ch4

ch4Student: ___________________________________________________________________________

1. Ethical strategies are the accepted principles of right or wrong governing the conduct of businesspeople. True False

2. What is considered normal business practice in one country may be considered unethical in other countries.

True False

3. In an international business setting, the most common ethical issues involve employment practices, human

rights, environmental regulations, corruption, and the moral obligation of multinational companies. True False

4. Basic human rights are respected by almost all nations.

True False

5. Rights that are taken for granted in developed nations, such as freedom of association, freedom of speech,

freedom of assembly, and so on, are universally accepted. True False

6. The Sullivan principles mandated that GM could operate in South Africa as long as the company complied

with the apartheid laws. True False

7. Myanmar has one of the worst human rights records in the world.

True False

8. Nearly all developing nations have substantial regulations governing the emission of pollutants, the

dumping of toxic chemicals, the use of toxic materials in the workplace, and so on. True False

9. 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 False

10. Corporations can contribute to the global tragedy of the commons by not pumping pollutants into the

atmosphere or dumping them in oceans or rivers. True False

11. International businesses cannot gain economic advantages by making payments to corrupt government officials. True False

12. The Foreign Corrupt Practices Act outlawed the paying of bribes to foreign government officials to gain

business. True False

13. The Foreign Corrupt Practices Act originally allowed "facilitating payments" to secure contracts that would

not otherwise be secured. True False

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

True False

15. The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions

obliges member states to make the bribery of foreign public officials a criminal offense. True False

16. Noblesse oblige refers to payments that ensure receiving the standard treatment that a business ought to

receive from a foreign government. True False

17. 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. True False

18. When multinationals use their power in a positive way to increase social welfare, it is ethical.

True False

19. The ethical obligations of a multinational corporation toward employment conditions, human rights,

environmental pollution, and the use of power are always clear-cut. True False

20. Ethical dilemmas are situations in which none of the available alternatives seems ethically acceptable.

True False

21. An individual with a strong sense of personal ethics is less likely to behave in an unethical manner in a

business setting. True False

22. Expatriate managers may experience more than the usual degree of pressure to violate their personal ethics. True False

23. A firm's organizational culture refers to the values and norms that are shared among employees of an

organization. True False

24. The Enron debacle indicates that an organizational culture can legitimize behavior that a society would

judge as unethical. True False

25. 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 False

26. 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. True False

27. Cultural relativism 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. True False

28. 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. True False

29. The naive immoralist claims that a multinational's home country standards of ethics are the appropriate

ones for companies to follow in foreign countries. True False

30. Most moral philosophers see value in utilitarian and Kantian approaches to business ethics.

True False

31. The utilitarian approaches to ethics hold that the moral worth of actions or practices is determined by their

consequences. True False

32. It typically is fairly easy to measure the benefits, costs, and risks of a course of action.

True False

33. An advantage of utilitarianism is that the philosophy allows for the consideration of justice.

True False

34. Rights theories recognize that human beings have fundamental rights and privileges that transcend national boundaries and cultures. True False

35. A just distribution is one that is considered fair and equitable.

True False

36. According to Rawls, inequalities can be just if the system that produces inequalities is to the advantage of

everyone. True False

37. Talking with prior employers regarding someone's reputation is a good way to discern a potential

employee's ethical predisposition. True False

38. Building an organization culture that places a high value on ethical behavior requires incentive and reward

systems. True False

39. A firm's stakeholders are individuals or groups that have an interest, claim, or stake in the company, what it

does, and how well it performs. True False

40. Companies can strengthen the moral courage of employees by committing themselves to retaliate against

employees who exercise moral courage, say no to superiors, or otherwise complain about unethical actions. True False

41. Identify the incorrect statement regarding ethical issues in international business.

A. They are often rooted in the fact that political systems, law, economic development, and culture of

nations vary significantly.B. Human rights and environmental regulations are some of the common ethical issues.C. Ethical practices of all nations are similar in nature.D.

Managers in multinational firms need to be particularly sensitive to differences in business practices because they work across national borders.

42. To guard against abuse of employment practices in other nations, multinationals should do all of the

following except: A. establish minimal acceptable standards that safeguard the basic rights and dignity of employees.B. adhere to working conditions of the host country if they are clearly inferior to those in a multinational's

home nation.C. audit foreign subsidiaries and subcontractors on a regular basis to make sure established standards are

met.D. take action to correct unacceptable behavior.

43. Which of the following was designed to allow GM to operate ethically in South Africa as long as the company did not obey the apartheid laws in its own South African operations? A. The righteous moral systemB. Sullivan principlesC. Noblesse obligeD. Cultural relativism

44. Identify the incorrect statement pertaining to foreign multinationals doing business in countries with

repressive regimes. A.

Inward investment by multinationals can be a force for economic, political, and social progress that ultimately improves the rights of people in repressive regimes.

B. No multinational does business with nations that lack the democratic structures and human rights records of developed nations.

C. Multinational investment cannot be justified on ethical grounds in some regimes due to their extreme human rights violations.

D. Multinationals adopting an ethical stance can, at times, improve human rights in repressive regimes. 45. Identify the incorrect statement about environmental regulations.

A. Environmental regulations are often lacking in developing nations.B. Environmental regulations are similar across developed and developing nations.C. Developed nations have substantial regulations governing the emission of pollutants, the dumping of

toxic chemicals, etc.D. Inferior environmental regulations in host nations, as compared to home nation, can lead to ethical

issues. 46. The _____ occurs when a resource is shared by all, but owned by no one, is overused by individuals,

resulting in its degradation. A. tragedy of the commonsB. noblesse obligeC. ethical dilemmaD. Friedman system

47. Which of the following observations about the Foreign Corrupt Practices Act is true?

A. The act outlawed the paying of bribes to foreign government officials to gain business.B. There is enough evidence that it put U.S. firms at a competitive disadvantage.C. The act originally allowed for "facilitating payments."D. The Nike case was the impetus for the 1977 passage of this act.

