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Ethics And the Conduct of Business 7th Edition By Boatright –  Test Bank
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Boatright

 

Ethics and the Conduct of Business

 

Seventh Edition

Chapter 1 Ethics in the World of Business

SUGGESTED DISCUSSION PROMPTS

What types of ethical concerns do decision-makers at the management level need to take into account?

 

What types of ethical concerns do decision-makers at lower organizational levels need to take into account?

 

How would you respond to someone who says that a business should always do

whatever is in its economic interests?

 

What is wrong with the thought that abiding by the law is all the ethics that a businessperson needs to worry about?

 

How does specialized knowledge come into play in the management of ethics?

 

 

Multiple Choice Questions

 

Choose the BEST possible answer for each of the following.

 

In many cases, rules of business ethics can be determined by .

applicable laws

company guidelines

economic requirements

rules of conduct that apply in everyday life

 

 

 

The economic character of business can be seen in its .

trading characteristics

ethical dimensions

personal aspects

legal guidelines

 

 

 

Organization in business is characterized mainly by its .

rules

hierarchy

profits

products

 

 

 

Decision making in business occurs at various distinctive .

places

levels

objectives

profits

 

 

 

It is possible for there to be unethical actions that are not .

illegal

wrong

avoidable

harmful

 

 

 

  1. Economic reasoning describes how we .

ought to reason

prioritize our desires

reason when pursuing our goals

would reason if we could have whatever we wanted

 

 

 

Adam Smith’s economic theory is based on which of the following assumptions?

People want to promote each others’ interests.

Morality is not relevant to economic concerns.

Free markets will fix their own ethical problems.

People will behave rationally as they pursue their interests.

 

 

 

What fact does the “ultimatum bargaining game” demonstrate?

It is often rational to price products below their market value.

 

Free markets will usually self-regulate.

 

Many people do not understand economics.

 

any people would rather not trade than be treated unfairly.

 

 

 

The school of thought that says that law and ethics govern two different realms is wrong because .

ethics applies to every field of life

anything that is legal is also ethical

anything that is illegal is also unethical

the law governs every aspect of life

 

 

 

10

. It is not ethically sufficient to obey the law because .

the law does not apply to business in general

B

. ethical constraints sometimes require that the law be ignored

C

. ethics goes beyond what can be legally codified

D

. the law itself is stricter than ethics

 

 

 

Essay Questions

. What is economic efficiency, and in what ways might the pursuit of economic efficiency be unethical?

 

Describe and explain an example of a business decision that would be unethical even

though it is legal.

 

In what ways does it benefit businesses to pursue ethical choices beyond what they are legally required to do?

 

Chapter 2 Ethical Decision Making

SUGGESTED DISCUSSION PROMPTS

What is ethically required of participants in a market economic system?

 

In what ways do participants in a market system have to depend upon each other?

 

In what ways do ethical considerations work against perfect operation of a market economy?

 

How does the prisoner’s dilemma reflect the limitations of a free market system?

 

What capacities are required of an agent to engage in ethical reasoning?

 

Multiple Choice Questions

 

Choose the BEST possible answer for each of the following.

 

A market economy is based fundamentally on .

ethical motivations

the profit motive

human welfare

manufacturing

 

 

 

A market with perfect competition would require .

agents to not be rational

that there be no contracts

that ethics not be necessary

ethical guidelines to be legally codified

 

 

 

Fraud is unethical because .

all parties must have access to pertinent information

no one may be permitted to profit too much

market economies require freedom of action

the market requires everyone to further their own interests

 

 

 

The difference between Homo economicus and actual people is that .

Homo economicus is capable of making any decision

Homo economicus pursues many different interests

actual people pursue their own self-interest

actual people are less than perfectly rational

 

 

 

A market economy alone cannot sustain public goods because .

no one would want to take advantage of public goods

everyone would be free riders if they could be

people would try to sell each other public goods

participants in a market economy are imperfectly rational

 

 

 

  1. Market outcomes lead to unequal outcomes mainly because .

it involves random processes

participants have differing levels of skill

free markets are inherently unjust

there is government interference

 

 

 

A fiduciary has the special responsibility to .

care for another’s financial interests

 

sell goods as efficiently as possible

 

provide as much information as possible

 

ake a professional interest in another’s success

 

 

 

The ethical requirements that are specific to professionals arise in part from

.

their duty not to profit at others’ expense

the implicit contract that they have with other professionals

the duties they owe to their governing association

their specialized knowledge and responsibilities

 

 

 

The internal workings of firms are founded on .

markets

B

. agents

C

. roles

D

. relationships

 

 

 

1

  1. The ethical concept of dignity most centrally involves .

treating all persons equally

disclosing all information that is needed by others

recognizing the intrinsic value of persons or other entities

behaving with high standards of virtue

 

 

 

Essay Questions

What are the basic components of a market system, and what assumptions are made about human behavior?

