Deck 5: Ethics in International Business

Question 1

The power of a multinational corporation is constrained not only by laws and regulations,but also by the discipline of the market and the competitive process.

Answer 1

True

Question 2

The Foreign Corrupt Practices Act outlawed the paying of bribes to foreign government officials to gain business.

Answer 2

True

Question 3

According to Milton Friedman,businesses should undertake social expenditures beyond those mandated by the law and required for the efficient running of a business.

Answer 3

False

Question 4

The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions obliges member-states and other signatories to make the bribery of foreign public officials a criminal offense.

Question 5

Enterprises headquartered in a country which scores high on masculinity and power distance measures are more likely to behave ethically than enterprises headquartered in a culture where individualism and uncertainty avoidance are strong.

Question 6

The concept of social responsibility refers to the idea that businesspeople should consider the social consequences of economic actions when making business decisions.

Question 7

A righteous moralist claims that a while operating in a host country,a multinational company should follow the ethical standards of that host country.

Question 8

Societal business ethics are not divorced from personal ethics.

Question 9

Noblesse oblige is a French term referring to those multinationals that have unethically used their power for private gain.

Question 10

The Foreign Corrupt Practices Act does not allow for "facilitating payments."

Question 11

According to the concept of cultural relativism,a firm,while operating in any host country,should adopt the ethics of the culture that is predominant in its home country.

Question 12

Our personal ethical code exerts a profound influence on the way we behave as businesspeople.

Question 13

Facilitating payments are payments to secure contracts that would not otherwise be secured.

Question 14

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.

Question 15

Leon Sullivan argued that it was ethically justified for Western businesses to operate in South Africa so long as the companies obeyed the apartheid laws.

Question 16

An organizational culture that requires all decisions to be purely economic allows unethical behavior to flourish and persist.

Question 17

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

Question 18

Ethical dilemmas are situations in which only one of the available alternatives seems ethically acceptable.

Question 19

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

Question 20

The term ethics refers to accepted principles of right or wrong that govern the conduct of a person,the members of a profession,or the actions of an organization.

Question 21

_____ is referred to as a course of action that does not violate the accepted principles of right or wrong governing the conduct of businesspeople.

A) Ethical strategy
B) Business blueprint
C) Organizational progress
D) Trade arrangement
E) Corrective action

Question 22

The righteous moralist approach to ethics is typically associated with managers from developed nations.

Question 23

The action that produces the greatest good for the greatest number of people can result in the unjustified treatment of a minority.

Question 24

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

A) Business strategies
B) Business ethics
C) Mission statements of a business
D) Vision statements
E) Promissory notes

Question 25

John Rawls's veil of ignorance is a conceptual tool that contributes to the moral compass that managers can use to help them navigate through difficult ethical dilemmas.

Question 26

Business leaders should use every relevant opportunity to stress the importance of business ethics and make sure that key business decisions not only make good economic sense but also are ethical.

Question 27

Ethics officers act as an internal ombudsperson with responsibility for handling confidential inquiries from employees.

Question 28

Firms now have ethics officers to penalize those employees who exercise moral courage.

Question 29

Customers,suppliers,and lenders constitute the internal stakeholders of an organization.

Question 30

Moral courage enables managers to walk away from a decision that is profitable but unethical.

Question 31

John Rawls argues that all economic goods and services should be distributed equally except when an unequal distribution would work to everyone's advantage.

Question 32

Kantian ethics assert 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.

Question 33

The first step in an ethical algorithm is to identify those common resources that are not owned by any one in particular but are used by everybody.

Question 34

The term _____ refers to accepted principles of right or wrong that govern the conduct of a person,the members of a profession,or the actions of an organization.

A) strategy
B) goodwill
C) ethics
D) mission
E) vision

Question 35

Internal stakeholders of a company do not have an exchange relationship with the company.

Question 36

According to John Rawls difference principle,wide variations in income and wealth can be considered just if the market-based system that produces this unequal distribution also benefits the least-advantaged members of society.

Question 37

To strengthen the moral courage of employees,companies should not retaliate against those employees who complain about unethical actions.

Question 38

Star Synergy Inc.,a chemical dye manufacturing firm headquartered in the U.S.,has started its production units in the less developed nations of the world in order to benefit from the low production costs.However,the process of dye extraction results in the release of toxic substances.Hence,the most ethical and economical way for the firm to tackle this problem will be to:

A) shift production units to nations where costs related to environmental protection and labor are high.
B) adhere to the local environmental protection standards of the less developed host nation.
C) introduce the company's home nation environmental standards in their less developed nation production units.
D) shut down the production units as they are hazardous to the global environment as a whole.
E) use the toxic substances released, in the extraction of dyes, as a by product to manufacture other products.

