Deck 3: Ethics in Business

Question 1

Corporate "citizenship" involves making decisions beyond just maximizing profits and dividends.

Answer 1

True

Question 2

Company codes of conduct outline company policies on particular issues and how employees are expected to act.

Answer 2

True

Question 3

It can be difficult to predict with certainty how a court will apply a given law to a particular action.

Answer 3

True

Question 4

One of the most important ways to maintain an ethical workplace is for management to set standards and expectations for ethical behavior.

Question 5

One view of the role of business in society is the perceived duty of a company only to generate revenue for its owners.

Question 6

Under the categorical imperative, an unethical decision that would have only a small impact is acceptable as long as no one else in society acts the same way.

Question 7

Conduct that is legal is ethically unquestionable.

Question 8

Congress does not pass laws based on ethics.

Question 9

Ethics is a branch of philosophy that focuses on morality.

Question 10

Duty-based ethics is based in the idea that every business has certain duties to others.

Question 11

The study of ethics goes no further than the requirements of the law to evaluate what is right for society.

Question 12

The Sarbanes-Oxley Act was enacted to reduce the number of unethical business decisions by requiring the accountability of publicly traded companies.

Question 13

Once a law is passed to codify an ethical requirement, the ethical aspect of the action is no longer important.

Question 14

When making ethical decisions, a business should evaluate the financial implications.

Question 15

The effectiveness of an industry code of ethics is partly determined by the commitment of the industry or company leadership to enforce it.

Question 16

Because it may be unclear how a court will interpret and apply a law, companies can ensure decisions are viewed as ethical by documenting their own interpretation of the law.

Question 17

Ethical decision makers should test and reflect on the outcome of their decisions.

Question 18

When profit maximization is the goal, a company does not benefit from ethical behavior.

Question 19

Outcome-based ethics deals with traditional standards of behavior.

Question 20

The term moral minimum is best defined as the highest degree of ethical behavior expected of a firm.

Question 21

Because social media is so widespread, it is legal and ethical for a company to have social media policies limiting employees from criticizing the company.

Question 22

Once a company has investigated any foreign suppliers, it is unnecessary to continue to monitor those suppliers.

Question 23

With respect to what society will tolerate, a company's compliance with the law, and no more, is

A)the highest ethical level.
B)the lowest ethical level.
C)the only ethical level.
D)irrelevant.

Question 24

As part of the IDDR approach described in the text, it is important to list many possible actions and analyze them using several different ethical theories.

Question 25

Under the "stakeholder view," no group ever has a greater stake in company decisions than the shareholders do.

Question 26

An overemphasis on long-run profit maximization is a common reason for ethical problems that occur in business.

Question 27

Making ethical decisions is most often best done by analyzing objective standards (such as profit or number of people fired)instead of subjective impacts on stakeholders.

Question 28

The first step in making an ethical decision is to understand the problem.

Question 29

Under the principle of rights theory, the key factor in a decision is how the result may harm the rights of the company to make money.

Question 30

Cloud Source LLC sells to Distribution Inc. a promising idea for a technological innovation that looks promising but that is still being developed. This is

A)ethical and legal.
B)ethical but illegal.
C)legal but unethical.
D)illegal and unethical.

Question 31

Rationalization is the process of making a logical decision based in evidence and an analysis of the ethical dimensions of the decision.

Question 32

Global businesses need to be conscious of the impact of different religious principles on ethics.

Question 33

The Fraud Reduction and Data Analytics Act to prevent, detect, and respond to fraud in federal programs institutionalizes

A)fraud.
B)ethical rights and duties.
C)federal programs.
D)corporate policy.

Question 34

Corporate social responsibility may increase a business's reputation or goodwill.

Question 35

Judging a job applicant based on what an online search reveals about the applicant's activities outside the workplace universally is viewed as ethical.

Question 36

Corporate social responsibility links the responsibility of citizenship with the strategy and key principles of a business.

Question 37

Business ethics looks at whether business decisions

A)are right or wrong.
B)derive from well-known business principles.
C)follow legal doctrine.
D)align with corporate policy.

Question 38

Outcome-based ethics determines what is ethical by looking at the potential benefits and harms of a given action.