 

What is the difference between a fiduciary and an agent? What special obligations

are characteristic of a fiduciary that is not an agent?

 

What are the required components of the moral point of view, and how are they exercised in a business setting?

 

 

Chapter 3 Ethical Theories

SUGGESTED DISCUSSION PROMPTS

What would an act utilitarian and a rule utilitarian say differently when evaluating the same case?

 

What specific problem is posed to utilitarianism by its economic application?

 

What is the major contrast between utilitarianism and Kantian ethics?

 

What are the attractive features of virtue theory? What are its limitations in application to business?

 

In what ways is the rights and justice perspective a fitting ethical theory for business ethics?

 

Multiple Choice Questions

 

Choose the BEST possible answer for each of the following.

What does the P&G case show about the applicability of ethics to business?

When a company makes unethical decisions, it is usually breaking the law.

Ethics in business applies differently from how it does in the rest of the world.

A company’s behavior many be unethical even if no harm is done.

A company’s ethical decisions should always affect its bottom line.

 

 

 

Teleological theories of ethics locate goodness in .

the outcome of actions

the intentions of the agent

the obligations of people to each other

the maximization of economic opportunity

 

 

 

Rule utilitarianism favors rules that .

always benefit the most people

everyone agrees with

utilitarians think are good rules

would maximize goodness if everyone followed them

 

 

 

What is the most fundamental drawback of having cost-benefit analyses serve as the basis for ethical decisions in business?

Some things do not really have value.

A determinate value must be placed on things that have incalculable value.

Cost-benefit analyses are time-consuming and require specialized skill.

Cost-benefit analyses require a commitment to consequentialism.

 

 

 

  1. A “maxim,” according to Kant’s terminology, is .

the outcome of an action

the reason that one undertakes an action

the moral principle that one has in mind

that which would make an action moral

 

 

 

Kant’s rule requiring respect for persons asks that we .

not use people as means to an end

view each person as a moral agent

view each person as an end unto himself

only use another person if we have sufficient reason for doing so

 

 

 

Virtue ethics defines a moral action as that which .

a wise person would do

B

. leads to the most virtue overall

C

. is done with the most virtuous intentions

D

. is done according to the proper rules

 

 

 

8

. A drawback to theorizing about business ethics in terms of rights is that .

not everyone has rights

people’s rights may conflict

it is hard to draw the line between different types of rights

conceptions of rights differ between cultures

 

 

 

The notion of justice is most basically concerned with .

fairness

equality

rights

economics

 

 

 

Essay Questions

In what ways is the need to calculate utility a problem for utilitarianism?

 

What is Kant’s categorical imperative? Explain its two formulations.

 

Describe how rights and justice can be explained in terms of one another.

 

Chapter 4 Whistle-Blowing

SUGGESTED DISCUSSION PROMPTS

Why do employees want to blow the whistle?

 

Do employers have valid reasons to frown on whistle-blowing?

 

What must an employee do in order to ensure that they blow the whistle properly?

 

What are the objectives of legal protection for whistle-blowers?

 

Why would a company develop a whistle-blowing policy?

 

Multiple Choice Questions

 

Choose the BEST possible answer for each of the following.

 

A whistle-blower is primarily motivated by .

retaliation

ethical concern

personal gain

fear of retribution

 

 

 

Which of the following is necessary for whistle-blowing to occur?

information

legal protection

a nondisclosure agreement

managing authority

 

 

 

Some corporations have an ombudsman, whose role is to .

blow the whistle

release information to the public

report on employees

hear complaints

 

 

 

How does the disloyalty argument against whistleblowing receive support from the law?

Loyalty to a single company is enforced by the law.

There is little legal precedent for whistleblower protection.

There are many laws enforcing corporate confidentiality.

Employees of a corporation are by legal definition agents of that corporation.