48. Facilitating payments are:

A. permitted under the amended Foreign Corrupt Practices Act.B. a direct violation of the Foreign Corrupt Practices Act.C. permitted so long as they designed only to gain exclusive preferential treatment.D. used to secure contracts that would otherwise not be secured.

49. The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions excludes: A. speed payments to secure contracts that would otherwise not be secured.B. grease payments to gain exclusive preferential treatment.C. facilitating payments made to expedite routine government action.D. payments to government officials for special privileges.

50. Grease payments:

A. are not the same as facilitating payments or speed money.B. are facilitating payments made to expedite routine government action.C. are payments to gain exclusive preferential treatments.D. can be used to secure contracts that would otherwise not be secured.

51. 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 is known as: A. business ethics.B. noblesse oblige.C. ethical dilemma.D. social responsibility.

52. Which of the following, in a business setting, is taken to mean benevolent behavior that is the responsibility

of successful enterprises? A. Sullivan's principlesB. Ethical dilemmaC. Tragedy of the commonsD. Noblesse oblige

53. Ethical dilemmas exist because of all of the following reasons except:

A. many real-world decisions are complex and difficult to frame.B. decisions may involve first, second, and third-order consequences that are hard to quantify.C. doing the right thing, or knowing what the right thing might be, is often far too easy.D. they are situations in which none of the available alternatives seem ethically acceptable.

54. Which of the following is not likely to lead to unethical behavior?

A. An organizational culture that deemphasizes business ethics.B. A process that does not incorporate ethical considerations into business decision making.C. A strong personal ethical code governing the conduct of an individual.D. Pressure from the parent company to meet unrealistic performance goals.

55. Expatriate managers may experience more than the usual degree of pressure to violate their personal ethics

because of all of the following reasons except: A. they are away from their ordinary social context and supporting culture.B. they are psychologically and geographically closer to the parent company.C. they may be based in a culture that does not place the same value on ethical norms important in the

manager's home country.D. they may be surrounded by local employees who have less rigorous ethical standards.

56. Which of the following refers to the values and norms that the employees of an organization share? A. Vision statementB. Cultural relativismC. Organization cultureD. Power orientation

57. According to _____, the social responsibility of business is to increase profits, so long as the company stays

within the rules of law. A. the naive immoralistB. the righteous moralistC. cultural relativismD. the Friedman doctrine

58. According to the Friedman doctrine:

A. ethics are nothing more than the reflection of culture.B. a multinational's home-country standards of ethics are inappropriate to follow in foreign countries.C.

businesses should not undertake social expenditures beyond those mandated by the law and required for the efficient running of a business.

D.

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.

59. Cultural relativism suggests that:

A. ethics are nothing more than the reflection of culture and that a firm should adopt the ethics of the culture

in which it is operating.B. the only social responsibility of business is to increase profits.C. managers of a firm should not make decisions regarding social investments.D. a multinational's home-country standards of ethics are always appropriate to follow in foreign countries.

60. Child labor is permitted and widely employed in Country X. A multinational company entering Country

X decides to employ minors in its subsidiary, even though it is against the multinational's home-country ethics. Which of the following approaches to business ethics would justify the actions of the multinational company? A. Righteous moralistB. Cultural relativismC. The justice theoryD. The rights theory

61. The idea that universal notions of morality transcend different cultures is implicitly rejected by:

A. the righteous moralist.B. the naive immoralist.C. the Friedman doctrine.D. cultural relativism.

62. The righteous moralist suggests that: A. ethics are nothing more than the reflection of culture.B. a multinational's home-country standards of ethics are the appropriate ones for companies to follow in

foreign countries.C. the social responsibility of business is to increase profits, so long as the company stays within the rules

of law.D.


63. According to the naive immoralist:

A. a multinational's home-country standards of ethics are the appropriate ones for companies to follow in

foreign countries.B. the social responsibility of business is to increase profits, so long as the company stays within the rules

of law.C. ethics are nothing more than the reflection of a culture.D. if firms in a host nation do not follow ethical norms then the manager of a multinational should also not

follow ethical norms there. 64. The utilitarian approach to business ethics suggests that:

A. people should be treated as ends and never purely as means to the ends of others.B. the moral worth of actions or practices is determined by their consequences.C. people have dignity and need to be treated as such.D. human beings have fundamental rights and privileges that transcend national cultures.

65. According to the _____ approach, the best decisions are those that produce the greatest good for the

greatest number of people. A. naive immoralistB. Friedman doctrineC. utilitarianD. Kantian

66. The Kantian approach to ethics suggests that:

A. human beings have fundamental rights and privileges that transcend national boundaries.B. the moral worth of actions or practices is determined by their consequences.C. people should be treated as ends and never purely as means to the ends of others.D. ethics are nothing more than the reflection of culture.

67. Identify the correct statement about the rights theories.

A. Human beings have fundamental rights and privileges that transcend national boundaries.B. The moral worth of actions or practices is determined by their consequences.C. People should be treated as ends never purely as means to the ends of others.D. Minimum levels of morally acceptable behavior should be established.

68. The United Nations' Universal Declaration of Human Rights, related to employment, upholds all of the following except: A. just and favorable work conditions.B. equal pay for equal work.C. prohibition of trade unions.D. protection against unemployment.

