Question 1

An international U.S. based company sets up a production unit in a developing country with poor environmental regulations. This contributes to:

Accepted Answer

The setting up of a production unit in a developing country with poor environmental regulations contributes to the global tragedy of the commons. This is because the company is exploiting and degrading natural resources that are shared by all humans, and the absence of strong regulations allows the company to externalize the environmental costs to society and the global community. This leads to negative environmental impacts and undermines the sustainability of the planet.

Question 2

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

Accepted Answer

The Tragedy of the Commons is a concept in which a shared resource, such as a pasture or fishery, is overused by individuals who are acting in their own self-interest, ultimately leading to depletion or degradation of the resource. The term was popularized by biologist Garrett Hardin in 1968.

Question 3

BP, one of the world's largest oil companies, has made it part of the company policy to undertake "social investments" in the countries where it does business. There was no economic reason for BP to make this social investment, but the company believes it is morally obligated to give something back to the societies that have made their success possible. BP's actions are an example of:

Accepted Answer

BP's policy of "social investments" reflects the concept of noblesse oblige, which is the idea that those who are privileged or powerful have a responsibility to use their resources to help others. This policy goes beyond the narrow economic interests of the company and demonstrates a moral commitment to the well-being of society. Cultural relativism is a theory that holds that moral standards are relative to the culture in which they are practiced, and the Friedman doctrine is a belief that a corporation's only social responsibility is to maximize profits for its shareholders. The tragedy of the commons refers to the depletion of a shared resource due to individual self-interest.

Question 4

Which of the following was designed to allow GM to operate ethically in South Africa as long as the company did not obey the apartheid laws in its own South African operations?

Accepted Answer

The Sullivan principles were a set of guidelines developed by Rev. Leon Sullivan that encouraged companies to operate ethically in South Africa by promoting non-discrimination, fair labor practices, and equal opportunities for all employees. GM agreed to abide by these principles, which allowed them to maintain a presence in South Africa while not complying with apartheid laws.

Question 5

A situation in which none of the available alternatives seems morally acceptable is called:

Accepted Answer

An ethical dilemma is a situation in which none of the available options seems morally acceptable. It occurs when there is a conflict between two or more ethical principles or values, and each choice involves a violation of one or more of these. Therefore, when faced with an ethical dilemma, it is essential to carefully consider all options and their potential impact on others before making a decision.

Question 6

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 is known as:

Accepted Answer

The idea of considering the social consequences of economic actions and having a presumption in favor of decisions with both good economic and social consequences is known as social responsibility. The other options, moral relativism and ethical dilemma, refer to different ethical concepts, while noblesse oblige refers to the obligation of the privileged to act with generosity and responsibility toward those less privileged, which is related to but not synonymous with social responsibility.

Question 7

Which of the following observations about the Foreign Corrupt Practices Act is true?

Accepted Answer

The Lockheed case was the impetus for the 1977 passage of the Foreign Corrupt Practices Act in the United States. The act outlawed the paying of bribes to foreign government officials to gain business.

Question 8

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

Accepted Answer

The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions excludes facilitating payments made to expedite routine government action from the convention.

Question 9

Child labor is permitted and widely employed in Country X. A multinational company entering Country X decides to employ minors in its subsidiary, even though it is against the multinational's home-country ethics. Which of the following approaches to business ethics would justify the actions of the multinational company?

Accepted Answer

Cultural relativism argues that an action should be judged based on the standards of the culture in which it occurs. In Country X, child labor is widely employed and accepted. Therefore, the multinational company may believe that employing minors complies with the ethical standards of the local culture.

Question 10

To foster ethical behavior, many businesses draft a code of ethics, which is an informal statement of the ethical priorities the company follows.

Accepted Answer

To foster ethical behavior, businesses need to build an organization that values ethical behavior. To do this, many companies now draft a code of ethics, which is a formal statement of the ethical priorities a business adheres to.

Question 11

Identify the INCORRECT statement about environmental regulations.

Accepted Answer

Environmental regulations vary significantly between developed and developing nations. Developed nations generally have more robust regulations and enforcement mechanisms in place, while developing nations often lack the resources and institutional capacity to implement and enforce environmental regulations effectively.

Question 12

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

Accepted Answer

The statement is aligned with the Friedman doctrine, which argues that the only social responsibility of business is to increase profits, as long as it stays within the boundaries of the law.

Question 13

It is in the best interest of prospective employees to find out all they can about the ethical climate in an organization.

Accepted Answer

Knowing the ethical climate of an organization can help prospective employees make informed decisions about whether or not to join the organization and if their personal and professional values align with the organization's values. It can also help them avoid any negative consequences of working in an unethical environment.

Question 14

Cultural relativism suggests that:

Accepted Answer

Cultural relativism suggests that a firm should adopt the ethics of the culture in which it is operating. This means that ethical practices may vary across different countries and cultures, and a firm should strive to understand and comply with the ethical norms and values of the host country. This approach recognizes that what may be considered ethical in one culture may not be acceptable in another, and that a one-size-fits-all approach to ethics may not be appropriate in a multicultural business environment.

Question 15

Which of the following, in a business setting, is taken to mean benevolent behavior that is the responsibility of successful enterprises?

Accepted Answer

Noblesse oblige refers to the idea that those who are successful and privileged have a responsibility to behave with generosity and kindness towards those who are less fortunate or in lower positions. In a business setting, this could manifest as a commitment to corporate social responsibility or philanthropy. Sullivan's principles refer to ethical standards for conducting business, while an ethical dilemma refers to a situation in which a difficult decision must be made between two ethical choices. The tragedy of the commons refers to the depletion of shared resources due to individuals acting in their own self-interest.

Question 16

Which of the following refers to the values and norms that the employees of an organization share?

Accepted Answer

Organization culture refers to the shared values, beliefs, attitudes, and practices that characterize an organization and guide its behavior. The other options are not directly related to this concept.

Question 17

Facilitating payments are:

Accepted Answer

Sometimes known as speed money or grease payments, facilitating payments are payments to ensure receiving the standard treatment that a business ought to receive from a foreign government, but might not due to the obstruction of a foreign official.

Question 18

Ethics officers are hired by many businesses to make sure that all employees are trained to be ethically aware and that ethical considerations enter the business decision-making process at all levels of the organization.

Accepted Answer

Ethics officers are indeed hired by many businesses to ensure ethical awareness and decision making within the organization.

Question 19

Expatriate managers may experience more than the usual degree of pressure to violate their personal ethics because of all of the following reasons EXCEPT:

Accepted Answer

Expatriate managers are typically farther away from their parent company, not closer both psychologically and geographically. The other reasons listed - being away from their usual context and supporting culture, being in a culture with different ethical norms, and being surrounded by employees with less rigorous ethical standards - can all contribute to the pressure to violate personal ethics.

Question 20

According to the Friedman doctrine:

Accepted Answer

The Friedman doctrine states that businesses should not undertake social expenditures beyond those mandated by the law and required for the efficient running of a business. It also asserts that a multinational's home-country standards of ethics are inappropriate to follow in foreign countries. Therefore, option C is the correct choice. Options A and D are not consistent with the Friedman doctrine, and option B is incorrect as it contradicts the premise that a multinational should not follow the same ethical standards in different countries.

Quiz 5: Ethics in International Business