25) The contention that ethical standards should reflect the collective views of multiple societies
in establishing a set of universal ethical principles (that are widely recognized as laying
legitimacy to ethical boundaries on actions and behavior in all situations) and in allowing
inclusion of a set of prevailing customary actions of local cultures or groups (with their traditions
and shared values), that further prescribe to what represents ethically permissible behavior and
what does not, constitutes the basic principles of
A) the school of ethical relativism.
B) the school of ethical universalism.
C) integrated social contracts theory.
D) corporate social responsibility.
E) the triple bottom line.
26) According to integrated social contracts theory, the ethical standards a company should try to
uphold
A) are governed by the school of ethical universalism.
B) are governed both by a limited number of universal ethical principles and the circumstances
of local cultures, traditions, and shared values.
C) are governed by each country’s Code of Required Ethical Conduct, which sets forth that each
individual/group/business/organization has a “social contract” to observe the ethical and moral
standards that the country has adopted.
D) should be determined by the company’s moral managers.
E) should be absolute and avoid wiggle room according to the circumstances of the situation.
27) In 2017, it came to light that in order to meet its demanding profit target, Wells Fargo put
such pressure on its employees to hit sales quotas that many employees responded by
fraudulently opening customer accounts. Wells Fargo’s ethical lapses are NOT a good example
of
A) how certain universal ethical principles apply in those situations where all societies—those
endowed with rationality and moral knowledge—have a common moral agreement on what is
right and wrong.
B) how, within the boundaries of a social contract, local cultures or groups can specify what
additional actions may or may not be ethically permissible.
C) how universal ethical principles or norms leave some “moral free space” for the people in a
particular country (or local culture or even a company) to make specific interpretations of what
other actions may or may not be permissible within the bounds defined by universal ethical
principles.
D) how universal ethical norms always take precedence over local ethical norms.
E) how local ethical norms always take precedence over universal ethical norms.
28) Integrated social contracts theory DOES NOT apply
A) to those situations where most all societies—endowed with rationality and moral
knowledge—have common moral agreement on what is wrong and thereby place limits on which
actions and behaviors fall inside the boundaries of what is right, and which ones fall outside.
B) to commonly held views about what is morally right and wrong that constitute a “social
contract” (contract with society) that is binding on all individuals, groups, organizations, and
businesses in terms of establishing the line between ethical and unethical behaviors.
C) to principles or norms that provide some “moral free space” for the people in a particular
country (or local culture or even a company) to make specific interpretations of how certain
actions may or may not be permissible within the bounds defined by universal ethical principles.
D) to the principle that universal ethical norms take precedence over local ethical norms.
E) to the slippery slope of ethical relativism.
29) Shannon and Ian, student consultants, chose a home construction business as a client for a
semester strategic planning assignment. Upon examination of the client’s financial statements,
the students discover that their client has been cheating the government out of several thousand
dollars a year in taxes. Their client is a company owned by a couple who are in their late 50s and
who have two children in college. Shannon and Ian are the only persons other than the owners
who are in a position to know about this situation. Which ethical principle should guide Shannon
and Ian in their decision whether or not to report the owners to the Internal Revenue Service?
A) There is no such thing as “moral free space”—all ethical standards are determined by societal
norms, and individuals have an implied social contract to live up to these standards.
B) Few nations or cultures have common moral agreement on what is ethically right and wrong.
C) There should be no absolute limits put on what actions and behaviors fall inside the
boundaries of what is ethically or morally right and which actions/behaviors fall outside.
D) Adherence to universal ethical norms always takes precedence over local ethical norms.
E) Ethical relativism should always be adhered to before ethical universalism when dealing
within boundaries of a country’s culture and norms.
30) The strength of integrated social contracts theory is that it
A) correctly recognizes that all soundly reasoned ethical standards are universal.
B) accommodates the best parts of ethical universalism and ethical relativism.
C) puts no absolute limits on what actions and behaviors fall inside the boundaries of what is
ethically or morally right and which actions/behaviors fall outside.
D) recognizes the importance of allowing local ethical norms to always take precedence over
universal ethical norms.
