Business Law Text and Cases Legal, Ethical Global and Corporate Environment 12th Edition by Kenneth W. Clarkson - Test Bank Instant Download - Complete Test Bank With Answers Sample Questions Are Posted Below Chapter 5 Ethics and Business Decision Making N.B.: TYPE indicates that …
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Business Law Text and Cases Legal, Ethical Global and Corporate Environment 12th Edition by Kenneth W. Clarkson – Test Bank
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Sample Questions Are Posted Below
Chapter 5
Ethics and Business
Decision Making
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N.B.: TYPE indicates that a question is new, modified, or unchanged, as follows.
N A question new to this edition of the Test Bank. + A question modified from the previous edition of the Test Bank. = A question included in the previous edition of the Test Bank. |
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true/false questions
A1. Ethics is the branch of philosophy that focuses on what constitutes right and wrong behavior.
ANSWER: T PAGE: 93 TYPE: =
A2. Business ethics focuses on ethical behavior in the business world.
ANSWER: T PAGE: 93 TYPE: =
A3. An action may be legal and ethical.
ANSWER: T PAGE: 94 TYPE: N
NAT: AACSB Analytic AICPA Critical Thinking
A4. The legality of an action is always clear.
ANSWER: F PAGE: 94 TYPE: =
NAT: AACSB Analytic AICPA Legal
A5. Corporations can be perceived as owing ethical duties to groups other than their shareholders.
ANSWER: T PAGE: 94 TYPE: =
NAT: AACSB Ethics AICPA Critical Thinking
A6. The minimal acceptable standard for ethical behavior is compliance with the law.
answer: T PAGE: 94 TYPE: =
NAT: AACSB Analytic AICPA Critical Thinking
A7. Business ethics is consistent only with short-run profit maximization.
ANSWER: F PAGE: 94 TYPE: =
NAT: AACSB Ethics AICPA Critical Thinking
A8. Focusing on a firm’s short-term profits without considering the company’s long-term needs may be acting unethically.
ANSWER: T PAGE: 94 TYPE: N
NAT: AACSB Ethics AICPA Critical Thinking
A9. Ethical codes of conduct can set the ethical tone of a firm.
answer: T PAGE: 96 TYPE: =
NAT: AACSB Ethics AICPA Risk Analysis
A10. Setting realistic workplace goals can reduce the probability that employees will act unethically.
ANSWER: T PAGE: 96 TYPE: =
NAT: AACSB Ethics AICPA Risk Analysis
A11. Some companies have set up confidential systems for employees to “raise red flags” about suspected unethical practices.
ANSWER: T PAGE: 98 TYPE: N
NAT: AACSB Ethics AICPA Risk Analysis
A12. Restricting the bonuses that are paid to executives is unethical.
answer: F PAGE: 99 TYPE: N
NAT: AACSB Ethics AICPA Critical Thinking
A13. Ethical reasoning is the process through which an individual rationalizes whatever action he or she chooses to take.
ANSWER: F PAGE: 100 TYPE: =
NAT: AACSB Ethics AICPA Critical Thinking
A14. In ethical terms, a cost-benefit analysis is an assessment of the negative and positive effects of alternative actions on individuals.
answer: T PAGE: 101 TYPE: =
NAT: AACSB Analytic AICPA Risk Analysis
A15. According to utilitarianism, an action that affects the majority adversely is morally wrong.
answer: T PAGE: 101 TYPE: =
NAT: AACSB Ethics AICPA Critical Thinking
A16. It may be unethical for a company with a product that is outlawed in one country to look elsewhere for a market.
answer: T PAGE: 101 TYPE: N
NAT: AACSB Ethics AICPA Critical Thinking
A17. A business firm’s profits may suffer if the firm is not a “good corporate citizen.”
ANSWER: T PAGE: 103 TYPE: N
NAT: AACSB Ethics AICPA Critical Thinking
A18. Businesspersons who would choose to act unethically may be deterred from doing so because of public opinion.
ANSWER: T PAGE: 104 TYPE: =
NAT: AACSB Ethics AICPA Critical Thinking
A19. One guideline to evaluating the ethics of a particular action is to “let your conscience be your guide.”
answer: T PAGE: 104 TYPE: =
NAT: AACSB Analytic AICPA Risk Analysis
A20. Bribery of foreign government officials is both an ethical and a legal issue.