Question 39

Multinational corporations do not qualify to act as moral agents within the framework of rights theories.

Question 40

External stakeholders are individuals or groups who have no interest,claim,or stake in a company.

Question 41

The Sullivan principles attempted to fight against _____.

A) globalization
B) apartheid laws
C) legalization of facilitating payments
D) democratic structures
E) anti-dumping laws

Question 42

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

A) Social loafing
B) Guerilla attack
C) The tragedy of the commons
D) A deadweight loss
E) Capital deepening

Question 43

Due to certain strict environmental and employment standards in its home nation,Taurus Inc.has shifted its operations to developing nations.Hence,the firm has now been able to gain competitive advantage by avoiding costly pollution controls.This strategic move of Taurus Inc.will be considered as:

A) illegal.
B) ethical.
C) immoral.
D) uneconomical.
E) totalitarian.

Question 44

In order to build large production units and expedite certain routine government actions related to this,Scorpius Inc.made legal payments to the government officials of a host nation.Such payments are typically referred to as:

A) bribes.
B) speed money.
C) customs duties.
D) excise taxes.
E) preferred dividends.

Question 45

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

A) Monopoly trade practices Act
B) Foreign Corrupt Practices Act
C) Sullivan principles
D) Smith-Connally Act
E) Taft-Hartley Act

Question 46

_____ are the payments that are made to expedite routine government actions,and hence are also known as speed money or grease payments.

A) Amortized payments
B) Subvention payments
C) Facilitating payments
D) Deferred payments
E) Custom payments

Question 47

Which of the following statements is true about Sullivan principles?

A) They were widely opposed by U.S. firms, such as General Motors, operating in South Africa.
B) They promoted the abolition of apartheid laws.
C) It has been argued that they led to the violation of human rights in South Africa.
D) These principles were against the introduction of democratic elections in South Africa.
E) Western businesses that followed these principles were considered unethical.

Question 48

Which of the following best exemplifies noblesse oblige?

A) Multinational corporations gaining monopoly rights in developing countries in order to weaken the local competition
B) Multinational corporations funding schools, universities, and hospitals in under developed countries
C) Multinational corporations altering the laws of a host country to suit their businesses
D) Multinational corporations bribing the poorly paid government officials in a foreign market
E) Multinational corporations moving production to developing countries to exploit their lower employment standards

Question 49

In a business setting,the term "noblesse oblige" refers to:

A) a benevolent behavior that is considered the responsibility of successful enterprises.
B) obliging a government official with the expectation of a reciprocal favor.
C) rich corporations abusing their power for private gain.
D) preferential treatment received by successful companies from governments.
E) tax exemptions that are given only to local companies but not to foreign companies.

Question 50

Brain Wing Inc.has won the bid to build airplanes for one of its host countries government.However,the execution of the contract has been delayed due to certain unproductive,bureaucratic procedures in the less developed nation.In order to legally overcome this problem,Brain Wing Inc.should resort to the payment of:

A) customs duties.
B) excise taxes.
C) expatriation taxes.
D) speed money.
E) repatriation fee.

Question 51

In the modern world,corporations can contribute to the global tragedy of the commons by:

A) moving production to locations where they are free to pump pollutants into the environment.
B) imposing stringent environmental standards on developing countries, thus further crippling their economies.
C) creating common environmental and employment standards for all nations.
D) adopting costly pollution controls and in turn losing out on economic advantages.
E) adhering to civil laws rather than common laws in case of any environmental violations.

Question 52

Which of the following best exemplifies the global tragedy of the commons?

A) A firm exploiting the weak employment standards in a host nation
B) A firm dumping its chemical wastes directly into an ocean
C) A firm exploiting the weak intellectual property rights in a developing nation
D) A neighboring country opposing the introduction of a free trade area
E) A country denying its citizens of their basic human rights

Question 53

The concept of _____ 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.

A) corporate dissonance
B) class consciousness
C) corporate dynamism
D) social responsibility
E) economies of scale

Question 54

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

A) makes it mandatory for the companies to adhere to the pollution control standards of their home country in all the nations in which they do business.
B) does not consider facilitating payments a criminal offense.
C) makes grease payments mandatory in order to obtain exclusive preferential treatment in a host nation.
D) considers payment of speed money to be moral, but illegal.
E) makes it obligatory for companies to adopt a zero-tolerance approach toward grease payments.

Question 55

The Republic of Loransia wants all the international companies operating in the country to adhere to Sullivan principles.Which of the following is an implication of this?

A) Racial discrimination will increase in the country.
B) The citizens will be denied of their basic human rights.
C) The cost of doing business in the country will reduce, as democracy will be hampered.
D) The international businesses will be expropriated due to nationalization.
E) The business operations of the international companies will be ethically justified.

