Deck 4: Ethics in International Business

Question 1

The tragedy of commons phenomenon was first named by Garrett Hardin.

Answer 1

True
Explanation: The tragedy of the commons was first named by Garrett Hardin when describing a particular problem in sixteenth century England,where overgrazing in large open areas-or commons-were free for all to use as pasture,which led to its degradation and the loss of a much-needed supplemental income for the poor.

Question 2

Evidence clearly indicates that,in the context of pervasive and cumbersome regulations in developing countries,corruption substantially improves efficiency and helps economic growth.

Answer 2

False
Explanation: Several economists argue that in the context of pervasive and cumbersome regulations in developing countries,corruption may improve efficiency and help growth.However,other economists have argued that corruption reduces the returns on business investment and leads to low economic growth.One study of the connection between corruption and economic growth in 70 countries found that corruption had a significant negative impact on a country's growth rate.

Question 3

Evidence indicates that the Foreign Corrupt Practices Act of the United States put U.S.firms at a substantial competitive disadvantage.

Answer 3

False
Explanation: The Foreign Corrupt Practices Act in the United States outlawed the paying of bribes to foreign government officials to gain business.Some U.S.businesses immediately objected that the act would put U.S.firms at a competitive disadvantage.However,there is no evidence that subsequently occurred.

Question 4

Carbon dioxide emission regulations for industries have been standardized across the globe.

Question 5

Investment in China is frequently justified on the grounds that although China's human rights record is often questioned by human rights groups,and although the country is not a democracy,continuing inward investment will help boost economic growth,raise living standards,and usher in political change.

Question 6

No one owns the atmosphere or the oceans,so no one is harmed if these are polluted.

Question 7

One of the conditions necessary for General Motors to abide by,as indicated within the Sullivan principles,was that the company should not obey the apartheid laws in its own South African operations.

Question 8

The Lockheed case-where the company made payments to Japanese officials and agents to secure a large contract from Nippon Air-was the impetus for the 1977 passage of the Foreign Corrupt Practices Act in the United States.

Question 9

Royal Dutch Shell has been repeatedly criticized for contributing to human rights violations in Nigeria.

Question 10

Environmental pollution regulations are usually much more stringent in developing countries than in rich industrialized nations.

Question 11

The tragedy of commons occurs when a resource owned by a developing country is overused by multinational corporations,resulting in its degradation.

Question 12

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

Question 13

Corruption has been a problem in almost every society in history,with the exception of Western nations.

Question 14

Both Foreign Corrupt Practices Act of the United States and OECD's Convention on Combating Bribery of Foreign Public Officials in International Business Transactions,allow for facilitating payments.

Question 15

Myanmar and Nigeria are examples of countries where inward investment by a multinational proved to be a force for economic,political,and social progress that ultimately improved the rights of people in repressive regimes and ushered in democracy.

Question 16

Ten years after he proposed the Sullivan principles,Leon Sullivan concluded that simply following the principles was sufficient to break down the apartheid regime and that any American company,adhering to his principles,could ethically justify a continued presence in South Africa.

Question 17

In international business,a course of action that is legal is invariably also ethical.

Question 18

The course of action that a business opts to take and which does not violate accepted principles or business ethics is known as an ethical strategy.

Question 19

Rights that are taken for granted in developed countries,such as freedom of speech,find universal acceptance.

Question 20

"Noblesse oblige" is a Latin term that refers to the social convention that,persons of high and noble birth must be obliged through preferential treatment and gift-giving.

Question 21

Companies can strengthen the moral courage of employees by committing themselves to not retaliate against employees who exercise moral courage.

Question 22

The ethical obligations of a multinational corporation toward employment conditions,human rights,and corruption are always clear-cut since accepted ethical principles about these fundamental issues are universal.

Question 23

A strategy,or course of action,that does not violate the accepted principles of right or wrong governing the conduct of businesspeople is a(n):

A)ethical strategy.
B)operational strategy.
C)functional strategy.
D)humanistic strategy.