Question 39

Decision makers need to consider what they can and will do before they consider what they should do.

Question 40

Ethics focuses on how persons making business decisions apply

A)legal doctrine.
B)moral principles.
C)corporate policy.
D)financial priorities.

Question 41

Underscoring the importance of ethics is that the law is not always easy to interpret or apply because laws

A)are organized and structured, and thus can be difficult to read.
B)represent the people's will, which changes.
C)result from a political process involving compromise.
D)contain arbitrary and capricious terms.

Question 42

Ray, the manager of Soy Farm Inc., must decide whether to plant genetically modified seed that could spread to the crop of an adjacent farm, whose owner opposes its use. Not using the seed could cut Soy's production and profitability, impacting its owners, employees, creditors, and others. If Ray considers all of these factors in making his decision, he is likely applying

A)religious principles.
B)the categorical imperative.
C)the principle of rights theory.
D)utilitarianism.

Question 43

The National Association of Manufacturers (NAM)announces a new industry code of ethics. The effectiveness of this code will be determined by

A)the commitment of NAM's members to enforcing the code.
B)the similarity of the code to the personal values of NAM's members.
C)the success of the campaign publicizing the code.
D)the relationship between the code and the law.

Question 44

Ethical issues that a business manager is not likely to encounter include

A)protocols for company meetings.
B)questions of workplace diversity.
C)compliance with environmental regulations.
D)application of safety standards.

Question 45

Basil and other managers employed by Creosote Company are most likely to find that unethical behavior in the workplace can be deterred by

A)taking immediate action in response to unethical conduct.
B)imposing sanctions disproportionate to misconduct.
C)distributing rewards without regard to ethics.
D)ignoring small breaches of company rules.

Question 46

When making decisions that are ethical under either profit maximization or corporate citizenship theories, a business should include all of the following steps except

A)recognize that there is an ethical issue in the decision.
B)apply ethical theories to reasonable alternatives.
C)publicize the options you rejected with your reasons.
D)reflect on the outcome of the decision once it is made.

Question 47

The utilitarian theory of ethics does not require

A)a choice among alternatives to produce the maximum societal utility.
B)a determination of whom an action will affect.
C)an assessment of the effects of alternatives on those affected.
D)the acquiring of the means of production by workers.

Question 48

When adopting duty-based ethics, corporations often demonstrate the duties they owe

A)through required government disclosure forms.
B)in their mission statements and strategic plans.
C)by adopting a corporate religion.
D)in the biographies of corporate leaders.

Question 49

Questions of what is ethical involve the extent to which a company has

A)a legal duty beyond those duties mandated by ethics.
B)an ethical duty beyond those duties mandated by law.
C)any duty beyond those mandated by both ethics and the law.
D)any duty when it is uncertain whether a legal duty exists.

Question 50

Data Inc. adheres strictly to the goal of maximizing profits. Data will benefit from ethical behavior

A)if customer service is good.
B)if its owners are happy with the revenue.
C)under no circumstances.
D)if it efficiently allocates scarce resources.

Question 51

Compliance with the law is not always sufficient to determine "right" behavior because

A)the law does not codify all ethical requirements.
B)company codes are also sources of law.
C)business decisions can have negative impacts.
D)ethical problems occur in business.

Question 52

"Be honest and treat people fairly." In regard to business ethics, implementing this motto is

A)subordinate to such expedient factors as cash flow and debt payments.
B)only important in politically sensitive situations.
C)important in all circumstances.
D)only important with respect to important customers.

Question 53

Peanut Products Company (PPC)makes goods that can cause severe health problems to those with peanut allergies. PPC analyzes the cost of warning people of the risk (which the company's management sees as obvious)and the harm to people if no warning is provided. This analysis most likely is part of

A)a duty-based ethics approach.
B)corporate social responsibility.
C)religious ethical principles.
D)outcome-based ethics.

Question 54

Under the principle of rights theory, a key factor in determining whether a business decision is ethical is how that decision

A)compares to religious principles.
B)affects the rights of others.
C)causes consequences that would follow if everyone acted the same way.
D)supports the right to make a profit.