69. Article 1 of the United Nations' Universal Declaration of Human Rights states: "All human beings are born

free and equal in dignity and rights." This best echoes: A. cultural relativism.B. Friedman doctrine.C. the righteous moralist approach.D. Kantian ethics.

70. Any person or institution that is capable of moral action such as a government or corporation is a(n):

A. moral agent.B. utilitarian.C. righteous moralist.D. naive immoralist.

71. Justice theories of business ethics focus on:

A. the moral worth of actions or practices.B. minimum levels of morally acceptable behavior.C. fundamental rights and privileges that transcend national boundaries.D. the attainment of a just distribution of economic goods and services.

72. Under the veil of ignorance, everyone is imagined to be ignorant of:

A. all of his/her particular characteristics.B. fundamental rights and privileges.C. the moral worth of actions or practices.D. the minimum levels of morally acceptable behavior.

73. According to John Rawls:

A. each person should be permitted the maximum amount of basic liberty compatible with a similar liberty

for others.B. freedom of speech and assembly is the single most important component in a justice system.C. equal basic liberty is only possible in a pure market economy.D. inequalities in a justice system are not to be tolerated under any circumstance.

74. Rawls' philosophy that inequalities are justified if they benefit the position of the least-advantaged person is

known as the: A. inequality principle.B. equity principle.C. difference principle.D. indifference principle.

75. Managers of international business can do all of the following to make sure ethical issues are considered in business decisions except: A. favor hiring and promoting people with a well-grounded sense of personal ethics.B. build an organizational culture that places a high value on ethical behavior.C. make sure that leaders within the business do not articulate the rhetoric of ethical behavior.D. develop moral courage.

76. External stakeholders:

A. are individuals or groups who own the business.B. include all employees, the board of directors, and stockholders.C. typically comprise customers, suppliers, lenders, etc.D. are individuals or groups who work for the business.

77. Internal stakeholders:

A. are individuals or groups who work for or own the business.B. do not have any claim on a firm or its activities.C. typically comprise customers, suppliers, lenders, governments, unions, etc.D. are individuals, except employees, board of directors, and stockholders that have some claim on the

firm. 78. _____ means standing in the shoes of a stakeholder and asking how a proposed decision might impact that

stakeholder. A. Veil of ignoranceB. Difference principleC. Moral imaginationD. Noblesse oblige

79. Establishing _____ involves a business' resolve to place moral concerns ahead of other concerns in cases

where either the fundamental rights of stakeholders or key moral principles have been violated. A. a veil of ignoranceB. a difference principleC. moral imaginationD. moral intent

80. Which of the following enables managers to walk away from a decision that is profitable, but unethical?

A. Noblesse obligeB. Moral courageC. The difference principleD. The Friedman doctrine

81. What are business ethics? What is the relationship between business ethics and an ethical strategy?

82. What is considered normal practice in one country may be considered unethical in others. Discuss.

83. Discuss how companies such as Exxon, Kodak, and IBM helped improve human rights in South Africa.

84. Should a multinational feel free to pollute in a developing nation?

85. What is the Foreign Corrupt Practices Act? What is its purpose?

86. What is the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions?

87. In your opinion, are bribes ever acceptable? Why or why not?

88. Discuss the notion of social responsibility. What does it mean for corporations?

89. What are ethical dilemmas? Why do they exist?

90. Why do managers behave in a manner that is unethical?

91. What are the determinants of ethical behavior?

92. Explain the Friedman doctrine. Who developed the philosophy? How well does this approach hold up

ethically?

93. Discuss the cultural relativism approach to business ethics. What is the connection between this approach

and the phrase "When in Rome do as the Romans do"? How well does this approach hold up ethically?

94. How does the righteous moralist approach business ethics? Who is likely to favor this approach?

95. Discuss the naive immoralist's approach to business ethics. What are the criticisms of this approach?

96. Discuss the utilitarian approach to business ethics. When was this approach developed? What are its drawbacks?

97. Consider the Kantian approach to ethics. Who is responsible for the philosophy?

98. What are rights theories? What is the connection between rights theories and the United Nations?

99. Describe justice theories. What is John Rawls' position on ethics?

100.What is the veil of ignorance? Why is it important to business?

ch4 Key

1.(p. 124)

Ethical strategies are the accepted principles of right or wrong governing the conduct of businesspeople. FALSE

AACSB: Ethical Understanding/Reasoning Abilities

Blooms: KnowledgeDifficulty: Easy

Hill - Chapter 04 #1Learning Objective: 04-1

2.(p. 124)

What is considered normal business practice in one country may be considered unethical in other countries. TRUE


Blooms: KnowledgeDifficulty: Medium


3.(p. 124)

In an international business setting, the most common ethical issues involve employment practices, human rights, environmental regulations, corruption, and the moral obligation of multinational companies. TRUE




4.(p. 125)

Basic human rights are respected by almost all nations. FALSE




5.(p. 125)

Rights that are taken for granted in developed nations, such as freedom of association, freedom of speech, freedom of assembly, and so on, are universally accepted. FALSE




6.(p. 125)

The Sullivan principles mandated that GM could operate in South Africa as long as the company complied with the apartheid laws. FALSE




7.(p. 127)

Myanmar has one of the worst human rights records in the world. TRUE




8.(p. 128)

Nearly all developing nations have substantial regulations governing the emission of pollutants, the dumping of toxic chemicals, the use of toxic materials in the workplace, and so on. FALSE




9.(p. 128)

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




10.(p. 128)

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


Blooms: ComprehensionDifficulty: Medium


11.(p. 128)

International businesses cannot gain economic advantages by making payments to corrupt government officials. FALSE




