Test Bank for Understanding Business Ethics 3rd Edition by Peter A. Stanwick, Sarah D. Stanwick

Stanwick, Understanding Business Ethics, 3e Instructor Resource

Test Bank for Understanding Business Ethics Stanwick, Sarah D. Stanwick

3rd

Edition

Peter

Chapter 1-13

Chapter 1: The Foundation of Ethical Thought Test Bank Multiple Choice 1. How is the price of a meal determined at a Panera Cares Café? a. Customers decide how much to pay for their meal b. Meal prices are determined based on the cost of meal preparations c. Café managers set the prices of the meals each day based on ingredient costs d. Top management at Panera set a standard price of meals for all café locations.

Ans: a Learning Objective: 1.1 Cognitive Domain: Knowledge Answer Location: Panera Cares Community Café: A Loaf in Every Area Question Type: MC 2. The average Panera Cares Café will generate revenues of ___________ and profits of __________ per month. a. $10,000; $300 to $400 b. $50,000; $1,000 to $5,000 c. $100,000; $3,000 to $4,000 d. $500,000; $30,000 to $35,000 Ans: c Learning Objective: 1.1 Cognitive Domain: Knowledge Answer Location: Panera Cares Community Café: A Loaf in Every Area Question Type: MC The profit from Panera Cares Café is used to a. Open new cafes b. Fund training programs c. Increase wages d. Publicize Panera Bread Ans: b Learning Objective: 1.1 Cognitive Domain: comprehension Answer Location: Panera Cares Community Café: A Loaf in Every Area Question Type: MC

A.

Stanwick, Understanding Business Ethics, 3e Instructor Resource 4. ___________ can be defined as the values that an individual uses to interpret whether any particular action or behavior is considered acceptable and appropriate. a. Ethics b. Validity c. Reliability d. Commitment Ans: a Learning Objective: 1.1 Cognitive Domain: Comprehension Answer Location: Introduction Question Type: MC 5. _____________ can be defined as the collective values of a business organization that can be used to evaluate whether the behaviors of the organization’s collective members are considered acceptable and appropriate. a. Validity b. Business ethics c. Self-efficacy d. Groupthink Ans: b Learning Objective: 1.1 Cognitive Domain: Knowledge Answer Location: Introduction Question Type: MC 6. Which of the following is not one of the three types of ethical examinations? a. Descriptive b. Constructive c. Analytical d. Normative Ans: b Learning Objective: 1.2 Cognitive Domain: Comprehension Answer Location: Types of Ethical Examinations Question Type: MC 7. What percentage of the 1,700 executives from 43 countries surveyed by Ernest and Young stated they would be willing to make cash payments in the form of a bribe in order to obtain business from a customer? a. 5% b. 15% c. 25% d. 45% Ans: b Learning Objective: 1.1

Stanwick, Understanding Business Ethics, 3e Instructor Resource Cognitive Domain: Comprehension Answer Location: Why Is Studying Ethics So Important?

Question Type: MC 8. ____________ is the presentation of facts related to specific ethical actions of an individual or organization. a. Analytical ethics b. Descriptive ethics c. Normative ethics d. Constructive ethics Ans: b Learning Objective: 1.2 Cognitive Domain: Comprehension Answer Location: Types of Ethical Examinations Question Type: MC 9. Which of the following is used when an observer wants to understand the cause of events that generated the ethical issue? a. Analytical ethics b. Descriptive ethics c. Normative ethics d. Constructive ethics Ans: b Learning Objective: 1.2 Cognitive Domain: Comprehension Answer Location: Types of Ethical Examinations Question Type: MC 10. _____________ is the process of understanding the reasons a course of action that may have an ethical impact took place. a. Analytical ethics b. Descriptive ethics c. Normative ethics d. Constructive ethics Ans: a Learning Objective: 1.2 Cognitive Domain: Comprehension Answer Location: Types of Ethical Examinations Question Type: MC 11. From a legal standpoint, _____________ would address the ―motive‖ behind the actions instead of just being satisfied with a description of the actions. a. Analytical ethics b. Descriptive ethics c. Normative ethics d. Constructive ethics

Stanwick, Understanding Business Ethics, 3e Instructor Resource Ans: a Learning Objective: 1.2 Cognitive Domain: Comprehension Answer Location: Types of Ethical Examinations Question Type: MC 12. _____________ is a prescribed course of action that attempts to ensure that ethical behavior will be followed in the future. a. Analytical ethics b. Descriptive ethics c. Normative ethics d. Constructive ethics Ans: c Learning Objective: 1.2 Cognitive Domain: Comprehension Answer Location: Types of Ethical Examination Question Type: MC 13. ______________ allows employees and managers to address potential ethical issues before they occur. a. Analytical ethics b. Descriptive ethics c. Normative ethics d. Constructive ethics Ans: c Learning Objective: 1.2 Cognitive Domain: Comprehension Answer Location: Types of Ethical Examination Question Type: MC 14. Which of the following is not one of the three teleological frameworks? a. Ethical egoism b. Utilitarianism c. Kant’s ethics d. Sidgwick’s Dualism Ans: c Learning Objective: 1.2 Cognitive Domain: Comprehension Answer Location: Teleological Frameworks Question Type: MC 15. The supporters of ______________ argue that this framework is the only ethical mold that captures the essence of motivation within individuals. a. Utilitarianism b. Sidgwick’s Dualism c. Ethical Egoism

Stanwick, Understanding Business Ethics, 3e Instructor Resource d. Kant’s Ethics Ans: c Learning Objective: 1.2 Cognitive Domain: Comprehension Answer Location: Teleological Frameworks Question Type: MC 16. ______________ is based on the principle of utility where each person’s actions add to the overall utility of the community impacted by his or her actions. a. Utilitarianism b. Sidgwick’s dualism c. Ethical egoism d. Kant’s ethics Ans: a Learning Objective: 1.2 Cognitive Domain: Comprehension Answer Location: Teleological Frameworks Question Type: MC 17. Supporters of _______________ state that this theory is the only one that captures the essence of benevolent behavior. a. Utilitarianism b. Sidgwick’s dualism c. Ethical egoism d. Kant’s ethics Ans: a Learning Objective: 1.2 Cognitive Domain: Comprehension Answer Location: Teleological Frameworks Question Type: MC 18. ______________ attempted to resolve the fundamental difference of whether the actions for one’s self-benefit impact just the individual or others. a. Utilitarianism b. Sidgwick’s dualism c. Ethical egoism d. Kant’s ethics Ans: b.

Learning Objective: 1.2 Cognitive Domain: Comprehension Answer Location: Teleological Frameworks Question Type: MC 19. Sidgwick’s dualism argues that _______________ is necessary in an individual’s actions. a. Utilitarianism b. Rational benevolence

Stanwick, Understanding Business Ethics, 3e Instructor Resource c. Ethical egoism d. Kent’s ethics Ans: b Learning Objective: 1.2 Cognitive Domain: Comprehension Answer Location: Teleological Frameworks Question Type: MC 20. Which of the following ethical frameworks focuses on the duty or obligation in determining whether the actions are wrong or right? a. Teleological b. Sidgwick’s dualism c. Deontological d. Ethical egoism Ans: c Learning Objective: 1.2 Cognitive Domain: Comprehension Answer Location: Deontological Frameworks Question Type: MC 21. All of the following are deontological frameworks except a. Ethical egoism b. Existentialism c. Contractarianism d. Kant’s Ethics Ans: a Learning Objective: 1.2 Cognitive Domain: Comprehension Answer Location: Deontological Frameworks Question Type: MC 22. ___________ is based on the belief that all individuals agree to social contracts to be a member within a society. a. Intuitionism b. Existentialism c. Contractarianism d. Kant’s Ethics Ans: c Learning Objective: 1.2 Cognitive Domain: Comprehension Answer Location: Deontological Frameworks Question Type: MC 23. ___________ is based on the underlying belief that the only person who can determine right and wrong is based on the free will of the person making the decision. a. Intuitionism

Stanwick, Understanding Business Ethics, 3e Instructor Resource b. Existentialism c. Contractarianism d. Kant’s Ethics Ans: b Learning Objective: 1.2 Cognitive Domain: Comprehension Answer Location: Deontological Frameworks Question Type: MC 24. Which of the following is not one of Ross’s seven guiding principles? a. Gratitude b. Justice c. Self-Improvement d. Greed Ans: d Learning Objective: 1.2 Cognitive Domain: Comprehension Answer Location: Seven Guiding Principles to Support Ethical Actions Question Type: MC 25. ___________ can be defined as the trait of an individual who has obsessive and compulsive continuous thoughts of sexual desire. a. Pride b. Envy c. Lust d. Sloth Ans: c Learning Objective: 1.3 Cognitive Domain: Comprehension Answer Location: The Seven Deadly Sins Question Type: MC 26. What did Dante call love of justice perverted to revenge and spite? a. Wrath b. Envy c. Pride d. Greed Ans: a Learning Objective: 1.3 Cognitive Domain: Comprehension Answer Location: The Seven Deadly Sins Question Type: MC 27. What allows animal instincts to control the appetite of an individual? a. Lust b. Gluttony

Stanwick, Understanding Business Ethics, 3e Instructor Resource c. Greed d. Pride Ans: b Learning Objective: 1.3 Cognitive Domain: Comprehension Answer Location: The Seven Deadly Sins Question Type: MC 28. The trolley problem is an example of a Sidgwick’s dualism b Kant’s ethics c An ethical dilemma d Ethical egotism Ans: c Learning Objective: 1.3 Cognitive Domain: Comprehension Answer Location: The Trolley problem Question Type: MC 29. Traditional examples of violations of the _____________ principle include theft, misappropriation of funds, and wasting resources. a. Reliability b. Dignity c. Property d. Transparency Ans: c Learning Objective: 1.4 Cognitive Domain: Comprehension Answer Location: Global Business Standards Codex Question Type: MC 30. The ____________ principle is based on the belief that it is the employee’s responsibility to honor the commitments he or she has made to the firm. a. Reliability b. Responsiveness c. Self-respect d. Transparency Ans: a Learning Objective: 1.4 Cognitive Domain: Comprehension Answer Location: Global Business Standards Codex Question Type: MC 31. The _____________ principle is the belief that employees have a responsibility to supply information when it is requested by various stakeholders. a. Reliability

Stanwick, Understanding Business Ethics, 3e Instructor Resource b. Responsiveness c. Self-respect d. Transparency Ans: b Learning Objective: 1.4 Cognitive Domain: Comprehension Answer Location: Global Business Standards Codex Question Type: MC 32. Which of the following is not an example of fairness? a. Distributive fairness b. Reciprocal fairness c. Procedural fairness d. Fiduciary fairness Ans: d Learning Objective: 1.4 Cognitive Domain: Comprehension Answer Location: Global Business Standards Codex Question Type: MC 33. The ______________ principle is based on the assumption that there are no actual or potential conflicts of interest between the employee and the firm. a. Property b. Dignity c. Citizenship d. Fiduciary Ans: d Learning Objective: 1.4 Cognitive Domain: Comprehension Answer Location: Global Business Standards Codex Question Type: MC 34. The _____________ principle is based on the assumption that every employee should act as a responsible citizen in the community. a. Reliability b. Dignity c. Citizenship d. Fiduciary Ans: c Learning Objective: 1.4 Cognitive Domain: Comprehension Answer Location: Global Business Standards Codex Question Type: MC

Stanwick, Understanding Business Ethics, 3e Instructor Resource

True/False 35. The values that an individual uses to interpret whether any particular action or behavior is considered legal or illegal are called ethics. a. True b. False Ans: b Learning Objective: 1.1 Cognitive Domain: Knowledge Answer Location: Why Is Studying Ethics Important?

Question Type: TF 36. The collective values of a business organization that can be used to evaluate whether the behaviors of the organization’s collective members are considered acceptable and appropriate are called business ethics. a. True b. False Ans: a Learning Objective: 1.1 Cognitive Domain: Knowledge Answer Location: Why Is Studying Ethics Important?

Question Type: TF 37. Within the analytical ethics context, there is no interpretation of the facts or assumptions concerning why certain courses of action took place. a. True b. False Ans: b Learning Objective: 1.2 Cognitive Domain: Comprehension Answer Location: Types of Ethical Examination Question Type: TF 38. From a legal standpoint, analytical ethics would address the ―motive‖ behind the actions instead of just being satisfied with a description of the actions. a. True b. False Ans: a Learning Objective: 1.2 Cognitive Domain: Knowledge Answer Location: Types of Ethical Examination Question Type: TF 39. The supporters of the ethical egoism theory would argue that businesses should focus solely on their own self-interests and maximize their level of profitability by developing a strong competitive advantage. a. True

Stanwick, Understanding Business Ethics, 3e Instructor Resource b. False Ans: a Learning Objective: 1.2 Cognitive Domain: Knowledge Answer Location: Teleological Frameworks Question Type: TF 40. As opposed to deontological frameworks, which focus on whether the results are favorable or not, teleological frameworks focus on the duty or obligation in determining whether the actions are right or wrong. a. True b. False Ans: b Learning Objective: 1.2 Cognitive Domain: Knowledge Answer Location: Deontological Frameworks Question Type: TF 41. Contractarianism is based on the underlying belief that the only person who can determine right or wrong is based on the free will of the person making the decision. a. True b. False Ans: b Learning Objective: 1.2 Cognitive Domain: knowledge Answer Location: Deontological Frameworks Question Type: TF 42. Existentialism is based on the belief that all individuals agree to social contracts to be a member within a society. a. True b. False Ans: b Learning Objective: 1.2 Cognitive Domain: Knowledge Answer Location: Deontological Frameworks Question Type: TF 43. Kant’s ethical view is considered a dualism because it attempts to bridge the gap between the existentialist and contractarian points of view. a. True b. False Ans: a Learning Objective: 1.2 Cognitive Domain: Knowledge

Stanwick, Understanding Business Ethics, 3e Instructor Resource Answer Location: Deontological Frameworks Question Type: TF 44. Ethical egoism is represented in self-improvement, and utilitarianism is represented in beneficence and noninjury. a. True b. False Ans: a Learning Objective: 1.2 Cognitive Domain: Knowledge Answer Location: Seven Guiding Principles to Support Ethical Actions Question Type: TF 45. Existentialism is represented in fidelity and self-improvement, and contractarianism is represented in fidelity and justice. a. True b. False Ans: A Learning Objective: 1.2 Cognitive Domain: Knowledge Answer Location: Seven Guiding Principles to Support Ethical Actions Question Type: TF 46. The traditional components of fiduciary duty include ensuring that there are no actual or potential conflicts of interest given the actions of the employee. a. True b. False Ans: a Learning Objective: 1.4 Cognitive Domain: knowledge Answer Location: Global Business Standards Codex Question Type: TF 47. The transparency principle is based on the belief that every employee should conduct business in a truthful and open manner. a. True b. False Ans: a Learning Objective: 1.4 Cognitive Domain: Knowledge Answer Location: Global Business Standards Codex Question Type: TF 48. The property principle involves making affirmative efforts for those individuals who need help in their personal pursuits, and it also helps protect those individuals who are vulnerable to unethical actions.

Stanwick, Understanding Business Ethics, 3e Instructor Resource a. True b. False Ans: b Learning Objective: 1.4 Cognitive Domain: Knowledge Answer Location: Global Business Standards Codex Question Type: TF 49. The fiduciary principle is based on the belief that stakeholders who have a vested interest in the firm should be treated fairly. a. True b. False Ans: b Learning Objective: 1.4 Cognitive Domain: Knowledge Answer Location: Global Business Standards Codex Question Type: TF

Essay 50. In a short essay, list and discuss the three teleological frameworks. a. Ethical egoism—based on the belief that every individual should act in a way to promote himself or herself if the net result will generate, on balance, positive rather than negative results. b. Utilitarianism—can be based on single acts of individuals (act utilitarianism) or on guiding behavior indirectly through an evaluation of ethical conduct via rules procedures (rule utilitarianism). c. Sidgwick’s dualism—attempted to bridge the gap between the two competing frameworks of ethical egoism and utilitarianism. At the core of the argument is that both previous theories had elements of using cost-benefit analysis to help analyze the actions of individuals.

Sidgwick’s dualism attempted to resolve the fundamental difference of whether the actions for one’s self-benefit impact just the individual or others.

Answer Location: Teological Frameworks Question Type: ESS 51. In a short essay, list and discuss the three deontological frameworks. a. Existentialism—based on the underlying belief that the only person who can determine right and wrong is based on the free will of the person making the decisions. b. Contractarianism—also called social contract theory, is based on the belief that all individuals agree to social contracts to be a member within a society. c. Kant’s ethics—Kant argues that the free will to make decisions that were considered rational needed to be converted into a universal will. Kant’s ethical view is considered a dualism because it attempts to bridge the gap between the existentialist and contractarian points of view.

Answer Location: Deontological Frameworks Question Type: ESS

Stanwick, Understanding Business Ethics, 3e Instructor Resource 52. In a short essay, list and discuss five of the seven guiding principles that W.D. Ross presented as the basis of how individuals develop a level of intuition that becomes incorporated in their decision-making process. a. Fidelity—an individual needs to keep explicit and implicit promises b. Reparation—an individual must act on repairing the consequences for previous wrongful acts c. Gratitude—an individual must be able to show gratitude for the kindnesses that others have given him or her d. Justice—an individual should try to see that any goods are fairly distributed e. Beneficence—an individual should focus on trying to improve the lives of others f. Self-improvement—an individual should improve himself or herself by focusing on virtue and intelligence g. Noninjury—an individual should not cause any harm to others Answer Location: Seven Guiding Principles to Support Ethical Actions Question Type: ESS 53. In a short essay, list and discuss five of the seven deadly sins described as one of the founding areas of guidance for those unsure about their ethical standing. a. Lust—defined as the trait of an individual who has obsessive and compulsive continuous thoughts of sexual desire b. Gluttony—defined as when an individual over indulges and over consumes anything good to the point that the good is wasted when it is consumed c. Greed—defined as an excessive desire by the individual to obtain wealth, status, and power d. Sloth—can be defined as being lazy and indifferent about one’s own actions e. Wrath—defined as an uncontrollable level of anger or rage f. Envy—relates to focusing on one’s own self-interests in the desire to obtain qualities or possessions of another person g. Pride—relates to being considered above or ―superior‖ to another person Answer Location: The Seven Deadly Sins Question Type: ESS 54. In a short essay, list and describe five of the eight major underlying principles in which ethical behavior can be interpreted and evaluated. a. Fiduciary principle—the traditional components of fiduciary duty include ensuring that there are no actual or potential conflicts of interest given the actions of the employee. It also is implied that each employee will not put his or her self-interests above the interest of the firm b. Property principle—based on the belief that every employee should respect property as well as the rights of the owners of the property c. Reliability principle—based on the belief that it is the employee’s responsibility to honor commitments he or she has made to the firm d. Transparency principle—based on the belief that every employee should conduct business in a truthful and open manner e. Dignity principle—based on the belief that each employee needs to respect the dignity of all individuals f. Fairness principle—based on the belief that stakeholders who have a vested interest in the firm should be treated fairly

Stanwick, Understanding Business Ethics, 3e Instructor Resource g. Citizenship principle—based on the belief that every employee should act as a responsible citizen in the community h. Responsiveness principle—based on the belief that employees have a responsibility to respond to requests for information about the operations from the various stakeholders Answer Location: Global Business Standards Codex Question Type: ESS

Stanwick, Understanding Business Ethics, 3e Instructor Resource

Chapter 2: The Evolving Complexities of Business Ethics Test Bank Multiple Choice 1. The tax shelter established by Promogroup is based on _____________ of royalties that go into and leave the Netherlands. a. The simple flow b. The net present value c. Discounted cash flow d. Internal rate of return Ans: a Learning Objective: 2.1 Cognitive Domain: Knowledge Answer Location: Bono: I Still Haven’t Found the Tax Rate That I’m Looking For Question Type: MC 2. The Dutch tax shelters are viable only to artists who are _______________. a. U.S. citizens b. Only Dutch citizens c. Not U.S. citizens d. Only German citizens Ans: c Learning Objective: 2.1 Cognitive Domain: Knowledge Answer Location: Bono: I Still Haven’t Found the Tax Rate That I’m Looking For Question Type: MC 3. _____________ is derived from the Greek word for character. a. Honor b. Reciprocity c. Ethos d. Norm Ans: c Learning Objective: 2.2 Cognitive Domain: Comprehension Answer Location: History of Business Ethics Question Type: MC 4. The discovery of ethics began with discussions initiated by all of the following individuals except a. Socrates b. Aristotle c. Plato d. Napoleon Ans: d

Stanwick, Understanding Business Ethics, 3e Instructor Resource Learning Objective: 2.2 Cognitive Domain: Knowledge Answer Location: History of Business Ethics Question Type: MC 5. Which philosopher stated that a person is not complete until that person is a contributing member of society? a. Socrates b. Aristotle c. Plato d. Napoleon Ans: b Learning Objective: 2.2 Cognitive Domain: Knowledge Answer Location: History of Business Ethics Question Type: MC 6. The decade of the ______________ was a time when companies began to cover up their wrong doings rather than deal with the issues head-on. a. 1960s b. 1970s c. 1980s d. 1990s Ans: b Learning Objective: 2.2 Cognitive Domain: Knowledge Answer Location: History of Business Ethics Question Type: MC 7. The Ethics Resource Center helped form the first business ethics office at General Dynamics in ____________. a. 1965 b. 1975 c. 1985 d. 1995 Ans: c Learning Objective: 2.2 Cognitive Domain: Knowledge Answer Location: History of Business Ethics Question Type: MC 8. Intellectual Property Theft and Cybercrime become commonplace during the a. 1970s b. 1980s c. 1990s d. 2000s

Stanwick, Understanding Business Ethics, 3e Instructor Resource Ans: d Learning Objective: 2.2 Cognitive Domain: Knowledge Answer Location: History of Business Ethics Question Type: MC 9. The most ethically related significant event of the United States during the 2000s was the passage of the _____________. a. Civil Rights Act b. Sherman Antitrust Act c. Foreign Corrupt Practices Act d. Sarbanes-Oxley Act Ans: d Learning Objective: 2.2 Cognitive Domain: Knowledge Answer Location: History of Business Ethics Question Type: MC 10. The term _______________ is defined by the Merriam-Webster dictionary as ―a firm adherence to a code of especially moral or artistic values.‖ a. Reciprocity b. Accountability c. Integrity d. Commitment Ans: c Learning Objective: 2.3 Cognitive Domain: Comprehension Answer Location: The Role of Integrity Question Type: MC 11. Integrity is derived from the Latin word integri, which means ______________. a. Reciprocity b. Wholeness c. Commitment d. Reliability Ans: b Learning Objective: 2.3 Cognitive Domain: Comprehension Answer Location: The Role of Integrity Question Type: MC 12. All of the following are types of tests that an individual can use to evaluate the integrity of his or her actions except a. Publicity b. Reliability c. Trusted friend

Stanwick, Understanding Business Ethics, 3e Instructor Resource d. Golden Rule Ans: b Learning Objective: 2.4 Cognitive Domain: Comprehension Answer Location: Specific Behaviors of Integrity Question Type: MC 13. The _____________ test is based on the scenario of whether the individual is comfortable if his or her actions were publicized in a newspaper or on television. a. Universality b. Trusted friend c. Publicity d. Golden Rule Ans: c Learning Objective: 2.4 Cognitive Domain: Comprehension Answer Location: The Role of Integrity Question Type: MC 14. The _____________ test is also known as the Golden Rule. a. Reliability b. Reciprocity c. Publicity test d. Universality Ans: b Learning Objective: 2.4 Cognitive Domain: Comprehension Answer Location: The Role of Integrity Question Type: MC 15. All of the following represent one of the thirteen behaviors that can help identify the level of integrity in individual action except a. Reproaching just acts b. Possessing humility c. Maintaining reciprocity d. Taking responsibility Ans: c Learning Objective: 2.4 Cognitive Domain: Comprehension Answer Location: Specific Behaviors of High Integrity Question Type: MC 16. Refusing to perform any act that would be considered unjust is an example of which of the following specific behaviors of high integrity? a. Reproaching just acts b. Processing humility

Stanwick, Understanding Business Ethics, 3e Instructor Resource c. Maintaining reciprocity d. Take responsibility Ans: a Learning Objective: 2.4 Cognitive Domain: Comprehension Answer Location: Specific Behaviors of High Integrity Question Type: MC 17. All of the following are examples of avenues along which unintentional unethical behavior may be developed except a. Implicit prejudice b. In-group favoritism c. Maximizing reciprocity d. Claiming credit for others’ actions Ans: c Learning Objective: 2.6 Cognitive Domain: Comprehension Answer Location: Is Everyone Unethical?

Question Type: MC 18. ______________ occurs when the decision maker forms a bias toward individuals in the same group as the decision maker. a. Implicit prejudice b. Ingroup favoritism c. Reciprocity d. Conflicts of interest Ans: b Learning Objective: 2.6 Cognitive Domain: Comprehension Answer Location: Is Everyone Unethical?

Question Type: MC 19. Which of the following are not regarded as barriers to being an ethical organization? a. Ill-conceived goals b. Indirect blindness c. Fulfilling commitments d. The slippery slope Ans: c Learning Objective: 2.6 Cognitive Domain: Comprehension Answer Location: Five Barriers to an Ethical Organization Question Type: MC 20. Which of the following does not constitute cheating? a. Breaking the rules b. Advancing self interest

Stanwick, Understanding Business Ethics, 3e Instructor Resource c Doing whatever it takes d. Acting responsibly and ethically Ans: d Learning Objective: 2.7 Cognitive Domain: Comprehension Answer Location: The Cheating Culture Question Type: MC 21. Which of the following are not characteristics of the cheating culture? a. Everyone does it b. Winner takes all c. Acting responsibly and ethically d. The hidden hand Ans: c Learning Objective: 2.7 Cognitive Domain: Comprehension Answer Location: The Cheating Culture Question Type: MC 22. In a global study measuring different components of cheating, it was discovered that a. Cheating occurred more in corrupt countries b. Cheating occurred more in developed countries c. Women were more likely to act upon and support cheating than men d. Cheating occurred regardless of the level of corruption within a country Ans: d Learning Objective: 2.7 Cognitive Domain: Comprehension Answer Location: The Cheating Culture Question Type: MC 23. Which of these is not an example of technology influencing individual cheating behavior? a. Copying and pasting from a website b. Inadequately citing or referencing sources c. The development of individual thought d. Pasting from generic sources such as Wikipedia Ans: c Learning Objective: 2.6 Cognitive Domain: Comprehension Answer Location: The Role of Technology and Cheating Question Type: MC 24. Based on the findings of the 2011 National Business Ethics Survey, the generation called _____________ has a less positive view of the company’s ethical culture and were less likely to report unethical activities. a. baby boomers b. Gen Xers

Stanwick, Understanding Business Ethics, 3e Instructor Resource c. millenials d. traditionalists Ans: c Learning Objective: 2.8 Cognitive Domain: Comprehension Answer Location: Generational Differences Pertaining to Cheating Question Type: MC 25. Based on the findings of the 2011 National Business Ethics Survey, what proportion of Generation X felt pressure to act unethically in the workplace? a. 8% b. 10% c. 25% d. 7% Ans: b Learning Objective: 2.7 Cognitive Domain: Comprehension Answer Location: Generational Differences Pertaining to Cheating Question Type: MC 26. Based on the findings of the 2011 National Business Ethics Survey, what is the key motivator for Baby Boomers? a. Salary b. Security c. Maintain a full personal life d. Desire for a work life balance Ans: a Learning Objective: 2.7 Cognitive Domain: Comprehension Answer Location: Generational Differences Pertaining to Cheating Question Type: MC 27. Based on the findings of the 2011 National Business Ethics Survey, what is not a positive trait for baby boomers? a. Hardworking b. Idealistic c. committed to harmony d. Tech savvy Ans: d Learning Objective: 2.7 Cognitive Domain: Comprehension Answer Location: Generational Differences Pertaining to Cheating Question Type: MC 28. Based on the findings of the 2011 National Business Ethics Survey, what is not a negative trait for millennials?

Stanwick, Understanding Business Ethics, 3e Instructor Resource a. Lacking literacy fundamentals b. Accept diversity c. Lack loyalty to a single organization d. Short attention span Ans: b Learning Objective: 2.7 Cognitive Domain: Comprehension Answer Location: Generational Differences Pertaining to Cheating Question Type: MC 29. Which of the following factors do not characterize high levels of mutual trust in organizations? a. Positive relationships between managers and subordinates b. Delegation of decision making c. High remuneration levels d. Consistent and predictable behavior Ans: c Learning Objective: 2.8 Cognitive Domain: Comprehension Answer Location: The Role of Trust in Ethical Conduct Question Type: MC

True/False 30. The tax shelter established by the Promogroup is based on the simple flow of royalties that go into and leave the Netherlands. a. True b. False Ans: a Learning Objective: 2.1 Cognitive Domain: Comprehension Answer Location: Bono: I Still Haven’t Found the Tax Rate That I’m Looking For Question Type: TF 31. The Dutch tax shelters are viable only to artists who are U.S. citizens. a. True b. False Ans: b Learning Objective: 2.1 Cognitive Domain: Comprehension Answer Location: Bono: I Still Haven’t Found the Tax Rate That I’m Looking For Question Type: TF 32. Ninety five percent of U2’s revenue, which includes concert ticket sales and record sales, is earned outside Ireland. a. True

Stanwick, Understanding Business Ethics, 3e Instructor Resource b. False Ans: a Learning Objective: 2.1 Cognitive Domain: Comprehension Answer Location: Bono: I Still Haven’t Found the Tax Rate That I’m Looking For Question Type: TF 33. During the 1950s, the most significant event in the United States was the passage of the Sarbanes-Oxley Act. a. True b. False Ans: b Learning Objective: 2.2 Cognitive Domain: Comprehension Answer Location: History of Business Ethics Question Type: TF 34. The Ethics Resource Center helped form the first business ethics office at General Dynamics in 1985. a. True b. False Ans: a Learning Objective: 2.2 Cognitive Domain: Comprehension Answer Location: History of Business Ethics Question Type: TF 35. Integrity is derived from the Latin word integri, which means wholeness. a. True b. False Ans: a Learning Objective: 2.4 Cognitive Domain: Knowledge Answer Location: The Role of Integrity Question Type: TF 36. The publicity test of integrity is based on the scenario that the individual would be comfortable in telling his or her best friend or a close family member about his or her actions. a. True b. False Ans: b Learning Objective: 2.5 Cognitive Domain: Knowledge Answer Location: The Role of Integrity Question Type: TF

Stanwick, Understanding Business Ethics, 3e Instructor Resource 37. The universality test of integrity draws on the belief of whether the individual would consider it acceptable behavior if anyone in the world did the same action. a. True b. False Ans: a Learning Objective: 2.5 Cognitive Domain: Knowledge Answer Location: The Role of Integrity Question Type: TF 38. The obituary test of integrity is also called the Golden Rule. a. True b. False Ans: b Learning Objective: 2.5 Cognitive Domain: Knowledge Answer Location: The Role of Integrity Question Type: TF 39. ―Maintaining the ability to be concerned about the greater good‖ is a specific behavior that can help identify the level of integrity in individual actions. a. True b. False Ans: a Learning Objective: 2.6 Cognitive Domain: Knowledge Answer Location: Specific Behaviors of High Integrity Question Type: TF 40. The illusion of objectivity occurs when a decision maker believes that his or her decisions are free of biases. a. True b. False Ans: a Learning Objective: 2.6 Cognitive Domain: Knowledge Answer Location: Is Everyone Unethical?

Question Type: TF 41. Gender and ethnic biases can be common implicit prejudices. a. True b. False Ans: a Learning Objective: 2.6 Cognitive Domain: Knowledge

Stanwick, Understanding Business Ethics, 3e Instructor Resource Answer Location: Is Everyone Unethical?

Question Type: TF 42. In the global study measuring different components of cheating, there is a strong positive correlation between cheating and the level of corruption in a country. a. True b. False Ans: b Learning Objective: 2.7 Cognitive Domain: Knowledge Answer Location: The Cheating Culture Question Type: TF 43. Copying information from journal articles and generic sources such as Wikipedia without stating the source is allowable behavior. a. True b. False Ans: b Learning Objective: 2.7 Cognitive Domain: Knowledge Answer Location: The Role of Technology and Cheating Question Type: TF 44. Trust within an organization reinforces and encourages delegation of decisions, mutual concern, and whistle-blowing a. True b. False Ans: b Learning Objective: 2.7 Cognitive Domain: Knowledge Answer Location: The Role of Trust in Ethical Conduct Question Type: TF

Essay 45. In a short essay, describe the significant developments in business ethics during the 1960s, 1970s, 1980s, 1990s, and 2000s.

Ans: The climate of today’s business ethics has seen a real change from those initial discussions that were made centuries ago. During each decade, we have been faced with turbulent ethical times.  In the 1960s, the climate of business ethics was more of a period of social unrest. This era showed the birth of corporate social responsibility movement, with corporations beginning to establish codes of conduct to help deal with newfound problems among employees and employers.

Stanwick, Understanding Business Ethics, 3e Instructor Resource 

The economy of the 1970s suffered a recession, and then the unemployment rate rose dramatically during this time. This was a time when companies began to cover up their wrongdoings rather than deal with the issues head-on.  The era of the 1980s showed a time when financial fraud surfaced through the savings and loan scandal.  The 1990s saw an outgrowth of global opportunities for companies, but they were not without concerns. Unsafe work practices, child labor issues, and environmental issues gained prominence.  At the new millennium, unethical companies began to surface, wrought with financial mismanagement problems. The most significant event in the United States was the passage of the Sarbanes-Oxley Act in 2002, which attempted to control the financial mismanagement issues eroding the integrity and confidence of corporations and their stakeholders.

