behavior.

 

90. _____ are the accepted principles of right or wrong governing the conduct of businesspeople.

A. Sustainable strategies

 

B. Business ethics

 

C. Moral worth of actions

 

D. Ethical strategies

 

91. The veil of ignorance was developed by _____ as part of his approach to justice theories.

A. Milton Friedman

 

B. John Rawls

 

C. Kantian

 

D. Leon Sullivan

 

92. Often, the code of ethics draws heavily upon documents such as the _____, which itself is grounded in Kantian and rights-based theories of moral philosophy.

A. Convention on Combating Bribery of Foreign Public Officials

 

B. Foreign Corrupt Practices Act

 

C. Convention on International Business Transactions

 

D. UN Universal Declaration of Human Rights

 

93. Which of the following is a reason why managers behave in a manner that is unethical?

A. Psychological and geographical distances of a foreign subsidiary from the home office

 

B. Pressure from an ethical leader

 

C. Confusion between personal ethics and business ethics

 

D. Incorporating ethical issues into strategic and operational decision making

 

94. In the international business setting, one of the most common ethical issues involves _____.

A. hiring practices

 

B. government deregulation

 

C. the moral obligation of multinational corporations

 

D. facilitating payments

 

95. The _____ obliges member states to make the bribery of foreign public officials a criminal offense and excludes facilitating payments made to expedite routine government action from the convention.

A. Convention on Combating Bribery of Foreign Public Officials

 

B. Foreign Corrupt Practices Act

 

C. Convention on International Business Transactions

 

D. Universal Declaration of Human Rights

 

 

Essay Questions

96. Discuss how companies such as Exxon, Kodak, and IBM helped improve human rights in South Africa.

 

 

 

 

97. Should a multinational feel free to pollute in a developing nation?

 

 

 

 

98. In your opinion, are bribes ever acceptable? Why or why not?

 

 

 

 

99. Discuss the notion of social responsibility. What does it mean for corporations?

 

 

 

 

100. What are ethical dilemmas? Why do they exist?

 

 

 

 

101. Why are expatriate managers at a greater risk of violating their personal code of ethics?

 

 

 

 

102. Explain the Friedman doctrine. Who developed the philosophy? How well does this approach hold up ethically?

 

 

 

 

103. Discuss the cultural relativism approach to business ethics. What is the connection between this approach and the phrase “When in Rome do as the Romans”? How well does this approach hold up ethically?

 

 

 

 

104. Discuss the naive immoralist’s approach to business ethics. What are the criticisms of this approach?

 

 

 

 

105. Discuss the utilitarian approach to business ethics. When was this approach developed? What are its drawbacks?

 

 

 

 

106. What are the ways in which international business and its managers can ensure that ethical issues are considered in business decisions?

 

 

 

 

107. Describe the five-step process that businesses can use to think through ethical problems.

 

 

 

 

108. Why do organizations appoint an ethics officer?

 

 

 

 

109. How can companies strengthen the moral courage of employees?

 

 

 

 

110. Explain the concept of moral imagination as it relates to a company’s stakeholders.

 

 

 

 

Chapter 05 Ethics, Corporate Social Responsibility, and Sustainability Answer Key

True / False Questions

1. Ethical strategies are the accepted principles of right or wrong governing the conduct of businesspeople.

FALSE

An ethical strategy is a strategy, or course of action, that does not violate the accepted principles of right or wrong governing the conduct of businesspeople.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-01 Understand the ethical issues faced by international businesses.
Topic: Ethical Issues in International Business
 

 

2. What is considered normal business practice in one country may be considered unethical in other countries.

TRUE

Many of the ethical issues in international business are rooted in the fact that political systems, law, economic development, and culture vary significantly from nation to nation. What is considered normal practice in one nation may be considered unethical in another.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-01 Understand the ethical issues faced by international businesses.
Topic: Ethical Issues in International Business
 

 

3. The Sullivan principles mandated that GM could operate in South Africa as long as the company complied with the apartheid laws.

FALSE

GM adopted the Sullivan principles. Sullivan argued that it was ethically justified for GM to operate in South Africa so long as two conditions were fulfilled. First, the company should not obey the apartheid laws in its own South African operations. Second, the company should do everything within its power to promote the abolition of apartheid laws.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-01 Understand the ethical issues faced by international businesses.
Topic: Ethical Issues in International Business
 

 

4. Corporations can contribute to the global tragedy of the commons by not pumping pollutants into the atmosphere or dumping them in oceans or rivers.

FALSE

In the modern world, corporations can contribute to the global tragedy of the commons by moving production to locations where they are free to pump pollutants into the atmosphere or dump them in oceans or rivers, thereby harming these valuable global commons.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-01 Understand the ethical issues faced by international businesses.
Topic: Ethical Issues in International Business
 

 

5. International businesses cannot gain economic advantages by making payments to corrupt government officials.

FALSE

There always have been and always will be corrupt government officials. International businesses can and have gained economic advantages by making payments to those officials.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-01 Understand the ethical issues faced by international businesses.
Topic: Ethical Issues in International Business
 

 

6. The Foreign Corrupt Practices Act originally allowed “facilitating payments” to secure contracts that would not otherwise be secured.

FALSE

The Foreign Corrupt Practices Act was subsequently amended to allow for “facilitating payments.” Sometimes known as speed money or grease payments, facilitating payments are not payments to secure contracts that would not otherwise be secured and nor are they payments to obtain exclusive preferential treatment.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-01 Understand the ethical issues faced by international businesses.
Topic: Key Regulations Governing Ethics and Social Responsibility
 

 

7. In a business setting, noblesse oblige is taken to mean benevolent behavior that is the responsibility of successful enterprises.

TRUE

Noblesse oblige is a French term that refers to honorable and benevolent behavior considered the responsibility of people of high (noble) birth. In a business setting, it is taken to mean benevolent behavior that is the responsibility of successful enterprises.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-01 Understand the ethical issues faced by international businesses.
Topic: Ethical Issues in International Business
 

 

8. Social responsibility refers to the idea that businesspeople should favor decisions that have both good economic and social consequences.

TRUE

The concept of social responsibility refers to the idea that businesspeople should consider the social consequences of economic actions when making business decisions, and that there should be a presumption in favor of decisions that have both good economic and social consequences.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-01 Understand the ethical issues faced by international businesses.
Topic: Ethical Issues in International Business
 

 

9. The ethical obligations of a multinational corporation toward employment conditions, human rights, environmental pollution, and the use of power are always clear-cut.

FALSE

The ethical obligations of a multinational corporation toward employment conditions, human rights, corruption, environmental pollution, and the use of power are not always clear-cut.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-02 Recognize an ethical dilemma.
Topic: Ethical Decision Making
 

 

10. Ethical dilemmas are situations in which none of the available alternatives seems ethically acceptable.

TRUE

Ethical dilemmas are situations in which none of the available alternatives seems ethically acceptable.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-02 Recognize an ethical dilemma.
Topic: Ethical Decision Making
 

 

11. Societal business ethics are divorced from personal ethics.

FALSE

Societal business ethics are not divorced from personal ethics, which are the generally accepted principles of right and wrong governing the conduct of individuals.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-03 Identify the causes of unethical behavior by managers.
Topic: Causes of Unethical Behavior
 

 

12. An individual with a strong sense of personal ethics is less likely to behave in an unethical manner in a business setting.