12.(p. 129)

The Foreign Corrupt Practices Act outlawed the paying of bribes to foreign government officials to gain business. TRUE

AACSB: Ethical/Legal Responsibilities



13.(p. 129-130)

The Foreign Corrupt Practices Act originally allowed "facilitating payments" to secure contracts that would not otherwise be secured. FALSE




14.(p. 130)

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




15.(p. 130)

The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions obliges member states to make the bribery of foreign public officials a criminal offense. TRUE




16.(p. 131)

Noblesse oblige refers to payments that ensure receiving the standard treatment that a business ought to receive from a foreign government. FALSE




17.(p. 131)

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. TRUE




18.(p. 131)

When multinationals use their power in a positive way to increase social welfare, it is ethical. TRUE




19.(p. 131)

The ethical obligations of a multinational corporation toward employment conditions, human rights, environmental pollution, and the use of power are always clear-cut. FALSE




20.(p. 132)

Ethical dilemmas are situations in which none of the available alternatives seems ethically acceptable. TRUE




21.(p. 132)

An individual with a strong sense of personal ethics is less likely to behave in an unethical manner in a business setting. TRUE




22.(p. 133)

Expatriate managers may experience more than the usual degree of pressure to violate their personal ethics. TRUE




23.(p. 134)

A firm's organizational culture refers to the values and norms that are shared among employees of an organization. TRUE




24.(p. 134)

The Enron debacle indicates that an organizational culture can legitimize behavior that a society would judge as unethical. TRUE




25.(p. 135)

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




26.(p. 136)

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




27.(p. 137)

Cultural relativism 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. TRUE




28.(p. 137)

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




29.(p. 138)

The naive immoralist claims that a multinational's home country standards of ethics are the appropriate ones for companies to follow in foreign countries. FALSE




30.(p. 138)

Most moral philosophers see value in utilitarian and Kantian approaches to business ethics. TRUE




31.(p. 138)

The utilitarian approaches to ethics hold that the moral worth of actions or practices is determined by their consequences. TRUE




32.(p. 139)

It typically is fairly easy to measure the benefits, costs, and risks of a course of action. FALSE




33.(p. 139)

An advantage of utilitarianism is that the philosophy allows for the consideration of justice. FALSE




34.(p. 139)

Rights theories recognize that human beings have fundamental rights and privileges that transcend national boundaries and cultures. TRUE




35.(p. 141)

A just distribution is one that is considered fair and equitable. TRUE




36.(p. 141)

According to Rawls, inequalities can be just if the system that produces inequalities is to the advantage of everyone. TRUE




37.(p. 142)

Talking with prior employers regarding someone's reputation is a good way to discern a potential employee's ethical predisposition. TRUE




38.(p. 144)

Building an organization culture that places a high value on ethical behavior requires incentive and reward systems. TRUE




39.(p. 144)

A firm's stakeholders are individuals or groups that have an interest, claim, or stake in the company, what it does, and how well it performs. TRUE




40.(p. 146)

Companies can strengthen the moral courage of employees by committing themselves to retaliate against employees who exercise moral courage, say no to superiors, or otherwise complain about unethical actions. FALSE


Blooms: ComprehensionDifficulty: Easy


41.(p. 124)

Identify the incorrect statement regarding ethical issues in international business. A. They are often rooted in the fact that political systems, law, economic development, and culture of

nations vary significantly.B. Human rights and environmental regulations are some of the common ethical issues.C. Ethical practices of all nations are similar in nature.D.

Managers in multinational firms need to be particularly sensitive to differences in business practices because they work across national borders.

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.




42.(p. 125)

To guard against abuse of employment practices in other nations, multinationals should do all of the following except: A. establish minimal acceptable standards that safeguard the basic rights and dignity of employees.B. adhere to working conditions of the host country if they are clearly inferior to those in a

multinational's home nation.C. audit foreign subsidiaries and subcontractors on a regular basis to make sure established standards

are met.D. take action to correct unacceptable behavior.

A strong argument can be made that it is not okay for a multinational firm to tolerate poor working conditions in its foreign operations or its subcontractors' operations.




43.(p. 125)

Which of the following was designed to allow GM to operate ethically in South Africa as long as the company did not obey the apartheid laws in its own South African operations? A. The righteous moral systemB. Sullivan principlesC. Noblesse obligeD. Cultural relativism

According to the Sullivan principles, a company should not obey the apartheid laws in its own South African operations; the company should do everything within its power to promote the abolition of apartheid laws.




44.(p. 127)

Identify the incorrect statement pertaining to foreign multinationals doing business in countries with repressive regimes. A.

Inward investment by multinationals can be a force for economic, political, and social progress that ultimately improves the rights of people in repressive regimes.

B. No multinational does business with nations that lack the democratic structures and human rights records of developed nations.

C. Multinational investment cannot be justified on ethical grounds in some regimes due to their extreme human rights violations.

D. Multinationals adopting an ethical stance can, at times, improve human rights in repressive regimes.

It is often argued that investment by a multinational can be a force for economic, political, and social progress that ultimately improves the rights of people in repressive regimes. In general, this belief suggests that it is ethical for a multinational to do business in nations that lack the democratic structures and human rights records of developed nations.


Blooms: ComprehensionDifficulty: Hard


45.(p. 128)

Identify the incorrect statement about environmental regulations. A. Environmental regulations are often lacking in developing nations.B. Environmental regulations are similar across developed and developing nations.C. Developed nations have substantial regulations governing the emission of pollutants, the dumping of

toxic chemicals, etc.D. Inferior environmental regulations in host nations, as compared to home nation, can lead to ethical

issues.