ANSWER: T PAGE: 106 TYPE: =
NAT: AACSB Analytic AICPA Critical Thinking
MULTIPLE-CHOICE questions
A1. John is sales manager for Kleen ‘N Brite Products, Inc. Compared to John’s personal activities, his business activities most likely involve
ANSWER: A PAGE: 93 TYPE: =
A2. Mariah works in the public relations department of New Trends Sales Company. Her job includes portraying New Trends’s activities in their best light. In this context, ethics consist of
answer: B PAGE: 93 TYPE: =
A3. Any decision by the management of Fast-Food Franchise Corporation may significantly affect its
ANSWER: B PAGE: 93 TYPE: =
A4. Peak & Vale Accountants provides other firms with accounting services. Questions of what is ethical involve the extent to which Peak & Vale has
answer: B PAGE: 94 TYPE: =
A5. Housemate, Inc., makes and sells a variety of household products. With a fair amount of certainty, Housemate’s decision makers can predict whether a given business action would be legal in
ANSWER: B PAGE: 94 TYPE: =
A6. Kennedy Capital Corporation provides other firms with funds to expand operations. If Kenney strictly complies with existing laws, the firm will
answer: C PAGE: 94 TYPE: =
A7. Flexo Trucking Company transports hazardous waste. Garn is a Flexo driver, whom the company knows drives longer hours than federal regulations permit. One night, Garn exceeds the limit and has an accident. Spilled chemicals contaminate Hill City’s water source, forcing the residents to move away. Flexo acted unethically because
answer: A PAGE: 96 TYPE: N
A8. Ergonomic Corporation convenes its employees for its managers to announce (1) a new company-wide ethical code of conduct, (2) an ad campaign to publicize the new code, and (3) the discharge of employees who do not adhere to the code. One of the most effective ways to set a tone of ethical behavior within a business organization is
ANSWER: A PAGE: 98 TYPE: N
A9. Lyle, vice-president of sales for Mi-T Electric, Inc., adheres to Judeo-Christian religious ethical standards. With respect to their application, these standards are
ANSWER: A PAGE: 100 TYPE: N
A10. In making business decisions, Glenda, personnel manager for HVAC Maintenance, Inc., applies his belief that all persons have fundamental rights. This is
ANSWER: C PAGE: 101 TYPE: N
A11. Made4U Goods, Inc., asks its employees, many of whom are members of the National Machinists Union, to apply the utilitarian theory of ethics. This theory does not require
answer: D PAGE: 101 TYPE: =
A12. Halley, a lawyer on the staff of International Group, applies the utilitarian theory of ethics in business contexts. Utilitarianism focuses on
answer: C PAGE: 101 TYPE: =
A13. In making decisions for United Merchandising Company, Vance uses a cost-benefit analysis. This is part of
answer: D PAGE: 101 TYPE: =
A14. Chuckie, president of DrinkUp Fresh Beverages, Inc., does not apply utilitarianism to business ethical issues. One problem with utilitarianism is that it
ANSWER: D PAGE: 101 TYPE: =
A15. A common ethical dilemma faced by the management of General Holdings Corporation involves the effect that its decision will have on
ANSWER: A PAGE: 101 TYPE: +
A16. Fealty Credit Corporation asks its employees to evaluate their actions and get on the ethical business decision-making “bandwagon.” Guidelines for judging individual actions include all of the following except
answer: C PAGE: 104 TYPE: N
A17. Spencer Hydraulics Corporation’s ethics committee is asked a business ethics question—should the firm bid low to obtain a contract that it knows it can fulfill only at a higher price? A practical method to investigate and solve this question involves all of the following steps except
ANSWER: A PAGE: 105 TYPE: N
A18. Ethical standards would most likely be considered violated if Retail Mart Corporation deals with a company in a developing nation that
ANSWER: C PAGE: 106 TYPE: N
A19. Bilt-Well Construction Corporation makes a side payment to a government official in Nigeria to obtain a contract. In the United States, this is
ANSWER: A PAGE: 107 TYPE: =
A20. To assist in detecting illegal bribes, Cut Rite Contractors, Inc., and all U.S. companies, must
ANSWER: B PAGE: 107 TYPE: N
ESSAY questions
A1. Ophelia, an executive with Pharma Drug Distribution, Inc., has to decide whether to market a product that might have undesirable side effects for a small percentage of users. How should Ophelia decide whether to sell the product? How does the standard of ethics that is applied affect this answer?