TRUE

Our personal ethical code exerts a profound influence on the way we behave as businesspeople. An individual with a strong sense of personal ethics is less likely to behave in an unethical manner in a business setting.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-03 Identify the causes of unethical behavior by managers.
Topic: Causes of Unethical Behavior
 

 

13. A firm’s organizational culture refers to the values and norms that are shared among employees of an organization.

TRUE

The term organization culture refers to the values and norms that are shared among employees of an organization.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-03 Identify the causes of unethical behavior by managers.
Topic: Causes of Unethical Behavior
 

 

14. The utilitarian approach to ethics is a straw men approach to business ethics that has some inherent value, but is unsatisfactory in important ways.

FALSE

Straw men approaches to business ethics can be characterized as the Friedman doctrine, cultural relativism, the righteous moralist, and the naive immoralist.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

15. Milton Friedman’s basic position is that the only social responsibility of business is to increase profits, so long as the company stays within the rules of law.

TRUE

The Nobel Prize-winning economist Milton Friedman wrote an article in 1970 that has since become a classic straw man that business ethics scholars outline only to then tear down. Friedman’s basic position is that the only social responsibility of business is to increase profits, so long as the company stays within the rules of law.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

16. The Friedman doctrine is the belief that ethics are nothing more than a reflection of culture and therefore, a firm should adopt the ethics of the culture in which it is operating.

FALSE

Friedman’s basic position is that the only social responsibility of business is to increase profits, so long as the company stays within the rules of law. He explicitly rejects the idea that businesses should undertake social expenditures beyond those mandated by the law and required for the efficient running of a business.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

17. Cultural relativism suggests that even if slavery is culturally acceptable in a country, a foreign firm operating in that country should avoid using slave labor.

FALSE

At its extreme, cultural relativism suggests that if a culture supports slavery, it is OK to use slave labor in a country.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Analyze
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

18. The righteous moralist approach to ethics is typically associated with managers from developing and under-developed nations.

FALSE

A righteous moralist claims that a multinational’s home-country standards of ethics are the appropriate ones for companies to follow in foreign countries. This approach is typically associated with managers from developed nations.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

19. Most moral philosophers see value in utilitarian and Kantian approaches to business ethics.

TRUE

In contrast to the straw men approaches to ethics, most moral philosophers see value in utilitarian and Kantian approaches to business ethics.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

20. Utilitarian philosophy takes into consideration the principle of justice.

FALSE

The problem with utilitarianism is that the philosophy omits the consideration of justice. The action that produces the greatest good for the greatest number of people may result in the unjustified treatment of a minority.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

21. According to Rawls, inequalities are unjust even if the system that produces inequalities is to the advantage of everyone.

FALSE

Rawls accepts that inequalities can be just if the system that produces inequalities is to the advantage of everyone. More precisely, he formulates what he calls the difference principle, which is that inequalities are justified if they benefit the position of the least-advantaged person.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

22. Building an organization culture that places a high value on ethical behavior requires incentive and reward systems.

TRUE

Building an organization culture that places a high value on ethical behavior requires incentive and reward systems, including promotions that reward people who engage in ethical behavior and sanction those who do not.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-05 Explain how managers can incorporate ethical considerations into their decision making.
Topic: Ethical Issues in International Business
 

 

23. To establish moral intent, managers need to stand in the shoes of a stakeholder and ask how a proposed decision might impact that stakeholder.

FALSE

Managers need to establish moral intent, to be able to think through ethical problems. This means the business must resolve to place moral concerns ahead of other concerns in cases where either the fundamental rights of stakeholders or key moral principles have been violated.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-05 Explain how managers can incorporate ethical considerations into their decision making.
Topic: Ethical Decision Making
 

 

24. To foster ethical behavior, many businesses draft a code of ethics, which is an informal statement of the ethical priorities the company follows.

FALSE

To foster ethical behavior, businesses need to build an organization that values ethical behavior. To do this, many companies now draft a code of ethics, which is a formal statement of the ethical priorities a business adheres to.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-05 Explain how managers can incorporate ethical considerations into their decision making.
Topic: Ethical Issues in International Business
 

 

25. Ethics officers are hired by many businesses to make sure that all employees are trained to be ethically aware and that ethical considerations enter the business decision-making process at all levels of the organization.

TRUE

To make sure that a business behaves in an ethical manner, a number of firms now have ethics officers. These individuals are responsible for making sure that all employees are trained to be ethically aware, that ethical considerations enter the business decision-making process, and that the company’s code of ethics if followed.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-05 Explain how managers can incorporate ethical considerations into their decision making.
Topic: Ethical Issues in International Business
 

 

Multiple Choice Questions

26. The _____ occurs when a resource held in common by all, but owned by no one, is overused by individuals, resulting in its degradation.

A. tragedy of the commons

 

B. moral ignorance

 

C. noblesse oblige

 

D. veil of ignorance

The tragedy of the commons occurs when a resource held in common by all, but owned by no one, is overused by individuals, resulting in its degradation. The phenomenon was first named by Garrett Hardin when describing a particular problem in sixteenth-century England.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-01 Understand the ethical issues faced by international businesses.
Topic: Ethical Issues in International Business
 

 

27. The _____ outlawed the paying of bribes to foreign government officials to gain business.

A. Convention on Combating Bribery of Foreign Public Officials

 

B. Foreign Corrupt Practices Act

 

C. Convention on International Business Transactions

 

D. Universal Declaration of Human Rights

The Lockheed case was the impetus for the 1977 passage of the Foreign Corrupt Practices Act in the United States. The act outlawed the paying of bribes to foreign government officials to gain business.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-01 Understand the ethical issues faced by international businesses.
Topic: Key Regulations Governing Ethics and Social Responsibility
 

 

28. Facilitating payments are also known as _____.

A. grease monkeying

 

B. pocket lining

 

C. speed money

 

D. sliding

Sometimes known as speed money or grease payments, facilitating payments are not payments to secure contracts that would not otherwise be secured and nor are they payments to obtain exclusive preferential treatment.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-01 Understand the ethical issues faced by international businesses.
Topic: Ethical Issues in International Business
 

 

29. _____ is a French term that refers to honorable and benevolent behavior considered the responsibility of people of high (noble) birth.

