Business & Society, 16e (Lawrence)
Chapter 17 Business and Its Suppliers
1) A growing trend is for lead firms to work collaboratively with their suppliers to build
capabilities and create shared value.
2) An organization that purchases goods or services from another company is known as a supplier.
3) The term “supply webs” refers to the multiple steps taken to move a product or service from the
most distant supplier to the customer.
4) All overseas supplier factories that pay low wages are engaging in a highly unethical social
practice.
5) Global lead firms that depend on farmed, extracted, or mined resources run a relatively high risk
for human rights abuses by their suppliers.
6) Suppliers that dump toxic chemicals, emit air pollution, or reduce biodiversity have little impact
on the lead firm that buys their products.
7) Because supply chains have become heavily globalized, government regulation efforts are now
more concentrated and increasingly effective.
8) A 2016 survey of senior supply chain managers from more than 1300 global firms found that the
primary reason for engaging in supplier social responsibility was to improve the financial bottom
line.
9) A company can develop its own code of conduct or adopt an NGO or industrywide code.
10) Assurance that a supplier is in compliance with the relevant code of conduct is determined by a
supply chain audit.
11) When a supply chain audit is conducted, workers are usually willing to share their experiences
with the auditors.
12) An emerging method of auditing suppliers involves gathering factory conditions directly from
employees using their mobile phones.
13) Lead firms often choose to develop their supplier’s capabilities when the supplier has a strong
management team, many resources, and high technical knowledge.
14) One reason lead firms do not change suppliers is due to moral obligation to the workers and
community not to cause job loss.
15) Lead firms sometimes create contradictory demands on suppliers, for example, by insisting on
low costs as well as compliance with expensive environmental standards.
16) Which of these statements is true regarding lead firms and their suppliers in the wake of the
global financial crisis?
A) The number of widely used suppliers decreased.
B) Lead firms preferred larger suppliers.
C) Lead firms sought ongoing strategic relationships.
D) All of these answers are correct.
17) Which type of supplier is hired to provide products or services directly to a lead firm?
A) Tier-1.
B) Tier-2.
C) Subcontractors.
D) Networks.
18) As a stakeholder, suppliers’ interests include:
A) Earning income.
B) Utilizing productive capacity efficiently.
C) Building short-term, but profitable, business relationships.
D) Both earning income and utilizing productive capacity efficiently.
19) A supplier that controls critical worker skills and technical know-how holds which type of
power over its lead firm?
A) Economic.
B) Informational.
C) Legal.
D) Voting.
20) A visual representation of the many links between a lead firm and its suppliers, superimposed
on a geographical map is called a:
A) Linked list.
B) Supply chain map.
C) Supply web.
D) Network map.
21) Social impacts of global supply chains include:
A) Wages.
B) Working conditions.
C) Employee health.
D) All of these answers are correct.
22) The International Labor Organization (ILO) identifies child labor by which factors?
A) A child’s age.
B) The work hours.
C) The child’s work experience.
D) Both a child’s age and the work hours.
23) The illegal recruitment and movement of people against their will is called:
A) Temporary labor.
B) Day workers.
C) Forced labor.
D) Farm workers.
24) Environmental concerns for supply chain managers include:
A) The distance of transporting goods from their source to the consumer.
B) Efficiency within the supply chain.
C) The consolidation of carbon emissions.
D) Both of these answers are correct: The distance of transporting goods from their source to the
consumer; and efficiency within the supply chain.
25) Which of these statements is not true about supply chain transparency?
A) A firm’s social, ethical, and environmental responsibility is revealed.
B) Technology is enhancing supplier transparency.
C) Brand loyalty among consumers is reduced by a firm’s revelations.
D) Recent audits and certifications are publicized.
26) The lack of jurisdiction of home country governments over supplier behavior is exemplified
by:
A) The United States Department of Labor having no control over safety in Indonesia.
B) OSHA being unable to enforce laws in Alabama.
C) Business elites in developing countries effectively blocking regulation.
D) The Global Compact having moral authority but no enforcement power.
27) Private governance is most likely to emerge under which of these conditions?
A) Small lead firms have leverage over larger suppliers.
B) Large lead firms have leverage over larger suppliers.
C) The public is totally satisfied with a firm’s social and environmental performance.
D) Firms with highly visible brands are more vulnerable to reputational damage.
28) Codes of conduct are accurately described by which statement?
A) Most early codes of conduct were developed by individual companies.
B) The adoption rate of industry-specific codes of conduct is currently decreasing.
C) Standard-setting organizations have failed to influence industries and individual firms.
