Global Business Today, 11e (Hill)
Chapter 5 Ethics, Corporate Social Responsibility, and Sustainability
1) The term ethics refers to accepted principles of right or wrong that govern the conduct of a
person, the members of a profession, or the actions of an organization.
2) Many of the ethical issues in international business are rooted in the fact that political systems,
law, economic development, and culture vary significantly from nation to nation.
3) The Sullivan principles stem from the beliefs of Leon Sullivan who felt it was not ethical for
General Motors to operate in South Africa unless the company participated in apartheid laws for its
African operations.
4) The phenomenon known as the tragedy of the commons occurs when multiple companies
attempt to produce and sell the same products.
5) “Facilitating payments” are payments to secure contracts that would not otherwise be secured.
6) After it was amended, the Foreign Corrupt Practices Act allowed for “facilitating payments.”
7) The OECD convention on bribery obliges member states and other signatories to make the
bribery of foreign public officials a criminal offense.
8) An ethical dilemma occurs when neither of the choices in a situation seem appropriate or right.
9) An individual’s personal ethical code generally has little influence on their behavior in business.
10) Unfortunately, it is common in business practices to assume that people from different cultures
make ethical decisions using the same process.
11) The social rules that provide guidelines for appropriate behavior in a particular situation are
known as values.
12) According to the concept of cultural relativism, a firm, while operating in any host country,
should adopt the ethics of the culture that is predominant in its home country.
13) One criticism of the righteous moralist approach to ethics is that adopting home-country
standards isn’t always appropriate.
14) The utilitarian approaches to ethics are based on the idea that the moral worth of actions is
determined by their ultimate consequences.
15) One concern with the utilitarian approach is that the action that produces the greatest good for
the greatest number of people may result in the unjustified treatment of a minority.
16) Kantian ethics is concerned with environmental ethical issues such as manufacturing
emissions and polluted waters.
17) John Rawls argues that all economic goods and services should be distributed equally except
when an unequal distribution would work to everyone’s advantage.
18) According to John Rawls’s veil of ignorance, inequalities are justified if they benefit the
position of the least-advantaged person.
19) Business leaders should use every relevant opportunity to stress the importance of business
ethics and make sure that key business decisions not only make good economic sense but also are
ethical.
20) In order to create a business culture that places a high value on ethical behavior, a system of
incentives and rewards must be in place.
21) The first step in an ethical algorithm is to identify those common resources that are not owned
by anyone in particular but are used by everybody.
22) An external stakeholder includes any individuals and groups that have some type of direct or
indirect claim on a company.
23) Ethics officers act as an internal ombudsperson with responsibility for handling confidential
inquiries from employees.
24) The concept of corporate social responsibility (CSR) refers to the idea that businesspeople
should consider the social consequences of economic actions when making business decisions.
25) The core idea behind sustainability is for business to NOT exert a negative impact on the
ability of future generations to meet their own economic needs.
26) Business ________ refers to accepted principles of right or wrong that govern the conduct of a
businessperson, the members of a profession, or the actions of an organization.
A) strategy
B) goodwill
C) ethics
D) mission
E) vision
27) The Sullivan principles resulted from Leon Sullivan’s response to
A) globalization.
B) apartheid laws.
C) grease payments.
D) deforestation.
E) anti-dumping laws.
28) The apartheid system was based on a violation of
A) environmental standards.
B) human rights.
C) educational standards.
D) totalitarian beliefs.
E) religious principles.
29) Ten years after he proposed what came to be known as Sullivan’s principles, Leon Sullivan
concluded that following his principles
A) was the most ethical way of doing business in South Africa.
B) was not sufficient to ethically justify the existence of Western businesses in South Africa.
C) would be effective only when companies opposed democracy in South Africa.
D) had led international companies to successfully combat the apartheid regime in South Africa.
E) would safeguard the citizens and businesses in South Africa from Western businesses.
30) Due to strict environmental standards in its home nation, Neptune Inc. has shifted its
operations to developing nations. The firm has now been able to gain competitive advantage by
avoiding costly pollution controls. This strategic move of Neptune Inc. would be considered
A) illegal.
B) ethical.
C) immoral.
D) uneconomical.
E) totalitarian.
31) Which of these companies has adopted unethical practices?
A) Gemini Inc. ceased its operations in some developing nations on account of low employment
standards in those countries.
B) ModernMeds Corp. sells its medicines at a lower price in less developed nations.
C) Capricorn Inc., a multinational company operating in developing nations, pays its labor 30
percent more than what the local competitors pay.
D) Centaur Inc. closed down a production plant as the local management there employed child
labor.
E) ClearLand Inc. sends its waste products for disposal to a developing nation because the
pollution control laws in its home country are stricter than those in the developing nation.
32) BlueLine Boxes moved its entire production operation to a foreign country, where the
company was free to dump pollutants into the river located adjacent to the factory. In this scenario,
BlueLine Boxes is contributing to
A) environmental growth.
B) corruption.
C) human rights growth.
D) improving its corporate social responsibility.
