Chapter 3 3 Companies are legally required to have written codes of ethics

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 3—Conducting Business Ethically and Responsibly

Objective: 3.1

19. About two-thirds of Canada‘s largest corporations have codes of ethics.

a. True

b. False

Difficulty: 1 Page-Reference: 81

Question ID: 03-2-149 Skill: Knowledge

Objective: 3.1

20. Companies are legally required to have written codes of ethics.

a. True

b. False

Difficulty: 1 Page-Reference: 80

Question ID: 03-2-150 Skill: Knowledge

Objective: 3.1

21. Behaviour that is unethical is also typically illegal.

a. True

b. False

Difficulty: 1 Page-Reference: 75

Question ID: 03-2-151 Skill: Knowledge

Objective: 3.1

22. To be unethical, behaviour must also be illegal.

a. True

b. False

Difficulty: 1 Page-Reference: 75

Question ID: 03-2-152 Skill: Comprehension

Objective: 3.1

23. John is a manager who pays workers less than what they deserve because he knows they are

afraid to lose their job. John’s behaviour is illegal.

a. True

b. False

Difficulty: 1 Page-Reference: 75

Question ID: 03-2-153 Skill: Comprehension

Objective: 3.1

24. Social responsibility refers to a business’s obligation to make decisions that benefit employees.

a. True

b. False

Difficulty: 1 Page-Reference: 94–96

Question ID: 03-2-154 Skill: Knowledge

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 3—Conducting Business Ethically and Responsibly

Objective: 3.2

25. While everyone seems to accept the idea that attention must be paid to organizational

stakeholders, it is difficult to know which ones should be given the most attention.

a. True

b. False

Difficulty: 1 Page-Reference: 83

Question ID: 03-2-155 Skill: Comprehension

Objective: 3.2

26. Social responsibility is an attempt by a business to balance its commitments to groups and

individuals in its environment, including customers, other businesses, employees, and investors.

a. True

b. False

Difficulty: 1 Page-Reference: 81

Question ID: 03-2-156 Skill: Knowledge

Objective: 3.2

27. The fair trade movement is designed to level the playing field with respect to trade between

developing and developed countries.

a. True

b. False

Difficulty: 1 Page-Reference: 83

Question ID: 03-2-157 Skill: Comprehension

Objective: 3.2

28. Organizational stakeholders are those groups, individuals, and organizations that are directly

affected by the practices of an organization and that therefore have a stake in its performance.

a. True

b. False

Difficulty: 2 Page-Reference: 82

Question ID: 03-2-158 Skill: Knowledge

Objective: 3.2

29. Most companies that strive to be responsible to their stakeholders concentrate on five main

groups: customers, employees, investors, suppliers, and creditors.

a. True

b. False

Difficulty: 2 Page-Reference: 82

Question ID: 03-2-159 Skill: Knowledge

Objective: 3.2

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 3—Conducting Business Ethically and Responsibly

30. There is general agreement on the proper role businesses should take in executing their social

responsibilities.

a. True

b. False

Difficulty: 1 Page-Reference: 94

Question ID: 03-2-160 Skill: Knowledge

Objective: 3.2

31. Because the CEO of Xanadu Corp. believes very strongly that the purpose of a business firm is to

make as much money as possible as long as it doesn’t break the law while doing so, she reflects the view

called managerial capitalism.

a. True

b. False

Difficulty: 1 Page-Reference: 83

Question ID: 03-2-161 Skill: Comprehension

Objective: 3.2

32. There is currently a strong consensus that global warming is happening and that it is being

caused largely by human activity.

a. True

b. False

Difficulty: 1 Page-Reference: 85

Question ID: 03-2-162 Skill: Knowledge

Objective: 3.3

33. Australia, Canada, and the U.S. are the world’s largest greenhouse gas emitters on a per capita

basis.

a. True

b. False

Difficulty: 1 Page-Reference: 83

Question ID: 03-2-163 Skill: Knowledge

Objective: 3.3

34. The United Nations “cap and trade” system essentially gives certain companies (i.e., those that

have bought carbon credits) the right to pollute the atmosphere with carbon dioxide.

a. True

b. False

Difficulty: 3 Page-Reference: 84

Question ID: 03-2-164 Skill: Comprehension

Objective: 3.3

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 3—Conducting Business Ethically and Responsibly

