International Business Chapter 5 Ethics International Business True False Questions Ethical Strategies Are The Accepted

Chapter 05 Ethics in International Business

True / False Questions

1.

Ethical strategies are the accepted principles of right or wrong governing

the conduct of businesspeople.

FALSE

An ethical strategy is a strategy, or course of action, that does not violate

the accepted principles of right or wrong governing the conduct of

businesspeople.

AACSB: Ethics

Blooms: Remember

Difficulty: 1 Easy

Learning Objective: 05-01 Understand the ethical issues faced by international businesses.

Topic: Introduction

2.

What is considered normal business practice in one country may be

considered unethical in other countries.

TRUE

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. What is considered normal practice in

one nation may be considered unethical in another.

AACSB: Ethics

Blooms: Remember

Difficulty: 1 Easy

Learning Objective: 05-01 Understand the ethical issues faced by international businesses.

Topic: Ethical Issues in International Business

3.

The Sullivan principles mandated that GM could operate in South Africa as

long as the company complied with the apartheid laws.

FALSE

GM adopted the Sullivan principles. Sullivan argued that it was ethically

justified for GM to operate in South Africa so long as two conditions were

fulfilled. First, the company should not obey the apartheid laws in its own

South African operations. Second, the company should do everything within

its power to promote the abolition of apartheid laws.

Topic: Ethical Issues in International Business

4.

The tragedy of the commons occurs when a resource held in common by all,

but owned by no one, is overused by individuals, resulting in its

degradation.

TRUE

The tragedy of the commons occurs when a resource held in common by all,

but owned by no one, is overused by individuals, resulting in its degradation.

The phenomenon was first named by Garrett Hardin when describing a

particular problem in sixteenth-century England.

AACSB: Ethics

Blooms: Remember

Difficulty: 1 Easy

Learning Objective: 05-01 Understand the ethical issues faced by international businesses.

Topic: Ethical Issues in International Business

5.

Corporations can contribute to the global tragedy of the commons by not

pumping pollutants into the atmosphere or dumping them in oceans or

rivers.

FALSE

In the modern world, corporations can contribute to the global tragedy of

the commons by moving production to locations where they are free to

pump pollutants into the atmosphere or dump them in oceans or rivers,

thereby harming these valuable global commons.

AACSB: Ethics

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 05-01 Understand the ethical issues faced by international businesses.

Topic: Ethical Issues in International Business

6.

International businesses cannot gain economic advantages by making

payments to corrupt government officials.

FALSE

There always have been and always will be corrupt government officials.

International businesses can and have gained economic advantages by

making payments to those officials.

AACSB: Ethics

7.

The Foreign Corrupt Practices Act outlawed the paying of bribes to foreign

government officials to gain business.

TRUE

The Lockheed case was the impetus for the 1977 passage of the Foreign

Corrupt Practices Act in the United States. The act outlawed the paying of

bribes to foreign government officials to gain business.

AACSB: Ethics

Blooms: Remember

Difficulty: 1 Easy

Learning Objective: 05-01 Understand the ethical issues faced by international businesses.

Topic: Ethical Issues in International Business

8.

The Foreign Corrupt Practices Act originally allowed “facilitating payments”

to secure contracts that would not otherwise be secured.

FALSE

The Foreign Corrupt Practices Act was subsequently amended to allow for

“facilitating payments.” Sometimes known as speed money or grease

payments, facilitating payments are not payments to secure contracts that

would not otherwise be secured and nor are they payments to obtain

exclusive preferential treatment.

Topic: Ethical Issues in International Business

9.

Facilitating payments are also known as speed money or grease payments.

TRUE

Sometimes known as speed money or grease payments, facilitating

payments are not payments to secure contracts that would not otherwise be

secured and nor are they payments to obtain exclusive preferential

treatment.

AACSB: Ethics

Blooms: Remember

Difficulty: 1 Easy

Learning Objective: 05-01 Understand the ethical issues faced by international businesses.

Topic: Ethical Issues in International Business

10.