D) The costs of building common industry standards have become prohibitive.
29) Which groups often collaborate when developing industry-wide codes of conduct?
A) Government officials.
B) NGOs.
C) Companies.
D) All of these answers are correct.
30) According to a 2016 survey of senior supply chain managers, what is the leading reason to
invest in supplier social responsibility?
A) To reduce costs.
B) To satisfy government regulations.
C) To create a positive image and enhance brand equity.
D) To avoid disruptions of product supply.
31) Richard M. Locke argues that global supply chains are best managed through a combination of
public and private governance because:
A) Government-enforced laws give legitimacy to demands for workplace changes.
B) Regulators benefit from record-keeping required by private companies’ codes of conduct.
C) Public and private organizations are able to share the enforcement workload.
D) All of these answers are correct.
32) Which type of supplier audit is being used when a company hires and trains its own staff of
auditors?
A) External.
B) Third-party.
C) Factory.
D) Internal.
33) This type of audit is perceived by stakeholders as more objective and reliable:
A) Internal.
B) Third-party.
C) Government.
D) Crowd-pleasing.
34) What is one drawback of conducting supplier audits?
A) Workers trust the auditors to the point of giving away company secrets.
B) Audits scale so well across the supply chain that only general averages can be collected.
C) On-site inspections are expensive.
D) On-site inspections are so fast that teams must conduct hundreds of them in a single day.
35) When suppliers endure audit after audit by different lead firms, this is called:
A) Crowd-sourced auditing.
B) Third-party auditing.
C) Audit chaos.
D) Audit fatigue.
36) Which of these programs offer a common auditing tool for sharing data on the labor,
environmental and ethical practices of suppliers?
A) Sustainable Compliance Initiative.
B) Federal Trade Commission.
C) Sedex Global.
D) Both Sustainable Compliance Initiative and Sedex Global.
37) According to a recent survey, what percentage of firms would terminate a supplier if serious
violations were found?
A) 7 percent.
B) 26 percent.
C) 48 percent.
D) 97 percent.
38) When a lead firm invests in supplier resources or offers training, this is an example of:
A) Root cause analysis.
B) Supplier development.
C) Supply chain auditing.
D) Shared value.
39) How can a lead firm improve a supplier’s performance when the cost to replace the supplier is
high?
A) Engage the supplier in capability-building.
B) Fire the supplier.
C) Report the supplier to the Better Business Bureau.
D) Build the supplier’s products internally.
40) Studying the underlying cause of repeated supplier violations is called:
A) Capability-building.
B) Supplier scoring.
C) Root cause analysis.
D) Supply chain auditing.
41) Which of these measures is (are) frequently used to rate suppliers when using an integrated
supplier scorecard?
A) Environmental performance.
B) Product quality.
C) Number of employees.
D) Both environmental performance and product quality.
42) When firms invest in suppliers to exchange knowledge and collaborate on improvements, they
create shared value for:
A) The supplier only.
B) The lead firm only.
C) The public.
D) Both the supplier and the lead firm.
43) When lead firms work with suppliers they can create shared value such as:
A) Higher income for the supplier.
B) Higher quality products for customers.
C) A more stable supply of products.
D) All of these answers are correct.
44) What is the first step that lead firms take to develop their suppliers?
A) Creating shared value.
B) Capability building.
C) Supplier monitoring.
D) Publicizing the results.
45) In the discussion case, Ikea’s Sustainable Cotton Supply Chain, which statement accurately
describes IKEA’s supply chain?
A) Nearly 100 percent of IKEA’s cotton was sourced from just two countries, India and China.
B) The long and complex chain involved farming, ginning, spinning, weaving, and stitching.
C) The supply chain was long but all steps flowed easily across only a few locations.
D) The company’s supply chain was self-contained with IKEA owning all steps in the process.
46) Define suppliers and explain their interests and power, especially as related to lead firms. How
has globalization affected the supply chain?
47) Select a common product and create a supply chain map showing the product movement from
source to consumer.
48) Discuss the social, ethical, and environmental issues that affect suppliers. Provide three
examples of suppliers that are currently raising concerns for their lead firms.
49) Explain why some companies are establishing their own forms of private regulation.
50) Describe the three types of supplier audits: internal, third-party, and crowd-sourced.
51) Walmart, Monster Beverage, and Patagonia are presented as three examples of firms capturing
the extraordinary complexity of the business-supplier relationship. Identify the major components
of these examples as a model for other firms to follow in managing its supplier stakeholder
relationship.
52) Under what conditions might a lead firm choose to develop a supplier rather than replace
them?