E) recognizes that individuals and businesses have a basic right to “moral free space” and that it
is inappropriate to specify ethically permissible and ethically impermissible actions and
behaviors.
31) According to integrative social contracts theory, the ethical standards a company should try
to uphold
A) are governed by the school of ethical universalism.
B) should be determined by the company’s board of directors.
C) should never be absolute but rather always provide some wiggle room according to the
circumstances of the situation.
D) are governed by each country’s Code of Required Ethical Conduct, which sets forth that each
individual/group/business/organization has a “social contract” to observe the ethical and moral
standards that the country has adopted.
E) are governed both by (1) a limited number of universal ethical principles that are widely
recognized as putting legitimate ethical boundaries on actions and behavior in all situations and
(2) the circumstances of local cultures, traditions, and shared values that further prescribe what
constitutes ethically permissible behavior and what does not—but universal norms always take
precedence over local ethical norms.
32) The litmus test of a company’s code of ethics is
A) the degree to which it is connected to a company’s statement of core values.
B) the extent to which it is embraced in crafting strategy and in the day-to-day operations of the
business.
C) the extent to which a company’s approach to ethical behavior mirrors the ethical principles for
society at large.
D) based on the rules a company’s top management and board of directors make about “what is
right” and “what is wrong.”
E) determined by the ethical behaviors expected of company personnel in the course of doing
their jobs.
33) For their final business class in college, Bill and Jill have been assigned a client that needs to
improve its accounting and budgeting systems. Bill received the assignment by claiming on his
résumé to have majored in accounting. His consulting partner, Jill, a marketing major, learns that
he never actually passed any accounting courses. Jill is deciding whether or not to overlook the
false claim, since Bill is otherwise conscientious and honorable and failure to pass the course
might jeopardize his graduation. In her conversation with the instructor, which question will Jill
NOT raise?
A) Would the potential outcome of the proposed action pose a risk of embarrassment?
B) Is what we are proposing to do fully compliant with our code of ethical conduct?
C) Is there anything in the proposed action that could be considered ethically objectionable?
D) Is it apparent that this proposed action is in harmony with our core values?
E) Are any conflicts or concerns evident between the proposed action and our core values?
34) Senior executives can ensure compliance with the ethical code of conduct by considering
whether
A) the proposed action is fully compliant and in harmony with the code of ethical conduct and
whether stakeholders would consider anything ethically objectionable.
B) the code of conduct is rejected by the market and accepted by employees.
C) the code of conduct was accepted by rivals.
D) the creation of the code of conduct should be handled by executives or employees.
E) to eliminate the need to execute a code of conduct at all.
35) Unethical managerial behavior tends to be driven by such factors as
A) a lack of training in what is ethical and what is not.
B) overzealous or obsessive pursuit of personal gain, wealth, and other self interests; a company
culture that puts the profitability and good business performance ahead of ethical behavior; and
heavy pressures on company managers to meet or beat performance targets.
C) widespread managerial belief in the ethical relativism school of thinking.
D) widespread managerial belief in the ethical universalism school of thinking.
E) confusing differences between what is ethical behavior in one’s personal life and what is
ethically permissible in business.
36) When Robin and Rich ask for a client’s financial statements in order to complete the data
collection for their strategic management project, the owner of the business tells Robin that his
accountants are “preparing the financials but these won’t be ready for several months.” The client
instead suggests that Robin and Rich fabricate the financials instead, since what he “really wants
is a marketing plan,” and that “no one will ever know if you’ve seen the actual financials or not.”
Which of the following should NOT guide Robin and Rich in their decision whether or not to
take this as an authorization to submit false data as part of their final report?
A) the pervasiveness of immoral and amoral businesspeople
B) overzealous pursuit of personal gain, wealth, and other selfish interests
C) a company or campus culture that places good business performance and good grades ahead
of ethical behavior
D) heavy pressures on students to meet or beat assignment deadlines
E) their desire to complete the project, independent of their actual performance on the project
37) For Uber, what was NOT a consequence of pursuing a strategy that had unethical or shady
components?