Learning Objective: 2.2 Cognitive Domain: analysis Answer Location: History of Business Ethics Question Type: ESS 46. In a short essay, define integrity, and explain the role of integrity in the corporation.

Ans: The underlying assumption of the role of employees within the organization is a deeply rooted level of organizational commitment. That commitment generates an attitude in which the employees can be passionate about their effort and the overall commitment of the firm. After they leave the firm, the employees want to believe that there is a legacy of their contribution to the success of the firm. It is this commitment, passion, and dedication that drive employees to a high level of integrity within their work setting. Integrity is based on employees’ continuous efforts to balance their personal values with the requirements to perform their jobs effectively throughout their careers.

Learning Objective: 2.3 Cognitive Domain: Analysis Answer Location: The Role of Integrity Question Type: ESS 47. List and describe five tests used to measure integrity.

Ans: a. Publicity test—based on the scenario of whether the individual would be comfortable if his or her actions were publicized in a newspaper or on television b. Trusted friend test—based on the scenario that the individual would be comfortable in telling his or her best friend or a close family member about his or her actions c. Reciprocity test (also known as the Golden Rule)—asks whether the individual treats others as he or she would like to be treated d. Universality test—draws on the belief of whether the individual would consider it acceptable behavior if anyone in the world did the same action e. Obituary test—tasks the individual to look back in hindsight on one’s previous actions over the course of one’s career and ask if he or she is comfortable with the evaluation Learning Objective: 2.5 Cognitive Domain: Analysis

Stanwick, Understanding Business Ethics, 3e Instructor Resource Answer Location: The Role of Integrity Question Type: ESS

48. Donald Zauderer listed thirteen specific behaviors that can help identify the level of integrity in individual actions. In a short essay, list and discuss seven of these specific behaviors.

Ans: a. Process humility—an individual should be humble in his or her actions when interacting with others b. Maintain concern for the greater good—an individual should always make decisions that benefit the firm overall c. Be truthful—an individual should always be truthful not only in his or her statements but also in his or her actions d. Fulfill commitments—an individual should always make a good-faith effort to fulfill all the commitments the individual promised to complete e. Strive for fairness—an individual should make decisions that are fair to everyone who can be impacted by the decision f. Take responsibility—an individual should always take full responsibility for one’s own actions g. Have respect for the individual—an individual should respect the interest and actions of others h. Celebrate the good fortune of others—an individual should share the joy in another person’s accomplishments I. Develop others—an individual should be able to support the employee development of other employees within the organization g. Reproach unjust acts—an individual should refuse to perform any act that he or she would consider to be unjust h. Be forgiving—an individual should let go of past actions that have had a negative impact I. Extend self for others—an individual should help and provide assistance to others in a time of need Learning Objective: 2.4 Cognitive Domain: analysis Answer Location: Specific Behaviors of High Integrity Question Type: ESS 49. In a short essay, discuss the differences in unethical behavior between the generations identified in Table 2.2 Ans: a. Millennials: highest levels of unethical behavior in sexual harassment (growing 2009-2011), discrimination (stable), health safety violations, conflicts of interest, improper hiring, lying to customers and employees, benefits violations, resource violation. Lowest in abusive behavior, breaches of employee privacy b. Generation X: stuck in the middles except highest for Internet abuse c. Baby Boomers: inverse of Millennials d. Discussion point: Are the results merely a generational difference or a true behavioral paradigm shift? Does this depend on your own perspective and demographics?

Learning Objective: 2.8 Cognitive Domain: Analysis

Stanwick, Understanding Business Ethics, 3e Instructor Resource Answer Location: Generational Differences Pertaining to Ethics Question Type: ESS

Chapter 3: Stakeholders and Corporate Social Responsibility Test Bank Multiple Choice 1. In the opening case, _______________ is the organization that certifies companies that can have the Fair Trade logo on their products. a. WorldFair b. CountryFair c. Fair Trade USA d. MultiFair Ans: c Learning Objective: 3.8 Cognitive Domain: Application Answer Location: When Is Fair Trade not Fair Trade?

Question Type: MC 2. Which coffee shop paid $1.26 per pound for fair trade coffee beans in the case? a. Mountain People’s Co-Op b. Whole Foods c. Costa Coffee d. Starbucks Ans: a Learning Objective: 3.8 Cognitive Domain: application Answer Location: When Is Fair Trade not Fair Trade?

Question Type: MC 3. The CEO of FreeTrade USA is ____________ who stated that the program allows the farmers to deal directly with the wholesaler, eliminating up to five different middlemen that could include a local buyer, a miller, an exporter, a shipper, and an importer. a. Paul Rice b. Owen D. Young c. Sandy Weil d. A.A. Berle Ans: a Learning Objective: 3.8 Cognitive Domain: application Answer Location: When Is Fair Trade not Fair Trade?

Question Type: MC

Stanwick, Understanding Business Ethics, 3e Instructor Resource 4. In 1931, the concept of stakeholder theory was first presented by A.A. Berle who suggested that managers should be guardians of the investments of the organization. The expansion of this custodianship to include the wider community was developed by _________ and is the genesis of current stakeholder theory. a. Edward Freeman b. E. Merrick Dodd, Jr. c. Milton Friedman d. Archie Carroll Ans: b Learning Objective: 3.1 Cognitive Domain: Comprehension Answer Location: What Is a Stakeholder?

Question Type: MC 5. The article titled ―The Social Responsibility of Business Is to Increase Its Profits‖ that was published in the New York Times Magazine was written by ________________. a. Edward Freeman b. E. Merrick Dodd, Jr. c. Milton Friedman d. Archie Carroll Ans: c Learning Objective: 3.1 Cognitive Domain: Comprehension Answer Location: What Is a Stakeholder?

Question Type: MC 6. ______________ argued that in a free market system in which people are allowed to own property, the executives of the company need to be considered as the employees hired by the shareholders. a. Edward Freeman b. E. Merrick Dodd, Jr. c. Milton Friedman d. Archie Carroll Ans: c Learning Objective: 3.1 Cognitive Domain: Comprehension Answer Location: What Is a Stakeholder?

Question Type: MC 7. Traditional stakeholders for a firm include all of the following except a. Employees b. Suppliers c. The government d. Competitors Ans: d Learning Objective: 3.1

Stanwick, Understanding Business Ethics, 3e Instructor Resource Cognitive Domain: Comprehension Answer Location: What Is a Stakeholder?

Question Type: MC 8. Which of the following is NOT one of the three types of moral values according to Archie Carroll? a. Emoral b. Immoral c. Amoral d. Moral Ans: a Learning Objective: 3.2 Cognitive Domain: Comprehension Answer Location: Moral Management and Stakeholders Question Type: MC 9. ______________ managers focus only on their own goals and the goals of the company and consider legal requirements as constants or barriers that are ignored when their corporate actions are implemented. a. Emoral b. Immoral c. Amoral d. Moral Ans: b Learning Objective: 3.2 Cognitive Domain: Comprehension Answer Location: Moral Management and Stakeholders Question Type: MC 10. A(n) _____________ manager is a manager who would be considered ethically neutral and who does not focus proactively on ethical issues. a. Emoral b. Immoral c. Amoral d. Moral Ans: c Learning Objective: 3.2 Cognitive Domain: Comprehension Answer Location: Moral Management and Stakeholders Question Type: MC 11. _____________ managers not only meet the minimum legal standards but are proactive in presenting ethical leadership to the firm’s employees and other stakeholders. a. Emoral b. Immoral c. Amoral

Stanwick, Understanding Business Ethics, 3e Instructor Resource d. Moral Ans: d Learning Objective: 3.2 Cognitive Domain: Comprehension Answer Location: Moral Management and Stakeholders Question Type: MC 12. _____________ is the extent to which the organization can influence or impose its will on the stakeholder group. a. Power b. Legitimacy c. Urgency d. Reliability Ans: a Learning Objective: 3.3 Cognitive Domain: Comprehension Answer Location: Which Stakeholders Are More ―Important‖?

Question Type: MC 13. _____________ is the degree to which the issues raised by the stakeholder must be dealt with in a time-sensitive manner. a. Power b. Legitimacy c. Urgency d. Reliability Ans: c Learning Objective: 3.3 Cognitive Domain: Comprehension Answer Location: Which Stakeholders Are More ―Important‖?

Question Type: MC 14. The assumption that the actions of the corporation are desirable, proper, or appropriate within the limits of the corporation is called _______________. a. Power b. Legitimacy c. Urgency d. Reliability Ans: b Learning Objective: 3.3 Cognitive Domain: Comprehension Answer Location: Which Stakeholders Are More ―Important‖?

Question Type: MC 15. Which of the following is not one of the key trust factors between the firm and the stakeholder____________? a. Rational prediction of outcomes

Stanwick, Understanding Business Ethics, 3e Instructor Resource b. Emotion c. Financial return d. A clear moral element Ans: c Learning Objective: 3.4 Cognitive Domain: Comprehension Answer Location: The Ability to Build Trust With The Stakeholders Question Type: MC 16. _______________ reporting is a concept that is receiving momentum as a way of satisfying the reporting and disclosure needs of various stakeholder groups, although many companies refer to the concept as an accountability report. a. Double-bottom line b. Double-top line c. Triple-top line d. Triple-bottom line Ans: d Learning Objective: 3.5 Cognitive Domain: Comprehension Answer Location: Triple Bottom Line Reporting Question Type: MC 17. The concept of triple-bottom line was first introduced by _______________ in his book Cannibals With Forks: The Triple Bottom Line of Twenty-First Century Business. a. John Elkington b. Adam Smith c. Milton Friedman d. Michael Porter Ans: a Learning Objective: 3.5 Cognitive Domain: Comprehension Answer Location: Triple Bottom Line Reporting Question Type: MC 18. A ____________ is a new type of corporation that addresses issues related to financial, social, and environmental objectives. a. Customer corporation b. Stakeholder corporation c. Benefit corporation d. Management corporation Ans: C Learning Objective: 3.6 Cognitive Domain: Comprehension Answer Location: The Benefit Corporation Question Type: MC

Stanwick, Understanding Business Ethics, 3e Instructor Resource 19. Suppliers are key players in the stakeholder spectrum. Intel corporation has a developed a code of conduct. Which of these is not a component of the code? a. The supplier must be in strict compliance with the law b. The supplier must be U.S. registered c. The supplier must have respect for competition d. The supplier must not have any conflicts of interest with other parties Ans: b Learning Objective: 3.7 Cognitive Domain: Comprehension Answer Location: Suppliers as Stakeholders Question Type: MC 20. ______________ is defined as assigning a function or task that was previously done within a company to an external third party. a. Insourcing b. Macrosourcing c. Microsourcing d. Outsourcing Ans: d Learning Objective: 3.7 Cognitive Domain: Comprehension Answer Location: Suppliers as Stakeholders Question Type: MC 21. Based on an audit done by Verité in 2004, ______________ of audited firms in India were in violation of minimum wage rules. a. 21% b. 36% c. 60% d. 67% Ans: c Learning Objective: 3.7 Cognitive Domain: Comprehension Answer Location: Suppliers as Stakeholders Question Type: MC 22. Nongovernmental Organizations (NGOs) are increasingly important stakeholders to firms as influencers, on such aspects as human rights, the natural environment, and in the emerging world. Which is a not a factor to consider when working with NGOs? a. Transaction costs b. Brand impact c. Competitive position d. Financial stability Ans: d Learning Objective: 3.8 Cognitive Domain: Comprehension

Stanwick, Understanding Business Ethics, 3e Instructor Resource Answer Location: NGOs as Stakeholders Question Type: MC 23. According to the three-dimensional model of corporate performance presented by Archie Carroll, all of the following are questions that should be asked except a. What components should be included in the definition of corporate social responsibility? b. What are the overall external social issues that the firm must acknowledge? c. How can the firm maximize profitability? d. How will the firm address the social issues that affect its operations?

Ans: c Learning Objective: 3.9 Cognitive Domain: Comprehension Answer Location: The Role of Corporate Social Responsibility Question Type: MC 24. Which of the following terms is not a model of corporate social responsibility? a. Business case model b. Social values model c. Syncretic stewardship model d. Profit maximization model Ans: s Learning Objective: 3.9 Answer Location: Models of CSR Question Type: MC 25. _______________ CSR is the integration of CSR philosophy into the decision-making processes of the firm a. Project-oriented b. Quality-oriented c. Strategic d. Transformational Ans: c Learning Objective: 3.9 Answer Location: How Firms Implement CSR Question Type: MC 26. ______________ responsibilities are those responsibilities in which society does not have a clear message to present to businesses as to what their course of action should be. a. Entrenched b. Endured c. Socially balanced d. Discretionary Ans: d Learning Objective: 3.9 Cognitive Domain: Comprehension

Stanwick, Understanding Business Ethics, 3e Instructor Resource Answer Location: Components of CSR Question Type: MC 27. Which of the following types of firms recognizes the current and future benefits of interactions with various stakeholders? a. Skeptical firm b. Pragmatic firm c. Engaged firm d. Idealistic firm Ans: b Learning Objective: 3.10 Cognitive Domain: Comprehension Answer Location: Alternative Firm Configurations to Address Stakeholder Issues Question Type: MC 28. ____________ is concerned with the general public’s perceptions and beliefs about the firm. a. Corporate image b. Corporate reputation c. Corporate identity d. Corporate trust Ans: a Learning Objective: 3.10 Cognitive Domain: Comprehension Answer Location: The Role of Corporate Reputation Question Type: MC 29. Which of the following approaches is not a model of employee engagement with CSR ? a. Transactional b. Philanthropic c. Relational d. Developmental Ans: b Learning Objective: 3.10 Cognitive Domain: Comprehension Answer Location: Employee Engagement and CSR Question Type: MC 30. A firm whose philanthropy focus is high for competence orientation and low for market orientation is described as a(n) _________________ configuration. a. Constricted philanthropy b. Peripheral philanthropy c. Dispersed philanthropy d. Strategic philanthropy Ans: a Learning Objective: 3.11 Cognitive Domain: Comprehension

Stanwick, Understanding Business Ethics, 3e Instructor Resource Answer Location: Four Types of Corporate Philanthropy Question Type: MC 31. ________________ uses the potential synergies that can be created between their operational activities and their philanthropic activities. a. Constricted philanthropy b. Peripheral philanthropy c. Dispersed philanthropy d. Strategic philanthropy Ans: a Learning Objective: 3.11 Cognitive Domain: Comprehension Answer Location: Four Types of Corporate Philanthropy Question Type: MC 32. Which of the following types of philanthropy configuration is based on a firm having both a low market and low competence orientation? a. Constricted philanthropy b. Peripheral philanthropy c. Dispersed philanthropy d. Strategic philanthropy Ans: c Learning Objective: 3.11 Cognitive Domain: Comprehension Answer Location: Four Types of Corporate Philanthropy Question Type: MC 33. A firm which has a high level of commitment from both a market and competence orientation is described as having a(n) ________________ configuration. a. Constricted philanthropy b. Peripheral philanthropy c. Dispersed philanthropy d. Strategic philanthropy Ans: d Learning Objective: 3.11 Cognitive Domain: Comprehension Answer Location: Four Types of Corporate Philanthropy Question Type: MC 34. All of the following are strategic configurations related to corporate philanthropy except a. Targeted philanthropy b. Peripheral philanthropy c. Dispersed philanthropy d. Strategic philanthropy Ans: a Learning Objective: 3.11

Stanwick, Understanding Business Ethics, 3e Instructor Resource Cognitive Domain: Comprehension Answer Location: Four Types of Corporate Philanthropy Question Type: MC 35. _______________ organizations use stakeholder demands and expectations as the core of the corporate philanthropy. a. Targeted philanthropy b. Peripheral philanthropy c. Dispersed philanthropy d. Strategic philanthropy Ans: b Learning Objective: 3.11 Cognitive Domain: Comprehension Answer Location: Four Types of Corporate Philanthropy Question Type: MC

True/False 36. The underlying motivation of the Benefit Corporation concept is that corporations can focus on both shareholder value and provide social and environmental goods to society. a. True b. False Answer: a Learning Objective: 1.6 Cognitive Domain: Knowledge Answer Location: The Benefit Corporation Question Type: TF 37. Corporate social responsibility can be defined as the obligation companies have to develop and implement courses of action that aid in social issues that impact society. a. True b. False Ans: a Learning Objective: 3.5 Cognitive Domain: Knowledge Answer Location: The Role of CSR Question Type: TF 38. Total corporate social responsibilities are based on economic, legal, ethical, and discretionary responsibilities. a. True b. False Ans: a Learning Objective: 3.5 Cognitive Domain: Knowledge

Stanwick, Understanding Business Ethics, 3e Instructor Resource Answer Location: Components of CSR Question Type: TF 39. An amoral manager is one who not only does not care how his or her decisions impact the stakeholders, but the actions are actively counter intuitive to what is the right and ethical thing to do. a. True b. False Ans: b Learning Objective: 3.3 Cognitive Domain: Moral Management and Stakeholders Answer Location: Question Type: TF 40. A moral manager does not focus proactively on ethical issues nor does he or she try to purposely go against the social and legal norms that are expected of the firm by society. a. True b. False Ans: b Learning Objective: 3.3 Cognitive Domain: Moral Management and Stakeholders Answer Location: Question Type: TF 41. The relationship between stakeholders and the firm is based on mutual moral and ethical commitments. a. True b. False Ans: a Learning Objective: 1.4 Cognitive Domain: Knowledge Answer Location: The Ability to Build Trust With the Stakeholders Question Type: TF 42. A low level of trust allows stringent corporate governance structures to be developed to monitor the actions of the top-level managers. a. True b. False Ans: b Learning Objective: Cognitive Domain: Knowledge Answer Location: The Ability to Build Trust with the Stakeholders Question Type: TF

Stanwick, Understanding Business Ethics, 3e Instructor Resource 43. The triple bottom-line is not just a link between stakeholders and the firm but is also a valuable tool the firm uses to enhance its long-term sustainability from both a financial and a nonfinancial perspective. a. True b. False Ans: a Learning Objective: 3.5 Cognitive Domain: Knowledge Answer Location: Triple Bottom Line Reporting Question Type: TF 44. A benefit corporation is an organization that integrates financial, social, and environmental objectives. a. True b. False Ans: a Learning Objective: 1.6 Cognitive Domain: Knowledge Answer Location: The Benefit Corporation Question Type: TF 45. The relationship between the firm and its suppliers is solely commercial and financially based. a. True b. False Ans: b Learning Objective: 3.7 Cognitive Domain: Knowledge Answer Location: Suppliers as Stakeholders Question Type: TF 46. The customer-firm relationship is based on ethical principles as well as commercial criteria. a. True b. False Ans: a Learning Objective: 3.7 Cognitive Domain: Knowledge Answer Location: Customers as Stakeholders Question Type: TF 47. The common goal of most NGO campaigns is to use customer and public pressure to force the corporation to adjust its strategic focus. a. True b. False Ans: a Learning Objective: 3.8

Stanwick, Understanding Business Ethics, 3e Instructor Resource Cognitive Domain: Knowledge Answer Location: NGOs as Stakeholders Question Type: TF 48. Global CSR incudes aspects of economic responsibility, legal responsibility, ethical responsibility, and global philanthropic responsibility. a. True b. False Ans: a Learning Objective: 3.10 Cognitive Domain: Knowledge Answer Location: A Global Approach to CSR Question Type: TF 49. Placing the firm’s support toward a single philanthropic cause via public relations or advertising is not strategic philanthropy. In fact, this ―cause-related‖ marketing can backfire and lead to mistrust and suspicion about the true motives of the firm. a. True b. False Ans: a Learning Objective: 3.10 Cognitive Domain: Knowledge Answer Location: The Role of Corporate Philanthropy Question Type: TF

Essay 50. In a short essay, define and discuss the difference between immoral, amoral, and moral management styles.

Ans: a. An immoral manager—one who not only does not care how his or her decisions impact the stakeholders, but the actions are actively counter intuitive to what is the right and ethical thing to do. Immoral managers focus only on their own goals and the goals of the company and consider legal requirements as constraints or barriers that are ignored when their corporate actions are implemented. b. An amoral manager—a manager who would be considered ethically neutral. An amoral manager does not focus proactively on ethical issues nor does he or she try to purposely go against the social and legal norms that are expected of the firm by society. The danger with an amoral manager is that since ethical considerations are not contemplated in the decision-making process, the manager many unintentionally commit unethical acts and not realize the impact the decision had on various stakeholders. c. Moral manager—those decision makers who understand the importance and relevance of considering ethical issues when they are making decisions. Moral managers not only meet the minimum legal standards, but are proactive in presenting ethical leadership to the firm’s employees and other stakeholders.

Stanwick, Understanding Business Ethics, 3e Instructor Resource Learning Objective: 1.4 Cognitive Domain: Analysis Answer Location: Moral Management and Stakeholders Question Type: ESS 51. In a short essay, define power, urgency and legitimacy with respect to stakeholder theory.

Ans: a. Power— the extent to which the organization can influence or impose its will on the stakeholder group b. Legitimacy—the assumption that the actions of the corporation are desirable, proper, or appropriate within the limits of the corporation c. Urgency—the degree to which the issues raised by the stakeholder must be dealt with in a time-sensitive manner.

Learning Objective: 3.3 Cognitive Domain: Analysis Answer Location: Which Stakeholders Are More ―Important‖?

Question Type: ESS

52. In a short essay, define corporate social responsibility, and discuss its components.

Ans: Corporate social responsibility can be defined as the obligation companies have to develop and implement courses of action that aid in social issues that impact society. As a result, the term corporate social responsibility is used by corporations to signify several topics for corporations, including legal responsibility, fiduciary duty, legitimacy, and charitable contributions.

The components of corporate social responsibility include the following: a. Economic responsibilities—based on the underlying foundation of why a firm has been created, normally to develop economic value b. Legal responsibilities—the laws and regulations that all firms are expected to abide by as they perform their daily functions c. Ethical responsibilities—difficult to define and can change over time because they are based on the expectations of society d. Discretionary responsibilities—those responsibilities in which society does not have a clear message to present to businesses as to what their course of action should be Learning Objective: 3.9 Cognitive Domain: Analysis Answer Location: Components of CSR Question Type: ESS 53. Compare and contrast the different roles of customers, suppliers, and NGOs as stakeholders.

Ans: a. Customers—include here 4 elements: manufacturing process, sales and quotes, distribution, and customer service b. Suppliers—compliance with the law, respect for competition, conflict of interest, outsourcing and the impact of different cultures globally c. NGOs—focus on ethical stance, activism, protest and impact on corporate reputation

Stanwick, Understanding Business Ethics, 3e Instructor Resource Learning Objective: 3.7 and 3.8 Cognitive Domain: analysis Answer Location: Suppliers as Stakeholders, Customers as Stakeholders, NGOs as Stakeholders Question Type: ESS 54. In a short essay, list and discuss the four types of corporate philanthropy.

Ans: a. Peripheral philanthropy—a company with a high market orientation and low competence orientation is described as having a peripheral philanthropy orientation. These organizations use stakeholder demands and expectations as the core of the corporate philanthropy. b. Constricted philanthropy—a firm whose philanthropy focus is high for competence orientation and low for market orientation is described as a constricted philanthropy configuration. These organizations use the potential synergies that can be created between their operational activities and their philanthropic activities. c. Dispersed philanthropy—firm having both a low market and low competence orientation is described as a dispersed philanthropy configuration. These firms lack focus on the strategic direction of the philanthropy efforts. d. Strategic philanthropy—a firm which has a high level of commitment from both a market and competence orientation is described as having a strategic philanthropy configuration. This is considered to be the most effective approach since it addresses both internal and external issues.

Learning Objective: 3.11 Cognitive Domain: Analysis Answer Location: The Role of Corporate Philanthropy Question Type: ESS

Chapter 4: Ethics and Financial Reporting Test Bank Multiple Choice

1. In the opening case, HSBC held more than _______ accounts with connections to the United States. a. 400 b. 4,000 c. 40,000 d. 100,000 Ans: b Learning Objective: 4.1 Cognitive Domain: Application Answer Location HSBC: Products for Tax Evasion and Money Laundering, but No Free Toaster Question Type: MC 2. As a consequence of the French government investigation following receipt of eight DVDs of encrypted data, $250 to $300 million was recovered from the proceeds of a. Illegal arms sales b. Money laundering

Stanwick, Understanding Business Ethics, 3e Instructor Resource c. Tax evasion d. Blood diamond extraction Ans: c Learning Objective: 4.1 Cognitive Domain: Answer Location: HSBC: Products for Tax Evasion and Money Laundering, but No Free Toaster Question Type: MC 3. In 2002, the following firms except one were awarded the Ig Nobel Prize for the development and application of the concept of ―imaginary numbers‖ that are used in creative accounting in the business world, except a. Enron b. ExxonMobil c. Arthur Andersen d. WorldCom Ans: b Learning Objective: 4.1 Cognitive Domain: Comprehension Answer Location: The Role of Creative Accounting Question Type: MC 4. ____________ can be defined as the deviation from the traditional methods used to interpret an accounting rule or standard. a. Unvalidated accounting b. Stealth accounting c. Creative accounting d. Fragmented accounting Ans: c Learning Objective: 4.1 Cognitive Domain: Comprehension Answer Location: The Role of Creative Accounting Question Type: MC 5. One of these terms is not a form of insider trading, that is, using nonpublic information to make decisions based on an individual’s self-interests rather than those of the firm. a. Traditional theory b. Temporary insiders c. Ponzi schemes d. Tippers and tippees Ans: c Learning Objective: 4.2 Cognitive Domain: Comprehension Answer Location: The Role of Insider Trading as an Ethical Issue Question Type: MC 6. Which of the following is not an ethical perspective that affects accounting-based decisions?

Stanwick, Understanding Business Ethics, 3e Instructor Resource a Self-interest b Universal rules c Economic efficiency d Creative accounting Ans: d Learning Objective: 4.3 Cognitive Domain: Comprehension Answer Location: Ethical Philosophies and Accounting Issues Question Type: MC 7. The role of financial reporting is needed to provide information to investors and others with 3 out of the following objectives. Which is the odd one out? a. make investment and related decisions applicable to the firm b. help determine cash flows in the firm c. identify economic resources and obligations available to the firm d. establish employee remuneration packages Ans: d Learning Objective: 4.3 Cognitive Domain: Comprehension Answer Location: The role of Financial reporting Question Type: MC 8. Which is not one of the five philosophical prepositions of external financial reporting ? a. External realism b. Subjective judgement c. Insider trading practices d. Commitment to rationalism Ans: c Learning Objective: 4.3 Cognitive Domain: Comprehension Answer Location: Table 4.2 Question Type: MC 9. A formal audit is required to be conducted each _____________ for companies that are publicly traded. a. Fiscal month b. Fiscal quarter c. Fiscal year d. Decade Ans: c Learning Objective: 4.4 Cognitive Domain: Comprehension Answer Location: Where Were the Auditors?

Question Type: MC

Stanwick, Understanding Business Ethics, 3e Instructor Resource 10. _____________ consists of an inspection of the accounting records and other information deemed necessary to express an opinion on the fairness and adequacy of the financial statements. a. An exploration b. A compilation c. A debate d. An audit Ans: d Learning Objective: 4.4 Cognitive Domain: Comprehension Answer Location: Where Were the Auditors?

Question Type: MC 11. Auditors are considered the ______________ for the stakeholders. a. Influencers b. Decision makers c. Gatekeepers d. Specifiers Ans: c Learning Objective: 4.4 Cognitive Domain: Comprehension Answer Location: Where Were the Auditors?

Question Type: MC 12 Which is not one of the responsiblities of management in ensuring accuracy and transparency in providing financial statements ? a. Establish a framework for open timely communication with auditors b. Record identified audit differences c. Provide creative accounting solutions d. Base business decisions on economic reality Ans: c Learning Objective: 4.4 Cognitive Domain: Comprehension Answer Location: Responsibilities of Management Question Type: MC 13. Which of the following is NOT one of the three potential conflicts of interest that can take place during the audit process? a. Auditor-shareholder conflict of interest b. Auditor-firm conflict of interest c. Shareholders-management conflicts of interest d. Self-interests-professional standards Ans: a Learning Objective: 4.4 Cognitive Domain: Comprehension Answer Location: Where Were the Auditors?

Question Type: MC

Stanwick, Understanding Business Ethics, 3e Instructor Resource 14. All of the following are heuristics that would bias the evaluation of the financial statements except a. The halo effect b. Selective perception c. Plausible deniability d. Escalation of commitment Ans: a Learning Objective: 4.5 Cognitive Domain: Comprehension Answer Location: The Use of Heuristics in Auditing Question Type: MC 15. ______________ is when an individual is selective pertaining to the information given to him or her when a decision needs to be made. a. The halo effect b. Selective perception c. Plausible deniability d. Escalation of commitment Ans: b Learning Objective: 4.4 Cognitive Domain: Comprehension Answer Location: The Use of Heuristics in Auditing Question Type: MC 16. Which of the following occurs when the individual is hesitant to reject a biased proposal from someone else? a. The halo effect b. Selective perception c. Plausible deniability d. Escalation of commitment Ans: c Learning Objective: 4.4 Cognitive Domain: Comprehension Answer Location: The Use of Heuristics in Auditing Question Type: MC 17. _______________ is based on the belief that additional commitment is needed for a course of action even if this is not the correct course of action. a. The halo effect b. Selective perception c. Plausible deniability d. Escalation of commitment Ans: c Learning Objective: 4.4 Cognitive Domain: Comprehension

Stanwick, Understanding Business Ethics, 3e Instructor Resource Answer Location: The Use of Heuristics in Auditing Question Type: MC 18. All of the following are principles on which the American Institute of Certified Public Accountants current code of conduct is based except a. The public interest b. Objectivity and independence c. Management interest d. Due care Ans: c Learning Objective: 4.6 Cognitive Domain: Comprehension Answer Location: AIPC Code of Professional Conduct Question Type: MC 19. In direct response to the corporate scandals of Enron and WorldCom, the U.S. Congress passed the _______________. a. Sarbanes-Oxley Act b. Foreign Corrupt Practices Act c. Robinson Patman Act d. Sherman Antitrust Act Ans: a Learning Objective: 4.6 Cognitive Domain: Knowledge Answer Location: Components of the Sarbanes-Oxley Act Question Type: MC 20. ______________ is geared toward public companies and was established to help increase transparency, integrity, and accountability of public companies. a. Sarbanes-Oxley Act b. Foreign Corrupt Practices Act c. Robinson Patman Act d. Sherman Antitrust Act Ans: a Learning Objective: 4.6 Cognitive Domain: Knowledge Answer Location: Components of the Sarbanes-Oxley Act Question Type: MC 21. In a 2003 survey of 153 Boards of Directors, _________ considered that SOX had a postive impact on firms a. 15% b. 60% c. 27% d. 18% Ans: b

Stanwick, Understanding Business Ethics, 3e Instructor Resource Learning Objective: 4.6 Cognitive Domain: Knowledge Answer Location: Components of the Sarbanes-Oxley Act Question Type: MC 22. Which of the following are not Section 404 internal controls ? a. An internal code of ethics b. Independent board members c. Remuneration committees d. Creation of processes for reporting concerns Ans: c Learning Objective: 4.6 Cognitive Domain: Knowledge Answer Location: Section 404—Internal Controls Question Type: MC 23. All of the following are industry-based issues related to the antecedents of fraud except a. Level of industry concentration b. Environmental hostility c. Environmental dynamism d. Characteristics of the organization Ans: d Learning Objective: 4.3 Cognitive Domain: Comprehension Answer Location: Industry-Based Issues Question Type: MC 24. _____________ refers to the competitive environment of the industry. a. Level of industry concentration b. Environmental hostility c. Environmental dynamism d. Level of environmental heterogeneity Ans: b Learning Objective: 4.6 Cognitive Domain: Knowledge Answer Location: Industry-Based Issues Question Type: MC 25. Which of the following refers to the rate of speed and unpredictability of change within the industry? a. Level of industry concentration b. Environmental hostility c. Environmental dynamism d. Level of environmental heterogeneity Ans: c Learning Objective: 4.6

Stanwick, Understanding Business Ethics, 3e Instructor Resource Cognitive Domain: Knowledge Answer Location: Industry-Based Issues Question Type: MC 26. The ________________ refers to the level of diversity of the markets and customers, which must be addressed by the firm. a. Level of industry concentration b. Environmental hostility c. Environmental dynamism d. Level of environmental heterogeneity Ans: d Learning Objective: 4.6 Cognitive Domain: Knowledge Answer Location: Industry-Based Issues Question Type: MC 27 Which of the following is not a firm-level antecedent in developing fraudulent behavior ? a. The composition of the Board b. Level of senior management c. Remuneration strategies d. Organizational culture Ans: c Learning Objective: 4.6 Cognitive Domain: Knowledge Answer Location: Firm-Level Antecedents Question Type: MC 28. Which of the following statements is false? a. As the top level managers get older they are less likely to take risks and are not as concerned about short term gratification. b. As the level of experience of the top level managers increase, the likelihood of the top level managers committing fraud increases. c. The higher the level of formal education of the top level executive, the higher the level of moral development by the executive. d. The higher the level of self-control, the lower the likelihood that the executive will commit unethical behavior.