 

 

The biggest weakness in the disloyalty argument against whistleblowing is that

.

an employee differs in many ways from an agent

employees do not receive protection when whistleblowing

employers have no right to expect loyalty from employees

it does not apply to at-will employment

 

 

 

  1. Loyalty to a corporation can sometimes lead to whistleblowing if .

the corporation is a large one

the whistleblower enjoys legal protection

the whistleblower wants to see change in the corporation

the government is paying the employee for their information

 

 

 

Employees who are most upset with a company will most often .

write to the CEO

simply leave the company

C

. go public with their complaints

D

. hope the company will reform from within

 

 

 

8

. The main motivation for there to be whistleblower-protection laws is that whistleblowers .

represent a minority

are likely to be oppressed

benefit society

should enjoy freedom of speech

 

 

 

The main reason that companies should have a whistle-blowing policy is that

.

it avoids tension and strife

whistle-blowing helps business

it enhances employee satisfaction

wrongdoing harms them

 

 

 

10

. All whistle-blowing policies should include .

a guarantee against retaliation

a guarantee of continued employment

a way for employees to go public

specific monetary awards

 

 

 

Essay Questions

Describe ways in which employers can deal with potential cases of whistle-blowing.

How do they further their interests in this regard?

 

Explain the ironic dimension of whistle-blowing with respect to employee loyalty.

 

Describe the pros and cons of legal protection for whistle-blowing.

 

 

Chapter 5 Trade Secrets and Conflict of Interest

SUGGESTED DISCUSSION PROMPTS

What are the reasons for thinking of trade secrets as property?

 

What does a company have to show in order to have their trade secrets protected as property?

 

What can companies do within legal and ethical bounds to learn from other companies?

 

How might considerations of fair competition be used either for or against the protection of intellectual property?

 

How did conflicts of interest arise in the Enron situation?

 

Multiple Choice Questions

 

Choose the BEST possible answer for each of the following.

 

Courts have difficulty determining .

what constitutes a trade secret

whether trade secrets should be protected

why companies want to protect trade secrets

the extent to which trade secrets have been pursued

 

 

 

The Economic Espionage Act of 1996 .

was primarily aimed at protecting against domestic spying

was primarily aimed at protecting foreign companies in the U.S.

has been effective in protecting against domestic spying

was the first law in the U.S. to protect trade secrets

 

 

 

The question of intellectual property ownership becomes most complicated when

.

the intellectual property involves new technology

an inventor works for a company that manufactures the invention

the intellectual property is for

the inventor owns the right to many different patents

 

 

The Wexler case found that Greenberg had the right to his own formulas because

.

it would be unfair for his old company to use those formulas

his new company did not own the rights to the formulas

no one owned the rights to the formulas that Greenberg had created

not allowing him to do so would unfairly restrict his ability to compete with the new company

 

 

 

  1. One source of the idea that trade secrets are a form of property is the view that

.

trade should always be free and unrestricted

 

ach person owns the product of their labor

 

property should be had in common by all people

 

companies should be able to make a profit however they can

 

 

Why are noncompetition agreements with employees uncommon?

Most employees stay with the same company for a long time.

Most employees are not in a position to use trade secrets with another company

They are difficult to enforce.

They can result in difficulty for an employee to subsequently find suitable work.

 

 

Trade-secret protection agreements that are based on confidentiality assume that

.

A

. the trade secret was not developed by the employee

B

. the employee will not work for other companies

C

. the employer is involved in a high-tech industry

the employee will eventually work for a competitor

 

 

If a company gains information on a company through misrepresentation, this is a breach of .

property

honesty

trust

privacy

 

 

Conflicts of interest are an ethical problem for a business because they .

violate an individual’s right to privacy

create profits that would be owed to other companies instead

create incentive for company representatives to act against others’ best interest

prevent the company from succeeding as well as it might otherwise

 

 

 

  1. Arthur Andersen’s double role with Enron represented a conflict of interest because

.

Arthur Andersen made too much of a profit from one client

Enron did not reveal everything to Arthur Andersen that they should have

Arthur Andersen had incentive not to make criticisms that would hurt their consulting role

Arthur Andersen did not know their client well enough to be both consulting and auditing them

 

 

Essay Questions

What is a trade secret, and why is the government invested in helping companies protect them?

 

What are the ethical and legal limits that have been placed on competitor intelligence

gathering by companies?

 

How do conflicts of interest arise in business, and what can be done to prevent them?

 

Chapter 6 Privacy

SUGGESTED DISCUSSION PROMPTS

What are some definitions of privacy? Is privacy a right unto itself, or is it a special case of a more general kind of right?

 

Which do you think is the most sound ethical basis on which to defend privacy?

 

To what extent do you think companies’ gathering of personal employee information is justifiable?

 

Why is it ethically objectionable for companies to share employee information with outsiders?

 

In what ways has privacy on the internet become a major concern?

 

Multiple Choice Questions

 

Choose the BEST possible answer for each of the following.

