MGT 520 Business Ethics-Foundations of Business 4th Edition By Pride (TEST BANK)

1. Define business ethics. ANSWER: Ethics is the study of right and wrong and of the morality of the choices individuals make. Business ethics, more specifically defined, is the application of moral standards to business situations. POINTS: 1 DIFFICULTY: Easy REFERENCES: p. 34 LEARNING OBJECTIVES: FOBU.PRIDE.15.2-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic TOPICS: Business Ethics Defined KEYWORDS: Bloom's: Knowledge 2. Why are fairness and honesty in business important ethical concerns? Give examples. ANSWER: Fairness and honesty in business are considered as two important ethical concerns. In addition to obeying all laws and regulations, businesspeople are expected to refrain from knowingly deceiving, misrepresenting, or intimidating others. The PricewaterhouseCoopers LLP and Anderson’s Ark and Associates cases prove that the lack of fairness and honesty also is an expensive proposition. POINTS: 1 DIFFICULTY: Moderate REFERENCES: p. 35 LEARNING OBJECTIVES: FOBU.PRIDE.15.2-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic TOPICS: Ethical Issues KEYWORDS: Bloom's: Comprehension 3. What are the major ethical issues businesspeople face? ANSWER: Challenges to being fair and honest, temptations of placing personal welfare above the welfare of the organization, and conflicts of interest are among common ethical issues that businesspeople may regularly face. Business communications, especially advertising, can also present ethical questions for employees within organizations. POINTS: 1 DIFFICULTY: Moderate REFERENCES: pp. 34-36 LEARNING OBJECTIVES: FOBU.PRIDE.15.2-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic TOPICS: Ethical Issues KEYWORDS: Bloom's: Comprehension 4. What are the three major sets of factors believed to affect ethical behavior in an organization? ANSWER: Individual factors such as individual knowledge of issues, personal values, and personal goals influence the level of ethical behavior in an organization. Social factors such as cultural norms, actions and decisions of co-workers, significant others, and the use of the Internet affect ethical behavior. Also, the amount of freedom an organization gives an employee to behave unethically affects ethical behavior in an organization. POINTS: 1 DIFFICULTY: Easy REFERENCES: pp. 37-38 LEARNING OBJECTIVES: FOBU.PRIDE.15.2-3 NATIONAL STANDARDS: United States - BUSPROG: Analytic TOPICS: Factors Affecting Ethical Behavior KEYWORDS: Bloom's: Knowledge 5. What are some of the social factors that affect ethical decisions? ANSWER: Cultural norms is an important factor in considering ethical decision making. The actions and decisions of coworkers impact other employees’ sense of business ethics. Significant others--spouses, friends, and relatives--also can affect an employee’s perception of ethical and unethical decisions in the workplace. Also, the use of the Internet by employees in a business setting is also an important social factor that affects ethical decision making. POINTS: 1 DIFFICULTY: Easy REFERENCES: pp. 37-38 LEARNING OBJECTIVES: FOBU.PRIDE.15.2-3 NATIONAL STANDARDS: United States - BUSPROG: Analytic TOPICS: Factors Affecting Ethical Behavior KEYWORDS: Bloom's: Knowledge 6. How can the government encourage ethical behavior? Give an example. ANSWER: The government encourages ethical behavior by legislating regulations. One of the important landmark regulations that the government has created is the SarbanesOxley Act of 2002 which deals with corporate responsibility, conflicts of interest, and corporate accountability. POINTS: 1 DIFFICULTY: Easy REFERENCES: p. 38 LEARNING OBJECTIVES: FOBU.PRIDE.15.2-4 NATIONAL STANDARDS: United States - BUSPROG: Analytic TOPICS: Encouraging Ethical Behavior KEYWORDS: Bloom's: Knowledge 7. Define a code of ethics. Do codes cover every business situation? ANSWER: A code of ethics is a written guide to acceptable and ethical behavior in an organization. A code outlines uniform policies, standards, and punishments for violations. A code of ethics cannot possibly cover every situation that might arise in an organization. An environment in which employees recognize the importance of complying with the written code must also be in place. POINTS: 1 DIFFICULTY: Moderate REFERENCES: p. 39 LEARNING OBJECTIVES: FOBU.PRIDE.15.2-4 NATIONAL STANDARDS: United States - BUSPROG: Analytic TOPICS: Encouraging Ethical Behavior KEYWORDS: Bloom's: Comprehension 8. What might be the personal and social consequences of whistle-blowing within