Chapter 3 Discretionary Responsibility Pertains The Social Roles That

Document Type
Test Prep
Book Title
Effective Management 6th Edition
Authors
Chuck Williams
c.
societal
d.
social welfare
e.
shareholder
51. Which of the following is an example of a stakeholder group that an organization must satisfy to
assure long-term survival?
a.
suppliers
b.
customers
c.
employees
d.
governments
e.
all of these
52. According to the stakeholder model, which primary stakeholder group is theoretically most important
to the company?
a.
investors
b.
customers
c.
suppliers
d.
employees
e.
all primary stakeholders are of equal importance
53. Secondary stakeholders are important to a company because ____.
a.
the company depends on them for long-term survival
b.
they can affect public perceptions and opinions
c.
the company is endangered by a termination of their relationship
d.
they have the direct power to control management decisions
e.
they create an awareness of overt organizational integrity
54. ____ stakeholders are any groups that can influence or be influenced by the company and can affect
public perceptions about its socially responsible behavior.
a.
Preliminary
b.
Secondary
c.
Covert
d.
Conventional
e.
Reactive
55. Under the stakeholder model, ____ would be an example of a stakeholder group that does not engage
in regular transactions with the company and is not critical to its long-term survival but can still affect
public perceptions and opinions about the company's socially responsible behavior.
a.
the media
b.
suppliers
c.
governments
d.
employees
e.
shareholders
56. Which of the following is a secondary stakeholder group?
a.
governments
b.
suppliers
c.
the media
d.
employees
e.
shareholders
57. When media in India informed the public that Coca-Cola products bottled in India contained a high
level of certain cancer-causing pesticides, they were acting in the role of ____.
a.
overt constituents
b.
covert constituents
c.
secondary shareholders
d.
secondary stakeholders
e.
functional customers
58. Video Arts Inc., a Chicago-based business training company, is currently marketing The Grapevine, a
30-minute training video designed to teach companies how to deal with and prevent damaging gossip.
Which of the following is an example of a secondary stakeholder group for Video Arts?
a.
companies that use the video for training
b.
actors in the video
c.
distributors of the training video
d.
the company’s top managers
e.
business magazines that run ads for the training video
59. Shell's efforts to sink an abandoned offshore oil-storage buoy, were derailed by Greenpeace in
Germany, which mounted a well-orchestrated public relations blitz that caused Shell's gasoline sales to
plunge by 50 percent at some German stations. This is an example of how ____ stakeholders can
influence organizational strategy.
a.
covert
b.
functional
c.
situational
d.
reactive
e.
secondary
60. A consumer advocacy group is critical of ads by the U.S. Postal Service (USPS) that claim its Priority
Mail is a low-cost, two-day service while failing to disclose that first-class letters generally reach their
destination just as quickly and for a tenth the cost. The consumer advocacy group wants the USPS to
take ____ responsibility for its actions and do what is right.
a.
utilitarian
b.
fiscal
c.
legal
d.
ethical
e.
discretionary
61. Bayer AG, Syndial SpA, Crompton Corp., DuPont Dow Elastomers, and Zeon Chemicals are all
international manufacturers of rubber chemicals. They have all been indicted as participants in a
price-fixing scheme that drove up the costs of rubber chemicals used to make shoes, tires, and other
products. These companies ignored their ____ responsibility to society.
a.
economic
b.
ethical
c.
legal
d.
discretionary
e.
fiscal
62. ____ are the expectations that a company will voluntarily serve a social role beyond its economic,
legal, and ethical responsibilities.
a.
Stakeholder responsibilities
b.
Overt responsibilities
c.
Discretionary responsibilities
d.
Social expectations
e.
Stakeholders' expectations
63. Companies are not considered unethical if they do not perform their ____ responsibilities.
a.
legal
b.
fiscal
c.
discretionary
d.
overt
e.
economic
64. Ramin wood, which is used to make pool cues and picture frames, was declared an endangered species
and its export is regulated by the government of Indonesia. In spite of attempts to control the sale of
the wood, it is still being carried across Indonesia's national borders and sold in Malaysia where
government officials pretend the wood was legally acquired. Companies that buy the illegally-acquired
wood in Malaysia are ignoring their ____ responsibility to society.
a.
economic
b.
ethical
c.
legal
d.
discretionary
e.
fiscal
65. Which of the following statements about social responsibility is true?
a.
