Ethics and the Conduct of Business, 8th edition John R Boatright Solution Manual and Test Bank

Type:

Solution Manual and Test Bank

Resource:

Ethics and the Conduct of Business

Edition:

8th Edition

Author(s):

John R. Boatright

CONTENTS 1. Chapter One Ethics in the World of Business........................................................................................1 2. Chapter Two Ethical Decision Making...................................................................................................7 3. Chapter Three Ethical Theories...............................................................................................................13 4. Chapter Four Whistle-Blowing..............................................................................................................18 5. Chapter Five Trade Secrets and Conflict of Interest..............................................................................24 6. Chapter Six Privacy.............................................................................................................................30 7. Chapter Seven Discrimination and Affirmative Action...........................................................................35 8. Chapter Eight Employment Rights.........................................................................................................41 9. Chapter Nine Occupational Health and Safety.....................................................................................47 10. Chapter Ten Marketing, Advertising, and Product Safety..................................................................53 11. Chapter Eleven Ethics in Finance............................................................................................................58 12. Chapter Twelve Corporate Social Responsibility.....................................................................................63 13. Chapter Thirteen Corporate Governance and Accountability....................................................................68 14. Chapter Fourteen International Business Ethics…….................................................................................74

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Chapter 1 Ethics in the World of Business Chapter Summary Business ethics is concerned with identifying and understanding the ethical issues that arise in business, along with the development of knowledge and skills needed by a practicing manager to address these issues and to make sound business decisions. Ethical issues are an inevitable element of business decision making, and they are deeply intertwined with managerial practice and economic activity in general. The success of individual managers, business organizations, and the whole economic system depend upon sound ethical decision making. Although economics and law are important guides for business decision making, they are not entirely sufficient. Organizational research conducted by psychologists and sociologists further show that the treatment of business ethics from a purely philosophical perspective is likewise an insufficient approach. Organizational misconduct is often the result of flaws in individual and organizational decision making that can be corrected only by changing the overall decision making process. Practicing managers can promote an ethical organizational culture by actively discouraging misconduct and rewarding ethical decision making and conduct.

CHAPTER OBJECTIVES 1.1: Identify ethical issues created by diverse business situations and relationships and the level of decision making required to address them 1.2: Recognize the role of ethics in the conduct of business, with respect to economic principles and the law 1.3: Distinguish between ethical management and the management of ethics, and each of the three main roles of a manager 1.4: Analyze how ethical business conduct is challenged by decision making on individual and organizational levels SUGGESTED DISCUSSION PROMPTS 1. What types of ethical concerns do decision-makers at the management level need to take into account?

2. What types of ethical concerns do decision-makers at lower organizational levels need to take into account?

3. How would you respond to someone who says that a business should always do whatever is in its economic interests?

4. What is wrong with the thought that abiding by the law is all the ethics that a businessperson needs to worry about?

5. How does specialized knowledge come into play in the management of ethics?

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ASSESSMENT FOR IN-CLASS USE Multiple Choice Questions Choose the BEST possible answer for each of the following.

1. In many cases, rules of business ethics can be determined by _________ .

A. applicable laws B. company guidelines C. economic requirements D. rules of conduct that apply in everyday life Correct Answer: D 1.1: Identify ethical issues created by diverse business situations and relationships and the level of decision making required to address them Topic/Concept: Business Decision Making Difficulty Level: Easy Skill Level: Understanding 2. The economic character of business can be seen in its _________ .

A. trading characteristics B. ethical dimensions C. personal aspects D. legal guidelines Correct Answer: A 1.1: Identify ethical issues created by diverse business situations and relationships and the level of decision making required to address them Topic/Concept: Business Decision Making Difficulty Level: Easy Skill Level: Understanding 3. Organization in business is characterized mainly by its ________ .

A. rules B. hierarchy C. profits D. products Correct Answer: B 1.1: Identify ethical issues created by diverse business situations and relationships and the level of decision making required to address them Topic/Concept: Business Decision Making

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Difficulty Level: Easy Skill Level: Understanding 4. Decision making in business occurs at various distinctive ________ .

A. places B. levels C. objectives D. profits Correct Answer: B 1.1: Identify ethical issues created by diverse business situations and relationships and the level of decision making required to address them Topic/Concept: Business Decision Making Difficulty Level: Easy Skill Level: Understanding 5. If a business manager decides to proceed with a course of action although the manager has information that suggests the need to rethink the decision, the manager is being influenced by A. anchor heuristic B. confirmation bias C. sunk cost bias D. adjustment heuristic Correct Answer: C 1.4: Analyze how ethical business conduct is challenged by decision making on individual and organizational levels Topic/Concept: Ethics in Organizations Difficulty Level: Moderate Skill Level: Application 6. Economic reasoning describes how we _________.

A. ought to reason B. prioritize our desires C. reason when pursuing our goals D. would reason if we could have whatever we wanted Correct Answer: C 1.2: Recognize the role of ethics in the conduct of business, with respect to economic principles and the law Topic/Concept: Ethics, Economics, and Law Difficulty Level: Easy Skill Level: Understanding

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7. Adam Smith's economic theory is based on which of the following assumptions?

A. People want to promote each others' interests.

B. Morality is not relevant to economic concerns.

C. Free markets will fix their own ethical problems.

D. People will behave rationally as they pursue their interests.

Correct Answer: D 1.2: Recognize the role of ethics in the conduct of business, with respect to economic principles and the law Topic/Concept: Ethics, Economics, and Law Difficulty Level: Moderate Skill Level: Analysis 8. What fact does the "ultimatum bargaining game" demonstrate?

A. It is often rational to price products below their market value.

B. Free markets will usually self-regulate.

C. Many people do not understand economics.

D. Many people would rather not trade than be treated unfairly.

Correct Answer: D 1.2: Recognize the role of ethics in the conduct of business, with respect to economic principles and the law Topic/Concept: Ethics, Economics, and Law Difficulty Level: Moderate Skill Level: Analysis 9. The school of thought that says that law and ethics govern two different realms is wrong because ____________ A. ethics applies to every field of life B. anything that is legal is also ethical C. anything that is illegal is also unethical D. the law governs every aspect of life Correct Answer: A 1.2: Recognize the role of ethics in the conduct of business, with respect to economic principles and the law Topic/Concept: Ethics, Economics, and Law Difficulty Level: Easy Skill Level: Understanding 10. It is not ethically sufficient to obey the law because ___________ A. the law does not apply to business in general B. ethical constraints sometimes require that the law be ignored C. ethics goes beyond what can be legally codified

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D. the law itself is stricter than ethics Correct Answer: C 1.2: Recognize the role of ethics in the conduct of business, with respect to economic principles and the law Topic/Concept: Ethics, Economics, and Law Difficulty Level: Moderate Skill Level: Application Essay Questions 1. Identify two dangers of rationalization which can lead an individual to make unethical decisions.

1.4: Analyze how ethical business conduct is challenged by decision making on individual and organizational levels Topic/Concept: Ethics in Organizations Difficulty Level: Moderate Skill Level: Analysis 2. Describe and explain an example of a business decision that would be unethical even though it is legal.

1.2: Recognize the role of ethics in the conduct of business, with respect to economic principles and the law Topic/Concept: Ethics, Economics, and Law Difficulty Level: Moderate Skill Level: Analysis 3. Examine one way in which a manager's role (job obligations) may conflict with his or her moral obligations.

1.3: Distinguish between ethical management and the management of ethics, and each of the three main roles of a manager Topic/Concept: Ethics and Management Difficulty Level: Moderate Skill Level: Analysis 4. What is wrong with the thought that abiding by the law is all the ethics that a businessperson needs to worry about?

1.2: Recognize the role of ethics in the conduct of business, with respect to economic principles and the law Topic/Concept: Ethics, Economics, and Law

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Difficulty Level: Moderate Skill Level: Evaluation 5. How does specialized knowledge come into play in the management of ethics?

1.3: Distinguish between ethical management and the management of ethics, and each of the three main roles of a manager Topic/Concept: Ethics and Management Difficulty Level: Moderate Skill Level: Analysis

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Chapter 2 Ethical Decision Making CHAPTER SUMMARY Ethical decision making in business is often difficult and complex. Some situations are easily handled because what one ought to do or what is right and wrong are evident.

Those situations that give us pause or produce moral anguish require careful thought and ultimately an ability to engage in ethical reasoning. This chapter contributes to an understanding of ethical decision making by offering a division of business ethics into two parts: an ethics of the market and an ethics of roles and relationships, including firms. In business, we deal with some parties purely as market actors who are on the other side of a market transaction or exchange. For such market activity, certain moral rules or standards apply. These relationships are governed by professional ethics, a prime example being the legal profession. In addition to the law, an attorney must follow professional codes of ethics established by the state bar and/or professional association he or she belongs to. These codes can impose a greater obligation to act in the best interests of the client. For example, the attorneyclient relationship imposes on the attorney a duty to avoid conflicts of interests, to protect client property, and to closely guard confidential information. Other professional relationships involving business dealings can also take the form of an agency. These relationships are built on trust and confidence so the principal’s interests must be protected. The agent owes the principal a duty of loyalty to act in the principal’s best interest in all business dealings involving the agency.

When we attempt to think through the ethical issues that arise in business, we are engaging in ethical reasoning, which may be conducted on different levels. Ethical theories, which are presented in the next chapter, can guide ethical reasoning on the highest level by providing the most comprehensive and fundamental grounds for our moral beliefs and judgments.

Fortunately, substantial moral arguments that do not require an understanding of these theories can be constructed. Most of our everyday ethical reasoning employs familiar ethical concepts and principles that can be readily understood and applied. Accordingly, this chapter provides a framework of seven basic ethical principles that are sufficient for most business decision making. For those who seek more, though, the next chapter provides a survey of the main philosophical theories of ethics.

CHAPTER OBJECTIVES 2.1: Recognize the features of the market system, the ethics of market transactions, and the problems created by imperfect market conditions 2.2: Identify the duties and obligations associated with fundamental business roles and relationships in markets and firms 2.3: Describe the philosophical and psychological approaches to ethical reasoning and the principles that constitute a moral framework for business conduct

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SUGGESTED DISCUSSION PROMPTS 1. What is ethically required of participants in a market economic system?

2. In what ways do participants in a market system have to depend upon each other?

3. In what ways do ethical considerations work against perfect operation of a market economy?

4. How does the prisoner’s dilemma reflect the limitations of a free market system?

5. What capacities are required of an agent to engage in ethical reasoning?

ASSESSMENT FOR IN-CLASS USE Multiple Choice Questions Choose the BEST possible answer for each of the following.

1. A market economy is based fundamentally on A. ethical motivations B. the profit motive C. human welfare D. manufacturing

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Correct Answer: B 2.1: Recognize the features of the market system, the ethics of market transactions, and the problems created by imperfect market conditions Topic/Concept: Market Ethics Difficulty Level: Easy Skill Level: Understanding 2. A market with perfect competition would require A. agents to not be rational B. that there be no contracts C. that ethics not be necessary D. ethical guidelines to be legally codified

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Correct Answer: C 2.1: Recognize the features of the market system, the ethics of market transactions, and the problems created by imperfect market conditions Topic/Concept: Market Ethics Difficulty Level: Easy Skill Level: Understanding 3. Fraud is unethical because ______.

A. all parties must have access to pertinent information B. no one may be permitted to profit too much C. market economies require freedom of action

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D. the market requires everyone to further their own interests Correct Answer: A 2.1: Recognize the features of the market system, the ethics of market transactions, and the problems created by imperfect market conditions Topic/Concept: Market Ethics Difficulty Level: Easy Skill Level: Understanding 4. The difference between Homo economicus and actual people is that A. Homo economicus is capable of making any decision B. Homo economicus pursues many different interests C. actual people pursue their own self-interest D. actual people are less than perfectly rational

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Correct Answer: D 2.1: Recognize the features of the market system, the ethics of market transactions, and the problems created by imperfect market conditions Topic/Concept: Market Ethics Difficulty Level: Moderate Skill Level: Analysis 5. A market economy alone cannot sustain public goods because A. no one would want to take advantage of public goods B. people would be free riders if they could be C. people would try to sell each other public goods D. participants in a market economy are imperfectly rational

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Correct Answer: B 2.1: Recognize the features of the market system, the ethics of market transactions, and the problems created by imperfect market conditions Topic/Concept: Market Ethics Difficulty Level: Moderate Skill Level: Application 6. Market outcomes lead to unequal outcomes mainly because A. it involves random processes B. participants have differing levels of skill C. free markets are inherently unjust D. there is government interference

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Correct Answer: B 2.1: Recognize the features of the market system, the ethics of market transactions, and the problems created by imperfect market conditions

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Topic/Concept: Market Ethics Difficulty Level: Moderate Skill Level: Analysis 7. A fiduciary has the special responsibility to _________.

A. care for another’s financial interests B. sell goods as efficiently as possible C. provide as much information as possible D. take a professional interest in another’s success Correct Answer: A 2.2: Identify the duties and obligations associated with fundamental business roles and relationships in markets and firms Topic/Concept: Roles, Relationships, and Firms Difficulty Level: Easy Skill Level: Understanding 8. Professions have a contract with society whereby they _____ in exchange for sharing the many benefits of their specialized knowledge.