The Freedom of Information Act of 1966 had the unforeseen consequence of

.

making government more transparent in their dealings

making corporations more transparent in their dealings

compromising confidentiality about private individuals

making information more readily available to individuals

 

 

Employers feel the need to monitor their employees at work primarily .

to influence them

to keep them safe

to be competitive

to maintain productivity

 

 

Employers may want to use psychological testing on employees primarily .

to gauge suitability for a job

to detect potential sources of trouble

for statistical reporting purposes

to test for intelligence

 

 

 

One of the biggest issues in consumer privacy is when .

companies find out what customers most like

companies sell their collected information to other companies

companies use databases to store customer information

companies keep personal information on employees

 

 

 

The ethical meaning of privacy originates from .

the Bill of Rights

 

he idea of freedom of thought

 

the twentieth century

 

the use of contraceptives

 

 

 

  1. Which of the following is the best definition of privacy?

when certain facts are not known to others

when information about ourselves is under our control

to be free of to make choices

to be free of supervision

 

 

 

7

. Utilitarian arguments for privacy focus on .

A

. the rights of individuals

B

. the harm in violation

breaking the law

justice

 

 

 

A Kantian argument for privacy focuses on .

not harming people

contractual obligations

violations of the law

a setting of trust

 

 

 

An example of an acceptable use of employees’ medical information would be

.

for reporting to the government

to determine eligibility for employment

for determining benefits that would be needed

to gather companywide statistics to share with employees

 

 

 

10

. One way to protect people’s privacy on the internet is to .

  1. allow them to opt out of information collecting
  2. give them choices as to what will be done with their information
  3. only share information that people voluntarily provide
  4. only use information in a way that helps the free market

 

 

 

Essay Questions

Describe ways in which the right of privacy to be protected has been argued.

 

What are some reasons that employers collect personal employee information? In what ways might such collection raise ethical problems?

 

What are some principles of internet privacy, and how are they implemented?

 

 

Chapter 7 Discrimination and Affirmative Action

SUGGESTED DISCUSSION PROMPTS

Define discrimination. What forms of discrimination are unethical?

 

Is sexual harassment a form of discrimination, or should it be identified as something else?

 

What causes cases of sexual harassment? Can it be prevented?

 

What do you think provides the best reason for thinking that discrimination is wrong?

 

Is affirmative action a sufficient measure for correcting discrimination? Is it necessary?

 

Multiple Choice Questions

 

Choose the BEST possible answer for each of the following.

Discrimination is widely considered unethical largely because it is .

unjust

illegal

harmful

merited

 

 

 

It is not generally illegal to discriminate on the basis of .

sex

age

ability

nationality

 

 

 

Employers can be found guilty of discrimination .

only if they intend to discriminate

any time an employee feels discriminated against

if the effects were just as though discrimination had occurred

even if they have not transgressed a particular law

 

 

 

Religious discrimination is unique in that it that can involve .

prejudice

 

pecific practices

 

things beyond an employer’s control

 

abilities

 

 

 

Sexual harassment can be a form of discrimination .

when it involves prejudice

only when it is a condition for employment

any time sex is not a qualification

D

. when it involves a hostile work environment

 

 

 

  1. A utilitarian in opposition to discrimination would say that discrimination is wrong because .

it makes productivity suffer

it violates the right to privacy

it violates human dignity

it is unfair

 

 

A nonconsequentialist might argue against discrimination on the basis of .

the disadvantage it gives to minorities

the harm that it does to society

its damage to the economy

its being unjust

 

 

 

Affirmative action plans are generally aimed towards .

achieving certain quotas

rectifying past injustices

giving greater opportunities

correcting prejudice

 

 

 

One who supports affirmative action on the basis of compensation would argue on the basis of .

fairness

justice

benefits

consequences

 

 

10

. On what basis might one argue that affirmative action hurts those it is designed to help?

It ensures minorities are hired on a basis other than their qualifications.

People can always find ways to get around affirmative action policies.

Affirmative action programs could give minorities too many positions.

It is unjust to those who are qualified but not minorities.

 

 

Essay Questions

Why is sexual harassment often considered a form of discrimination?

 

How do people draw the line between job specifications that require discrimination on the one hand, and unfair discrimination on the other?

 

Describe a case of affirmative action and the type of discrimination that it would be

intended to overcome.

 

 

Chapter 8 Employment Rights

SUGGESTED DISCUSSION PROMPTS

Is the employment-at-will system a good one? What is the best reason for thinking so?

 

When might the principles of employment-at-will conflict with other principles?

 

What restrictions are permissible for employers to place on freedom of expression at work?

 

To what extent should workers enjoy the right to participation in their company?