Companies are viewed as having social responsibilities only in economic, legal, and
ethical areas.
b.
The relative importance of economic, legal, ethical, and discretionary responsibilities is
fixed and unchanging over time.
c.
Economic and legal responsibilities play a larger role in a company's social responsibility
than do ethical and discretionary responsibilities.
d.
Companies will be considered unethical if they do not perform their discretionary
responsibilities.
e.
Economic responsibilities are often referred to as fiscal responsibilities.
66. Lever's most successful product in India is Fair & Lovely, a skin whitening agent that is sold to
dark-skinned women in India marketed to help the women find better husbands and better jobs. Lever
is emphasizing its ____ responsibility to make a profit and ignoring its ____ responsibility to help
women realize that their appearances are superficial.
a.
legal; ethical
b.
discretionary; ethical
c.
economic; legal
d.
economic; fiscal
e.
economic; discretionary
67. For some time now, GlaxoSmithKline (GSK) has been making anti-AIDS drugs like Retrovir and
Epivir available in hard-hit areas of Africa at up to 75 percent off the global price. But that wasn't
enough for AIDS prevention groups, which were outraged by GSK's decision to use the World Trade
Organization's (WTO’s) patent protection rules to take action against governments importing
lower-cost versions of these drugs. AIDS prevention groups saw GSK’s use of WTO regulation as
acting at which level of social responsibility?
a.
economic
b.
fiscal
c.
legal
d.
discretionary
e.
accommodative
68. For some time now, GlaxoSmithKline (GSK) has been making anti-AIDS drugs like Retrovir and
Epivir available in hard-hit areas of Africa at up to 75 percent off the global price. By providing the
drugs at a fraction of their usual costs, GSK was acting at which level of social responsibility?
a.
discretionary
b.
global
c.
altruistic
d.
economic
e.
legal
69. When media in India informed the public that Coca-Cola products bottled in India contained a high
level of certain cancer-causing pesticides, Coke responded by saying that all of India's water was
contaminated and that it was not doing anything wrong by using the local water supply. What kind of a
strategy did Coke use to respond to its social responsibility problems?
a.
reactive strategy
b.
prospective strategy
c.
defensive strategy
d.
accommodative strategy
e.
proactive strategy
70. A U.S. metals broker advertises "95 percent of orders shipped from stock" even though the company
has no warehouses and no inventory. When questioned about the truth of the ad, the broker responded,
"We do ship 95 percent of our orders from stock, but it is from suppliers' stocks, not ours." To respond
to this ethical question, the broker used a(n) ____ strategy.
a.
reactive
b.
offensive
c.
accommodative
d.
proactive
e.
prospective
71. Bayer AG was indicted as a participant in an international price-fixing scheme that drove up the costs
of rubber chemicals used to make shoes, tires, and other products. Bayer AG paid its fine but did not
admit culpability. Instead, the company announced that paying the fine was less costly than litigation.
Bayer AG implemented a(n) ____ strategy.
a.
offensive
b.
reactive
c.
proactive
d.
accommodative
e.
adaptive
72. The social responsiveness strategy that could be considered essentially a public relations approach is
the ____ strategy.
a.
reactive
b.
defensive
c.
communicative
d.
proactive
e.
accommodative
73. A company implementing a(n) ____ strategy would choose to accept responsibility for a problem and
do all that society expects to solve problems.
a.
reactive
b.
defensive
c.
accommodative
d.
proactive
e.
connotative
74. A company implementing a(n) ____ strategy would demonstrate the greatest willingness on the part of
the company to meet or exceed society's expectations.
a.
reactive
b.
defensive
c.
productive
d.
proactive
e.
accommodative
75. The Rainforest Action Network, a national advocacy group, launched a bruising PR campaign to stop
Home Deport from selling old-growth lumber. After two years of bad publicity and resistance to new
store locations, Home Depot surrendered. Today, its suppliers are working with environmental and
forestry groups to certify that their wood products are not from endangered areas. Home Depot used
a(n) ____ strategy to respond to demands that it be socially responsible.
a.
proactive
b.
accommodative
c.
predictive
d.
defensive
e.
offensive
76. IBM has a long-standing “Reinventing Education” program, which involves intensive research into
how educational institutions can use the fruits of new technologies to transform what they do and
thereby improve education. IBM is using a(n) ____ strategy to show its social responsibility.
a.
proactive
b.
accommodative
c.
predictive
d.
defensive
e.
adaptive
77. IBM has a long-standing “Reinventing Education” program, which involves intensive research into
how educational institutions can use the fruits of new technologies to transform what they do and
thereby improve education. In the process, the program is actually helping to shape a market of
significant interest to IBM. IBM views the program as an investment rather than as a charitable
contribution. This is an example of the positive relationship between social responsibility and ____.
a.
social consensus
b.
secondary shareholders
c.
economic performance
d.
covert stakeholders
e.
resource munificence
78. Which of the following statements about social responsibility and economic performance is true?
a.