A. submit to total government regulation B. relinquish control over their work C. forgo licensing requirements D. are granted self-regulation Correct Answer: D 2.2: Identify the duties and obligations associated with fundamental business roles and relationships in markets and firms Topic/Concept: Roles, Relationships, and Firms Difficulty Level: Easy Skill Level: Understanding 9. From a traditional economic point of view, a firm was viewed as _____ which sought to maximize its profits.

A. a combination of markets and relationships B. a series of relationships, roles, and markets C. a moral actor D. a market actor Correct Answer: D 2.2: Identify the duties and obligations associated with fundamental business roles and relationships in markets and firms Topic/Concept: Roles, Relationships, and Firms Difficulty Level: Easy Skill Level: Understanding

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10. The ethical concept of dignity most centrally involves .

A. treating all persons equally B. disclosing all information that is needed by others C. recognizing the intrinsic value of persons or other entities D. behaving with high standards of virtue Correct Answer: C 2.3: Describe the philosophical and psychological approaches to ethical reasoning and the principles that constitute a moral framework for business conduct Topic/Concept: Ethical Reasoning Difficulty Level: Easy Skill Level: Understanding Essay Questions 1. What are the basic components of a market system, and what assumptions are made about human behavior?

2.1: Recognize the features of the market system, the ethics of market transactions, and the problems created by imperfect market conditions Topic/Concept: Market Ethics Difficulty Level: Moderate Skill Level: Application 2. What is the difference between a fiduciary and an agent? What special obligations are characteristic of a fiduciary that is not an agent?

2.2: Identify the duties and obligations associated with fundamental business roles and relationships in markets and firms Topic/Concept: Roles, Relationships, and Firms Difficulty Level: Moderate Skill Level: Analysis 3. What are the required components of the moral point of view, and how are they exercised in a business setting?

2.3: Describe the philosophical and psychological approaches to ethical reasoning and the principles that constitute a moral framework for business conduct Topic/Concept: Ethical Reasoning Difficulty Level: Moderate Skill Level: Analysis 4. What are some basic questions that should be asked when making a decision that poses an ethical dilemma?

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2.3: Describe the philosophical and psychological approaches to ethical reasoning and the principles that constitute a moral framework for business conduct Topic/Concept: Ethical Reasoning Difficulty Level: Moderate Skill Level: Application 5. Describe "context" and how it affects ethics and the decision-making process.

2.3: Describe the philosophical and psychological approaches to ethical reasoning and the principles that constitute a moral framework for business conduct Topic/Concept: Ethical Reasoning Difficulty Level: Easy Skill Level: Understanding

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Chapter 3 Ethical Theories CHAPTER SUMMARY This chapter presents the main concepts and theories of ethics developed over centuries by major moral philosophers. The value of any theory for business ethics is its usefulness in evaluating business practices, institutional arrangements, and economic systems.

Teleological theory examines the outcome stemming from a decision or behavior. Deontological theory is more concerned with the actual decision or behavior but not with the consequence stemming from the decision or behavior. In general, all of these theories justify most prevailing business practices, the institution of the modern corporation, and capitalism or the market system, but they also provide the basis for some criticism and improvement.

In the subsequent chapters, this theoretical foundation is used to explore a wide range of practical business ethics topics.

CHAPTER OBJECTIVES 3.1: Describe the four theses of classical utilitarianism, the utilitarian approach to decision making, and the main criticisms of the cost-benefit analysis method 3.2: Summarize the two intuitive principles of Kantian ethics and their implications for moral reasoning 3.3: Define virtue and explain how virtues and principles of virtue ethics are relevant to business 3.4: Identify the meaning and importance of rights and the types of rights that apply in different situations 3.5: Explain the role of justice in business ethics, the three kinds of justice outlined by Aristotle, and the contemporary principles of justice offered by Rawls and Nozick SUGGESTED DISCUSSION PROMPTS 1. What would an act utilitarian and a rule utilitarian say differently when evaluating the same case?

2. What specific problem is posed to utilitarianism by its economic application?

3. What is the major contrast between utilitarianism and Kantian ethics?

4. What are the attractive features of virtue theory? What are its limitations in application to business?

5. In what ways is the rights and justice perspective a fitting ethical theory for business ethics?

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ASSESSMENT FOR IN-CLASS USE Multiple Choice Questions Choose the BEST possible answer for each of the following.

1. What does the P&G case show about the applicability of ethics to business?

A. When a company makes unethical decisions, it is usually breaking the law.

B. Ethics in business applies differently from how it does in the rest of the world.

C. A company’s behavior many be unethical even if no harm is done.

D. A company’s ethical decisions should always affect its bottom line.

Correct Answer: C 3.1: Describe the four theses of classical utilitarianism, the utilitarian approach to decision making, and the main criticisms of the cost-benefit analysis method Topic/Concept: Utilitarianism Difficulty Level: Easy Skill Level: Understanding 2. Teleological theories of ethics locate goodness in A. the outcome of actions B. the intentions of the agent C. the obligations of people to each other D. the maximization of economic opportunity

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Correct Answer: A 3.1: Describe the four theses of classical utilitarianism, the utilitarian approach to decision making, and the main criticisms of the cost-benefit analysis method Topic/Concept: Utilitarianism Difficulty Level: Easy Skill Level: Understanding 3. Rule utilitarianism favors rules that _____.

A. always benefit the most people B. everyone agrees with C. utilitarians think are good rules D. would maximize goodness if everyone followed them Correct Answer: D 3.1: Describe the four theses of classical utilitarianism, the utilitarian approach to decision making, and the main criticisms of the cost-benefit analysis method.

Topic/Concept: Utilitarianism Difficulty Level: Easy Skill Level: Understanding

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4. What is the most fundamental drawback of having cost-benefit analyses serve as the basis for ethical decisions in business?

A. Some things do not really have value.

B. A determinate value must be placed on things that have incalculable value.

C. Cost-benefit analyses are time-consuming and require specialized skill.

D. Cost-benefit analyses require a commitment to consequentialism.

Correct Answer: B 3.1: Describe the four theses of classical utilitarianism, the utilitarian approach to decision making, and the main criticisms of the cost-benefit analysis method Topic/Concept: Utilitarianism Difficulty Level: Easy Skill Level: Understanding 5. A “maxim,” according to Kant’s terminology, is A. the outcome of an action B. the reason that one undertakes an action C. the moral principle that one has in mind D. that which would make an action moral

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Correct Answer: B 3.2: Summarize the two intuitive principles of Kantian ethics and their implications for moral reasoning Topic/Concept: Kantian Ethics Difficulty Level: Easy Skill Level: Understanding 6. Kant’s rule requiring respect for persons asks that we ________.

A. not use people as means to an end B. view each person as a moral agent C. view each person as an end unto himself D. only use another person if we have sufficient reason for doing so Correct Answer: C 3.2: Summarize the two intuitive principles of Kantian ethics and their implications for moral reasoning Topic/Concept: Kantian Ethics Difficulty Level: Easy Skill Level: Understanding

7. Virtue ethics defines a moral action as that which A. a wise person would do B. leads to the most virtue overall C. is done with the most virtuous intentions

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D. is done according to the proper rules Correct Answer: A 3.3: Define virtue and explain how virtues and principles of virtue ethics are relevant to business Topic/Concept: Virtue Ethics Difficulty Level: Easy Skill Level: Understanding 8. A drawback to theorizing about business ethics in terms of rights is that A. not everyone has rights B. people’s rights may conflict C. it is hard to draw the line between different types of rights D. conceptions of rights differ between cultures

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Correct Answer: B 3.4: Identify the meaning and importance of rights and the types of rights that apply in different situations Topic/Concept: Rights Difficulty Level: Easy Skill Level: Understanding 9. The notion of justice is most basically concerned with __________.

A. fairness B. equality C. rights D. economics Correct Answer: A 3.5: Explain the role of justice in business ethics, the three kinds of justice outlined by Aristotle, and the contemporary principles of justice offered by Rawls and Nozick Topic/Concept: Justice Difficulty Level: Easy Skill Level: Understanding Essay Questions 1. In what ways is the need to calculate utility a problem for utilitarianism?

3.1: Describe the four theses of classical utilitarianism, the utilitarian approach to decision making, and the main criticisms of the cost-benefit analysis method Topic/Concept: Utilitarianism Difficulty Level: Moderate Skill Level: Analysis

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2. What is Kant’s categorical imperative? Explain its two formulations.

3.2: Summarize the two intuitive principles of Kantian ethics and their implications for moral reasoning Topic/Concept: Kantian Ethics Difficulty Level: Easy Skill Level: Understanding 3. Describe how rights and justice can be explained in terms of one another.

3.4: Identify the meaning and importance of rights and the types of rights that apply in different situations Topic/Concept: Rights Difficulty Level: Moderate Skill Level: Analysis 4. What is virtue? Explain how principles of virtue ethics are relevant to business.

3.3: Define virtue and explain how virtues and principles of virtue ethics are relevant to business Topic/Concept: Virtue Ethics Difficulty Level: Easy Skill Level: Understanding 5. Explain the contemporary justice principles according to Rawls and Nozick.

3.5: Explain the role of justice in business ethics, the three kinds of justice outlined by Aristotle, and the contemporary principles of justice offered by Rawls and Nozick Topic/Concept: Justice Difficulty Level: Easy Skill Level: Understanding

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Chapter 4 Whistle-Blowing CHAPTER SUMMARY Whether or not to blow the whistle on misconduct in an organization is one o f the most difficult decisions that some people will ever have to make. The decision is wrenching personally because the stakes are so high. Yet many whistle-blowers say that they could not have lived with themselves if they had stayed silent. The decision is also difficult ethically, because whistle-blowing involves a conflict between two competing duties: to protect the public and to be loyal to an organization. Although loyalty is not always overriding, as the loyal agent argument holds, neither is it inconsequential. Deciding between these duties often requires that an employee exercise very careful judgment.

The one certain conclusion of this chapter is that whistle-blowing is ethically permissible under certain carefully specified conditions. (Whether it can ever be ethically required is a different question that seldom arises. Everyone has an obligation not to be a part of illegal and immoral activity, but exposing it at great risk to oneself is usually regarded as beyond what duty requires.) Blowing the whistle is only one response that an employee can make to report misconduct; however, the act of whistle-blowing itself can take on many different forms. So in addition to deciding whether to become a whistle-blower, employees are faced with the further question of how to blow the whistle in a justified manner. Finally, it is evident that employees who are justified in blowing the whistle ought not to suffer retaliation. What ought to be done to protect whistle-blowers from this fate is less clear. A plausible case can be made for legislation in this area, but the difficulty is drafting laws that achieve the desired result without interfering unduly in the legitimate conduct of business.

CHAPTER OBJECTIVES 4.1: Define the significance of whistle-blowing and the act itself according to seven criteria 4.2: Assess situations where whistle-blowing may or may not be justified, given the duties and obligations of all parties and the potential consequences of the act 4.3: Describe the characteristics and importance of laws designed to protect whistleblowers and key points in the debate over the moral justification of these laws 4.4: Identify the importance of developing an effective whistle-blowing policy for an organization and the key components of such a policy SUGGESTED DISCUSSION PROMPTS 1. Why do employees want to blow the whistle?

2. Do employers have valid reasons to frown on whistle-blowing?

3. What must employees do to ensure that they blow the whistle properly?

4. What are the objectives of legal protection for whistle-blowers?

5. Why would a company develop a whistle-blowing policy?

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ASSESSMENT FOR IN-CLASS USE Multiple Choice Questions Choose the BEST possible answer for each of the following.

1. A whistle-blower is primarily motivated by A. retaliation B. ethical concern C. personal gain D. fear of retribution

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Correct Answer: B 4.1: Define the significance of whistle-blowing and the act itself according to seven criteria Topic/Concept: What Is Whistle-Blowing?

Difficulty Level: Easy Skill Level: Understanding 2. Which of the following is necessary for whistle-blowing to occur?

A. information B. legal protection C. a nondisclosure agreement D. managing authority Correct Answer: A 4.1: Define the significance of whistle-blowing and the act itself according to seven criteria Topic/Concept: What Is Whistle-Blowing?

Difficulty Level: Easy Skill Level: Understanding 3. Some corporations have an ombudsman, whose role is to A. blow the whistle B. release information to the public C. report on employees D. hear complaints

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Correct Answer: D 4.1: Define the significance of whistle-blowing and the act itself according to seven criteria Topic/Concept: What Is Whistle-Blowing?

Difficulty Level: Easy Skill Level: Understanding

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4. Why is the loyal agent argument supported by the law?

A. The argument is supported because of the agent dictates the principal's job duties.

B. The argument is supported because the agent is morally but not contractually obligated to follow the principal's directions.

C. The argument is supported because the agent is not an employee of the principal.

D. The argument is supported because the agent is contractually obligated to perform his or her duty.

Correct Answer: D 4.2: Assess situations where whistle-blowing may or may not be justified, given the duties and obligations of all parties and the potential consequences of the act Topic/Concept: Justification of Whistle-Blowing Difficulty Level: Easy Skill Level: Understanding 5. The two Challenger spacecraft engineers who were concerned about possible Oring failure were unsuccessful at whistleblowing because they ________.