Noblesse oblige refers to payments that ensure receiving the standard

treatment that a business ought to receive from a foreign government.

FALSE

Noblesse oblige is a French term that refers to honorable and benevolent

behavior considered the responsibility of people of high (noble) birth.

AACSB: Ethics

Blooms: Remember

Difficulty: 1 Easy

Learning Objective: 05-01 Understand the ethical issues faced by international businesses.

Topic: Ethical Issues in International Business

11.

In a business setting, noblesse oblige is taken to mean benevolent behavior

that is the responsibility of successful enterprises.

TRUE

Noblesse oblige is a French term that refers to honorable and benevolent

behavior considered the responsibility of people of high (noble) birth. In a

business setting, it is taken to mean benevolent behavior that is the

responsibility of successful enterprises.

AACSB: Ethics

Blooms: Remember

Difficulty: 1 Easy

Learning Objective: 05-01 Understand the ethical issues faced by international businesses.

Topic: Ethical Issues in International Business

12.

Social responsibility refers to the idea that businesspeople should favor

decisions that have both good economic and social consequences.

TRUE

The concept of social responsibility refers to the idea that businesspeople

should consider the social consequences of economic actions when making

business decisions, and that there should be a presumption in favor of

decisions that have both good economic and social consequences.

AACSB: Ethics

13.

The ethical obligations of a multinational corporation toward employment

conditions, human rights, environmental pollution, and the use of power are

always clear-cut.

FALSE

The ethical obligations of a multinational corporation toward employment

conditions, human rights, corruption, environmental pollution, and the use

of power are not always clear-cut.

AACSB: Ethics

Blooms: Remember

Difficulty: 1 Easy

Learning Objective: 05-02 Recognize an ethical dilemma.

Topic: Ethical Dilemmas

14.

Ethical dilemmas are situations in which none of the available alternatives

seems ethically acceptable.

TRUE

Ethical dilemmas are situations in which none of the available alternatives

seems ethically acceptable.

AACSB: Ethics

Blooms: Remember

Difficulty: 1 Easy

Learning Objective: 05-02 Recognize an ethical dilemma.

Topic: Ethical Dilemmas

15.

Ethical dilemmas exist because many real-world decisions involve first-,

second-, and third- order consequences that are hard to quantify.

TRUE

Ethical dilemmas exist because many real-world decisions are complex,

difficult to frame, and involve first-, second-, and third-order consequences

that are hard to quantify. Doing the right thing, or even knowing what the

right thing might be, is often far from easy.

AACSB: Ethics

Blooms: Remember

Difficulty: 1 Easy

Learning Objective: 05-02 Recognize an ethical dilemma.

Topic: Ethical Dilemmas

16.

Societal business ethics are divorced from personal ethics.

FALSE

Societal business ethics are not divorced from personal ethics, which are

the generally accepted principles of right and wrong governing the conduct

of individuals.

AACSB: Ethics

Blooms: Remember

Difficulty: 1 Easy

Learning Objective: 05-03 Identify the causes of unethical behavior by managers.

17.

An individual with a strong sense of personal ethics is less likely to behave

in an unethical manner in a business setting.

TRUE

Our personal ethical code exerts a profound influence on the way we

behave as businesspeople. An individual with a strong sense of personal

ethics is less likely to behave in an unethical manner in a business setting.

AACSB: Ethics

Blooms: Remember

Difficulty: 1 Easy

Learning Objective: 05-03 Identify the causes of unethical behavior by managers.

Topic: The Roots of Unethical Behavior

18.

A firm’s organizational culture refers to the values and norms that are

shared among employees of an organization.

TRUE

The term organization culture refers to the values and norms that are

shared among employees of an organization.

AACSB: Ethics

Blooms: Remember

Difficulty: 1 Easy

Learning Objective: 05-03 Identify the causes of unethical behavior by managers.

Topic: The Roots of Unethical Behavior

19.

Employees in a business often take their cue from business leaders, and if

those leaders do not behave in an ethical manner, they might not either.