 

What should workers’ wages be compared to in order to determine if they are just?

 

Multiple Choice Questions

 

Choose the BEST possible answer for each of the following.

 

“Employment at will” means that .

a worker can choose his or her job

an employee can leave the company any time

an employer can release an employee at any time

a worker has rights to the products of his or her labor

 

 

 

The argument for property rights in labor assumes that .

a worker has the rights to their labor

an employer has the rights to its employees’ time

an employer has the rights to its employees’ labor

an employer can regulate its employees’ use of time

 

 

 

The utilitarian argument for employment at will relies on the idea that .

there is an implicit contract of employment

 

people own the products of their labor

 

mployers and employees both benefit from it

 

employees have the right to freedom of expression

 

 

The notion of due process can be used to argue against employment at will because

.

employees should own the products of their labor

employment at will can be arbitrary

property rights are most fundamental

due process requires a written contract

 

 

People are sometimes afraid to express their views at work because .

it may be against the law

B

. they do not want to stand out

C

. they are afraid of what others might think

D

. they are afraid of losing their jobs

 

 

 

  1. The Supreme Court has found that government workers .

have a right to free speech about job-related matters

cannot speak to the public about their jobs

have unlimited free speech since they are government workers

have different free speech rights from other employees

 

 

 

Workplaces are “democratic” insofar as .

companies are structured like democracies

workers are represented in company decisions

companies are not arranged hierarchically

companies are not headed by a single individual

 

 

 

Ethical arguments for democracy in the workplace are mainly based on .

productivity

organizational effectiveness

personal health

legitimizing power

 

 

 

Considerations of fair wages involve .

absolute standards

only comparative measures

employers’ preferences

redistribution of wealth

 

 

 

10

. Proponents of minimum wage who argue that extremely low wages are exploitative assume that .

employers have no choice but to offer low wages

jobs with other levels of wages are available

employers could offer the same jobs at higher wages

workers will not take just any job they can get

 

 

Essay Questions

How does the concept of property rights apply to at-will employment?

 

What are the limitations to the employment-at-will system, and how do they arise?

 

What is the best reason for adopting a minimum wage policy? What is the best argument against that reason?

 

Chapter 9 Occupational Health and Safety

SUGGESTED DISCUSSION PROMPTS

Should employers be held responsible for all and any workplace hazards?

 

Are cost-benefit analyses acceptable measures of occupational safety?

 

Do you think that employees who accept hazardous jobs could be said to be coerced in doing so?

 

What is the best justification that can be given for employees’ right to know about occupational hazards?

 

What is the difficult dilemma faced by companies whose working conditions pose a

danger to fetuses?

 

Multiple Choice Questions

 

Choose the BEST possible answer for each of the following.

The distinction between safety and health is based on the distinction between

.

intention and accident

accidents and illness

disease and wellness

ethics and law

 

 

Utilitarian reasoning in approaching workplace hazards might be based on .

legal precedent

the rights of workers

employers’ responsibilities

cost-benefit analysis

 

 

Employers can defend themselves from responsibility for a workplace accident by claiming that .

he accident was preventable

 

the worker knew the risks

 

the worker was negligent

 

the accident was unavoidable

 

 

Part of the reason that employees can be said to voluntarily assume risk for hazardous jobs is that .

the jobs require special skills

the pay is higher

information is always available about the jobs

many people are willing to do the jobs

 

 

 

  1. In determining whether workers assume a risk by choice, a disanalogy to a case of coercion is that .

A

. a worker is not forced to accept a job

B

. other jobs may be more hazardous

C

. there may be other people willing to accept the job

not all jobs are hazardous

 

 

In order to be able to work in a hazardous environment, employees must .

have the right to refuse hazardous conditions

be able to sue their employers

be able to quit their jobs

have the right to share information

 

 

The standard of justified belief that gives an employee the most leeway in having the right to refuse hazardous work is based on .

reasonable beliefs

expert opinion

objective conditions

subjective judgment

 

 

The drawback for the subjective standard of hazard assessment on the part of the employee is that .

the employee may not be the one in most danger

the employee may not have expert judgment

employees will be looking after their own interests

employers cannot be counted on to look after their employees’ interests

 

 

If employers maintain that they can protect employees from hazards better than employees can, this is incompatible with employees’ .

dignity

right to work

autonomy

safety

 

 

10

. Sex discrimination may apply to jobs that post fetal health risks because .

women in certain jobs may be subject to sexual harassment

pregnant women may have certain skills that others lack

pregnant women may decide to take less-hazardous jobs

employers may bar women from holding certain jobs

 

 

Essay Questions

Explain the concept of a direct cause as applied to workplace safety. How are employers held responsible for direct causes of accidents and hazards?