A. tried to resolve the matter internally at Morton Thiokol B. refused to use Morton Thiokol internal channels to address the matter C. did not document problems with the O-ring D. opted to contact the press before speaking with their superiors about potential problems with the O-ring Correct Answer: A 4.2: Assess situations where whistle-blowing may or may not be justified, given the duties and obligations of all parties and the potential consequences of the act Topic/Concept: Justification of Whistle-Blowing Difficulty Level: Easy Skill Level: Understanding 6. Loyalty to a corporation can sometimes lead to whistleblowing if A. the corporation is a large one B. the whistleblower enjoys legal protection C. the whistleblower wants to see change in the corporation D. the government is paying the employee for the information

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Correct Answer: C 4.2: Assess situations where whistle-blowing may or may not be justified, given the duties and obligations of all parties and the potential consequences of the act Topic/Concept: Justification of Whistle-Blowing Difficulty Level: Easy Skill Level: Understanding

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7. Employees who are most upset with a company will most often A. write to the CEO B. simply leave the company C. go public with their complaints D. hope the company will reform from within

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Correct Answer: B 4.2: Assess situations where whistle-blowing may or may not be justified, given the duties and obligations of all parties and the potential consequences of the act Topic/Concept: Justification of Whistle-Blowing Difficulty Level: Easy Skill Level: Understanding 8. The main motivation for there to be whistleblower-protection laws is that whistleblowers _______.

A. represent a minority B. are likely to be oppressed C. benefit society D. should enjoy freedom of speech Correct Answer: C 4.3: Describe the characteristics and importance of laws designed to protect whistleblowers and key points in the debate over the moral justification of these laws Topic/Concept: Right to Blow the Whistle Difficulty Level: Easy Skill Level: Understanding 9. The main reason that companies should have a whistle-blowing policy is that .

A. it avoids tension and strife B. whistle-blowing helps business C. it enhances employee satisfaction D. wrongdoing harms them Correct Answer: D 4.4: Identify the importance of developing an effective whistle-blowing policy for an organization and the key components of such a policy Topic/Concept: Developing a Policy Difficulty Level: Easy Skill Level: Understanding 10. All whistle-blowing policies should include A. a guarantee against retaliation B. a guarantee of continued employment C. a way for employees to go public

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D. specific monetary awards Correct Answer: A 4.4: Identify the importance of developing an effective whistle-blowing policy for an organization and the key components of such a policy Topic/Concept: Developing a Policy Difficulty Level: Easy Skill Level: Understanding Essay Questions 1. Describe ways in which employers can deal with potential cases of whistleblowing. How do they further their interests in this regard?

4.2: Assess situations where whistle-blowing may or may not be justified, given the duties and obligations of all parties and the potential consequences of the act Topic/Concept: Justification of Whistle-Blowing Difficulty Level: Moderate Skill Level: Evaluation 2. Explain the ironic dimension of whistle-blowing with respect to employee loyalty.

4.2: Assess situations where whistle-blowing may or may not be justified, given the duties and obligations of all parties and the potential consequences of the act Topic/Concept: Justification of Whistle-Blowing Difficulty Level: Easy Skill Level: Understanding 3. Describe the pros and cons of legal protection for whistle-blowing.

4.3: Describe the characteristics and importance of laws designed to protect whistleblowers and key points in the debate over the moral justification of these laws Topic/Concept: Right to Blow the Whistle Difficulty Level: Moderate Skill Level: Analysis 4. Describe the criteria for whistle-blowing.

4.1: Define the significance of whistle-blowing and the act itself according to seven criteria Topic/Concept: 4.1: What Is Whistle-Blowing?

Difficulty Level: Easy Skill Level: Understanding

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5. Why is it important to develop an effective whistle-blowing policy? What are some key components of an effective whistle-blowing policy?

4.4: Identify the importance of developing an effective whistle-blowing policy for an organization and the key components of such a policy Topic/Concept: 4.4: Developing a Policy Difficulty Level: Easy Skill Level: Understanding

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Chapter 5 Business Information and Conflict of Interest CHAPTER SUMMARY Like whistle-blowing, trade secrets and conflicts of interest involve a delicate balancing of the rights and interests of employers and employees, as well as the public at large. As a matter of public policy, trade secrets are protected through the implementation of laws that encourage conformance to rules of commercial morality. Trade secret protection can take many forms—arguments for property rights, fair competition, and a duty of confidentiality.

For example, ownership protection is necessary because disputes can arise where an employee claims rights to a product developed during the course of employment.

Noncompete clauses are highly favored by employers, but they are often struck down by the courts as a matter of public policy. Employers typically make the argument that noncompete clauses are necessary to protect trade secrets; however, fair competition issues often result from noncompete employment contracts that are overly broad and place unreasonable restrictions on competition. In reference to confidentiality, it is imperative for trade secret protection. Conflict of interest disputes occur when an employee breaches confidentiality and uses trade secret information to his/her advantage without permission from the employer.

CHAPTER OBJECTIVES 5.1: Identify the competing rights and considerations of fairness for employers and employees seeking to protect or use confidential information 5.2: Explain the concepts of intellectual property and trade secrets; the arguments surrounding questions of ownership, protection, and collection; and how these issues affect the employer-employee relationship 5.3: Describe the meaning of conflict of interest, the different types of conflict of interest, and ways by which business firms can manage these situations SUGGESTED DISCUSSION PROMPTS 1.

2.

3.

4.

5.

What are the reasons for thinking of trade secrets as property?

What does a company have to show to have its trade secrets protected as property?

What can companies do within legal and ethical bounds to learn from other companies?

How might considerations of fair competition be used either for or against the protection of intellectual property?

How did conflicts of interest arise in the Enron situation?

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ASSESSMENT FOR IN-CLASS USE Multiple Choice Questions Choose the BEST possible answer for each of the following.

1. Courts have difficulty determining .

A. what constitutes a trade secret B. whether trade secrets should be protected C. why companies want to protect trade secrets D. the extent to which trade secrets have been pursued Correct Answer: A 5.2: Explain the concepts of intellectual property and trade secrets; the arguments surrounding questions of ownership, protection, and collection; and how these issues affect the employer-employee relationship Topic/Concept: Proprietary Information Difficulty Level: Easy Skill Level: Understanding 2. The Economic Espionage Act of 1996 ________.

A. was primarily aimed at protecting against domestic spying B. was primarily aimed at protecting foreign companies in the U.S. C. has been effective in protecting against domestic spying D. was the first law in the U.S. to protect trade secrets Correct Answer: C 5.2: Explain the concepts of intellectual property and trade secrets; the arguments surrounding questions of ownership, protection, and collection; and how these issues affect the employer-employee relationship Topic/Concept: Proprietary Information Difficulty Level: Easy Skill Level: Understanding 3. The question of intellectual property ownership becomes most complicated when __.

A. the intellectual property involves new technology B. an inventor works for a company that manufactures the invention C. the intellectual property is not related to work performed for the employer D. the inventor owns the right to many different patents Correct Answer: B 5.2: Explain the concepts of intellectual property and trade secrets; the arguments surrounding questions of ownership, protection, and collection; and how these issues

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affect the employer-employee relationship Topic/Concept: Proprietary Information Difficulty Level: Easy Skill Level: Understanding 4. The Wexler case found that Greenberg had the right to his own formulas because __.

A. it would be unfair for his old company to use those formulas B. his new company did not own the rights to the formulas C. no one owned the rights to the formulas that Greenberg had created D. not allowing him to do so would unfairly restrict his ability to compete with the new company Correct Answer: D 5.2: Explain the concepts of intellectual property and trade secrets; the arguments surrounding questions of ownership, protection, and collection; and how these issues affect the employer-employee relationship Topic/Concept: Proprietary Information Difficulty Level: Easy Skill Level: Understanding 5. One source of the idea that trade secrets are a form of property is the view that ___.

A. trade should always be free and unrestricted B. each person owns the product of his/her labor C. property should be had in common by all people D. companies should be able to make a profit however they can Correct Answer: B 5.2: Explain the concepts of intellectual property and trade secrets; the arguments surrounding questions of ownership, protection, and collection; and how these issues affect the employer-employee relationship Topic/Concept: Proprietary Information Difficulty Level: Easy Skill Level: Understanding 6. Why are legal restrictions placed on noncompetition agreements?

A. Most employees stay with the same company for a long time.

B. Most employees are not in a position to use trade secrets with another company C. They are difficult to enforce.

D. They can result in difficulty for an employee to subsequently find suitable work.

Correct Answer: D 5.1: Identify the competing rights and considerations of fairness for employers and

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employees seeking to protect or use confidential information Topic/Concept: Confidential Information Difficulty Level: Easy Skill Level: Understanding 7. Trade-secret protection agreements that are based on confidentiality assume that ____.

A. the trade secret was not developed by the employee B. the employee will not work for other companies C. the employer is involved in a high-tech industry D. the employee will eventually work for a competitor Correct Answer: A 5.2: Explain the concepts of intellectual property and trade secrets; the arguments surrounding questions of ownership, protection, and collection; and how these issues affect the employer-employee relationship Topic/Concept: Proprietary Information Difficulty Level: Easy Skill Level: Understanding 8. If a company gains information on a company through misrepresentation, this is a breach of .

A. property B. honesty C. trust D. privacy Correct Answer: B 5.2: Explain the concepts of intellectual property and trade secrets; the arguments surrounding questions of ownership, protection, and collection; and how these issues affect the employer-employee relationship Topic/Concept: Proprietary Information Difficulty Level: Easy Skill Level: Understanding 9. Conflicts of interest are an ethical problem for a business because they .

A. violate an individual’s right to privacy B. create profits that would be owed to other companies instead C. create incentive for company representatives to act against others’ best interest D. prevent the company from succeeding as well as it might otherwise Correct Answer: C 5.3: Describe the meaning of conflict of interest, the different types of conflict of interest, and ways by which business firms can manage these situations

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Topic/Concept: Conflict of Interest Difficulty Level: Easy Skill Level: Understanding 10. Arthur Andersen’s double role with Enron represented a conflict of interest because ____.

A. Arthur Andersen made too much of a profit from one client B. Enron executives did not reveal everything to Arthur Andersen that they should have C. Arthur Andersen had incentive not to make criticisms that would hurt its consulting role D. Arthur Andersen did not know Enron well enough to be both consulting and auditing the company Correct Answer: C 5.3: Describe the meaning of conflict of interest, the different types of conflict of interest, and ways by which business firms can manage these situations Topic/Concept: Conflict of Interest Difficulty Level: Easy Skill Level: Understanding Essay Questions 1. What is a trade secret, and why is the government invested in helping companies protect them?

5.1: Identify the competing rights and considerations of fairness for employers and employees seeking to protect or use confidential information Topic/Concept: Confidential Information Difficulty Level: Easy Skill Level: Understanding 2. What are the ethical and legal limits that have been placed on competitor intelligence gathering by companies?

5.2: Explain the concepts of intellectual property and trade secrets; the arguments surrounding questions of ownership, protection, and collection; and how these issues affect the employer-employee relationship Topic/Concept: Proprietary Information Difficulty Level: Easy Skill Level: Understanding

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3. How do conflicts of interest arise in business, and what can be done to prevent them?

5.3: Describe the meaning of conflict of interest, the different types of conflict of interest, and ways by which business firms can manage these situations Topic/Concept: Conflict of Interest Difficulty Level: Moderate Skill Level: Evaluation

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Chapter 6 Privacy CHAPTER SUMMARY Although privacy is a relatively recent concept—dating in American law to the 1890s— public concern is clearly increasing, primarily in response to privacy-invading technologies. Chapter 6 discusses the ethical arguments for an individual’s right to privacy and describes big data analytics and other ways in which businesses challenge the privacy of employees, consumers, and Internet users. The chapter also considers the question of how to protect privacy while still allowing individuals to benefit from technology and businesses to access necessary information. Americans say that they value privacy, and yet they give up a great deal for convenience and material gain. Without question, the technologies that threaten privacy have brought us many benefits. Finding the right means is a great challenge to business firms that must meet employee and consumer expectations as they utilize new technologies. Protecting privacy a l s o requires a coordinated solution involving many parties. Until a solution is found, though, the focus of businesses will remain on developing and implementing privacy policies.

CHAPTER OBJECTIVES 6.1: Identify how different business practices challenge the privacy of employees in the workplace and consumers in the marketplace 6.2: Explain the concept of privacy and how the utilitarian and Kantian arguments defend privacy as a necessary right of all individuals 6.3: Evaluate the reasoning that leads a company to monitor its employees and the measures undertaken to limit such monitoring 6.4: Determine what ethical issue(s) are associated with a particular handling or use of employee records and whether the action is justified or a violation of the employee’s privacy 6.5: Describe how big data analytics enables companies to profile and target consumers and the potential ethical issues with this process 6.6: Analyze the ethical issues associated with collecting and using information about consumers’ online activities, and the adequacy of the rules and principles created to protect Internet privacy SUGGESTED DISCUSSION PROMPTS 1.

2.

3.

4.

What are some definitions of privacy? Is privacy a right unto itself, or is it a special case of a more general kind of right?

Which do you think is the most sound ethical basis on which to defend privacy?

