Question 1

Executive compensation is considered an external corporate governance mechanism because it is determined in part by market forces.

Accepted Answer

False

Question 2

Ethically responsible companies design and use governance mechanisms that serve all stakeholders' interests.

Accepted Answer

Ethically responsible companies aim to create value not just for shareholders, but also for customers, employees, suppliers, and the wider community. They design and use governance mechanisms that serve the interests of all stakeholders, not just the owners or management. These mechanisms can include diverse boards, transparent reporting, stakeholder engagement, and responsible executive compensation, among others.

Question 3

Awareness of and compliance with the attitudes of society can help an organization avoid problems associated with a bad ethical reputation.

Accepted Answer

Being aware of the attitudes of society and complying with them can help an organization avoid ethical issues and maintain a positive reputation. Ignoring these attitudes or going against them can result in negative consequences for the organization, including damaged reputation, loss of customers or even legal problems.

Question 4

A stakeholder is "any group or individual who can affect or is affected by the achievement of the organization's objectives."

Accepted Answer

This is the standard definition of a stakeholder as recognized by various management and business organizations. Stakeholders may include employees, customers, shareholders, suppliers, government entities, community groups, and others who have a stake in the success or failure of an organization.

Question 5

A board comprised primarily of outside directors will have better insights as to the firms intended strategic initiatives,the reasons for the initiatives,and the outcomes expected from them than will inside directors.

Accepted Answer

The answer of A board comprised primarily of outside directors...

Question 6

Organizational stakeholders are the firm's internal resources,capabilities,and core competencies that are used to accomplish what may at first appear to be unattainable goals in the competitive environment.

Accepted Answer

Organizational stakeholders are not internal resources, capabilities, or core competencies, but rather individuals or groups that have an interest or concern in the organization, such as employees, customers, shareholders, suppliers, and the community.

Question 7

Ethics are universal. What is unethical in one country will be viewed as unethical in other countries.

Accepted Answer

Ethics are not universal; they are influenced by cultural, social, and legal norms, which can vary significantly between countries.

Question 8

Relative power is the most critical criteria for prioritizing the demands of stakeholders.

Accepted Answer

Relative power is a crucial factor in prioritizing stakeholder demands as stakeholders with higher power (such as key customers or government regulators) may have a greater impact on the success of a project or organization than those with less power. Therefore, their demands may need to be given priority over others.

Question 9

Foreign investors are playing a relatively minor role in the governance of firms in many countries.

Accepted Answer

The answer of Foreign investors are playing a relatively minor...

Question 10

Overall,governance practices need to fit with the nature of the industry in which firms are competing. This cautions against prescribing universal "best" practices.

Accepted Answer

Governance practices should be tailored to fit the specific industry and context in which a firm operates, as there is no one-size-fits-all approach that works for every organization. What may be considered best practices in one industry may not apply in another, and thus a contextualized approach is necessary.

Question 11

Convergence advocates argue that a "survival-of-the-fittest" process will force firms globally to accept the best practices exemplified by Anglo-American practices.

Accepted Answer

Convergence advocates believe that competition and the global market will encourage firms to adopt the best practices, which are commonly associated with Anglo-American practices. They argue that this process will lead to a convergence of business practices and standards worldwide.

Question 12

The degree to which the firm is dependent on a stakeholder group gives that stakeholder less influence.

Accepted Answer

The degree of dependency on a stakeholder group gives them more influence, not less. The more dependent a firm is on a stakeholder group, the more power that group has over the firm's decisions and actions.

Question 13

Both top executives and owners of the firm wish to diversify the firm to reduce risk.

Accepted Answer

The answer of Both top executives and owners of the...

Question 14

The needs and desires of organizational stakeholders are inherently contradictory.

Accepted Answer

Organizational stakeholders have different goals, interests, and priorities, which often conflict with each other. For example, shareholders may want the company to prioritize profits, while employees may prioritize job security and fair compensation. Balancing these competing needs and desires is a key challenge for organizational leaders.

Question 15

If a stakeholder is dissatisfied with a firm,it will withdraw its support and give it to another firm.

Accepted Answer

This statement is true. If a stakeholder is dissatisfied with a firm, they may choose to withdraw their support and instead provide it to another firm that meets their needs and expectations better. This can have a significant impact on the original firm's reputation and success.

Question 16

An organization's willingness to tolerate or encourage unethical behaviour is a reflection of its core values.

Accepted Answer

An organization's core values play a significant role in shaping its culture and determining its approach to ethics. If an organization tolerates or supports unethical behavior, it indicates a misalignment with its stated values and can have serious consequences for the organization's reputation and success.

Question 17

Corporate governance is the set of mechanisms used to manage the relationship among stakeholders and to determine and control the strategic direction and performance of an organization.

Accepted Answer

Corporate governance involves managing the relationship between a company's stakeholders, including shareholders, management, employees, customers, and suppliers, and directing the strategic direction and performance of the organization. This includes ensuring ethical and responsible decision-making, transparent communication, and accountability to stakeholders.

Question 18

Stakeholders are individuals and groups who receive or have the potential to receive direct payments from an organization.

Accepted Answer

Stakeholders are individuals or groups who have an interest or concern in the activities of an organization. This includes individuals or groups who may not necessarily receive direct payments from the organization, such as customers, employees, suppliers, and the local community.

Question 19

In general,when governance mechanisms are strong,managers have free rein in their decisions.

Accepted Answer

When governance mechanisms are strong, there are checks and balances in place that limit the discretion of managers and provide oversight to ensure that decisions are made in the best interest of the organization and its stakeholders.

Question 20

Corporate governance mechanisms are designed to ensure that top managers make strategic decisions that best serve the interests of the entire group of stakeholders.

Accepted Answer

Corporate governance mechanisms such as board of directors, executive compensation plans, and shareholder activism are put in place to ensure that top managers act in the best interests of all stakeholders, not just their own personal interests or the interests of a specific group.

Quiz 3: Governance,Ethics & Corporate Social Responsibility in Strategy