35. Europol’s Criminal Finances and Technology section estimates that up to 90 percent of all carbon

market volume in certain EU nations is fraudulent.

a. True

b. False

Difficulty: 3 Page-Reference: 84

Question ID: 03-2-165 Skill: Knowledge

Objective: 3.3

36. When plant and animal waste is recycled to produce energy, this is referred to as biomass.

a. True

b. False

Difficulty: 3 Page-Reference: 86

Question ID: 03-2-166 Skill: Knowledge

Objective: 3.3

37. A business firm’s main responsibility to its customers is to ensure that the firm makes a profit so

that money can be channelled into research and development of new products.

a. True

b. False

Difficulty: 2 Page-Reference: 83

Question ID: 03-2-167 Skill: Comprehension

Objective: 3.3

38. Consumer rights include the right to safe products, the right to be informed, the right to low prices,

and the right to a refund.

a. True

b. False

Difficulty: 2 Page-Reference: 87–88

Question ID: 03-2-168 Skill: Knowledge

Objective: 3.3

39. In 2010, new laws came into effect that, unfortunately, made it more difficult for the Competition

Bureau to convict price-fixers.

a. True

b. False

Difficulty: 2 Page-Reference: 88

Question ID: 03-2-169 Skill: Comprehension

Objective: 3.3

40. Stealth advertising is unethical and illegal.

a. True

b. False

Difficulty: 2 Page-Reference: 89

Question ID: 03-2-170 Skill: Knowledge

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 3—Conducting Business Ethically and Responsibly

Objective: 3.3

41. Counterfeit goods are a problem mainly for products like luggage, pharmaceuticals, designer

clothing, and watches, but not much of a problem for products like fine wines.

a. True

b. False

Difficulty: 2 Page-Reference: 88–89

Question ID: 03-2-171 Skill: Knowledge

Objective: 3.3

42. Counterfeiting is harmful to companies that have spent a lot of time and money developing brand

name goods for sale, but it is beneficial for consumers because they get lower prices for products like

counterfeit motorcycles and pharmaceuticals.

a. True

b. False

Difficulty: 2 Page-Reference: 88–89

Question ID: 03-2-172 Skill: Comprehension

Objective: 3.3

43. Collusion occurs when two or more firms agree to collaborate on such wrongful acts as price

fixing.

a. True

b. False

Difficulty: 1 Page-Reference: 88

Question ID: 03-2-173 Skill: Knowledge

Objective: 3.3

44. A company that provides its employees with equal opportunities without regard to race, sex, or

other irrelevant factors is meeting its social responsibilities to employees.

a. True

b. False

Difficulty: 2 Page-Reference: 90

Question ID: 03-2-174 Skill: Knowledge

Objective: 3.3

45. There is general agreement that workers shouldn’t damage the reputation of the company they

work for, and there is consensus about what constitutes going “too far” when posting criticisms of the

company on social media.

a. True

b. False

Difficulty: 2 Page-Reference: 90

Question ID: 03-2-175 Skill: Comprehension

Objective: 3.3

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 3—Conducting Business Ethically and Responsibly

46. Whistleblowers are employees who detect and try to put an end to a company’s unethical, illegal,

and/or socially irresponsible actions by publicizing them.

a. True

b. False

Difficulty: 1 Page-Reference: 91

Question ID: 03-2-176 Skill: Knowledge

Objective: 3.3

47. Business firms can show their social responsibility toward employees by providing a safe

workplace with equal employment opportunities.

a. True

b. False

Difficulty: 1 Page-Reference: 90

Question ID: 03-2-177 Skill: Comprehension

Objective: 3.3

48. In a socially responsible company, whistle-blowers can report their findings to higher level

managers without fear of retaliation by other members of the organization.

a. True

b. False

Difficulty: 1 Page-Reference: 91

Question ID: 03-2-178 Skill: Comprehension

Objective: 3.3

49. Cheque kiting is unethical but not illegal.

a. True

b. False

Difficulty: 1 Page-Reference: 93

Question ID: 03-2-179 Skill: Knowledge

Objective: 3.3

50. It is illegal to misrepresent a company’s finances, but the situation regarding improper financial

mismanagement is not so clear.

a. True

b. False

Difficulty: 3 Page-Reference: 93

Question ID: 03-2-180 Skill: Comprehension

Objective: 3.3

51. Insider trading occurs when someone uses confidential information to gain from the purchase or

sale of stocks.