To what extent do you think companies’ gathering of personal employee information is justifiable?

Why is it ethically objectionable for companies to share employee information

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5.

with outsiders?

In what ways has privacy on the Internet become a major concern?

ASSESSMENT FOR IN-CLASS USE Multiple Choice Questions Choose the BEST possible answer for each of the following.

1. The Freedom of Information Act of 1966 had the unforeseen consequence of .

A. making government more transparent in its dealings B. making corporations more transparent in their dealings C. compromising confidentiality about private individuals D. making information more readily available to individuals Correct Answer: C 6.1: Identify how different business practices challenge the privacy of employees in the workplace and consumers in the marketplace Topic/Concept: Challenges to Privacy Difficulty Level: Easy Skill Level: Understanding 2.Employers feel the need to monitor their employees at work primarily A. to influence them B. to promote morale C. to be competitive D. to maintain productivity

.

Correct Answer: D 6.1: Identify how different business practices challenge the privacy of employees in the workplace and consumers in the marketplace Topic/Concept: Challenges to Privacy Difficulty Level: Easy Skill Level: Understanding 3. Employers may want to use psychological testing on employees primarily A. to gauge suitability for a job B. to detect potential sources of trouble C. for statistical reporting purposes D. to test for intelligence

.

Correct Answer: A 6.1: Identify how different business practices challenge the privacy of employees in the workplace and consumers in the marketplace

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Topic/Concept: Challenges to Privacy Difficulty Level: Easy Skill Level: Understanding 4. One of the biggest issues in consumer privacy is when .

A. companies find out what customers most like B. companies sell their collected information to other companies C. companies use databases to store customer information D. companies keep personal information on employees Correct Answer: B 6.5: Describe how big data analytics enables companies to profile and target consumers and the potential ethical issues with this process Topic/Concept: Big Data Analytics Difficulty Level: Easy Skill Level: Understanding 5. An argument used by employers to justify "off the clock" policies is ________.

A. to limit the amount of work related discussions B. to influence employee morale C. to promote a safe workplace D. to create information databases Correct Answer: C 6.3: Evaluate the reasoning that leads a company to monitor its employees and the measures undertaken to limit such monitoring Topic/Concept: Privacy Away from Work Difficulty Level: Easy Skill Level: Understanding 6. Which of the following is the best definition of privacy?

A. when certain facts are not known to others B. when information about ourselves is under our control C. to be free of to make choices D. to be free of supervision Correct Answer: A 6.2: Explain the concept of privacy and how the utilitarian and Kantian arguments defend privacy as a necessary right of all individuals Topic/Concept: Meaning and Value of Privacy Difficulty Level: Moderate Skill Level: Analyze 7. Utilitarian arguments for privacy focus on A. the rights of individuals

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.

B. the harm in violation C. breaking the law D. justice Correct Answer: B 6.2: Explain the concept of privacy and how the utilitarian and Kantian arguments defend privacy as a necessary right of all individuals Topic/Concept: Meaning and Value of Privacy Difficulty Level: Easy Skill Level: Understanding 8. A Kantian argument for privacy focuses on A. not harming people B. contractual obligations C. violations of the law D. autonomy

__.

Correct Answer: D 6.2: Explain the concept of privacy and how the utilitarian and Kantian arguments defend privacy as a necessary right of all individuals Topic/Concept: Meaning and Value of Privacy Difficulty Level: Easy Skill Level: Understanding 9. An example of an acceptable use of employees’ medical information would be __.

A. for reporting to the government B. to determine eligibility for employment C. for determining benefits that would be needed D. to gather companywide statistics to share with employees Correct Answer: C 6.4: Determine what ethical issue(s) are associated with a particular handling or use of employee records and whether the action is justified or a violation of the employee’s privacy Topic/Concept: Privacy of Employee Records Difficulty Level: Easy Skill Level: Understanding 10. To protect customers' privacy on the Internet, ABC Corporation is comparing several strategies. To best protect privacy, the company should allow its customers to _________.

A. opt out of information collection because it is most comprehensive B. opt in for the collection of certain types of personal data C. opt out with respect to sharing information that is given voluntarily

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D. opt in for information that is noncommercial in value Correct Answer: A 6.6: Analyze the ethical issues associated with collecting and using information about consumers’ online activities, and the adequacy of the rules and principles created to protect Internet privacy Topic/Concept: Using the Internet Difficulty Level: Moderate Skill Level: Analysis Essay Questions 1. As a part of its new recruitment strategy, XYZ Corporation's human resource department has decided to review social media posts of prospective employees to determine if the applicants are very religious. The company has encountered scheduling difficulties during the holidays and wishes to screen for applicants who would not object to working during the holidays. Evaluate the company's new recruitment strategy involving social media and make your best argument against this particular approach.

6.3: Evaluate the reasoning that leads a company to monitor its employees and the measures undertaken to limit such monitoring Topic/Concept: Privacy Away from Work Difficulty Level: Moderate Skill Level: Evaluate 2. What are some reasons that employers collect personal employee information? In what ways might such collection raise ethical problems?

6.4: Determine what ethical issue(s) are associated with a particular handling or use of employee records and whether the action is justified or a violation of the employee’s privacy Topic/Concept: Privacy of Employee Records Difficulty Level: Moderate Skill Level: Evaluate 3. What are some principles of Internet privacy, and how are they implemented?

6.6: Analyze the ethical issues associated with collecting and using information about consumers’ online activities, and the adequacy of the rules and principles created to protect Internet privacy Topic/Concept: Using the Internet Difficulty Level: Easy Skill Level: Understanding

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Chapter 7 Discrimination and Affirmative Action CHAPTER SUMMARY The ethical issues surrounding discrimination and affirmative action are problematic.

Rights figure prominently in these issues—both the rights of people who have been victimized by discrimination and the rights of people who now bear the burden of correcting past wrongs. Although affirmative action is often discussed in terms of being a remedy for past discrimination, it does have a contemporary purpose of addressing current discriminatory practices. One need only look at the persistent underrepresentation of certain groups in today’s workforce population to see that discrimination is still prevalent in society. Disparities exist and are evident in the high unemployment rates among veterans and the disabled, for example. Serious pay disparities also exist with respect to race and gender. Justice requires that people who have been wronged be compensated in some way and that all people be treated equally, but the concepts of just compensation and of equal opportunity or equal treatment are subject to differing interpretations. There ar e man y approaches to r emedy ing pas t an d present discrimin atio n. Not ev ery one agrees on which approach best addresses dis crimination in a mos t fair and equitable manner. Argu men ts based on utility provide strong support for antidiscrimination and affirmative-action policies; however, the benefits of any given policy must be weighed against the potential harms that may result. The ideal of a nondiscriminatory society is clear, but the pathway to it is strewn with formidable obstacles.

CHAPTER OBJECTIVES 7.1: Explain the meaning of discrimination in employment, the legal distinction between disparate treatment and disparate impact, and the various forms of discrimination 7.2: Define how sexual harassment and the distinct forms of sexual harassment constitute acts of discrimination 7.3: Apply and contrast arguments against discrimination that are based on utilitarianism, Kantian ethics, and principles of justice 7.4: Recommend steps and measures a company can take to help ensure that its hiring and promotion processes are nondiscriminatory 7.5: Analyze the various issues, arguments, and problems associated with affirmative action plans and court decisions SUGGESTED DISCUSSION PROMPTS 1. Define discrimination. What forms of discrimination are unethical?

2. Is sexual harassment a form of discrimination, or should it be identified as something else?

3. What causes cases of sexual harassment? Can it be prevented?

4. What do you think provides the best reason for thinking that discrimination is wrong?

5. Is affirmative action a sufficient measure for correcting discrimination? Is it

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necessary?

ASSESSMENT FOR IN-CLASS USE Multiple Choice Questions Choose the BEST possible answer for each of the following.

1. Discrimination is widely considered unethical largely because it is A. unjust B. illegal C. harmful D. merited

.

Correct Answer: A 7.1: Explain the meaning of discrimination in employment, the legal distinction between disparate treatment and disparate impact, and the various forms of discrimination Topic/Concept: What Is Discrimination?

Difficulty Level: Moderate Skill Level: Analyze 2. It is not generally illegal to discriminate on the basis of ___.

A. sex B. age C. ability D. nationality Correct Answer: C 7.1: Explain the meaning of discrimination in employment, the legal distinction between disparate treatment and disparate impact, and the various forms of discrimination Topic/Concept: What Is Discrimination?

Difficulty Level: Easy Skill Level: Understanding 3. Employers can be found guilty of discrimination ___.

A. only if they intend to discriminate B. any time an employee feels discriminated against C. if the effects were just as though discrimination had occurred D. even if they have not transgressed a particular law Correct Answer: C 7.1: Explain the meaning of discrimination in employment, the legal distinction between disparate treatment and disparate impact, and the various forms of discrimination Topic/Concept: What Is Discrimination?

Difficulty Level: Easy Skill Level: Understanding

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4. An employer can successfully defend a religious discrimination claim by .

A. showing that an accommodation request is unreasonable and would cause inconvenience to the employer B. showing that an accommodation request is unreasonable and would cause undue hardship to the employer C. showing that an accommodation request is unreasonable D. showing that an accommodation request would cause an undue hardship to the employer Correct Answer: B 7.1: Explain the meaning of discrimination in employment, the legal distinction between disparate treatment and disparate impact, and the various forms of discrimination Topic/Concept: What Is Discrimination?

Difficulty Level: Easy Skill Level: Understanding 5. Sexual harassment can be a form of discrimination A. when it involves prejudice B. only when it is a condition for employment C. any time sex is not a qualification D. when it involves a hostile work environment

.

Correct Answer: D 7.4: Recommend steps and measures a company can take to help ensure that its hiring and promotion processes are nondiscriminatory Topic/Concept: Preventing Discrimination Difficulty Level: Easy Skill Level: Understanding 6. A utilitarian in opposition to discrimination would say that discrimination is wrong because .

A. it makes productivity suffer B. it violates the right to privacy C. it violates human dignity D. it is unfair Correct Answer: A 7.3: Apply and contrast arguments against discrimination that are based on utilitarianism, Kantian ethics, and principles of justice Topic/Concept: Objections to Discrimination Difficulty Level: Moderate Skill Level: Analyze 7. A nonconsequentialist might argue against discrimination on the basis of A. the disadvantage it gives to minorities

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.

B. the harm that it does to society C. its damage to the economy D. its being unjust Correct Answer: D 7.3: Apply and contrast arguments against discrimination that are based on utilitarianism, Kantian ethics, and principles of justice Topic/Concept: Objections to Discrimination Difficulty Level: Moderate Skill Level: Analyze 8. When a superior uses the power of the position to grant or deny employment benefits unless a subordinate employee agrees to sexual favors, this is considered ________.

A. hostile working environment harassment B. reasonable person harassment C. quid pro quo harassment D. economic loss harassment Correct Answer: C 7.2: Define how sexual harassment and the distinct forms of sexual harassment constitute acts of discrimination Topic/Concept: Sexual Harassment Difficulty Level: Easy Skill Level: Understanding 9. One who supports affirmative action on the basis of compensation would argue on the basis of .

A. fairness B. justice C. benefits D. consequences Correct Answer: B 7.5: Analyze the various issues, arguments, and problems associated with affirmative action plans and court decisions Topic/Concept: Affirmative Action Difficulty Level: Moderate Skill Level: Analyze

10. On what basis might one argue that affirmative action hurts those it is designed to help?

A. It ensures minorities, women, veterans, and the disabled are hired on a basis other than their qualifications.

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B. People can always find ways to get around affirmative action policies.

C. Affirmative action programs could give minorities, women, veterans, and the disabled too many positions.

D. It is unjust to those who are qualified but not minorities or those who belong to other protected groups such as women, veterans, and the disabled.

Correct Answer: A 7.5: Analyze the various issues, arguments, and problems associated with affirmative action plans and court decisions Topic/Concept: Affirmative Action Difficulty Level: Moderate Skill Level: Analyze Essay Questions 1. Why is sexual harassment often considered a form of discrimination?

7.2: Define how sexual harassment and the distinct forms of sexual harassment constitute acts of discrimination Topic/Concept: Sexual Harassment Difficulty Level: Easy Skill Level: Understanding 2. How do people draw the line between job specifications that require discrimination on the one hand, and unfair discrimination on the other?

7.4: Recommend steps and measures a company can take to help ensure that its hiring and promotion processes are nondiscriminatory Topic/Concept: Preventing Discrimination Difficulty Level: Moderate Skill Level: Analyze 3. Describe a case of affirmative action and the type of discrimination that it would be intended to overcome.

7.5: Analyze the various issues, arguments, and problems associated with affirmative action plans and court decisions Topic/Concept: Affirmative Action Difficulty Level: Easy Skill Level: Understanding

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Chapter 8 EmploymentRights CHAPTER SUMMARY Employee rights are important because a substantial portion of people’s lives is dedicated to their jobs. Acts of injustice, such as wrongful termination, can have dire consequences for employees.

These consequences can include a loss of income, social networks, status, and standard of living.

The appearance of injustice is also a great concern f o r employers because workers are very sensitive to perceptions of unfair or unjust treatment and act accordingly. Employees may respond by striking or filing lawsuits, which are both costly and time consuming to defend.

