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Chapter 10—Globalization of Ethical Decision Making
MULTIPLE CHOICE
1. _____ identified four cultural dimensions that can have a profound impact on the business
environment: individualism/collectivism, power distance, uncertainty avoidance, and
masculinity/femininity.
a.
Milton Friedman
b.
Abraham Maslow
c.
Adam Smith
d.
Geert Hofstede
e.
John Maynard Keynes
2. _____ products encourage consumers to return and buy more. This approach is also known as planned
obsolescence.
a.
Laissez-faire
b.
Dumping
c.
Collectivistic
d.
Made-to-break
e.
Multinational
3. _____ is a term used by Adam Smith to explain the inherent mechanisms at work in free market
systems that keep commerce in equilibrium. It is also known as the “invisible hand.”
a.
Consumerism
b.
Cultural relativism
c.
Social democracy
d.
Laissez-fair
e.
Bimodal wealth distribution
4. _____ assumes that humans may not act rationally because of genetics, learned behavior, and rules of
thumb.
a.
Rational economics
b.
Socialism
c.
Cultural relativism
d.
National culture
e.
Behavioral economics
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5. Which of the following statements about multinational corporations (MNCs) is false?
a.
MNCs are corporate organizations that operate on a global scale without significant ties to
any one nation or region.
b.
MNCs are inherently unethical and always do harm in the countries in which they operate.
c.
MNCs are characterized by a global strategy of focusing on opportunities throughout the
world.
d.
Some MNCs are so large and powerful that their revenues are greater than the gross
domestic products of many countries.
e.
Because of their size and power, MNCs have been the subject of much criticism and the
source of a number of ethical issues.
6. Increasing the wealth gap between nations and misusing and misallocating scarce resources are ethical
issue accusations related to
a.
cultural differences.
b.
multinational corporations.
c.
consumerism.
d.
legal differences.
e.
international negotiations.
7. Which of the following is not a criticism of or charge against multinational corporations (MNCs)?
a.
They transfer jobs overseas, where wage rates are lower
b.
They increase the gap between rich and poor nations
c.
They pay excessively high taxes everywhere
d.
They exploit the labor markets of host countries
e.
They have an unfair advantage when competing with local businesses
8. Which of the following is a measure taken by governments to curtail MNC practices that create ethical
issues?
a.
Levying import taxes to lower the prices MNCs charge for their products
b.
Halting the establishment of minimum wage laws
c.
Avoiding the United Nations’ monitoring efforts
d.
Preventing the formation of labor unions
e.
Imposing export taxes to force MNCs to share more of their profits
9. _____ occurs when the middle class shrinks, resulting in highly concentrated wealth amongst the rich
and a large number of poor people with very few resources.
a.
Communism
b.
Socialism
c.
Bimodal wealth distribution
d.
A two-class social structure
e.
Laissez-faire capitalism
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10. An unconscious reference to one’s own cultural values, experiences, and knowledge is referred to as
the
a.
cultural reference criterion.
b.
unconscious cultural criterion.
c.
cultural-self criterion.
d.
self-reference criterion.
e.
unconscious cultural-self criterion.
11. When in Rome, do as the Romans do, or you must adapt to the cultural practices of the country in
which you are operating are rationalizations businesspeople sometimes offer for straying from their
own ethical values when doing business abroad. This practice is called
a.
self-reference criterion.
b.
country cultural values.
c.
consumerism.
d.
cultural relativism.
e.
dumping.
12. _____ involves transactions across national boundaries. It is a practice that brings together people who
have different cultures, values, laws, and ethical standards.
a.
Global business
b.
Country cultural values
c.
Social democracy
d.
Cultural relativism
e.
Bimodal wealth distribution
13. What concept refers to economic theories advocating the creation of a society where wealth and power
are distributed evenly, relative to the amount of work expended in production?
a.
Rational economics
b.
Socialism
c.
Capitalism
d.
Rational capitalism
e.