Many developed nations have substantial regulations governing the emission of pollutants, the dumping of toxic chemicals, the use of toxic materials in the workplace, and so on. Those regulations are often lacking in developing nations.




46.(p. 128)

The _____ occurs when a resource is shared by all, but owned by no one, is overused by individuals, resulting in its degradation. A. tragedy of the commonsB. noblesse obligeC. ethical dilemmaD. Friedman system

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.




47.(p. 129)

Which of the following observations about the Foreign Corrupt Practices Act is true? A. The act outlawed the paying of bribes to foreign government officials to gain business.B. There is enough evidence that it put U.S. firms at a competitive disadvantage.C. The act originally allowed for "facilitating payments."D. The Nike case was the impetus for the 1977 passage of this act.

The Lockheed case was the impetus for the 1977 passage of the Foreign Corrupt Practices Act in the United States. Since the act outlawed payment of bribes to foreign government officials to gain business, some U.S. businesses immediately objected that the act would put U.S. firms at a competitive disadvantage (there is no evidence that subsequently occurred).




48.(p. 129-130)

Facilitating payments are: A. permitted under the amended Foreign Corrupt Practices Act.B. a direct violation of the Foreign Corrupt Practices Act.C. permitted so long as they designed only to gain exclusive preferential treatment.D. used to secure contracts that would otherwise not be secured.

The Foreign Corrupt Practices Act was amended to allow for "facilitating payments."




49.(p. 130)

The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions excludes: A. speed payments to secure contracts that would otherwise not be secured.B. grease payments to gain exclusive preferential treatment.C. facilitating payments made to expedite routine government action.D. payments to government officials for special privileges.

The convention excludes facilitating payments made to expedite routine government action from the convention. Facilitating payments are not payments to secure contracts that would not otherwise be secured, nor are they payments to obtain exclusive preferential treatment. They are payments to ensure receiving the standard treatment that a business ought to receive from a foreign government, but might not due to the obstruction of a foreign official.




50.(p. 130)

Grease payments: A. are not the same as facilitating payments or speed money.B. are facilitating payments made to expedite routine government action.C. are payments to gain exclusive preferential treatments.D. can be used to secure contracts that would otherwise not be secured.

Grease payments are payments to ensure receiving the standard treatment that a business ought to receive from a foreign government, but might not due to the obstruction of a foreign official.




51.(p. 131)

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 is known as: A. business ethics.B. noblesse oblige.C. ethical dilemma.D. social responsibility.

Some moral philosophers argue that with power comes the social responsibility for multinationals to give something back to the societies that enable them to prosper and grow. In its purest form, social responsibility can be supported for its own sake simply because it is the right way for a business to behave.




52.(p. 131)

Which of the following, in a business setting, is taken to mean benevolent behavior that is the responsibility of successful enterprises? A. Sullivan's principlesB. Ethical dilemmaC. Tragedy of the commonsD. Noblesse oblige

Noblesse oblige is a French term that refers to honorable and benevolent behavior considered the responsibility of people of high (noble) birth.


Blooms: KnowledgeDifficulty: Hard


53.(p. 132)

Ethical dilemmas exist because of all of the following reasons except: A. many real-world decisions are complex and difficult to frame.B. decisions may involve first, second, and third-order consequences that are hard to quantify.C. doing the right thing, or knowing what the right thing might be, is often far too easy.D. they are situations in which none of the available alternatives seem ethically acceptable.

Doing the right thing, or even knowing what the right thing might be, is often far from easy.




54.(p. 132)

Which of the following is not likely to lead to unethical behavior? A. An organizational culture that deemphasizes business ethics.B. A process that does not incorporate ethical considerations into business decision making.C. A strong personal ethical code governing the conduct of an individual.D. Pressure from the parent company to meet unrealistic performance goals.

Business ethics are not divorced from personal ethics, which are the generally accepted principles of right and wrong governing the conduct of individuals. The first step to establishing a strong sense of business ethics is for a society to emphasize strong personal ethics.




55.(p. 133)

Expatriate managers may experience more than the usual degree of pressure to violate their personal ethics because of all of the following reasons except: A. they are away from their ordinary social context and supporting culture.B. they are psychologically and geographically closer to the parent company.C. they may be based in a culture that does not place the same value on ethical norms important in the

manager's home country.D. they may be surrounded by local employees who have less rigorous ethical standards.

Home-country managers working abroad in multinational firms may experience more than the usual degree of pressure to violate their personal ethics as they are psychologically and geographically distant from the parent company.




56.(p. 134)

Which of the following refers to the values and norms that the employees of an organization share? A. Vision statementB. Cultural relativismC. Organization cultureD. Power orientation

Values are abstract ideas about what a group believes to be good, right, and desirable, while norms are the social rules and guidelines that prescribe appropriate behavior in particular situations.




57.(p. 136)

According to _____, the social responsibility of business is to increase profits, so long as the company stays within the rules of law. A. the naive immoralistB. the righteous moralistC. cultural relativismD. the Friedman doctrine

Friedman's belief is that a firm should maximize its profits because that is the way to maximize the returns that accrue to the owners of the firm, its stockholders.




58.(p. 136)

According to the Friedman doctrine: A. ethics are nothing more than the reflection of culture.B. a multinational's home-country standards of ethics are inappropriate to follow in foreign countries.C.

businesses should not undertake social expenditures beyond those mandated by the law and required for the efficient running of a business.

D.


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.




59.(p. 137)

Cultural relativism suggests that: A. ethics are nothing more than the reflection of culture and that a firm should adopt the ethics of the

culture in which it is operating.B. the only social responsibility of business is to increase profits.C. managers of a firm should not make decisions regarding social investments.D. a multinational's home-country standards of ethics are always appropriate to follow in foreign

countries.