A. Bienveillante

 

B. Honourable

 

C. Aristocratic

 

D. Noblesse oblige

Noblesse oblige is a French term that refers to honorable and benevolent behavior considered the responsibility of people of high (noble) birth.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-01 Understand the ethical issues faced by international businesses.
Topic: Ethical Issues in International Business
 

 

30. Ethical dilemmas exist because many real-world decisions involve:

A. first-, second-, and third-order consequences that are hard to quantify.

 

B. people from different cultures.

 

C. employers and employees.

 

D. people from different multinational firms.

Ethical dilemmas exist because many real-world decisions are complex, difficult to frame, and involve first-, second-, and third-order consequences that are hard to quantify. Doing the right thing, or even knowing what the right thing might be, is often far from easy.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-02 Recognize an ethical dilemma.
Topic: Ethical Decision Making
 

 

31. Employees in a business often take their cue from _____.

A. other employees

 

B. business leaders

 

C. their families

 

D. government leaders

Leaders help to establish the culture of an organization, and they set the example that others follow. Other employees in a business often take their cue from business leaders, and if those leaders do not behave in an ethical manner, they might not either.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-03 Identify the causes of unethical behavior by managers.
Topic: Causes of Unethical Behavior
 

 

32. _____ approaches to business ethics are raised by business ethics scholars primarily to demonstrate that they offer inappropriate ethical decision making in a multinational enterprise.

A. Cultural relativism

 

B. The righteous moralist

 

C. Straw men

 

D. The naive immoralist

Straw men approaches to business ethics are raised by business ethics scholars primarily to demonstrate that they offer inappropriate guidelines for ethical decision making in a multinational enterprise.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

33. _____ arguments suggest that improving working conditions beyond the level required by the law and necessary to maximize employee productivity will reduce profits and are therefore not appropriate.

A. Rawls’

 

B. Kantian

 

C. Sullivan’s

 

D. Friedman’s

Friedman explicitly rejects the idea that businesses should undertake social expenditures beyond those mandated by the law and required for the efficient running of a business.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

34. According to the _____ point-of-view, a firm should adopt the ethics of the culture in which it is operating.

A. cultural relativism

 

B. righteous moralist

 

C. naïve immoralist

 

D. utilitarian approach

Cultural relativism is the belief that ethics are nothing more than the reflection of a culture—all ethics are culturally determined—and that accordingly, a firm should adopt the ethics of the culture in which it is operating.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

35. According to the _____, even if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should maintain the standards of the company’s home country.

A. cultural relativist

 

B. righteous moralist

 

C. utilitarian

 

D. naïve immoralist

A righteous moralist claims that a multinational’s home-country standards of ethics are the appropriate ones for companies to follow in foreign countries.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

36. An American firm that sets up production units in China is accused of releasing untreated chemical waste into water bodies. The manager of the firm defends the firm stating that, factories in China set up by French and British firms also release untreated chemical waste into water bodies. What approach to business ethics is the manager using?

A. Righteous moralist

 

B. Utilitarian

 

C. Naive immoralist

 

D. Cultural relativist

A naive immoralist asserts that if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either.

 

AACSB: Ethics
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

37. The _____ approaches to ethics hold that the moral worth of actions or practices is determined by their consequences.

A. naïve immoralist

 

B. cultural relativist

 

C. righteous moralist

 

D. utilitarian

Utilitarian approaches to ethics hold that the moral worth of actions or practices is determined by their consequences. An action is judged desirable if it leads to the best possible balance of good consequences over bad consequences.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

38. _____ recognize that human beings have fundamental rights and privileges that transcend national boundaries and cultures.

A. Rights theories

 

B. Utilitarians

 

C. Cultural relativists

 

D. Kantian ethics

Developed in the twentieth century, rights theories recognize that human beings have fundamental rights and privileges that transcend national boundaries and cultures. Rights establish a minimum level of morally acceptable behavior.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

39. Talking with _____ is a good way to discern a potential employee’s ethical predisposition.

A. human resource personnel

 

B. prior employers regarding someone’s reputation

 

C. someone’s psychologists

 

D. someone’s family

Businesses can give potential employees psychological tests to try to discern their ethical predisposition, and they can check with prior employees regarding someone’s reputation (e.g., by asking for letters of reference and talking to people who have worked with the prospective employee). The latter is common and does influence the hiring process.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-05 Explain how managers can incorporate ethical considerations into their decision making.
Topic: Ethical Decision Making
 

 

40. A firm’s _____ include customers, suppliers, and lenders.

A. internal stakeholders

 

B. clients

 

C. external stakeholders

 

D. community

Internal stakeholders are individuals or groups who work for or own the business. External stakeholders are all other individuals and groups that have some claim on the firm. Typically, this group comprises customers, suppliers, lenders, governments, unions, local communities, and the general public.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-05 Explain how managers can incorporate ethical considerations into their decision making.
Topic: Ethical Decision Making
 

 

41. _____ enables managers to walk away from a decision that is profitable but unethical.

A. Utilitarianism

 

B. Righteousness

 

C. Just distribution

 

D. Moral courage

It is important to recognize that employees in an international business may need significant moral courage. Moral courage enables managers to walk away from a decision that is profitable but unethical.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-05 Explain how managers can incorporate ethical considerations into their decision making.
Topic: Ethical Decision Making
 

 

42. Companies can strengthen the _____ of employees by committing themselves to not retaliate against employees who complain about unethical actions.

A. moral courage

 

B. code of ethics

 

C. ethical strategies

 

D. organizational culture

Companies can strengthen the moral courage of employees by committing themselves to not retaliate against employees who exercise moral courage, say no to superiors, or otherwise complain about unethical actions.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-05 Explain how managers can incorporate ethical considerations into their decision making.
Topic: Ethical Decision Making
 

 

43. It is in the best interest of prospective employees to find out all they can about the:

A. external stakeholders of an organization.

 

B. ethical climate in an organization.

 

C. internal stakeholders of an organization.

 

D. corporate social responsibility actions of an organization.

Not only should businesses strive to identify and hire people with a strong sense of personal ethics, but it also is in the best interest of prospective employees to find out as much as they can about the ethical climate in an organization.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-05 Explain how managers can incorporate ethical considerations into their decision making.
Topic: Ethics and Social Responsibility
 

 

44. Which of the following was designed to allow GM to operate ethically in South Africa as long as the company did not obey the apartheid laws in its own South African operations?

A. Sullivan principles

 

B. The righteous moral system

 

C. Noblesse oblige

 

D. Cultural relativism

GM adopted what came to be called the Sullivan principles, named after Leon Sullivan, a black Baptist minister and a member of GM’s board of directors. Sullivan argued that it was ethically justified for GM to operate in South Africa so long as certain conditions were fulfilled.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-01 Understand the ethical issues faced by international businesses.
Topic: Ethical Issues in International Business
 

 

45. Identify the INCORRECT statement about environmental regulations.

A. Environmental regulations are often lacking in developing nations.

 

B. Environmental regulations are similar across developed and developing nations.

 

C. Developed nations have substantial regulations governing the emission of pollutants, the dumping of toxic chemicals, and so on.

 

D. Inferior environmental regulations in host nations, as compared to home nation, can lead to ethical issues.

Many developed nations have substantial regulations governing the emission of pollutants, the dumping of toxic chemicals, the use of toxic materials in the workplace, and so on. Those regulations are often lacking in developing nations, and according to critics, the result can be higher levels of pollution from the operations of multinationals than would be allowed at home.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Analyze
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-01 Understand the ethical issues faced by international businesses.
Topic: Ethical Issues in International Business
 

 

46. The _____ occurs when a resource is shared by all, but owned by no one, is overused by individuals, resulting in its degradation.