Social responsibility can sometimes create significant costs for a company.
b.
Social responsibility guarantees profitability.
c.
Defensive, accommodative, and proactive strategies result in profitability and social
responsibility.
d.
There is a strong inherent relationship between social responsibility and economic
performance.
e.
All of these statements about social responsibility and economic performance are true.
Anglo American
South Africa is experiencing an AIDS epidemic. Life expectancy in that country is 48 years; life
expectancy has not been that low in the United States since 1909. Thirty percent of the population is
HIV positive. The largest employer by far in South Africa is Anglo American, a mining conglomerate.
This company estimates that between 25 and 30 percent of its employees are HIV positive. Dr. Brian
Brink, an employee of Anglo American, decided Anglo could help arrest the growth of AIDS by
providing its 130,000 South African employees with free anti-AIDS medicine. Anglo American’s
executives agreed. The decision to provide the drug makes Anglo one of the largest customers for
AIDS medicine in the world. Anglo provides clinics staffed with company-employed doctors and
nurses to provide for the medical needs of its employees. Anglo not only had to pay for the medicine
(which costs twice the salary of an average miner), it had to set up a system to dispense it and monitor
treatment. Anglo also supplies education, counseling, and disease testing as well as condoms to all of
its employees. Anglo’s decision to fight AIDS has sent a palpable wave of relief, optimism, and hope
throughout South Africa. Other companies have followed Anglo American’s lead.
79. Refer to Anglo American. The wave of relief, optimism, and hope throughout South Africa is a
reflection of the ____ caused by Anglo’s decision.
a.
social consensus
b.
probability of effect
c.
concentration of effect
d.
magnitude of consequences
e.
social obligation consequences
80. Refer to Anglo American. ____ is the term used to describe the obligation Anglo American had to take
actions that benefit society.
a.
Moral consensus
b.
Social responsibility
c.
Ethical diversity
d.
Ethical sourcing
e.
Social acculturation
81. Refer to Anglo American. The miners who work for Anglo American are examples of ____.
a.
secondary stakeholders
b.
organizational shareholders
c.
staff positions
d.
primary stakeholders
e.
whistleblowers
82. Refer to Anglo American. Even though Anglo American would not have been considered unethical if
it had not begun the fight against AIDS, it chose to assume a social role of ____, the highest level of
social responsibility.
a.
legal responsibility
b.
equitable responsibility
c.
discretionary responsibility
d.
moral responsibility
e.
economic responsibility
83. Refer to Anglo American. To meet its obligation for social responsibility, Anglo American used a
progressive approach to doing what it could to solve the problems caused by the AIDS epidemic in
South Africa. The mining conglomerate used a(n) ____ strategy.
a.
participative
b.
reactive
c.
economically based
d.
proactive
e.
offensive
WWYD American Express
With medical costs rising, a member of the board of directors notes that some companies refuse to hire
smokers and that the board should discuss this option. Nationwide, about 6,000 companies refuse to
hire smokers. Weyco, an employee benefits company in Michigan, requires applicants take a nicotine
test. The Cleveland Clinic doesn’t hire smokers nor does the Massachusetts Hospital Association.
The association’s CEO says, “Smoking is a personal choice, and … I have a personal choice within the
law about who we hire and who we don't.”
Costs are driving the trend to not hire smokers. According to the Centers for Disease Control,
a smoker costs about $4,000 more a year to employ because of increased health care costs and lost
productivity due to smoke breaks. This makes smoking, to some experts, “the biggest factor in
controllable health-care costs.” While few would disagree about the costs, others argue it is wrong to
not hire smokers. Jay Whitehead, publisher of a magazine for human resources managers, says,
“There is discrimination at many companies … against people who smoke.” Paul Sherer, a smoker
who was fired on the job after less than a week, says, “Not hiring smokers affects millions of people
and puts them in the same category as woman able to bear children, that is, people who contribute to
higher health care costs. It's unfair.” Law professor Don Garner believes that not hiring smokers is
“an overreaction on the part of employers whose interest is cutting costs. If someone has the ability to
do the job, he should get it. … Not hiring smokers is “respiratory apartheid.”