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.




60.(p. 137)

Child labor is permitted and widely employed in Country X. A multinational company entering Country X decides to employ minors in its subsidiary, even though it is against the multinational's home-country ethics. Which of the following approaches to business ethics would justify the actions of the multinational company? A. Righteous moralistB. Cultural relativismC. The justice theoryD. The rights theory

This approach is often summarized by the maxim "when in Rome do as the Romans do."


Blooms: ApplicationDifficulty: Hard


61.(p. 137)

The idea that universal notions of morality transcend different cultures is implicitly rejected by: A. the righteous moralist.B. the naive immoralist.C. the Friedman doctrine.D. cultural relativism.

Cultural relativism implicitly rejects the idea that universal notions of morality transcend different cultures, but some universal notions of morality are found across cultures.




62.(p. 137)

The righteous moralist suggests that: A. ethics are nothing more than the reflection of culture.B. a multinational's home-country standards of ethics are the appropriate ones for companies to follow

in foreign countries.C. the social responsibility of business is to increase profits, so long as the company stays within the

rules of law.D.


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.




63.(p. 138)

According to the naive immoralist: A. a multinational's home-country standards of ethics are the appropriate ones for companies to follow

in foreign countries.B. the social responsibility of business is to increase profits, so long as the company stays within the

rules of law.C. ethics are nothing more than the reflection of a culture.D. if firms in a host nation do not follow ethical norms then the manager of a multinational should also

not follow ethical norms there.

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.




64.(p. 138)

The utilitarian approach to business ethics suggests that: A. people should be treated as ends and never purely as means to the ends of others.B. the moral worth of actions or practices is determined by their consequences.C. people have dignity and need to be treated as such.D. human beings have fundamental rights and privileges that transcend national cultures.

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.




65.(p. 139)

According to the _____ approach, the best decisions are those that produce the greatest good for the greatest number of people. A. naive immoralistB. Friedman doctrineC. utilitarianD. Kantian

As a philosophy for business ethics, utilitarianism focuses attention on the need to weigh carefully all of the social benefits and costs of a business action and to pursue only those actions where the benefits outweigh the costs.




66.(p. 139)

The Kantian approach to ethics suggests that: A. human beings have fundamental rights and privileges that transcend national boundaries.B. the moral worth of actions or practices is determined by their consequences.C. people should be treated as ends and never purely as means to the ends of others.D. ethics are nothing more than the reflection of culture.

Kantian ethics hold that people should be treated as ends and never purely as means to the ends of others. People are not instruments, like a machine. People have dignity and need to be respected as such.




67.(p. 139)

Identify the correct statement about the rights theories. A. Human beings have fundamental rights and privileges that transcend national boundaries.B. The moral worth of actions or practices is determined by their consequences.C. People should be treated as ends never purely as means to the ends of others.D. Minimum levels of morally acceptable behavior should be established.

Utilitarian approaches to ethics hold that the moral worth of actions or practices is determined by their consequences. Kantian ethics hold that people should be treated as ends and never purely as means to the ends of others. Rights establish a minimum level of morally acceptable behavior.




68.(p. 140)

The United Nations' Universal Declaration of Human Rights, related to employment, upholds all of the following except: A. just and favorable work conditions.B. equal pay for equal work.C. prohibition of trade unions.D. protection against unemployment.

Article 23 of the United Nations' Universal Declaration of Human Rights, which relates directly to employment, states that everyone has the right to form and to join trade unions for the protection of his interests.




69.(p. 140)

Article 1 of the United Nations' Universal Declaration of Human Rights states: "All human beings are born free and equal in dignity and rights." This best echoes: A. cultural relativism.B. Friedman doctrine.C. the righteous moralist approach.D. Kantian ethics.

Echoing Kantian ethics, Article 1 of this declaration states: All human beings are born free and equal in dignity and rights. They are endowed with reason and conscience and should act towards one another in a spirit of brotherhood. Kantian ethics hold that people should be treated as ends and never purely as means to the ends of others.


Blooms: KnowledgeDifficulty: Hard


70.(p. 140)

Any person or institution that is capable of moral action such as a government or corporation is a(n): A. moral agent.B. utilitarian.C. righteous moralist.D. naive immoralist.

Within the framework of a theory of rights, certain people or institutions are obligated to provide benefits or services that secure the rights of others. Such obligations also fall upon more than one class of moral agent.




71.(p. 141)

Justice theories of business ethics focus on: A. the moral worth of actions or practices.B. minimum levels of morally acceptable behavior.C. fundamental rights and privileges that transcend national boundaries.D. the attainment of a just distribution of economic goods and services.

Justice theories focus on the attainment of a just distribution of economic goods and services. A just distribution is one that is considered fair and equitable.




72.(p. 141)

Under the veil of ignorance, everyone is imagined to be ignorant of: A. all of his/her particular characteristics.B. fundamental rights and privileges.C. the moral worth of actions or practices.D. the minimum levels of morally acceptable behavior.

Under the veil of ignorance, everyone is imagined to be ignorant of all of his or her particular characteristics, for example, race, sex, intelligence, nationality, family background, and special talents.




73.(p. 141)

According to John Rawls: A. each person should be permitted the maximum amount of basic liberty compatible with a similar

liberty for others.B. freedom of speech and assembly is the single most important component in a justice system.C. equal basic liberty is only possible in a pure market economy.D. inequalities in a justice system are not to be tolerated under any circumstance.