The extent of employee rights is uncertain. Some rights, such as the alleged rights to expression, participation, and a living wage, are arguably “manifesto rights,” which is to say ideals perhaps worth striving toward. Other rights, especially due process in termination, have more solid moral grounding. A key question about employee rights, though, is the extent to which they should be enforced by law. There is a considerable body of labor law that ensures fair or just treatment of workers, but on many matters, such as termination, it is questionable whether justice should be legally mandated through regulation or be achieved by more informal processes in the workplace.

Employee compensation is another hot topic because of the income inequality that exists between company executives and their workers. Critics argue that executive packages are often unfair because, unlike worker pay, there is no direct correlation between an executive's actual performance and overall compensation. Supporters of hefty executive packages argue that the only way to attract the top executives is to offer attractive compensation packages that coincide with their credentials. Proponents contend that these executives are well worth their pay. They point to statistical studies that have found executive compensation to be in proportion to the wealth created by corporations.

CHAPTER OBJECTIVES 8.1: Recognize the three basic arguments that justify employment at will and the three types of exceptions to this doctrine that protect employees from unjust dismissal 8.2: Describe the main arguments and principles of the Model Employment Termination Act that support the right of employees to due process in employment decisions 8.3: Explain the significance of freedom of expression for employees, the extent to which it is protected by law, and the arguments for and against this right in the workplace 8.4: Analyze the correlation between worker participation and workplace democracy and how Dahl's argument supports workplace democracy as a right 8.5: Assess the market forces and other factors that influence employee compensation, the fairness of wages, and justifications for a minimum wage 8.6: Evaluate the reasoning underlying criticisms and justifications of the compensation for

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top executives SUGGESTED DISCUSSION PROMPTS 1. Is the employment-at-will system a good one? What is the best reason for thinking so?

2. When might the principles of employment-at-will conflict with other principles?

3. What restrictions are permissible for employers to place on freedom of expression at work?

4. To what extent should workers enjoy the right to participation in their company?

5. What should workers’ wages be compared to in order to determine if they are just?

ASSESSMENT FOR IN-CLASS USE Multiple Choice Questions Choose the BEST possible answer for each of the following.

1. “Employment at will” means that __________.

A. a worker can choose his or her job B. an employee can leave the company any time C. an employer can release an employee at any time D. a worker has rights to the products of his or her labor Correct Answer: C 8.1: Recognize the three basic arguments that justify employment at will and the three types of exceptions to this doctrine that protect employees from unjust dismissal Topic/Concept: Employment at Will Difficulty Level: Easy Skill Level: Understanding 2. The argument for property rights in labor assumes that _______.

A. a worker has the rights to his/her labor B. an employer has the rights to its employees’ time C. an employer has the rights to its employees’ labor D. an employer can regulate its employees’ use of time Correct Answer: A 8.1: Recognize the three basic arguments that justify employment at will and the three types of exceptions to this doctrine that protect employees from unjust dismissal Topic/Concept: Employment at Will Difficulty Level: Easy Skill Level: Understanding 3. The utilitarian argument for employment at will relies on the idea that

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.

A. there is an implicit contract of employment B. people own the products of their labor C. employers and employees both benefit from it D. employees have the right to freedom of expression Correct Answer: C 8.1: Recognize the three basic arguments that justify employment at will and the three types of exceptions to this doctrine that protect employees from unjust dismissal Topic/Concept: Employment at Will Difficulty Level: Easy Skill Level: Understanding 4. The notion of due process can be used to argue against employment at will because __.

A. employees should own the products of their labor B. employment at will can be arbitrary C. property rights are most fundamental D. due process requires a written contract Correct Answer: B 8.2: Describe the main arguments and principles of the Model Employment Termination Act that support the right of employees to due process in employment decisions Topic/Concept: Right to Due Process Difficulty Level: Moderate Skill Level: Analyze 5. People are sometimes afraid to express their views at work because A. it may be against the law B. they do not want to stand out C. they are afraid of what others might think D. they are afraid of losing their jobs

.

Correct Answer: D 8.3: Explain the significance of freedom of expression for employees, the extent to which it is protected by law, and the arguments for and against this right in the workplace Topic/Concept: Freedom of Expression Difficulty Level: Easy Skill Level: Understanding

6. The Supreme Court has found that government workers .

A. have a right to free speech about job-related matters B. cannot speak to the public about their jobs C. have unlimited free speech since they are government workers

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D. have different free speech rights from other employees Correct Answer: A 8.3: Explain the significance of freedom of expression for employees, the extent to which it is protected by law, and the arguments for and against this right in the workplace Topic/Concept: Freedom of Expression Difficulty Level: Easy Skill Level: Understanding 7. Workplaces are “democratic” insofar as _________.

A. companies are structured like democracies B. workers are represented in company decisions C. companies are not arranged hierarchically D. companies are not headed by a single individual Correct Answer: B 8.4: Analyze the correlation between worker participation and workplace democracy and how Dahl's argument supports workplace democracy as a right Topic/Concept: Workplace Democracy Difficulty Level: Moderate Skill Level: Analyze 8. Ethical arguments for democracy in the workplace are mainly based on A. productivity B. organizational effectiveness C. personal health D. legitimizing power

.

Correct Answer: D 8.4: Analyze the correlation between worker participation and workplace democracy and how Dahl's argument supports workplace democracy as a right Topic/Concept: Workplace Democracy Difficulty Level: Moderate Skill Level: Analyze 9. Minimum wage is justifiable because ________.

A. it helps to prevent worker exploitation B. it is higher than a living wage C. it redistributes income with the middle class as its primary focus D. it is the most efficient way to raise income for poor workers Correct Answer: A 8.5: Assess the market forces and other factors that influence employee compensation, the fairness of wages, and justifications for a minimum wage

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Topic/Concept: Worker Compensation Difficulty Level: Easy Skill Level: Understanding 10. Proponents of minimum wage who argue that extremely low wages are exploitative assume that .

A. employers have no choice but to offer low wages B. jobs with other levels of wages are available C. employers could offer the same jobs at higher wages D. workers will not take just any job they can get Correct Answer: C 8.5: Assess the market forces and other factors that influence employee compensation, the fairness of wages, and justifications for a minimum wage Topic/Concept: Worker Compensation Difficulty Level: Moderate Skill Level: Evaluate Essay Questions 1. Assess some of the arguments proponents make for robust executive compensation packages. Argue why critics are opposed to these types of executive compensation packages.

8.6: Evaluate the reasoning underlying criticisms and justifications of the compensation for top executives Topic/Concept: Executive Compensation Difficulty Level: Moderate Skill Level: Evaluate 2. What are the limitations to the employment-at-will system, and how do they arise?

8.1: Recognize the three basic arguments that justify employment at will and the three types of exceptions to this doctrine that protect employees from unjust dismissal Topic/Concept: Employment at Will Difficulty Level: Easy Skill Level: Understanding

3. What is the best reason for adopting a minimum wage policy? What is the best argument against that reason?

8.5: Assess the market forces and other factors that influence employee compensation, the fairness of wages, and justifications for a minimum wage

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Topic/Concept: Worker Compensation Difficulty Level: Moderate Skill Level: Evaluate

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Chapter 9 Health and Safety CHAPTER SUMMARY This chapter shows that workers have a right to a safe and healthy workplace and that employers have a moral and, in many cases, a legal obligation to secure this right. The controversial questions concern two matters: What is the morally required level of health and safety, and how can this level be best achieved? Increasing the level of health and safety usually involves trade-offs with other goods, including higher wages for employees and greater profits for employers. The commonly accepted standard for making such tradeoffs is cost–benefit analysis, in which the benefits of increased workplace protection are balanced against the costs. In general, employees, employers, and society at large are best served when cost-effective decisions are made. However, the rights to know about and refuse hazardous work and the problem of reproductive hazards raise the different issue of the extent to which employees should be involved in protecting themselves. Not only may a right to employee involvement in matters of health and safety be morally justified, but such involvement may also be an effective means for achieving workplace health and safety that complements the protections offered by employers.

Just as workplace health and safety plays a prominent role in shaping business practices, so does consumer health and safety. Businesses are obligated to provide products that are reasonably safe for consumer use and consumption. The legal standards for liability determine safety standards and the extent to which businesses are liable for unsafe products. Likewise, they may impose liability on consumers for their own negligence and/or misuse of products. An injured consumer’s compensation claim may be reduced or even denied due to the consumer's own behavior.

CHAPTER OBJECTIVES 9.1: Explain the nature of ethical issues regarding occupational health and safety, employers’ obligations to protect their employees, and the arguments over the extent of employers’ responsibilities for injury or harm 9.2: Analyze the rights of employees to be informed about potential health and safety hazards and to refuse hazardous work, the justifications for these rights, and the difficulties they create for employers 9.3: Assess the risks posed by reproductive hazards in the workplace and the problems with fetal protection policies, including issues of discrimination, choice, and legal liability 9.4: Identify the responsibilities of manufacturers and consumers regarding harmful products, the ethical basis for three main theories defining these responsibilities, and problems with applying each theory

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SUGGESTED DISCUSSION PROMPTS 1. What legal duties do manufacturers have to produce safe products?

2. Should employers be held responsible for all and any workplace hazards, and are cost-benefit analyses acceptable measures of occupational safety?

3. Do you think that employees who accept hazardous jobs could be said to be coerced in doing so?

4. What is the best justification that can be given for employees’ right to know about occupational hazards?

5. What is the difficult dilemma faced by companies whose working conditions pose a danger to fetuses?

ASSESSMENT FOR IN-CLASS USE Multiple Choice Questions Choose the BEST possible answer for each of the following.

1. The distinction between safety and health is based on the distinction between .

A. intention and accident B. accidents and illness C. disease and wellness D. ethics and law Correct Answer: B 9.1: Explain the nature of ethical issues regarding occupational health and safety, employers’ obligations to protect their employees, and the arguments over the extent of employers’ responsibilities for injury or harm Topic/Concept: Rights in the Workplace Difficulty Level: Moderate Skill Level: Analyze 2. Utilitarian reasoning in approaching workplace hazards might be based on A. legal precedent B. the rights of workers C. employers’ responsibilities D. cost-benefit analysis Correct Answer: D 9.1: Explain the nature of ethical issues regarding occupational health and safety, employers’ obligations to protect their employees, and the arguments over the extent of employers’ responsibilities for injury or harm Topic/Concept: Rights in the Workplace Difficulty Level: Moderate

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Skill Level: Analyze 3. Employers can defend themselves from responsibility for a workplace accident by claiming that .

A. the accident was preventable B. the worker knew the risks C. the worker was negligent D. the accident was unavoidable Correct Answer: C 9.1: Explain the nature of ethical issues regarding occupational health and safety, employers’ obligations to protect their employees, and the arguments over the extent of employers’ responsibilities for injury or harm Topic/Concept: Rights in the Workplace Difficulty Level: Moderate Skill Level: Analyze 4. Part of the reason that employees can be said to voluntarily assume risk for hazardous jobs is that .

A. the jobs require special skills B. the pay is higher C. information is always available about the jobs D. many people are willing to do the jobs Correct Answer: B 9.1: Explain the nature of ethical issues regarding occupational health and safety, employers’ obligations to protect their employees, and the arguments over the extent of employers’ responsibilities for injury or harm Topic/Concept: Rights in the Workplace Difficulty Level: Easy Skill Level: Understanding 5. In determining whether workers assumed a risk by choice, a case not finding evidence of coercion means that ________.

A. workers were not forced to accept jobs B. other jobs may have been more hazardous C. there may have been other people willing to accept the jobs D. not all jobs were hazardous Correct Answer: A 9.2: Analyze the rights of employees to be informed about potential health and safety hazards and to refuse hazardous work, the justifications for these rights, and the difficulties they create for employers Topic/Concept: Hazardous Work Difficulty Level: Moderate

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Skill Level: Analyze 6. To be able to work in a hazardous environment, employees must A. have the right to refuse hazardous conditions B. be able to sue their employers C. be able to quit their jobs D. have the right to share information Correct Answer: A 9.2: Analyze the rights of employees to be informed about potential health and safety hazards and to refuse hazardous work, the justifications for these rights, and the difficulties they create for employers Topic/Concept: Hazardous Work Difficulty Level: Moderate Skill Level: Analyze 7. In product safety, manufacturers have to exercise due care or else they ________.

A. could be outcompeted by another manufacturer B. would have to find new customers C. would have to present an expert analysis D. could be fined or sued Correct Answer: D 9.4: Identify the responsibilities of manufacturers and consumers regarding harmful products, the ethical basis for three main theories defining these responsibilities, and problems with applying each theory Topic/Concept: Product Safety Difficulty Level: Moderate Skill Level: Evaluate 8. The drawback for the subjective standard of hazard assessment on the part of the employee is that .

A. the employee may not be the one in most danger B. the employee may not have expert judgment C. employees will be looking after their own interests D. employers cannot be counted on to look after their employees’ interests Correct Answer: B 9.2: Analyze the rights of employees to be informed about potential health and safety hazards and to refuse hazardous work, the justifications for these rights, and the difficulties they create for employers Topic/Concept: Hazardous Work Difficulty Level: Moderate Skill Level: Analyze

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9. If employers maintain that they can protect employees from hazards better than employees can, this is incompatible with employees’ .