Question 56

Which of the following is most likely to be considered as unethical?

A) Galaxy Inc. ceased its operations in some developing nations on the account that those countries had low employment standards.
B) Unicorn Inc. sells its medicines at a lower price in less developed nations.
C) Capricorn Inc., a multinational company operating in developing nations, pays its labor 30 percent more than what the local competitors pay.
D) Centaur Inc. had to close down a production plant as the local management there had employed child labor.
E) Orion Inc. sends its products for recycling to a developing nation because the pollution control laws in its home country are much more strict than that in the developing nation.

Question 57

Which of the following statements is true of facilitating payments?

A) According to the Foreign Corrupt Practices Act "facilitating payments" are as illegal as bribes.
B) Facilitating payments are payments to secure contracts that otherwise would not be secured.
C) Having a zero-tolerance approach toward facilitating payments is ethical.
D) Companies are allowed to make facilitating payments only in developing countries.
E) The concept of facilitating payments was introduced by the UN to put U.S. firms at a competitive disadvantage.

Question 58

Ten years after he proposed what came to be known as Sullivan's principles,Leon Sullivan concluded that his principles :

A) were the most ethical way of doing business in South Africa.
B) were not sufficient to ethically justify the existence of Western businesses in South Africa.
C) can be effective only when companies oppose democracy in South Africa.
D) had been extremely successful in combating the apartheid regime in South Africa.
E) would safeguard the citizens and businesses in South Africa from Western businesses.

Question 59

The term global commons refers to:

A) social norms and values that are common across the globe.
B) a group of nations that share similar ideologies on globalization.
C) natural resources from which everyone benefits but for which no one is specifically responsible.
D) common laws to be obeyed by companies involved in international business.
E) arrangements, like common currencies, between countries to simplify international trading.

Question 60

The Foreign Corrupt Practices Act was subsequently amended to allow for speed money or grease payments,which are payments made to:

A) secure contracts that would not otherwise be secured.
B) obtain exclusive preferential treatment in a foreign market.
C) influence foreign bureaucrats in the company's favor.
D) ensure receiving the standard treatment that a business ought to receive.
E) secure monopoly rights in less developed countries.

Question 61

The term "_____" refers to the values and norms that are shared among employees of a business corporation.

A) global commons
B) organization culture
C) social responsibility
D) corporate governance
E) ethnocentrism

Question 62

Unipeg Corporation has uniform high sales targets for its employees all across the globe,regardless of the environmental constraints in each market.Employees are penalized for any shortfall.This has caused many employees to falsify the values of their sales.In this context,the roots of unethical behavior can be traced to:

A) unrealistic performance expectations.
B) cultural differences of countries.
C) strong personal ethics among employees.
D) varying ethical standards in different nations.
E) national differences in factors of production.

Question 63

Cadmium Technologies Inc.believes that the sole purpose of its existence is to maximize profits for its stockholders.The firm has often been criticized for not engaging in any social investments.However,the firm has been appreciated for abiding by the laws while earning profits.According to this information,which of the following approaches to ethics is most likely being adopted by Cadmium Technologies?

A) Friedman doctrine
B) Utilitarianism
C) Kantian ethics
D) Sullivan's principles
E) Naive immoralist

Question 64

_____ 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 Friedman doctrine
B) The Sullivan principle
C) Utilitarianism
D) Marxism
E) Kantian ethics

Question 65

In a business setting managers sometimes do not realize they are behaving unethically,primarily because they:

A) fail to take into account the ethical dimension of business decisions.
B) ignore business variables such as cost, delivery, and product quality.
C) have a strong system of personal ethics.
D) abide by the concept of noblesse oblige.
E) believe that social investments made by their companies can always compensate for their unethical actions.

Question 66

Davis is the manager of a pharmaceutical manufacturing facility in a developing country.The manufacturing unit does not meet the acceptable standards of the manufacturing facility in the home nation.He knows that demanding a better manufacturing unit will raise the cost of the drugs mainly exported to other less developed countries,and hence its price.But he also realizes that by not demanding a better unit,the employees are prone to serious health issues.Davis is facing:

A) a role conflict.
B) the tragedy of the commons.
C) a positivity offset.
D) an ethical dilemma.
E) a negativity effect.

Question 67

The CEO of United Synergy Inc.,a company in its embryonic stage,believes that unethical behavior will result in premature decline of the company.In order to ensure that the company starts operating in the most ethical manner,the CEO should:

A) set unrealistic performance goals for the employees.
B) shun the concept of noblesse oblige.
C) outsource majority of the jobs in his company to a developing nation which has lax business regulations.
D) base decisions solely on business variables such as cost, delivery, and product quality.
E) hire employees with strong personal ethics.