a. True

b. False

Difficulty: 1 Page-Reference: 94

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 3—Conducting Business Ethically and Responsibly

Question ID: 03-2-181 Skill: Comprehension

Objective: 3.3

52. Business firms that engage in cheque kiting are acting in a socially responsible manner because

such financial techniques result in higher profits, higher dividends, and higher stock prices, and these

benefit shareholders.

a. True

b. False

Difficulty: 2 Page-Reference: 93

Question ID: 03-2-182 Skill: Comprehension

Objective: 3.3

53. The defensive stance to social responsibility acknowledges that business has contributed to many

of society’s problems and, therefore, business has a social obligation to correct those problems.

a. True

b. False

Difficulty: 1 Page-Reference: 95

Question ID: 03-2-183 Skill: Comprehension

Objective: 3.4

54. The obstructionist stance generally leads to higher financial performance than the accommodative

stance.

a. True

b. False

Difficulty: 1 Page-Reference: 95

Question ID: 03-2-184 Skill: Comprehension

Objective: 3.4

55. Some individuals oppose any business activity involving social responsibility because it cuts into

profits for investors.

a. True

b. False

Difficulty: 2 Page-Reference: 83

Question ID: 03-2-185 Skill: Comprehension

Objective: 3.4

56. The proactive stance is adopted by firms that actively seek opportunities to contribute to the well–

being of society.

a. True

b. False

Difficulty: 2 Page-Reference: 95

Question ID: 03-2-186 Skill: Knowledge

Objective: 3.4

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 3—Conducting Business Ethically and Responsibly

57. The most conservative approach to social responsibility for a firm is the accommodative stance.

a. True

b. False

Difficulty: 1 Page-Reference: 95

Question ID: 03-2-187 Skill: Comprehension

Objective: 3.4

58. After Max Clarkson designed and applied a social responsibility rating system for companies, he

found that companies that had the highest marks on questions of ethics and social responsibility also had

the highest financial performance.

a. True

b. False

Difficulty: 2 Page-Reference: 94

Question ID: 03-2-188 Skill: Knowledge

Objective: 3.4

59. Sustainable development means pursuing activities that meet current needs, but that will not put

future generations at a disadvantage when they attempt to meet their needs.

a. True

b. False

Difficulty: 2 Page-Reference: 97

Question ID: 03-2-189 Skill: Knowledge

Objective: 3.4

60. Xanex Corp. will respond to requests for donations from certain charitable organizations, but it will

not seek them out. This is an example of a defensive stance toward social responsibility.

a. True

b. False

Difficulty: 2 Page-Reference: 95

Question ID: 03-2-190 Skill: Comprehension

Objective: 3.4

61. The accommodative stance acknowledges that business has contributed to many of society’s

problems and, therefore, business has a social obligation to correct those problems.

a. True

b. False

Difficulty: 2 Page-Reference: 95

Question ID: 03-2-191 Skill: Knowledge

Objective: 3.4

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 3—Conducting Business Ethically and Responsibly

62. The obstructionist stance to a firm’s social responsibilities states that a firm should wait until

asked to participate and then respond a bit above the minimum legal requirement.

a. True

b. False

Difficulty: 1 Page-Reference: 95

Question ID: 03-2-192 Skill: Knowledge

Objective: 3.4

63. Social audits should be conducted prior to setting up any social responsibility program.

a. True

b. False

Difficulty: 1 Page-Reference: 97

Question ID: 03-2-193 Skill: Comprehension

Objective: 3.4

64. Making a company into a truly socially responsible firm requires that a top-level manager

personally direct the planning and implementation of this program, just as if he or she were introducing a

new product.

a. True

b. False

Difficulty: 2 Page-Reference: 97

Question ID: 03-2-194 Skill: Application

Objective: 3.4

65. A social audit is a systematic analysis of how a firm is using funds earmarked for achievement of

its social-responsibility goals.

a. True

b. False

Difficulty: 2 Page-Reference: 97

Question ID: 03-2-195 Skill: Knowledge

Objective: 3.4

66. Triple bottom line reporting means measuring the financial, marketing, and production

performance of a company.

a. True

b. False

Difficulty: 2 Page-Reference: 97

Question ID: 03-2-196 Skill: Knowledge

Objective: 3.4

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 3—Conducting Business Ethically and Responsibly

