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Exam 4: Demanding Ethical and Socially Responsible Behavior

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Question 101

Multiple Choice

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Many businesses have developed internal procedures to enforce their ethical policies. Which of the following is an example of an outside group urging ethical behavior in businesses?

A) Management teams
B) Union officials
C) Suppliers
D) Foreign trade representatives

E) C) and D)
F) None of the above

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Question 102

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Corporate social responsibility refers to the concern businesses have for the welfare of society.

A) True
B) False

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Question 103

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Trust between workers and managers must be based on a foundation of fairness, honesty, openness, and moral integrity.

U.S. businesses claim that unethical business practices are common outside the U.S.

Christina owns a boutique and is ordering jewelry made using semi-precious stones from a supplier in Mexico. Due to low wages in Mexico, her supplier promised an excellent wholesale price for these goods. You agree with Christina when she explains to you that international business law is very clear-cut with these dealings. As long as the supplier is not breaking any labor laws in his country, her social responsibility is covered.

Laws represent the standards of ________ behavior.

Chip's CPUs, a computer chip manufacturer, knowingly sold flawed chips and decided not to tell its customers of the possible problems. When it became public knowledge, however, the firm's stock price fell dramatically. This demonstrates the value that investors place on the ethical behavior of businesses.

Mini-Case Megan, Erin, and Ryan are in the middle of a heated discussion. The trio are the chief operating officers of the Frozen Fun Ice Cream Corporation and are reviewing the latest financial reports. Intense competition has resulted in deceased profits. Each of the three officers has his or her own view of how to help the company turn around. Megan suggests cutting costs by firing union workers and hiring replacement employees at lower wages. She has asked the firm's attorney to find a loophole in the contract that will allow for this action. Erin protests, stating that Megan's proposal is unethical and unfair. Erin believes that every stakeholder should be treated equally, and that profiting at the expense of others is reckless. Ryan, agreeing in part with Erin, states, "We must be sensitive to all affected parties, but clearly our primary goal is to make a profit for our investors." In an attempt to resolve the conflict between Megan and Erin, Ryan offers an alternative suggestion: reduce the firm's charitable contributions until acceptable profit levels rise. Erin is outraged and reminds Ryan of the social responsibilities that Frozen Fun Ice Cream has to the community, environment, suppliers, employees, and investors. -On which of the three ethics check questions would Megan primarily focus?

The green movement has resulted in a positive impact on U.S. jobs.

People involved in business may be tempted to do something unethical in order to increase sales and profits, but rarely do because if they are caught, our legal system will deal harshly with them.

An important source of public scrutiny is watchdogs. These are

Provide examples that serve to explain the differences among the following terms: (1) corporate responsibility; (2) corporate social initiatives; (3) corporate philanthropy.

In order to avoid insider trading, the SEC (Securities and Exchange Commission) has adopted a new rule called ________ that requires publicly traded companies to release information to everyone in a timely manner, rather than just to a few persons.

A society gets into trouble when people consider only what is illegal and not also what is ethical or unethical.

Legal behavior is a first step toward ethical behavior.

One factor causing businesses to vigorously enforce ethical standards is the

Making businesspeople more accountable for company actions may help restore trust in the free-market system and leaders in general.

A social audit measures a firm's progress in the area of worker-management relations.

Ethical behavior covers a ________ range of conduct than legal behavior.

The boxed material entitled Reaching Beyond Our Borders that told the story about Joe, the telecommunication employee, suggests that U.S. firms operating overseas are