Ans: b Learning Objective: 4.6 Cognitive Domain: Knowledge Answer Location: Individual-Level Moderators Question Type: MC 29 Which of the following is not an individual-level moderator of top level management? a. Level of experience of management b. Level of education c. Gender

Stanwick, Understanding Business Ethics, 3e Instructor Resource d. Relationship to Board members Ans: d Learning Objective: 4.6 Cognitive Domain: Knowledge Answer Location: Individual-Level Moderators Question Type: MC 30. All of the following are criteria that revenues must meet according to the SEC Staff Accounting Bulletin No. 101 except a. Persuasive evidence of an arrangement b. Delivery or services planned but not necessarily rendered c. Price fixed or readily determinable d. Collectability reasonably assured Ans: b Learning Objective: 4.7 Cognitive Domain: Comprehension Answer Location: Revenue Recognition Question Type: MC 31. ______________ accounting comes from the concept that management can manipulate the financial results of a company by adding or taking away reserves depending on the circumstances. a. Hypothetical b. Lease accounting c. Cookie jar d. Virtual Ans: c Learning Objective: 4.7 Cognitive Domain: Comprehension Answer Location: Raiding the Reserves/Cookie Jar Accounting Question Type: MC 32. ______________ financing creates separate legal entities from the parent company. Since these entities are not wholly owned subsidiaries they can be hidden from the investors by keeping the entities off the financial statements. a. Off-balance sheet b. Off-shore c. Cookie jar d. Virtual Ans: a Learning Objective: 4.7 Cognitive Domain: Comprehension Answer Location: Off–Balance Sheet Items Question Type: MC 33 Which is the odd one out in this list of off-balane sheet items?

Stanwick, Understanding Business Ethics, 3e Instructor Resource a. Retained or contingent interests in assets transferred to an unconsolidated entity b. Certain guarantee contracts c. Derivative instruments that are classified as equity d. Board mebmer remuneration schemes Ans: d Learning Objective: 4.7 Cognitive Domain: Comprehension Answer Location: Off–Balance Sheet Items Question Type: MC 34. A good example of a company that violated the use of off-balance sheet arrangements is ______________. a. ExxonMobil b. Enron c. Microsoft d. Google Ans: b Learning Objective: 4.7 Cognitive Domain: Comprehension Answer Location: Off–Balance Sheet Items Question Type: MC 35. ______________ is the purposeful intervention in the process of reporting income numbers with the objective of dampening the fluctuations of those numbers around their trend. a. Stakeholder management b. Income smoothing c. Cookie jar accounting d. Off-shore financing Ans: b Learning Objective: 4.7 Cognitive Domain: Comprehension Answer Location: Earnings Management Question Type: MC True/False 36. Creative accounting can be defined as the deviation from the traditional methods used to interpret an accounting rule or standard. a. True b. False Ans: a Learning Objective: 4.1 Cognitive Domain: Knowledge Answer Location: The Role of Creative Accounting Question Type: TF 37. The fundamental flaw of a Ponzi scheme is that it never ends until the person committing the fraud is caught and disappears.

Stanwick, Understanding Business Ethics, 3e Instructor Resource a. True b. False Ans: a Learning Objective: 4.2 Cognitive Domain: Knowledge Answer Location: The History of Ponzi Schemes Question Type: TF 38. An audit is required to be conducted each fiscal quarter for companies that are publicly traded. a. True b. False Ans: a Learning Objective: 4.3 Cognitive Domain: Knowledge Answer Location: Where Were the Auditors?

Question Type: TF 39. Auditors are considered gatekeepers for the stakeholders. a. True b. False Ans: a Learning Objective: 4.3 Cognitive Domain: Knowledge Answer Location: Where Were the Auditors?

Question Type: TF 40. Escalation of commitment occurs when the individual is hesitant to reject a biased proposal from someone else. a. True b. False Ans: b Learning Objective: 4.3 Cognitive Domain: Knowledge Answer Location: The Use of Heuristics in Auditing Question Type: TF 41. Plausible deniability is based on the belief that additional commitment is needed for a course of action even if this is not the correct course of action. a. True b. False Ans: b Learning Objective: 4.5 Cognitive Domain: Knowledge Answer Location: The Use of Hueristics in Auditing Question Type: TF

Stanwick, Understanding Business Ethics, 3e Instructor Resource 42. In direct response to the corporate scandals of Enron and WorldCom, the U.S. Congress passed the Sarbanes-Oxley Act in 2002. a. True b. False Ans: b Learning Objective: 4.4 Cognitive Domain: Knowledge Answer Location: Components of the Sarbanes-Oxley Act Question Type: TF 43. Corporate-level fraud refers to fraud which benefits the individual while occupational management fraud would focus on making materially misleading information pertaining to the financial status of the firm. a. True b. False Ans: b Learning Objective: 4.5 Cognitive Domain: Knowledge Answer Location: A Comprehensive Model of Top Management Fraud31 Question Type: TF 44. As an industry increases in concentration, the chance that collusion will take place in the industry also increases. a. True b. False Ans: a Learning Objective: 4.5 Cognitive Domain: Knowledge Answer Location: a comprehensive model of Top Management Fraud Question Type: TF 45. As the level of environmental dynamism increases, the potential for top level managers to commit fraud decreases. a. True b. False Ans: b Learning Objective: 4.6 Cognitive Domain: Knowledge Answer Location: Industry-Based Issues Question Type: TF 46. As top level managers get older they are less likely to take risks and are not as concerned about short term gratification. a. True b. False

Stanwick, Understanding Business Ethics, 3e Instructor Resource Ans: a Learning Objective: 4.4 Cognitive Domain: Knowledge Answer Location: Individual-Level Moderators Question Type: TF 47. As the level of experience of the top level managers increase, the likelihood of the top level managers commit fraud also increases. a. True b. False Ans: bFalse Learning Objective: 4.6 Cognitive Domain: Knowledge Answer Location: Individual-Level Moderators Question Type: TF 48. Under the cookie jar system, management will build up financial reserves in profitable years and release the financial reserves into the financial statements during unprofitable years. a. True b. False Ans: a Learning Objective: 4.6 Cognitive Domain: Knowledge Answer Location: accounting shenanigans or tricks of the trade Question Type: TF 49. Off-balance sheet financing creates separate legal entities from the parent company. a. True b. False Ans: a Learning Objective: 4.6 Cognitive Domain: Knowledge Answer Location: Off–Balance Sheet Items Question Type: TF 50. Earnings management is the purposeful intervention in the process of reporting income numbers with the objective of dampening the fluctuations of those numbers around their trend. a. True b. False Ans: a Learning Objective: 4.6 Cognitive Domain: Knowledge Answer Location: Earnings Management Question Type: TF Essay 51. In a short essay, list and discuss the three primary objectives of financial reporting.

Stanwick, Understanding Business Ethics, 3e Instructor Resource Ans: a.Make investment, credit, and financial decisions that relate to the firm b. Help the reader determine the level of cash flow for the firm c. Identify the economic resources and obligations to the firm, as identified by the Financial Accounting Standards Board Learning Objective: 4.4 Cognitive Domain: Analysis Answer Location: The Role of Financial Accounting Question Type: ESS 52. In a short essay, list and discuss the three potential conflicts of interest that can take place during the auditing process.

Ans: a. Auditor-firm conflicts of interest—the firm could potentially put pressure on the auditor to sign a ―clean audit‖ regardless of any concerns the auditor has with the statements since the auditor has a financial incentive to please the firm because the firm is a revenue-producing client for the auditing firm. However, the auditor has to abide by all the accounting standards and guidelines when he or she makes the overall evaluation of the integrity of the financial statements. b. Shareholder-management conflicts of interest—since the shareholders do not want any negative issues relating to the firm’s financial statements, the managers of the firm will want to present ―clean‖ financial statements to the shareholders. However, the auditor also has a duty to the shareholders to review objectively the financial transactions of the firm because the shareholders, via the board of directors, have selected and pay the external auditors. c. Self-interest-professional standards conflict of interest—the auditor may face a situation where he or she can benefit by violating the professional standards established by accounting organizations. For example, if an auditor has a financial interest in the firm, there would be a self-interest incentive to disregard financial transactions that have a negative impact on the firm.

Learning Objective: 4.4 Cognitive Domain: Analysis Answer Location: Where Were the Auditors?

Question Type: ESS 53. In a short essay, list the six sets of industry factors that affect the industry based antecedents of fraud.

Ans: a. b. c. d. e. f.

Culture, norms, and histories of the industry Industry investment horizons, payback periods, and financial returns Level of industry concentration Level of environmental hostility Level of environmental dynamism Level of environmental heterogeneity

Stanwick, Understanding Business Ethics, 3e Instructor Resource Learning Objective: 4.6 Cognitive Domain: Analysis Answer Location: Industry-Based Issues Question Type: ESS 54. In a short essay, list and discuss the five individual moderators that affect the individual-level antecedents of fraud.

Ans: a.

Age—as top level managers get older they are less likely to take risks and are not as concerned about short term gratification b.

Level of experience—as the level of experience of the top level managers increases, the likelihood of the top level managers committing fraud decreases c.

Level of education—the higher the level of formal education of the top level executive, the higher the level of moral development by the executives d.

Gender—previous research has shown that male decision makers are more likely to commit unethical behavior than female decision makers e.

Level of self-control—the higher the level of self-control, the lower the likelihood that the executive will commit unethical behavior.

Learning Objective: 4.6 Cognitive Domain: analysis Answer Location: Individual-Level Moderators Question Type: ESS 55. In a short essay, discuss how the practices of one time charges and cookie jar accounting enable managers to manipulate financial statements or manage earnings.

Ans: a. One time charges—Sometimes companies take expenses in one year that they know will not necessarily be recurring yearly. Investors will discount the impact of one-time charges when they evaluate a firm’s financial performance because it is a nonrecurring event. This means that firms include the amounts as separate and sometimes as extraordinary charges on the income statement. Although they may be legitimate, these special charges are being used to cover up some other expenditure or to help the company’s earnings look better. This may include restructuring charges, which companies can take when times are going bad to artificially improve their net income. b. Cookie Jar Accounting—Management can manipulate the financial results of a company by adding or taking away reserves (cookies) from a ―jar‖ depending on the circumstances.

Management will build up financial reserves in profitable years. When the firm has unprofitable years, the reserves are released into the financial statements so it appears that the firm was much more profitable than reality so smoothing peaks and troughs of its financial performance.

Income smoothing means companies will be understate earnings in good years and overstate earnings in bad years.

Learning Objective: 4.7 Cognitive Domain: Analysis Answer Location: Accounting Shenanigans or Tips of the Trade

Stanwick, Understanding Business Ethics, 3e Instructor Resource Question Type: ESS

Chapter 5: Ethical Leadership and Corporate Governance Test Bank Multiple Choice 1. In the opening case study, Korean Airlines stated initially that Ms. Cho had a responsibility to a. Demand the flight returned to the departure gate b. Inspect cabin service and monitor aircraft safety c. Put pressure on cabin staff d. Change the flight plans of the aircraft Ans: b Learning Objective: 5.1 Cognitive Domain: Application Answer Location: ―Nut Rage‖ on the Tarmac at JFK: It’s a Good Thing She Didn’t Ask to See the Wine List Question Type: MC 2. A(n) _______________ leader is one who is focused on creating a positive ethical climate for the firm’s employees a. Transactional b. Ethical c. Rational d. Committed Ans: b Learning Objective: 5.1 Cognitive Domain: Comprehension Answer Location: Ethical Leadership Question Type: MC 3. A(n) _______________ leader is one who is focused on developing a long-term vision for the company and who uses a charismatic personality to communicate his or her vision to the employees. a. Transactional b. Transformational c. Rational d. Committed Ans: b Learning Objective: 5.2 Cognitive Domain: Comprehension Answer Location: Transformational Leadership Question Type: MC

Stanwick, Understanding Business Ethics, 3e Instructor Resource 4. The _______________ of ethical power refers to the leader establishing a long term vision for the organization. a. Purpose b. Perspective c. Persistence d. Patience Ans: a Learning Objective: 5.2 Cognitive Domain: Comprehension Answer Location: Transformational Leadership Question Type: MC 5. __________ transformational leaders use power to manipulate others and focus on their own self interests. a. Authentic b. Effective c. Pseudo d. Ethical Ans: c Learning Objective: 5.2 Cognitive Domain: Comprehension Answer Location: Transformational Leadership Question Type: MC 6. The principles of ethical power include all of the following except a. Punishment b. Purpose c. Perspective d. Patience Ans: a Learning Objective: 5.2 Cognitive Domain: Comprehension Answer Location: Transformational Leadership Question Type: MC 7. ______________ leaders focus on operational and routine activities within a firm, and it is argued that this is not a true style of leadership but instead ―managership‖ in which control is used to protect the status quo of the firm. a. Transactional b. Transformational c. Rational d. Committed Ans: a Learning Objective: 5.2 Cognitive Domain: Comprehension

Stanwick, Understanding Business Ethics, 3e Instructor Resource Answer Location: Transactional Leadership Question Type: MC

8. A weak moral person and weak moral manager would generate a reputation of _____________ leadership. a. Unethical b. Ethical c. Hypocritical d. Inconsistent Ans: a Learning Objective: 5.2 Cognitive Domain: Comprehension Answer Location: Unethical Leader Question Type: MC 9. A(n) ______________ leader is a very dangerous position for a manager to establish with other employees within the firm because this leader would have destroyed all three critical traits of a moral person. a. Unethical b. Ethical c. Hypocritical d. Inconsistent Ans: c Learning Objective: 5.2 Cognitive Domain: Comprehension Answer Location: Hypocritical Leader Question Type: MC 10. A(n) ______________ leader is a manager who has strong ethical traits, behaviors, and decision making of a moral person but is not able to transfer those values to other employees within the firm. a. Unethical b. Ethical c. Hypocritical d. Inconsistent Ans: d Learning Objective: 5.2 Cognitive Domain: Comprehension Answer Location: Inconsistent Leader Question Type: MC 11. Martha Stewart could be an example of a(n) _______________ leader in that her media empire was built on the correct way to entertain and interact with other people, but her

Stanwick, Understanding Business Ethics, 3e Instructor Resource conviction may cause other employees within her empire to question whether any of her statements after her convictions were true. a. Unethical b. Ethical c. Hypocritical d. Inconsistent Ans: c Learning Objective: 5.2 Cognitive Domain: Comprehension Answer Location: Hypocritical Leader Question Type: MC 12. _______________ can be defined as the system that is used by firms to control and direct their operations and the operations of their representatives, the employees. a. Corporate culture b. Artifacts c. Corporate governance d. Ethical values Ans: c Learning Objective: 5.4 Cognitive Domain: Comprehension Answer Location: Ethics and Corporate Governance Question Type: MC 13. ______________ is the means through which firms ensure the needs of all their stakeholders are satisfied. a. Ethical leadership b. Corporate governance c. The board of directors d. Senior management Ans: b Learning Objective: 5.4 Cognitive Domain: Comprehension Answer Location: Ethics and Corporate Governance Question Type: MC 14. Board members can be classified as either _______________. a. Related or unrelated b. Inside or outside c. Tactical or operational d. Financial or nonfinancial Ans: b Learning Objective: 5.5 Cognitive Domain: Comprehension Answer Location: Board of Directors Question Type: MC

Stanwick, Understanding Business Ethics, 3e Instructor Resource 15. A(n) ____________ board member is a person who has direct financial ties to the firm. a. Related b. Outside c. Inside d. Operational Ans: c Learning Objective: 5.5 Cognitive Domain: Comprehension Answer Location: Board of Directors Question Type: MC 16. A(n) _____________ board member is one who does not have any direct financial ties to the firm. a. Related b. Outside c. Inside d. Operational Ans: b Learning Objective: 5.5 Cognitive Domain: Comprehension Answer Location: Board of Directors Question Type: MC 17. Which of the following is not recognized as one of the six core ethical values that are recommended to guide the behaviors of board members? a. Honesty b. Responsibility c. Competitiveness d. Citizenship Ans: c Learning Objective: 5.5 Cognitive Domain: Comprehension Answer Location: Board of Directors Question Type: MC 18. ______________ should view themselves as active owners of the firm, not just investors. a. Board of directors b. Institutional shareholders c. Senior management d. Employees Ans: b Learning Objective: 5.5 Cognitive Domain: Comprehension Answer Location: Board of Directors Question Type: MC

Stanwick, Understanding Business Ethics, 3e Instructor Resource 19. All of the following are major issues that most boards of directors have in common except a. the annual business plan of the firm b. Developing departmental production plans c. The issuance of stock options d. The issuance of dividends Ans: b Learning Objective: 5.5 Cognitive Domain: Comprehension Answer Location: Board of Directors Question Type: MC 20. Which of the following is NOT a type of board involvement as proposed by David Nadler? a. Passive b. Engaged c Interfering d. Operating Ans: c Learning Objective: 5.5 Cognitive Domain: Comprehension Answer Location: The Role of the Board of Directors Question Type: MC 21. The ____________ board has a proactive role within the decision-making process. a. Passive b. Engaged c. Reactive d. Operating Ans: b Learning Objective: 5.5 Cognitive Domain: Comprehension Answer Location: The Role of the Board of Directors Question Type: MC 22 The ____________ board is also called the ―rubber stamp‖ board. a. Passive b. Engaged c. Reactive d. Operating Ans: a Learning Objective: 5.5 Cognitive Domain: Comprehension Answer Location: The Role of the Board of Directors Question Type: MC

Stanwick, Understanding Business Ethics, 3e Instructor Resource 23. The ____________ board provides the function of validating to shareholders that the CEO is doing what is expected of him or her and that management will make corrective adjustments when necessary. a. Passive b. Engaged c. Certifying d. Operating Ans: c Learning Objective: 5.5 Cognitive Domain: Comprehension Answer Location: The Role of the Board of Directors Question Type: MC 24. Which board type becomes actively involved in all major decisions of the firm and meets frequently and focuses intensely on all issues on the agenda at the board meetings? a. Intervening board b. Passive board c. Certifying board d. Operating board Ans: a Learning Objective: 5.5 Cognitive Domain: Comprehension Answer Location: The Role of the Board of Directors Question Type: MC 25. The ____________ actually makes the key decisions for the firm, and the top-level management is responsible for implementing the board’s decisions. a. Intervening board b. Passive board c. Certifying board d. Operating board Ans: d Learning Objective: 5.6 Cognitive Domain: Comprehension Answer Location: The Role of the Board of Directors Question Type: MC 26. Strebel suggests that there are 4 major roles for the board of directors. Which one is not a role he indicates? a. Auditing b. Coaching c. Public relations d. Steering Ans: c Learning Objective: 5.4 Cognitive Domain: Knowledge

Stanwick, Understanding Business Ethics, 3e Instructor Resource Answer Location: A Contingent Perspective of Corporate Governance Question Type: MC 27. When the CEO is also the chairman of the board, it is called ____________. a. CEO universality b. CEO duality c. CEO certification d. CEO intervention Ans: b Learning Objective: 5.6 Cognitive Domain: Knowledge Answer Location: The Role of the Board of Directors Question Type: MC 28. ____________ in boards occur when the board is composed of mainly inside members a. Fair compensation b. Effective leadership c. Conflicts of interest d. Long-term vision Ans: c Learning Objective: 5.6 Cognitive Domain: Knowledge Answer Location: Ethics and the Structure of the Board of Directors Question Type: MC 29. There are four key characteristics of a strong and effective board member. Which one is not such a characteristic? a. The majority of the board members are outside members b. The majority of the board members are large owners of stock in the firm c. The majority of the board members are also operational managers d. The majority of the board members are members of a limited number of other boards Ans: b Learning Objective: 5.5 Cognitive Domain: Comprehension Answer Location: The Benefits of a Strong Board of Directors Question Type: MC 30. It can be argued that CEOs’ high level of compensation can be justified based on _____________ ethics. a. Kantian b. Deontological c. Utilitarian d. Sidgwick’s dualism Ans: a Learning Objective: 5.5 Cognitive Domain: Comprehension

Stanwick, Understanding Business Ethics, 3e Instructor Resource Answer Location: Ethical Viewpoints Explaining CEO Compensation Question Type: MC 31. From the perspective of _____________, high levels of CEO compensation coincide with the agency theory model of maximizing the returns to the stockholders. a. Ethical egoism b. Deontological ethics c. Utilitarian ethics d. Sidgwick’s dualism Ans: a Learning Objective: 5.5 Cognitive Domain: Comprehension Answer Location: Ethical Viewpoints Explaining CEO Compensation Question Type: MC 32. From a(n) _______________ perspective, it would be argued that CEO compensation is based on the rights of the individuals and the judgments made with a specific decision process instead of a focus on the decision choices. a. Deontological b. Ethical egoism c. Utilitarian d. Sidgwick’s dualism Ans: a Learning Objective: 5.5 Cognitive Domain: Comprehension Answer Location: Ethical Viewpoints Explaining CEO Compensation Question Type: MC 33. From the perspective of ______________, compensation would focus on the consequences of the greatest good to the greatest number of people. a. Ethical egoism b. Deontological ethics c. Utilitarianism d. Sidgwick’s dualism Ans: c Learning Objective: 5.5 Cognitive Domain: Comprehension Answer Location: Ethical Viewpoints Explaining CEO Compensation Question Type: MC 34. The relationship between stakeholders and corporate governance is critical. Which of the following is not one of the criteria for success? a. Reviewing global compliance standards b. Examine how its actions affect the corporate image c. How the ethical vision of top management changes over time d. Consistently improving financial performance.

Stanwick, Understanding Business Ethics, 3e Instructor Resource Ans: d Learning Objective: 5.4 Cognitive Domain: Comprehension Answer Location: Corporate Governance and Stakeholders Question Type: MC 35 ___________ expect the firm to perform at maximum financial performance within an effective corporate governance level. a Community members b Employees c Stockholders d Suppliers Ans: c Learning Objective: 5.4 Cognitive Domain: comprehension Answer Location: Corporate Governance and Stakeholders Question Type: MC

True/False 36. Ethical leadership can be defined as ―the demonstration of normatively appropriate conduct through personal actions and interpersonal relationship, and the promotion of such conduct to followers through two-way communication, reinforcement, and decision making.‖ a. True b. False Ans: True Learning Objective: 5.1 Cognitive Domain: Knowledge Answer Location: Ethical Leadership Question Type: TF 37. Transactional leadership is based on inspirational motivation, idealized influence, individualized considerations and intellectual stimulation. a. True b. False Ans: b Learning Objective: 5.1 Cognitive Domain: Knowledge Answer Location: Transactional Leadership Question Type: TF 38. The principles of ethical power are purpose, perspective, patience, and persistence. a. True b. False Ans: a Learning Objective: 5.1 Cognitive Domain: Knowledge

Stanwick, Understanding Business Ethics, 3e Instructor Resource Answer Location: Transformational Leadership Question Type: TF 39. Transformational leaders create a long-term vision for the firm. a. True b. False Ans: a Learning Objective: 5.1 Cognitive Domain: Knowledge or Comprehension Answer Location: Transformational Leadership Question Type: TF 40. An inconsistent leader has strong ethical traits and behavior and can translate those traits to others. a. True b. False Ans: b Learning Objective: 5.2 Cognitive Domain: Knowledge Answer Location: Inconsistent Leader Question Type: TF 41. Corporate governance can be defined as the system that is used by firms to control and direct their operations and the operations of their representatives, the employees. a. True b. False Ans: a Learning Objective: 5.3 Cognitive Domain: Knowledge Answer Location: Ethics and Corporate Governance Question Type: TF 42. Great leaders are stewards of the ethical commitment of the firm, and this commitment is transferred to the employees. a. True b. False Ans: a Learning Objective: 5.3 Cognitive Domain: Knowledge Answer Location: The Responsibility of Managers Question Type: TF 43. All of the outside board members should meet at least once a year without the presence of the CEO. a. True b. False

Stanwick, Understanding Business Ethics, 3e Instructor Resource Ans: a Learning Objective: 5.4 Cognitive Domain: Knowledge Answer Location: Board of Directors Question Type: TF 44. The passive board is also called the rubber stamp board. a. True b. False Ans: a Learning Objective: 5.5 Cognitive Domain: Knowledge Answer Location: The Role of the Board of Directors Question Type: TF 45. An intervening board allows the CEO and the top management team to take all the major decisions. a. True b. False Ans: b Learning Objective: 5.5 Cognitive Domain: Knowledge Answer Location: The Role of the Board of Directors Question Type: TF 46. The certifying board actually makes the key decisions for the firm, and the top-level management is responsible for implementing the board’s decisions. a. True b. False Ans: False Learning b: 5.6 Cognitive Domain: Knowledge Answer Location: The Role of the Board of Directors Question Type: TF 47. The operating board actually makes the key decisions for the firm, and the top-level management is responsible for implementing the board’s decisions. a. True b. False Ans: a Learning Objective: 5.6 Cognitive Domain: Knowledge Answer Location: The Role of the Board of Directors Question Type: TF 48. When the CEO is also the chairman of the board, it is called CEO duality.

Stanwick, Understanding Business Ethics, 3e Instructor Resource a. True b. False Ans: a Learning Objective: 5.6 Cognitive Domain: Knowledge Answer Location: The Role of the Board of Directors Question Type: TF 49. Research has found that there is a direct relationship between CEO compensation and the financial performance of the firm. a. True b. False Ans: False Learning Objective: 5.6 Cognitive Domain: Knowledge Answer Location: CEO Compensation and Ethical Reputation Question Type: TF 50. The Securities and Exchange Commission in 2004 proposed a code of disclosure that excluded the compensation for the chairman of the board. a. True b. False Ans: b Learning Objective: 5.6 Cognitive Domain: Knowledge Answer Location: Ethical Viewpoints Explaining CEO Compensation Question Type: TF

Essay Questions 51. In a short essay, define and describe ethical leadership.

Ans a. Ethical leadership is the demonstration of normatively appropriate conduct through personal actions and interpersonal relationships and the promotion of such conduct to followers through two-way communication, reinforcement, and decision making. Ethical leadership is the driving force for a firm to have a positive ethical climate with its employees. With a positive ethical climate, employees have a supportive work environment, which leads to higher commitment and job satisfaction of the employees. Ethical leadership reinforces the beliefs of social learning theory that suggests that when the firm has role models for the employees, the employees will try to copy the behavior of the role models.

Ethical leadership is demonstrated in the leader’s various actions. The ethical commitment of the leader affects the leader’s character, which influences the leader’s motives and influences strategies. b. Ethical leaders are effective, credible, and legitimate role models to their subordinates. In addition, ethical leaders present a powerful and salient ethical message to subordinates through effective communication and reinforcement. Leaders influence the attitudes, beliefs, and behaviors of employees through either the transactional or the transformational leadership style.

Stanwick, Understanding Business Ethics, 3e Instructor Resource Learning Objective: 5.2 Cognitive Domain: Analysis Answer Location: Ethical Leadership Question Type: ESS 52. In a short essay, describe the following types of leaders based on the combination of moral person and moral manager scenarios: (a) unethical leader, (b) ethical leader, (c) hypocritical leader, and (d) inconsistent leader.

Ans: a. Unethical leader—a weak moral person and weak moral manager would generate a reputation of unethical leadership b. Ethical leader—having the core ethical traits of behavior and decision making of a moral person, but more important, it is the ability to use those grounded ethical characteristics and transfer them to others within the organization through the characteristics of a moral manager c. Hypocritical Leader—this type of leader has destroyed all three of the critical traits of a moral person. By saying one thing about ethical values then acting unethically, employees within the organization no long view the manager as being a person of integrity, a person they can trust, or a person who is honest. d. Inconsistent Leader—this type of leader is a manager who has strong ethical traits, behaviors, and the decision making of a moral person but is not able to transfer those values to other employees within the firm.

Learning Objective: 5.3 Cognitive Domain: Analysis Answer Location: The Transformation From Moral Person to Transformational Leader Question Type: ESS 53. In a short essay, discuss corporate governance.

Ans: Corporate governance can be defined as the system that is used by firms to control and direct their operations and the operations of their representatives, the employees. It is through the corporate governance structure that firms can ensure that the needs of all their stakeholders are satisfied. The corporate governance system gives a method in which ethical vision can be measured and is validated. It is this system that governs the behavior of the managers within the firm. The corporate governance system also ensures that the behaviors of the employees within the firm are fair, just, and transparent.

Learning Objective: 5.4 Cognitive Domain: Analysis Answer Location: Ethics and Corporate Governance Question Type: ESS 54. In a short essay, list and discuss the six core ethical values that are recommended to guide the behavior of board members.

Ans: a. Honesty—it is expected that board members will be truthful and forthright with their decisions b. Integrity—it is expected that board members will act with honor and that their actions and decisions will always coincide with the ethical vision and standards of the firm

Stanwick, Understanding Business Ethics, 3e Instructor Resource c. Loyalty—it is expected that board members should avoid all deals that benefit their selfinterests instead of the interests of the stakeholders d. Responsibility—it is expected that board members will fulfill all their assigned responsibilities and that their actions will be transparent e. Fairness—it is expected that board members will make all decisions and treat others in a fair and respectful manner f. Citizenship—it is expected that board members will act as good citizens for the communities in which the firm has operations Learning Objective: 5.5 Cognitive Domain: Analysis Answer Location: Board of Directors Question Type: ESS 55. In a short essay, describe and evaluate Strebel’s contingent perspective of corporate governance.

Ans: Auditing Role This role occurs when there is an effective top management within the firm, and the externalities facing the firm are insignificant. The board can focus on the financial aspects of the firm’s operations. The role of the board usually occurs in a stable business environment that does not require large levels of new investment.

Supervising Role The supervising role includes ensuring that the needs of critical stakeholders are addressed in the strategic decision-making process. As a result, the board focuses on strategic, societal, and riskrelated issues to make sure the firm has strategic fit with these issues.

Coaching Role The board takes a coaching role when the management has not been effective with the development of their strategic focus. A coaching board seeks active participation in the decisionmaking process to help the top level manager make the most effective strategic decision. As a result, the board has the time to give advice on how the firm should proceed strategically.

Steering Role In a steering role, the management is ineffective in making strong strategic decisions, and externalities have a significant impact on the firm. The board becomes actively involved in both the short-term and long-term strategic focus of the firm in an attempt for the firm to survive in the long term. An incompetent CEO will be replaced with a board member until a permanent replacement can be selected. In addition, the board addresses the unmet needs of critical stakeholders.

Learning Objective: 5.6 Cognitive Domain: analysis Answer Location: A Contingent Perspective of Corporate Governance Question Type: ESS

Chapter 6: Strategic Planning, Corporate Culture, and Corporate Compliance

Stanwick, Understanding Business Ethics, 3e Instructor Resource

Test Bank Multiple Choice 1. Charles Prince, as CEO of Citigroup, had to address a number of ethical issues. Which of the following is not one of them? a. Government probes in the UK b. Separation of financial and investment roles c. Misleading customers in the consumer lending unit d. Loss of private banking licenses in the United States Ans: D Learning Objective: 6.1 Cognitive Domain: Knowledge Answer Location: When Ethics Drive a Change in Strategy Question Type: MC 2. ______________ is the process in which future courses of action are developed to achieve the firm’s short- and long-term goals. a. Strategic planning b. Tactical planning c. Operational planning d. Virtual planning Ans: a Learning Objective: 6.1 Cognitive Domain: Knowledge Answer Location: Ethics and Strategic Planning Question Type: MC 3. Peter Drucker developed the _____________,which involves the decision maker’s ability to look at his or her reflection after the decision had been made and state that he or she had made the right choice. a. Historical test b. Cycle test c. Subjective test d. Mirror test Ans: d Learning Objective: 6.1 Cognitive Domain: Comprehension Answer Location: Ethics and Strategic Planning Question Type: MC 4. The ethical cycle is concluded by _______________. a. The analysis of the moral problem b. The identification of the moral problem c. Ethical judgment d. Reflection

Stanwick, Understanding Business Ethics, 3e Instructor Resource Ans: d Learning Objective: 6.2 Cognitive Domain: Comprehension Answer Location: The Ethical Cycle Question Type: MC 5. Which of the following factors is not part of the identification of the moral problem? a. A clear statement of what the moral problem is b. The identification of those affected by the problem c. The morality of individual employees d. The moral issues of the problem reflection Ans: c Learning Objective: 6.2 Cognitive Domain: Comprehension Answer Location: The Ethical Cycle Question Type: MC 6. Which is not a strategic ethical decision to build character? a. Who am I? b. Who are we? c. Where are we going? d. Who is the company?

Ans: c Learning Objective: 6.3 Cognitive Domain: Comprehension Answer Location: Using Ethical decisions to Build Character Question Type: MC 7. Constance Bagley designed a _______________ process to help decision makers make the right decisions a. Decision ladder b. Decision tree c. Three step d. True false grid Ans: b Learning Objective: 6.3 Cognitive Domain: Comprehension Answer Location: Is There a Link Between Strategic Planning and an Ethical Culture?

Question Type: MC 8. During which of the following stages of the ethical life cycle does the evaluation of different options take place? a. Problem analysis b. Moral problem statement c. Ethical judgment d. Reflection

Stanwick, Understanding Business Ethics, 3e Instructor Resource Ans: c Learning Objective: 6.2 Cognitive Domain Comprehension Answer Location: The Ethical Cycle Question Type: MC 9. _______________ is defined as the shared values and beliefs of employees within any given organization. a. Social culture b. Corporate culture c. Strategic planning d. Ethical judgment Ans: b Learning Objective: 6.5 Cognitive Domain: Knowledge Answer Location: Corporate Culture Question Type: MC 10. Which of the following does not represent one of the activities that represent unethical activities that an effective corporate culture eliminates within a firm? a. Violating rights to privacy b. Embezzling funds c. Fair trade practices d. Making false statements Ans: c Learning Objective: 6.5 Cognitive Domain: Comprehension Answer Location: Corporate Culture Question Type: MC 11. In the Snyder model that develops a framework to address ethical crises, which of the following is not an internal normal factor? a. Product failure or recall b. Sexual harassment c. Corporate scandal d. Strike Ans: c Learning Objective: 6.4 Cognitive Domain: Comprehension Answer Location: Table 6.1 Question Type: MC 12. In the Snyder model that develops a framework to address ethical crises, which of the following is not an external abnormal factor? a. Terrorism b. Strike

Stanwick, Understanding Business Ethics, 3e Instructor Resource c. Natural disaster d. Reputation issues Ans: b Learning Objective: 6.4 Cognitive Domain: Comprehension Answer Location: Table 6.1 Question Type: MC 13. In the Snyder model that develops a framework to address ethical crises, ________________ crises occur within the organization but are rare and unpredictable. a. Internal-normal b. External-normal c. Internal-abnormal d. External-abnormal Ans: c Learning Objective: 6.4 Cognitive Domain: Comprehension Answer Location: Table 6.1 Question Type: MC 14. Which of the following are factors such as what is seen and heard within a firm? a. Shared values b. Basic assumptions c. Artifacts d. Self-interests Ans: c Learning Objective: 6.2 Cognitive Domain: Knowledge Answer Location: Corporate Culture.