According to Rawls, valid principles of justice are those with which all persons would agree if they could freely and impartially consider the situation. Each person should be permitted the maximum amount of basic liberty compatible with a similar liberty for others. Rawls takes these to be political liberty, freedom of speech and assembly, liberty of conscience and freedom of thought, the freedom and right to hold personal property, and freedom from arbitrary arrest and seizure.




74.(p. 141)

Rawls' philosophy that inequalities are justified if they benefit the position of the least-advantaged person is known as the: A. inequality principle.B. equity principle.C. difference principle.D. indifference principle.

According to Rawls, inequalities can be just if the system that produces inequalities is to the advantage of everyone. More precisely, he formulates the difference principle, which is that inequalities are justified if they benefit the position of the least-advantaged person.




75.(p. 142)

Managers of international business can do all of the following to make sure ethical issues are considered in business decisions except: A. favor hiring and promoting people with a well-grounded sense of personal ethics.B. build an organizational culture that places a high value on ethical behavior.C. make sure that leaders within the business do not articulate the rhetoric of ethical behavior.D. develop moral courage.

Managers of international business can make sure that leaders within the business not only articulate the rhetoric of ethical behavior, but also act in a manner that is consistent with that rhetoric.




76.(p. 144)

External stakeholders: A. are individuals or groups who own the business.B. include all employees, the board of directors, and stockholders.C. typically comprise customers, suppliers, lenders, etc.D. are individuals or groups who work for the business.

External stakeholders are all other individuals and groups that have some claim on the firm. Typically, this group comprises customers, suppliers, lenders, governments, unions, local communities, and the general public.




77.(p. 144)

Internal stakeholders: A. are individuals or groups who work for or own the business.B. do not have any claim on a firm or its activities.C. typically comprise customers, suppliers, lenders, governments, unions, etc.D. are individuals, except employees, board of directors, and stockholders that have some claim on the

firm.

Internal stakeholders are individuals or groups who work for or own the business. They include all employees, the board of directors, and stockholders.




78.(p. 144)

_____ means standing in the shoes of a stakeholder and asking how a proposed decision might impact that stakeholder. A. Veil of ignoranceB. Difference principleC. Moral imaginationD. Noblesse oblige

Stakeholder analysis involves a certain amount of what has been called moral imagination. This means standing in the shoes of a stakeholder and asking how a proposed decision might impact that stakeholder.




79.(p. 145)

Establishing _____ involves a business' resolve to place moral concerns ahead of other concerns in cases where either the fundamental rights of stakeholders or key moral principles have been violated. A. a veil of ignoranceB. a difference principleC. moral imaginationD. moral intent

Some experts have recommended a five-step process to think through ethical problems where one of the steps requires managers to establish moral intent. At this stage, input from top management might be particularly valuable.




80.(p. 145)

Which of the following enables managers to walk away from a decision that is profitable, but unethical? A. Noblesse obligeB. Moral courageC. The difference principleD. The Friedman doctrine

Moral courage gives an employee the strength to say no to a superior who instructs her to pursue actions that are unethical.




81.(p. 124)

What are business ethics? What is the relationship between business ethics and an ethical strategy? Business ethics are the accepted principles of right or wrong governing the conduct of businesspeople. An ethical strategy is a strategy, or course of action, that does not violate these accepted principles.




82.(p. 124)

What is considered normal practice in one country may be considered unethical in others. Discuss. Many of the ethical issues and dilemmas in international business are rooted in the fact that political systems, law, economic development, and culture vary significantly from nation to nation. Therefore, what might be considered a normal business practice in one country may constitute unethical behavior in another country. Managers in a multinational company need to be sensitive to these differences and choose the ethical action in those circumstances where variation across societies creates the potential for ethical problems. In the international business setting, the most common ethical issues involve employment practices, human rights, environmental regulations, corruption, and the moral obligation of multinational corporations.




83.(p. 125-126)

Discuss how companies such as Exxon, Kodak, and IBM helped improve human rights in South Africa. During the 1980s, many American companies doing business in South Africa realized that following the Sullivan principles of not obeying apartheid laws and trying to promote their abolition was not a sufficiently ethical strategy. Consequently, many companies divested their holdings in the nation. At the same time, the U.S. government and other nations imposed economic sanctions on the country. Together, these actions helped bring about democratic elections in the nation in 1994, and an end to white minority rule.




84.(p. 128)

Should a multinational feel free to pollute in a developing nation? This question is designed to stimulate classroom discussion or the personal opinion of the student. Issues that might emerge include whether there is any danger that amoral management might move production to a developing nation precisely because costly pollution controls are not required, the notion that the environment is public good that no one owns, but that anyone can despoil, and legality of various actions.


Blooms: ApplicationDifficulty: Medium


85.(p. 129-130)

What is the Foreign Corrupt Practices Act? What is its purpose? The Foreign Corrupt Practices Act was passed in 1977 in United States. The act outlawed the paying of bribes to foreign government officials to gain business. The act was later amended to allow for facilitating payments or grease money that enabled companies to make payments to ensure that they receive the standard that a business ought to receive from a government.




86.(p. 130)

What is the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions? In 1997, the OECD adopted the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. The convention obliges member states to make it a criminal offense to make the bribery of foreign public officials a criminal offense. The convention excludes facilitating payments made to expedite routine government action from the convention.




87.(p. 130)

In your opinion, are bribes ever acceptable? Why or why not? This question is designed to allow the students to explore the idea of bribery as possibly resulting in a positive rather than a negative outcome. Some economists have suggested that corruption might in fact improve efficiency and help growth. Others however, argue that corruption simply reduces the returns on business investment and leads to low economic growth.