A) a pressing need to repair a toxic workplace culture characterized by sexual harassment and
managerial inaction in response to formal complaints about unwanted behavior
B) devastating public relations and the need for damage control
C) a significant market share loss to Lyft
D) defections of investors who nevertheless believed that the company’s ride-sharing industry
will grow
E) the ouster of its co-founder Travis Kalanick from his position as the company’s CEO
38) The likelihood of ethical lapses as well as poor long-term company performance tends to
increase when there are
A) dramatic cuts in research and development expenditures in years when low earnings are
reported by the company
B) increases in research and development expenditures in years when low earnings are reported
by the company
C) executive commitment to implementing strategic suggestions from the board of directors
D) attracting investors who think the company’s industry will grow
E) hiring and maintaining a skilled and diverse workforce
39) Short-termism is NOT likely to be an impetus for company managers to
A) decrease spending on research and development
B) avoid stock repurchases made to increase earnings-per-share of a company
C) maintain and hire critical employees with compensations tied to annual company earnings
D) take into consideration all tangible future cash flows over intangible brand value appreciation
E) carry business operations with existing technologies in all markets to cut costs and increase
profits
40) Short-termism is defined as
A) making assessments of the moral character of a company’s managers.
B) the tendency for managers to focus on immediate performance objectives at the expense of
longer-term strategic objectives.
C) assessing the costs and damages to the company’s reputation as a result of ethical violations.
D) weighing the short-term costs of regulatory compliance with the long-term costs of
noncompliance.
E) assessing the short-term costs of complying with government regulations.
41) Cultural demands to employ unethical means if circumstances become challenging can
prompt
A) otherwise dishonorable people to behave ethically.
B) increased observance of ethical strategic actions.
C) a moral work climate.
D) clever ways to operate outside established policies to boost profits.
E) company authorization to observe what’s right.
42) When high ethical principles are deeply ingrained in the corporate culture of a company,
culture can function as a powerful mechanism for all of the following EXCEPT
A) communicating ethical behavioral norms.
B) gaining employee buy-in to the company’s moral standards.
C) gaining employee buy-in to the company’s business principles.
D) gaining employee buy-in to the company’s corporate values.
E) boosting short-termism.
43) In July 2018, the Papa John’s pizza chain decided to distance itself from John Schnatter, its
founder and pitchman, after it was reported that he had used a racial slur in a comment about
black people. Mr. Schnatter apologized and resigned as chairman. The company said Mr.
Schnatter’s image, a fixture on its marketing materials, would be removed as the “first of several
key steps to rebuild trust from the inside-out.” Papa John’s suddenly faced the tricky task of
disentangling itself from its founder and convincing its customers and investors to move on, and
also began considering whether or not to rebrand itself. Papa John’s strategy needs to be ethical
because
A) of the dangers that Papa John’s top management will become embarrassed if the company
does not take action.
B) it is good business and in the best interest of shareholders.
C) everyone in the media is an ethics watchdog and somebody is sure to blow the whistle on the
company’s unethical behavior.
D) of the inevitable risks of being boycotted by customers of major corporate affiliates including
Major League Baseball and the National Football League if an unethical strategy is used.
E) unethical strategies boost long-termism in corporate culture.
44) The effect of ethical standards on a company’s strategy does NOT
A) always reflect badly on the character of the company personnel involved.
B) encompass what is unethical in whole or in part as morally wrong.
C) automatically result in damage to a company’s reputation and have costly consequences.
D) constitute good business and pursue the best interest of shareholders.
E) lead to lower employee morale and higher employee turnover.
45) What is a faulty or invalid reason why a company’s strategy should be ethical?
A) An unethical strategy reflects badly on the character of the company personnel involved.
B) Senior executives fear public embarrassment and disciplinary action if caught doing
something perceived as unethical.
C) An ethical strategy is in the self-interest of shareholders, partly because an unethical strategy
can damage a company’s reputation and partly because unethical behavior can be very costly in
terms of fines and penalties.