E) the global tragedy of the commons.
33) The term global commons refers to
A) social norms and values that are common across the globe.
B) a group of nations that share similar ideologies on globalization.
C) natural resources from which everyone benefits but for which no one is specifically responsible.
D) common laws to be obeyed by companies involved in international business.
E) arrangements, like common currencies, between countries to simplify international trading.
34) Over the past few years, three new factories have been built near Pleasantown. A four-acre
area of land lies between these three factories and since no one “owns” this land, all three factories
are using it as a landfill to dump waste products. The once-beautiful land is now encased in
garbage. What phenomenon does this portray?
A) social loafing
B) cultural relativism
C) tragedy of the commons
D) deadweight loss
E) antidumping
35) In the modern world, corporations often hasten the global tragedy of the commons by
A) moving production to locations where they are free to pump pollutants into the environment.
B) imposing stringent environmental standards on developing countries.
C) creating common environmental and employment standards for all nations.
D) adopting costly pollution controls and in turn losing out on economic advantages.
E) adhering to civil laws rather than common laws in case of any environmental violations.
36) Which company is contributing to the global tragedy of the commons?
A) a firm exploiting the weak employment standards in a host nation
B) a firm dumping its chemical wastes directly into an ocean
C) a firm exploiting the weak intellectual property rights in a developing nation
D) a neighboring country opposing the introduction of a free trade area
E) a country denying its citizens basic human rights
37) Speed money, or grease payments, are payments made to
A) secure contracts that would not otherwise be secured.
B) obtain exclusive preferential treatment in a foreign market.
C) influence foreign bureaucrats in the company’s favor.
D) ensure a business receives the standard treatment that it ought to receive.
E) secure monopoly rights in less developed countries.
38) In order to build large production units and expedite certain routine government actions related
to this, Scorpius Inc. made legal payments to the government officials of the host nation. Such
payments are typically referred to as
A) bribes
B) speed money
C) customs duties.
D) excise taxes.
E) preferred dividends.
39) The result of the Convention on Combating Bribery of Foreign Public Officials in
International Business Transactions was to
A) make it mandatory for companies to adhere to the pollution control standards of their home
country in all the nations in which they do business.
B) make bribery of foreign officials a criminal offense but not consider facilitating payments a
criminal offense.
C) make grease payments mandatory in order to obtain exclusive preferential treatment in a host
nation.
D) consider payment of speed money to be moral, but illegal.
E) make it obligatory for companies to adopt a zero-tolerance approach toward grease payments.
40) SolarCorp. won the bid to build an energy facility for a host country government. However, the
execution of the contract has been delayed due to bureaucratic procedures in the less developed
nation. In order to legally overcome this problem, SolarCorp. could resort to the payment of
A) customs duties.
B) excise taxes.
C) expatriation taxes.
D) speed money.
E) repatriation fees.
41) Financial Resources Inc. paid a sum of $50,000 to an official of a foreign government to ensure
that the company obtained exclusive preferential treatment. The $50,000 can be classified as
A) customs duties.
B) excise taxes.
C) speed money.
D) a bribe.
E) repatriation fees.
42) Studies have found that facilitating payments ultimately increase the cost of doing business
and as a result some companies have
A) embraced a “wait and see” approach.
B) made such payments a part of normal business practice.
C) adopted a zero-tolerance approach.
D) agreed that such payments should only be used in the home country.
E) asked the United Nations to legalize these payments.
43) The practice of “gift giving” between the parties to a business negotiation is considered right
and proper in many Asian cultures. However, some Westerners view the practice as a form of
bribery, and therefore unethical, particularly if the gifts are substantial. This demonstrates that
A) notions of ethics are universal.
B) Asian countries are still influenced by totalitarianism.
C) what is ethical depends on one’s cultural perspective.
D) Asian cultures are more economically advanced.
E) accepted employment practices are universal.
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44) Sun-Yip is the manager of an appliance manufacturing facility in a developing country. This
facility does not meet the acceptable standards of the manufacturing facility in his home nation. He
knows that demanding a better facility will raise the cost of the appliances that are mainly exported
to other less-developed countries. However, he also realizes that by not demanding a better
facility, the employees who work there are prone to serious health issues. Sun-Yip is facing
A) a role conflict.
B) the tragedy of the commons.
C) factor endowments.
D) an ethical dilemma.
E) the difference principle.
45) Which of these employees is facing an ethical dilemma?
A) Javier has felt unsure about a car he purchased and has been reading only good reviews about
the car to console himself.
B) After seeing a whole new collection of phones at a store, Max is regretting the purchase of an
outdated phone he made last month.
C) The manager at Almas Inc. has to make a vendor choice between his underqualified cousin and
a highly-experienced, trusted supplier.
D) Salena is responsible for deciding whether she should upgrade the manufacturing unit with new
machines and reduce costs or retain the impoverished manual labor force.
E) Lars has to decide whether the annual profits of the company should be distributed to the
employees as a salary hike or in the form of non-monetary benefits.