51) A guideline for responsible action by a firm in its operations worldwide is a(n) ________.
A) code of conduct
B) corporate monitoring policy
C) education program
D) honor code
52) The U.N. Global Compact is best described as a(n) ________.
A) corruption mandate
B) environmental initiative
C) external code of conduct
D) international trade guideline
53) Which of the following is most important when designing an internal code of conduct?
A) requesting U.N. oversight and intervention when necessary
B) communicating the code of conduct only to employees
C) reporting results to external stakeholders
D) forming local polices for each subsidiary
54) Which of the following is most important to the effectiveness of an internal code of conduct?
A) ensuring that employees understand the code by requiring confirmation in writing
B) paying bonuses to suppliers and distributors that agree to the code
C) relying on nonprofit NGOs to develop guidelines
D) adhering to industry standards and norms
55) What is the primary problem associated with Anglo American PLC’s ART program?
A) unknown side effects to drugs and treatment
B) rising costs of medications and procedures
C) poor treatment adherence by employees
D) lack of sufficient insurance coverage
56) What is the primary reason that Anglo American PLC developed its ART program?
A) comply with government standards
B) maintain a healthy workforce
C) abide by union demands
D) reduce employee benefits
57) Quantum Footwear is an MNE that manufactures inexpensive shoes. Quantum outsources portions
of its production to independent companies located in Bangladesh and India where child labor is
common. Other clothing and footwear firms have recently faced criticism regarding the use of child
labor, and Quantum executives want to avoid similar problems. Which of the following would be the
best approach for Quantum?
A) improving conditions at the subcontract facilities
B) developing an external ethics code for foreign partners and letting them worry about compliance.
C) requiring local governments to alter their labor policies
D) leaving the market and focusing on domestic production
58) Quantum Footwear is an MNE that manufactures inexpensive shoes. Quantum outsources portions
of its production to independent companies located in Bangladesh and India where child labor is
common. Other clothing and footwear firms have recently faced criticism regarding the use of child
labor, and Quantum executives want to avoid similar problems. Which of the following guidelines
enforced by Quantum would LEAST likely be supported by the International Labor Organization?
A) establishing bridge schools
B) monitoring workplace safety
C) allowing children ages 10-15 to work a maximum of 4 hours per day
D) prohibiting abusive labor conditions
59) General Electric’s Ecomagination initiative is responding in part to the fact that it is operating in
many countries which require compliance with higher environmental standards than exist in the United
States.
60) In the long run, MNEs must adequately meet the needs of all stakeholders in order to prosper and
survive.
61) Stockholders are typically more interested in corporate social responsibility than in earning profits.
62) The teleological approach asserts that individuals make moral judgments independent of
consequences.
63) According to utilitarianism, actions are moral if they produce the greatest amount of good for the
greatest number of people.
64) GE’s Ecomagination program has enabled the firm to develop a competitive advantage over its
competitors.
65) Governmental agencies and nongovernmental organizations monitor the behavior of companies and
their employees to ensure that laws are being followed.
66) Pursuing responsible behavior for strategic and financial success is an example of relative behavior.
67) An important business objective for pursuing ethical behavior is to create a better relationship with
corrupt politicians and customers.
68) Relativism is the theory that ethical truths depend on the values of the groups holding them; thus,
MNEs should adhere to or adopt the cultures of the countries in which they are located.
69) Normativism asserts that universal standards of behavior exist and should be accepted in all cultures.
70) The law is often based on imprecisely defined moral concepts that cannot be separated from legal
concepts.
71) The argument that “anything legal is ethical” is insufficient as a basis for ethical behavior because
the law usually does not apply to everyone and does not have enforceable rules.
72) Under the practice of extraterritoriality, legal and ethical values in a country may cause its
companies to operate abroad according to home country laws rather than host country laws.
73) The requirement by the U.S. government that its subsidiaries abroad comply with trade restrictions
with Cuba is an example of externalities.
74) The Foreign Corrupt Practices Act applies only to companies registered in the United States.
75) A payment to a customs official to clear legitimate merchandise is permitted by the Foreign Corrupt
Practices Act.
76) Transparency International, the OECD, and the ICC are all working to stop bribery around the
world.
77) The OECD Convention against bribery is an example of an agreement that targets the demand side
of bribery.
78) Meeting the needs of the present without compromising the ability of future generations to meet
their own needs is known as sustainability.
79) U.S. MNEs that operate in Europe are under pressure to conform to the emissions standards of the
Kyoto Protocol.
80) When a pharmaceutical company charges a market price in developed countries and a discounted
price in developing countries, the company is using partial source pricing.
81) The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) permits
developing countries to import generic products from other countries if they don’t have the capacity to
produce generic drugs.
82) According to the Ethical Trading Initiative, child labor cannot be used unless there are no suitable
alternatives for employees.
83) The U.N. Global Compact is a legally binding document that requires MNEs to establish codes of
conduct.
84) Studies indicate that employee morale is largely unaffected by a company’s corporate behavior.
85) An effective code of conduct reports results to external stakeholders.
86) An internal code of conduct is a set of guidelines, recommendations, and rules issued by entities
within society but outside the firm with the intent of affecting the behavior of international business
entities in order to enhance corporate responsibility.
87) The creation of a code of conduct includes steps such as establishing a global policy, communicating
the code to employees, ensuring that the policies are followed, and reporting results to external
stakeholders.
88) HIV/AIDS is affecting the operations of Anglo American PLC by forcing the company to invest
outside of South Africa to avoid having to deal with workforce health issues.
89) Which stakeholders must companies satisfy? What role should stakeholders play in a firm’s internal
code of conduct?
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90) What is the difference between relativism and normativism? How do these concepts relate to ethical
behavior in international business?
91) Explain why the argument that “anything that is legal is ethical” is insufficient.
92) What is extraterritoriality? Why is the concept controversial?
93) What types of payments are legal and illegal under the Foreign Corrupt Practices Act (FCPA) of the
United States? Provide an example.
94) What is the Foreign Corrupt Practices Act? How has this law affected ethical behavior among
international businesses?
95) What ethical and labor-related issues are a major challenge to footwear and clothing MNEs that
operate in developing countries? What guidelines are provided by the Ethical Trading Initiative?
96) What motivations do companies have to act responsibly? How can codes of conduct help firms to
act ethically?
97) How have sustainability demands and the Kyoto Protocol affected international business? Discuss
the controversies surrounding each.
98) How can an MNE operating in a developing country have a positive influence on labor policies?
Illustrate your answer with an example.