67. A major concern for the small business owner is whether he or she can afford to have a social

agenda.

a. True

b. False

Difficulty: 2 Page-Reference: 98

Question ID: 03-2-197 Skill: Comprehension

Objective: 3.5

68. Because Joan owns a small company, the concept of socially responsible behaviour does not

apply to her.

a. True

b. False

Difficulty: 2 Page-Reference: 98

Question ID: 03-2-198 Skill: Comprehension

Objective: 3.5

1. What is ethical behaviour?

Difficulty: 2 Page-Reference: 74

Question ID: 03-3-199 Skill: Knowledge

Objective: 3.1

2. What is unethical behaviour?

Difficulty: 2 Page-Reference: 74

Question ID: 03-3-200 Skill: Knowledge

Objective: 3.1

3. What are managerial ethics?

Difficulty: 2 Page-Reference: 76

Question ID: 03-3-201 Skill: Knowledge

Objective: 3.1

4. What is the first step in making ethical judgments?

Difficulty: 2 Page-Reference: 78

Question ID: 03-3-202 Skill: Application

Objective: 3.1

5. List four ethical norms.

Difficulty: 2 Page-Reference: 78

Question ID: 03-3-203 Skill: Knowledge

Objective: 3.1

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 3—Conducting Business Ethically and Responsibly

6. List two ways that a company can formalize top management commitment to ethical business

practices.

Difficulty: 2 Page-Reference: 80–81

Question ID: 03-3-204 Skill: Application

Objective: 3.1

7. What is social responsibility?

Difficulty: 2 Page-Reference: 81

Question ID: 03-3-205 Skill: Knowledge

Objective: 3.2

8. List five general categories of organizational stakeholders.

Difficulty: 2 Page-Reference: 82

Question ID: 03-3-206 Skill: Knowledge

Objective: 3.2

9. Summarize the debate about global warming.

Difficulty: 2 Page-Reference: 85

Question ID: 03-3-207 Skill: Comprehension

Objective: 3.3

10. What are carbon credits?

Difficulty: 2 Page-Reference: 84

Question ID: 03-3-208 Skill: Knowledge

Objective: 3.3

11. What is recycling?

Difficulty: 2 Page-Reference: 86

Question ID: 03-3-209 Skill: Knowledge

Objective: 3.3

12. What is price fixing?

Difficulty: 2 Page-Reference: 88

Question ID: 03-3-210 Skill: Knowledge

Objective: 3.3

13. What is a whistle-blower?

Difficulty: 2 Page-Reference: 91

Question ID: 03-3-211 Skill: Knowledge

Objective: 3.3

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 3—Conducting Business Ethically and Responsibly

14. What is cheque kiting?

Difficulty: 2 Page-Reference: 93

Question ID: 03-3-212 Skill: Knowledge

Objective: 3.3

15. What is insider trading?

Difficulty: 2 Page-Reference: 94

Question ID: 03-3-213 Skill: Knowledge

Objective: 3.3

16. What is a social audit?

Difficulty: 2 Page-Reference: 97

Question ID: 03-3-214 Skill: Knowledge

Objective: 3.4

17. List the four general approaches to social responsibility.

Difficulty: 1 Page-Reference: 95

Question ID: 03-3-215 Skill: Knowledge

Objective: 3.4

1. What are ethics? What influences the development of ethics? How can ethical values vary

significantly from one person to another?

Difficulty: 2 Page-Reference: 74–78

Question ID: 03-4-216 Skill: Comprehension

Objective: 3.1

2. What is the simplified three-step model for applying ethical judgments to situations that may arise

during the course of business activities?

Difficulty: 2 Page-Reference: 78

Question ID: 03-4-217 Skill: Knowledge

Objective: 3.1

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 3—Conducting Business Ethically and Responsibly

3. What are the ethical norms and the issues that they entail?

Difficulty: 2 Page-Reference: 78–79

Question ID: 03-4-218 Skill: Knowledge

Objective: 3.1

4. Are ethics influenced by a business firm’s policies? Are business firms influenced by a person’s

ethical values? Explain.