Question 68

Which of the following is most likely to reduces the pressure on managers to violate their personal ethics?

A) Making managers work away from their ordinary social context and supporting culture
B) Keeping managers psychologically and geographically close to the parent company
C) Pressurizing managers to meet unrealistic business goals
D) Adopting an organizational culture which emphasizes that all decisions should be purely economic
E) Pressuring managers to shun the concept of noblesse oblige

Question 69

The practice of "gift giving" between the parties to a business negotiation is considered right and proper behavior in many Asian cultures.However,some Westerners view the practice as a form of bribery,and therefore unethical,particularly if the gifts are substantial.This reflects that:

A) notions of ethics are universal.
B) Asian countries are still under the influence of totalitarianism.
C) what is ethical depends on one's cultural perspective.
D) Asian cultures are more economically advanced.
E) there is a unanimous agreement about accepted ethical principles.

Question 70

Which of the following best exemplifies an ethical dilemma?

A) Javier has been doubtful about a car he purchased recently, and hence has only been reading good reviews about the car to console himself.
B) After seeing a whole new collection of phones at a store, Max is regretting the purchase of an outdated phone he made last month.
C) The manager at Almas Inc. has to make a vendor choice between his under qualified cousin and a highly experienced, trusted supplier.
D) Andrew is responsible for deciding whether he should upgrade the manufacturing unit with new machines and reduce costs for the clients, or retain the impoverished manual labor.
E) Samantha has to decide whether the annual profits of the company should be distributed to the employees as a salary hike or in the form of non-monetary benefits.

Question 71

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

A) Milton Friedman
B) Leon Sullivan
C) Karl Marx
D) Immanuel Kant
E) David Hume

Question 72

Which of the following statements is true about the Friedman doctrine?

A) Milton Friedman explicitly rejects the idea that businesses should behave in an ethical manner.
B) According to Friedman, managers should weigh the social benefits and costs of an action before deciding whether to pursue it.
C) The best decisions, from Friedman's perspective, are those that produce the greatest good for the greatest number of people.
D) According to Friedman, managers of a firm should not make decisions about social investments for its stockholders.
E) Friedman's basic position is that the only social responsibility of business is to increase profits even if that involves breaking the rules of law.

Question 73

Which of the following is detrimental to an ethical business setting?

A) Keeping in mind that each decision has a moral dimension
B) Encouraging leaders to demonstrate strong personal ethics
C) Operating in cultures which score high on masculinity and power distance measures
D) Setting realistic, achievable performance goals for employees
E) Frequently auditing the activities of expatriate managers

Question 74

The CEO of Gold Chip Software engages in corruption and uses his power in the company to enrich himself and his family members.Consequently,his employees too engage in the same behavior.In this case,the roots of unethical behavior can be traced to:

A) unrealistic performance expectations.
B) organizational leadership.
C) noblesse oblige and social responsibility.
D) varying ethical standards in different cultures.
E) geographical distance between employees and the parent company.

Question 75

Which of the following is a straw man approach to business ethics?

A) The Friedman doctrine
B) Kantian ethics
C) Sullivan's principles
D) Utilitarian philosophy
E) Just distribution

Question 76

Which of the following activities is most likely to be considered ethical?

A) Locating highly polluting production plants in those countries that have lax pollution control laws
B) Undertaking "social investments" in host countries
C) Paying bribes to government officials in developing countries to secure a contract
D) Polluting resources that are considered as global commons
E) Stringently following the laws of a country even if they violate basic human rights

Question 77

Which of the following is most likely to lead to unethical behavior in a business setting?

A) A strong sense of personal ethics exhibited by employees
B) Home-country managers working abroad in multinational firms away from their ordinary social context and supporting culture
C) Providing managers with a moral compass or an ethical algorithm
D) Large business corporations making social investments in host countries
E) Multinational corporations advocating the concept of noblesse oblige

Question 78

Which of the following statements best brings out the nature of ethical dilemmas?

A) Knowing what the right thing might be and doing it correctly is always easy in a business environment.
B) There is a universal agreement about accepted ethical principles.
C) What is ethical is independent of one's cultural perspective.
D) Ethical dilemmas exist because real-world decisions are simple.
E) In ethical dilemmas the appropriate course of action is not clear.

Question 79

The first step to establishing a strong sense of business ethics is for a society to emphasize strong:

A) personal ethics.
B) class consciousness.
C) cross-cultural literacy.
D) organizational citizenship.
E) ethnocentric behavior.

Question 80

A situation in which none of the available alternatives seems morally acceptable constitutes a(n):

A) role conflict.
B) tragedy of the commons.
C) cognitive dissonance.
D) ethical dilemma.
E) emotional contagion.