Question Type: MC 15. _____________ are based on what groups within the firm learn about what is acceptable and not acceptable. a. Shared values b. Basic assumptions c. Artifacts d. Self-interests Ans: a Learning Objective: 6.2 Cognitive Domain: Comprehension Answer Location: Corporate Culture Question Type: MC 16. The agreed starting point for decision making within a firm is called ______________. a. Shared values b. Basic assumptions

Stanwick, Understanding Business Ethics, 3e Instructor Resource c. Artifacts d. Self-interests Ans: b Learning Objective: 6.5 Cognitive Domain: Comprehension Answer Location: Corporate Culture Question Type: MC 17. Schein developed a set of enabling mechanisms to change culture. Which of the following is not a primary embedding mechanism? a. The reaction of a leader to a critical incident b Observation of a leader’ behavior as a role model c. Rites and rituals of the organization d. The leader’s criteria for recruitment and selection of subordinates Ans: c Learning Objective: 6.6 Cognitive Domain: Comprehension Answer Location: Table 6.2 Question Type: MC 18. Schein developed a set of enabling mechanisms to change culture. Which of the following is not a secondary articulation and reinforcement mechanism? a. Design and structure of the organization b. The leader’s criteria for allocation of rewards c. Design of buildings, facades and physical spaces d. Formal statements developed to represent the firm’s philosophy.

Ans: b Learning Objective: 6.6 Cognitive Domain: Comprehension Answer Location: Table 6.2 Question Type: MC 19. Which of the following does not represent one of the three stages of Kurt Lewin’s model of change? a. Unfreezing b. Moving c. Refreezing d. Confusion Ans: d Learning Objective: 6.6 Cognitive Domain: Comprehension Answer Location: How to Change Ethical Values Question Type: MC 20. Alan Graf believes that culture should include all of the following basic components except a. Define the philosophy and corporate values in a mission statement

Stanwick, Understanding Business Ethics, 3e Instructor Resource b. Utilize a tall organizational hierarchy so that control can be maintained c. Develop guidelines for employees d. Establish a formal channel for employees to report violations Ans: b Learning Objective: 6.6 Cognitive Domain: Comprehension Answer Location: How to Change Ethical Values Question Type: MC 21. Which is not one of the factors in creating a climate of integrity in a firm? a. Set an example through strong leadership b. Set realistic goals c. Ignore employee development needs d. Distinguish between compliance and ethics Ans: c Learning Objective: [AO: LO needs to be added] Cognitive Domain: Comprehension Answer Location: Evaluation of Corporate Culture Question Type: MC 22. During which of the following steps in the Deloitte & Touche five-step process to embed ethics and values within the culture of the firm does management ask its employees via surveys and interviews what their assessment of the firm’s culture is? a. Review of current compliance program b. Review of current ethical policies and procedures c. Risk/cultural assessment d. Development of an ongoing self-assessment of the compliance program Ans: C Learning Objective: 6.7 Cognitive Domain: Comprehension Answer Location: Ethics and Corporate Compliance Question Type: MC 23. In the Deloitte & Touche five step process to embed ethics and values within the culture of a firm, the ________________ is the stage that gaps and ambiguities are removed. a. Review and revise phase b. Development of an ongoing self-assessment of the compliance program c. Review of current ethical policies and procedures d. Risk/cultural assessment Ans: a Learning Objective: 6.7 Cognitive Domain: Comprehension Answer Location: Ethics and Corporate Compliance Question Type: MC

Stanwick, Understanding Business Ethics, 3e Instructor Resource 24. According to the Federal Sentencing Guidelines, ______________ is the most common criminal change brought against organizations. a. Fraud b. Environmental waste discharge c. Violation of taxes d. Antitrust violations Ans: a Learning Objective: 6.8 Cognitive Domain: Comprehension Answer Location: The U.S. Federal Sentencing Guidelines for Organizations Question Type: MC 25. The PWC survey about the Sarbanes-Oxley Act identified a number of key benefits of the act. Which of the four factors below is not one of these factors? a. Better information b. Greater transparency c. Limited accounting principles d. Greater confidence Ans: C Learning Objective: 6.8 Cognitive Domain: Comprehension Answer Location: The Challenge of Compliance Question Type: MC 26. The U.S Federal Sentencing Guidelines for organizations requires organizations to establish a(n) a. Annual reporting cycle b. Effective compliance program c. Limited accounting principles d. Greater confidence Ans: b Learning Objective: 6.8 Cognitive Domain: Comprehension Answer Location: The U.S. Federal Sentencing Guidelines for Organizations Question Type: MC 27. Which of the following is defined as the use of intimidation or power in return for a financial benefit? a. Extortion b. Bribery c. Embezzlement d. Fraud Ans: a Learning Objective: 6.8 Cognitive Domain: Comprehension Answer Location: Corporate Compliance Systems and Global Corruption

Stanwick, Understanding Business Ethics, 3e Instructor Resource Question Type: MC 28. The taking of money illegally from a firm or other source is called ______________. a. Extortion b. Bribery c. Embezzlement d. Fraud Ans: c Learning Objective: 6.8 Cognitive Domain: Comprehension Answer Location: Corporate Compliance Systems and global Corruption Question Type: MC 29. In general, corruption can be classified into each of the following major types except: a. Collusive peddling b. Petty corruption c. Grand corruption d. Influence peddling Ans: a Learning Objective: 6.8 Cognitive Domain: Comprehension Answer Location: Corporate Compliance Systems and Global Corruption Question Type: MC 30. _______________ occurs when private individuals give illegal financial incentives to nonelected public officials in exchange for favorable dealings with certain government transactions. a. Collusive peddling b. Petty corruption c. Grand corruption d. Influence peddling Ans: b Learning Objective: 6.8 Cognitive Domain: Comprehension Answer Location: Corporate Compliance Systems and Global Corruption Question Type: MC 31. Which of the following occurs when illegal financial incentives are given to higher-ranked public officials for decisions that usually include major infrastructure contracts, the purchasing of military equipment, or other major industry-based decisions? a. Collusive peddling b. Petty corruption c. Grand corruption d. Influence peddling Ans: c Learning Objective: 6.8

Stanwick, Understanding Business Ethics, 3e Instructor Resource Cognitive Domain: Comprehension Answer Location: Corporate Compliance Systems and Global Corruption Question Type: MC 32. All of the following are countries that tolerate having their nationals give bribes in other countries and also allow the bribes to be written off as business expenses on the firm’s tax statements except a. France b. Germany c. Japan d. United States Ans: d Learning Objective: 6.9 Cognitive Domain: Comprehension Answer Location: The U.S. Foreign Corrupt Practices Act Question Type: MC 33. Transparency International has developed an annual ranking of the level of __________in countries round the world. a. Bribery b. Corruption c. Embezzlement d. Ethical practices Ans: b Learning Objective: 6.8/6.9 Cognitive Domain: Comprehension Answer Location: Corporate Compliance Systems and Global Corruption Question Type: MC 34. Kennedy and Di Tella have made an estimate of the cost of corruption. What are the estimated economic costs of organized crime activities and unfair prices set in the marketplace? a. Premium by up to 5% b. Discount of up to 10% c. Premium of 15% to 20% d. Premium of 25% Ans: c Learning Objective: 6.9 Cognitive Domain: Comprehensions Answer Location: The Cost of Compliance Question Type: MC 35. The U.S. Foreign Corrupt Practices Act that forbids firms from contributing to foreign political campaigns was passed into law in a. 1907 b. 2007 c. 1990

Stanwick, Understanding Business Ethics, 3e Instructor Resource d. 1977 Ans: d Learning Objective: 6.9 Cognitive Domain: Comprehensions Answer Location: The U.S. Foreign Corrupt Practices Act Question Type: MC

True/False 36. Strategic planning is the process in which future courses of action are developed to achieve the firms’ short- and long-term goals. a. True b. False Ans: a Learning Objective: 6.1 Cognitive Domain: Knowledge Answer Location: Ethics and Strategic Planning Question Type: TF 37. The mirror test involves the decision maker’s ability to look in the mirror after the decision has been made and state that he or she has made the right choice. a. True b. False Ans: a Learning Objective: 6.1 Cognitive Domain: Knowledge Answer Location: Ethics and Strategic Planning Question Type: TF 38. The ethical cycle begins with the identification of the current ethical culture. a. True b. False Ans: b Learning Objective: 6.4 Cognitive Domain: Knowledge Answer Location: The Ethical Cycle Question Type: TF 39. It is during the problem analysis stage that the outcomes from the ethical judgment stage are further evaluated so a definitive course of action can be determined. a. True b. False Ans: b Learning Objective: 6.3 Cognitive Domain: Knowledge

Stanwick, Understanding Business Ethics, 3e Instructor Resource Answer Location: The Ethical Cycle Question Type: TF 40. Factors such as the political and social structure of the country have no impact on the ethical decision-making process. a. True b. False Ans: b Learning Objective: 6.4 Cognitive Domain: Knowledge Answer Location: How to Address Strategic Ethical Decision Making From a Global Perspective Question Type: TF 41. An ethical crisis occurs when an event that was not part of the normal course of action for a firm takes place and affects the firm. a. True b. False Ans: a Learning Objective: 6.4 Cognitive Domain: Knowledge Answer Location: How to Address Ethical Crisis and Disaster Recovery Question Type: TF 42. Corporate culture is based on norms and behavior patterns within any given organization. a. True b. False Ans: a Learning Objective: 6.5 Cognitive Domain: Knowledge Answer Location: Corporate Culture Question Type: TF 43. Shared values are factors such as what is seen and heard within a firm. a. True b. False Ans: b Learning Objective: 6.5 Cognitive Domain: Knowledge Answer Location: Corporate Culture Question Type: TF 44. Basic assumptions are the key starting point for ethical decision making within the firm. a. True b. False Ans: a Learning Objective: 6.4

Stanwick, Understanding Business Ethics, 3e Instructor Resource Cognitive Domain: Knowledge Answer Location: Corporate Culture Question Type: TF 45. Lewin’s primary embedding mechanisms are concerned with the behavior and leadership traits of the most senior managers in a firm. a. True b. False Ans: True Learning Objective: 6.7 Cognitive Domain: Knowledge Answer Location: How to Change Ethical Values Question Type: TF 46. In the unfreezing stages of Kurt Lewin’s three-stage model, the new perceptions and ideals are ―locked in.‖ a. True b. False Ans: b Learning Objective: 6.6 Cognitive Domain: Knowledge Answer Location: How to Change Ethical Values Question Type: TF 47. The 2011 National Business Ethics Survey 2011 found 22% of the respondents had observed misconduct in the workplace, and 45% of these were subject to some form of retaliation. a. True b. False Ans: b Learning Objective: 6.4 Cognitive Domain: Knowledge Answer Location: Evaluation of Corporate Culture Question Type: TF 48. Grand corruption occurs when private individuals give illegal financial incentives to nonelected public officials in exchange for favorable dealings with certain government transactions. a. True b. False Ans: b Learning Objective: 6.4 Cognitive Domain: Knowledge or Comprehension Answer Location: Corporate Compliance Systems and Global Corruption Question Type: TF

Stanwick, Understanding Business Ethics, 3e Instructor Resource 49. Petty corruption occurs when illegal financial incentives are given to higher-ranked public officials. a. True b. False Ans: b Learning Objective: 6.4 Cognitive Domain: Knowledge or Comprehension Answer Location: Corporate Compliance Systems and Global Corruption Question Type: TF 50. Criminal penalties for violation of the Foreign Corrupt Practices Act can be up to $2 million for a firm and $100,000 and 5 years in prison for an individual. a. True b. False Ans: a Learning Objective: 6.9 Cognitive Domain: Knowledge or Comprehension Answer Location: The U.S. Foreign Corrupt Practices Act Question Type: TF 51. The OECD anticorruption agreement, called the Convention on Combating the Bribery of Foreign Public Officials, was agreed in 2007. a. True b. False Ans: b Learning Objective: 6.9 Cognitive Domain: Knowledge or Comprehension Answer Location: The U.S. Foreign Corrupt Practices Act Question Type: TF Essay 52. In a short essay, list and discuss the decision-making steps in the ethical cycle.

Ans: a.

Moral problem statement—must be developed based on the responses of three conditions: a clear statement of what the moral problem is, an identification of who is affected by the resolution of the moral problem, and the moral issue of the problem b.

Problem analysis—in order to analyze the moral problem, three factors must be identified: (1) Which stakeholders are impacted by the problem, and how does it impact their own interests? (2) What are the moral values that need to be considered to analyze the problem?; and (3) What are the relevant facts related to the moral problem? c.

Options for action—by presenting these alternative solutions, the decision makers are able to understand how each alternative can impact the relevant stakeholders

Stanwick, Understanding Business Ethics, 3e Instructor Resource d.

Ethical judgment—for each of the options that were presented in the previous step, an evaluation takes place to see which of the options would be acceptable based on the moral values and beliefs of the decision makers and the organization as a whole e.

Reflection—it is during the reflection stage that the outcomes from the ethical judgment stage are further evaluated so a definitive course of action can be determined Learning Objective: 6.2 Cognitive Domain: Application Answer Location: The Ethical Cycle Question Type: ESS 53. In a short essay, list and discuss the three levels on which corporate culture exists simultaneously within a firm.

Ans: a.

Artifacts—factors such as what is seen and heard within a firm. Artifacts can also be the language used within the workplace as well as how people dress and the types of stories that are relayed to other workers within the firm b.

Shared values—based on what groups within the firm learn about what is acceptable and not acceptable. A value can be shared, and it could become a shared assumption at a later time. c.

Basic assumptions—the agreed starting point for decision making within the firm. The basic assumptions are the linchpin for the establishment and maintenance of an ethical culture within the firm.

Learning Objective: 6.5 Cognitive Domain: Analysis Answer Location: Corporate Culture Question Type: ESS 54. In a short essay, set out the key steps that firms need to follow to evaluate their corporate culture to develop an effective integrity strategy.

Ans: Managers model, communicate, and reinforce ethical behavior to their employees. Top management model to lower-level managers in these same ways to create an environment of ethical integrity.

Top-level managers are responsible for ensuring that the corporate culture supports ethical behavior. Deloitte recommends that managers ask the following questions as part of their cultural assessment of their firms:  Do rank-and-file employees understand the tone set by senior management?  Do you know, without a doubt, that your organization’s culture encourages ethical behavior at all levels?  Can employees throughout your organization describe the company’s code of ethics?  Do employees in all areas of your organization ask questions and express concerns?  Do your employees believe that the mechanisms are in place to allow them to voice opinions without fear of retribution?

Learning Objective: 6.7 Cognitive Domain: application

Stanwick, Understanding Business Ethics, 3e Instructor Resource Answer Location: Evaluation of Corporate Culture Question Type: ESS 55. In a short essay, list the five-step process needed to embed positive ethics and values within the culture of the firm through its compliance program.

Ans: a.

Step 1 is for the firm to do a risk/cultural assessment. It is during this step that management asks its employees via surveys and interviews what their assessment of the firm’s culture is. b.

Step 2 is to review the current compliance program to determine if any revisions need to be made. It is during this stage that management determines whether any revisions need to be made pertaining to the reporting structure, the methods of communication for employees, and any other components of the current compliance program. c.

Step 3 is to review of current ethical policies and procedures of the firm to ensure both the content and responsibilities coincide with the current ethical vision of the firm. d.

Step 4 is to review and revise, if necessary, the communication, training, and implementation phases of the compliance program. It is during this step that any gaps that were identified in the cultural assessment in Step 1 can be resolved so there is no ambiguity about the ethical vision of the firm. e.

Step 5 is to develop an ongoing self-assessment of the compliance program. It would also be during this step that any revisions to the monitoring and reporting components of the compliance program would be adjusted if necessary.

Learning Objective: 6.6 and 6.7 Cognitive Domain: Analysis Answer Location: Ethics and Corporate Compliance Question Type: ESS 56. In a short essay, identify the key elements of corruption and and how these may be classified.

Ans: Corruption is the conscious abuse of public roles and resources for the private benefit of a firm or the individuals of the firm.

Corruption can be broadly defined as the use of bribery, extortion, or embezzlement for the benefit of one’s own interests.

Bribery is giving a financial benefit in return for influencing the decision of a person in a position of trust.

Extortion is the use of intimidation or power in return for a financial benefit.

Embezzlement is the taking of money illegally from a firm or other source.

In general, corruption can be classified into three major types: petty corruption, grand corruption, and influence peddling.

Petty corruption occurs when private individuals give illegal financial incentives to nonelected public officials in exchange for favorable dealings with certain government transactions. These transactions usually are related to taxes, low-level regulations, licensing, or some other low-level government issue.

Stanwick, Understanding Business Ethics, 3e Instructor Resource Grand corruption occurs when illegal financial incentives are given to higher-ranked public officials. These high-level decisions usually include major infrastructure contracts, the purchasing of military equipment, or other major industry-based decisions.

Influence peddling occurs when illegal transactions take place along with legal transactions. An example of influence peddling would be illegal political campaign contributions.

Learning Objective: 6.8 and 6.9 Cognitive Domain: Analysis Answer Location: Corporate Compliance Systems and Global Corruption Question Type: ESS

Chapter 7: Decision Making and Human Resource Issues Test Bank Multiple Choice 1. The Triangle Shirtwaist Factory was located in _____________. a. Detroit b. San Francisco c. Dallas d. Manhattan Ans: d Learning Objective: 7.1 Cognitive Domain: Comprehension Answer Location: The Triangle Shirtwaist Factory Fire: How Tragedy Can Create Change Question Type: MC 2. The Wagner Act was passed in_____________ to protect the rights of workers and allow them to organize into unions. a. 1909 b. 2002 c. 1935 d. 2011 Ans: c Learning Objective: 7.1 Cognitive Domain: Comprehension Answer Location: The Triangle Shirtwaist Factory Fire: How Tragedy Can Create Change Question Type: MC 3. In which of the following stages of moral development does the individual make moral decisions based on the consequences and repercussions of their actions? a. Obedience and punishment orientation b. Instrumental purpose and exchange c. Interpersonal accord, conformity, mutual expectations d. Social accord and system maintenance Ans: a Learning Objective: 7.1 Cognitive Domain: Comprehension

Stanwick, Understanding Business Ethics, 3e Instructor Resource Answer Location: Ethical Decision Making: Kohlberg’s Six Stages of Moral Development Question Type: MC 4. The individual acts based on what is expected of him or her by others in which of the following stages of moral development? a. Obedience and punishment orientation b. Instrumental purpose and exchange c. Interpersonal accord, conformity, mutual expectations d. Social accord and system maintenance Ans: c Learning Objective: 7.1 Cognitive Domain: Comprehension Answer Location: Ethical Decision Making: Kohlberg’s Six Stages of Moral Development Question Type: MC 5. In which of the following stages of moral development is the belief that since individuals have a different set of values, it is important to view rules relative to the group, which must accept them? a. Obedience and punishment orientation b. Instrumental purpose and exchange c. Interpersonal accord, conformity, mutual expectations d. Social contract and individual rights Ans: d Learning Objective: 7.1 Cognitive Domain: Comprehension Answer Location: Ethical Decision Making: Kohlberg’s Six Stages of Moral Development Question Type: MC 6. The individual is governed by his or her own chosen ethical principles in which of the following stages of moral development? a. Obedience and punishment orientation b. Instrumental purpose and exchange c. Interpersonal accord, conformity, mutual expectations d. Universal ethical principles.

Ans: D Learning Objective: 7.1 Cognitive Domain: Comprehension Answer Location: Ethical Decision Making: Kohlberg’s Six Stages of Moral Development Question Type: MC 7. In the Milgram study of 1963, what proportion of volunteers would have obeyed the instruction to ―kill‖ the subject? a. 12% b. 65% c. 25% d. 40%

Stanwick, Understanding Business Ethics, 3e Instructor Resource Ans: b Learning Objective: 7.2 Cognitive Domain: Comprehension Answer Location: The Role of Emotion in Moral Decision Making Question Type: MC 8. Which of the following is not one of the three categories of moral luck? a. Resultant luck b. Circumstantial luck c. Constitutive luck d. Virtual luck Ans: d Learning Objective: 7.2 Cognitive Domain: Comprehension Answer Location: The Role of Emotion in Moral Decision Making Question Type: MC 9. ______________ is based on the background, family support system, and life experiences a person has before the moral decision is made. a. Resultant luck b. Circumstantial luck c. Constitutive luck d. Virtual luck Ans: c Learning Objective: 7.2 Cognitive Domain: Comprehension Answer Location: The Role of Emotion in Moral Decision Making Question Type: MC 10. Which of the following is not one of the elements of ethics? a. Doing the right thing b. Making the right choices c. Presenting the right ideas d. Raising the share price Ans: d Learning Objective: 7.2 Cognitive Domain: Knowledge Answer Location: Rationalizing Unethical Behaviors Question Type: MC 11 Determining if the decision would be considered fair by those affected by it is called a. Transparency b. Effect c. Fairness d. Equal Ans: c

Stanwick, Understanding Business Ethics, 3e Instructor Resource Learning Objective: 7.2 Cognitive Domain: Comprehension Answer Location: Fairness Question Type: MC 12. The Texas Instruments Code of Ethical Conduct includes three of the following elements.

Which one is not included? a. Is the action legal? b. Does it comply with our values? c. Will it benefit personally? d. Keep asking until you get answer.

Ans: c Learning Objective: 7.2 Cognitive Domain: Comprehension Answer Location: Fairness Question Type: MC 13. Actions that a decision maker can compromise within established boundaries are called a. Compromising actions b. Negotiated actions c. Discretionary actions d. Stakeholder actions Ans: c Learning Objective: 7.2 Cognitive Domain: Comprehension Answer Location: Fairness Question Type: MC 14. Actions which the decision maker cannot change are called a. Rigid actions b. Inflexible actions c. Nondiscretionary actions d. Discretionary actions Ans: C Learning Objective: 7.2 Cognitive Domain: Comprehension Answer Location: Fairness Question Type: MC 15. ______________ is the strength of conviction or self-regulation by the individual. a. Ego strength b. Field dependence c. Locus of control d. Resultant luck Ans: a Learning Objective: 7.2

Stanwick, Understanding Business Ethics, 3e Instructor Resource Cognitive Domain: Comprehension Answer Location: Interactionist Model of Ethical Decision Making in Organizations Question Type: MC 16. ______________ refers to the individual’s perception of how much control he or she has over an activity of event. a. Ego strength b. Field dependence c. Locus of control d. Resultant luck Ans: c Learning Objective: 7.2 Cognitive Domain: Comprehension Answer Location: Interactionist Model of Ethical Decision Making in Organizations Question Type: MC 17. Which of the following components of moral intensity relates to the decision maker’s perception of the probability that the act will take place and the probability that harm or benefit will occur consequently? a. Social consensus b. Magnitude of consequences c. Probability of effect d. Temporal immediacy Ans: c Learning Objective: 7.2 Cognitive Domain: Comprehension Answer Location: Ethical Decision Making and Moral Intensity Question Type: MC 18. Which of the following is not a measure of moral intensity? a. Social consensus b. Probability of effect c Temporal immediacy d. Social status Ans: d Learning Objective: 7.2 Cognitive Domain: Comprehension Answer Location: Ethical Decision Making and Moral Intensity Question Type: MC 19. ______________ refers to the degree in which society would agree that the act is either good or evil. a. Social consensus b. Magnitude of consequences c. Probability of effect d. Temporal immediacy

Stanwick, Understanding Business Ethics, 3e Instructor Resource Ans: a Learning Objective:.3 Cognitive Domain: Comprehension Answer Location: Ethical Decision Making and Moral Intensity Question Type: MC 20. Influence is a component of the implementation of power in ethical decision making. Which of the following is not an ethical use of influence? a. Negotiating in an ethical manner b. Adjusting through mutual agreement the viewpoint of another c. Misleading others about your future intentions d. Using nonverbal methods to change the viewpoint through, for example, physical evidence Ans: C Learning Objective: 7.3 Cognitive Domain: Application Answer Location: The Role of Power and Influence in Ethical Decisions Question Type: MC 21. Which is not a trait of the perfect leader according to Machiavelli? a. Ability to manipulate b. Bold in action c. Stealthy when needed d. Negotiating in an ethical manner Ans: d Learning Objective: 7.3 Cognitive Domain: Comprehension Answer Location: A Machiavellian Approach to Decision Making Question Type: MC 22. ______________ occurs when a relatively small number of people with a large stake in the action of the firm are impacted by the decision. a. Social consensus b. Magnitude of consequences c. Concentration of effect d. Temporal immediacy Ans: c Learning Objective: 7.3 Cognitive Domain: Comprehension Answer Location: Ethical Decision Making and Moral Intensity Question Type: MC 23. Which of the following types of diversity is based on having employees with different educational and/or professional backgrounds? a. Traits and value diversity b. Task-related diversity c. Demographic diversity

Stanwick, Understanding Business Ethics, 3e Instructor Resource d. Geographic diversity Ans: b Learning Objective: 7.3 Cognitive Domain: Comprehension Answer Location: The Role of Workplace Diversity Question Type: MC 24 ______________ would include such actions as stealing money or materials from the firm or accepting bribes. a. Political deviance b. Property deviance c. Production deviance d. Personal aggression Ans: b Learning Objective: 7.2 Cognitive Domain: Comprehension Answer Location: Ethical Climate and Organizational Misbehavior Question Type: MC 25. Which of the following categories of deviant behavior includes actions such as acting in an uncivilized manner, accusing and blaming the wrong people when mistakes are made, and starting false rumors and gossip that can be harmful to employees? a. Political deviance b. Property deviance c. Production deviance d. Personal aggression Ans: a Learning Objective: 7.4 Cognitive Domain: Comprehension Answer Location: Ethical Climate and Organizational Misbehavior Question Type: MC 26. Which is not a reason for employee theft? a. Personal economic pressure b. The opportunity to steal c. Personal social norms d. Peer pressure Ans: d Learning Objective: 7.3 Cognitive Domain: Comprehension Answer Location: Employee Theft Question Type: MC 27. A firm’s response to reducing employee theft normally has three stages. Which is not one of them? a. Prevention by not hiring potential thieves

Stanwick, Understanding Business Ethics, 3e Instructor Resource b. Prevention and detection of criminal behavior c. Effective sanction once thieves have been caught d. Accept that this is a norm of employee behavior Ans: d Learning Objective: 7.3 Cognitive Domain: Comprehension Answer Location: Employee Theft Question Type: MC 28. In 2011, the EEOC received _________ claims of sexual harassment. a. 113,640 b. 1,364 c. 11,364 d. 1,136,400 Ans: c Learning Objective: 7.4 Cognitive Domain: Comprehension Answer Location: Sexual Harassment and Sexual Discrimination Question Type: MC 29. ______________ refers to an arrangement where the victim will provide a sexual favor in return for a bonus. a. Sexual harassment b. Quid pro quo c. Hostile work environment d. Organizational climate Ans: b Learning Objective: 7.5 Cognitive Domain: Comprehension Answer Location: Quid Pro Quo Question Type: MC 30. ______________ is a major basis for office bullying. a. Sexual discrimination b. Dislike for a person c. Age discrimination d. Gender discrimination Ans: b Learning Objective: 7.5 Cognitive Domain: Comprehension Answer Location: Office Bullying Question Type: MC 31. Which of the following is not a form of employee monitoring? a. Going undercover b. Tapping landline phones

Stanwick, Understanding Business Ethics, 3e Instructor Resource c. Bullying d. Monitoring personal web postings Ans: c Learning Objective: 7.6 Cognitive Domain: Comprehension Answer Location: Employee Monitoring Question Type: MC 32. What proportion of employees admits to e-mailing confidential information to outside parties? a. 14% b. 89% c. 9% d. 5% Ans: a Learning Objective: 7.6 Cognitive Domain: Comprehension Answer Location: Employee Monitoring Question Type: MC 33. What proportion of men reported the reason for extreme job working ―high compensation‖? a. 90% b. 52% c. 43% d. 23% Ans: c Learning Objective: 7.6 Cognitive Domain: Comprehension Answer Location: The Ethical Issues Related to Extreme Jobs Question Type: MC 34. What proportion of women reported the reason for extreme job working ―High quality colleagues‖? a. 82% b. 28% c. 43% d. 30% Ans: c Learning Objective: 7.6 Cognitive Domain: Comprehension Answer Location: The Ethical Issues Related to Extreme Jobs Question Type: MC 35. What is not a reason for working at an extreme job? a. Stimulating and challenging b. High compensation

Stanwick, Understanding Business Ethics, 3e Instructor Resource c. Pressure from domestic situation d. Power/status Ans: c Learning Objective: 7.4 Cognitive Domain: Comprehension Answer Location: The Ethical Issues Related to Extreme Jobs Question Type: MC True/False 36. The perception of how a manager reacts to an ethical dilemma varies significantly based on the moral development stage of the manager. a. True b. False Ans: a Learning Objective: 7.1 Cognitive Domain: Knowledge Answer Location: Ethical Decision Making: Kohlberg’s Six Stages of Moral Development Question Type: TF 37. Resultant luck is based on the background, family support system, and life experiences a person has before the moral decision is made. a. True b. False Ans: a Learning Objective: 7.2 Cognitive Domain: The Role of Emotion in Moral Decision <making Answer Location: Question Type: MC True/False 38. Transparency refers to deciding if one accepts having others know what one has decided. a. True b. False Ans: a Learning Objective: 7.2 Cognitive Domain: Comprehension Answer Location: Transparency Question Type: TF 39. Field dependence refers to the ability of using external information to help resolve an ambiguous situation. a. True b. False Ans: a Learning Objective: 7.3

Stanwick, Understanding Business Ethics, 3e Instructor Resource Cognitive Domain: Knowledge Answer Location: Interactionist Model of Ethical Decision Making in Organizations Question Type: TF 40. If an individual has an internal locus of control, the individual believes he or she can have control over the activity. a. True b. False Ans: True Learning Objective: 7.3 Cognitive Domain: Knowledge Answer Location: Interactionist Model of Ethical Decision Making in Organizations Question Type: TF 41. Magnitude of consequences refers to the amount of time that will take place between when the decision is taken and the consequences. a. True b. False Ans: b Learning Objective: 7.3 Cognitive Domain: Knowledge Answer Location: Ethical Decision Making and Moral Intensity Question Type: TF 42. Influence is something an individual has, but power is something an individual has to do. a. True b. False Ans: b Learning Objective: 7.3 Cognitive Domain: Knowledge Answer Location: The Role of Power and Influence in Ethical Decisions Question Type: TF 43. Traits and value-diversity relates to diversity in personalities, values, or their vision of the future course of the firm. a. True b. False Ans: a Learning Objective: 7.4 Cognitive Domain: Knowledge Answer Location: The Role of Workplace Diversity Question Type: TF 44. Geographic diversity relates to having employees with different genders, different ages, different ethnic backgrounds, and/or professional backgrounds. a. True

Stanwick, Understanding Business Ethics, 3e Instructor Resource b. False Ans: b Learning Objective: 7.4 Cognitive Domain: Knowledge Answer Location: The Role of Workplace Diversity Question Type: TF 45. Production deviance and political deviance would be more harmful to the firm while political deviance and personal aggression would be more harmful to individuals within the firm. a. True b. False Ans: True Learning Objective: 7.4 Cognitive Domain: Knowledge Answer Location: Ethical Climate and Organizational Misbehavior Question Type: TF 46. Political deviance includes actions such as acting in an uncivilized manner, accusing and blaming the wrong people when mistakes are made, and starting false rumors and gossip that can be harmful to employees. a. True b. False Ans: a Learning Objective: 7.4 Cognitive Domain: Knowledge Answer Location: Ethical Climate and Organizational Misbehavior Question Type: TF 47. Distributive justice is a bottom up approach in which you ask and listen to what the subordinates are telling you. a. True b. False Ans: b Learning Objective: 7.4 Cognitive Domain: Knowledge Answer Location: Ethical Climate and Organizational Misbehavior Question Type: TF 48. Of all the types of deviant or misbehavior, employee theft appears to be the most common. a. True b. False Ans: a Learning Objective: 7.4 Cognitive Domain: knowledge Answer Location: Employee Theft Question Type: TF

Stanwick, Understanding Business Ethics, 3e Instructor Resource 49. Office bullying is covered by the provisions of the Civil Rights Act. a. True b. False Ans: b Learning Objective: 7.4 Cognitive Domain: Knowledge Answer Location: Office Bullying Question Type: TF 50. An extreme job is one where the employee works in a hostile environment climatically or geographically. a. True b. False Ans: b Learning Objective: 7.6 Cognitive Domain: Knowledge Answer Location: The Ethical Issues Related to Extreme Jobs Question Type: TF Essay 51. In a short essay, list and discuss the six stages in the moral development of an individual.

Ans: a. Stage 1: Obedience and Punishment Orientation—in this stage, the individual makes moral decisions based on the consequences and repercussions of their actions. b. Stage 2: Instrumental Purpose and Exchange—in this stage, the individual interprets the rules to determine whether they are beneficial to the individual. c. Stage 3: Interpersonal Accord, Conformity, Mutual Expectations—in this stage, interpersonal relations and mutual respect impact the decision-making process of the individual. d. Stage 4: Social Accord and System Maintenance—in this stage, decisions are made based on the obligations and duties that have been accepted by the individual. e. Stage 5: Social Contract and Individual Rights—in this stage, the belief is that since individuals may have a different set of values, it is important to view rules relative to the group, which must accept them. f. Stage 6: Universal Ethical Principles—in this stage, the individual is governed by his or her own chosen ethical principles.