 

Explain the argument that workers assume the risk of hazardous jobs, and describe how the argument can be challenged.

 

Describe how the issue of sex discrimination applies to jobs that pose health risks to developing fetuses.

 

Chapter 10 Marketing, Advertising, and Product Safety

SUGGESTED DISCUSSION PROMPTS

Are there any other cardinal marketing values besides well-being, fairness, and freedom? Or do other values fall under one of those three?

 

What specific ethical issues arise from the point of view of the salesperson?

 

Are prices ever really unfair? Why or why not?

 

Is the FTC correct to hold truth in advertising to a standard of an “ignorant” consumer?

 

What is wrong with subliminal persuasion that is not an issue with other forms of

 

persuasion?

Multiple Choice Questions

 

Choose the BEST possible answer for each of the following.

 

The need for fairness in marketing arises from the need for .

transactions to be beneficial to everyone

transactions to not harm anyone

information to be freely available to anyone

consumers to get what they want

 

 

 

The requirement for freedom can be transgressed in cases in which .

consumers do not get what they think they are getting

a company does not market its product at a competitive price

a product is unhealthful for consumers

consumers in a target market are not qualified to make rational choices

 

 

The requirement of truthful labeling is an instance of the marketing value of

.

ell-being

 

fairness

 

freedom

 

health

 

 

 

Pricing has to remain competitive so that

companies can maximize their profits

workers get paid fair wages

consumers are free to choose the best exchange

D

. consumers get as high-quality products as possible

 

 

 

5

. Full-line forcing by a manufacturer to a retailer is ethically questionable because

.

A

. it drives prices higher

B

. it limits consumer choice

it makes consumers dependent on one brand

it prevents consumers from obtaining adequate information

 

 

 

  1. The easiest way for advertising to be unethical is if it is .

untruthful

expensive

harmful

tacky

 

 

 

By what measure is it determined whether an ad causes a false belief?

if it deceives an ignorant consumer

if it substantially interferes with a decision to buy

whether it contains any factually incorrect information

whether it is a product a reasonable person would want to buy

 

 

 

The dependence effect is an ethical danger zone because .

prices may end up artificially high

wants are created by the producer instead of the consumer

there is insufficient competition between producers

products may end up being marketed to the wrong people

 

 

 

One possibly unintended effect of advertising is that it .

trains us to prefer lower prices

diverts producer’s budgets from other things

molds us as the types of consumers we are

enhances our consumer awareness

 

 

 

10

. In product safety theory, manufacturers have to exercise due care, or else .

they could be outcompeted by another manufacturer

they would have to find new customers

they would have to prove an expert analysis

they could be fined or sued

 

 

Essay Questions

Why is freedom an important ethical issue in marketing? Describe how the consumer’s freedom may be transgressed by marketing.

 

What kinds of laws have been passed to protect the consumer from unethical marketing and sales practices?

 

Explain the basis of privity. What are the limitations to relying on privity as a basis of consumer recourse?

 

Chapter 11 Ethics in Finance

SUGGESTED DISCUSSION PROMPTS

How does the field of finance provide intrinsic motivation for deception?

 

Is it unethical for a financial broker to generate commissions in a way that neither helps nor harms their client?

 

How does one tell when legitimate transactions become a case of “churning”?

 

What does it mean for financial markets to be “fair”?

 

What ethical rules does insider trading involve breaking?

 

Multiple Choice Questions

 

Choose the BEST possible answer for each of the following.

 

Financial dealings most fundamentally require the value of .

freedom

time

trust

competence

 

 

 

Financial service people are most fundamentally in the business of selling .

savings

 

nvestments

 

stocks

 

bonds

 

 

Deception is an ever-present danger in financial selling mostly because .

the customer has to rely on the seller for all of the relevant information

financial salespeople often do not know very much about the securities they sell

there are not many laws that regulate financial services

no one ever has all the information at a given time

 

 

A financial broker may be tempted to “churn” because by doing so they can

.

sell more shares

B

. artificially inflate yields

C

. get more customers

D

. earn additional commissions

 

 

 

  1. Due to the wide variety of financial products available, it is incumbent on the broker to help the customer select those that are .

suitable

liquid

cheapest

least risky

 

 

Doing business in the financial markets most fundamentally presupposes that

will be respected.

power

fairness

freedom

ideas

 

 

 

Efficiency in financial markets means that .

social well-being will be maximized

all investments will keep their value

overall yields will increase

fairness will always be maintained

 

 

 

If people in financial markets have unequal access to information, .

it is always unfair

this can happen in spite of their expertise

it should not impact their ability to make good decisions

a law has probably been broken

 

 

Agreements reached in financial trading are generally considered fair as long as

.

everyone profits from the exchange

all traders involved are professionals

everyone has the same information

they are reached through good-faith bargaining

 

 

10

. Takeover offers must now be accompanied by enough time so that .