A. Friedman effect

 

B. noblesse oblige

 

C. inequity aversion

 

D. tragedy of the commons

The tragedy of the commons occurs when a resource held in common by all, but owned by no one, is overused by individuals, resulting in its degradation.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-01 Understand the ethical issues faced by international businesses.
Topic: Ethical Issues in International Business
 

 

47. An international U.S.-based company sets up a production unit in a developing country with poor environmental regulations. This contributes to the:

A. noblesse oblige situation.

 

B. inequity aversion.

 

C. global tragedy of the commons.

 

D. Friedman effect.

In the modern world, corporations can contribute to the global tragedy of the commons by moving production to locations where they are free to pump pollutants into the atmosphere or dump them in oceans or rivers, thereby harming these valuable global commons.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-01 Understand the ethical issues faced by international businesses.
Topic: Ethical Issues in International Business
 

 

48. Which of the following observations about the Foreign Corrupt Practices Act is true?

A. The act outlawed the paying of bribes to foreign government officials to gain business.

 

B. There is enough evidence that it put U.S. firms at a competitive disadvantage.

 

C. The act originally allowed for “facilitating payments.”

 

D. The Nike case was the impetus for the 1977 passage of this act.

The Lockheed case was the impetus for the 1977 passage of the Foreign Corrupt Practices Act in the United States. The act outlawed the paying of bribes to foreign government officials to gain business.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-01 Understand the ethical issues faced by international businesses.
Topic: Key Regulations Governing Ethics and Social Responsibility
 

 

49. Facilitating payments are:

A. a direct violation of the Foreign Corrupt Practices Act.

 

B. permitted so long as they designed only to gain exclusive preferential treatment.

 

C. used to secure contracts that would otherwise not be secured.

 

D. permitted under the amended Foreign Corrupt Practices Act.

Sometimes known as speed money or grease payments, facilitating payments are payments to ensure receiving the standard treatment that a business ought to receive from a foreign government, but might not due to the obstruction of a foreign official.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-01 Understand the ethical issues faced by international businesses.
Topic: Key Regulations Governing Ethics and Social Responsibility
 

 

50. The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions excludes:

A. bribes made to secure contracts that would otherwise not be secured.

 

B. grease payments to gain exclusive preferential treatment.

 

C. facilitating payments made to expedite routine government action.

 

D. payments to government officials for special privileges.

The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions excludes facilitating payments made to expedite routine government action from the convention.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-01 Understand the ethical issues faced by international businesses.
Topic: Key Regulations Governing Ethics and Social Responsibility
 

 

51. The idea that businesspeople should consider the social consequences of economic actions when making business decisions and that there should be a presumption in favor of decisions that have both good economic and social consequences is known as:

A. moral relativism.

 

B. noblesse oblige.

 

C. ethical dilemma.

 

D. social responsibility.

The concept of social responsibility refers to the idea that businesspeople should consider the social consequences of economic actions when making business decisions, and that there should be a presumption in favor of decisions that have both good economic and social consequences.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-01 Understand the ethical issues faced by international businesses.
Topic: Ethics and Social Responsibility
 

 

52. Which of the following, in a business setting, is taken to mean benevolent behavior that is the responsibility of successful enterprises?

A. Sullivan’s principles

 

B. Ethical dilemma

 

C. Tragedy of the commons

 

D. Noblesse oblige

Noblesse oblige is a French term that refers to honorable and benevolent behavior considered the responsibility of people of high (noble) birth. In a business setting, it is taken to mean benevolent behavior that is the responsibility of successful enterprises.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-01 Understand the ethical issues faced by international businesses.
Topic: Ethics and Social Responsibility
 

 

53. BP, one of the world’s largest oil companies, has made it part of the company policy to undertake “social investments” in the countries where it does business. There was no economic reason for BP to make this social investment, but the company believes it is morally obligated to give something back to the societies that have made their success possible. BP’s actions are an example of:

A. cultural relativism.

 

B. the Friedman doctrine.

 

C. noblesse oblige.

 

D. the tragedy of the commons.

Noblesse oblige is a French term that refers to honorable and benevolent behavior considered the responsibility of people of high (noble) birth. In a business setting, it is taken to mean benevolent behavior that is the responsibility of successful enterprises.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-01 Understand the ethical issues faced by international businesses.
Topic: Ethics and Social Responsibility
 

 

54. A situation in which none of the available alternatives seems morally acceptable is called:

A. an ethical dilemma.

 

B. noblesse oblige.

 

C. the tragedy of the commons.

 

D. the free rider problem.

Ethical dilemmas are situations in which none of the available alternatives seems ethically acceptable.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-02 Recognize an ethical dilemma.
Topic: Ethical Decision Making
 

 

55. Expatriate managers may experience more than the usual degree of pressure to violate their personal ethics because of which of the following?

A. They are surrounded by their ordinary social context and supporting culture.

 

B. They are psychologically and geographically closer to the parent company.

 

C. They may be based in a culture that does not place the same value on ethical norms important in the manager’s home country.

 

D. They may be surrounded by local employees who have more rigorous ethical standards.

Home-country managers working abroad in multinational firms (expatriate managers) may experience more than the usual degree of pressure to violate their personal ethics. They are away from their ordinary social context and supporting culture, and they are psychologically and geographically distant from the parent company.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-03 Identify the causes of unethical behavior by managers.
Topic: Causes of Unethical Behavior
 

 

56. Which of the following refers to the values and norms that the employees of an organization share?

A. Vision statement

 

B. Cultural relativism

 

C. Organization culture

 

D. Power orientation

The term organization culture refers to the values and norms that are shared among employees of an organization.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-03 Identify the causes of unethical behavior by managers.
Topic: Causes of Unethical Behavior
 

 

57. According to _____, the social responsibility of business is to increase profits, so long as the company stays within the rules of law.

A. the naive immoralist

 

B. the righteous moralist

 

C. cultural relativism

 

D. the Friedman doctrine

Friedman’s basic position is that the only social responsibility of business is to increase profits, so long as the company stays within the rules of law. He explicitly rejects the idea that businesses should undertake social expenditures beyond those mandated by the law and required for the efficient running of a business.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

58. According to the Friedman doctrine:

A. ethics are nothing more than the reflection of culture.

 

B. a multinational’s home-country standards of ethics are inappropriate to follow in foreign countries.

 

C. businesses should not undertake social expenditures beyond those mandated by the law and required for the efficient running of a business.

 

D. if a manager of a multinational sees that firms from other nations are not following environmental legislation in a host nation, that manager should not either.