Learning Objective: 7.1 Cognitive Domain: Analysis Answer Location: Ethical Decision Making: Kohlberg’s Six Stages of Moral Development Question Type: ESS5 52. In a short essay, list and discuss the three categories of moral luck.

Ans:

Stanwick, Understanding Business Ethics, 3e Instructor Resource a. Resultant luck—when two individuals perform the exact same action, the results of the actions may be vastly different b. Circumstantial luck—occurs when certain conditions or circumstances take place in order for the individual to demonstrate his or her moral values c. Constitutive luck—based on the background, family support system, and life experiences a person has before the moral decision is made Learning Objective: 7.2 Cognitive Domain: Analysis Answer Location: The Role of Emotion in Moral Decision Making Question Type: ESS 53. In a short essay, list and discuss the three critical individual variables that would affect how individuals approach resolving an ethical dilemma.

Ans: a. Ego strength—the strength of conviction or self-regulation by the individual b. Field dependence—refers to the ability of using external information to help resolve an ambiguous situation c. Locus of control—refers to the individual’s perception of how much control he or she has over an activity or event Learning Objective: 7.3 Cognitive Domain: Analysis Answer Location: Interactionist Model of Ethical Decision Making in Organizations Question Type: ESS 54. In a short essay, compare and contrast the roles of power and influence in ethical decisions.

Ans: a. Managing Power The Stanford prison experiment highlighted that anyone can potentially use power to abuse others and enhance his or her own self-interests. To use power in an ethical manner, a person must meet two standards. The first concerns the power being exercised to benefit others who have granted the decision maker the power with the expectation that the decision maker will serve others. The second standard is that the power conforms to both the legal and accepted cultural standards of what is considered ethical behavior. Therefore, it would be unethical or illegal to use the decision maker’s power to enhance the interests of the firm while not abiding by the ethical standards established by society. New managers need to establish networks to get compromises and agreements. As such, managers must be political to accomplish their agendas.

Managers must develop their own informal power to manage key relationships. Formal power is the type of power that is associated with the job title. Informal power is the type of power that managers can develop by having strong positive relationships with others. b. Influence Influence is the ability to change the viewpoint of another person based on verbal and nonverbal actions. Power is something an individual has, but influence is something that an individual can do. As a result, people use power to influence the actions of others. Influence can be an effective tool because it is not a direct use of power. Influence can be used ethically if the adjustment of the viewpoint of another person results in both parties achieving a beneficial result. Manipulation

Stanwick, Understanding Business Ethics, 3e Instructor Resource occurs when the true intentions of the person are hidden and may only become evident after the decision has been implemented. c. A Machiavellian Approach to Decision Making Niccolò Machiavelli’s book The Prince described how a prince was able to obtain and maintain his power. His ―ultimate‖ prince was one who was calculating and amoral and did whatever was necessary to stay in power. The value of the leader is based on the ultimate success of the leader.

This includes using force when necessary against internal and external enemies to ensure the most favorable result. Machiavelli described the perfect leader as one who was able to manipulate, was bold in his actions, and was stealthy when he needed to be. The prince, or leader, must be able to execute his actions based on not what ought to be done but on what actions served the leader’s self-interests. The prince reminds the reader, ―It is better to be feared than to be loved.‖ d. How to Control Power and Influence Ensure that power and influence are exercised in an ethical manner. Firm’s policies and standards of the firm are based on the highest ethical standards possible. Furthermore, these policies and procedures must be enforced at all times. Each individual’s performance evaluation is based, in part, on his or her ethical performance. An evaluation must occur to ensure that managers are not misusing their power and influence.

Learning Objective: 7.1 Cognitive Domain: Analysis Answer Location: The Role of Power and Influence in Ethical Decisions13 Question Type: ESS 55. In a short essay, list and discuss the elements involved in employee monitoring.

Ans: Undercover: Physically go undercover to see how the employees perform during the day. a. Viewing Social Media: A relatively new and easy way to monitor the activities of the workers is to view social media accounts. b. E-Mails and Instant Messaging: Firms now have an opportunity to monitor employees by viewing the content on their computers and the content on their firm-issued phones. As long as the equipment belongs to the firm and is loaned to the employee for use, the employer has the right to monitor all information that flows from those sources. c. Tapping Landline Phones: Even though more and more companies are shifting exclusively to smartphones, most firms still have landline phones. As a result, those phones can be tapped so that the employers can monitor the conversations that take place with that phone. d. Monitoring Personal Web Postings: Personal blogs are a gold mine of information for current and potential employers. As with the social media, the individuals are less likely to filter out their true beliefs on these online formats.

Learning Objective: 7.6 Cognitive Domain: Analysis Answer Location: Employee Monitoring Question Type: ESS

Stanwick, Understanding Business Ethics, 3e Instructor Resource

Chapter 8: Ethics and the Environment Multiple Choice 1. In the opening case which of these outcomes do the billboards not fulfill? a. Purified water b. Advertising c. Electricity generation d. Purified air Ans: C Learning Objective: 8.2 Cognitive Domain: Application Answer Location: Case: the intersection of billboards and environmental sustainability Question Type: MC 2. In the opening case the new billboard purifies __________cubic meters of air daily. a. 98 b. 100,000 c. 1200 d. 5 Ans C Learning Objective: 8.2 Cognitive Domain: Application Answer Location: the intersection of billboards and environmental sustainability Question Type: MC 3. The roots of the tragedy of the commons concepts go back to ____________, who stated that what is common to most people will receive the least amount of care. a. Friedman b. Aristotle c. Socrates d. Kant Ans: B Learning Objective: 8.1 Cognitive Domain: Comprehension Answer Location: The Tragedy of the Commons.

Question Type: MC

4. The underlying belief of the _______________ is that free access with unrestricted use of any resource that is finite will ultimately ruin the resource through overexploitation. a. tragedy of the commons b. tragedy of the benefits c. tragedy of the differentials d. tragedy of the failures Ans: A

Stanwick, Understanding Business Ethics, 3e Instructor Resource Learning Objective: 8.1 Cognitive Domain: Comprehension Answer Location: The Tragedy of the Commons Question Type: MC

5. _____________ was not a reason why the natural environment was considered not to be a legitimate stakeholder? a. It did not have a voice b. It is not human c. It does not fit within Kant’s ethical viewpoint d. The natural environment is a vital component of the wider external environment impacting on the firm Ans: A Learning Objective: 18.1 Cognitive Domain: Comprehension Answer Location: The Tragedy of the Commons.

Question Type: MC 6_____________ refutes the benefits of Adam Smith’s invisible hand by arguing that the selfinterests of each individual do not always translate into the promotion of the public good for everyone. a. Milton Friedman b. Michael Porter c. Garrett Hardin d. Henry Sidgwick Ans: C Learning Objective: 8.1 Cognitive Domain: Comprehension Answer Location: The Tragedy of the Commons.

Question Type: MC 7. The endorsement of the natural environment can help create competitive advantages for firms.

Which of the following is not an advantageous factor? a. the reduction of waste b. the creation of a positive corporate image c. reduce negative impact on the environment d. greenwash policies Ans: D Learning Objective: 8-2 Cognitive Domain: Comprehension Answer Location: Natural Environment as a competitive advantage Question Type: MC

Stanwick, Understanding Business Ethics, 3e Instructor Resource 8. Under a(n) _______________ strategy, waste products are considered to be an inefficient use of resources. a. environmental cost leadership b. ecobranding c. ecoefficiency d. beyond compliance leadership Ans: C Learning Objective: 8-2 Cognitive Domain: Comprehension Answer Location: Natural Environment as a competitive advantage Question Type: MC 9. In the __________________ strategic focus, the firm makes a conscious effort to acknowledge the demands of its stakeholders and is able to provide ―proof‖ to their stakeholders pertaining to their commitment to the natural environment. a. environmental cost leadership b. ecobranding c. ecoefficiency d. beyond compliance leadership Ans: D Learning Objective: 8-2 Cognitive Domain: Comprehension Answer Location: Natural Environment as a competitive advantage Question Type: MC 10. In the ________________ strategic focus, firms use their proactive environmental commitments in an attempt to differentiate their products and services for their customers and also allows potential customers to consider the natural environment when they are purchasing products and services. a. environmental cost leadership b. ecobranding c. ecoefficiency d. beyond compliance leadership Ans: B Learning Objective: 8-2 Cognitive Domain: Comprehension Answer Location: Natural Environment as a competitive advantage Question Type: MC 11. According to the text, an example of a company that has embraced ecobranding to its fullest is _______________. a. Dell Computers b. Timberland c. General Electric d. Google Ans: B

Stanwick, Understanding Business Ethics, 3e Instructor Resource Learning Objective: 8-2 Cognitive Domain: Comprehension Answer Location: Natural Environment as a competitive advantage Question Type: MC 12. In which of the following strategic focus does the firm embrace proactive environmental ideals as long as they can help reduce the overall cost of production? a. environmental cost leadership b. ecobranding c. ecoefficiency d. beyond compliance leadership Ans: A Learning Objective: 8-2 Cognitive Domain: Comprehension Answer Location: Natural Environment as a competitive advantage Question Type: MC 13. An environmental compliance system does not include one of the following areas: a. publish an annual environmental report b. provide employees with environmental trainng c. provide financial incentives for good environmental practice d. ensure that the same environmental standards are consistent globally Ans: A Learning Objective: C Cognitive Domain: Comprehension Answer Location: Vountary Environmental Compliance Question Type: MC

14. A green manufacturing company can make three strategic manufacturing adjustments. Which of the following may not be a positive adjustment. a. Adjustment to the manufacturing process b. outsourcing of the manufacturing process c. Introduction of new production processes d. Incorporate waste reduction and recycling technologies Ans: A Learning Objective: 8.3 Cognitive Domain: Comprehension Answer Location: What does it mean to be green?

Question Type: MC 14. Which of the following is not a research and development strategic adjustmen as part of going green? a. develop new products that are environmentally friendly b. consider redesigning the product and the production process c. charging premium prices for new green products

Stanwick, Understanding Business Ethics, 3e Instructor Resource d. develop waste recovery strategies Ans: C Learning Objective: 8.3 Cognitive Domain: Comprehension Answer Location: What does it mean to be green?

Question Type: MC 15. ___________ of firm transformation is concerned with alignment of strategy and deployment of the sustainable strategy? a. Stage 1 b. Stage 2 c. Stage 3 d. Stage 5 Ans: C Learning Objective: 8.3 Cognitive Domain: Comprehension Answer Location: What does it mean to be green?

Question Type: MC

16. Ramus argues that employees are key stakeholders in the implementation of environmental commitment. _____________ is a key barrier to gaining their commitment? a. Strategic auditing b. Intrinsic personal awards c. Extrinsic personal awards d. lack of support by line managers Ans: D Learning Objective: 8.4 Cognitive Domain: Comprehension Answer Location: Employees as environmental stakeholders Question Type: MC 17. Employees at ______________ took responsibility for developing environmental programs that focus on waste reduction and recycling a. Lucent technologies b. Dupont c. GE Plastics d. Timberland Ans: C Learning Objective: 8.4 Cognitive Domain: Comprehension Answer Location: Employees as environmental stakeholders Question Type: MC 18. With membership of 1.3 million, ______________ is the oldest and largest environmental group in the United States.

Stanwick, Understanding Business Ethics, 3e Instructor Resource a. the Sierra Club b. the Environmental Defense Fund c. Greenpeace d. Friends of the Earth Ans: A Learning Objective: 8.4 Cognitive Domain: Knowledge Answer Location: NGOs as environmental stakeholders Question Type: MC 19. Friends of the Earth has idenetified envonmental accounting tricks that companies play.

Which of the following is not one? a. Lowballing superfund liabilities b. creating anEnvironmental Defense Fund c. hiding asbestos liability d. painting a rosy picture Ans: B Learning Objective: 8.4 Cognitive Domain: Comprehension Answer Location: NGOs as environmental stakeholders Question Type: MC 20.Firms that had _______________ had the highest incidneces of environmental policies a. a low level of financial performance b. a medium level of financial performance c. a high level of financial performance d. a market leading level of financial performance Ans: B Learning Objective: 8.4 Cognitive Domain: Comprehension Answer Location: Communicating the Firm’s environmental commitment to its stakeholders Question Type: MC 21.In what year according to the text did the first major environmentally focused federal legislation take place? a. 1938 b 1963 c. 1972 d. 1988 Ans: A Learning Objective: 8.5 Cognitive Domain: Comprehension Answer Location: United States Government legislation Question Type: MC

Stanwick, Understanding Business Ethics, 3e Instructor Resource 22. _____________, as defined by the EPA, is a periodic, objective, and documented assessment of an organization’s operations compared to the audit criteria. a. Strategic auditing b. Operational auditing c. Ethical auditing d. Environmental auditing Ans: D Learning Objective: 8.6 Cognitive Domain: Comprehension Answer Location: environmental Accounting Issues Question Type: MC 23. _______________ can be defined as the systematic equal allocation of environmental benefits and burdens. a. Environmental auditing b. Ethical justice c. Environmental justice d. Environmental accounting Ans: C Learning Objective: 8.7 Cognitive Domain: Comprehension Answer Location: Environmental Justice Question Type: MC 24. According to the EPA what is considered to be a safe distance from a pollution source? a. 1 mile b. 800 yards c. 2and a half miles d. 5 miles Ans: C Learning Objective: 8.7 Cognitive Domain: Comprehension Answer Location: Environmental Justice Question Type: MC 25. All of the following represent the major components needed to define sustainability EXCEPT: a. a system to ensure the sustainable management of the earth’s natural resources b. the development of social and institutional structures that would support the sustainable management of the natural resources c. changes in the economic framework to support the sustainable management of the earth’s natural resources d. all of the selections represent major components needed to define sustainability Ans: D Learning Objective: 8.8 Cognitive Domain: Comprehension

Stanwick, Understanding Business Ethics, 3e Instructor Resource Answer Locationethics of Climate Change Question Type: MC 26. According to the text, which of the following is NOT one of the three types of economies based on a country’s stage of economic development? a. survival b. emerging c. developed d. overdeveloped Ans: D Learning Objective: 8.8 Cognitive Domain: Comprehension Answer Location: Environmental sustainability Question Type: MC 27. The _______________ was created in December 1997 with the aim of having every industrialized nation in the world voluntarily reduce the level of greenhouse gas (GHG) emissions into the atmosphere by 5.2 percent as compared with 1990 GHG emissions levels. a. Sarbanes-Oxley Act b. Environmental Defense Fund c. Kyoto Treaty d. Equator Principles Ans: C Learning Objective: 8.8 Cognitive Domain: Knowledge Answer Location: Environmental sustainability Question Type: MC 28 Which of the following is NOT considered to be one of the six greenhouse gases? a. carbon dioxide b. hydrogen peroxide c. nitrous oxide d. methane Ans: B Learning Objective: 8.8 Cognitive Domain: Knowledge Answer Location: Environmental sustainability Question Type: MC 29. According to the text, the majority of greenhouse gases originate from _____________. a. carbon dioxide b. hydrogen peroxide c. nitrous oxide d. methane Ans: A Learning Objective: 8.8

Stanwick, Understanding Business Ethics, 3e Instructor Resource Cognitive Domain: Knowledg Answer Location: Environmental Sustainability.

Question Type: MC 30. All of the following represent types of risk for a firm due to the impact of climate change EXCEPT: a. regulatory risk b. employee risk c. physical d. litigation risk Ans: B Learning Objective: 8.8 Cognitive Domain: Comprehension Answer Location: The effects of Climate Change on the firm Question Type: MC 31______________ is based on the belief that as the climate change continues to impact the global environment, governments from around the world adapt stronger and more rigid regulations to control GHG emissions. a. Regulatory risk b. Supply chain risk c. Physical d. Litigation risk Ans: A Learning Objective: 8.8 Cognitive Domain: Comprehension Answer Location: The effects of Climate Change on the firm Question Type: MC 32. The assumption that as climate change continues to impact the world, the vulnerability of suppliers and the raw materials needed for manufacturing will decrease is called _____________. a. regulatory risk b. supply chain risk c. physical d. litigation risk Ans: B Learning Objective: 1-2 Cognitive Domain: Comprehension Answer Location: The effects of Climate Change on the firm.

Question Type: MC

33. Which of the following types of risk is based on the premise that firms with high GHG emission levels will be threatened more frequently with lawsuits similar to those established in the tobacco, pharmaceutical and asbestos industries?

Stanwick, Understanding Business Ethics, 3e Instructor Resource a. regulatory risk b. supply chain risk c. physical d. litigation risk Ans: D Learning Objective: 8.8 Cognitive Domain: Comprehension Answer Location: The effects of Climate Change on the firm.

Question Type: MC 34. ______________ is related to how the customer perceives the firm. a. Reputational risk b. Supply chain risk c. Physical d. Litigation risk Ans: A Learning Objective: 8.8 Cognitive Domain: Comprehension Answer Location: The effects of Climate Change on the firm.

Question Type: MC 35. There are three levels of scope both for the organizational and product carbon footprint.

Which of the actions below is not one of them? a. Direct emissions controlled or owned by the firm. b. Indirect emission sources not owned or controlled by the firm c. Other indirect GHG emissions related to the firm d. Personal emission generation by employees of the firm Ans: D Learning Objective: 8.8 Cognitive Domain: Comprehension Answer Location: A firm’s carbon footprint Question Type: MC True/False 26. In the tragedy of the Commons, Hardin refutes Adam Smith’s invisible hand by arguing that the self-interests of each individual do not always translate into the promotion of the public good for everyone. a. True b. False Ans: True Learning Objective:8.1 Cognitive Domain: Knowledge Answer Location: The Tragedy of the Commons Question Type: TF

Stanwick, Understanding Business Ethics, 3e Instructor Resource 27. An example of a company that has embraced ecobranding to its fullest is Timberland. a. True b. False Ans: True Learning Objective: 8.2 Cognitive Domain: Comprehension Answer Location: Natural Environment as a competitive advantage Question Type: TF 28. Firms with an ecobranding strategic focus do not aim to generate a higher profit margin for its products and services. a. True b. False Ans: False Learning Objective: 8.2 Cognitive Domain: Knowledge Answer Location: Natural Environment as a competitive advantage Question Type: TF 29. Once a firm has completed its sustainable strategy implementation then that is the end of the journey. a. True b. False Ans: True Learning Objective: 8.2 Cognitive Domain: Knowledge Answer Location: Natural Environment as a competitive advantage Question Type: TF 30. Employee led environmental innovation strategies do not add value to the firm’s environmental credibility a. True b. False Ans: False Learning Objective: 8.2 Cognitive Domain: Knowledge Answer Location: Natural Environment as a competitive advantage Question Type: TF 31. Friends of the Earth is the oldest and largest environmental group in the United States. a. True b. False Ans: False Learning Objective: 8.4 Cognitive Domain: Knowledge Answer Location: NGOs as Environmental Stakeholders

Stanwick, Understanding Business Ethics, 3e Instructor Resource Question Type: TF 32. Research conducted by Stanwick and Stanwick found that firms in the ―middle of the pack‖ financially had the highest levels of environmentally committment. a. True b. False Ans: True Learning Objective: 8.4 Cognitive Domain: Knowledge Answer Location: Communicating the firm’s environmental commitmet to its stakeholders Question Type: TF 33. In the US two key accounting rules, ―FAS 5—Accounting for Contingencies‖ and ―FIN 14— Reasonable Estimation of Loss,‖ provide appropriate disclosures about their environmental liabilities. a. True b. False Ans: False Learning Objective: 8.5 Cognitive Domain: Knowledge Answer Location: Environmental accounting issues Question Type: TF 34. Environmental justice can be defined as the systematic equal allocation of environmental benefits and burdens. a. True b. False Ans: True Learning Objective: 8.7 Cognitive Domain: Knowledge Answer Location: Environmental Justice Question Type: TF 35. To view sustainability from a global perspective, it must be recognized that countries in different stages of development regard sustainability with different priorities. a. True b. False Ans: True Learning Objective: 8..7 Cognitive Domain: Knowledge Answer Location: Environmental Sustainability Question Type: TF 36. Approximately 70% of solar radiation is reflected back towards the Sun False Learning Objective: 8.8

Stanwick, Understanding Business Ethics, 3e Instructor Resource Cognitive Domain: Knowledge Answer Location: ethics and climate change Question Type: TF 37. In developing a climate change strategy, supply chain measures include acquire energy from the cheapest sources only. a. True b. False Ans: True Learning Objective: 8.8 Cognitive Domain: Knowledge Answer Location: ethics and climate change Question Type: TF 38. Supply chain risk is based on the belief that as the climate change continues to impact the global environment, governments around the world adopt stronger and more rigid regulations to control GHG emissions. a. True b. False Ans: True Learning Objective: 8.8 Cognitive Domain: Knowledge Answer Location: The effects of climate change on the firm Question Type: TF 39. Regulatory risk is based on the assumption that as climate change continues to impact the world, the vulnerability of suppliers and the raw materials needed for manufacturing will decrease. a. True b. False Ans: False Learning Objective: 8.8 Cognitive Domain: Knowledge Answer Location: The effects of climate change on the firm Question Type: TF 40. The firm’s carbon footprint is based on the total amount of GHG emissions that are a direct result of the firm’s operations. a. True b. False Ans: True Learning Objective 8.8 Cognitive Domain: Knowledge Answer Location: A firm’s carbon footprint Question Type: TF

Stanwick, Understanding Business Ethics, 3e Instructor Resource Essay Questions 41. In a short essay, explain the concept of the Tragedy of the Commons.

Ans: The underlying belief of the tragedy of the commons is that free access with unrestricted use of any resource that is finite will ultimately ruin the resource through overexploitation. From a natural environment context, the tragedy of the commons would predict the eventual use of all the natural resources on Earth due to the lack of control over their use.

Learning Objective: 8.1 Cognitive Domain: Analysis Answer Location: The tragedy of the Commons Question Type: ESS 42. In a short essay, discuss the strategic focus of (a) Ecoefficiency, (b) Beyond Compliance Leadership, (c) Ecobranding, (d) Environmental Cost Leadership.

Ans: a. Ecoefficiency – in this strategic focus, productivity is the key element for companies to gain an environmentally competitive advantage b. Beyond Compliance Leadership – in this strategic focus, firms are able to provide ―proof‖ to their stakeholders pertaining to their commitment to the natural environment c. Ecobranding – in this strategic focus, firms use their proactive environmental commitments in an attempt to differentiate their products and service for their customers. Ecobranding allows potential customers to consider the natural environment when they are purchasing products and services. d. Environmental Cost Leadership – in this strategic focus, firms that compete on low price can offset their environmental investments. Firms that use this strategy embrace proactive environmental ideals as long as they can help reduce the overall costs of production.

Learning Objective: 8.2 Cognitive Domain: Analysis Answer Location: Natural Environment as a competituive advantage Question Type: ESS 43. In a short essay outline how a can transform itself through adopting Sustainable Strategies Ans: The transformation of a firm to integrate sustainable strategies is a six-stage process.

The stages are: 1 Develop the strategy-envisioning a new future, 2 translate the strategy-the need for new analytic frameworks, 3 align the organization-developing and deploying the sustainability strategy, 4 plan operations-implementing the sustainability plan, 5 monitor and learn-evaluating sustainability performance, and 6 test and adapt-re-envisioning sustainability.

Learning Objective: 8.3 Cognitive Domain: Analysis Answer Location: What does it mean to be green?

Question Type: ESS

Stanwick, Understanding Business Ethics, 3e Instructor Resource 44. In a short essay, list at least seven of the 13 areas in which environmentally proactive firms should address environmental issues.

Ans: a. Release an environmental policy that is available for all stakeholders to review b. Establish specific targets to be measured for annual environmental performance benchmarks c. Publish an annual environmental report d. Implement an environmental management system e. Use environmental criteria when making purchasing decisions f. Provide employees with environmental training g. Make the employees accountable and responsible for the overall environmental performance of the company h. Use life cycle analysis that evaluates the environmental impact of a product from its creation until it is no longer in use i. Have top-level managers who understand and attempt to address the issues of sustainable development j. Implement a system to try to reduce the level of fossil fuel use k. Implement a system to reduce toxic chemical use l. Implement a system to reduce the use of unsustainable products m. Ensure that the same environmental standards are consistent globally Learning Objective: 8.3 Cognitive Domain: Analysis Answer Location: Voluntary environmental compliance Question Type: ESS 45. In a short essay, list and discuss the five types of risks a firm encounters due to the impact of climate change.

Ans: a. Regulatory risk – based on the belief that as the climate change continues to impact the global environment, government from around the world adapt stronger and more rigid regulations to control GHG emissions b. Supply chain risk – based on the assumption that as climate change continues to impact the world, the vulnerability of suppliers and the raw materials needed for manufacturing will decrease c. Litigation risk – based on the premise that firms with high GHG emission levels will be threatened more frequently with lawsuits similar to those established in the tobacco, pharmaceutical and asbestos industries d. Reputational risk – related to how the customer perceives the firm. If the reputation and image of the firm is negative due to its high level of GHG emissions, it could reduce or eliminate the firm’s competitive advantage in the market place. e. Physical risk – relates to how changes in climate result in weather disasters such as droughts, floods, storms and rising sea levels Learning Objective: 8.8 Cognitive Domain: Analysis Answer Location: The effects of Climate Change on the firm Question Type: ESS

Stanwick, Understanding Business Ethics, 3e Instructor Resource

Chapter 9: Ethics and Information Technology Test Bank Multiple Choice 1. In the opening case, the hacking into Sony Pictures databases was instigated by a group from ______. a. FBI b. Sony insiders c. North Korea d. Anonymous Ans: c Learning Objective: 9.4 Cognitive Domain: Application Answer Location: The Interview: Two Big Thumbs Down From North Korea Question Type: MC 2. In the opening case, on what date did Sony Pictures announce that ―The Interview‖ would be available to view on national cable and satellite systems ______. a. December, 17 2014 b. December, 19 2014 c. January 1, 2015 d. February 5, 2015 Ans: c Learning Objective: 9.4 Cognitive Domain: Application Answer Location: The Interview: Two Big Thumbs Down From North Korea Question Type: MC 3. Based on the results of the American Management Association/ePolicy Institute Survey on electronic monitoring and surveillance, companies reported that they had dismissed ______of workers for misusing the Internet. a. 9% b. 30% c. 48% d. 73% Ans: b Learning Objective: 9.2 Cognitive Domain: Comprehension Answer Location: Why Are Information Technology Ethical Issues Important?

Question Type: MC 4. Based on the results of the American Management Association/ePolicy Institute Survey on electronic monitoring and surveillance, what percentage of companies notified their employees that they were monitoring phone use? a. 7% b. 16%

Stanwick, Understanding Business Ethics, 3e Instructor Resource c. 73% d. 84% Ans: d Learning Objective: 9.2 Cognitive Domain: Comprehension Answer Location: Why Are Information Technology Ethical Issues Important?

Question Type: MC 5 In Gentile and Svloka’s research, what is not a policy area identified for information technology activities? a. Data policy b. Financial performance policy c. Workers’ rights d. Competitiveness Ans: b Learning Objective: 9.3 Cognitive Domain: Comprehension Answer Location: Table 9.1 Question Type: MC 6. Which of the following is NOT a question that managers should ask of themselves before they collect, store, and release potentially private information? a. What is the nature of the data? b. Who should have access to the information? c. Who is responsible for screening potential users to ensure they have a valid reason to request access to the information? d. What is the financial value of the data being collected?

Ans: d Learning Objective: 9.3 Cognitive Domain: Comprehension Answer Location: Management Issues Question Type: MC 7. An effective data policy needs to address issues of all of the following except a. Privacy b. Accuracy c. Ownership d. Profitability Ans: d Learning Objective: 9.3 Cognitive Domain: Comprehension Answer Location: Table 9.1 Question Type: MC 8. An effective workers’ rights policy needs to address issues of all of the following except a. Type of monitoring taking place

Stanwick, Understanding Business Ethics, 3e Instructor Resource b. Type of information being collected c. Accuracy of information being collected d. Identification of what information is private or public Ans: c Learning Objective: 9.3 Cognitive Domain: Comprehension Answer Location: Policy Areas That Can Address Information Technology Management Issues Question Type: MC 9. All of the following are mentioned in the text as types of critical analysis to assist managers with their decision-making process except a. Stakeholder analysis b. Rights-based analysis c. Government-based analysis d. Duty-based analysis Ans: c Learning Objective: 9.1 Cognitive Domain: Comprehension Answer Location: The Next Step: Critical Analysis Question Type: MC 10. The ______________ is used to help managers determine a decision that will produce the greatest good to the greatest number of stakeholders. a. Stakeholder analysis b. Utilitarian goal-based analysis c. Government-based analysis d. Duty-based analysis Ans: b Learning Objective: 9.1 Cognitive Domain: Comprehension Answer Location: The Next Step: Critical Analysis Question Type: MC

11. Which of the following types of analysis focuses on an evaluation of whether the options available to the manager impact any of the fundamental ethical duties of the manager? a. Stakeholder analysis b. Utilitarian goal-based analysis c. Government-based analysis d. Duty-based analysis Ans: d Learning Objective: 9.1 Cognitive Domain: Comprehension Answer Location: The Next Step: Critical Analysis Question Type: MC

Stanwick, Understanding Business Ethics, 3e Instructor Resource 12. Under the ______________, employers can consider individual’s e-mails corporate property. a. Foreign Corrupt Practices Act b. Sydney Principles c. Kyoto Treaty d. Electronic Communications Privacy Act Ans: d Learning Objective: 9.3 Cognitive Domain: Comprehension Answer Location: Privacy of Employees Question Type: MC 13. Which of the following is NOT one of the six questions that help determine whether an invasion of privacy is justifiable by an employer? a. For what purpose is the undocumented personal knowledge sought? b. Is this purpose a profitable and important one? c. Is the knowledge sought through invasion of privacy relevant to its justifying purpose? d. Is invasion of privacy the only or the least offensive means of obtaining the knowledge?