Question 24

Situations in which none of the available alternatives seems ethically acceptable present an ethical dilemma.

Question 25

All managers need a moral compass to guide them through ethical dilemmas.

Question 26

Under Rawls's veil of ignorance,everyone is imagined to be ignorant of all of his or her particular characteristics.

Question 27

Straw men approaches to business ethics are raised by business ethics scholars primarily to demonstrate that they offer appropriate guidelines for ethical decision making in a multinational enterprise.

Question 28

The ethics philosophy of naive immoralism demonstrates moral imperialism and a lack of cultural sensitivity.

Question 29

Kantian ethics hold that people should be treated as ends and never purely as means to the ends of others.

Question 30

When work conditions in a host nation are clearly inferior to those in a multinational company's home nation,what standards should be applied?

A)Those of the home nation
B)Global standards
C)Minimal acceptable standards
D)The highest possible standards

Question 31

Business ethics are divorced from the personal ethics of the individuals conducting business.

Question 32

According to rights theories,the collective good must always take precedence over fundamental rights of citizens.

Question 33

In his doctrine of business ethics,Milton Friedman explicitly argues against ethical behavior by firms.

Question 34

An organizational culture can legitimize behavior that society would judge as unethical,particularly when this is mixed with a focus on unrealistic performance goals.

Question 35

According to the text,in the international business setting,the most common ethical issues involve human rights,environmental regulations,corruption,the moral obligation of multinational corporations,and _____.

A)border control
B)employment practices
C)foreign exchange regulations
D)economic aid

Question 36

Expatriate managers of multinational firms have less than the usual degree of pressure to violate their personal ethics.

Question 37

Managers can best make ethical decisions by applying a straightforward business calculus to what they perceive to be a business decision.

Question 38

Building an organization culture that places a high value on ethical behavior requires incentive and reward systems.

Question 39

Power is morally neutral-it is neither good nor bad.

Question 40

Fashionista Apparels ensures that its subcontractors in South America engage in good _____ by paying their workers well and keeping to 8-hour workdays.

A)environmental practices
B)financial practices
C)employment practices
D)trade practices

Question 41

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

A)payments to secure contracts that would not otherwise be secured.
B)payments to obtain exclusive preferential treatment.
C)payments to influence officials in the company's favor.
D)payments to ensure receiving the standard treatment that a business ought to receive.

Question 42

Myanmar and Nigeria have been cited in the text as examples of countries where:

A)sanctions have been instrumental in toppling repressive regimes.
B)democracy has been ushered in as a result of economic growth.
C)the economy has grown as a result of foreign investment.
D)investment cannot be justified on ethical grounds.

Question 43

Which foreign company in Nigeria has been repeatedly criticized for its alleged contribution to human rights violations in the country?

A)Royal Dutch Shell
B)Nike
C)British Petroleum
D)Banana Republic

Question 44

Which of the following arguments strengthens the ethical case for never engaging in corruption,no matter how compelling the benefits might seem?

A)There are cases where side payments to government officials can remove the bureaucratic barriers to investments that create jobs.
B)Corruption tends to corrupt both the bribe giver and the bribe taker.
C)In the context of pervasive and cumbersome regulations in developing countries,corruption may improve efficiency and help growth.
D)Giving bribes might be the price that must be paid to do a greater gooD.

Question 45

The well-publicized Lockheed incident of the 1970s is an example of _____ in international business.

A)human rights violations
B)corruption
C)environmental hazards
D)product safety violations

Question 46

Most climate scientists argue that human industrial and commercial activity is increasing the amount of carbon dioxide in the atmosphere,leading to:

A)an abundance of mineral deposits in the soil.
B)lax emission laws.
C)global warming.
D)meta-cooling.

Question 47

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 restrictive pollution regulations on developing countries,thus further crippling their economies.
C)strengthening pollution regulations in developing countries to bring them at par with their Western counterparts.
D)moving production out of locations where there are lax environmental regulations and inadequate enforcement of the same.