TRUE

Leaders help to establish the culture of an organization, and they set the

example that others follow. Other employees in a business often take their

cue from business leaders, and if those leaders do not behave in an ethical

manner, they might not either.

AACSB: Ethics

Blooms: Remember

Difficulty: 1 Easy

Learning Objective: 05-03 Identify the causes of unethical behavior by managers.

Topic: The Roots of Unethical Behavior

20.

Straw men approaches to business ethics offer appropriate guidelines for

ethical decision making in a multinational enterprise.

FALSE

Straw men approaches to business ethics are raised by business ethics

scholars primarily to demonstrate that they offer inappropriate guidelines

for ethical decision making in a multinational enterprise.

AACSB: Ethics

Blooms: Remember

Difficulty: 1 Easy

21.

The utilitarian approach to ethics is a straw men approach to business

ethics that has some inherent value, but is unsatisfactory in important

ways.

FALSE

Straw men approaches to business ethics can be characterized as the

Friedman doctrine, cultural relativism, the righteous moralist, and the naive

immoralist.

AACSB: Ethics

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 05-04 Describe the different philosophical approaches to ethics.

Topic: Philosophical Approaches to Ethics

22.

Milton Friedman’s basic position is that the only social responsibility of

business is to increase profits, so long as the company stays within the

rules of law.

TRUE

The Nobel Prize-winning economist Milton Friedman wrote an article in

1970 that has since become a classic straw man that business ethics

scholars outline only to then tear down. Friedman’s basic position is that

the only social responsibility of business is to increase profits, so long as

Difficulty: 1 Easy

Learning Objective: 05-04 Describe the different philosophical approaches to ethics.

Topic: Philosophical Approaches to Ethics

23.

The Friedman doctrine is the belief that ethics are nothing more than a

reflection of culture and therefore, a firm should adopt the ethics of the

culture in which it is operating.

FALSE

Friedman’s basic position is that the only social responsibility of business is

to increase profits, so long as the company stays within the rules of law. He

explicitly rejects the idea that businesses should undertake social

expenditures beyond those mandated by the law and required for the

efficient running of a business.

AACSB: Ethics

Blooms: Remember

Difficulty: 1 Easy

Learning Objective: 05-04 Describe the different philosophical approaches to ethics.

Topic: Philosophical Approaches to Ethics

24.

Friedman’s arguments suggest that improving working conditions beyond

the level required by the law and necessary to maximize employee

productivity will reduce profits and are therefore not appropriate.

TRUE

Friedman explicitly rejects the idea that businesses should undertake social

expenditures beyond those mandated by the law and required for the

efficient running of a business.

AACSB: Ethics

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 05-04 Describe the different philosophical approaches to ethics.

Topic: Philosophical Approaches to Ethics

25.

According to the cultural relativism point-of-view, a firm should adopt the

ethics of the culture in which it is operating.

TRUE

Cultural relativism is the belief that ethics are nothing more than the

reflection of a culture—all ethics are culturally determined—and that

accordingly, a firm should adopt the ethics of the culture in which it is

operating.

AACSB: Ethics

26.

Cultural relativism suggests that even if slavery is culturally acceptable in a

country, a foreign firm operating in that country should avoid using slave

labor.

FALSE

At its extreme, cultural relativism suggests that if a culture supports slavery,

it is OK to use slave labor in a country.

AACSB: Ethics

Blooms: Understand

Difficulty: 2 Medium

Learning Objective: 05-04 Describe the different philosophical approaches to ethics.

Topic: Philosophical Approaches to Ethics

27.

According to the righteous moralist, if a manager of a multinational sees

that firms from other nations are not following ethical norms in a host

nation, that manager should not either.

FALSE

A righteous moralist claims that a multinational’s home-country standards

of ethics are the appropriate ones for companies to follow in foreign

countries.

AACSB: Ethics

Blooms: Remember

Difficulty: 1 Easy

28.

The righteous moralist approach to ethics is typically associated with

managers from developing and under-developed nations.

