Deck 2: Stakeholders, Managers, and Ethics

Question 1

Shareholders are the owners of the organization.

Answer 1

True

Question 2

To be effective, an organization must at least minimally satisfy the interests of all the groups that have a stake in the organization.

Answer 2

True

Question 3

The system of hierarchical reporting relationships in an organization is known as a chain of command.

Answer 3

True

Question 4

In general, stakeholders are motivated to participate in an organization if they receive inducements that exceed the value of the contributions they are required to make.

Question 5

A manager who has direct responsibility for the production of goods and services is said to be holding a staff role.

Question 6

Outside directors of a corporation are full-time employees of the corporation.

Question 7

The stakeholder group with ultimate authority over the use of a corporation's resources is customers.

Question 8

Shareholders' claim on organizational resources is often considered inferior to the claims of other inside stakeholders.

Question 9

A manager who is in charge of sales holds a staff role.

Question 10

The CEO determines top management's rewards and incentives.

Question 11

Suppliers have a direct effect on the organization's efficiency and an indirect effect on its ability to attract customers.

Question 12

An inside director of a company can be a professional director who holds positions on the boards of many companies.

Question 13

Inside directors hold offices in a company's formal hierarchy.

Question 14

Shareholders are a part of inside stakeholders.

Question 15

All stakeholder groups are equally important for an organization.

Question 16

The chief operating officer, functional managers, and divisional managers form a company's top management team.

Question 17

Customers are usually an organization's smallest outside stakeholder group.

Question 18

The board has the legal authority to hire, fire, and discipline corporate management.

Question 19

The workforce and managers are considered outside stakeholders.

Question 20

A problem in determining managerial accountability that arises when delegating authority to managers is known as an agency problem.

Question 21

Organizations that are doing badly in an economic sense and are struggling to survive are the ones most likely to commit unethical and illegal acts.

Question 22

Behaving ethically can reduce transaction costs through the reputation effect.

Question 23

The rewards that stakeholders receive for participating in an organization are called ________.

A) inducements
B) contributions
C) annuity
D) dividends

Question 24

________ are the owners of an organization, and, as such, their claim on organizational resources is often considered superior to the claims of other inside stakeholders.

A) Employees
B) Customers
C) Shareholders
D) Trade unions

Question 25

Which of the following is an inside stakeholder group?

A) government
B) customers
C) suppliers
D) shareholders

Question 26

Divisional managers are not corporate managers.

Question 27

Which of the following is an inside stakeholder group that contributes money and capital?

A) government
B) suppliers
C) shareholders
D) managers

Question 28

________ are people who have an interest or claim in an organization, in what it does, and in how well it performs.

A) Stakeholders
B) Early adopters
C) Boundary spanners
D) Late adopters

Question 29

In the long run, an organization that follows unethical practices tends to spend more on research and development and less on advertising and managerial salaries.

Question 30

Stakeholders will generally participate in an organization if ________.

A) the goods and services produced by the organization are of high quality
B) they receive inducements that exceed the value of the contributions they are required to make
C) the organization has a well-defined structure and culture
D) the organization is large and takes advantage of economies of scale and economies of scope

Question 31

Which of the following groups of stakeholders receives inducements in the form of dividends and stock appreciation?

A) trade unions
B) suppliers
C) shareholders
D) workforce

Question 32

"Self-dealing" is the term used to describe the conduct of managers who take advantage of their position to act in their own interests rather than in the interests of other stakeholders.

Question 33

As per the moral rights model of ethics, an ethical decision is one that produces the greatest good for the greatest number of people.

Question 34

Which of the following groups of stakeholders receives inducements in the form of bonuses, status, and power?

A) shareholders
B) managers
C) suppliers
D) unions

Question 35

________ are people who are closest to an organization and have the strongest or most direct claim on organizational resources.

A) Early adopters
B) Free riders
C) Whistle-blowers
D) Internal stakeholders

Question 36

An ethical dilemma is the quandary people experience when they must decide whether or not they should act in a way that benefits someone else, even if it harms others and isn't in their own interest.

Question 37

Ethics and law change as time passes.

Question 38

As per the justice model of ethics, an ethical decision is a decision that best maintains and protects the fundamental rights and privileges of the people affected by it.

