1. Define business ethics.
ANSWER: Ethics is the study of right and wrong and of the morality of the choices individuals
make. Business ethics, more
... [Show More] specifically defined, is the application of moral standards
to business situations.
POINTS: 1
DIFFICULTY: Easy
REFERENCES: p. 34
LEARNING OBJECTIVES: FOBU.PRIDE.15.2-1
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: Business Ethics Defined
KEYWORDS: Bloom's: Knowledge
2. Why are fairness and honesty in business important ethical concerns? Give examples.
ANSWER: Fairness and honesty in business are considered as two important ethical concerns. In
addition to obeying all laws and regulations, businesspeople are expected to refrain
from knowingly deceiving, misrepresenting, or intimidating others. The
PricewaterhouseCoopers LLP and Anderson’s Ark and Associates cases prove that
the lack of fairness and honesty also is an expensive proposition.
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: p. 35
LEARNING OBJECTIVES: FOBU.PRIDE.15.2-2
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: Ethical Issues
KEYWORDS: Bloom's: Comprehension
3. What are the major ethical issues businesspeople face?
ANSWER: Challenges to being fair and honest, temptations of placing personal welfare above the
welfare of the organization, and conflicts of interest are among common ethical issues
that businesspeople may regularly face. Business communications, especially
advertising, can also present ethical questions for employees within organizations.
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: pp. 34-36
LEARNING OBJECTIVES: FOBU.PRIDE.15.2-2
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: Ethical Issues
KEYWORDS: Bloom's: Comprehension
4. What are the three major sets of factors believed to affect ethical behavior in an organization?
ANSWER: Individual factors such as individual knowledge of issues, personal values, and personal
goals influence the level of ethical behavior in an organization. Social factors such as
cultural norms, actions and decisions of co-workers, significant others, and the use of
the Internet affect ethical behavior. Also, the amount of freedom an organization gives
an employee to behave unethically affects ethical behavior in an organization.
POINTS: 1
DIFFICULTY: Easy
REFERENCES: pp. 37-38
LEARNING OBJECTIVES: FOBU.PRIDE.15.2-3
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: Factors Affecting Ethical Behavior
KEYWORDS: Bloom's: Knowledge
5. What are some of the social factors that affect ethical decisions?
ANSWER: Cultural norms is an important factor in considering ethical decision making. The
actions and decisions of coworkers impact other employees’ sense of business
ethics. Significant others--spouses, friends, and relatives--also can affect an
employee’s perception of ethical and unethical decisions in the workplace. Also, the
use of the Internet by employees in a business setting is also an important social
factor that affects ethical decision making.
POINTS: 1
DIFFICULTY: Easy
REFERENCES: pp. 37-38
LEARNING OBJECTIVES: FOBU.PRIDE.15.2-3
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: Factors Affecting Ethical Behavior
KEYWORDS: Bloom's: Knowledge
6. How can the government encourage ethical behavior? Give an example.
ANSWER: The government encourages ethical behavior by legislating regulations. One of the
important landmark regulations that the government has created is the SarbanesOxley Act of 2002 which deals with corporate responsibility, conflicts of interest, and
corporate accountability.
POINTS: 1
DIFFICULTY: Easy
REFERENCES: p. 38
LEARNING OBJECTIVES: FOBU.PRIDE.15.2-4
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: Encouraging Ethical Behavior
KEYWORDS: Bloom's: Knowledge
7. Define a code of ethics. Do codes cover every business situation?
ANSWER: A code of ethics is a written guide to acceptable and ethical behavior in an
organization. A code outlines uniform policies, standards, and punishments for
violations. A code of ethics cannot possibly cover every situation that might arise in an
organization. An environment in which employees recognize the importance of
complying with the written code must also be in place.
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: p. 39
LEARNING OBJECTIVES: FOBU.PRIDE.15.2-4
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: Encouraging Ethical Behavior
KEYWORDS: Bloom's: Comprehension
8. What might be the personal and social consequences of whistle-blowing within one's own firm?
ANSWER: Whistle-blowing, the practice of informing the press or government officials about
unethical practices within one’s organization, could impact the employee who blew the
whistle through loss of his or her job even though the Sarbanes-Oxley Act of 2002
protects whistle-blowers who report corporate misconduct. Retaliation by executives
is a criminal offense but, nevertheless, retaliation does occur.
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: p. 41
LEARNING OBJECTIVES: FOBU.PRIDE.15.2-4
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: Encouraging Ethical Behavior
KEYWORDS: Bloom's: Comprehension
9. What are a few examples of companies acting socially responsible?
ANSWER: Student answers will vary. Some possible answers include Walmart’s donation of $20
million in cash, 100 truckloads of free merchandise, and food for 100,000 meals after
Hurricane Katrina, General Mills’ foundation that awards millions of dollars in grants
to community organizations, and Dell’s foundation that supports a wide range of
programs that benefit children in Dell’s principal U.S. locations.
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: p. 42
LEARNING OBJECTIVES: FOBU.PRIDE.15.2-4
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: Social Responsibility
KEYWORDS: Bloom's: Knowledge
10. Define the doctrine of caveat emptor.
ANSWER: Caveat emptor is a Latin phrase meaning “let the buyer beware.” During the early
1900s, business acted primarily without oversight by government regulation and
consumers were left to their own devices to determine if a product or service was
what was expected and what was portrayed.