Fascism
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14. Risk compartmentalization occurs when
a.
companies place their most problematic employees into separate profit centers so that they
cannot influence one another to act unethically.
b.
all profit centers within a corporation are aware of the code of ethics.
c.
all profit centers within an organization become aware of the consequences of competitors’
actions.
d.
various profit centers within an organization become unaware of the consequences of their
actions on the firm as a whole.
e.
ethics and compliance programs reduce the risk of misconduct.
15. _____ has been codified in a United Nations document and is defined as an inherent dignity with equal
and inalienable rights as the foundation of freedom, justice, and peace in the world.
a.
Cultural relativism
b.
Human rights
c.
Consumerism
d.
Dumping
e.
Health care
16. Power distance dimension refers to the “power inequality” between superiors and subordinates. Which
of the following countries probably ranks high on the power distance scale?
a.
Saudi Arabia
b.
Austria
c.
England
d.
Denmark
e.
Sweden
17. Who argued during the 1930s that the state could stimulate economic growth and improve stability in
the private sector?
a.
Adam Smith
b.
John Maynard Keynes
c.
Milton Friedman
d.
Herbert Hoover
e.
Geert Hofstede
18. The practice of charging high prices for products sold in home markets while selling the same products
in foreign markets at low prices, which do not cover the costs of exporting, is known as
a.
price discrimination.
b.
price gouging.
c.
dumping.
d.
skimming.
e.
loading.
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19. _____ assume(s) that a the market, through its own inherent mechanisms, will keep commerce in
equilibrium.
a.
Social democracy
b.
Laissez-faire economics
c.
Economics
d.
Multinational corporations
e.
Rational economics
20. Those who ascribe to consumerism
a.
believe that consumers should purchase everything they can afford.
b.
do not believe in taxes on locally made products.
c.
believe that consumers should own the means of production.
d.
believe that consumers, not producers, should dictate the economic structure of a society.
e.
believe that corporations should have the freedom to do whatever they want.
21. _____ is based upon the assumption that people are predictable and will maximize the utility of their
choices relative to their needs and wants.
a.
Rational economics
b.
Socialism
c.
Capitalism
d.
Behavioral economics
e.
Consumerism
22. _____ allows for private ownership of property and features a large government equipped to offer such
services as education and health care to its citizens
a.
Democracy
b.
Communism
c.
Socialism
d.
Capitalism
e.
Social democracy.
23. _____ assumes that economic decisions are influenced by human behavior.
a.
Rational economics
b.
Socialism
c.
Capitalism
d.
Rational capitalism
e.
Behavioral economics
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24. _____ refers to how members of a society respond to ambiguity. A high score means that a culture
tends to minimize risk-taking.
a.
Rational economics
b.
National culture
c.
Bimodal wealth distribution
d.
Power distance
e.
Uncertainty avoidance
25. The _____ formed in 1995 and administers its own trade agreements, facilitates future trade
negotiations, settles trade disputes, and monitors the trade policies of member nations
a.
International Monetary Fund
b.
United Nations
c.
World Trade Organization
d.
North American Free Trade Act
e.
European Union
26. What is a major role of the International Monetary Fund (IMF)?
a.
It determines the credit ratings of countries.
b.
It is the lender of last resort for individuals who cannot secure other types of loans.
c.
It functions as a collection agent for global banks.
d.
It makes short-term loans to member countries that have deficits and provides foreign
currencies for its members.
e.
It provides mortgage loans to international home buyers.
27. Which of the following organizations emerged from the Bretton Woods agreement of 1944, where a
group of international leaders decided that the primary responsibility for the regulation of monetary
relationships among national economies should rest in an extra-national body?
a.
International Monetary Fund
b.
United Nations
c.
World Trade Organization
d.
North American Free Trade Act
e.
European Union
28. These values were developed by a reverend and the UN Secretary General. They express support for
universal human rights.
a.
The Global Sullivan Principles
b.
Sarbanes-Oxley Act
c.
FSGO
d.
Global common values
e.