Ans: b Learning Objective: 9.3 Cognitive Domain: Comprehension Answer Location: Types of Computer Monitoring Question Type: MC 1$. Which of the following is NOT one of the benefits of using e-mail? a. Cost b. Efficiency c. Documentation d. Information overload Ans: d Learning Objective: 9.3 Cognitive Domain: Comprehension Answer Location: Table 9.2 Question Type: MC 16. ________________ is one of the costs of using e-mail. a. Frivolous use b. Access to resources c. Monitoring d. Data protection Ans: a Learning Objective: 9.3 Cognitive Domain: Comprehension Answer Location: Table 9.2 Question Type: MC

Stanwick, Understanding Business Ethics, 3e Instructor Resource 17. ______________ sell laptops that use fingerprint readers as part of their security systems. a. Aladdin Knowledge Systems b. Biometric Security Systems c. Lenovo and Fujitsu d. Privacy Rights Clearinghouse Ans: c Learning Objective: 9.4 Cognitive Domain: Comprehension Answer Location: Types of Computer Monitoring Question Type: MC

18. What percentage of managers considered the right of employees to send and receive personal e-mails during working hours seriously unethical? a. 39% b. 50% c. 56% d. 58% Ans: b Learning Objective: 9.2 Cognitive Domain: Comprehension Answer Location: 9 Question Type: MC 19. ___________________ allows unannounced monitoring of business–related calls. a. The California Public Utilities Commission b. The Privacy Rights Clearinghouse c. The Electronics Communications Privacy Act d: Federal Trades Commission Ans: c Learning Objective: 9.3 Cognitive Domain: Comprehension Answer Location: Privacy of Customers Question Type: MC

20. One of the most common ways of monitoring customers and potential customers is by using ____________. a. Computer viruses b. Spyware c. Cookies d. Hardware Ans: c Learning Objective: 9.3 Cognitive Domain: Comprehension Answer Location: Privacy of customers

Stanwick, Understanding Business Ethics, 3e Instructor Resource Question Type: MC 21. Which of the following is not one of the consumer protection tools recommended by the Federal Trade Commission? a. Protect your private information b. Pay attention c. Use your common sense d. Share passwords Ans: d Learning Objective: 9.3 Cognitive Domain: Comprehension Answer Location: Table 9.4 Question Type: MC 22. Business analytics is a key tool to analyze big data so that firms can customize their strategic focus on customers. What is not a big risk in data analysis? a. Loss of anonymity b. Data patterns versus reality c. Discrimination-based customer segmentation d. Growth in market share and sales Ans: d Learning Objective: 9.3 Cognitive Domain: Comprehension Answer Location: The Ethical Issues Related to Big Data Question Type: MC 23. All financial institutions, according to the Federal Trade Commission Safeguards Rule, must develop a security plan that does all of the following except a. Designates one or more employees to coordinate the safeguard efforts b. Partner with the Federal Trade Commission to access confidential data when needed c. Designs and implements a safeguards program and regularly monitors and tests it d. Selects appropriate service providers and makes them implement safeguards Ans: b Learning Objective: 9.3 Cognitive Domain: Comprehension Answer Location: The Ethical Issues Relating to Big Data Question Type: MC 24. Bush, Venables, and Bush identified a series of ethical issues facing internet usage. Which of the following is not one? a. Privacy b. Pornography c. Security transactions d. Validity Ans: d Learning Objective: 9.4

Stanwick, Understanding Business Ethics, 3e Instructor Resource Cognitive Domain: Comprehension Answer Location: The Challenge of Technology Question Type: MC 25. ________________ is a common attitude toward the illegal download of music. a. It benefits artists b. It is on the Internet, so I can copy it for free c. It is my right d. Intellectual property rights are not relevant Ans: B Learning Objective: 9.4 Cognitive Domain: Comprehension Answer Location: The Challenge of Technology Question Type: MC 26. Which of the following is not a guideline dealing with information security compliance? a. Maintain stable information security controls even when business changes occur b. Design information systems to permit later auditing c. Hold third party service providers to high standards d. Monitor personnel to prevent information misuse or loss Ans: a Learning Objective: 9.4 Cognitive Domain: Comprehension Answer Location: The Role of Government Regulations Question Type: MC 27. _____________ has two treaties that protect the copyrights of intellectual property worldwide on properties such as books, songs, films, and pirated CDs and DVDs. a. The European Union’s Electronic Commerce Directive b. Millennium Development Summit c. The World Intellectual Property Organization d. USA Patriot Act Ans: c Learning Objective: 9.4 Cognitive Domain: Comprehension Answer Location: The Role of Government Regulations Question Type: :MC 28. ____________ is the use of e-mail to try to mimic a legal, legitimate company to access personal or financial information from individuals. a. Phishing b. Skyping c. Snaring d. Surfing Ans: a Learning Objective: 9.5

Stanwick, Understanding Business Ethics, 3e Instructor Resource Cognitive Domain: Comprehension Answer Location: Technology-Based Fraud Question Type: MC 29. An initiative by the Federal Bureau of Investigation, in conjunction with other government agencies, called ______________ was developed to help target and convict cybercriminals. a. Operation Web Collect b. Operation Web Find c. Operation Web Snare d. Operation Web Catch Ans: c Learning Objective: 9.5 Cognitive Domain: Comprehension Answer Location: Technology-Based Fraud Question Type: MC 30. Operation Web Snare was an initiative by the Federal Bureau of Investigation to help target and convict cybercriminals. In 150 investigations the value of money lost by the victims was ______. a. $21m b. $210m c. $870,000 d. $87m Ans: b Learning Objective: 9.5 Cognitive Domain: Knowledge Answer Location: Technology-Based Fraud Question Type: MC 31. _____________ is the use of computer technology to commit terrorism crimes. a. Virtualterrorism b. Techterrorism c. Cyberterrorism d. Retroterrorism Ans: c Learning Objective: 9.5 Cognitive Domain: Comprehension Answer Location: Internet Attacks Question Type: MC 32. ______ is software that can be loaded onto a computer so an outside party can monitor the computer operations without the consent of the computer user. a. Hardware b. Skyware c. Spyware d. Cyberware

Stanwick, Understanding Business Ethics, 3e Instructor Resource Ans: c Learning Objective: 9.5 Cognitive Domain: Comprehension Answer Location: Internet Attacks Question Type: MC 33. In direct response to the terrorist attacks on September 11, 2001, President George W. Bush signed into law the ________________. a. Robinson-Patman Act b. USA PATRIOT Act c. Sarbanes-Oxley Act d. Sherman Antitrust Act Ans: b Learning Objective: 9.6 Cognitive Domain: Knowledge Answer Location: The USA Patriot Act Question Type: MC 34. One of the provisions of the USA PATRIOT Act is ensure that every designated firm creates the position of compliance officer. Which of the items below is not one of the key duties? a. Approve a written antimoney laundering program b. Written policies, procedures, and controls to prevent and detect money laundering c. Administering the firm’s computer monitoring program d. An ongoing employee training program Ans: c Learning Objective: 9.6 Cognitive Domain: Knowledge Answer Location: The USA Patriot Act Question Type: MC True/False 35. In The Interview hacking case, North Korea instigated a computer outage on Sony for 10 hours on December 22, 2014. a. True b. False Ans: b Learning Objective: 9.3 Cognitive Domain: Comprehension Answer Location: The Interview: Two Big Thumbs Down From North Korea Question Type: TF 36. The American Management Association/ePolicy Institute survey examined the relationship between ethics and technology. One finding stated that 45% of firms monitored the time spent and numbers called on the phone. a. True b. False

Stanwick, Understanding Business Ethics, 3e Instructor Resource Ans: b Learning Objective: 9.1/9.4 Cognitive Domain: Knowledge Answer Location: Why Are Information Technology Ethical Issues Important?

Question Type: TF 37. As access and accumulation of information become easier within a firm, so does the probability that information becomes more accurate. a. True b. False Ans: b Learning Objective: 9.1 Cognitive Domain: Knowledge Answer Location: Management Issues and Policy areas for Information Technology Question Type: TF 38. An effective data policy needs to address issues of privacy, control, accuracy, and security. a. True b. False Ans: b Learning Objective: 9.1 Cognitive Domain: Knowledge Answer Location: Table 9.1 Question Type: TF 39. Issues that need to be addressed in the workers’ rights policy include the type of monitoring that can take place within the firm, the type of information that may be collected pertaining to the employee, and the identification of what information would be considered private versus public. a. True b. False Ans: a Learning Objective: 9.2 Cognitive Domain: Knowledge Answer Location: Policy Areas That Can Address Information Technology Management Issues Question Type: TF 40. Stakeholder analysis treats all stakeholders equally in the critical analysis of information technology management issues. a. True b. False Ans: a Learning Objective: 9.1 Cognitive Domain: Knowledge Answer Location: Stakeholder Analysis Question Type: TF

Stanwick, Understanding Business Ethics, 3e Instructor Resource 41. In general, most employees can assume that their e-mail messages are not private. a. True b. False Ans: a Learning Objective: 9.2 Cognitive Domain: Knowledge Answer Location: Privacy of Employees Question Type: TF 42. The Northumberland National Park Authority Information technology policies are established to optimize managers’ power over employees and their use of IT equipment and tools. a. True b. False Ans: b Learning Objective: 9.2 Cognitive Domain: Knowledge Answer Location: Privacy of Employees Question Type: TF 43. Information overload is a positive benefit of e-mail communication channels in organizations. a. True b. False Ans: b Learning Objective: 9.2 Cognitive Domain: Knowledge Answer Location: Privacy of Employees Question Type: TF 44. The Privacy Rights Clearinghouse suggests that privacy of personal calls made at work may be increased through using cell phones, pay phones, or separate phones that employers have designated for personal calls. a. True b. False Ans: b Learning Objective: 9.3 Cognitive Domain: Knowledge Answer Location: Privacy of Customers Question Type: TF 45. Biometric Security Systems identifies users based on a combination of PINS and passwords. a. True b. False Ans: b Learning Objective: 9.4

Stanwick, Understanding Business Ethics, 3e Instructor Resource Cognitive Domain: Knowledge Answer Location: Types of Computer Monitoring Question Type: TF 46. Cookies are a form of monitoring customers and potential customers. a. True b. False Ans: b Learning Objective: 9.3 Cognitive Domain: Knowledge Answer Location: Privacy of Customers Question Type: TF 47. The FTC Safeguards Rule applies only to firms listed on the NYSE. a. True b. False Ans: b Learning Objective: 9.3 Cognitive Domain: Knowledge Answer Location: Discrimination-Based Customer Segmentation Question Type: TF 48. Downloading of music and movies has become a large problem as more and more Internet users develop attitudes that if the music is there, it is for entertainment purposes and it is free. a. True b. False Ans: a Learning Objective: 9.4 Cognitive Domain: Knowledge Answer Location: Intellectual Property Question Type: TF 49. The European Union’s Electronic Commerce Directive has two treaties that protect the copyrights of intellectual property worldwide on properties such as books, songs, films, and pirated CDs and DVDs. a. True b. False Ans: b Learning Objective: 9.4 Cognitive Domain: Comprehension Answer Location: The Role of Government Regulations Question Type: TF 50. The ultimate goal of phishing is to acquire personal information pertaining to an individual that could be used in the future for illegal activities. a. True

Stanwick, Understanding Business Ethics, 3e Instructor Resource b. False Ans: a Learning Objective: 9.4 Cognitive Domain: Knowledge or Comprehension Answer Location: Technology-Based Fraud Question Type: TF 51. Software that can be loaded onto a computer so the computer operations can be monitored by an outside party without the consent of the computer user is called spyware. a. True b. False Ans: a Learning Objective: 9.4 Cognitive Domain: Knowledge or Comprehension Answer Location: Technology-Based Fraud Question Type: TF Essay 52. In a short essay, list and discuss any three of the five issues that managers have to consider when deriving an ethical policy for information technology.

Ans: Privacy Managers are able to have unlimited access to information that could be considered private and personal. The ability to capture information at great speeds and permanently store it allows managers permanent access to private information pertaining to various stakeholders including employees, customers, suppliers, and even special interest groups. Therefore, managers can have access to the information history of any person for which data have been collected by the firm.

To protect the privacy of the individuals for which information has been collected, managers need to ask certain questions of themselves before they collect, store, and release potentially private information: What is the nature of the data? If the information were known to the public, what would be the net effect on the individual? Who should have access to this information?

Who is responsible for screening potential users to ensure they have a valid reason to request access to the information?

Ownership The collection of information raises the question of property rights. Ownership is based on the answer to the question, ―Who has the legal ownership of the information?‖ As a result, identifying the legitimate owner resolves the ambiguity of who is the ultimate decision maker pertaining to the information. From a privacy perspective, the individual has ownership of his or her own personal information. From a property rights perspective, a firm has to verify whether the owner or some other party is the legal owner of information that has been created and captured during the operations of the firm.

Control Information technology has allowed managers to implement many different types of control mechanisms through capturing, tracking, and monitoring information flows inside and outside the firm. Information control has moved beyond simple inventory and asset tracking to include

Stanwick, Understanding Business Ethics, 3e Instructor Resource the ability to track the movements, actions, and communications of each employee within the firm.

Accuracy As access and accumulation of information become easier within a firm, so does the probability that some of the information may be inaccurate. As a result, managers must be sure that the source of the information has generated accurate data as well as interpreted the data in an accurate manner.

Security As availability and the dissemination of information become easier, so do the security issues that are related to data become more challenging. The manager must ensure that comprehensive steps have been implemented to guarantee that data collected by the firm are protected diligently so there are no negative impacts on stakeholders based on the content of the information.

Learning Objective: 9.2 Cognitive Domain: Analysis Answer Location: Management Issues and Policy Areas for Information Technology Question Type: ESS 53.In a short essay discuss how the use of e-mail impacts on the privacy of employees.

Ans: Electronic Mail (E-Mail) In general, most employees can assume that e-mail messages are not private. The computer systems are owned by the company, and thus, employers are allowed to monitor the messages being sent through the computer systems. Under the 1986 Electronic Communications Privacy Act, employers can consider individuals’ e-mail corporate property Is any e-mail actually private? And just how far can you go without being unethical when it comes to others’ e-mail? Can e-mail be used against employees? The answer to this last question is yes. In addition, employees need to be reminded that their e-mail accounts and individual email messages really aren’t private. Many companies have turned to monitoring the e mail of their employees Misconceptions Pertaining to E-Mail Privacy Why are there so many misconceptions about the level of privacy of e-mail? The first could be the lack of experience and understanding by the e-mail user. The user may not understand or realize that e-mail can be retrieved even after it has been deleted from the hard drive. The second reason could be a vague or nonexistent policy pertaining to e-mail from the firm.

Utilitarian Goal-Based Analysis Pertaining to the Use of E-Mail An employee–employer stakeholder cost-benefit analysis can be used to determine whether the benefits of using e-mail outweigh the financial and ethical costs.

Benefits: Cost benefits, efficiency, documentation, access to resources, monitoring.

Costs: Offensive communications—e mail may relay inappropriate and/or offensive behaviour, frivolous use, information overload Learning Objective: 9.2 Cognitive Domain: Analysis Answer Location: Privacy of Employees Question Type: ESS

Stanwick, Understanding Business Ethics, 3e Instructor Resource 54. In a short essay, describe the World Intellectual Property Organization and the European Union’s Electronic Commerce Directive in the context of the role of government regulations.

Ans: a. The World Intellectual Property Organization—WIPO has two treaties that protect the copyrights of intellectual property worldwide on properties such as books, songs, films, and pirated CDs and DVDs. The Digital Millennium Copyright Act, passed in 1998 by the U.S. Congress was based on one of the WIPO treaties. b. The European Union’s Electronic Commerce Directive—this directive forced companies to abide by the information technology laws of not only their country of origin but also of a total of 15 countries.

Learning Objective: 9.4 Cognitive Domain: Analysis Answer Location: The Role of Government Regulations Question Type: ESS 55. In a short essay, list four of the six measures that can be used to protect businesses from cyberterrorism.

Ans: a. An effective risk assessment b. A comprehensive review of the company’s policies and procedures related to security c. A sound business recovery plan described in the company’s policies and procedures d. Development of an incident response plan e. Education for key managers and employees, including training and seminars f. Insurance to provide coverage if an attack occurs Learning Objective: 9.5 Cognitive Domain: Analysis Answer Location: Internet Attacks Question Type: ESS 56. In a short essay, explain the USA PATRIOT Act. Ans: The act provides expanded government authority over matters such as electronic communications and the use of computer and monetary transactions. Under the current conditions of the Act, government officials are allowed to request and monitor electronic communications that they believe may have a terrorist link. They do not have to have evidence of terrorist activity to make this request. As a result, all electronic communications are now considered available for government inspection. The USA PATRIOT Act also has a broad definition of which types of companies are included within the act. The act is designed to monitor the activities of financial institutions; however, the act considers many types of businesses that are involved in financial transactions.

Learning Objective: 9.6 Cognitive Domain: Analysis Answer Location: The USA Patriot Act Question Type: ESS

Chapter 10: Ethics and Information Technology

Stanwick, Understanding Business Ethics, 3e Instructor Resource

Test Bank Multiple Choice Questions 1. In the opening vignette the app supporting the Pepsi AMP drink was described as a. A little cultural exchange b. A roadmap to success with your favorite kinds of women c. Amp up before you score d. Cutting edge Ans: b Learning Objective: 10.2 Cognitive Domain: Application Answer Location: There Is Now an App for Chauvinism Question Type: MC 2. Which of the following is not one of the original four Ps in the marketing mix as devised by McCarthy in 1960? a. Place b. Price c. Pride d. Promotion Ans: c Learning Objective: 10.2 Cognitive Domain: Comprehension Answer Location: Alternative Views of the Foundation of Marketing and Advertising Question Type: MC 3. _________ is the cornerstone of any marketing campaign. a. Lust b. Envy c. Pride d. Greed Ans: d Learning Objective: 10.2 Cognitive Domain: Comprehension Answer Location: Alternative Views of the Foundation of Marketing and Advertising Question Type: MC 4. Green harvesting firms initially focused on__________________. a. Short term cost savings b. More expensive manufacturing processes c. Changes in product design d. Authentication of green claims Ans: a Learning Objective: 10.1 Cognitive Domain: Comprehension Answer Location: Green Marketing

Stanwick, Understanding Business Ethics, 3e Instructor Resource Question Type: MC 5. ______________ are consumers who understand the issues related to the natural environment but are not willing to pay more for proactive environmental products. a. Greenback greens b. Sprouts c. True blue greens d. Basic browns Ans: b Learning Objective: 10.1 Cognitive Domain: Comprehension Answer Location: Green Marketing Question Type: MC 6. ____________are more willing than the general public is to purchase green products. a. Greenback greens b. Grousers c. True blue greens d. Basic browns Ans. a Learning Objective: 10.1 Cognitive Domain: Comprehension Answer Location: Green Marketing Question Type: MC 7. All of the following are categories described by the critical factors of compromise and confidence that determine the level of effectiveness in green products except a. Win-win purchases b. Win-lose purchases c. Feelgood purchases d. Why bother? purchases Ans: b Learning Objective: 10.1 Cognitive Domain: Comprehension Answer Location: Green Marketing Question Type: 8 An example of a why bother? purchase is ______. a. Nondisposable diapers b. Body Shop purchases c. Unleaded gasoline d. Recycled nonchlorine-bleached paper products Ans: a Learning Objective: 10.1 Cognitive Domain: Comprehension Answer Location: Green Marketing

Stanwick, Understanding Business Ethics, 3e Instructor Resource Question Type: MC 9. ______________ purchases are those products in which the consumer must accept a high level of compromise but has little confidence that their purchase will have material environmental impact. a. Why bother? b. Feelgood c. Why not? d. Win-lose Ans: a Learning Objective: 10.1 Cognitive Domain: Comprehension Answer Location: Green Marketing Question Type: MC 10. The _____________ level of commitment focuses on the marketing and production managers for the firm’s strategic focus related to environmental issues. a. Quasistrategic b. Strategic c. Tactical d. Virtual Ans: c Learning Objective: 10.1 Cognitive Domain: Comprehension Answer Location: Enviro-Preneurial Marketing Strategies Question Type: MC 11. The ______________ level of commitment refers to the commitment by the top level executives of the firm to develop and implement a proactive environmental marketing strategy. a. Quasistrategic b. Strategic c. Tactical d. Virtual Ans: b Learning Objective: 10.1 Cognitive Domain: Comprehension Answer Location: Enviro-Preneurial Marketing Strategies Question Type: MC 12 Which is not one of the ethical issues that firms need to be aware of when using social media? a. Unreported endorsements b Compromising consumer privacy c. Improper anonymity d. Phishing Ans: d Learning Objective: 10.1

Stanwick, Understanding Business Ethics, 3e Instructor Resource Cognitive Domain: Comprehension Answer Location: Ethical Issues and Social Media Question Type: MC 13. The Steenhaut and Van Kenhove research into ethical consumer behavior was based on __________________. a. Unreported endorsements b Giving too much change at the checkout in a store c. Compromising consumer privacy d. Improper anonymity Ans: b Learning Objective: 10.1 Cognitive Domain: Comprehension Answer Location: Ethical Consumer Behavior Question Type: MC 14. ______________ focuses on the relationship between the customers and the firm from a commitment perspective. a. Cultural marketing b. Relationship marketing c. Constructive marketing d. Social Marketing Ans: b Learning Objective: 10.2 Cognitive Domain: Comprehension Answer Location: Ethical Consumer Behavior Question Type: MC 15. Which is not one of the three stages of the privacy issues related to consumer information? a. How the information is collected b. How the firm promotes the product c. How the information is used d. How the firm controls the information Ans: b Learning Objective: 10.2 Cognitive Domain: Comprehension Answer Location: Relationship Marketing and Privacy Question Type: MC 16. There are six steps in building a two-way relationship between the firm and the customer.

Which is not one? a. Developing a database b. Analyzing the consumer data c. Targeting the customers d. Financial incentives for the customers Ans: d

Stanwick, Understanding Business Ethics, 3e Instructor Resource Learning Objective: 10.2 Cognitive Domain: Comprehension Answer Location: Relationship Marketing and Privacy Question Type: MC 1. A(n) ______________ can be defined as ―an attempt by one or more parties to achieve certain objectives by urging individual consumers to refrain from making selected purchases in the marketplace.‖ a. Consumer objection b. Consumer boycott c. Consumer enhancement d. Consumer convergence Ans b Learning Objective: 10.3 Cognitive Domain: Comprehension Answer Location: The Role of Consumer Boycotts Question Type: MC 18. Which of the following is NOT one of the four factors that are able to predict whether a consumer would participate in a boycott? a. Desire to make a difference b. Scope of self-enhancement c. Counterarguments that inhibit boycotting d. Value system of the boycotter Ans: d Learning Objective: 10.3 Cognitive Domain: Comprehension Answer Location: The Role of Consumer Boycotts Question Type: MC 19. The _______________ refers to the intrinsic benefits that boycotting can create for the individual consumer. a. Desire to make a difference b. Scope of self-enhancement c. Counterarguments that inhibit boycotting d. Cost to the boycotter of constrained consumption Ans: b Learning Objective: 10.3 Cognitive Domain: Comprehension Answer Location: The Role of Consumer Boycotts Question Type: MC 20. A negative consequence of boycotting a product made in a sweatshop may be that___________________. a. The factory workers may be fired b. Customers may perceive the ―free rider‖ benefits of supporting the boycott

Stanwick, Understanding Business Ethics, 3e Instructor Resource c. Customers increase their level of social and personal self-esteem d. Consumers feel better about themselves Ans: a Learning Objective: 10.3 Cognitive Domain: Comprehension Answer Location: Counterarguments That Inhibit Boycotting Question Type: MC 21. The cause of the Johnson and Johnson Tylenol contamination case was______________. a. Faulty manufacturing processes b. Contaminated raw materials c. Injection of cyanide into capsules d. Customers taking incorrect doses Ans: c Learning Objective: 10.4 Cognitive Domain: Comprehension Answer Location The Ethical Challenge of Product Recalls Question Type: MC 22. Which is not a reason why a product is withdrawn from the marketplace according to the text? a. A design flaw in the product b. Unfair competition c. Accidental contamination of the product d. Misuse of the product by consumers Ans: b Learning Objective: 10.4 Cognitive Domain: Comprehension Answer Location The Reasons for Recalls Question Type: MC 23. All of the following are mentioned in the texts as steps of decisions that are made by management within the firm during a product recall EXCEPT: a. policy and planning b. product development c. green marketing strategies d. logistics/information systems Ans A Learning Objective: 10.5 Cognitive Domain: Comprehension Answer Location: the steps of a recall Question Type: MC 24. In which of the following stages of a product recall process does management set the tone for the recall and establish a response team to determine the scale and scope of a recall? a. Policy and planning

Stanwick, Understanding Business Ethics, 3e Instructor Resource b. Product development c. Green marketing strategies d. Logistics/information systems Ans: a Learning Objective: 10.5 Cognitive Domain: Comprehension Answer Location: The Steps of a Recall Question Type: MC 25. A traceability system for the product is part of the ____________________step of a recall. a. Product development b. Communications c. Logistics and information systems d. Policy and planning Ans: c Learning Objective: 10.5 Cognitive Domain: Comprehension Answer Location: The Steps of a Recall Question Type: MC 26. Which is not one of the financial costs of a recall? a. Communication costs b. Engineering costs c. Marketing costs d. Legal costs Ans: c Learning Objective: 10.5 Cognitive Domain: Comprehension Answer Location: Financial Costs of a Recall Question Type: MC 27. During the 2002 hurricane in Baton Rouge, Louisiana, what was the opportunistic price of the flashlight? a. $4.97 b. $7.99 c. $11.98 d. $14.97 Ans: c Learning Objective: 10.7 Cognitive Domain: Comprehension Answer Location: The Ethics of Fair Pricing Question Type: MC 28. _________________can ensure the long-term relationship with the customer. a. A preferred vendor status b. A paid business lunch

Stanwick, Understanding Business Ethics, 3e Instructor Resource c. Accepting a gift d. Accepting entertainment Ans: a Learning Objective: 10.7 Cognitive Domain: Comprehension Answer Location: The Ethics of Purchasing and Sales Question Type: MC 29. ______________ is based on who has the bargaining power between the purchaser and the supplier. a. Intercultural power b. Interorganizational power c. Interorganizational relationships d. Interpersonal relationships Ans: b Learning Objective: 10.7 Cognitive Domain: Comprehension Answer Location: The Ethics of Purchasing and Sales Question Type: MC 30. ______________ concern(s) the long-term focus of the purchasing firms and the level of satisfaction between the purchaser and supplier. a. Intercultural power b. Interorganizational power c. Interorganizational relationships d. Interpersonal relationships Ans: c Learning Objective: 10.7 Cognitive Domain: Comprehension Answer Location: The Ethics of Purchasing and Sales Question Type: MC 31. Which is not one of the processes that determines the level of trust in interpersonal relationships? a. Calculative process b. Prediction process c. Intentionality process d. Social ties Ans: d Learning Objective: 10.7 Cognitive Domain: Comprehension Answer Location: The Ethics of Purchasing and Sales Question Type: MC 32. All of the following are examples of false and misleading advertising except a. Going out of business sale

Stanwick, Understanding Business Ethics, 3e Instructor Resource b. Bait and switch c. Use of fillers d. All are examples of false and misleading advertising Ans: d Learning Objective: 10.7 Cognitive Domain: Comprehension Answer Location: The Ethics of Purchasing and Sales Question Type: MC 33. In what year did the Joe Camel character ―die‖? a. 1987 b. 1997 c. 2011 d. 2012 Ans: b Learning Objective: 10.8 Cognitive Domain: Comprehension Answer Location: The Eventual Truth in Advertising Question Type: MC 34. Cereals with high sugar and low nutritional values comprised ____% of the food advertising viewed by children in 2007. a. 5% b. 17% c. 55% d. 92.3% Ans: b Learning Objective: 10.7 Cognitive Domain: Comprehension Answer Location: Advertising to Children Question Type: MC 35. The International Obesity Taskforce established the Sydney Principles to protect children against the negative impact of food and beverage advertising. Which is not one? a. Support the rights of children b. No product advertising is allowed in certain venues, including schools and day care facilities c. Protection of the children should be the responsibility of various stakeholders including parents, government, society, and the private sector d. Children’s products to be targeted for Saturday morning when children would be watching their weekly cartoons Ans: d Learning Objective: 10.7 Cognitive Domain: Comprehension Answer Location: The Sydney Principles Question Type: MC

Stanwick, Understanding Business Ethics, 3e Instructor Resource True/False 36. Products in the win-win category are identified as having a clear and transparent environmental benefit with little compromise needed by the customer. a. True b. False Ans: a Learning Objective: 10.1 Cognitive Domain: Knowledge Answer Location: Green Marketing Question Type: TF 37. Examples of why not? Products include nondisposable diapers. a. True b. False Ans: b Learning Objective: 10.1 Cognitive Domain: Knowledge Answer Location: Green Marketing Question Type: TF 38. The tactical level of commitment focuses on the marketing the production managers for its strategic focus related to environmental issues. a. True b. False Ans: a Learning Objective: 10.1 Cognitive Domain: Knowledge Answer Location: Green Marketing Question Type: TF 39. Relationship marketing focuses on the relationship between the customer and the firm from a commitment perspective. a. True b. False Ans: a Learning Objective: 10.2 Cognitive Domain: Knowledge Answer Location: Ethical Consumer Behavior Question Type: TF 40. A consumer boycott can be defined as ―an attempt by one or more parties to achieve certain objectives by urging individual consumers to refrain from making purchases in the marketplace.’ a. True b. False Ans: a

Stanwick, Understanding Business Ethics, 3e Instructor Resource Learning Objective: 10.2 Cognitive Domain: Knowledge Answer Location: The Role of Consumer Boycotts Question Type: TF 41. Boycotts usually occur based on one event that triggers the motivation of the consumers. a. True b. False Ans: a Learning Objective: 10.3 Cognitive Domain: Knowledge Answer Location: The Role of consumer Boycotts Question Type: TF 42. The desire to make a difference refers to the intrinsic benefits that boycotting can create for the individual consumer. a. True b. False Ans: b Learning Objective: 10.3 Cognitive Domain: Knowledge Answer Location: The Role of Consumer Boycotts Question Type: TF 43. A direct cost related to boycotting varies greatly on the amount of use the consumer has for the firm’s product. a. True b. False Ans: a Learning Objective: 10.3 Cognitive Domain: Knowledge Answer Location: The Role of Consumer Boycotts Question Type: TF 44. Interorganizational power is based on who has the bargaining power between the purchaser and the supplier. a. True b. False Ans: a Learning Objective: 10.7 Cognitive Domain: Knowledge Answer Location: Ethics of Purchasing and Sales Question Type: TF 45. Interorganizational relationships refer to the personal dynamics between the purchasing individual and the supplier salesperson.

Stanwick, Understanding Business Ethics, 3e Instructor Resource a. True b. False Ans: b Learning Objective: 10.7 Cognitive Domain: Knowledge Answer Location: Ethics of Purchasing and Sales Question Type: TF 46. Interpersonal relationships concern the long-term focus of the purchasing firms and the level of satisfaction between the purchaser and the supplier. a. True b. False Ans: b Learning Objective: 10.7 Cognitive Domain: Knowledge Answer Location: Ethics of Purchasing and Sales Question Type: TF 47. In 1938, the Federal Trade Commission prohibited the use of any false advertising. a. True b. False Ans: a Learning Objective: 10.7 Cognitive Domain: Knowledge Answer Location: False and Misleading Advertising Question Type: TF 48. The Tobacco Plain Packaging Act was passed by the United States in 2011. a. True b. False Ans: b Learning Objective: 10.8 Cognitive Domain: Knowledge Answer Location: The Eventual Truth in Advertising Question Type: TF 49. The International Obesity Taskforce has established guiding principles in order to attempt to protect children against the negative impact of food and beverage advertising. a. True b. False Ans: a Learning Objective: 10.7 Cognitive Domain: Knowledge Answer Location: Advertising to Children Question Type: TF

Stanwick, Understanding Business Ethics, 3e Instructor Resource 50. In June 2012, The Walt Disney Company announced that all products that will be advertised on the children-based television channels, radio stations, and websites owned by the company must comply with strict nutritional standards. a. True b. False Ans: a Learning Objective: 10.7 Cognitive Domain: Knowledge Answer Location: The Magic of Disney Question Type: TF Essay Questions 51. In a short essay, discuss the following levels of ―enviro-preneurial‖ marketing strategies: (a) functional or tactical, (b) quasistrategic or business level, (c) and strategic level. a. Functional or tactical level—The tactical level of commitment focuses on the marketing and production managers for their strategic focus related to environmental issues. Specific objectives to the functional areas are developed, and metrics are used to measure the success of the environmental programs. b. Quasistrategic—The quasistrategic level focuses on how addressing environmental issues can enhance the competitive advantage of the firm. It is within this level that firms evaluate the effectiveness of their green marketing as compared with their competitors in the marketplace. c. Strategic level—The strategic level refers to commitment by the top level executives of the firm to develop and implement a proactive environmental marketing strategy. The net result is an overall commitment of the firm from both a micro-organizational and macro-organizational perspective.

Learning Objective: 10.1 Cognitive Domain: Answer Location: Green Marketing Question Type: ESS 52. In a short essay, list the seven steps to developing a customer relationship management model.

Ans: 1. The first step is developing a database that is the foundation of the model containing data related to the current customers that the firm is serving. Some examples are the type of transactions made by the consumers, the contact information of the consumers, descriptive information related to the consumers, and the type of response to previous marketing efforts targeted toward the consumers.

2. The second step is analyzing the consumer data used to develop groups or clusters of consumers with similar buying patterns. This clustering allows the firm to categorize the consumers based on the market segment their buying patterns represent. In addition, the analysis of the data can be used to calculate the existing and future profitability of each consumer. By determining the ―lifetime customer value,‖ the firm can be more effective in allocating its resources to target the specific clusters and individual consumers.

Stanwick, Understanding Business Ethics, 3e Instructor Resource 3. The third step in the process is selecting the customers based on targeting the current and future most profitable customers. The customer selection can also be used to ―fire‖ customers whose costs outweigh the potential future benefits of maintaining the customer.

4. The fourth step is targeting the customers. The ultimate goal of relationship marketing is to develop a one-to-one relationship between the individual customer and the firm. Through data analysis, firms can target the specific needs of each individual customer.

5. The fifth step is developing relationship marketing, which can include establishing loyalty or reward programs, customizing advertising and benefits, and customizing customer service.

6. The sixth step is addressing the privacy issues related to the customer relationship management model, for example, feelings of being ―violated‖ to the fear of being harmed by identity theft. Firms must be proactive in being transparent in their privacy policies so they can react quickly to any violations to ensure these relationships continue with the customers.

7. The seventh and final step is metrics. Metrics are used to measure the success of the customer relationship management program, for example, financial performance measurements such as profitability, market share, and revenue growth and should focus on customer-based performance Learning Objective: 10.2 Cognitive Domain: Answer Location: Relationship Marketing and Privacy Question Type: ESS 53. In a short essay, list and discuss the four factors that are found to predict whether a consumer would participate in a boycott.

Ans: 1. The desire to make a difference—based on the belief that participation in the boycott can lead to adjustment in the behavior of the firm. The net result is that the boycott will result in ensuring the message to stop this type of behavior will be sent not only to the target firm but also to other firms in the same industry.

2. The scope of self-enhancement—refers to the intrinsic benefits that boycotting can create for the individual consumer. By boycotting, consumers feel better about themselves because they are ―doing something‖ to change the status quo.

3. Counterarguments that inhibit boycotting—a potential boycotting consumer will evaluate what the potential negative outcomes of participating in the boycott would be.

4. Cost to the boycotter of constrained consumption—a direct cost to boycotting varies greatly on the amount of use the consumer has for the firm’s products. A heavy user of the firm’s products will suffer significantly by not having access to the product.

Learning Objective: 10.3 Cognitive Domain: Answer Location: The Role of Customer Boycotts Question Type: ESS 54. In a short essay, list and discuss the four sequential decisions that are made by managers within a firm when implementing an effective product recall.

Ans: 1. Policy and planning—It is in the policy and planning stage that management sets the tone for the recall. Before the recall takes place, management needs to stress the importance of being ready if a recall is needed. Once a recall has occurred, management needs to establish a response

Stanwick, Understanding Business Ethics, 3e Instructor Resource team to determine the scale and scope of the recall. After a recall has been implemented, a strategy is needed for the reintroduction of the product, if viable.

2. Product development—Before a recall takes place, the firm should have in place safeguards to ensure a recall is not needed. This would include using total quality management techniques and evaluating current products to verify they meet the quality and safety standards established by the firm.

3. Communications—Before the recall starts, the firm must identify who the critical stakeholders are who would be impacted by a recall. During the recall, the firm must quickly communicate what the problems are and what the firm is doing to correct them.

4. Logistics and information systems—Before the recall takes place, the firm must establish a traceability system for the product as well as provide quick notification of product defects.

During the recall, the firm must trace the product and develop a recall-management information and logistics system. After the recall, management must continue to maintain recall logistics after the recall deadline and record the recall notification procedures.

Learning Objective: 10.5 Cognitive Domain: Answer Location: The Steps of a Recall Question Type: ESS 55. In a short essay, list and discuss four of the ways in which false and misleading advertising may take place.