Question 48

Who first named the phenomenon that is known as the "tragedy of the commons?"

A)Alfred Chandler
B)Garrett Hardin
C)Leon Sullivan
D)Henry Gleason

Question 49

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 governance
B)class consciousness
C)affirmative action
D)social responsibility

Question 50

The Sullivan principles were formulated in response to:

A)human rights violations in the Honduras.
B)the apartheid system in South Africa.
C)the sweat shops in China.
D)military dictatorship in Myanmar.

Question 51

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

A)condones bribery of foreign public officials to secure contracts.
B)excludes facilitating payments made to expedite routine government action.
C)excludes bribery that does not result in human rights violations.
D)makes payment of speed money illegal.

Question 52

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

A)Murphy's law
B)Pareto efficiency
C)The tragedy of the commons
D)A deadweight loss

Question 53

The atmosphere and oceans can be viewed as a _____ from which everyone benefits but for which no one is specifically responsible.

A)preserve of developed nations
B)global commons
C)responsibility of developing nations
D)global liability

Question 54

Which of the following statements would be an argument that supports the U.S.Congress' exemption of facilitating payments from the Foreign Corrupt Practices Act?

A)Corruption reduces the returns on business investment and leads to low economic growth in most developing countries.
B)Unproductive bureaucrats may siphon off the profits from a business activity.
C)Corruption had a significant negative impact on a country's growth rate.
D)In the context of pervasive and cumbersome regulations in developing countries,corruption may improve efficiency and help growth.

Question 55

In a business setting,the term "noblesse oblige" is taken to mean:

A)benevolent behavior that is the responsibility of successful enterprises.
B)obliging an official with the expectation of a reciprocal favor.
C)rich corporations abusing their power for private gain.
D)the preferential treatment received by successful companies from governments.

Question 56

Perrault Machines and Tools,an American multinational company,is looking for suppliers in Asia.It is,however,concerned about the working conditions in factories around the region.Which of the following is a good way for the company to guard against ethical abuses at its supplier's facilities?

A)Pay the suppliers well above local rates.
B)Accept the working conditions practiced in the host nation.
C)Require that the supplier conforms to the legal standards of the host country.
D)Audit the foreign suppliers on a regular basis.

Question 57

The Lockheed case was the impetus for the 1977 passage of the _____ in the United States,which outlawed the paying of bribes to foreign government officials to gain business.

A)International Anticorruption and Good Governance Act
B)International Emergency Economic Powers Act
C)Foreign Corrupt Practices Act
D)Ethics in Government Act

Question 58

Which of the following was the first company to adopt Sullivan's principles for its activities in South Africa?

A)General Electric
B)General Mills
C)General Motors
D)General Insurance

Question 59

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

A)following the principles was the most ethical way of addressing the ethical concerns in doing business in South AfricA.
B)even following the principles would not ethically justify continuing to do business in South Africa.
C)a new set of principles was needed to allow companies to ethically continue their business in South Africa.
D)the principles had been successful in combating apartheid in South Africa.

Question 60

In 1997,the trade and finance ministers from the member states of the Organization for Economic Cooperation and Development (OECD)adopted the _____,which obliges member states and other signatories to make the bribery of foreign public officials a criminal offense.

A)Foreign Corrupt Practices Act
B)International Anticorruption and Good Governance Act
C)Convention on Combating Bribery of Foreign Public Officials in International Business Transactions
D)Prevention of Corruption in International Business Negotiations and Transactions Act

Question 61

All of the following are truths about power EXCEPT that:

A)it is morally neutral.
B)it always decreases social welfare.
C)how it is used matters.
D)it can be used in positive ways.

Question 62

Henry is the manager of a large manufacturing facility in an Asian country.Local government officials are pressuring him to pay them a substantial bribe and are threatening to force the facility to close if he doesn't comply.Henry's company has a zero-tolerance policy toward corruption.However,Henry is aware that closing the factory will plunge the local community into unemployment and abject poverty.Henry is at a loss to know what to do.Henry is facing a(n):

A)paradox.
B)tragedy of the commons.
C)Warnock's dilemma.
D)ethical dilemma.