one's own firm? ANSWER: Whistle-blowing, the practice of informing the press or government officials about unethical practices within one’s organization, could impact the employee who blew the whistle through loss of his or her job even though the Sarbanes-Oxley Act of 2002 protects whistle-blowers who report corporate misconduct. Retaliation by executives is a criminal offense but, nevertheless, retaliation does occur. POINTS: 1 DIFFICULTY: Moderate REFERENCES: p. 41 LEARNING OBJECTIVES: FOBU.PRIDE.15.2-4 NATIONAL STANDARDS: United States - BUSPROG: Analytic TOPICS: Encouraging Ethical Behavior KEYWORDS: Bloom's: Comprehension 9. What are a few examples of companies acting socially responsible? ANSWER: Student answers will vary. Some possible answers include Walmart’s donation of $20 million in cash, 100 truckloads of free merchandise, and food for 100,000 meals after Hurricane Katrina, General Mills’ foundation that awards millions of dollars in grants to community organizations, and Dell’s foundation that supports a wide range of programs that benefit children in Dell’s principal U.S. locations. POINTS: 1 DIFFICULTY: Moderate REFERENCES: p. 42 LEARNING OBJECTIVES: FOBU.PRIDE.15.2-4 NATIONAL STANDARDS: United States - BUSPROG: Analytic TOPICS: Social Responsibility KEYWORDS: Bloom's: Knowledge 10. Define the doctrine of caveat emptor. ANSWER: Caveat emptor is a Latin phrase meaning “let the buyer beware.” During the early 1900s, business acted primarily without oversight by government regulation and consumers were left to their own devices to determine if a product or service was what was expected and what was portrayed. POINTS: 1 DIFFICULTY: Easy REFERENCES: p. 45 LEARNING OBJECTIVES: FOBU.PRIDE.15.2-5 NATIONAL STANDARDS: United States - BUSPROG: Analytic TOPICS: The Evolution of Social Responsibility in Business KEYWORDS: Bloom's: Knowledge 11. How does the economic model ofsocial responsibility differ from the socioeconomic model ofsocial responsibility? ANSWER: The economic model ofsocial responsibility ascribes that society benefits most when business is left alone to produce and market profitable products that society needs. This contrasts sharply with the socioeconomic model of social responsibility which places emphasis not only on profits but also on the impact of business decisions on society. POINTS: 1 DIFFICULTY: Moderate REFERENCES: pp. 46-47 LEARNING OBJECTIVES: FOBU.PRIDE.15.2-5 NATIONAL STANDARDS: United States - AACSB: Reflective Thinking TOPICS: Two Views of Social Responsibility KEYWORDS: Bloom's: Analysis 12. What would proponents of the socioeconomic model argue to support their position? ANSWER: Since a corporation is a creation of society and is deemed a part of society, a corporation must act as a good citizen or society has the right to demand changes by that entity. Businesses have a responsibility to not only stockholders but also to customers, employees, suppliers, and the general public. POINTS: 1 DIFFICULTY: Moderate REFERENCES: p. 47 LEARNING OBJECTIVES: FOBU.PRIDE.15.2-5 NATIONAL STANDARDS: United States - BUSPROG: Analytic TOPICS: Two Views of Social Responsibility KEYWORDS: Bloom's: Comprehension 13. What would opponents of the socioeconomic model argue to support their position? ANSWER: Businesses are most functional and successful and of most benefit to society when left alone to produce and market profitable products and services that society needs and wants. Social responsibility is someone else’s job and is not a primary responsibility of a business. A firm is legally obligated to act in the economic interest of its stockholders and successful businesses pay taxes that are used to meet the needs of society. POINTS: 1 DIFFICULTY: Easy REFERENCES: pp. 47-48 LEARNING OBJECTIVES: FOBU.PRIDE.15.2-5 NATIONAL STANDARDS: United States - BUSPROG: Analytic TOPICS: Two Views of Social Responsibility KEYWORDS: Bloom's: Comprehension 14. Define consumerism. How have the rights of consumers changed since 1930? ANSWER: Consumerism consists of all activities undertaken to protect the rights of consumers. The three primary categories of the consumer movement include environmental protection, product performance and safety, and information disclosure. Before the 1930s, workers, consumers, and government had very little influence on business activities. Consumerism since the 1930s has shown consumers that they do have rights and can expect businesses to meet environmental, safety, as well as other expectations. POINTS: 1 DIFFICULTY: Challenging REFERENCES: pp. 48; 45 LEARNING OBJECTIVES: FOBU.PRIDE.15.2-5 NATIONAL STANDARDS: United States - AACSB: Reflective Thinking TOPICS: Consumerism; The Evolution of Social Responsibility in Business KEYWORDS: Bloom's: Analysis 15. Explain the six basic rights of consumers. ANSWER: The six basic rights of consumers include the right to safety, the right to be informed, the right to choose, and the right to be heard--all rights asserted in President Kennedy’s Consumer Bill of Rights. Two additional rightsthe right to consumer education and the right to service--were added in 1975 and 1994 respectively. POINTS: 1 DIFFICULTY: Easy REFERENCES: pp. 48-50 LEARNING OBJECTIVES: FOBU.PRIDE.15.2-7 NATIONAL STANDARDS: United States - BUSPROG: Analytic TOPICS: Consumerism KEYWORDS: Bloom's: Knowledge 16. What are the three major consumerism forces today? ANSWER: The three major consumerism forces include individual consumer advocates and organizations, consumer education programs, and consumer laws. Consumer advocates and organizations take it upon themselves to protect the rights of consumers. Consumer education programs attempt to educate consumers to make wiser purchasing decisions. Numerous consumer laws have contributed to major advances in consumerism. POINTS: 1 DIFFICULTY: Easy REFERENCES: p. 50 LEARNING OBJECTIVES: FOBU.PRIDE.15.2-7 NATIONAL STANDARDS: United States - BUSPROG: Analytic TOPICS: Consumerism KEYWORDS: Bloom's: Comprehension 17. What is an affirmative action program? Be certain to detail the objectives of such programs in your answer. ANSWER: An affirmative action program is a plan designed to increase the number of minority employees at all levels within a business. The object of affirmative action programs is to ensure that minorities are represented within the organization in approximately the same proportion as in the community within which the organization exists. POINTS: 1 DIFFICULTY: Easy REFERENCES: p. 52 LEARNING OBJECTIVES: FOBU.PRIDE.15.2-8 NATIONAL STANDARDS: United States - BUSPROG: Analytic TOPICS: Employment Practices KEYWORDS: Bloom's: Knowledge 18. Why did Congress create the Equal Employment Opportunity Commission? ANSWER: Congress created the Equal Employment Opportunity Commission, a government agency with the power to investigate complaints of employment discrimination and sue firms that practice it, in order to help solve discrimination that occurs against workers that may not fall within the affirmative action category. POINTS: 1 DIFFICULTY: Easy REFERENCES: p. 53 LEARNING OBJECTIVES: FOBU.PRIDE.15.2-8 NATIONAL STANDARDS: United States - BUSPROG: Analytic TOPICS: Employment Practices KEYWORDS: Bloom's: Knowledge 19. Why is pollution of concern to most citizens? Why are some businesspeople particularly concerned about pollution? ANSWER: Even though environmentalists have been warning society about the dangers of industrial pollution for several decades, it has only been fairly recently that citizens have witnessed that pollution can be a threat to life and health. If businesses do not think it’s their civil and social responsibility to act responsibly in regard to pollution, federal agencies such as the Environmental Protection Agency will take legal action to force firms to conform to pollution standards and requirements. POINTS: 1 DIFFICULTY: Moderate REFERENCES: pp. 54-55 LEARNING OBJECTIVES: FOBU.PRIDE.15.2-9 NATIONAL STANDARDS: United States - BUSPROG: Analytic TOPICS: Concern for the Environment KEYWORDS: Bloom's: Comprehension 20. Describe the four types of pollution. Who should pay for a clean environment? ANSWER: The four types of pollution include water, air, land, and noise pollution. Many business leaders advocate for tax money to be used to clean up the environment and to keep it clean. They reason behind this is that businesses are not the only polluters and, therefore, government should be involved in cleanup costs. POINTS: 1 DIFFICULTY: Moderate REFERENCES: pp. 55-57 LEARNING OBJECTIVES: FOBU.PRIDE.15.2-9 NATIONAL STANDARDS: United States - AACSB: Reflective Thinking TOPICS: Concern for the Environment KEYWORDS: Bloom's: Analysis 21. What sort of information should be included in a social audit? Who would prepare the audit? How would such a document be used? ANSWER: A social audit typically includes human resources, community involvement, the quality and safety of products, business practices, and efforts to reduce pollution and improve the environment. A program director often prepares a social audit for the firm. A social audit should be used to evaluate what a business is doing with regard to social issues and to