A. dignity B. right to work C. autonomy D. safety Correct Answer: C 9.2: Analyze the rights of employees to be informed about potential health and safety hazards and to refuse hazardous work, the justifications for these rights, and the difficulties they create for employers Topic/Concept: Hazardous Work Difficulty Level: Moderate Skill Level: Analyze 10. Sex discrimination may apply to jobs that pose fetal health risks because A. women in certain jobs may be subject to sexual harassment B. pregnant women may have certain skills that others lack C. pregnant women may decide to take less-hazardous jobs D. employers may bar women from holding certain jobs

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Correct Answer: D 9.3: Assess the risks posed by reproductive hazards in the workplace and the problems with fetal protection policies, including issues of discrimination, choice, and legal liability Topic/Concept: Reproductive Hazards Difficulty Level: Moderate Skill Level: Evaluate Essay Questions 1. Explain the concept of a direct cause as applied to workplace safety. How are employers held responsible for direct causes of accidents and hazards?

9.1: Explain the nature of ethical issues regarding occupational health and safety, employers’ obligations to protect their employees, and the arguments over the extent of employers’ responsibilities for injury or harm Topic/Concept: Rights in the Workplace Difficulty Level: Moderate Skill Level: Analyze 2. Explain the argument that workers assume the risk of hazardous jobs, and describe how the argument can be challenged.

9.2: Analyze the rights of employees to be informed about potential health and

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safety hazards and to refuse hazardous work, the justifications for these rights, and the difficulties they create for employers.

Topic/Concept: Hazardous Work Difficulty Level: Moderate Skill Level: Evaluate 3. Describe how the issue of sex discrimination applies to jobs that pose health risks to developing fetuses.

9.3: Assess the risks posed by reproductive hazards in the workplace and the problems with fetal protection policies, including issues of discrimination, choice, and legal liability Topic/Concept: Reproductive Hazards Difficulty Level: Moderate Skill Level: Evaluate 4. Identify the responsibilities manufacturers and consumers bear regarding harmful products.

9.4: Identify the responsibilities of manufacturers and consumers regarding harmful products, the ethical basis for three main theories defining these responsibilities, and problems with applying each theory Topic/Concept: Product Safety Difficulty Level: Easy Skill Level: Understanding

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Chapter 10 Marketing and Advertising CHAPTER SUMMARY The ethics of marketing is concerned chiefly with how producers treat their customers. What goods to produce and how to sell them are among the most basic decisions that businesses make, and the impacts of these decisions on the well-being of consumers are many and varied. However, the interactions between producers and consumers take place primarily in a market, and so much of the ethics of marketing is the ethics of the buyer–seller relationship, in which honesty and fair dealing are the main moral requirements. Much of this chapter deals with marketing practices in which sales techniques and the pricing, labeling, and advertising of products are manipulative, deceptive, or otherwise unfair to consumers. In addition, marketing, especially advertising, has social consequences that producers must handle responsibly.

CHAPTER OBJECTIVES 10.1: Explain how principles of fairness, freedom, and well-being are challenged by marketing practices and why an ethical framework is necessary 10.2: Analyze unethical sales practices, the difficulties sales personnel face in avoiding them, and issues with the sufficiency of information on product labels 10.3: Evaluate the nature and effects of unethical pricing and distribution practices on consumers and the fairness of markets 10.4: Identify the ethical issues with product development and market research and how companies can conduct these essential marketing tasks responsibly 10.5: Describe the difficulties in defining what constitutes deceptive advertising and how it interferes with consumers’ ability to make rational choices 10.6: Recognize how different advertising practices use irrational persuasion techniques to influence consumers’ choices and the ethical arguments against these practices 10.7: Assess the potential harm advertising poses to individuals and society and the responsibility of companies to consider the consequences of their marketing efforts 10.8: Examine how Internet advertising and the online collection and use of personal information challenge the rights of individuals to privacy, autonomy, and fair treatment 10.9: Summarize the significance of social advertising and the ethical issues associated with it SUGGESTED DISCUSSION PROMPTS 1. Are there any other cardinal marketing values besides well-being, fairness, and freedom? Or do other values fall under one of those three?

2. What specific ethical issues arise from the point of view of the salesperson?

3. Are prices ever really unfair? Why or why not?

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4. Is the FTC correct to hold truth in advertising to a standard of an “ignorant” consumer?

5. What is wrong with subliminal persuasion that is not an issue with other forms of persuasion?

ASSESSMENT FOR IN-CLASS USE Multiple Choice Questions Choose the BEST possible answer for each of the following.

1. The need for fairness in marketing arises from the need for A. transactions to be beneficial to everyone B. transactions to not harm anyone C. information to be freely available to anyone D. consumers to get what they want

.

Correct Answer: A 10.1: Explain how principles of fairness, freedom, and well-being are challenged by marketing practices and why an ethical framework is necessary Topic/Concept: 10.1: Marketing Ethics Framework Difficulty Level: Easy Skill Level: Understanding 2. Identify a poor description of effective social advertisement.

A. Creators of social advertisement must aim for outcomes that are aligned with the overall advertisement message.

B. Social advertisement topics are those of importance to the public at large.

C. Creators of social advertisement realize the limits of social advertisement because social problems sometimes require a political remedy.

D. Social advertisement must manipulate individuals to engage them.

Correct Answer: D 10.9: Summarize the significance of social advertising and the ethical issues associated with it Topic/Concept: Social Advertising Difficulty Level: Easy Skill Level: Understanding 3. Truthful labeling is essential to the ethical marketing concept of ________.

A. well-being B. fairness C. freedom D. health

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Correct Answer: B 10.2: Analyze unethical sales practices, the difficulties sales personnel face in avoiding them, and issues with the sufficiency of information on product labels Topic/Concept: Sales Practices and Labeling Difficulty Level: Moderate Skill Level: Analyze 4. Pricing has to remain competitive so that A. companies can maximize their profits B. workers get paid fair wages C. consumers are free to choose the best exchange D. consumers get as high-quality products as possible Correct Answer: C 10.3: Evaluate the nature and effects of unethical pricing and distribution practices on consumers and the fairness of markets Topic/Concept: Pricing and Distribution Difficulty Level: Moderate Skill Level: Evaluate 5. Full-line forcing by a manufacturer to a retailer is ethically questionable because .

A. it drives prices higher B. it limits consumer choice C. it makes consumers dependent on one brand D. it prevents consumers from obtaining adequate information Correct Answer: B 10.3: Evaluate the nature and effects of unethical pricing and distribution practices on consumers and the fairness of markets Topic/Concept: Pricing and Distribution Difficulty Level: Moderate Skill Level: Evaluate 6. Advertising is considered to be unethical is if it is _______.

A. untruthful B. expensive C. harmful D. tacky Correct Answer: A 10.1: Explain how principles of fairness, freedom, and well-being are challenged by marketing practices and why an ethical framework is necessary Topic/Concept: Marketing Ethics Framework Difficulty Level: Easy

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Skill Level: Understanding 7. By what measure is it determined whether an ad causes a false belief?

A. if it deceives an ignorant consumer B. if it substantially interferes with a decision to buy C. whether it contains any factually incorrect information D. whether it is a product a reasonable person would want to buy Correct Answer: A 10.5: Describe the difficulties in defining what constitutes deceptive advertising and how it interferes with consumers’ ability to make rational choices Topic/Concept: Deceptive Advertising Difficulty Level: Easy Skill Level: Understanding 8. The dependence effect is an ethical danger zone because A. prices may end up artificially high B. wants are created by the producer instead of the consumer C. there is insufficient competition between producers D. products may end up being marketed to the wrong people

.

Correct Answer: B 10.6: Recognize how different advertising practices use irrational persuasion techniques to influence consumers’ choices and the ethical arguments against these practices Topic/Concept: Irrational Persuasion Difficulty Level: Easy Skill Level: Understanding 9. A strong argument in defense of advertisement is that it ________.

A. does not negatively affect cognitive development B. has little impact on children’s emotional development C. is not solely responsible for marketing orientation D. does not create negative self-image Correct Answer: C 10.7: Assess the potential harm advertising poses to individuals and society and the responsibility of companies to consider the consequences of their marketing efforts Topic/Concept: Impact of Advertising Difficulty Level: Moderate Skill Level: Evaluate 10. A significant ethical issue facing Internet consumers is the inability to ________.

A. sell personal ads B. track other consumers' information C. create online accounts

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D. identify how personal data are collected and used Correct Answer: D 10.8: Examine how Internet advertising and the online collection and use of personal information challenge the rights of individuals to privacy, autonomy, and fair treatment Topic/Concept: Internet Advertising Difficulty Level: Easy Skill Level: Understanding Essay Questions 1. Why is freedom an important ethical issue in marketing? Describe how the consumer’s freedom may be transgressed by marketing.

10.1: Explain how principles of fairness, freedom, and well-being are challenged by marketing practices and why an ethical framework is necessary Topic/Concept: Marketing Ethics Framework Difficulty Level: Easy Skill Level: Understanding 2. What kinds of laws have been passed to protect the consumer from unethical marketing and sales practices?

10.3: Evaluate the nature and effects of unethical pricing and distribution practices on consumers and the fairness of markets Topic/Concept: Pricing and Distribution Difficulty Level: Easy Skill Level: Understanding 3. Identify the ethical issues with product development and market research and how companies can conduct these essential marketing tasks responsibly.

10.4: Identify the ethical issues with product development and market research and how companies can conduct these essential marketing tasks responsibly Topic/Concept: Development and Research Difficulty Level: Easy Skill Level: Understanding

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Chapter 11 Ethics in Finance CHAPTER SUMMARY Ethical issues in finance are important because they bear on our financial well-being. Ethical misconduct, whether it be by individuals acting alone or by financial institutions, has the potential to rob people of their life savings. Because so much money is involved in financial dealings, there must be well-developed and effective safeguards in place to ensure personal and organizational ethics. Although the law governs much financial activity, strong emphasis must be placed on the integrity of finance professionals and on ethical leadership in our financial institutions. Some of the principles in finance ethics are common to other aspects of business, especially the duties of fiduciaries and fairness in sales practices and securities markets. However, such activities as insider trading and hostile takeovers raise unique issues that require special consideration. Insider trading is prohibited because it involves trading of information not publicly available or breaching a fiduciary duty by misappropriating confidential information. Hostile takeovers are problematic because of the conflicting interests and fiduciary duties that exist among the various parties involved.

CHAPTER OBJECTIVES 11.1: Explain the three basic forms of ethical misconduct when selling financial products and services, and the responsibilities brokers have to their clients 11.2: Assess the significance of the three main elements of fairness in financial markets and the ethical issues introduced by new financial instruments and practices 11.3: Summarize the two main arguments against insider trading and the challenges in applying these theories to its prevention and prosecution 11.4: Analyze the ethical issues raised by various hostile takeover tactics and what they suggest about the rights and fiduciary duties of officers and directors SUGGESTED DISCUSSION PROMPTS 1. How does the field of finance provide intrinsic motivation for deception?

2. Is it unethical for a financial broker to generate commissions in a way that neither helps nor harms her client?

3. How does one tell when legitimate transactions become a case of “churning”?

4. What does it mean for financial markets to be “fair”?

5. What ethical rules does insider trading involve breaking?

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ASSESSMENT FOR IN-CLASS USE Multiple Choice Questions Choose the BEST possible answer for each of the following.

1. Financial dealings most fundamentally require the value of A. freedom B. time C. trust D. competence

_.

Correct Answer: C 11.1: Explain the three basic forms of ethical misconduct when selling financial products and services, and the responsibilities brokers have to their clients Topic/Concept: Financial Services Difficulty Level: Easy Skill Level: Understanding 2. Financial service people are most fundamentally in the business of selling ___________.

A. savings B. investments C. stocks D. bonds Correct Answer: B 11.1: Explain the three basic forms of ethical misconduct when selling financial products and services, and the responsibilities brokers have to their clients Topic/Concept: Financial Services Difficulty Level: Easy Skill Level: Understanding 3. Deception is an ever-present danger in financial selling mostly because .

A. the customer has to rely on the seller for all of the relevant information B. financial salespeople often do not know very much about the securities they sell C. there are not many laws that regulate financial services D. no one ever has all the information at a given time Correct Answer: A 11.1: Explain the three basic forms of ethical misconduct when selling financial products and services, and the responsibilities brokers have to their clients Topic/Concept: Financial Services Difficulty Level: Easy Skill Level: Understanding

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4. A financial broker may be tempted to “churn” because by doing so he can _.

A. sell more shares B. artificially inflate yields C. get more customers D. earn additional commissions Correct Answer: D 11.1: Explain the three basic forms of ethical misconduct when selling financial products and services, and the responsibilities brokers have to their clients Topic/Concept: Financial Services Difficulty Level: Easy Skill Level: Understanding 5. Due to the wide variety of financial products available, it is incumbent on the broker to help the customer select those that are .

A. suitable B. liquid C. cheapest D. least risky Correct Answer: A 11.1: Explain the three basic forms of ethical misconduct when selling financial products and services, and the responsibilities brokers have to their clients Topic/Concept: Financial Services Difficulty Level: Easy Skill Level: Understanding 6. Doing business in the financial markets most fundamentally presupposes that will be respected.