ANSWER: When a corporate executive has to decide whether to market a product that might have undesirable side effects for a small percentage of users but that would be beneficial for most users, the decision turns on the benefit to the many versus the harm to the few. Of course, all possible precautions should be taken to protect the few. A more specific answer depends on which system of ethics is applied.
From a religious duty-based perspective, the answer might be absolute: do not sell the product because some would be harmed, sell the product only to those who would not be harmed, or sell the product with clear warnings of the possible harm. Similar conclusions might be reached through a philosophical, “categorical imperative,” duty-based approach, which would consider the result if every corporation chose to sell the product. A principle-of-rights duty-based approach might likewise come to the same conclusions, reasoning that all persons have a right to life, for example, and that the corporation has an ethical duty to respect that right and act accordingly. From a utilitarian perspective, under a cost-benefit analysis, if the product were sold, it could benefit the greatest number of persons—future and current employees, as well as shareholders, and most consumers. If there was “bad” publicity, and it was adverse enough to reduce sales, however, more persons could benefit from the decision not to market the product. Under any of the different corporate social responsibility theories, the decision whether to market the product would acknowledge the firm’s duty to act ethically and be accountable to society. There might be a balancing of the interests of competing stakeholder groups or a shouldering of the responsibility to behave in a socially beneficial way as a good corporate citizen. Of course, the firm would likely have to accept any legal liability that would arise from its sale of the product.
To apply any of these approaches, the executive might evaluate the situation according to the six guidelines for making ethical business decision. Is the action legal? Is it in line with the company’s rules? If so, is it in accord with the “spirit” of the law, those policies, and one’s conscience? Could it withstand the glare of publicity and satisfy promises made to others? It seems probable that sales of the product would violate the company’s rules—at the least because in the long run the sales could negatively impact corporate profits when some are harmed by the product’s use—and that, thus, the sales could not withstand publicity, promises to others, or any individual’s conscience. Under the five-step procedure to review the ethical conflicts, the first step is to specify the facts, the problem, and the ethical principles at issue. The second step is to discuss potential actions and their effects. The third step is to come to a consensus as to what to do. This consensus should withstand moral scrutiny (the fourth step) and fulfill corporate, community, and individual values (the fifth step). It seems unlikely that a proposed sale of the product would survive the fourth step, under either a duty-based or an outcome-based ethical standard.
PAGEs: 94–96 & 100–106 type: N
A2. Matchless Clothing Company buys clothing assembled by Nantra, Ltd., a foreign firm that employs young children for long hours and low pay. Nantra’s nation does not enforce its child labor laws. Human International Politics (HIP), a political activist organization, discovers Matchless’s connection to Nantra and plans to reveal this information. Before HIP does so, however, Matchless publicly releases the information itself and announces that it is severing its relationship with Nantra. Matchless publicizes its action in its advertising, and the company’s sales and profits increase, apparently as a direct result. Has Matchless acted unethically in any way? From an ethical perspective, is Matchless’s conduct in this situation more important than whatever its motive might be?
ANSWER: Matchless has not acted unethically in publicly releasing the information itself or in severing its relationship with Nantra. Ethical behavior can sometimes generate sufficient good will to warrant practicing it out of a desire for increased profits. By the same token, unethical behavior can sometimes generate enough bad publicity to warrant avoiding it out of the same desire. A business firm’s activities that are perceived as ethical and receive wide publicity can benefit the firm’s owners in the short run-and even in the long run if the firm’s enhanced public image continues to attract more consumers to its products. There is nothing unethical about making a profit. It is the behavior that generates the profit that can be questionable. Business ethics thus has a practical element. A business firm should act in its best interest. A firm interested in profits should also be interested in the public’s opinion. As for a motive beyond the incentive to make money, it can be difficult to determine, especially in the complicated world of business ethics. Thus, conduct is probably the more effective measure of ethical behavior, and consequently more important than motive.
PAGES: 101–104 type: =
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Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