Friedman explicitly rejects the idea that businesses should undertake social expenditures beyond those mandated by the law and required for the efficient running of a business.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

59. Cultural relativism suggests that:

A. a firm should adopt the ethics of the culture in which it is operating.

 

B. the only social responsibility of a firm is to increase profits.

 

C. a firm’s ethical policies should remain the same in all cultures.

 

D. a multinational should follow its home-country cultural practices in all the host-countries where it has operations.

Cultural relativism is the belief that ethics are nothing more than the reflection of a culture—all ethics are culturally determined—and that accordingly, a firm should adopt the ethics of the culture in which it is operating.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

60. Child labor is permitted and widely employed in Country X. A multinational company entering Country X decides to employ minors in its subsidiary, even though it is against the multinational’s home-country ethics. Which of the following approaches to business ethics would justify the actions of the multinational company?

A. Righteous moralist

 

B. Cultural relativism

 

C. The justice theory

 

D. The rights theory

Cultural relativism is the belief that ethics are nothing more than the reflection of a culture—all ethics are culturally determined—and that accordingly, a firm should adopt the ethics of the culture in which it is operating.

 

AACSB: Ethics
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

61. A multinational company is accused of paying bribes to the government of a host country to obtain permission to build a production factory. The public relations manager of the company defends the company’s actions as being ethically sound; he states that in the host country, paying bribes to government officials is the accepted norm and is in keeping with the social practices in the host country. The public relations manager is using which of the following philosophical doctrines to defend the actions of the company?

A. The Friedman doctrine

 

B. Righteous moralist

 

C. Noblesse oblige

 

D. Cultural relativism

Cultural relativism is the belief that ethics are nothing more than the reflection of a culture—all ethics are culturally determined—and that accordingly, a firm should adopt the ethics of the culture in which it is operating.

 

AACSB: Ethics
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

62. In its extreme viewpoint, _____ suggests that if a culture supports slavery, it is all right to use slave labor in the country.

A. the Friedman doctrine

 

B. noblesse oblige

 

C. righteous moralist

 

D. cultural relativism

Cultural relativism does not stand up to a closer look. At its extreme, cultural relativism suggests that if a culture supports slavery, it is OK to use slave labor in a country.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

63. The righteous moralist suggests that:

A. ethics are nothing more than the reflection of culture.

 

B. a multinational’s home-country standards of ethics are the appropriate ones for companies to follow in foreign countries.

 

C. the social responsibility of business is to increase profits, so long as the company stays within the rules of law.

 

D. if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either.

A righteous moralist claims that a multinational’s home-country standards of ethics are the appropriate ones for companies to follow in foreign countries. This approach is typically associated with managers from developed nations.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

64. According to the naive immoralist,

A. a multinational’s home-country standards of ethics are the appropriate ones for companies to follow in foreign countries.

 

B. the social responsibility of business is to increase profits, so long as the company stays within the rules of law.

 

C. ethics are nothing more than the reflection of a culture.

 

D. if firms in a host nation do not follow ethical norms then the manager of a multinational should also not follow ethical norms there.

A naive immoralist asserts that if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

65. An American manager in Colombia routinely pays off the local drug lord to guarantee that his plant will not be bombed and that none of his employees will be kidnapped. The manager argues that such payments are ethically defensible because everyone is doing it. The manager’s argument exemplifies which of the following ethical approaches?

A. Naive immoralist

 

B. Kantian ethics

 

C. Righteous moralist

 

D. Noblesse oblige

A naive immoralist asserts that if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either. The classic example to illustrate the approach is known as the drug lord problem.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

66. The utilitarian approach to business ethics suggests that:

A. people should be treated as ends and never purely as means to the ends of others.

 

B. the moral worth of actions or practices is determined by their consequences.

 

C. people have dignity and need to be treated as such.

 

D. human beings have fundamental rights and privileges that transcend national cultures.

Utilitarian approaches to ethics hold that the moral worth of actions or practices is determined by their consequences. An action is judged desirable if it leads to the best possible balance of good consequences over bad consequences.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

67. According to the _____ approach, the best decisions are those that produce the greatest good for the greatest number of people.

A. naive immoralist

 

B. Friedman doctrine

 

C. Kantian ethics

 

D. utilitarian

The best decisions, from a utilitarian perspective, are those that produce the greatest good for the greatest number of people.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

68. The products of Carmen Stores, an international sports apparel chain, are manufactured in sweat factories in China. According to the company president, using sweatshop labor offers a means of livelihood to children and young adults, as well as supplies good quality apparel to customers at a lower cost. She asserts that the actions of the company are justified because it results in the benefit of the maximum number of people. The company president’s argument is based on which of the following ethical viewpoints?

A. The righteous moralist

 

B. The Friedman doctrine

 

C. Kantian approach to business ethics

 

D. Utilitarian approach to business ethics

As a philosophy for business ethics, utilitarianism focuses attention on the need to weigh carefully all of the social benefits and costs of a business action and to pursue only those actions where the benefits outweigh the costs. The best decisions, from a utilitarian perspective, are those that produce the greatest good for the greatest number of people.

 

AACSB: Ethics
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

69. The Kantian approach to ethics suggests that:

A. human beings have fundamental rights and privileges that transcend national boundaries.

 

B. the moral worth of actions or practices is determined by their consequences.

 

C. people should be treated as ends and never purely as means to the ends of others.

 

D. ethics are nothing more than the reflection of culture.

Kantian ethics hold that people should be treated as ends and never purely as means to the ends of others.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

70. Identify the correct statement about the rights theories.

A. Human beings have fundamental rights and privileges that transcend national boundaries.

 

B. The moral worth of actions or practices is determined by their consequences.

 

C. People should be treated as ends never purely as means to the ends of others.

 

D. The only social responsibility of business is to increase profits, so long as the company stays within the rules of law.

Developed in the twentieth century, rights theories recognize that human beings have fundamental rights and privileges that transcend national boundaries and cultures.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

71. Which of the following persons believed that people should be treated as ends and never purely as means to the ends of others?

A. John Stuart Mill

 

B. Immanuel Kant

 

C. Milton Friedman

 

D. David Hume

Kantian ethics are based on the philosophy of Immanuel Kant (1724-1804). Kantian ethics hold that people should be treated as ends and never purely as means to the ends of others. People are not instruments, like a machine.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

72. The United Nations Universal Declaration of Human Rights, related to employment, upholds which of the following?

A. The requirement for the formation of trade unions.

 

B. A sliding pay scale based upon need.

 

C. Prohibition of trade unions.

 

D. Protection against unemployment.

Article 23 of the United Nations Universal Declaration of Human Rights states: Everyone has the right to form and to join trade unions for the protection of his interests.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Analyze
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

73. Article 1 of the United Nations Universal Declaration of Human Rights states: All human beings are born free and equal in dignity and rights. This best echoes:

A. cultural relativism.

 

B. Friedman doctrine.

 

C. the righteous moralist approach.

 

D. Kantian ethics.

Echoing Kantian ethics, Article 1 of the United Nations Universal Declaration of Human Rights states: All human beings are born free and equal in dignity and rights. They are endowed with reason and conscience and should act towards one another in a spirit of brotherhood.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

74. Which of the following statements is true about the United Nations Universal Declaration of Human Rights?

A. It transcends national borders.

 

B. It states that human rights are culturally determined.

 

C. It states that an action is judged desirable if it leads to the best possible balance of good consequences over bad consequences.