Question 39

As per the moral rights model of ethics, an ethical decision is a decision that distributes benefits and harms among stakeholders in a fair, equitable, or impartial way.

Question 40

Stock-based compensation schemes help solve the agency problem.

Question 41

Which of the following statements is true about an outside director?

A) An outside director of an organization should have worked with the organization for at least 10 years at some point during his career.
B) Outside directors tend to dominate boards because as compared to inside directors, these people have better access to most of the information about the company.
C) An outside director should be a current employee of the organization.
D) An outside director of an organization can be an executive of some other company.

Question 42

Which of the following organizational positions is a part of an organization's top management team?

A) functional manager
B) executive vice president
C) divisional manager
D) plant supervisor

Question 43

Which of the following terms best describes the system of hierarchical reporting relationships in an organization?

A) line of control
B) span of authority
C) matrix of hierarchy
D) chain of command

Question 44

Which of the following is an outside stakeholder group?

A) shareholders
B) suppliers
C) managers
D) workforce

Question 45

According to the capitalistic view, the primary goal of an organization is to ________.

A) maximize shareholder wealth
B) form long-term relationships with suppliers
C) satisfy employees
D) satisfy customers

Question 46

In effect, ________ are the agents or employees of shareholders.

A) suppliers
B) customers
C) managers
D) unions

Question 47

Vice presidents are part of ________ management.

A) corporate
B) divisional
C) functional
D) line

Question 48

Which of the following is a primary responsibility of a chief operating officer?

A) selecting the members of the board of directors
B) managing the organization's internal functions
C) selecting key executives to occupy the topmost levels of the managerial hierarchy
D) determining top management's rewards and incentives

Question 49

In the case of a large organization, which of the following options best represents the accurate chain of command at the corporate management stage?

A) CEO, president, senior vice presidents, executive vice presidents
B) board, CEO, executive vice presidents, presidents
C) CEO, president, executive vice presidents, vice presidents
D) president, divisional managers, executive vice presidents, vice presidents

Question 50

Which of the following organizational positions is considered to be a part of corporate management?

A) project manager
B) chief operating officer
C) divisional manager
D) plant supervisor

Question 51

The stakeholder group with ultimate authority over the use of a corporation's resources is ________.

A) managers
B) customers
C) government
D) shareholders

Question 52

In an organization, the position of the ________ is one of trusteeship.

A) managers
B) members of the board of directors
C) customers
D) government

Question 53

Managers who are in charge of a specific organizational function such as sales or R&D hold a(n) ________ role.

A) distributive
B) line
C) staff
D) integrative

Question 54

Managers who have direct responsibility for the production of goods and services are considered to be holding a(n) ________ role.

A) staff
B) integrative
C) line
D) distributive

Question 55

To be effective, an organization must ________.

A) satisfy interests of all the stakeholders equally
B) consider employees as the most important stakeholder group and give priority to their interests over the interests of all the other stakeholders
C) at least minimally satisfy the interests of all the stakeholders
D) consider customers as the most important stakeholder group and give priority to their interests over the interests of all the other stakeholders

Question 56

Which of the following would be considered to be the lowest level of management in a chain of command?

A) executive vice presidents
B) functional managers
C) divisional managers
D) vice presidents

Question 57

Which of the following persons can be an inside director in an organization?

A) a government official
B) a professional director who holds positions on the board of many companies
C) a full-time employee of the organization
D) an executive of another company that operates in the same industry

Question 58

Which of the following employees would be considered to have a line role?

A) sales manager
B) executive vice president of finance
C) R&D director
D) vice president of production

Question 59

Which of the following group of outside stakeholders contributes high-quality inputs?

A) unions
B) government
C) customers
D) suppliers

Question 60

________ are usually an organization's largest outside stakeholder group.

A) Suppliers
B) Customers
C) Shareholders
D) Workforce

Question 61

A doctor was banned from practicing medicine because he consistently prescribed unnecessary procedures. This doctor violated ________.

A) professional ethics
B) the justice model of ethics
C) individual ethics
D) the utilitarian model of ethics

Question 62

The reputation effect ________.