A. power B. fairness C. freedom D. ideas Correct Answer: B 11.2: Assess the significance of the three main elements of fairness in financial markets and the ethical issues introduced by new financial instruments and practices Topic/Concept: Financial Markets Difficulty Level: Moderate Skill Level: Analyze

7. Efficiency in financial markets means that

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____.

A. social well-being will be maximized B. all investments will keep their value C. overall yields will increase D. fairness will always be maintained Correct Answer: C 11.2: Assess the significance of the three main elements of fairness in financial markets and the ethical issues introduced by new financial instruments and practices Topic/Concept: Financial Markets Difficulty Level: Moderate Skill Level: Evaluate 8. If people in financial markets have unequal access to information, A. it is always unfair B. this can happen in spite of their expertise C. it should not impact their ability to make good decisions D. a law has probably been broken

__.

Correct Answer: B 11.2: Assess the significance of the three main elements of fairness in financial markets and the ethical issues introduced by new financial instruments and practices Topic/Concept: Financial Markets Difficulty Level: Moderate Skill Level: Evaluate 9. Agreements reached in financial trading are generally considered fair as long as __.

A. everyone profits from the exchange B. all traders involved are professionals C. everyone has the same information D. they are reached through good-faith bargaining Correct Answer: D 11.3: Summarize the two main arguments against insider trading and the challenges in applying these theories to its prevention and prosecution Topic/Concept: Insider Trading Difficulty Level: Easy Skill Level: Understanding

10. Takeover offers must now be accompanied by enough time so that A. shareholders have opportunity to consider the offer carefully B. consumers can decide whether to buy stock in the company C. abusive tender offers can be rescinded by government action D. there can be an orderly transition of control

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.

Correct Answer: A 11.4: Analyze the ethical issues raised by various hostile takeover tactics and what they suggest about the rights and fiduciary duties of officers and directors Topic/Concept: Hostile Takeovers Difficulty Level: Moderate Skill Level: Analyze Essay Questions 1. Explain why in the context of finance it is so important that customers be empowered to make rational choices.

11.1: Explain the three basic forms of ethical misconduct when selling financial products and services, and the responsibilities brokers have to their clients Topic/Concept: Financial Services Difficulty Level: Easy Skill Level: Understanding 2. Describe an example of the kind of transaction that a financial advisor might make that does not benefit the client.

11.1: Explain the three basic forms of ethical misconduct when selling financial products and services, and the responsibilities brokers have to their clients Topic/Concept: Financial Services Difficulty Level: Easy Skill Level: Understanding 3. Describe how the ideal of fairness plays out in the financial markets.

11.2: Assess the significance of the three main elements of fairness in financial markets and the ethical issues introduced by new financial instruments and practices Topic/Concept: Financial Markets Difficulty Level: Moderate Skill Level: Evaluate

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Chapter 12 Corporate Social Responsibility CHAPTER SUMMARY The meaning of corporate social responsibility ( C S R ) and the arguments for it, as well as the attitudes of business toward it, have changed dramatically over the past 50 years. The vigorous debate over the normative case for CSR gave way eventually to a wary acceptance and then an enthusiastic embrace of the business case. Somewhere along the way, the question about CSR changed from whether to how. However, whether the meaning of CSR also shifted to fit with what business was willing and able to do is an open question. What is undeniable is that, in the words of the Economist magazine, “CSR is thriving.” CSR has become a virtual industry, with most large corporations proclaiming long lists of activities. The challenge now for corporations is to be strategic about CSR and develop programs that provide the greatest benefit for themselves and society. The challenge for society is to make demands on corporations that best utilize their capabilities and resources.

CHAPTER OBJECTIVES 12.1: Recognize the significance and implications of corporate social responsibility for businesses, how CSR is commonly demonstrated, and its related concepts 12.2: Describe the dominant moral arguments against the concept of CSR and the counterarguments and justifications for CSR as a requirement of companies 12.3: Analyze the arguments that a market for virtue makes CSR a profitable strategy and a source of competitive advantage 12.4: Summarize the important aspects of successful CSR programs, the difficulties with measuring the social performance of companies, and various attempts at measurement 12.5: Compare how nonprofit and for-profit social enterprises operate and can compete successfully in the marketplace SUGGESTED DISCUSSION PROMPTS 1. What does it mean for a corporation to be “socially responsible”?

2. To what extent do you think companies are motivated to be socially responsible for publicity reasons?

3. In what ways would a company that only does what the law requires not be living up to CSR? 4. What is corporate citizenship, and how does it relate to corporate social responsibility?

5. How can companies be profitable and pursue CSR at the same time?

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ASSESSMENT FOR IN-CLASS USE Multiple Choice Questions Choose the BEST possible answer for each of the following.

1. CSR as a worldwide movement has over the years been A. mainly manifested among medium-sized companies B. mostly confined to the United States C. increasingly under criticism D. gaining increased acceptance

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Correct Answer: D 12.1: Recognize the significance and implications of corporate social responsibility for businesses, how CSR is commonly demonstrated, and its related concepts Topic/Concept: The CSR Debate Difficulty Level: Easy Skill Level: Understanding 2. Milton Friedman argued that CSR ____.

A. is harmful to the community B. fails to serve the interests of company’s stockholders C. is acceptable if carried out by the government D. would be a passing fad Correct Answer: B 12.2: Describe the dominant moral arguments against the concept of CSR and the counterarguments and justifications for CSR as a requirement of companies Topic/Concept: Normative Case for CSR Difficulty Level: Easy Skill Level: Understanding 3. A company’s ethical responsibilities .

A. bring it in line with social norms B. are a subset of its legal responsibilities C. always directly advance its profit making D. are the same as its economic responsibilities Correct Answer: A 12.1: Recognize the significance and implications of corporate social responsibility for businesses, how CSR is commonly demonstrated, and its related concepts Topic/Concept: The CSR Debate Difficulty Level: Easy Skill Level: Understanding

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4. CSR as exercised toward a company’s employees may include ___ A. providing safe working facilities B. providing paid time off C. improving employees’ quality of life D. abiding by minimum-wage laws

___.

Correct Answer: C 12.1: Recognize the significance and implications of corporate social responsibility for businesses, how CSR is commonly demonstrated, and its related concepts Topic/Concept: The CSR Debate Difficulty Level: Easy Skill Level: Understanding 5. Corporate citizenship is an area of CSR that always involves A. specific ways a company treats its employees B. a company’s awareness of its broader social context C. a company’s products that it produces D. a company’s involvement in the government

_________.

Correct Answer: B 12.1: Recognize the significance and implications of corporate social responsibility for businesses, how CSR is commonly demonstrated, and its related concepts Topic/Concept: The CSR Debate Difficulty Level: Easy Skill Level: Understanding 6. In addition to accurately measuring CSR results, a company must also ensure that the data are _________.

A. interpreted using well-respected guidelines B. reflected in a positive manner C. controlled by the company D. selectively released Correct Answer: A 12.4: Summarize the important aspects of successful CSR programs, the difficulties with measuring the social performance of companies, and various attempts at measurement Topic/Concept: Implementing CSR Difficulty Level: Easy Skill Level: Understanding 7. According to the “classical view,” companies ________.

A. have a responsibility to their environment B. can promote CSR without sacrificing profitability C. are not essentially different from other types of organizations D. exist for reasons other than promoting social responsibility

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Correct Answer: D 12.2: Describe the dominant moral arguments against the concept of CSR and the counterarguments and justifications for CSR as a requirement of companies Topic/Concept: Normative Case for CSR Difficulty Level: Easy Skill Level: Understanding 8. Friedman supported socially responsible corporate decisions as long as they ___.

A. are recognized as philanthropic activities B. benefit society at large C. further a company’s self-interest D. do not break the law Correct Answer: C 12.2: Describe the dominant moral arguments against the concept of CSR and the counterarguments and justifications for CSR as a requirement of companies Topic/Concept: Normative Case for CSR Difficulty Level: Easy Skill Level: Understanding 9. Friedman argued that social spending by corporations is a form of taxation on ___.

A. the public B. the employees C. the shareholders D. the board of directors Correct Answer: C 12.2: Describe the dominant moral arguments against the concept of CSR and the counterarguments and justifications for CSR as a requirement of companies Topic/Concept: Normative Case for CSR Difficulty Level: Easy Skill Level: Understanding

10. Companies that pursue CSR are most likely to gain a competitive advantage if its CSR efforts ___.

A. target popular special-interest groups B. are integrated into a corporate strategy C. are pursued as frugally as possible D. involve as many employees as possible

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Correct Answer: B 12.3: Analyze the arguments that a market for virtue makes CSR a profitable strategy and a source of competitive advantage Topic/Concept: Business Case for CSR Difficulty Level: Moderate Skill Level: Analyze Essay Questions 1. Describe the current status of corporate social responsibility as an expectation for businesses.

12.3: Analyze the arguments that a market for virtue makes CSR a profitable strategy and a source of competitive advantage Topic/Concept: Business Case for CSR Difficulty Level: Easy Skill Level: Understanding 2. Compare and contrast the different ways in which companies are motivated to be socially responsible.

12.3: Analyze the arguments that a market for virtue makes CSR a profitable strategy and a source of competitive advantage Topic/Concept: Business Case for CSR Difficulty Level: Moderate Skill Level: Analyze 3. Compare how nonprofit and for-profit social enterprises operate and can compete successfully in the marketplace.

12.5: Compare how nonprofit and for-profit social enterprises operate and can compete successfully in the marketplace Topic/Concept: Business with a Mission Difficulty Level: Moderate Skill Level: Analyze

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Chapter 13 Governance, Accountability, and Compliance CHAPTER SUMMARY The modern corporation is a remarkable form of economic organization that enables everyone in society to interact for mutual gain. Ideally, everyone should benefit from the wealth-creating power of business corporations. For corporations to function and provide their benefits, several problems must be solved. First, corporations must be controlled so that investors, employees, customers, suppliers, and other groups that participate in productive activity are protected. This is the task of corporate governance. Second, there must be a control environment within the corporation to detect and deter employee misconduct. This is the task of corporate ethics. Third, corporations must be held accountable so that corporate executives do not engage in fraud or other wrongdoing. In addition to corporate governance, this task is addressed by accounting and auditing, a corporation’s board of directors, and the criminal law. When an economic system combines all of these elements together—corporate governance, corporate ethics, and corporate accountability—the results can be a prosperous society. Where one or more of the elements is absent, the corporation cannot achieve its full potential.

CHAPTER OBJECTIVES 13.1: Identify the moral arguments and legal rules for shareholders’ control of publicly held corporations, and the additional considerations for protecting the interests of other stakeholders 13.2: Critique how financial reporting, corporate management roles, and the law function to prevent fraud and other kinds of corporate misconduct, and the flaws in the system that have allowed major scandals 13.3: Evaluate the components of corporate ethics programs, the federal guidelines designed to punish and prevent misconduct, and how adopting a code of ethics benefits companies SUGGESTED DISCUSSION PROMPTS 1. Is a corporation’s charitable giving a corporate function, or is it something extra?

2. Do corporations exist merely to facilitate transactions, or is there some other reason for their being?

3. What advantages does the stakeholder theory of corporate control have over the shareholder theory?

4. What should corporations emphasize and incorporate in their ethics programs?

5. What is the role of federal sentencing guidelines in enhancing fairness?

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ASSESSMENT FOR IN-CLASS USE Multiple Choice Questions Choose the BEST possible answer for each of the following.

1. Shareholders have governance over a company in return for A. influence B. capital C. prestige D. advertising

.

Correct Answer: B 13.1: Identify the moral arguments and legal rules for shareholders’ control of publicly held corporations, and the additional considerations for protecting the interests of other stakeholders Topic/Concept: Corporate Governance Difficulty Level: Easy Skill Level: Understanding 2. The property rights theory of corporations has it that incorporation A. is a general aspect of ownership B. is a matter of owning enough capital C. should be accompanied by rules D. is anyone’s right

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Correct Answer: A 13.1: Identify the moral arguments and legal rules for shareholders’ control of publicly held corporations, and the additional considerations for protecting the interests of other stakeholders Topic/Concept: Corporate Governance Difficulty Level: Easy Skill Level: Understanding 3. Although Electronics, Inc. has a code of ethics for its subcontractors, it has experienced issues with its government contracts. Several subcontractors have been embroiled in scandals involving unethical conduct. Most recently, a subcontractor falsified thousands of dollars in work orders. If Electronics, Inc. wants to show the government that it is serious about preventing unethical conduct, it should ________.

A. educate subcontractors about its expectations and monitor them for compliance B. emphasize that it bears little responsibility for the subcontractor's behavior because the subcontractor is not an employee by law C. warn subcontractors about the perils of getting caught D. provide proof of its code of ethics which prohibits unethical conduct

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Correct Answer: A 13.3: Evaluate the components of corporate ethics programs, the federal guidelines designed to punish and prevent misconduct, and how adopting a code of ethics benefits companies Topic/Concept: Corporate Compliance Difficulty Level: Moderate Skill Level: Evaluate 4. Accountants, Inc. wishes to expand its accounting practice to include both consulting and auditing services. Which aspect of its strategy should be examined more closely?