FALSE

A righteous moralist claims that a multinational’s home-country standards

of ethics are the appropriate ones for companies to follow in foreign

countries. This approach is typically associated with managers from

developed nations.

AACSB: Ethics

Blooms: Remember

Difficulty: 1 Easy

Learning Objective: 05-04 Describe the different philosophical approaches to ethics.

Topic: Philosophical Approaches to Ethics

29.

An American firm that sets up production units in China is accused of

releasing untreated chemical waste into water bodies. The manager of the

firm defends the firm stating that, factories in China set up by French and

British firms also release untreated chemical waste into water bodies. In

this example, the manager is using the utilitarian approach to business

ethics.

FALSE

Utilitarian approaches to ethics hold that the moral worth of actions or

practices is determined by their consequences. A naive immoralist asserts

that if a manager of a multinational sees that firms from other nations are

not following ethical norms in a host nation, that manager should not either.

AACSB: Ethics

AACSB: Reflective Thinking

Blooms: Apply

Difficulty: 3 Hard

Learning Objective: 05-04 Describe the different philosophical approaches to ethics.

Topic: Philosophical Approaches to Ethics

30.

Most moral philosophers see value in utilitarian and Kantian approaches to

business ethics.

TRUE

In contrast to the straw men approaches to ethics, most moral philosophers

see value in utilitarian and Kantian approaches to business ethics.

Blooms: Remember

Difficulty: 1 Easy

Learning Objective: 05-04 Describe the different philosophical approaches to ethics.

Topic: Philosophical Approaches to Ethics

31.

The utilitarian approaches to ethics hold that the moral worth of actions or

practices is determined by their consequences.

TRUE

Utilitarian approaches to ethics hold that the moral worth of actions or

practices is determined by their consequences. An action is judged

desirable if it leads to the best possible balance of good consequences over

bad consequences.

AACSB: Ethics

Blooms: Remember

Difficulty: 1 Easy

Learning Objective: 05-04 Describe the different philosophical approaches to ethics.

Topic: Philosophical Approaches to Ethics

32.

Utilitarian philosophy takes into consideration the principle of justice.

FALSE

The problem with utilitarianism is that the philosophy omits the

consideration of justice. The action that produces the greatest good for the

greatest number of people may result in the unjustified treatment of a

minority.

Difficulty: 2 Medium

Learning Objective: 05-04 Describe the different philosophical approaches to ethics.

Topic: Philosophical Approaches to Ethics

33.

Rights theories recognize that human rights and privileges are culturally

determined and vary from country to country.

FALSE

Developed in the twentieth century, rights theories recognize that human

beings have fundamental rights and privileges that transcend national

boundaries and cultures. Rights establish a minimum level of morally

acceptable behavior.

AACSB: Ethics

Blooms: Remember

Difficulty: 1 Easy

Learning Objective: 05-04 Describe the different philosophical approaches to ethics.

Topic: Philosophical Approaches to Ethics

34.

According to Rawls, inequalities are unjust even if the system that produces

inequalities is to the advantage of everyone.

FALSE

Rawls accepts that inequalities can be just if the system that produces

inequalities is to the advantage of everyone. More precisely, he formulates

what he calls the difference principle, which is that inequalities are justified

if they benefit the position of the least-advantaged person.

Blooms: Remember

Difficulty: 1 Easy

Learning Objective: 05-04 Describe the different philosophical approaches to ethics.

Topic: Philosophical Approaches to Ethics

35.

Talking with prior employers regarding someone’s reputation is a good way

to discern a potential employee’s ethical predisposition.

TRUE

Businesses can give potential employees psychological tests to try to

discern their ethical predisposition, and they can check with prior

employees regarding someone’s reputation (e.g., by asking for letters of

reference and talking to people who have worked with the prospective

employee). The latter is common and does influence the hiring process.

AACSB: Ethics

Blooms: Remember

Difficulty: 1 Easy

Learning Objective: 05-05 Explain how managers can incorporate ethical considerations into their decision making.

Topic: Implications for Managers