Question 63

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

A)paradox.
B)tragedy of the commons.
C)Warnock's dilemma.
D)ethical dilemma.

Question 64

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

A)The Friedman doctrine
B)Kantian ethics
C)Sullivan's principles
D)Utilitarian approach

Question 65

Which straw men approach to business ethics is best summarized by the maxim "When in Rome,do as the Romans?"

A)Cultural relativism
B)Righteous moralist
C)Naive immoralist
D)Friedman doctrine

Question 66

Which of the following companies is cited by the text as a multinational which has acknowledged a moral obligation to use its power to enhance social welfare in the communities where it does business?

A)News Corporation
B)BP
C)East India Company
D)Royal Dutch Shell

Question 67

Several studies of unethical behavior in a business setting have concluded that businesspeople sometimes do not realize they are behaving unethically,primarily because:

A)they fail to take into account the ethical dimension of business decisions.
B)they ignore business variables such as cost,delivery,and product quality.
C)they have a strong system of personal ethics.
D)they focus on ethical issues and exclude economic and business aspects.

Question 68

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 how:

A)notions of ethics are universal.
B)Westerners are more conservative in culture.
C)what is ethical depends upon one's cultural perspective.
D)Asian cultures are more economically advanceD.

Question 69

All of the following are reasons why expatriate managers may experience increased pressure to violate their personal ethical standards EXCEPT that:

A)they may be surrounded by local employees who have less rigorous ethical standards.
B)they place a high value on adherence to human rights.
C)they are geographically away from the parent company.
D)they are pressured by their company to meet unrealistic goals.

Question 70

In its extreme viewpoint,_____ suggests that if a culture supports slavery,it is all right to use slave labor in the country.

A)the righteous moralist
B)cultural relativism
C)the Kantian ethic
D)utilitarian approach

Question 71

_____ approaches to business ethics are raised by business ethics scholars primarily to demonstrate that they offer inappropriate guidelines for ethical decision-making in a multinational enterprise.

A)Straw men
B)The Sullivan principles
C)Just distribution
D)Rights theories

Question 72

Milton Friedman said: ''There is one and only one social responsibility of business-to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game,which is to say that it engages in open and free competition without deception or fraud." This demonstrates that he:

A)equates ethical behavior with social responsibility.
B)argues against ethical behavior for businesses.
C)advocates social responsibility for businesses.
D)states that businesses should behave in an ethical manner.

Question 73

The belief that ethics are culturally determined and that firms should adopt the ethics of the cultures in which they operate is referred to as _____.

A)naive moralism
B)righteous moralism
C)cultural relativism
D)the Friedman doctrine

Question 74

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

A)personal work ethic
B)organization culture
C)organization governance
D)corporate governance

Question 75

The CEO of Verity Software is a corrupt man who uses his power in the company to enrich family members and himself.Consequently,his employees too engage in corruption.In this case,the roots of unethical behavior can be traced to:

A)unrealistic performance expectations.
B)leadership.
C)making decisions based only on business variables.
D)varying ethical standards in different cultures.

Question 76

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

A)strong personal ethics.
B)international law.
C)organization culture.
D)unrealistic performance expectations.

Question 77

One's personal ethical code:

A)is divorced from business ethics.
B)exerts scant influence on the way one behaves at work.
C)comes from a number of sources.
D)is immune to external pressures.

Question 78

The text references author Robert Bryce's views about the Enron scandal to illustrate several causes of unethical behavior in business.Which of the following is one of them?

A)Focusing only on the business aspect
B)Organization culture
C)Personal ethics of expatriate managers
D)The pressures of international business

Question 79

Of the following,whose basic position is that 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)Robert Bryce
D)Alfred Chandler

Question 80

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

A)unrealistic performance expectations.
B)cultural differences of countries.
C)making decisions based on market differences.
D)varying ethical standards in different cultures.