UN Global Compact
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29. What is the purpose of the UN Global Compact?
a.
To promote free trade around the world
b.
To support international banking institutions
c.
To uphold the principle of consumerism
d.
To provide legal representation to international corporations facing lawsuits
e.
To promote human rights, sustainability, and eradicate corruption
30. What is the AACSB?
a.
A major international institution regulating banks around the world
b.
An accrediting institution for organizational ethics
c.
A non-political international governing body
d.
An international organization that promotes a set of principles promoting the teaching of
responsible management in business schools
e.
A group that promotes sustainability and environmental awareness
31. As business facilitates exchanges, consumption beyond basic needs will increase globally. The
important issues related to consumerism include all but which of the following?
a.
What are the impacts of production on the environment, on society, and on individuals?
b.
What are the impacts of certain forms of consumerism on the environment, on society, and
on individuals?
c.
How much of what we deem necessary for consumption is influenced by corporations?
d.
What are necessities and what are luxuries?
e.
What are the impacts of poor countries’ consumption patterns on wealthy countries?
32. Which two developing countries are expected to generate some of the largest increases in consumption
in the future?
a.
The United States and Russia
b.
Russia and China
c.
China and United States
d.
Brazil and Russia
e.
China and India
33. According to the World Trade Organization, which of the following products and services are most
vulnerable to protectionism?
a.
Textbooks and other school supplies
b.
Travel agencies
c.
Music and dance
d.
Intellectual property
e.
Shoes, cars, and steel
34. Which of the following is not an article in the UN Human Rights Declaration?
a.
Freedom of religion
b.
The right to work in favorable conditions
c.
The right to electricity and running water
d.
The right to a home adequate for health and well-being
e.
Mothers and children being entitled to a special level of care
35. The growth of the Internet and differing security laws between countries has led to an increase in
concern for the human right of
a.
religion.
b.
a secure job.
c.
healthcare.
d.
privacy.
e.
freedom of speech.
36. Which of the following is not a key area of global ethical risk, as outlined by the Eurasia Group?
a.
Internet security and privacy
b.
Strained relations with China
c.
Instability in emerging markets
d.
Unequal levels of child labor laws
e.
Nationalism and protectionism
37. What is a living wage?
a.
The minimum wage that a worker requires to meet basic needs.
b.
The wage at which the average worker can live really well.
c.
It is a synonym for minimum wage.
d.
The wage received by child workers in order to stay alive.
e.
A wage given to workers entirely in the form of food.
38. The benefit of healthcare is being debated as to whether it is a right or privilege. Which of the
following countries does not consider health care to be a right?
a.
The United States
b.
France
c.
Sweden
d.
Germany
e.
Canada
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39. The “G–Zero” risk is a global ethical risk. It refers to
a.
the fear that China wields too much power on the global stage.
b.
the idea that countries are becoming increasingly nationalistic, rather than globalized.
c.
the fear that natural resources are becoming increasingly scarce.
d.
the United State’s falling ranking in education and the effect that will have on global
competitiveness.
e.
the fear that religious extremism hurts global competitiveness.
40. The _____ was a result of a meeting in which international leaders decided that primary responsibility
for the regulation of monetary relationships among nations should rest in an external body.
a.
United Nations
b.
North American Free Trade Agreement
c.
World Trade Agreement
d.
World Bank
e.
International Monetary Fund
41. Which of the following has the power to enact legally binding ground rules for international commerce
and trade policy?
a.
Global Sullivan Principles
b.
World Trade Organization
c.
Global Sullivan Organization
d.
Federal Trade Commission
e.
Global Commerce Association
ESSAY
42. Why are many international business ethics issues different from domestic ethical issues?
43. How can differences in two countries’ cultures create ethical issues in business?
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44. Discuss the ethical issues associated with multinational corporations.
45. What are the roles of the IMF and the WTO in encouraging, monitoring, and regulating international
trade?
46. What is dumping and why is it considered anticompetitive? Does the United States allow dumping?