A) solves the agency problem
B) leads to equal distribution of resources among all the stakeholders
C) increases the problems of self-dealing
D) reduces transaction costs

Question 63

A son of a mobster believes that it is ethical to steal if it is in the best interest of his family. This view comes from ________.

A) justice model of ethics
B) professional ethics
C) personal ethics
D) moral rights model of ethics

Question 64

A(n) ________ problem is a problem in determining managerial accountability that arises when delegating authority to managers.

A) self-dealing
B) organizational contract
C) line of command
D) agency

Question 65

As per the ________ model of ethics, an ethical decision is one that produces the greatest good for the greatest number of people.

A) mutual association
B) utilitarian
C) justice
D) moral rights

Question 66

A manager decides to distribute the pool of bonus money equally among all of the subordinates, even though some performed better than others. Which model of ethics is being used by him in making this decision?

A) justice
B) moral rights
C) utilitarian
D) mutual association

Question 67

________ occurs when an employee informs an outside person or agency, such as a government agency, a newspaper, or television reporter, about an organization's (its managers') illegal or immoral behavior.

A) Boundary spanning
B) Moonlighting
C) Whistle-blowing
D) Dumping

Question 68

Which of the following managers has a staff role?

A) R&D manager
B) production manager
C) divisional manager
D) assembly line supervisor

Question 69

Behavior that follows accepted ethical rules confers a(n) ________ effect on an individual or an organization.

A) observer-expectancy
B) framing
C) focusing
D) reputation

Question 70

Which of the following organizations is most likely to commit unethical and illegal acts such as collusion, price fixing, or bribery?

A) an organization that is introducing a new product in the market
B) an organization that is struggling to survive
C) an organization that is entering into a new market
D) an organization that has a flat and decentralized organizational structure

Question 71

A manager decides to locate a manufacturing plant in a location that maximizes the overall benefits to the stakeholders. Which model of ethics is being used by the manager?

A) justice
B) moral rights
C) utilitarian
D) mutual association

Question 72

In the long run, an organization that follows unethical practices is most likely to ________.

A) be more innovative
B) spend less on advertising or managerial salaries
C) be bureaucratized
D) spend more on research and development

Question 73

As per the ________ Act, CEOs, COOs, and the chief financial officer are required to sign off on their company's balance statements so they can be held personally and legally liable for accidental or deliberate mistakes found later.

A) Sarbanes-Oxley
B) Taft-Hartley
C) Walsh-Healey
D) Davis-bacon

Question 74

Which of the following is generally used to solve agency problems?

A) self-dealing
B) stock-based compensation schemes
C) a highly centralized organization structure
D) a matrix organization structure

Question 75

A manager chooses to tell affected employees about an impending layoff, despite the damage this causes to the stock price of the organization. She did this because it was "the right thing to do." Which model of ethics is she using?

A) justice
B) moral rights
C) utilitarian
D) mutual association

Question 76

"Self-dealing" is defined as ________.

A) a manager acting in his own best interest, as opposed to the interests of the other stakeholders
B) a cash bonus distributed privately amongst the top-management team
C) a manager promoting family members at the expense of others
D) a form of control that aligns the interests of principal and agent so both parties have the incentive to work together to maximize organizational effectiveness

Question 77

Which of the following is one of the two conditions that lead to a moral hazard problem?

A) the principal possesses more information than the agent
B) the agent has an incentive to pursue goals and objectives that are different from the principal's
C) the principal acts in his own best interest, as opposed to the interests of the other stakeholders
D) the agent is given the authority to allocate scarce organizational resources

Question 78

The "tragedy of the commons" illustrates that ________.

A) the utilitarian model of ethics is the most effective model of ethics
B) all unethical actions are always illegal
C) the rational pursuit of individual self interest results in a collective disaster
D) all the available resources should be equally distributed among all the stakeholders

Question 79

Which of the following statements is true regarding a divisional manager?

A) A divisional manager is a part of the top-management team.
B) Divisional managers act as outside directors for the company.
C) A divisional manager is not a corporate manager.
D) A marketing manager is an example of a divisional manager.

Question 80

Which of the following is a model of ethics?

A) mutual association
B) utilitarian
C) value integration
D) incremental benefit