109. A business that takes a public position on a political issue that affects the welfare of
society is exercising corporate social responsibility.
110. Defining a socially responsible company is complicated. Businesses differ from other
businesses, as well as the people they serve, on what we mean by “socially responsible.”
111. Opponents of corporate social responsibility argue that firms which use their profits to
promote social causes are not being fair to investors who provided the funds for the purpose of
financial gain.
112. A corporate policy should never make a value statement about the environment or other
social and political issues, because it is doubtful the company can live up to the proclamation.
113. Corporate social responsibility covers all those social issues outside our businesses that
affect customers and the environment, but not internal issues such as employee considerations
and work safety. Internal issues are covered by business laws.
114. Some experts feel that corporate social responsibility means solely making money for
stockholders.
115. As a response to the Enron scandal, the federal government now requires social audits of
all U.S. businesses.
116. In a famous speech, former President John F. Kennedy proposed that businesses had
four basic rights, and in his own words, he proclaimed that “each one of them leads us back to
the right to keep the profits from one’s business.”
117. Often it is the threat of negative publicity that pressures businesses to enforce their
corporate code of ethics.
118. Although the green movement is a social trend, it is difficult to predict its future
contributions to society.
119. Out-Tel, a computer chip manufacturer, knowingly sold defective chips and failed to
notify customers of the potential problems. When the problem became public knowledge, the
firm’s stock price fell dramatically. This illustrates the value that investors place on the ethical
behavior of businesses.
120. At a recent town hall meeting, citizens expressed concern regarding the impact of a
proposed new gambling casino. The owner of the proposed casino responded, “I don’t know what
all of this fuss is about. I’m just a businessman trying to earn a profit, provide new jobs, and pay
taxes.” His response reflects an overall commitment to corporate social responsibility.
121. Recently, a large insurance company in the Midwest made a public commitment toward
corporate philanthropy when it dedicated 3% of its profits toward the cultural and environmental
concerns of the large metropolitan area that houses its corporate headquarters. The CEO stated,
“In honor of several hundred employees that come to work here every day, we want to give
something back.” In light of the fact that this is only helping one metropolitan area, the donation
falls outside the realm of corporate social responsibility.
122. Fresh Walls Paint Company promotes its products as nontoxic and made from natural,
organic substances that are safe for all persons including those with asthma and other lung
conditions. In order to live up to customer expectations, it must walk the walk and not just talk
the talk! If consumers learn that Fresh Walls’ paints do not meet their expectations, their reaction
is likely to tarnish the company’s image.
123. About 10 years ago, there were several bank mergers. Shortly after Big Bucks Bank bid on
The Bank of Plenty, a story hit the local newspapers about the investigation into the purchase of
several thousand shares of stock of the Bank of Plenty by three of its top executives, just prior to
the announcement that Big Bucks Bank planned to buy Bank of Plenty. Upon close examination
by the SEC (Securities and Exchange Commission) it was determined that the stock purchases
were an illegal maneuver on the part of these executives. This is an example of
insider trading
.
The executives were “banking” on the stock price rising sharply when the purchase
announcement was made public.
124. Abby is a stockbroker for a large financial services company. A client who works at Sixth
Generation Software, Ltd., just called to purchase several thousand shares of his company’s
stock. He reveals to her that the company is about to announce the appointment of a new CEO.
Abby asks her client if this information is public knowledge. The reason she asks is to make
certain that her client, her company, and she remain in compliance with Regulation FD, the Fair
Disclosure rule.
125. Recently, Bob was trying to choose among three mutual fund investments for his
retirement account. As a
socially conscious investor
, he will prefer to invest in funds that hold the
stocks of oil and coal companies, as opposed to wind-turbine and renewable energy companies.
126. U.S. businesses claim that unethical business practices are common outside the U.S.
127. The ethical standards by which international political leaders are judged are more lenient
today than they were in years past.
128. Many U.S. companies are demanding socially responsible behavior from their international
suppliers.
129. Due to the fact that American ethical standards are very clear-cut, international suppliers
do not have difficulty adhering to them.
130. The objective of the Inter-American Convention Against Corruption document formulated
and signed by the Organization of American States is to identify common global ethics.
131. The International Organization for Standardization (ISO) plans to publish a standard on
social responsibility called ISO 26000.
132. U.S. businesses consider The Foreign Corrupt Practices Act as legislation that has helped
increase their profits abroad.
133. All U.S. companies practice the same ethical standards when dealing with suppliers and
contract manufacturers abroad.
134. Due to their significant economic power, large multinational firms can ignore the ethical
standards of a society without consequences.
135. U.S. businesses have little influence over the behavior of businesses from other
countries.
136. Applying the ethical standards of the U.S. to foreign firms is a difficult process for U.S.
firms.
137. “Hear no evil, see no evil, speak no evil” is the best policy for U.S. firms to follow in their
dealings with corrupt foreign suppliers.
138. While “doing the right thing” is an admirable code of ethics, there are no international
organizations dealing with global ethics and corruption.
139. Due to the complicated laws and ethical standards abroad, U.S. businesses are
encouraged to adopt a “don’t ask, don’t tell” policy.
140. According to the
Reaching Beyond Our Borders
box, corporate ethics can clash with
cultural ethics, especially in global business.
141. A few years ago, several U.S. clothing manufacturers were sued in Los Angeles courts by
watchdog groups who learned of poor working conditions in manufacturing plants on a U.S.
territory known as the Marianas Islands. Customers are concerned with human rights abuses and
other problems with supplier relationships abroad.
142. Olivia is ordering trendy necklaces and earrings made with semi-precious stones from a
supplier in Belize, for her city boutique. Due to low paying wages in Belize, the supplier has
promised an excellent wholesale price for these goods. You concur with Olivia when she explains
to you that international business law is very clear-cut with these dealings. As long as the
supplier is not breaking any labor laws in his country, Olivia’s social responsibility is covered.
143. In the
Reaching Beyond Our Borders
box, the story proves that a large multi-national
company can ask its employees to follow, and should expect them to follow, the same ethical
standards they would practice if living and working within the U.S. borders.
144. In the
Reaching Beyond Our Borders
box, the story demonstrates the many ethical
similarities between North and South American businesses. This is fortunate for large firms that
do business south of the U.S. border. They can depend on their subsidiary firms to have no
problems when implementing U.S. company employee policies.
145. Obeying the law is ________ ethical behavior.
146. ________ refers to standards of moral behavior.
147. A recent study revealed that most Americans have:
148. Which of the following statements describes ethical behavior in the U.S.?
149. The danger in writing new laws to correct behavior is that:
150. Given the ethical lapses that are prevalent today in our businesses, which of the following
can be done to restore trust in the free-market system and leaders in general?
151. Laws represent the standards of ________ behavior.