Ans: Choose any four from the following: Going Out of Business Sale When a retailer is having a ―going out of business‖ sale, the retailer will raise the prices of the remaining inventory and then ―discount‖ them so it appears the consumer is able to buy the products at a reduced rate. Or the firm may have continuous ―going out of business‖ sales with no intention of actually going out of business.

Manipulation of Product Size or Weight Firms will attempt to misled consumers by presenting their products in different sizes or weights than expected by consumers. For example, in the United States, consumers expect products to be described in the traditional English measurement system. A manipulation can take place when the product is only described in metric terms, and the opposite occurs in other parts of the world.

Firms can reduce the amount of the product without identifying the change to the consumers.

When the change does occur, the weight of the product could be presented in small type. For example, a ―pound‖ of coffee or bacon is now sold in 12-ounce packages instead of 16-ounce packages. Another example is a product that displays ―bad‖ ingredients as ―only‖ having 120 calories per serving. The customer usually does not realize that the firm has calculated that amount based on a serving size, which is less than the full amount in the package or container.

Use of Fillers In food products, fillers can be used to increase the weight of the product. For example, liquids are added to food products to increase the weight at a very low cost. Another example is restaurants that do not offer free refills but then fill the glasses with ice. The ice costs less than the drink, so the consumer is receiving less actual drink for the price.

Use of Vague or Undefinable Terms Firms will use terms that are too vague or impossible to define to describe their products.

Whether it is healthy, organic, or natural, each firm could have its own interpretation of the

Stanwick, Understanding Business Ethics, 3e Instructor Resource meaning of the term. If there is no legal definition for the term, the firm is allowed to make its own interpretation about how to describe its product. As a result, consumers do not have a realistic method to compare these adjectives from one product to another if different companies have different definitions of the term.

Misleading Pictures or Illustrations A common way to mislead consumers is to have a picture on the product that does not represent the product being sold. These misleading pictures can be on advertisements, websites, catalogs, or the packaging of the product.

Bait and Switch Another common misleading advertising practice is the technique called bait and switch. The consumers are ―baited‖ into coming into the store because of a ―fantastic‖ offer that is usually a high-demand scarce product priced below retail cost. The retailer does not have any intention of selling the product that has been advertised. After the consumer has come into the store, the practice moves from the bait to the switch. The consumer asks for the baited product and is told that they are sold out, but there is another product that would better suit the needs of the customer. The customer is now offered the new more expensive product, and the switch has taken place.

Learning Objective: 10.7 Cognitive Domain: Analysis Answer Location: False and Misleading Advertising Question Type: ESS

Chapter 11: Ethical Issues in the Developing World Test Bank Multiple Choice 1. In the opening case, children were being paid _______ of the standard adult pay rate for doing the same work at HEG Electronics. a. 16% b. 50% c. 70% d. 80% Ans: c Learning Objective: 11.1 Cognitive Domain: Comprehension Answer Location: Samsung Electronics and the Cycle of Child Labor Question Type: MC 2. In the opening, case on what date did Samsung lift the ban on using Shinyang Electronics as a supplier? a. August, 7 2012 b. July 10, 2014 c. July 14, 2014 d. August 5, 2014 Ans: d Learning Objective: 11.1 Cognitive Domain: Comprehension

Stanwick, Understanding Business Ethics, 3e Instructor Resource Answer Location: Samsung Electronics and the Cycle of Child Labor Question Type: MC 3. Which of the following is NOT mentioned in the text as an income category that would be used to describe customers at the base of the pyramid? a. Extreme poverty b. Subsistence c. Low income d. Moderate income Ans: d Learning Objective: 11.1 Cognitive Domain: Comprehension Answer Location: The Bottom of the Pyramid Question Type: MC 4. Consumers who earn under $1 per day are considered to be in which of the following income categories? a. Extreme poverty b. Subsistence c. Low income d. Moderate income Ans: a Learning Objective: 11.1 Cognitive Domain: Comprehension Answer Location: The Bottom of the Pyramid Question Type: MC 5. What is not a strategic focus for firms who concentrate on bottom of the pyramid customers? a. Large volume low profit margins b. Transactions taking place in an informal market c. Long term view of the project d. Products based on normal market conditions Ans: d Learning Objective: 11.2 Cognitive Domain: Comprehension Answer Location: The Bottom of the Pyramid Question Type: MC 6. Which of the following is NOT an ethical issue that can be raised by multinational corporations focusing on bottom of the pyramid (Bop) markets? a. Appropriateness of the products b. Price points established by the firms c. Potential misuse of advertising and promotion d. All selections are ethical issues that can be raised by multinational corporations Ans: d Learning Objective: 11.2

Stanwick, Understanding Business Ethics, 3e Instructor Resource Cognitive Domain: Comprehension Answer Location: The Bottom of the Pyramid Question Type: MC 7. All of the following are key principles in order to be profitable addressing the needs of the customers in the bottom of the pyramid (BOP) except a. Establishing or comingling competitive advantage b. Foreign direct investment into the BOP country c. Leveraging and transferring social embeddedness d. Enhancing mutual values Ans: b Learning Objective: 11.2 Cognitive Domain: Comprehension Answer Location: New Generation Business Strategies for the Bottom of the Pyramid Question Type: MC 8. _________________relates to understanding that pilot studies carry a high level of risk. a. Orchestrating effective experiments b. Managing failure c. Establishing the competitive advantage d. Leveraging and transferring social embeddedness Ans: b Learning Objective: 11.2 Cognitive Domain: Comprehension Answer Location: New Generation Business Strategies for the Bottom of the Pyramid Question Type: MC 9. _______________ can be defined as organizations that have created business models that cater to basic human needs that are not currently being served. a. Traditional entrepreneurship b. Social entrepreneurship c. Financial entrepreneurship d. Unorthodox entrepreneurship Ans: b Learning Objective: 11.3 Cognitive Domain: Comprehension Answer Location: Social Entrepreneurship Question Type: MC 10 Which of the following is NOT one of the three critical attributes in order to be a successful social entrepreneur? a. A specific vision of purpose and goals and objectives of the organization b. A high level of emotional intelligence to make socially conscious decisions c. The ability to use his or her leadership skills to champion the implementation of his or her vision d. The will and motivation to be committed to developing the business

Stanwick, Understanding Business Ethics, 3e Instructor Resource Ans: b Learning Objective: 11.3 Cognitive Domain: Comprehension Answer Location: Social Entrepreneurship Question Type: MC 11. All of the following are types of capital that social entrepreneurs need to focus on in order to succeed in their vision except a. Financial capital b. Cultural capital c. Environmental capital d. Aesthetic capital Ans: b Learning Objective: 11.3 Cognitive Domain: Comprehension Answer Location: Social Entrepreneurship Question Type: MC 12. Elkington and Hartigan identified 10 characteristics of successful social entrepreneurs.

Which of the following is not one? a. Using innovation, resourcefulness, and opportunity b. Not wait until all resources are available to capitalize on the opportunity c. Be a good teacher d. Concentrate on rates of return Ans: D Learning Objective: 11.3 Cognitive Domain: Comprehension Answer Location: Ten Characteristics of Successful Social Entrepreneurs Question Type: MC 13. All of the following are mentioned in the text as characteristics of successful social entrepreneurs EXCEPT: a. Trying to following the constraints of ideology or discipline b. Focusing on how the organization’s mission will be used to create social value c. Using innovation, resourcefulness and opportunity to determine what practical solutions are viable to solve the social problem d. Recognizing everyone has the ability to contribute to the economic and social development of the organization Ans: a Learning Objective: 11.3 Cognitive Domain: Comprehension Answer Location: Ten Characteristics of Successful Social Entrepreneurs Question Type: MC 14. Which of the following is NOT one of the different types of social entrepreneurs based on the proposed typology by Skaher Zahra?

Stanwick, Understanding Business Ethics, 3e Instructor Resource a. Social Bricoleur b. Social Constructionist c. Social Technologist d. Social Engineer Ans: c Learning Objective: 11.4 Cognitive Domain: Comprehension Answer Location: Typology of Social Entrepreneurs Question Type: MC 15. A social entrepreneur who focuses on addressing the social needs of local communities is referred to a(n) ______________. a. Social bricoleur b. Social constructionist c. Social technologist d. Social engineer Ans: A Learning Objective: 11.4 Cognitive Domain: Comprehension Answer Location: Typology of Social Entrepreneurs Question Type: MC 16. An example of a(n) _______________ would be an individual who sets up a relief organization to help individuals who have been affected by a natural disaster. a. Social bricoleur b. Social constructionist c. Social technologist d. Social engineer Ans: A Learning Objective: 11.4 Cognitive Domain: Comprehension Answer Location: Typology of Social Entrepreneurs Question Type: MC 17. An example of a(n) _______________ is Jacqueline Novogratz who established the Acumen Fund in 2001 which the mission to use entrepreneurial approaches to solve global poverty problems. a. Social bricoleur b. Social constructionist c. Social technologist d. Social engineer Ans: b Learning Objective: 11.4 Cognitive Domain: Comprehension Answer Location: Typology of Social Entrepreneurs Question Type: MC

Stanwick, Understanding Business Ethics, 3e Instructor Resource 18. An example of a(n) _______________ is Muhammad Yunus who established the Grameen Bank to set up microloans for poor villagers in Bangladesh. a. Social bricoleur b. Social constructionist c. Social technologist d. Social engineer Ans: D Learning Objective: 11.4 Cognitive Domain: Comprehension Answer Location: Typology of Social Entrepreneurs Question Type: MC 19. ____________ is the organization set up by Yunus to provide education as part of his microfinance initiative in Bangladesh. a. Grameen Veolia b. Grameen Shamogree c. Grameen Shikkha d. Grammen Shakti Ans: c Learning Objective: 11.5 Cognitive Domain: Comprehension Answer Location: Building Social Businesses Question Type: MC 20. All of the following are principles for social business except a. Investors of the organization will only receive a 5% return on their full investment amount b. The business objective of the organization is to address a social problem and not to maximize profitability c. When the investment amount is paid in full to all the investors, the subsequent profits will be invested back into the firm for expansion and improvement opportunities d. The employees of the organization will receive market wages with superior working conditions Ans: a Learning Objective: 11.5 Cognitive Domain: Comprehension Answer Location: Building Social Businesses Question Type: MC 21. _____________ is the process in which small loans are given to entrepreneurial individuals in developing counties in order to develop income that will benefit the individual as well as the local village through poverty reduction. a. Equity finance b. Macro finance c. Debt finance d. Microfinance Ans: d

Stanwick, Understanding Business Ethics, 3e Instructor Resource Learning Objective: 11.5 Cognitive Domain: Comprehension Answer Location: Microfinance Question Type: MC 22. All of the following are unique characteristics of microfinance loans except a. No collateral is needed b. Loans are usually repaid between 6 months and a year c. Only a maximum of 10% ownership equity is required in exchange for the loan d. When the loan has been repaid, the money is then ―recycled‖ as loans to other entrepreneurs in the village Ans: c Learning Objective: 11.5 Cognitive Domain: Comprehension Answer Location: Building Social Businesses Question Type: MC 23. Which of the following is not one of the characteristics of Fair Trade as stated by the Fairtrade Labeling Organization? a. Based on dialogue, transparency, and respect b. Offering better trading conditions to, and securing the rights of, marginalized producers and workers c. Campaigning for changes in the rules and practice of conventional international d. A zero-sum game Ans: d Learning Objective: 11.6 Cognitive Domain: Comprehension Answer Location: Fair Trade Question Type: MC 24. Fair Trade licensees receive three benefits of being Fair Trade certified. Which is not one? a. Charge higher prices b. Expect higher revenues c. Increase their workforce d. Improve their images and reputations Ans: c Learning Objective: 11.6 Cognitive Domain: Comprehension Answer Location: Core Principles of Fair Trade Question Type: MC 25. In the United Kingdom, which is not one of the unethical issues around Fair Trade practices? a. Misrepresenting the program to the customers b. Expecting higher revenues c. Lying about the Fair Trade program d. No giving customers relevant information that could affect purchasing decisions

Stanwick, Understanding Business Ethics, 3e Instructor Resource Ans: b Learning Objective: 11.6 Cognitive Domain: Comprehension Answer Location: Ethical Issues Related to Fair Trade Question Type: MC 26. Which is not one of the key human rights as defined by the UN General Assembly in 1948?. a. Freedom b. Justice c. Peace d. Prosperity Ans: d Learning Objective: 11.7 Cognitive Domain: Comprehension Answer Location: Human Rights Question Type: MC 27. Which of the following is NOT one of the companies that joined forces in 2003 to help lead a corporate response to human rights issues by developing the Business Leaders Initiative on Human Rights? a. Barclays PLC b. MTV Networks Europe c. The Body Shop International d. Microsoft Ans: d Learning Objective: 11.7 Cognitive Domain: Comprehension Answer Location: Human Rights Question Type: MC 28. In 2007, __________ million people in sub-Saharan Africa were classified as undernourished. a. 10.9 b. 146 c. 457 d. 925 Ans: c Learning Objective: 11.9 Cognitive Domain: Comprehension Answer Location: A Global Challenge Question Type: MC 29. According to the text, all of the following are indicated as root causes of hunger except a. The education gap b. The natural environment c. The poverty gap

Stanwick, Understanding Business Ethics, 3e Instructor Resource d. Poor infrastructure Ans: A Learning Objective: 11.9 Cognitive Domain: Comprehension Answer Location: What Causes Hunger?

Question Type: MC 30. To be classified as a biofuel, a product must be made of at least _______ renewable materials and be produced from living organisms or from organic/food waste products. a. 20% b. 40% c. 60% d. 80% Ans: d Learning Objective: 11.10 Cognitive Domain: Comprehension Answer Location: Food Versus Fuel Question Type: MC 31. The European Union (EU) is demanding that all EU countries must have _______ of their transportation fuel come from renewable sources such as biofuel or wind power by 2020. a. 10% b. 15% c. 73% d. 98% Ans: a Learning Objective: 11.10 Cognitive Domain: Comprehension Answer Location: Food Versus Fuel Question Type: MC 32. In 2013, _____million people lived in poverty in the United States. a. 5.7 million b. 10 million c. 37 million d. 45.3 million Ans: d Learning Objective: 11.10 Cognitive Domain: Comprehension Answer Location: How Domestic Hunger and Poverty Can Be Used in the Decision-Making Process of Managers Question Type: MC 33. Which of the following is NOT one of the goals developed during the United Nations Millennium Summit? a. Eradicate extreme poverty and hunger

Stanwick, Understanding Business Ethics, 3e Instructor Resource b. Maximize technology infrastructure c. Achieve universal primary education d. Promote gender equality and empower women Ans: b Learning Objective: 11.11 Cognitive Domain: Comprehension Answer Location: The United Nations Millennium Development Goals Question Type: MC 34. In Sub-Saharan Africa, mortality numbers for children younger than age 5 have declined from 12.4 million in 1990 to ______ million in 2009. a. 8.1 million b. 5 million c. 2.6 million d. 1.1 million Ans: a Learning Objective: 11.11 Cognitive Domain: Comprehension Answer Location: Progress Toward Reaching the Millennium Development Goals by 2015 Question Type: MC 35. Which is not a factor that explains why there is variable progress to meet Millennium Development Goals? a. Poor governance b Poverty trap c. Policy neglect d. Population growth Ans: d Learning Objective: 11.11 Cognitive Domain: Comprehension Answer Location: Progress Toward Reaching the Millennium Development Goals by 2015 Question Type: MC 36. Which of the following is NOT a factor that encourages private sector investment to reduce poverty? a. Strong infrastructures b. A strong and objective legal system c. A government that supports economic growth d. High population growth Ans: d Learning Objective: 11.11 Cognitive Domain: Comprehension Answer Location: Private Sector Investment and MDGsQuestion Type: MC

Stanwick, Understanding Business Ethics, 3e Instructor Resource True/False 37. Strategies to be used to address the needs of the customers at the base of the pyramid depend on the income level of the customers. a. True b. False Ans: T Learning Objective: 11.1 Cognitive Domain: Knowledge Answer Location: The Bottom of the Pyramid Question Type: TF 38. The first generation of business strategies targeted to the poorest customers focused on ―fortune finding,‖ while the second generation of business strategies focuses on ―fortune creating‖ by forming partnerships with local businesses within the poorest countries. a. True b. False Ans: a Learning Objective: 11.1 Cognitive Domain: Knowledge Answer Location: New Generation Business Strategies for the Bottom of the Pyramid Question Type: TF 39. The three critical attributes of a successful social entrepreneur are wealth, intelligence, and the ability to speak multiple languages. a. True b. False Ans: b Learning Objective: 11.3 Cognitive Domain: Knowledge Answer Location: Social Entrepreneurship Question Type: TF 40. A Social bricoleur is one who uses his or her existing resource base in order to address the social mission of the organization. a. True b. False Ans: a Learning Objective: 11.3 Cognitive Domain: Knowledge Answer Location: Typology of Social Entrepreneurs Question Type: TF 41. An example of a social engineer entrepreneur is Jacqualine Novogratz who established the Acumen Fund in 2001 which the mission to use entrepreneurial approaches to solve global poverty problems. a. True b. False

Stanwick, Understanding Business Ethics, 3e Instructor Resource Ans: b Learning Objective: 11.3 Cognitive Domain: Knowledge Answer Location: Typology of Social Entrepreneurs Question Type: TF 42. Microfinance is the process in which small loans are given to entrepreneurial individuals in developing countries in order to develop income which will benefit the individual as well as the local village through poverty reduction. a. True b. False Ans: a Learning Objective: 11.5 Cognitive Domain: Knowledge Answer Location: Microfinance Question Type: TF 43. One of the unique aspects of microfinance loans is that only a small amount of collateral is needed and the loans are usually repaid between two to five years. a. True b. False Ans: b Learning Objective: 11.5 Cognitive Domain: Knowledge Answer Location: Microfinance Question Type: TF 44. The payback rate for microfinance loans is between 60 and 65%. a. True b. False Ans: b Learning Objective: 11.5 Cognitive Domain: Knowledge Answer Location: Microfinance Question Type: TF 45. The underlying foundation to the concept of Fair Trade is that a free market based trade system does not always produce sustainable livelihood for the farmers and other members of the global food chain. a. True b. False Ans: a Learning Objective: 11.6 Cognitive Domain: Knowledge Answer Location: Fair Trade Question Type: TF

Stanwick, Understanding Business Ethics, 3e Instructor Resource 46. Human rights such as civil rights, property rights, and labor rights do not have a direct impact on the strategic focus of a firm. a. True b. False Ans: b Learning Objective: 11.7 Cognitive Domain: Knowledge Answer Location: Human Rights Question Type: TF 47. In 2003, seven companies joined forces to help lead a corporate response to human rights issues by developing the Business Leaders Initiative on Human Rights. a. True b. False Ans: b Learning Objective: 11.7 Cognitive Domain: Knowledge Answer Location: Human Rights Question Type: TF 48. The Social Accountability 8000 certification is a standard that provides a way for companies to ensure that they are offering humane workplace. a. True b. False Ans: b Learning Objective: 11.7 Cognitive Domain: Knowledge Answer Location: Human Rights Question Type: TF 49. To be classified as a biofuel, a product must be made of at least 80% renewable materials and be produced from living organisms or from organic/food waste products. a. True b. False Ans: a Learning Objective: 11.10 Cognitive Domain: Knowledge Answer Location: Food Versus Fuel Question Type: TF 50. Ethanol is also known as hydrogen peroxide. a. True b. False Ans: b Learning Objective: 11.10

Stanwick, Understanding Business Ethics, 3e Instructor Resource Cognitive Domain: Knowledge Answer Location: Food Versus Fuel Question Type: TF 51. The purpose of the United Nations Millennium Summit was to establish global goals to address human development challenges. a. True b. False Ans: a Learning Objective: 11.11 Cognitive Domain: Knowledge Answer Location: The United Nations Millennium Development Goals Question Type: TF Essay 52. In a short essay, list the seven key principles that are required in order for a firm to be profitable when addressing the needs of customers in the bottom of the pyramid.

Ans: 1.

Create market opportunities 2.

Craft solutions with the bottom of the pyramid 3.

Orchestrate effective experiments 4.

Manage failures 5.

Establish or comingle competitive advantage 6.

Leverage and transfer social embeddedness 7.

Enhance mutual value Learning Objective: 11.1 Cognitive Domain: Analysis Answer Location: The Bottom of the Pyramid Question Type: ESS 53. In a short essay, list the ten characteristics of successful social entrepreneurs.

Ans: 1. Try to disregard the constraints of ideology or discipline 2. Use innovation, resourcefulness, and opportunity to determine what practical solutions are viable to solve the social problem 3. Use innovation to focus on the development of new products or services 4. Focus on how the organization’s mission will be used to create social value and be able to share its knowledge with other social entrepreneurs 5. Don’t wait until all resources are available in order to capitalize on the opportunity 6. Recognize that everyone has the ability to contribute to the economic and social development of the organization 7. Every entrepreneur is willing to take risks in order to succeed

Stanwick, Understanding Business Ethics, 3e Instructor Resource 8. Make sure to balance the passion for the project with the ability to measure and monitor the social impact of the project 9. Successful social entrepreneurs are good teachers for others to learn how to achieve their social goals 10. Sometimes patience is necessary when the expected progress is not experienced for a successful completion of the project Learning Objective: 11.3 Cognitive Domain: Analysis Answer Location: Ten Characteristics of Successful Social Entrepreneurs Question Type: ESS 54. In a short essay, list and discuss the three types of social entrepreneurs. Include an example of each type of social entrepreneur to support your answer. g. Social Bricoleur—usually focuses on addressing the social needs of local communities. Bricoleur can be defined as the ability to use existing resources to address the strategic issue. Therefore, a social bricoleur is one who uses his or her existing resource base in order to address the social mission of the organization. An example of a social bricoleur would be an individual who sets up a relief organization to help individuals who have been affected by a natural disaster. h. Social Constructionist—focuses on exploiting the market gaps that do not serve certain customers. By identifying and serving these previously ―missed‖ opportunities, social constructionists know how to increase awareness that will lead to social reform. An example of a social constructionist is Jacqueline Novogratz who established the Acumen Fund in 2001 and whose mission was to use entrepreneurial approaches to solve global poverty problems. i. Social Engineer—identifies systemic broad problems within the existing social structures and addresses these problems with frame breaking revolutionary change. An example of one of the most famous social engineers is Muhammad Yunis who established the Grameen Bank to set up microloans for poor villagers in Bangladesh.

Learning Objective: Cognitive Domain: 11.3 Answer Location: Typology of Social Entrepreneurs Question Type: ESS 55. In a short essay, list and discuss the root causes of hunger.

Ans: The Natural Environment Natural disasters such as floods and drought can severely damage the crops in developing countries. In addition, these disasters can also wash away or destroy seeds that would be planted in the following year. Drought is considered the most common cause of food shortages in the world because it affects crops and livestock. The additional impact on climate change has made factors such as drought even more intense. Warmer temperatures and drier air due to changing climate conditions has had a further devastating impact in developing countries.

War Civil and external wars drain valuable and precious resources that could be used for food production. Wars destroy lives and land and force people to be displaced from their homes.

Stanwick, Understanding Business Ethics, 3e Instructor Resource Subsequently, a potentially large and migrating population that has no source of income needs to be fed. For example, the Darfur region in Sudan has been at war since 2004, and the result is that more than 1 million people have left their homes, which has generated a severe food crisis.

Furthermore, food can be used as a weapon during a war. Soldiers can destroy crops and livestock to force the villagers to obey their commands. In addition, fields and water wells have been destroyed by explosives to force the farmers off their land. When wars started throughout Central Africa during the 1990s, the proportion of people who went hungry grew from 53% to 58%.

The Poverty Gap Farmers in developing countries cannot afford to buy the seeds and tools needed to develop a good harvest. Craftspeople can’t develop their crafts because they cannot afford the tools. As was mentioned previously, the poor cannot afford to buy food so that they have energy to be able to concentrate to perform well at a job.

Poor Infrastructure In developing countries, poor infrastructure greatly restricts the availability of food across large distances. Poor roads limit the availability of the food, and poor or nonexistent warehouses limit the amount of supply that can be stored for future sales. In addition, poor irrigation systems force farmers to rely on the weather for water for their crops.

Overexploitation of the Environment Poor farming techniques such as overcropping, overgrazing, and deforestation greatly limit the sustainability of the farms over time. The soil is also being attacked by erosion, salination, and desertification, which reduce the fertility of the land over time.

Learning Objective: 11.9 Cognitive Domain: Analysis Answer Location: What Causes Hunger?

Question Type: ESS 56. In a short essay, discuss what factors could explain why some regions have not moved forward on the UN Millennium Development Goals (MDGs) according to Sachs and MacArthur.

Ans: Poor governance. Governments that abuse the human rights of their citizens and are corrupt in their dealings with others will make it difficult to achieve MDGs because their actions are counterproductive to achieving the MDGs. However, the poor level of governance in the country could also be based on lack of knowledge, expertise, and infrastructure. As a result, the leaders of the country may not have the proper skill set to address these complex problems.

The poverty trap. A poverty trap occurs when a country does not have the financial resources necessary to implement the investments needed to improve infrastructure and reduce the levels of hunger and disease, which leads to stagnant economic development. Developing countries are caught in a vicious poverty circle that is very difficult to break. When the citizens of the country are extremely poor, they don’t save money because they spend all their money just to survive. The result of having no disposable income reduces or eliminates any additional expenditures, which ultimately results in very low tax revenues for the country. The low level of tax revenues directly affects the ability of the country to help its citizens improve economically

Stanwick, Understanding Business Ethics, 3e Instructor Resource and limits the country’s ability to make investments for improving the infrastructure within the country. An inadequate infrastructure then leads to lower levels of foreign investment, which further reduces the resources available to the government and could eventually lead to conflict and civil war within the country.

Persistent pockets of poverty. Countries such as Brazil, China, and Mexico have large middle classes that demand resources from the government. The result is that additional resources are not allocated to reduce these pockets of poverty.

Policy neglect. The concept of policy neglect refers to the inability of top-level governmental decision makers to understand the challenges and subsequent consequences of their decisions. Policy neglect traditionally causes biases, stereotypes, or ignorance.

Learning Objective: 11.11 Cognitive Domain: Analysis Answer Location: Progress Toward Reaching the Millennium Development Goals by 2015 Question Type: ESS

Chapter 12: Establishing a Code of Ethics and Ethical Guidelines Test Bank Multiple Choice 1. In the opening case ―How We’re Fixing Up Tyco,‖ what did Tyco do to re-create its image? a. Changed its corporate logo b. Changed the board members c. Sold off the business d. Merged with another company Ans: b Learning Objective: 12.6 Cognitive Domain: Application Answer Location: How We’re Fixing Up Tyco Question Type: MC 2. In the opening case ―How We’re Fixing Up Tyco,‖ which of the following individuals was the senior vice president of corporate governance at Tyco who had the responsibility of repairing the tarnished image of the diversified conglomerate? a. Jack Welch b. Ken Lay c. Charles Prince d. Eric Pillmore Ans: d Learning Objective: 12.6 Cognitive Domain: Application Answer Location: How We’re Fixing Up Tyco Question Type: MC

Stanwick, Understanding Business Ethics, 3e Instructor Resource 3. A(n) _____________ can be defined as a written document that explicitly states what acceptable and unacceptable behaviors are for all of the employees in an organization. a. Code of values b. Code of culture c. Code of ethics d. Code expectations Ans: c Learning Objective: 12.6 Cognitive Domain: Application Answer Location: Role of a Code of Ethics Question Type: MC 4. Which of the following is a statement that sets forth a company’s beliefs and responsibilities to stakeholders? a. A values statement b. A corporate credo c. A corporate contingency plan d. An Internet privacy policy Ans: b Learning Objective: 12.1 Cognitive Domain: Comprehension Answer Location: Role of a Code of Ethics Question Type: MC 5. All of the following are mentioned in the text as types of statements that a corporation may adopt to communicate the corporation’s view of the subject of ethics except a. A values statement b. A corporate credo c. A corporate contingency plan d. An Internet privacy policy Ans: c Learning Objective: 12.1 Cognitive Domain: Comprehension Answer Location: Role of a Code of Ethics Question Type: MC 6. A (n) ______________ is a succinct document that is intended to set out the guiding principles of a company. a. A values statement b. A corporate credo c. A corporate contingency plan d. An Internet privacy policy Ans: a Learning Objective: 12.1 Cognitive Domain: Comprehension

Stanwick, Understanding Business Ethics, 3e Instructor Resource Answer Location: Role of a Code of Ethics.

Question Type: MC 7. When was the date of the original corporate code of ethics introduced by J. C. Penney a. 1903 b. 1913 c. 1933 d. 1943 Ans: b Learning Objective: 12.1 Cognitive Domain: Comprehension Answer Location: Code of Ethics and Stakeholders Question Type: MC 8. Why should a code of ethics be put into writing regardless of the size of the business?: a. It adds value to the share price b. It helps stakeholders know which behaviors are acceptable and which are not c. It satisfies the needs of the board d. It helps profits Ans: b Learning Objective: 12.1 Cognitive Domain: Comprehension Answer Location: Code of Ethics and Stakeholders Question Type: MC 9. Presenting the firm’s commitment to unbiased and good-faith interactions with its stakeholders is called ____________. a. Integrity b. Justice c. Reciprocity d. Utility Ans. b Learning Objective: 12.1 Cognitive Domain: Comprehension Answer Location: Code of Ethics and Stakeholders Question Type: MC 10. All of the following are ethical values a firm should consider when developing and/or modifying a code of ethics except a. Integrity b. Justice c. Reciprocity d. Utility Ans. c Learning Objective: 12.1 Cognitive Domain: Comprehension

Stanwick, Understanding Business Ethics, 3e Instructor Resource Answer Location: Code of Ethics and Stakeholders Question Type: MC 11 According to the text, all of following will occur if a code of ethics is in place and that code is enforced except a. Employee loyalty decreases b. Managers become more confident c. Competitive positions improve d. Customer relationships get more solid Ans: a Learning Objective: 12.3 Cognitive Domain: Comprehension Answer Location: Benefits of a Code of Ethics Question Type: MC

12. W. Edwards Deming set out 14 points in his definition of quality in the firm. Many of these points are related to ethical concepts. All of the following form part of the definition except ______. a. Drive out fear b. Eliminate quotas c. Maintain staff barriers d. Institute training Ans: c Learning Objective: 12.3 Cognitive Domain: Comprehension Answer Location: Benefits of a Code of Ethics Question Type: MC 13. General Electric in 2010 published its Citizenship Report titled ______. a. Financial Growth b. Sustainable Growth c. Sustainable Development d. Financial Development Ans: b Learning Objective: 12.2 Cognitive Domain: Comprehension Answer Location: Content of a Code of Ethics Question Type: MC 14. Which element is not included in a ―Living Code of Ethics‖? a. Authentic leadership b. Organizational culture c. The decision-making process d. The price of goods and services Ans: d

Stanwick, Understanding Business Ethics, 3e Instructor Resource Learning Objective: 12.4 Cognitive Domain: Comprehension Answer Location: A Living Code of Ethics Question Type: MC 15. When considering the organizational components of the Living Code of Ethics, ______ must integrate with living code of ethics in the day-to-day operations of the firm. a. The socialization process b. The decision-making process c. Reward systems d. Organizational learning Ans: B Learning Objective: 12.4 Cognitive Domain: Comprehension Answer Location: A Living Code of Ethics Question Type: MC 16. Waddock and Bodwell developed the Total Responsibility Management concept based on Deming’s TQM. Which of the following is not one of the elements? a. Inspiration process b. Integration process c. Involvement process d. Innovation and improvement process Ans: c Learning Objective: 12.4 Cognitive Domain: K Comprehension Answer Location: The Role of Total Responsibility Management and a Code of Ethics Question Type: MC 17. During the _____________, a firm identifies the establishment of its ethical leadership commitment as well as establishes the vision-setting process. a. Inspiration process b. Integration process c. Commercialization process d. Innovation and improvement process Ans: a Learning Objective: 12.4 Cognitive Domain: K Comprehension Answer Location: Inspiration Process Question Type: MC 18. The _____________ involves top management integrating the ethical vision, value, and leadership into the strategic decision-making process. a. Inspiration process b. Integration process c. Commercialization process

Stanwick, Understanding Business Ethics, 3e Instructor Resource d. Innovation and improvement process Ans: b Learning Objective: 12.4 Cognitive Domain: Comprehension Answer Location: Integration: Changes in Strategies and Management Practices Question Type: MC 19. Deloitte recommends a standard format for a code of ethics. What is the first part of the code? a. An ethical decision framework to assists employees b. A listing of available resources for obtaining guidance c. The company’s mission statement, vision, and values d. A letter from the senior leadership team that sets the tone of the code Ans: d Learning Objective: 12.5 Cognitive Domain: Comprehension Answer Location: Steps for an Effective Code of Ethics Question Type: MC 20. All of the following are considered critical elements of a good ethics program except a. An introduction from the CEO b. The assignment of functional responsibility c. Proper employee training d. An ethics hotline Ans: a Learning Objective: 12.5 Cognitive Domain: Comprehension Answer Location: Steps for an Effective Code of Ethics Question Type: MC 21. Which of the following is NOT mentioned in the text as a reason a code of ethics might be adopted? a. Peer pressure within the same industry b. Government failure c. Improve customer relationships d. Improve profitability An: d Learning Objective: 12.5 Cognitive Domain: Comprehension Answer Location: Value of a Code of Ethics Question Type: MC 22. Which of the following is an example of POOR practice in making a code of conduct effective? a. Set up an ethics committee within the board of directors b. Review and make adjustments to the code when necessary

Stanwick, Understanding Business Ethics, 3e Instructor Resource c. Assign one unit within the company to be responsible for the effectiveness of the firm’s ethical commitment d. Make sure senior staff set the correct example by ―walking the talk‖ Ans: c Learning Objective: 12. 6 Cognitive Domain: Comprehension Answer Location: Table 12.1 Question Type: MC 23. Which of the following is an example of GOOD practice in making a code of conduct effective? a. Post the code on a notice board without any action b. View the code as a confidential document c. Review and make adjustments when necessary d. Assign one unit within the company to be responsible for the effectiveness of the firm’s ethical commitment Ans: c Learning Objective: 12. 6 Cognitive Domain: Comprehension Answer Location: Table 12.1 Question Type: MC 24. MetLife has a comprehensive code of business conduct and ethics. ______ are responsible for ―reading, understanding, and adhering‖ to the code. a. The Board of Directors b. Stakeholders c. All employees d. Suppliers Ans: c Learning Objective: 12.6 Cognitive Domain: Comprehension Answer Location: Examples of Codes of Ethics Question Type: MC 25. Which of the following organizations published a comprehensive code of ethics but did not carry them out? a. Metlife b. Enron c. J. C. Penney d. GE Ans: b Learning Objective: 12.6 Cognitive Domain: Comprehension Answer Location: Examples of Codes of Ethics Question Type: MC

Stanwick, Understanding Business Ethics, 3e Instructor Resource 26. Section 406 of the ______________ requires that companies that are publicly traded disclose whether or not they have a code of ethics. a. Robinson-Patman b. Sherman Antitrust Act c. Foreign Corrupt Practices Act d. Sarbanes-Oxley Act Ans: d Learning Objective: 12.6 Cognitive Domain: Comprehension Answer Location: Role of Government Regulations Question Type: MC 27. Which of the following is NOT one of the three major global codes of ethics as indicated in the text? a. The Caux Round Table Principles b. Kyoto Treaty c. The Organization of Economic Co-operation and Development guidelines for multinational enterprises d. The United Nations Global Impact Ans: b Learning Objective: 12.7 Cognitive Domain: Comprehension Answer Location: Global Code of Ethics Question Type: MC 28. The _____________ is an international network of business leaders who are committed to promoting the concept of moral capitalism. a. The Caux Round Table Principles b. Kyoto Treaty c. The Organization of Economic Co-operation and Development guidelines for multinational enterprises d. The United Nations Global Impact Ans: a Learning Objective: 12.7 Cognitive Domain: Knowledge Answer Location: Global Code of Ethics.

