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Chapter 03
Organizational Ethics
True / False Questions
1. Shareholders lack interest in the ethical performance of an organization.
2. Organizational culture can be defined as the values, beliefs, and norms shared by the
employees as well as the competitors of that organization.
3. An organization's operating culture represents the sum of all the policies and procedures,
both written and informal.
4. A value chain is composed of the key functional inputs that an organization provides in the
transformation of raw materials into a delivered product or service.
5. Finance, which is a primary activity of an organization's value chain, sources components
and builds products for an organization.
6. Marketing, sales, and customer service are identified as the key functions in a value
chain.
7. Marketing (and advertising) is one of the key functions in a value chain.
8. Distribution and marketing are line functions, supporting each of the key functional
areas.
9. Information systems team coordinate the recruitment, training, and development of
personnel for all aspects of an organization.
10. Research and development (R&D) professionals carry the responsibility for the future
growth of an organization.
11. Given that research and development (R&D) teams do not interact directly with
customers, the potential for ethical dilemmas is nonexistent.
12. For a research and development (R&D) team, the real ethical dilemmas come when
decisions are made about product quality.
13. The manufacturing process is responsible for ensuring that a product reaches the hands
of a satisfied customer.
14. Utilitarianism refers to the theory that suggests actions are taken out of duty and
obligation to a purely moral ideal, rather than based on the needs of the situation.
15. Universal ethics refers to ethical choices that offer the greatest good for the greatest
number of people.
16. Marketing professionals abide by a code of ethics adapted by the American Marketing
Association.
17. The code of ethics adapted by the American Marketing Association speaks about
improving "customer confidence in the integrity of the marketing exchange system."
18. The human resources function within an organization should ideally be directly involved
in the marketing process of the organization.
19. The human resources function within an organization should ideally be directly involved
in the maintenance of the technology in the organization.
20. The human resources function within an organization should ideally be directly involved in
the creation of a career development program of an employee.
21. If an employee leaves a company, the human resources department is responsible for
hosting an exit interview to ensure that anything that the organization can learn from the
employee's departure is fed back into the company's strategic plan for future growth and
development.
22. The human resources function within an organization seldom needs to be involved in the
relationship between the company and an employee.
23. The advocates of ethical business conduct argue that an organization's marketing team
should be at the center of any corporate code of ethics.
24. The advocates of ethical business conduct argue that an organization's human resources
(HR) should be the sole creator of any corporate code of ethics.
25. An organization's human resources (HR) must ensure that the leadership selection and
development processes include an ethics component.
26. An organization's human resources (HR) professionals must help ensure that ethics is a
top organizational priority.
27. Marketing professionals are responsible for ensuring that the right programs and policies
for ethical business conduct are in place.
28. The human resources function of an organization can be divided into three distinct areas:
financial transactions, auditing, and accounting function.
29. The accounting function provides the certification, by an impartial third-party
professional, that an organization's financial statements are accurate.
30. The auditing function keeps track of all the financial transactions of an organization by
documenting the money coming in and money going out and balancing the accounts at the end of
the period.
31. The accounting profession is governed by a set of laws and established legal precedents.
32. It is illegal to defer receipts from one quarter to the next to manage one's tax liabilities.
33. Some of the illegal financial functions carried out by an organization include
underreporting income, overvaluing assets, and taking questionable deductions.
34. When a company's financial statements have been certified by an objective third-party to
be "clean," that certification is meant to be for the public's benefit rather than the company's
benefit.
35. The obligation that an auditing firm has to a paying client while owing an objective, third-
party assessment of that client's financial stability to stakeholders and potential investors
represents a potentially significant conflict of interest.
36. A situation in which one relationship or obligation places an individual or firm in direct
conflict with an existing relationship or obligation refers to a conflict of interest.
37. Selling a product that has the potential to be harmful to a firm's customers represents a
significant conflict of interest.
3-14
38. Nonprofit organizations do not face problems with unethical behavior.
39. Profits are the main reason behind stretching the truth and bending the rules that have
become a regular occurrence in a workplace.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 03-05 Determine potential conflicts of interest within any organizational function.
Multiple Choice Questions
40. Identify a true statement about a company's organizational culture.
41. Which of the following statements is true of organizational culture?
42. Anderson Enterprises endorses low power distance which implies that the firm lays
emphasis on a less consultative or democratic work structure. Subordinates work on important
assignments and managers often socialize with them. Which of the following concepts is being
reflected in the above scenario?
43. Identify a true statement about value chain.
personnel for all aspects of an organization.
44. A composition of the key functional inputs that an organization provides in the
transformation of raw materials into a delivered product or service is termed _____.
45. According to the value chain of an organization, which of the following is classified as a
primary activity?
46. A primary activity of an organization according to the value chain is that of _____.
47. In the context of the value chain of an organization, _____ is a support activity.
48. In the context of the value chain of an organization, which of the following is a line
function of an organization?
49. _____ serves as a support line function to key functional areas in an organization's value
chain.
50. _____ serves as a support line function to key functional areas in an organization's value
chain.
51. Which of the following statements is true of a company's value chain?
52. The research and development (R&D) department of an organization:
53. Brendon joins Almer Inc. as the head of the research and development (R&D) team. In
order to allow Almer Inc. to capture and maintain a leading position in the market, Brendon
should _____.
54. Cathy heads the research and development (R&D) team of Anderson Enterprises. Which
of the following R&D functions should Cathy and her team undertake to allow the organization
capture and maintain a leading position in its market?