  1. shareholders have opportunity to consider the offer carefully
  2. consumers can decide whether to buy stock in the company
  3. abusive tender offers can be rescinded by government action
  4. there can be an orderly transition of control

 

 

Essay Questions

Explain why in the context of finance it is so important that customers be empowered to make rational choices.

 

 

Describe an example of the kind of transaction that a financial advisor might make that does not benefit the client.

 

Describe how the ideal of fairness plays out in the financial markets.

 

Chapter 12 Corporate Social Responsibility

SUGGESTED DISCUSSION PROMPTS

What does it mean for a corporation to be “socially responsible”?

 

To what extent do you think companies are motivated to be socially responsible for publicity reasons?

 

In what ways would a company that only does what the law requires not be living up

to CSR?

 

What is corporate citizenship, and how does it relate to corporate social responsibility?

 

How can companies be profitable and pursue CSR at the same time?

 

Multiple Choice Questions

 

Choose the BEST possible answer for each of the following.

 

CSR as a worldwide movement has over the years been .

mainly manifested among medium-sized companies

mostly confined to the United States

increasingly come under criticism

gaining increased acceptance

 

 

 

Milton Friedman argued that CSR _.

s harmful to the community

 

fails to serve the interests of company’s stockholders

 

is acceptable if carried out by the government

 

would be a passing fad

 

 

 

A company’s ethical responsibilities .

bring it in line with social norms

are a subset of its legal responsibilities

always directly advance its profit making

D

. are the same as its economic responsibilities

 

 

 

4

. CSR as exercised towards a company’s employees may include .

providing safe working facilities

providing paid time off

improving employees’ quality of life

abiding by minimum-wage laws

 

 

 

Corporate citizenship is an area of CSR that always involves .

specific ways a company treats its employees

a company’s awareness of its broader social context

a company’s products that it produces

a company’s involvement in the government

 

 

 

  1. The normative case for CSR is now usually based on the of CSR.

obligation

permissibility

legality

cost

 

 

 

According to the “classical view,” companies .

have a responsibility to their environment

can promote CSR without sacrificing profitability

are not essentially different from other types of organizations

exist for reasons other than promoting social responsibility

 

 

 

Friedman supported socially responsible corporate decisions as long as they

.

are not

benefit society at large

further a company’s self-interest

do not break the law

 

 

Friedman argued that social spending by corporations is a form of taxation on

.

the public

the employees

the shareholders

the board of directors

 

 

10

. Companies that pursue CSR are most likely to gain a competitive advantage if its CSR efforts .

target popular special-interest groups

are integrated into a corporate strategy

are pursued as frugally as possible

involve as many employees as possible

 

 

Essay Questions

Describe the current status of corporate social responsibility as an expectation for businesses.

 

Describe the different ways in which companies are motivated to be socially responsible.

 

What was Friedman’s argument against corporate social responsibility? What are its weaknesses?

 

 

Chapter 13 Corporate Governance and Accountability

SUGGESTED DISCUSSION PROMPTS

Is a corporation’s charitable giving a corporate function, or is it something extra?

 

Do corporations exist merely to facilitate transactions, or is there some other reason for their being?

 

What advantages does the stakeholder theory of corporate control have over the

shareholder theory?

 

What should corporations emphasize and incorporate in their ethics programs?

 

What is the role of federal sentencing guidelines in enhancing fairness?

 

Multiple Choice Questions

 

Choose the BEST possible answer for each of the following.

 

Shareholders have governance over a company in return for .

influence

 

apital

 

prestige

 

advertising

 

 

 

The property rights theory of corporations has it that incorporation .

is a general aspect of ownership

is a matter of owning enough capital

should be accompanied by rules

is anyone’s right

 

 

The social institution theory of corporations has it that incorporation .