 

D. It states that the only social responsibility of business is to increase profits, so long as the company stays within the rules of law.

The notion that there are fundamental rights that transcend national borders and cultures was the underlying motivation for the United Nations Universal Declaration of Human Rights, which has been ratified by almost every country on the planet and lays down basic principles that should always be adhered to irrespective of the culture in which one is doing business.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

75. Justice theories of business ethics focus on:

A. the moral worth of actions or practices.

 

B. minimum levels of morally acceptable behavior.

 

C. fundamental rights and privileges that transcend national boundaries.

 

D. the attainment of an equitable distribution of goods and services.

A just distribution is one that is considered fair and equitable. Rawls argues that all economic goods and services should be distributed equally except when an unequal distribution would work to everyone’s advantage.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

76. According to John Rawls:

A. each person should be permitted the maximum amount of basic liberty compatible with a similar liberty for others.

 

B. freedom of speech and assembly is the single most important component in a justice system.

 

C. equal basic liberty is impossible in a pure market economy.

 

D. ethics is culturally determined.

According to Rawls, valid principles of justice are those with which all persons would agree if they could freely and impartially consider the situation. One such principle is that each person be permitted the maximum amount of basic liberty compatible with a similar liberty for others.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

77. Rawls’ philosophy that inequalities are justified if they benefit the position of the least-advantaged person is known as the:

A. inequality principle.

 

B. equity principle.

 

C. difference principle.

 

D. ignorance veil principle.

John Rawls formulated what he called the difference principle, which is that inequalities are justified if they benefit the position of the least-advantaged person.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

78. According to John Rawls’s difference principle,

A. certain people or institutions are obligated to provide benefits or services that secure the rights of others.

 

B. fundamental human rights should transcend national borders and cultures.

 

C. the best decisions are those that produce the greatest good for the greatest number of people.

 

D. inequalities are justified if they benefit the position of the least-advantaged person.

John Rawls formulated what he called the difference principle, which is that inequalities are justified if they benefit the position of the least-advantaged person.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

79. External stakeholders:

A. are individuals or groups who own the business.

 

B. include all employees, the board of directors, and stockholders.

 

C. typically comprise customers, suppliers, lenders, etc.

 

D. are individuals or groups who work for the business.

External stakeholders are all other individuals and groups that have some claim on the firm. Typically, this group comprises customers, suppliers, lenders, governments, unions, local communities, and the general public.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-05 Explain how managers can incorporate ethical considerations into their decision making.
Topic: Ethics and Social Responsibility
 

 

80. Which of the following is an example of an external stakeholder?

A. Employees

 

B. Customers

 

C. Stockholders

 

D. The board of directors

Internal stakeholders include all employees, the board of directors, and stockholders. External stakeholders are all other individuals and groups that have some claim on the firm. Typically, this group comprises customers, suppliers, lenders, governments, unions, local communities, and the general public.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-05 Explain how managers can incorporate ethical considerations into their decision making.
Topic: Ethics and Social Responsibility
 

 

81. _____ means standing in the shoes of a stakeholder and asking how a proposed decision might impact that stakeholder.

A. Veil of ignorance

 

B. Difference principle

 

C. Moral imagination

 

D. Noblesse oblige

Stakeholder analysis involves a certain amount of what has been called moral imagination. This means standing in the shoes of a stakeholder and asking how a proposed decision might impact that stakeholder.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-05 Explain how managers can incorporate ethical considerations into their decision making.
Topic: Ethics and Social Responsibility
 

 

82. Establishing _____ involves a business to resolve to place moral concerns ahead of other concerns in cases where either the fundamental rights of stakeholders or key moral principles have been violated.

A. a veil of ignorance

 

B. a difference principle

 

C. moral imagination

 

D. moral intent

Moral intent implies that a business must resolve to place moral concerns ahead of other concerns in cases where either the fundamental rights of stakeholders or key moral principles have been violated.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-05 Explain how managers can incorporate ethical considerations into their decision making.
Topic: Ethics and Social Responsibility
 

 

83. Which of the following enables managers to walk away from a decision that is profitable, but unethical?

A. Noblesse oblige

 

B. Moral courage

 

C. The difference principle

 

D. The Friedman doctrine

It is important to recognize that employees in an international business may need significant moral courage. Moral courage enables managers to walk away from a decision that is profitable but unethical.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-05 Explain how managers can incorporate ethical considerations into their decision making.
Topic: Ethical Decision Making
 

 

84. What is the term for a company’s formal statement of the ethical priorities it expects all of its employees to follow?

A. Code of ethics

 

B. Stakeholders pledge

 

C. Moral courage

 

D. Difference principle

Many companies explicitly articulate values that emphasize ethical behavior by drafting a code of ethics, which is a formal statement of the ethical priorities a business adheres to.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-05 Explain how managers can incorporate ethical considerations into their decision making.
Topic: Ethics and Social Responsibility
 

 

85. Business ethics that either deny the value of business ethics or apply the concept in a very unsatisfactory way are termed _____.

A. straw men

 

B. the Sullivan principles

 

C. just distribution

 

D. rights theories

Straw men approaches to business ethics are raised by business ethics scholars primarily to demonstrate that they offer inappropriate guidelines for ethical decision making in a multinational enterprise.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

86. Which of the following ethical theories explicitly rejects the idea that businesses should undertake social expenditures beyond those mandated by the law and required for the efficient running of a business?

A. The naive immoralist

 

B. The Friedman doctrine

 

C. Cultural relativism

 

D. The righteous moralist

Friedman’s basic position is that the only social responsibility of business is to increase profits, so long as the company stays within the rules of law. He explicitly rejects the idea that businesses should undertake social expenditures beyond those mandated by the law and required for the efficient running of a business.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

87. A(n) _____ asserts that if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either.

A. Kantian ethicist

 

B. righteous moralist

 

C. naive immoralist

 

D. utilitarian ethicist

A naive immoralist asserts that if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

88. Any person or institution that is capable of moral action such as a government or corporation is a(n) _____.

A. moral agent

 

B. utilitarian

 

C. righteous moralist

 

D. naive immoralist

A moral agent is any person or institution that is capable of moral action such as a government or corporation.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

89. Under the veil of ignorance, everyone is imagined to be ignorant of:

A. all of his/her particular characteristics.

 

B. fundamental rights and privileges.

 

C. the moral worth of actions or practices.

 

D. the minimum levels of morally acceptable behavior.

Under the veil of ignorance, everyone is imagined to be ignorant of all of his or her particular characteristics, for example, race, sex, intelligence, nationality, family background, and special talents.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

90. _____ are the accepted principles of right or wrong governing the conduct of businesspeople.