revise its social responsibility program. POINTS: 1 DIFFICULTY: Moderate REFERENCES: p. 58 LEARNING OBJECTIVES: FOBU.PRIDE.15.2-10 NATIONAL STANDARDS: United States - BUSPROG: Analytic TOPICS: Implementing a Program of Social Responsibility KEYWORDS: Bloom's: Comprehension 22. How should social responsibility programs be funded? Explain your answer. ANSWER: Funding may likely come from one of three sources: (1) pass the cost on to consumers in the form of higher prices; (2) absorb the cost of the program; or (3) find government funding through tax reductions or other incentives. POINTS: 1 DIFFICULTY: Moderate REFERENCES: p. 59 LEARNING OBJECTIVES: FOBU.PRIDE.15.2-10 NATIONAL STANDARDS: United States - BUSPROG: Analytic TOPICS: Implementing a Program of Social Responsibility KEYWORDS: Bloom's: Comprehension Excellent Air Incorporated (EAI) Excellent Air Inc. is a well-known establishment in the airline business. It is currently one of the top firms in the industry. The company prides itself on good customer service and being concerned with the broader societal good. EAI management is not only concerned with doing things right, but also with doing the right things. Many of their decisions reflect this philosophy. Initially, the company had a problem with employees reporting their suspicions about unethical behavior to the press instead of to EAI management. As a result, the company made sure its employees knew the firm's guidelines on fixing ethical issues. EAI also developed a code of conduct based on standards that continue to be upheld within the company. Since the code of conduct has been put in place, there have been fewer ethical violations. Although employee salaries at EAI are not as high as those at competing firms, the company experiences very low employee turnover. The firm has created a corporate culture that not only makes its employees want to stay, but that also results in higher profits. If EAI can maintain the relationship it has built with its employees and customers, it will have little difficulty keeping up its remarkable success. 23. Refer to Excellent Air Incorporated. The principles that EAI choose to pride itself on show that the company has a. a moral minority. b. cultural diversity. c. social responsibility. d. caveat emptor. e. a social audit. ANSWER: c POINTS: 1 DIFFICULTY: Moderate REFERENCES: p. 42 LEARNING OBJECTIVES: FOBU.PRIDE.15.2-4 NATIONAL STANDARDS: United States - BUSPROG: Analytic TOPICS: Social Responsibility KEYWORDS: Bloom's: Comprehension 24. Refer to Excellent Air Incorporated. Initially, employees were not willing to go to EAI management with ethical issues but would instead report them to the press. This is an example of a. whistle-blowing. b. a social audit. c. poor employees. d. opportunity emptor. e. a narc. ANSWER: a POINTS: 1 DIFFICULTY: Easy REFERENCES: p. 41 LEARNING OBJECTIVES: FOBU.PRIDE.15.2-4 NATIONAL STANDARDS: United States - BUSPROG: Analytic TOPICS: Encouraging Ethical Behavior KEYWORDS: Bloom's: Comprehension 25. Refer to Excellent Air Incorporated. To fix the ethical issue problems, EAI management should have implemented all of the following guidelines for making ethical decisions except which one? a. Listen and learn. b. Identify the ethical issue. c. Create and analyze options. d. Create an industry benchmark. e. Explain your decision and resolve any differences that arise. ANSWER: d POINTS: 1 DIFFICULTY: Challenging REFERENCES: p. 41 LEARNING OBJECTIVES: FOBU.PRIDE.15.2-4 NATIONAL STANDARDS: United States - BUSPROG: Analytic TOPICS: Encouraging Ethical Behavior KEYWORDS: Bloom's: Comprehension 26. Refer to Excellent Air Incorporated. Since the company created its code of conduct, employees have limited , or amount of freedom to perform an unethical act. a. time b. responsibility c. moral dilemmas d. unethical options e. opportunity ANSWER: e POINTS: 1 DIFFICULTY: Challenging REFERENCES: pp. 39; 41 LEARNING OBJECTIVES: FOBU.PRIDE.15.2-4 NATIONAL STANDARDS: United States - BUSPROG: Analytic TOPICS: Encouraging Ethical Behavior KEYWORDS: Bloom's: Comprehension 27. Refer to Excellent Air Incorporated. EAI's creation of its code of conduct demonstrated its application of moral standards to business situations, which is also known as a. moral responsibility. b. social consciousness. c. social responsibility. d. moral consciousness. e. business ethics. ANSWER: e POINTS: 1 DIFFICULTY: Moderate REFERENCES: p. 34 LEARNING OBJECTIVES: FOBU.PRIDE.15.2-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic TOPICS: Business Ethics Defined KEYWORDS: Bloom's: Knowledge