With a board meeting just a month away, you’ve got to prepare for questions. The board is
interested in making good decisions for the company, but “doing the right thing” is also one of its core
values. When it comes to smokers, surveys reveal that firms have clearly decided that reducing
smoking at work, or hiring fewer smokers, is in their best interest. What’s changed in the last decade is
that rather than minimize smoking at work, companies are now more likely to minimize smokers by
not hiring them. The key driver is costs. According to the Centers for Disease Control, smoking
costs businesses $157 billion a year in expenses that are directly related to smoking-related illnesses or
deaths.
On that basis, not hiring smokers makes fiscal sensebut is it legal? Federal law suggests that
it is. Unlike race, gender, ethnicity, religion, and sexual preference, smokers are not a protected class.
Furthermore, smokers are not protected by the Americans with Disability Act. However, while federal
laws can allow employers to not hire smokers, approximately 30 states have made it illegal to not hire
smokers. Lifestyle-discrimination laws prevent employers from using nonwork behavior (i.e., behavior
that occurs outside of work hours such as smoking) to not hire employees.
More specifically, “smokism,” discriminating against people because they smoke, is defined as
“the prejudice, discrimination or denial of justice and fair treatment by individuals or institutions
against people who smoke a tobacco related product.” Not hiring smokers would clearly be smokism.
And if it’s not smoking, can it be beer or cheeseburgers?
Another key part of any kind of discrimination is that nonperformance relevant criteria are
used to make decisions about who to hire, fire, train, or promote in a company. Viewed from this
perspective, is there a significant difference between ageism, sexism, racism, and smokism? In each
“ism,” non-performance relevant criteria, such as age, sex, race, and whether one smokes, are used to
make decisions about people at work.
84. Refer to WWYD American Express. Ethical behavior in companies takes place when its employees
__________ accepted principles of right and wrong.
a.
write down
b.
invent
c.
discuss
d.
follow
e.
reject
85. Refer to WWYD American Express. If the decision to hire smokers can be viewed as a social
responsibility issue, the increased costs associated with employing smokers would have an financial
impact on:
a.
advocacy groups
b.
suppliers
c.
shareholders
d.
media
e.
trade associations
86. Refer to WWYD American Express. If American Express were to argue solely that employing
smokers would increase the company’s overall costs, the company would be relying on a(n)_____
definition of social responsibility as justification for its decision.
a.
economic
b.
legal
c.
ethical
d.
discretionary
e.
societal
87. Refer to WWYD American Express. Because it American Express managers are considering whether
to implement a policy of not hiring smokers in the future, the decision has lower ethical intensity
because of the:
a.
proximity of effect
b.
probable consequences
c.
social effect
d.
magnitude
e.
temporal immediacy
88. Refer to WWYD American Express. Because the board members will not be responsible for hiring and
firing American Express employees, there decision has a very low:
a.
magnitude of consequences
b.
social consensus
c.
proximity of effect
d.
temporal immediacy
e.
concentration of effect
SHORT ANSWER
1. What is ethical behavior? Briefly comment on its implications for conducting business internationally.
2. Why should companies establish compliance programs under the U.S. Sentencing Commission
Guidelines?
3. List four of the seven requirements for an effective compliance program as established under the U.S.
Sentencing Commission Guidelines.
4. List two factors that influence ethical decision making. How does ethical education and training
influence these three factors and, thus, improve ethical decision making?
5. Identify and briefly describe Kohlberg's three phases of moral development.
6. What are the four steps managers can take to increase ethical decision making in their organizations?
7. What are the four steps managers must follow to create an ethical business climate?
8. Define stakeholders. What are the two types of stakeholder groups? Give one example of each.
9. List and briefly describe the four areas of corporate social responsibility that are most relevant to
stakeholders.
ANS:
1. Discuss the nature and value of integrity testing to management as a tool in encouraging ethical
decision making in their organizations.
2. What is social responsiveness? Identify the four strategies that can be used to respond to social
responsibility problems. How do these strategies differ? Use the relationship between social
responsibility and economic performance to explain why a company might choose one strategy over
another in a given set of circumstances.
ANS:

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