A. Sustainable strategies

 

B. Business ethics

 

C. Moral worth of actions

 

D. Ethical strategies

Business ethics are the accepted principles of right or wrong governing the conduct of businesspeople.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-01 Understand the ethical issues faced by international businesses.
Topic: Ethical Issues in International Business
 

 

91. The veil of ignorance was developed by _____ as part of his approach to justice theories.

A. Milton Friedman

 

B. John Rawls

 

C. Kantian

 

D. Leon Sullivan

The veil of ignorance was developed by John Rawls as part of his approach to justice theories. According to Rawls, valid principles of justice are those with which all persons would agree if they could freely and impartially consider the situation. Impartiality is guaranteed by the veil of ignorance. Under the veil of ignorance, everyone is imagined to be ignorant of all of his/her particular characteristics. Under these conditions everyone would agree that (1) each person be permitted the maximum amount of basic liberty compatible with a similar liberty for others, and (2) once basic liberty is assured, inequality in basic social goods is to be allowed only if such inequalities benefit everyone.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Gradable: automatic
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

92. Often, the code of ethics draws heavily upon documents such as the _____, which itself is grounded in Kantian and rights-based theories of moral philosophy.

A. Convention on Combating Bribery of Foreign Public Officials

 

B. Foreign Corrupt Practices Act

 

C. Convention on International Business Transactions

 

D. UN Universal Declaration of Human Rights

A code of ethics is a formal statement of the ethical priorities a business adheres to. Often, the code of ethics draws heavily upon documents such as the UN Universal Declaration of Human Rights, which itself is grounded in Kantian and rights-based theories of moral philosophy.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-05 Explain how managers can incorporate ethical considerations into their decision making.
Topic: Ethics and Social Responsibility
 

 

93. Which of the following is a reason why managers behave in a manner that is unethical?

A. Psychological and geographical distances of a foreign subsidiary from the home office

 

B. Pressure from an ethical leader

 

C. Confusion between personal ethics and business ethics

 

D. Incorporating ethical issues into strategic and operational decision making

The causes that contribute to unethical behavior in businesses are very complex. However, a few generalizations can be made. Unethical behavior is rooted in poor personal ethics, societal culture, the psychological and geographical distances of a foreign subsidiary from the home office, a failure to incorporate ethical issues into strategic and operational decision making, a dysfunctional culture, and failure of leaders to act in an ethical manner.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-03 Identify the causes of unethical behavior by managers.
Topic: Causes of Unethical Behavior
 

 

94. In the international business setting, one of the most common ethical issues involves _____.

A. hiring practices

 

B. government deregulation

 

C. the moral obligation of multinational corporations

 

D. facilitating payments

Many of the ethical issues and dilemmas in international business are rooted in the fact that political systems, law, economic development, and culture vary significantly from nation to nation. Therefore, what might be considered a normal business practice in one country may constitute unethical behavior in another country. Managers in a multinational company need to be sensitive to these differences and choose the ethical action in those circumstances where variation across societies creates the potential for ethical problems. In the international business setting, the most common ethical issues involve employment practices, human rights, environmental regulations, corruption, and the moral obligation of multinational corporations.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-01 Understand the ethical issues faced by international businesses.
Topic: Ethical Issues in International Business
 

 

95. The _____ obliges member states to make the bribery of foreign public officials a criminal offense and excludes facilitating payments made to expedite routine government action from the convention.

A. Convention on Combating Bribery of Foreign Public Officials

 

B. Foreign Corrupt Practices Act

 

C. Convention on International Business Transactions

 

D. Universal Declaration of Human Rights

In 1997, the OECD adopted the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. The convention obliges member states to make the bribery of foreign public officials a criminal offense. The convention excludes facilitating payments made to expedite routine government action from the convention.

 

AACSB: Ethics
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Gradable: automatic
Learning Objective: 05-01 Understand the ethical issues faced by international businesses.
Topic: Key Regulations Governing Ethics and Social Responsibility
 

 

Essay Questions

96. Discuss how companies such as Exxon, Kodak, and IBM helped improve human rights in South Africa.

During the 1980s, many American companies doing business in South Africa realized that following the Sullivan principles of not obeying apartheid laws and trying to promote their abolition was not a sufficiently ethical strategy. Consequently, many companies divested their holdings in the nation. At the same time, the U.S. government and other nations imposed economic sanctions on the country. Together, these actions helped bring about democratic elections in the nation in 1994, and an end to white minority rule.

 

AACSB: Ethics
Blooms: Analyze
Difficulty: 3 Hard
Gradable: manual
Learning Objective: 05-01 Understand the ethical issues faced by international businesses.
Topic: Ethical Issues in International Business
 

 

97. Should a multinational feel free to pollute in a developing nation?

This question is designed to stimulate classroom discussion or the personal opinion of the student. Issues that might emerge include whether there is any danger that a moral management might move production to a developing nation precisely because costly pollution controls are not required, the notion that the environment is public good that no one owns, but that anyone can despoil, human-induced global warming, and legality of various actions.

 

AACSB: Ethics
Blooms: Evaluate
Difficulty: 3 Hard
Gradable: manual
Learning Objective: 05-01 Understand the ethical issues faced by international businesses.
Topic: Ethical Issues in International Business
 

 

98. In your opinion, are bribes ever acceptable? Why or why not?

This question is designed to allow the students to explore the idea of bribery as possibly resulting in a positive rather than a negative outcome. Some economists have suggested that corruption might in fact improve efficiency and help growth. Others however, argue that corruption simply reduces the returns on business investment and leads to low economic growth.

 

AACSB: Ethics
Blooms: Evaluate
Difficulty: 3 Hard
Gradable: manual
Learning Objective: 05-01 Understand the ethical issues faced by international businesses.
Topic: Ethical Issues in International Business
 

 

99. Discuss the notion of social responsibility. What does it mean for corporations?

The concept of social responsibility refers to the idea that businesspeople should consider the social consequences of economic actions when making business decisions, and that there should be a presumption in favor of decisions that have both good economic and social consequences. In a business setting, social responsibility means that benevolent behavior is the responsibility of successful enterprises.

 

AACSB: Ethics
Blooms: Analyze
Difficulty: 3 Hard
Gradable: manual
Learning Objective: 05-01 Understand the ethical issues faced by international businesses.
Topic: Ethics and Social Responsibility
 

 

100. What are ethical dilemmas? Why do they exist?

Ethical dilemmas are situations in which none of the available alternatives seems ethically acceptable. Ethical dilemmas exist because many real-world decisions are complex, difficult to frame, and involve first-, second-, and third-order consequences that are hard to quantify. To deal with these situations, managers need a moral compass to guide them through the dilemma to find an acceptable solution.

 

AACSB: Ethics
Blooms: Evaluate
Difficulty: 3 Hard
Gradable: manual
Learning Objective: 05-02 Recognize an ethical dilemma.
Topic: Ethical Decision Making
 

 

101. Why are expatriate managers at a greater risk of violating their personal code of ethics?

Expatriate managers may experience more than the usual degree of pressure to violate their personal ethics. They are away from their ordinary social context and supporting culture, and they are psychologically and geographically distant from the parent company. They may be based in a culture that does not place the same value on ethical norms important in the manager’s home country, and they may be surrounded by local employees who have less rigorous ethical standards. The parent company may pressure expatriate managers to meet unrealistic goals that can only be fulfilled by acting unethically. For example, to meet centrally mandated performance goals, expatriate managers might give bribes to win contracts. Local managers might encourage the expatriate to adopt such behavior. Due to its geographical distance, the parent company may be unable to see how expatriate managers are meeting goals, or may choose not to see how they are doing so, allowing such behavior to flourish and persist.