Question Type: MC 29. Which of the following is not a component of the Caux Round Table Principles? a. The responsibilities of business are beyond shareholders and are to all stakeholders b. Businesses need to support multilateral trade c. Businesses need to abolish all child labor d. Businesses must avoid illicit operations Ans: c Learning Objective: 12.7 Cognitive Domain: Knowledge

Stanwick, Understanding Business Ethics, 3e Instructor Resource Answer Location: Table 12.2 Question Type: MC 30. Which of the following are recommendations made by governments for multinational enterprises to adopt into their own codes of ethics? a. The Caux Round Table Principles b. Kyoto Treaty c. The Organization of Economic Co-operation and Development guidelines for multinational enterprises d. The United Nations Global Impact Ans: c Learning Objective: 12.7 Cognitive Domain: Comprehension Answer Location: Global Code of Ethics Question Type: MC 31. The ___________ was based on a challenge by former Secretary-General of the United Nations Kofi Annan for businesses to adopt universal environmental and social principles. a. The Caux Round Table Principles b. Kyoto Treaty c. The Organization of Economic Co-operation and Development guidelines for multinational enterprises d. The United Nations Global Impact Ans: d Learning Objective: 12.7 Cognitive Domain: Knowledge Answer Location: Global Code of Ethics Question Type: MC 32. ______________ is a key element of the United Nations Global Impact Principles. a. Respect global rules b. Multilateral trade c. Human rights d. Self-regulatory practices Ans: c Learning Objective: 12.7 Cognitive Domain: Comprehension Answer Location: Global Code of ethics Question Type: MC 33. Which of the following organizations is not involved in developing a Global Code of Ethics? a. Caux Round Table b. Organization of Economic Co-operation and Development Guidelines c. World Economic Forum d. United Nations Global Impact Ans: C

Stanwick, Understanding Business Ethics, 3e Instructor Resource Learning Objective: 12.7 Cognitive Domain: Comprehension Answer Location: Table 12.2 Question Type: MC 34. ______ is one of the most common mistakes that companies make when developing Global Ethics Programs. a. Having consensus on objectives for globalization of ethics commitments b. Committing resources that focus on ethics issues in other countries c. Not offering training in languages other than English d. Acknowledging cultural differences Ans: c Learning Objective: 12,7 Cognitive Domain: comprehension Answer Location: Global Code of Ethics Question Type: MC True/False Questions 35. The code of ethics of a firm represents the identification and interpretation of what the firm considers acceptable behavior. a. True b. False Ans: a Learning Objective: 12.1 Cognitive Domain: Knowledge Answer Location: Role of a Code of Ethics Question Type: TF 36. A corporate credo is a statement that sets forth the company’s beliefs and responsibilities to stakeholders. a. True b. False Ans: a Learning Objective: 12.1 Cognitive Domain: Knowledge Answer Location: Role of a Code of Ethics Question Type: TF 37. The four ethical values that firms should consider when developing and/or modifying a code of ethics are integrity, justice, competence, and utility. a. True b. False Ans: a Learning Objective: 12.1 Cognitive Domain: Knowledge

Stanwick, Understanding Business Ethics, 3e Instructor Resource Answer Location: Code of Ethics and Stakeholders Question Type: TF 38. A code of ethics is valuable to a firm only if the employees believe in the code and the code has a direct impact on their actions within the firm. a. True b. False Ans: True Learning Objective: 12.3 Cognitive Domain: Knowledge Answer Location: Code of Ethics and Stakeholders Question Type: TF 39. It is important to put a code of ethics into writing regardless of the size of the business because it helps stakeholders know which behaviors are acceptable and which are not. a. True b. False Ans: True Learning Objective: 12.3 Cognitive Domain: Knowledge Answer Location: Code of Ethics and Stakeholders Question Type: TF 40. The annual report of the firm is an element of the Living Code of Ethics. a. True b. False Ans: False Learning Objective: 12.3 Cognitive Domain: Knowledge Answer Location: A Living Code of Ethics Question Type: TF 41. Organizational learning can increase the level of ethical awareness by employees and can create a positive climate pertaining to ethical values and beliefs. a. True b. False Ans: False Learning Objective: 12.3 Cognitive Domain: Knowledge or Answer Location: A Living Code of Ethics Question Type: TF 42. Total Responsibility Management starts with the premise that the vision of the firm drives the development of the code of ethics. a. True b. False

Stanwick, Understanding Business Ethics, 3e Instructor Resource Ans: a Learning Objective: 12.4 Cognitive Domain: Knowledge Answer Location: The Role of Total Responsibility Management and a Code of Ethics Question Type: TF 43. The three major stages of the TRM system are unfreezing, moving, and refreezing. a. True b. False Ans: False Learning Objective: 12.4 Cognitive Domain: Knowledge Answer Location: The Role of Total Responsibility Management and a Code of Ethics Question Type: TF 44. Stakeholder engagement processes ensure that the ethical vision the firm is developing coincides with the needs and expectations of all the stakeholders. a. True b. False Ans: True Learning Objective: 12.4 Cognitive Domain: Knowledge Answer Location: Inspiration Process Question Type: TF 45. Firms that implement a Total Responsibility Management system are not able to generate the relevant information of interest for internal and external stakeholders due to the complexity of the system. a. True b. False Ans: b Learning Objective: 12.4 Cognitive Domain: Knowledge Answer Location: Innovation: Focusing on Assessment, Improvement, and Learning Systems Question Type: TF 46. An effective code of ethics is formed of a standard set of recommendations that includes both advice and internal structures to help employees implement the code of ethics.

Ans: True Learning Objective: 12.5

Stanwick, Understanding Business Ethics, 3e Instructor Resource Cognitive Domain: Knowledge or Comprehension Answer Location: Steps for an Effective Code of Ethics Question Type: TF 47 One reason why a code of ethics should be adopted is to increase market share and profitability. a. True b. False Ans: b Learning Objective: 12.5 Cognitive Domain: Knowledge or Comprehension Answer Location: Value of a Code of Ethics Question Type: TF 48. Section 406 of the Sarbanes-Oxley Act of 2002 requires that companies that are publicly traded disclose whether or not they have a code of ethics. a. True b. False Ans: True Learning Objective: 12.6 Cognitive Domain: Knowledge Answer Location: Role of Government Regulations Question Type: TF 49. Kyosei is defined as the ability to live and work together for the common good that allows for mutual prosperity through cooperation. a. True b. False Ans: a Learning Objective: 112.7 Cognitive Domain: Knowledge Answer Location: Global Code of Ethics Question Type: TF 50. The UN Global Impact was established in January 1999 based on a challenge by former Secretary-General of the United Nations Kofi Annan for businesses to adopt universal environmental and social principles. a. True b. False Ans: a Learning Objective: 12.7 Cognitive Domain: Knowledge Answer Location: Global Code of Ethics Question Type: TF Essay Questions

Stanwick, Understanding Business Ethics, 3e Instructor Resource 51. In a short essay, list and discuss the four types of statements that a corporation may adopt to communicate the corporation’s view of the subject of ethics.

Ans: 1.

Values statement—a succinct document that is intended to set out the guiding principles of a company 2.

Corporate credo—a statement that sets forth the company’s beliefs and responsibilities to stakeholders 3.

Code of ethics—a detailed statement of a firm’s ethical policies 4.

Internet privacy policy—a statement discussing the company’s privacy policy for Internet transactions, usually written in very legal terms Learning Objective: 12.1 Cognitive Domain: Analysis Answer Location: The Role of a Code of Ethics Question Type: ESS 52. In a short essay, list and discuss the three major stages of the Total Responsibility Management system.

Ans: 1.

Inspiration process: It is during the inspiration process that the firm identifies the establishment of its ethical leadership commitment as well as establishes the vision-setting process. It is also during this stage that the formalization of the responsibilities and commitments to the ethical vision take place. The inspiration stage also incorporates the process to engage with the firm’s stakeholders and identifies its foundation values along with the international standards that are applicable to its operations.

2.

Integration: The integration process involves top management integrating the ethical vision, value, and leadership into the strategic decision-making process. The integration process involves integration into the corporate- and business-level strategies of the firm as well as identifying strategic implementation responsibilities, which include human resource and management system issues.

3.

Innovation: Through the use of the Total Responsibility Management system, firms are not only able to present their ethical vision to their stakeholders via their codes of ethics, but they also will be able to generate new ideas on how to improve their TRM systems.

Learning Objective: 12.4 Cognitive Domain: Analysis Answer Location: The Role of Total Responsibility Management and a Code of Ethics Question Type: ESS 53. In a short essay, describe the main elements of a Living Code of Ethics.

Ans: Authentic Leadership Authentic leadership is based on a strong belief in the leader’s value, character, and moral capacity. Authentic leaders focus on the needs of others and help in their development.

Organizational Components Attraction-Selection-Attrition

Stanwick, Understanding Business Ethics, 3e Instructor Resource The development of a process in which ethical people are attracted to work for the firm, are selected to work for the firm, and stay employed by the firm.

The Socialization Process The socialization process allows the values, beliefs, attitudes, norms and traits of the living code of ethics to be transferred to the new employees.

Reward Systems Firms that have a positive ethical focus use reward systems to acknowledge the ethical behavior of the employees. The firm must ensure that the reward systems coincide with the living code of ethics.

The Decision-Making Process The decision-making process by the employees must integrate with the living code of ethics in the day-to-day operations of the firm.

Organizational Learning Organizational learning is the process in which the firm generates and captures information relevant to its operations and transfers it to its employees.

Organizational Culture Organizational culture is a pattern of shared values and beliefs that are incorporated by the employees throughout the firm.

Learning Objective: 12.3 Cognitive Domain: Analysis Answer Location: A Living Code of Ethics Question Type: ESS

54. In a short essay, list six components of a code of conduct for financial institutions according to the publication ―Corporate Codes of Conduct: Guidance to Implementing an Effective Ethics Program.‖ Ans: 1.

Safeguarding confidential information 2.

Ensuring the integrity of records 3.

Providing strong internal controls over assets 4.

Providing candor in dealing with auditors, examiners, and legal counsel 5.

Avoiding self-dealings and acceptance of gifts or favors 6.

Observing applicable laws 7.

Implementing appropriate background checks 8.

Involving internal auditors in monitoring corporate codes of conduct or ethics policies 9.

Providing a mechanism to report questionable activity 10.

Outlining penalties for a breach of the corporate code of conduct or ethics policy 11.

Providing periodic training and acknowledgment of the policy 12.

Periodically updating policies to reflect new business activities

Stanwick, Understanding Business Ethics, 3e Instructor Resource Learning Objective: 12. 6 Cognitive Domain: Analysis Answer Location: Role of Government Regulations Question Type: ESS 55. In a short essay, list and discuss common mistakes that companies make when developing global ethics programs.

Ans: a.

Not having consensus on objectives for globalization of ethics commitment b.

Not incorporating international-based employees in the development of the company’s ethics policies c.

Not focusing on the potential competitive advantages of have a strong positive ethical 4. program d.

Making the ethical policy in other countries match the country’s legal requirements e.

Not committing resources and/or employees who focus on ethics issues in other countries f.

Not selecting only home country employees to fill any ethics-based positions g.

Not offering ethics training in languages other than English h.

Not making sure that all countries interpret the meaning of the ethics policy consistently i.

Failing to acknowledge the many cultural differences related to business ethics Learning Objective: 12.7 Cognitive Domain: Analysis Answer Location: Table 12.3 Question Type: ESS

Chapter 13: Evaluating Corporate Ethics Test Bank Multiple Choice 1. In the opening vignette, the Hillsborough accident occurred in ______. a. Liverpool b. Nottingham c. Sheffield d. London Ans: c Learning Objective: 13.1 Cognitive Domain: Application Answer Location: The Hillsborough Disaster: The Tragic Story of 96 Lost Lives Question Type: MC 2. In the opening vignette __________________were accused of being intoxicated, arriving late, and stealing. a. Police b. Liverpool fans c. Nottingham Forest fans d. Firefighters Ans: b

Stanwick, Understanding Business Ethics, 3e Instructor Resource Learning Objective: 13.1 Cognitive Domain: Application Answer Location: The Hillsborough Disaster: The Tragic Story of 96 Lost Lives Question Type: MC 3. In the opening vignette, what number of witness reports was altered by police to eliminate any unfavorable comment s directed toward the police? a. 14 b. 41 c. 115 d. 1,600 Ans: c Learning Objective: 13.1 Cognitive Domain: Application Answer Location: The Hillsborough Disaster: The Tragic Story of 96 Lost Lives Question Type: MC 4. According to the research study conducted by PricewaterhouseCoopers in the 2014 Global Economic Crime Survey, which of the following regions experienced the highest growth in the level of economic crime? a. Africa b. North America c. Eastern Europe d. Emerging Eight Ans: c Learning Objective: 13.2 Cognitive Domain: Comprehension Answer Location: Table 13.1 Question Type: MC 5. According to the research study conducted by PricewaterhouseCoopers 2014 Global Economic Crime Survey, which of the following industry categories had the lowest percentage for both 2011 and 2014? a. Manufacturing b. Chemicals c. Transport and logistics d. Insurance Ans: b Learning Objective: 13.2 Cognitive Domain: Comprehension Answer Location: Table 13.2 Question Type: MC 6. According to the research study conducted by PricewaterhouseCoopers 2014 Global Economic Crime Survey, when fraud was committed by someone external to the company ______% were dismissed by their employer.

Stanwick, Understanding Business Ethics, 3e Instructor Resource a. 17% b. 5% c. 23% d. 79% Ans: d Learning Objective: 13.2 Cognitive Domain: Comprehension Answer Location: Who Commits the Fraud?

Question Type: MC 7. The goals of an ethics training program do not include a. Providing the necessary tools need by employees to understand the ethical decision-making process b. Explaining the procedure used when employees violate ethical standards c. Giving pay rises to all employees d. Creating a strong ethical work climate Ans: c Learning Objective: 13.2 Cognitive Domain: Comprehension Answer Location: Establishing an Ethics Training Program Question Type: MC

8. The International Association of Business Communicators found that ______% of respondents had not received any formal ethics training. a. 24% b. 95% c. 17% d. 65% Ans: d Learning Objective: 13.2 Cognitive Domain: Comprehension Answer Location: Establishing an Ethics Training Program Question Type: MC 9. Which of the following is not one of the three Rs in admitting mistakes? a. Assume responsibility b. Remove the evidence c. Demonstrate regret d. Offer a remedy to fix the problem Ans: b Learning Objective: 13.2 Cognitive Domain: Comprehension Answer Location: Establishing an Ethics Training Program Question Type: MC

Stanwick, Understanding Business Ethics, 3e Instructor Resource 10. Which of the following is not one of the elements in increasing employee awareness of ethical programs? a. Write codes of conduct in simple terms b. Ensure ethical policies are not one sided c. Enable general organizational gripe sessions d. Ensure relevancy, genuineness, and reality Ans: c Learning Objective: 13.2 Cognitive Domain: Comprehension Answer Location: Establishing an Ethics Training Program Question Type: MC 11. When establishing a global ethics training program, Jackson recommends all of the following elements, except a. Ensure morally sensitive cultural education b. Provide education on international human rights c. Implement a program based on the company’s home ethics and culture d. Consider global cultural dimensions Ans: C Learning Objective: 13.4 Cognitive Domain: Comprehension Answer Location: Establishing a Global Ethics Training Program Question Type: MC 12. Internal communication ethical tools such as an ethics hotline would be considered too impersonal and not appropriate for a(n) ______________ based culture. a. Individualism b. Collectivism c. High uncertainty avoidance d. Low uncertainty avoidance Ans: b Learning Objective: 13.4 Cognitive Domain: Comprehension Answer Location: Consider Global Cultural Dimensions and Ethics Training Programs Question Type: MC 13. In a(n) ______________, the presentation of ethics codes and formal procedures would be perceived as irrelevant and, therefore, most likely ignored by the audience. a. High-context b. Low-context c. High uncertainty avoidance d. Low uncertainty avoidance Ans: a Learning Objective: 13.4 Cognitive Domain: Comprehension Answer Location: Consider Global Cultural Dimensions and Ethics Training Programs

Stanwick, Understanding Business Ethics, 3e Instructor Resource Question Type: MC 14. An effective ethics training program provides other benefits for the firm. Which of the following is not one such benefit? a. Allow companies to maintain a moral course regardless of the economic conditions. b. Develop strong employee growth and vision. c. Improve employee promotion prospects d. Help integrate ethical values in the day-to-day decisions of management.

Ans: c Learning Objective: 13.4 Cognitive Domain: Comprehension Answer Location: Table 13.5 Question Type: MC 15. Enforcement of the ethics code is essential to be effective. Which of the following elements of compliance is not relevant? a. Top management and their supervisors participating in the same programs as employees b. Static and not updated c. Consistency in enforcement d. Clarity of the code contents Ans: b Learning Objective: 13.5 Cognitive Domain: Comprehension Answer Location: Enforcement and the Ethics Training Program Question Type: MC 16. Nonpunitive ethics programs would be more effective for which of the following types of cultures? a. Feminine b. Masculine c. Low context d. High context Ans: a Learning Objective: 13.5 Cognitive Domain: Comprehension Answer Location: Consider Global Cultural Dimensions and Ethics Training Programs Question Type: MC 17. When was the Federal Sentencing Guidelines for Organizations Act passed? a. 1957 b. 1989 c. 1991 d. 1997 Ans: c Learning Objective: 13.5 Cognitive Domain: Knowledge

Stanwick, Understanding Business Ethics, 3e Instructor Resource Answer Location: Corporate Ethics Officers Question Type: MC 18. The ethics officer has a number of specific roles. Which of the following is not one? a. Creating an ethics program. b. Maintaining oversight of the program c. Evaluating and investigating ethical charges d. Having the final say in all ethics matters Ans: d Learning Objective: 13.5 Cognitive Domain: Comprehension Answer Location: Corporate Ethics Officers Question Type: MC 19. What is not one of the role challenges of the Corporate Ethics Officer? a. Conflict b. Ambiguity c. Complexity d. tolerance Ans: D Learning Objective: 13.5 Cognitive Domain: Comprehension Answer Location: Corporate Ethics Officers Question Type: MC 20. What is the key question for the corporate ethics officer to ask when considering aspects of universality? a. How much information is needed to make an informed decision? b. Are all the stakeholders treated fairly with this decision? c. Would this decision be acceptable as a ―universal law‖ that applies to all? d. Could we defend this decision if our actions became public knowledge?

Ans: c Learning Objective: 13.5 Cognitive Domain: Comprehension Answer Location: Table 13.6 Question Type: MC 21. An ethics training program that just focuses on a masculine-based view of the firm will not give due consideration to which of the following? a. Strong control mechanisms b. Individual punishment sanctions c. Comprehensive ethics training d. Nonpunitive ethics programs Ans: d Learning Objective: 13.4 Cognitive Domain: Comprehension

Stanwick, Understanding Business Ethics, 3e Instructor Resource Answer Location: Establishing a Global Ethics Training Program Question Type: MC 22. Which of the following types of cultures would be less likely to change or provide input to their supervisors? a. Low uncertainty avoidance b. High uncertainty avoidance c. Low power distance d. High power distance Ans: d Learning Objective: 1-2 Learning Objective: 13.4 Cognitive Domain: Comprehension Answer Location: Establishing a Global Ethics Training Program Question Type: MC 23. _____________ can be defined as the regular comprehensive evaluation of the compliance of the firm’s ethical policies and procedures. a. Social auditing b. Cultural auditing c. Ethical auditing d. Fiscal auditing Ans: c Learning Objective: 13.6 Cognitive Domain: Comprehension Answer Location: Ethical Auditing Question Type: MC 24. The process is which an employee informs another responsible party in the company about potentially unethical behavior is called _____________. a. Whistle-blowing b. Phishing c. Strategic reciprocity d. Kettle-blowing Ans: a Learning Objective: 13.7 Cognitive Domain: Comprehension Answer Location: Whistle-Blowing Question Type: MC 25. The Government Accountability Project identified 10 elements for whistle blowers to consider before deciding to pursue the matter. Which of the following is not one of those factors? a. Establish credibility b. Identify problems early c. Impact on the whistleblower d. Extend broad coverage

Stanwick, Understanding Business Ethics, 3e Instructor Resource Ans: c Learning Objective: 13.7 Cognitive Domain: Comprehension Answer Location: Whistle-Blowing Question Type: MC 26. To be effective, an ethical hotline should_________________. a. Be available in a single language b. Be staffed 24 hours per day c. Be charged at premium rates d. Be controlled by the CEO Ans: b Learning Objective: 13.8 Cognitive Domain: Comprehension Answer Location: Hotlines Question Type: MC 27. Ethics hotlines can take a number of organizational forms. Which is not one? a. In-house b. Outsourced c. Hybrid d. Customer service department based Ans: D Learning Objective: 13.8 Cognitive Domain: Comprehension Answer Location: Table 13.8 Question Type: MC 28. The ____________ has the authority to enforce the whistle-blower section of the SarbanesOxley Act. a. Federal Trade Commission b. Occupational Safety and Health Administration c. Federal Communications Commission d. Securities Exchange Commission Ans: b Learning Objective: 13.5 Cognitive Domain: Comprehension Answer Location: Government Regulations and Whistle-Blowing Question Type: MC 29. The ____________ was amended in 1986. a. False Claims Act b. Sarbanes-Oxley Act c. Occupational Safety and Health Administration d. US Foreign Corrupt Practices Act Ans: a

Stanwick, Understanding Business Ethics, 3e Instructor Resource Learning Objective: 13.5 Cognitive Domain: Comprehension Answer Location: Government Regulations and Whistle-Blowing Question Type: MC 30.The Integrity Helpline (Deloitte and Touche USA LLP) sets out a number of circumstances in which the hotline should be contacted by employees. Which is not one of them?

• a. If you believe that ethics and compliance issues are not being resolved • b. If you don’t feel comfortable reporting through normal channels • c. If the IT systems break down d. If you wish to remain anonymous when filing a report Ans: c Learning Objective: 13.7 Cognitive Domain: Comprehension Answer Location: Hotlines Question Type: MC 31. Ethics training programs by incorporating global issues serve the utilitarian need of doing the greatest good for the greatest number. Which of the following are not global issues? a. Human rights b. Environmental sustainability c. Salary and financial benefits d. Economic development Ans: c Learning Objective: 13. 4 Cognitive Domain: Comprehension Answer Location: Establishing a Global Ethics Training Program Question Type: MC 32. All of the following are examples of types of stakeholders except a. Government b. Suppliers c. Competitors d. Customers Ans: c Learning Objective: 13.3, 13.4 Cognitive Domain: Comprehension Answer Location: Table 13.3 Question Type: MC 33. Once the standards of an organization’s code of ethics are agreed on, the firm must implement its strategic ethical vision in the ______________. a. Implementation stage b. Inspiration stage c. Commercialization stage d. Reflection stage

Stanwick, Understanding Business Ethics, 3e Instructor Resource Ans: a Learning Objective: 13.4 Cognitive Domain: Comprehension Answer Location: Evaluation of Ethics and Stakeholders Question Type: MC 34. Which of the following points is the starting point for the model discussed in this chapter? a. Duty to the stakeholder b. Ethics training programs c. Requirement of the board d. Reflection stage Ans: A Learning Objective: 13.2 Cognitive Domain: Comprehension Answer Location: Evaluation of Ethics and Stakeholders Question Type: MC 35. ______________ was the key whistle-blower in disclosing consumers being misled about the addictive nature of nicotine. a. Cynthia Cooper b. Coleen Rowley c. Sherron Watkins d. Jeffrey Wigand Ans: d Learning Objective: 13.2 Cognitive Domain: Comprehension Answer Location: Table 13.10 Question Type: MC

True/False 36. The three categories of classification determining how fraud is detected are corporate control, corporate culture, and beyond the influence of management. a. True b. False Ans: a Learning Objective: 13.1 Cognitive Domain: Knowledge Answer Location: How Are They Caught?

Question Type: TF 37. Enforcing the ethics policy is a fairly simple challenge to address in the ethics arena. a. True b. False Ans: b Learning Objective: 13.1 Cognitive Domain: Knowledge or Comprehension

Stanwick, Understanding Business Ethics, 3e Instructor Resource Answer Location: Establishing an Ethics Training Program Question Type: TF 38. Establishing an ethics program is a challenge only for large publicly traded companies. a. True b. False Ans: b Learning Objective: 13.2 Cognitive Domain: Knowledge Answer Location: Establishing an Ethics Training Program Question Type: TF 39. As multinational corporations approach the issue of ethics training programs, the level of complexity increases due to the intricacies of doing business in a global environment. a. True b. False Ans: a Learning Objective: 13.4 Cognitive Domain: Knowledge Answer Location: Establishing a Global Ethics Training Program Question Type: TF 40. Individualists will comply with ethical standards if they are based on the ethical norms of the group. a. True b. False Ans: b Learning Objective: 13.4 Cognitive Domain: Knowledge Answer Location Establishing a Global Ethics Training Program Question Type: TF 41. In low-context cultures, the presentation of ethics codes and formal procedures would be perceived as irrelevant and, therefore, most likely ignored by the audience. a. True b. False Ans: b Learning Objective: 13.4 Cognitive Domain: Knowledge Answer Location: Establishing a Global Ethics Training Program Question Type: TF 42. Low uncertainty avoidance not only accepts risk and ambiguity but embraces it. a. True b. False Ans: a

Stanwick, Understanding Business Ethics, 3e Instructor Resource Learning Objective: 13.4 Cognitive Domain: Knowledge or Comprehension Answer Location: Establishing a Global Ethics Training Program Question Type: TF 43. Feminine cultures focus on material goods, status, accomplishment, and reward for ambition. a. True b. False Ans: b Learning Objective: 13.4 Cognitive Domain: Knowledge Answer Location: Establishing a Global Ethics Training Program Question Type: TF 44. For low power distance cultures, accountability and blame should be distributed on the actual job responsibilities of the employees. a. True b. False Ans: True Learning Objective: 13.4 Cognitive Domain: Knowledge Answer Location: Establishing a Global Ethics Training Program Question Type: TF 45. In the United States, the role of a corporate ethics officer moved to the forefront in the decision-making process of firms when the Federal Sentencing Guidelines for Organizations Act was passed in 1991. a. True b. False Ans: True Learning Objective: 13.5 Cognitive Domain: Knowledge Answer Location: Corporate Ethics Officers Question Type: TF 46. Many corporations are finding themselves appointing ethics officers. a. True b. False Ans: a Learning Objective: 1-4 Cognitive Domain: Knowledge Answer Location: Corporate Ethics Officers Question Type: TF 47. Ethical auditing can be defined as the regular comprehensive evaluation of the compliance of the firm’s ethical policies and procedures.

Stanwick, Understanding Business Ethics, 3e Instructor Resource a. True b. False Ans: a Learning Objective: 13.6 Cognitive Domain: Knowledge Answer Location: Ethical Auditing Question Type: TF 48. The ethical auditing process is an evaluation tool used by management to ensure that the ethical conduct described in the code of ethics is enforced throughout the organization. a. True b. False Ans: a Learning Objective: 13.6 Cognitive Domain: Knowledge Answer Location: Ethical Auditing Question Type: TF 49. Whistle-blowing is the process in which an employee informs another responsible party in the company about potentially unethical behavior. a. True b. False Ans: True Learning Objective: 13.7 Cognitive Domain: Knowledge Answer Location: Whistle-Blowing Question Type: TF 50. Many companies find that setting up hotlines and other reporting mechanisms for reporting environmental programs is quite difficult to accomplish. a. True b. False Ans: b Learning Objective: 13.8 Cognitive Domain: Knowledge Answer Location: Hotlines Question Type: TF

Essay 51. In a short essay, list four specific goals that would enhance the employees’ knowledge of ethical issues, develop skills to support a strong ethical climate, and ensure proper ethical decision making by the employees.

Ans: 1. Provide the necessary tools needed by the employees to understand the ethical-decision making process

Stanwick, Understanding Business Ethics, 3e Instructor Resource 2. Give the employees an opportunity to assess ethical priorities 3. Explain the procedure when employees are in violation of ethical standards established by the firm 4. Give the opportunity for employees to be able to identify ethical programs based on the firm’s ethical standards 5. Increase the level of sensitivity of the employees’ views pertaining to specific ethical issues 6. Enhance the ability of the employees to increase their level of individual reflection as it relates to ethical issues 7. Create a strong, positive ethical work climate in which ethical support systems and codes are in place within the firm Learning Objective: 13.3 Cognitive Domain: Analysis Answer Location: Establishing an Ethical Training Program Question Type: ESS 52. In a short essay, list and discuss the different cultural dimensions, according to Geert Hofstede, that can impact both the message of the ethics training program and how the message is presented to its employees around the world.

Ans: a. Individualism vs. Collectivism—Individualism focuses on the achievement of individual goals, while collectivism focuses on the attainment of group-based goals. b. High-Context vs. Low-Context Communication—Low-context communication culture focuses primarily on the actual words spoken or written to interpret the meaning the other person is trying to communicate. A high-context communication culture interprets not only the words that have been spoken and/or written but also uses nonverbal cues to aid in the interpretation of the meaning of the words. c. High Uncertainty vs. Low Uncertainty Avoidance—High uncertainty avoidance culture is based on the view that the individuals do not want any ambiguity in their jobs. Low uncertainty avoidance not only accepts risk and ambiguity but embraces it. d. Masculinity vs. Feminity—Masculine cultures focus on material goods, status, accomplishment, and reward for ambition. Feminine cultures focus on caring for human needs and supporting others within the group. e. High vs. Low Power Distance—High power distance cultures embrace the hierarchical relationship that occurs between the manager and the subordinate. Employees in a low power distance culture would be too shy to speak their minds to their supervisors with the presentation of new ideas.

Learning Objective: 13.4 Cognitive Domain: Analysis Answer Location: Establishing a Global Ethics Training Program Question Type: ESS 53. In a short essay, discuss the role of ethics officers.

Corporate ethics officers will help with the evaluation of the ethical decision-making process that may be already established in the company, or the ethics officer may be charged with creating an

Stanwick, Understanding Business Ethics, 3e Instructor Resource ethics program for the company. These officers may be charged with communicating the ethics program to employees, setting up effective reporting mechanisms, and maintaining the oversight the program established. Most importantly, the ethics officer will be charged with evaluating and investigating ethical charges.

Learning Objective: 13.5 Cognitive Domain: Analysis Answer Location: Corporate Ethics Officers Question Type: ESS 54. In a short essay, describe the concept of ethical auditing.

Ethical auditing can be defined as the regular comprehensive evaluation of the compliance of the firm’s ethical policies and procedures. Ethical auditing attempts to look at an organization’s faithfulness to its ethics program. This includes the mission in conjunction with the ethics code.

Most important, an ethics audit will help an organization recognize risks relates to questionable practices in the organization. The ethical auditing process is an evaluation tool used by management to ensure that the ethical conduct described in the code of ethics is enforced throughout the organization.

Learning Objective: 13.6 Cognitive Domain: Analysis Answer Location: Ethical Auditing Question Type: ESS 55. In a short essay, explain whistle-blowing and list the four-step process that must take place before a firm is notified by a whistle-blower of potentially unethical behavior.

Whistle-blowing is the process in which an employee informs another responsible party in the company about potentially unethical behavior. The four-step process includes the following questions: Question 1: Did the individual observe behavior that was illegal, immoral, or illegitimate? If yes, move to question 2.

Question 2: Should the activity be reported? If yes, move to question 3.

Question 3: Should the questioned activity be halted by the firm? If yes, move to question 4.

Question 4: What should be done concerning the whistle-blower?

Learning Objective: 13.7 Cognitive Domain: Analysis Answer Location: Whistle-Blowing Question Type: ESS