A

. is an essentially public matter

B

. should always be charted by the government

C

. should be handled democratically

is a matter best left to shareholders

 

 

 

Property can generally be defined as .

some physical object

the right to vote

power over another person

a set of rights

 

 

 

Adolf Berle argued against public responsibility of a corporation on the basis of

.

the rights of stakeholders

limiting the power of shareholders

excessive managerial power

corporations’ impact on society

 

 

 

  1. The contractual theory of corporations states that .

corporations have an implicit contract with society at large

corporations make transactions easier than they otherwise would be

individuals would be able to do business most easily without contracts

when individuals pool their assets they are more likely to act with social responsibility

 

 

The central argument for shareholder control of a company states that .

companies without shareholders are not likely to be profitable

shareholders have the most to lose in their company involvement

shareholders are more likely than management to operate a company profitably

management can only control a company insofar as they are paid by it

 

 

 

According to stakeholder theory, .

stakeholders invest the most capital in a corporation

a company ought to be run to the benefit of everyone involved in it

everyone involved in a company should be treated as shareholders

ownership of a company should be divided among all stakeholders

 

 

 

Unethical business conduct usually arises from .

ignorance of the law

unscrupulous individuals acting alone

attempts to cheat shareholders of their dividends

the way that an organization as a whole operates

 

 

 

10

. An effective corporate ethics program should include .

standards that have been communicated to all levels

oversight given to a few individuals

training in all of the relevant laws

reporting of all procedures to the public

 

 

 

Essay Questions

What was the nature of the change in corporate ownership that occurred in the early 20th century?

 

Explain Dodd’s argument that corporations have a social service.

 

Explain the reasons why shareholder theory of control better accounts for interest protection than stakeholder theory.

 

 

Chapter 14 International Business Ethics

SUGGESTED DISCUSSION PROMPTS

Should a corporation try to impose its values on corporations from other cultures?

Why or why not?

 

Can corporations across cultures potentially agree on all ethical issues, or are some differences insurmountable?

 

How can corporations operate internationally so as not to place other peoples at a

 

disadvantage?

Why is the issue of bribery likely to arise when doing business in certain international settings?

 

hat can and should corporations do to curtail human rights abuses in international operations?

 

Multiple Choice Questions

 

Choose the BEST possible answer for each of the following.

Why is it not ethically sufficient for multinational corporations to simply follow the laws of the countries in which they do business?

Unethical practices may be legal in other countries.

Corporations are bound by the laws of their home country.

Some of the laws in foreign nations may be unenforceable.

Laws in other countries may unduly restrict business.

 

 

The relativist view on confronting different systems of business ethics says that

.

the same ethics should be practiced in other countries as at home

B

. ethical systems do not vary greatly between different countries

C

. one should follow whatever practices are accepted in a certain place

D

. no one knows what the ethically correct way of doing business is

 

 

3

. The absolutist view on confronting different systems of business ethics ignores the fact that .

A

. people may disagree over the correct ethical standards

B

. ethical standards come from cultural views current in a location

C

. ethical standards in other countries may not be the same as those one is used to

D

. one may have to lower one’s standards in order to business effectively

 

 

4

. The absolutist position on morality places the responsibility for setting standards on

.

A

. the local people where business id conducted

B

. the visitor to a foreign country

C

. the government of the country where business is conducted

D

. a single impartial and ethically ideal observer

 

 

 

  1. The practice of respecting basic rights in international transactions ensures that

.

A

. a moral minimum will be respected

B

. no ethical transgressions will take place

C

. everyone will agree on all ethical standards

D

. everyone will understand each other culturally

 

 

6

. One of Richard DeGeorge’s guidelines for multinational corporations is that .

A

. they should carry out actions that benefit their home country

B

. they should conform to the ethical expectations of the local culture

C

. they should pay their employees the same as they pay their domestic employees

D

. they should do more good than harm for the host country

 

 

7

. Justice must be strongly considered in international operations mainly because

.

A

. multinational corporations often are not familiar with local laws

B

. foreign investment most often benefits the rich rather than the poor

C

. globalized businesses tend to make more profits than other companies do

D

. multinational corporations have a duty to aid developing countries

 

 

8

. An internationally agreed-upon code of ethics includes an emphasis on .

A

. profitability

B

. human rights

C

. politics

D

. abiding by the law

 

 

9

. Wage standards in developing countries are often very low mainly because .

A

. wages are not set by the market

B

. developing countries do not have as many factories

C

. local politics prevents workers from campaigning for higher wages

D

. workers are willing to work for much less than someone comparable in the United States

 

 

 

1

  1. One of the unjust consequences of bribery is that .

A

. bribes only help bureaucracies

B

. bribes are disproportionately paid by richer corporations

C

. it leads to greater economic inequality

D

. it enriches multinational corporations

 

 

Essay Questions

. Compare the approaches of absolutism versus relativism for understanding cultural differences in ethics.

 

. Describe the codes of ethics that are understood to apply to all forms of international business.

 

. Explain why bribery is unethical.