D) Customers shun companies known for their shady behavior and ethically upstanding company
personnel are repulsed by a work environment where unethical behavior is condoned.
E) A strategy that is unethical in whole or in part is morally wrong.
46) The strength of the beliefs underlying the moral case for an ethical strategy relates to all
EXCEPT which of the following?
A) It begins with managers who themselves have strong character (for example, who are honest,
have integrity, and truly care about how they conduct a company’s business).
B) It starts with managers who walk the walk in displaying the company’s stated values.
C) It involves managers with high ethical principles and standards who are advocates of a
corporate code of ethics and strong ethics compliance and are genuinely committed.
D) It starts with managers who understand there is a big difference between adopting values
statements superficially and truly accepting a company’s actual strategy and business conduct.
E) It starts with managers that involve themselves in creating strategies based on risks and loss of
reputation that implementing an unethical strategy can cost.
47) Notions of right and wrong, fair and unfair, moral and immoral, ethical and unethical
A) are governed mainly by religious views held in different geographic regions of the world.
B) are present in all societies, organizations, and individuals.
C) vary enormously from country to country across the world.
D) ultimately depend on the circumstances—nothing is really black or white when it comes to
ethical standards.
E) ultimately depend on a person’s own values and beliefs.
48) Visible costs that are incurred by companies and imposed for ethical wrongdoing include all
of the following EXCEPT
A) government fines and penalties.
B) civil penalties arising from class-action lawsuits or other litigation.
C) lower dividends for shareholders.
D) lower stock prices.
E) legal and investigative costs.
49) Internal administrative costs which are incurred by companies for ethical wrongdoing
include all of the following EXCEPT
A) costs attached to adverse effects on employee productivity.
B) costs of remedial education and ethics training to company personnel.
C) costs incurred in taking corrective actions.
D) administrative costs associated with future compliance.
E) legal and investigative costs.
50) After it came to light in 2017 that Wells Fargo employees fraudulently opened customer
accounts to hit sales quotas, rehabilitating this bank’s shattered reputation was expected to be
time-consuming and costly because its employees’ actions could
A) result in increased corporate taxes on the bank’s profits.
B) lead to unnerved creditors and increased risk of default on loans due to potential business
fallout.
C) result in higher stock prices and higher returns on invested capital.
D) result in the increased costs of servicing the bank’s customers.
E) result in poaching talented employees from rival banks.
51) The theory of corporate social responsibility concerns
A) a company’s duty to establish socially acceptable core values and to have a strictly enforced
code of ethical conduct.
B) a company’s duty to maximize shareholder value.
C) the blending of shareholder interests and employee interests.
D) the company’s responsibility to balance between strategic actions to benefit shareholders
against the duty to be a good corporate citizen.
E) top management’s responsibility to ensure that the company’s actions and decisions are in the
best interest of society at large.
52) The business case behind why companies should act in a socially responsible manner does
NOT include
A) increased buyer patronage
B) internal benefits such as improved workforce retention and operational efficiency
C) aggressive pursuit of market share, revenues, and profits
D) reduced risk of reputation-damaging incidents
E) shareholder benefits such as increased stock price and financial performance
53) The essence of socially responsible business behavior is
A) balancing strategic actions to benefit shareholders against the duty to be a good corporate
citizen.
B) pursuing actions to keep prices low enough that the company’s profits will not be viewed by
the general public as obscenely high or exorbitant.
C) making sizable contributions to political action committees representing the interests of the
industry.
D) undertaking actions to balance the interests of all company stakeholders rather than just
exclusively working to protect the interests of shareholders.
E) providing jobs for the local community rather than outsourcing them to low wage labor
countries.
54) The notion of social responsibility as it applies to businesses is concerned with
A) a company’s duty to put the public interest ahead of shareholder interests.
B) societal expectations that all company stakeholders will be treated equally and fairly.
C) a company’s duty to establish a loyal workforce.
D) the responsibility that top management has for ensuring that the company’s actions and
decisions are in the best interest of stakeholders at large.
E) a company’s duty to operate in an honorable manner and provide good working conditions for
employees.