88.(p. 131)

Discuss the notion of social responsibility. What does it mean for corporations? 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. In a business setting, social responsibility means that benevolent behavior is the responsibility of successful enterprises.




89.(p. 132)

What are ethical dilemmas? Why do they exist? Ethical dilemmas are situations in which none of the available alternatives seems ethically acceptable. 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. To deal with these situations, managers need a moral compass to guide them through the dilemma to find an acceptable solution.




90.(p. 132-135)

Why do managers behave in a manner that is unethical? There is no easy answer to this question, but a few generalizations can be made. First, business ethics are not divorced from personal ethics. Second, some businesspeople do not realize they are behaving unethically. Third, an organization may not emphasize business ethics, and instead simply focus on the economic outcome of a business decision. Fourth, sometimes there is pressure from the parent company to meet unrealistic performance goals that can be attained only by cutting corners or acting in an unethical manner. A fifth, root cause of unethical behavior is often seen to be as leadership or leaders who do not behave in an ethical manner.




91.(p. 133)

What are the determinants of ethical behavior? The determinants of ethical behavior include decision-making processes, leadership, unrealistic performance goals, organization culture, and personal ethics. Together these factors help determine whether a manager behave in an ethically responsible manner or not.




92.(p. 136)

Explain the Friedman doctrine. Who developed the philosophy? How well does this approach hold up ethically? In 1970, Milton Friedman suggested 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 business should undertake social expenditures beyond those mandated by the law and required for the efficient running of a business. Friedman does state that businesses should behave in an ethical manner and not engage in deception and fraud, however, most economists believe that his approach to ethics does not hold up well. For example, even though child labor may not be against the law in a particular country, it is still unethical to use child labor.




93.(p. 137)

Discuss the cultural relativism approach to business ethics. What is the connection between this approach and the phrase "When in Rome do as the Romans do"? How well does this approach hold up ethically? The cultural relativism approach is the belief that ethics are nothing more than the reflection of a culture and accordingly, a firm should adopt the ethics of the culture in which it is operating. This approach is often summarized by the maxim "When in Rome do as the Romans do." Cultural relativism does not stand up well to business ethics because it suggests that if a culture allows slavery, then it is acceptable for a firm to use slaves as well.




94.(p. 137-138)

How does the righteous moralist approach business ethics? Who is likely to favor this approach? The 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 counties. The main criticism of this approach is that it goes too far. While there are some universal moral principles that should not be violated, it does not always follow that the appropriate thing is to adopt home-country standards.




95.(p. 138)

Discuss the naive immoralist's approach to business ethics. What are the criticisms of this approach? The 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. This approach has been criticized with the argument that simply accepting an action as being ethically justified just because everyone is doing it is not sufficient. Moreover, the multinational company does have the ability to change the prevailing practice in the country.




96.(p. 138-139)

Discuss the utilitarian approach to business ethics. When was this approach developed? What are its drawbacks? The utilitarian to business ethics was developed in the 18th and 19th centuries by philosophers such as David Hume, Jeremy Bentham, and John Stuart Mill. The utilitarian approach to ethics holds that the moral worth of actions or practices is determined by their consequences. An action is judged to be desirable if it leads to the best possible balance of good consequences over bad consequences. The best decisions are those that produce the greatest good for the greatest number of people.However, the approach has its limits. One serious drawback of the utilitarian approach is that it is difficult to measure the benefits, costs, and risks of a course of action. A second problem is that the philosophy omits the consideration of justice.




97.(p. 139)

Consider the Kantian approach to ethics. Who is responsible for the philosophy? Kantian ethics are based on the philosophy of Immanuel Kant, and hold that people should be treated as ends and never purely as means to the ends of others. Employing people in sweatshops, making them work long hours for low pay in poor work conditions, is a violation ethics according to the Kantian philosophy because it treats people as mere cogs in a machine and not as conscious moral beings who have dignity.




98.(p. 139-140)

What are rights theories? What is the connection between rights theories and the United Nations? Rights theories recognize that human beings have fundamental rights and privileges that transcend national borders and cultures. Rights establish a minimum level of morally acceptable behavior. This philosophy formed the basis for the UN Universal Declaration of Human Rights, which has been ratified by almost every country in the world and lays down basic principles that should always be adhered to irrespective of the culture in which one is doing business.




99.(p. 141)

Describe justice theories. What is John Rawls' position on ethics? Justice theories focus on the attainment of a just distribution of economic goods and services. One theory that is particularly important was developed by John Rawls. Rawls argues that all economic goods and services should be distributed equally except when an unequal distribution would work to everyone's advantage. Rawls developed the veil of ignorance as a conceptual tool that contributes to the moral compass that helps managers assess ethical dilemmas.




100.(p. 141)

What is the veil of ignorance? Why is it important to business? The veil of ignorance was developed by John Rawls as part of his approach to justice theories. According to Rawls, valid principles of justice are those with which all persons would agree if they could freely and impartially consider the situation. Impartiality is guaranteed by the veil of ignorance. Under the veil of ignorance, everyone is imagined to be ignorant of all of his/her particular characteristics. Under these conditions everyone would agree that (1) each person be permitted the maximum amount of basic liberty compatible with a similar liberty for others, and (2) once basic liberty is assured, inequality in basic social goods is to be allowed only if such inequalities benefit everyone.




ch4 Summary

Category # of Questions

AACSB: Ethical Understanding/Reasoning Abilities 95

AACSB: Ethical/Legal Responsibilities 5

Blooms: Application 2

Blooms: Comprehension 16

Blooms: Knowledge 82

Difficulty: Easy 23

Difficulty: Hard 6

Difficulty: Medium 71

Hill - Chapter 04 100

Learning Objective: 04-1 38





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