A. The accounting firm has failed to take into account that auditing is more lucrative than consulting.

B. Hiring an accounting firm for consultation can be problematic because it is not a widely accepted business practice.

C. CPAs are not qualified to give advice beyond accounting and financial matters.

D. Conflicts of interest are likely to arise from offering both services to one client.

Correct Answer: D 13.2: Critique how financial reporting, corporate management roles, and the law function to prevent fraud and other kinds of corporate misconduct, and the flaws in the system that have allowed major scandals Topic/Concept: Corporate Accountability Difficulty Level: Moderate Skill Level: Analyze 5. Adolf Berle argued against public responsibility of a corporation on the basis of .

A. the rights of stakeholders B. limiting the power of shareholders C. excessive managerial power D. corporations’ impact on society Correct Answer: C 13.1: Identify the moral arguments and legal rules for shareholders’ control of publicly held corporations, and the additional considerations for protecting the interests of other stakeholders Topic/Concept: Corporate Governance Difficulty Level: Easy Skill Level: Understanding 6. Although ABC Corporation has a comprehensive ethics program, several of its employees have been charged with financial fraud. If ABC is subsequently convicted of the crime and sentenced under the Federal Sentencing Guidelines, it

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can expect ________.

A. strict sanctions without the possibility of leniency B. lenient sanctions because it has a comprehensive ethics program C. standard sanctions regardless of its comprehensive ethics program D. reassurance of no sanctions because it has a comprehensive ethics program Correct Answer: B 13.3: Evaluate the components of corporate ethics programs, the federal guidelines designed to punish and prevent misconduct, and how adopting a code of ethics benefits companies Topic/Concept: Corporate Compliance Difficulty Level: Moderate Skill Level: Evaluate 7. The central argument for shareholder control of a company states that .

A. companies without shareholders are not likely to be profitable B. shareholders have the most to lose in their company involvement C. shareholders are more likely than management to operate a company profitably D. management can only control a company insofar as they are paid by it Correct Answer: B 13.1: Identify the moral arguments and legal rules for shareholders’ control of publicly held corporations, and the additional considerations for protecting the interests of other stakeholders Topic/Concept: Corporate Governance Difficulty Level: Easy Skill Level: Understanding 8. According to stakeholder theory, ___ .

A. stakeholders invest the most capital in a corporation B. a company ought to be run to the benefit of everyone involved in it C. everyone involved in a company should be treated as shareholders D. ownership of a company should be divided among all stakeholders Correct Answer: B 13.1: Identify the moral arguments and legal rules for shareholders’ control of publicly held corporations, and the additional considerations for protecting the interests of other stakeholders Topic/Concept: Corporate Governance Difficulty Level: Easy Skill Level: Understanding 9. Unethical business conduct usually arises from A. ignorance of the law B. unscrupulous individuals acting alone

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C. attempts to cheat shareholders of their dividends D. the way that an organization as a whole operates Correct Answer: D 13.2: Critique how financial reporting, corporate management roles, and the law function to prevent fraud and other kinds of corporate misconduct, and the flaws in the system that have allowed major scandals Topic/Concept: Corporate Accountability Difficulty Level: Moderate Skill Level: Analyze 10. An effective corporate ethics program should include A. standards that have been communicated to all levels B. oversight given to a few individuals C. training in all of the relevant laws D. reporting of all procedures to the public

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Correct Answer: A 13.2: Critique how financial reporting, corporate management roles, and the law function to prevent fraud and other kinds of corporate misconduct, and the flaws in the system that have allowed major scandals Topic/Concept: Corporate Accountability Difficulty Level: Moderate Skill Level: Analyze Essay Questions 1. Evaluate some key components of corporate ethics programs and how they promote ethical conduct.

13.3: Evaluate the components of corporate ethics programs, the federal guidelines designed to punish and prevent misconduct, and how adopting a code of ethics benefits companies Topic/Concept: Corporate Compliance Difficulty Level: Moderate Skill Level: Evaluate

2. Examine the reasoning behind the Sarbanes-Oxley Act and the ways in which it prevents accounting fraud.

13.2: Critique how financial reporting, corporate management roles, and the law function to prevent fraud and other kinds of corporate misconduct, and the flaws in the system that have allowed major scandals Topic/Concept: Corporate Accountability

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Difficulty Level: Moderate Skill Level: Analyze 3. Explain the reasons why shareholder theory of control better accounts for interest protection than stakeholder theory.

13.1: Identify the moral arguments and legal rules for shareholders’ control of publicly held corporations, and the additional considerations for protecting the interests of other stakeholders Topic/Concept: Corporate Governance Difficulty Level: Moderate Skill Level: Analyze

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Chapter 14 International Business Ethics CHAPTER SUMMARY Operating abroad, especially in less-developed countries, creates dilemmas that lead to charges of serious ethical failings. Multinational corporations ( M N C s ) generally recognize a social responsibility and attempt to fulfill their responsibilities everywhere they are located. The major cause of occasional failures to act responsibly is not the lack of effort but the diversity of political and legal systems around the world and differences in economic development. Foreign operations give rise to challenges—and also create opportunities for misconduct—that simply do not exist for purely domestic enterprises.

The main quandary facing all MNCs is deciding which standards to follow. Neither of the two extreme positions is satisfactory. The familiar adage “When in Rome, do as the Romans do” and the opposite, “When in Rome or anywhere else, do as you would at home,” are both inadequate guides. Instead, this chapter offers guidelines for developing special standards for the conduct of international business that can be applied to such matters as so-called sweatshops, foreign bribery, and human rights abuses. Ultimately, the solution to many of the ethical problems of international business lies in the development of international agreements and codes of ethics. As the guidelines for multinational corporations become more detailed and comprehensive, the need for special standards of international business may diminish, and business conduct may eventually be the same worldwide.

CHAPTER OBJECTIVES 14.1: Categorize the various ethical problems that multinational companies may face in their foreign operations, especially while conducting business in less-developed countries 14.2: Explain how the moral concepts of rights, welfare, and justice offer guidelines for conducting international business and the role of global civil society in developing and enforcing these guidelines 14.3: Describe the ethical issues in determining wages and standards for working conditions in international business, and factors that multinational corporations and foreign contractors should consider to improve on those set by market mechanisms 14.4: Evaluate the various forms of bribery and factors that foster them, the ethical problems with bribery, and the diverse means and strategies for combating bribery 14.5: Relate the challenges multinational companies face in dealing with repressive governments, and how a strategy of constructive engagement can be applied to operations in countries with a record of human rights abuses.

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SUGGESTED DISCUSSION PROMPTS 1. Should a corporation try to impose its values on corporations from other cultures?

Why or why not?

2. Can corporations across cultures potentially agree on all ethical issues, or are some differences insurmountable?

3. How can corporations operate internationally so as not to place other peoples at a disadvantage?

4. Why is the issue of bribery likely to arise when doing business in certain international settings?

5. What can and should corporations do to curtail human rights abuses in international operations?

ASSESSMENT FOR IN-CLASS USE Multiple Choice Questions Choose the BEST possible answer for each of the following.

1. Why is it not ethically sufficient for multinational corporations to simply follow the laws of the countries in which they do business?

A. Unethical practices may be legal in other countries.

B. Corporations are bound by the laws of their home country.

C. Some of the laws in foreign nations may be unenforceable.

D. Laws in other countries may unduly restrict business.

Correct Answer: A 14.1: Categorize the various ethical problems that multinational companies may face in their foreign operations, especially while conducting business in less-developed countries Topic/Concept: Different Standards Difficulty Level: Easy Skill Level: Understanding 2. The relativist view on confronting different systems of business ethics says that .

A. the same ethics should be practiced in other countries as at home B. ethical systems do not vary greatly between countries C. one should follow whatever practices are accepted in a certain place D. no one knows what the ethically correct way of doing business is Correct Answer: C 14.1: Categorize the various ethical problems that multinational companies may face in their foreign operations, especially while conducting business in less-developed countries Topic/Concept: Different Standards 75 ..

Difficulty Level: Easy Skill Level: Understanding 3. The absolutist view on confronting different systems of business ethics ignores the fact that .

A. people may disagree over the correct ethical standards B. ethical standards come from cultural views current in a location C. ethical standards in other countries may not be the same as those one is used to D. one may have to lower one’s standards in order to business effectively Correct Answer: B 14.1: Categorize the various ethical problems that multinational companies may face in their foreign operations, especially while conducting business in less-developed countries Topic/Concept: Different Standards Difficulty Level: Easy Skill Level: Understanding 4. The absolutist position on morality places the responsibility for setting standards on .

A. the local people where business is conducted B. the visitor to a foreign country C. the government of the country where business is conducted D. a single impartial and ethically ideal observer Correct Answer: C 14.1: Categorize the various ethical problems that multinational companies may face in their foreign operations, especially while conducting business in less-developed countries Topic/Concept: Different Standards Difficulty Level: Easy Skill Level: Understanding 5. The practice of respecting basic rights in international transactions ensures that .

A. a moral minimum will be respected B. no ethical transgressions will take place C. everyone will agree on all ethical standards D. everyone will understand each other culturally Correct Answer: A 14.2: Explain how the moral concepts of rights, welfare, and justice offer guidelines for conducting international business and the role of global civil society in developing and enforcing these guidelines Topic/Concept: Guidelines for Multinationals Difficulty Level: Easy Skill Level: Understanding 76 ..

6. One of Richard DeGeorge’s guidelines for multinational corporations is that .

A. they should carry out actions that benefit their home country B. they should conform to the ethical expectations of the local culture C. they should pay their employees the same as they pay their domestic employees D. they should do more good than harm for the host country Correct Answer: D 14.2: Explain how the moral concepts of rights, welfare, and justice offer guidelines for conducting international business and the role of global civil society in developing and enforcing these guidelines Topic/Concept: Guidelines for Multinationals Difficulty Level: Easy Skill Level: Understanding 7. Justice must be strongly considered in international operations mainly because .

A. multinational corporations often are not familiar with local laws B. foreign investment most often benefits the rich rather than the poor C. globalized businesses tend to make more profits than other companies do D. multinational corporations have a duty to aid developing countries Correct Answer: B 14.2: Explain how the moral concepts of rights, welfare, and justice offer guidelines for conducting international business and the role of global civil society in developing and enforcing these guidelines Topic/Concept: Guidelines for Multinationals Difficulty Level: Easy Skill Level: Understanding 8. An internationally agreed-upon code of ethics includes an emphasis on A. profitability B. human rights C. politics D. abiding by the law

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Correct Answer: B 14.2: Explain how the moral concepts of rights, welfare, and justice offer guidelines for conducting international business and the role of global civil society in developing and enforcing these guidelines Topic/Concept: Guidelines for Multinationals Difficulty Level: Easy Skill Level: Understanding 9. Wage standards in developing countries are often very low mainly because 77 ..

.

A. wages are not set by the market B. developing countries do not have as many factories C. local politics prevents workers from campaigning for higher wages D. workers are willing to work for much less than someone comparable in the United States Correct Answer: A 14.3: Describe the ethical issues in determining wages and standards for working conditions in international business, and factors that multinational corporations and foreign contractors should consider to improve on those set by market mechanisms Topic/Concept: Wages and Working Conditions Difficulty Level: Easy Skill Level: Understanding 10. ABC Corporation is an American company that wishes to do business with Rimonter, a corporation located in Asia. Rimonter has the standard practice of requiring an undocumented payment of $50,000 to a charitable organization headed

by Rimonter's CEO. This payment is required in exchange for securing a manufacturing contract with Rimonter Corporation. In response to Rimonter's demand, ABC Corporation should ________.

A. agree to pay the $50,000 to the charitable organization but document the payment B. refuse to pay $50,000 to the charitable organization but offer to pay $10,000 instead C. refuse to pay $50,000 to the charitable organization and look for a different business partner D. agree to pay the $50,000 to the charitable organization in installments of $10,000 over the next 5 years Correct Answer: C 14.4: Evaluate the various forms of bribery and factors that foster them, the ethical problems with bribery, and the diverse means and strategies for combating bribery Topic/Concept: Foreign Bribery Difficulty Level: Moderate Skill Level: Evaluate Essay Questions 1. Compare the approaches of absolutism versus relativism for understanding cultural differences in ethics.

14.1: Categorize the various ethical problems that multinational companies may face in their foreign operations, especially while conducting business in less-developed countries Topic/Concept: Different Standards Difficulty Level: Moderate 78 ..

Skill Level: Analyze 2. Describe the codes of ethics that are understood to apply to all forms of international business.

14.2: Explain how the moral concepts of rights, welfare, and justice offer guidelines for conducting international business and the role of global civil society in developing and enforcing these guidelines Topic/Concept: Guidelines for Multinationals Difficulty Level: Easy Skill Level: Understanding 3. Relate the challenges multinational companies face in dealing with repressive governments, and how a strategy of constructive engagement can be applied to operations in countries with a record of human rights abuses.

14.5: Relate the challenges multinational companies face in dealing with repressive governments, and how a strategy of constructive engagement can be applied to operations in countries with a record of human rights abuses Topic/Concept: Human Rights Abuses Difficulty Level: Moderate Skill Level: Evaluate

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