Question 55

Duty-based ethical standards are most likely to derive from

A)a corporate ethics code.
B)a cost-benefit analysis.
C)philosophical reasoning.
D)the law.

Question 56

Build-It Inc. applied an inexpensive but untested technique to brace a transit tunnel wall. The technique was legal but the tunnel collapsed, killing several commuters. Build-It's action was

A)unethical because the technique was untested.
B)ethical because the technique was legal.
C)unethical because the technique was inexpensive.
D)ethical because the technique inexpensive and untested.

Question 57

If a company strictly complies with existing laws, the firm will

A)fulfill all business ethics obligations.
B)fulfill no business ethics obligations.
C)fulfill some business ethics obligations.
D)not need to fulfill any business ethics obligations.

Question 58

Considering the triple bottom line requires looking at how business decisions impact all of the following except

A)the profits.
B)the planet.
C)the people.
D)the platitudes.

Question 59

A company's ethical code of conduct is not

A)law.
B)a set of rules that the company can enforce.
C)an outline of the company's policies.
D)a guide for the company's decision makers facing ethical questions.

Question 60

When the chief financial officer, or other executive, of a corporation is unsure whether a certain business action is legal, she should act

A)in her own best interest.
B)honestly and responsibly.
C)in the best short-run interest of the company.
D)to maximize profit.

Question 61

In addressing an ethical problem, a business decision maker evaluates possible solutions to the problem and then considers what should be done. In terms of the IDDR approach, this is

A)the discussion step.
B)the decision step.
C)the inquiry step.
D)the review step.

Question 62

A highly successful company is most likely to behave more unethically than a less successful firm if

A)both companies' clients and customers focus solely on profitability.
B)employees are expected to continue performing at a high level.
C)the government does not investigate the source of the success.
D)the successful company focuses on long-run profit maximization.

Question 63

To avoid unethical practices by a foreign supplier, an effective business practice is to

A)pay foreign employees at U.S. pay rates.
B)have suppliers sign contracts affirming that they will behave ethically.
C)routinely monitor the foreign workplaces.
D)obtain a legislative decree that the supplier is ethical.

Question 64

Lily, an executive with Medico Inc., has to decide whether to market a product that could offer substantial benefits but might also have potentially serious side effects for a small percentage of users. Using the different ethical philosophies discussed, analyze the decision.

Question 65

Adhering to utilitarian ethics in making a business decision is likely to result in an action that is considered morally correct if it produces the greatest good for

A)the business decision maker.
B)the business.
C)the fewest people.
D)the most people.

Question 66

A cost-benefit analysis is part of

A)a duty-based ethics approach.
B)corporate social responsibility.
C)the principle of rights theory.
D)utilitarianism.

Question 67

To successfully apply the concept of corporate social responsibility, the key factor is

A)the relation of a social activity to a corporate business activity.
B)the nature of the publicity a corporation will derive from a social activity.
C)the political correctness of a social activity.
D)the effect of a social activity on corporate profitability.

Question 68

A business corporation that acts to ensure its employees are treated fairly and its operations minimally impact the environment is applying the concept of

A)moral minimum.
B)corporate social responsibility.
C)categorical imperative.
D)triple bottom line.

Question 69

According to the theory of corporate social responsibility, any decision by corporate management should consider how an action affects the firm's

A)officers and employees only.
B)officers, shareholders, suppliers, customers, and community.
C)shareholders only.
D)profit only.

Question 70

Making a business decision based on its projected financial outcome and then arguing that the decision is ethical is

A)rationalizing the decision.
B)questioning the decision.
C)using the utilitarian approach.
D)using the stakeholder approach.

Question 71

Teresa must resolve a business problem for which she believes there is no easy answer. She identifies the reasons for this belief before analyzing solutions. In terms of the IDDR approach, this is

A)the discussion step.
B)the decision step.
C)the inquiry step.
D)the review step.

Question 72

Sports Equipment Corporation sells a profit-generating product that is capable of seriously injuring consumers who misuse it in a foreseeable way. The firm's managers are contemplating adding a warning to the product but that warning will increase the cost of the product, and they are worried that it may deter some potential customers from buying it. Thinking about the two main theories of the role of business in society, discuss whether the corporation would behave ethically by continuing to sell the product without warning.