Difficulty: 2 Page-Reference: 80–81

Question ID: 03-4-219 Skill: Comprehension

Objective: 3.1

5. Is downloading music that you have not paid for ethical or unethical? Is it illegal or legal? Why?

Difficulty: 3 Page-Reference: 78

Question ID: 03-4-220 Skill: Application

Objective: 3.1

6. You are managing a company that is being asked to pay a bribe. If you do not pay the bribe you will

have to lay off 500 people and risk a chance of going out of business. What do you do and why?

Difficulty: 3 Page-Reference: 78

Question ID: 03-4-221 Skill: Application

Objective: 3.1

7. What are the ethical norms and the issues that they deal with?

Difficulty: 2 Page-Reference: 79

Question ID: 03-4-222 Skill: Knowledge

Objective: 3.1

8. “The purpose of any company is to make a good product, provide good jobs, and make a profit. Any

social responsibilities that take away from that are not the role of business.” Agree or disagree with this

statement, and support your position.

Difficulty: 3 Page-Reference: 83

Question ID: 03-4-223 Skill: Analysis

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 3—Conducting Business Ethically and Responsibly

Objective: 3.2

9. You are managing a company that either has to cut the dividend or cut 10% of the company‘s

workforce. What do you do? Why?

Difficulty: 3 Page-Reference: 83

Question ID: 03-4-224 Skill: Application

Objective: 3.2

10. What are the four major areas of social responsibility? Provide an example of each.

Difficulty: 2 Page-Reference: 83–94

Question ID: 03-4-225 Skill: Comprehension

Objective: 3.3

11. Discuss the problem of land pollution. Include in your response the sources of land pollution and

a recommended solution for dealing with that problem.

Difficulty: 2 Page-Reference: 86–87

Question ID: 03-4-226 Skill: Application

Objective: 3.3

12. Identify and explain the four rights of consumers. How did these rights originate? What can

business firms do to deal with these rights?

Difficulty: 2 Page-Reference: 87–88

Question ID: 03-4-227 Skill: Application

Objective: 3.3

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 3—Conducting Business Ethically and Responsibly

13. How may a business firm show that it is socially responsible in dealing with its employees?

Explain your response.

Difficulty: 2 Page-Reference: 90-92

Question ID: 03-4-228 Skill: Application

Objective: 3.3

14. Social responsibility toward investors requires firms to manage their resources and to represent

their financial status honestly. Provide some examples of irresponsible behaviour taken by business

firms.

Difficulty: 2 Page-Reference: 92–94

Question ID: 03-4-229 Skill: Comprehension

Objective: 3.3

15. What are the three major types of pollution? Give an example of each.

Difficulty: 1 Page-Reference: 83–87

Question ID: 03-4-230 Skill: Knowledge

Objective: 3.3

16. “The only way recycling will ever work is if customers demand it and are willing to pay the higher

prices for it.” Agree or disagree with this statement, and support your position.

Difficulty: 2 Page-Reference: 86–87

Question ID: 03-4-231 Skill: Analysis

Objective: 3.3

17. What is consumerism? Identify the four basic consumer rights.

Difficulty: 1 Page-Reference: 87–88

Question ID: 03-4-232 Skill: Knowledge

Objective: 3.3

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 3—Conducting Business Ethically and Responsibly

18. Shareholders are owners of the company. How can a company act irresponsibly toward its

owners?

Difficulty: 2 Page-Reference: 92–94

Question ID: 03-4-233 Skill: Comprehension

Objective: 3.3

19. Give examples of the types of actions a business can take to meet its social responsibilities.

Difficulty: 2 Page-Reference: 94–98

Question ID: 03-4-234 Skill: Comprehension

Objective: 3.4

20. Give three arguments in favour and three arguments against the social responsibility of business.

Difficulty: 3 Page-Reference: 94–98

Question ID: 03-4-235 Skill: Comprehension

Objective: 3.4

21. What are the four stances an organization can take concerning its obligations to society? Provide

a short explanation of the four stances.

Difficulty: 2 Page-Reference: 95

Question ID: 03-4-236 Skill: Knowledge

Objective: 3.4

22. What are the four steps that must be taken when a firm decides that it wants to become socially

responsible? Explain.

Difficulty: 2 Page-Reference: 96–97

Question ID: 03-4-237 Skill: Comprehension

Objective: 3.4

Business, Eighth Canadian Edition Griffin, Ebert, Starke, Dracopoulos, Lang

Chapter 3—Conducting Business Ethically and Responsibly