 

AACSB: Ethics
Blooms: Evaluate
Difficulty: 3 Hard
Gradable: manual
Learning Objective: 05-03 Identify the causes of unethical behavior by managers.
Topic: Causes of Unethical Behavior
 

 

102. Explain the Friedman doctrine. Who developed the philosophy? How well does this approach hold up ethically?

In 1970, Milton Friedman suggested that the only social responsibility of business is to increase profits, so long as the company stays within the rules of law. He explicitly rejects the idea that business should undertake social expenditures beyond those mandated by the law and required for the efficient running of a business. Friedman does state that businesses should behave in an ethical manner and not engage in deception and fraud, however, most economists believe that his approach to ethics does not hold up well. For example, even though child labor may not be against the law in a particular country, it is still unethical to use child labor.

 

AACSB: Ethics
Blooms: Analyze
Difficulty: 2 Medium
Gradable: manual
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

103. Discuss the cultural relativism approach to business ethics. What is the connection between this approach and the phrase “When in Rome do as the Romans”? How well does this approach hold up ethically?

The cultural relativism approach is the belief that ethics are nothing more than the reflection of a culture and accordingly, a firm should adopt the ethics of the culture in which it is operating. This approach is often summarized by the maxim “When in Rome do as the Romans.” Cultural relativism does not stand up well to business ethics because it suggests that if a culture allows slavery, then it is acceptable for a firm to use slaves as well. Cultural relativism implicitly rejects the idea that universal notions of morality transcend different cultures, however, some universal notions of morality are found across cultures.

 

AACSB: Ethics
Blooms: Evaluate
Difficulty: 3 Hard
Gradable: manual
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

104. Discuss the naive immoralist’s approach to business ethics. What are the criticisms of this approach?

The naive immoralist asserts that if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either. This approach has been criticized with the argument that simply accepting an action as being ethically justified just because everyone is doing it is not sufficient. Moreover, the multinational company does have the ability to change the prevailing practice in the country.

 

AACSB: Ethics
Blooms: Analyze
Difficulty: 3 Hard
Gradable: manual
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

105. Discuss the utilitarian approach to business ethics. When was this approach developed? What are its drawbacks?

The utilitarian approach to business ethics was developed in the 18th and 19th centuries by philosophers such as David Hume, Jeremy Bentham, and John Stuart Mill. The utilitarian approach to ethics holds that the moral worth of actions or practices is determined by their consequences. An action is judged to be desirable if it leads to the best possible balance of good consequences over bad consequences. The best decisions are those that produce the greatest good for the greatest number of people.

This approach has certain limitations. One serious drawback of the utilitarian approach is that it is difficult to measure the benefits, costs, and risks of a course of action. A second problem is that the philosophy omits the consideration of justice.

 

AACSB: Ethics
Blooms: Analyze
Difficulty: 3 Hard
Gradable: manual
Learning Objective: 05-04 Describe the different philosophical approaches to ethics.
Topic: Philosophical Approaches to Ethics
 

 

106. What are the ways in which international business and its managers can ensure that ethical issues are considered in business decisions?

An international business and its managers can take several steps to make sure ethical issues are considered in business decisions. Some of these are: (1) favor hiring and promoting people with a well-grounded sense of personal ethics; (2) build an organizational culture that places a high value on ethical behavior; (3) make sure that leaders within the business not only articulate the rhetoric of ethical behavior, but also act in a manner that is consistent with that rhetoric; (4) put decision-making processes in place that require people to consider the ethical dimension of business decisions; and (5) develop moral courage.

 

AACSB: Ethics
Blooms: Apply
Difficulty: 2 Medium
Gradable: manual
Learning Objective: 05-05 Explain how managers can incorporate ethical considerations into their decision making.
Topic: Ethical Decision Making
 

 

107. Describe the five-step process that businesses can use to think through ethical problems.

Some experts on ethics have recommended a five-step process to think through ethical problems. In step 1, businesspeople should identify which stakeholders a decision would affect and in what ways. Stakeholder analysis involves a certain amount of moral imagination. Step 2 involves judging the ethics of the proposed strategic decision, given the information gained in step 1. Managers need to determine whether a proposed decision would violate the fundamental rights of any stakeholders. Step 3 requires managers to establish moral intent. This means the business must resolve to place moral concerns ahead of other concerns in cases where either the fundamental rights of stakeholders or key moral principles have been violated. Step 4 requires the company to engage in ethical behavior. Step 5 requires the business to audit its decisions, reviewing them to make sure they were consistent with ethical principles, such as those stated in the company’s code of ethics.

 

AACSB: Ethics
Blooms: Apply
Difficulty: 2 Medium
Gradable: manual
Learning Objective: 05-05 Explain how managers can incorporate ethical considerations into their decision making.
Topic: Ethical Decision Making
 

 

108. Why do organizations appoint an ethics officer?

To make sure that a business behaves in an ethical manner, a number of firms now have ethics officers. These individuals are responsible for making sure that all employees are trained to be ethically aware, that ethical considerations enter the business decision-making process, and that the company’s code of ethics is followed. Ethics officers may also be responsible for auditing decisions to make sure they are consistent with this code. In many businesses, ethics officers act as an internal ombudsperson with responsibility for handling confidential inquiries from employees, investigating complaints from employees or others, reporting findings, and making recommendations for change.

 

AACSB: Ethics
Blooms: Evaluate
Difficulty: 2 Medium
Gradable: manual
Learning Objective: 05-05 Explain how managers can incorporate ethical considerations into their decision making.
Topic: Ethics and Social Responsibility
 

 

109. How can companies strengthen the moral courage of employees?

Companies can strengthen the moral courage of employees by committing themselves to not retaliate against employees who exercise moral courage, say no to superiors, or otherwise complain about unethical actions. Companies can also set up ethics hotlines, which allow employees to anonymously register a complaint with a corporate ethics officer.

 

AACSB: Ethics
Blooms: Apply
Difficulty: 2 Medium
Gradable: manual
Learning Objective: 05-05 Explain how managers can incorporate ethical considerations into their decision making.
Topic: Ethical Decision Making
 

 

110. Explain the concept of moral imagination as it relates to a company’s stakeholders.

All stakeholders are in an exchange relationship with the company. Each stakeholder group supplies the organization with important resources (or contributions), and in exchange each expects its interests to be satisfied by inducements. Stakeholder analysis involves a certain amount of what has been called moral imagination. This means standing in the shoes of a stakeholder and asking how a proposed decision might impact that stakeholder.

 

AACSB: Ethics
Blooms: Apply
Difficulty: 2 Medium
Gradable: manual
Learning Objective: 05-05 Explain how managers can incorporate ethical considerations into their decision making.
Topic: Ethical Decision Making
 

 

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