POINTS: 1
DIFFICULTY: Easy
REFERENCES: p. 45
LEARNING OBJECTIVES: FOBU.PRIDE.15.2-5
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: The Evolution of Social Responsibility in Business
KEYWORDS: Bloom's: Knowledge
11. How does the economic model ofsocial responsibility differ from the socioeconomic model ofsocial responsibility?
ANSWER: The economic model ofsocial responsibility ascribes that society benefits most when
business is left alone to produce and market profitable products that society needs.
This contrasts sharply with the socioeconomic model of social responsibility which
places emphasis not only on profits but also on the impact of business decisions on
society.
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: pp. 46-47
LEARNING OBJECTIVES: FOBU.PRIDE.15.2-5
NATIONAL STANDARDS: United States - AACSB: Reflective Thinking
TOPICS: Two Views of Social Responsibility
KEYWORDS: Bloom's: Analysis
12. What would proponents of the socioeconomic model argue to support their position?
ANSWER: Since a corporation is a creation of society and is deemed a part of society, a
corporation must act as a good citizen or society has the right to demand changes by
that entity. Businesses have a responsibility to not only stockholders but also to
customers, employees, suppliers, and the general public.
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: p. 47
LEARNING OBJECTIVES: FOBU.PRIDE.15.2-5
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: Two Views of Social Responsibility
KEYWORDS: Bloom's: Comprehension
13. What would opponents of the socioeconomic model argue to support their position?
ANSWER: Businesses are most functional and successful and of most benefit to society when
left alone to produce and market profitable products and services that society needs
and wants. Social responsibility is someone else’s job and is not a primary
responsibility of a business. A firm is legally obligated to act in the economic interest
of its stockholders and successful businesses pay taxes that are used to meet the
needs of society.
POINTS: 1
DIFFICULTY: Easy
REFERENCES: pp. 47-48
LEARNING OBJECTIVES: FOBU.PRIDE.15.2-5
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: Two Views of Social Responsibility
KEYWORDS: Bloom's: Comprehension
14. Define consumerism. How have the rights of consumers changed since 1930?
ANSWER: Consumerism consists of all activities undertaken to protect the rights of consumers.
The three primary categories of the consumer movement include environmental
protection, product performance and safety, and information disclosure. Before the
1930s, workers, consumers, and government had very little influence on business
activities. Consumerism since the 1930s has shown consumers that they do have
rights and can expect businesses to meet environmental, safety, as well as other
expectations.
POINTS: 1
DIFFICULTY: Challenging
REFERENCES: pp. 48; 45
LEARNING OBJECTIVES: FOBU.PRIDE.15.2-5
NATIONAL STANDARDS: United States - AACSB: Reflective Thinking
TOPICS: Consumerism; The Evolution of Social Responsibility in Business
KEYWORDS: Bloom's: Analysis
15. Explain the six basic rights of consumers.
ANSWER: The six basic rights of consumers include the right to safety, the right to be informed,
the right to choose, and the right to be heard--all rights asserted in President
Kennedy’s Consumer Bill of Rights. Two additional rightsthe right to consumer
education and the right to service--were added in 1975 and 1994 respectively.
POINTS: 1
DIFFICULTY: Easy
REFERENCES: pp. 48-50
LEARNING OBJECTIVES: FOBU.PRIDE.15.2-7
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: Consumerism
KEYWORDS: Bloom's: Knowledge
16. What are the three major consumerism forces today?
ANSWER: The three major consumerism forces include individual consumer advocates and
organizations, consumer education programs, and consumer laws. Consumer
advocates and organizations take it upon themselves to protect the rights of
consumers. Consumer education programs attempt to educate consumers to make
wiser purchasing decisions. Numerous consumer laws have contributed to major
advances in consumerism.
POINTS: 1
DIFFICULTY: Easy
REFERENCES: p. 50
LEARNING OBJECTIVES: FOBU.PRIDE.15.2-7
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: Consumerism
KEYWORDS: Bloom's: Comprehension
17. What is an affirmative action program? Be certain to detail the objectives of such programs in your answer.
ANSWER: An affirmative action program is a plan designed to increase the number of minority
employees at all levels within a business. The object of affirmative action programs is
to ensure that minorities are represented within the organization in approximately the
same proportion as in the community within which the organization exists.
POINTS: 1
DIFFICULTY: Easy
REFERENCES: p. 52
LEARNING OBJECTIVES: FOBU.PRIDE.15.2-8
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: Employment Practices
KEYWORDS: Bloom's: Knowledge
18. Why did Congress create the Equal Employment Opportunity Commission?
ANSWER: Congress created the Equal Employment Opportunity Commission, a government
agency with the power to investigate complaints of employment discrimination and
sue firms that practice it, in order to help solve discrimination that occurs against
workers that may not fall within the affirmative action category.
POINTS: 1
DIFFICULTY: Easy
REFERENCES: p. 53
LEARNING OBJECTIVES: FOBU.PRIDE.15.2-8
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: Employment Practices
KEYWORDS: Bloom's: Knowledge
19. Why is pollution of concern to most citizens? Why are some businesspeople particularly concerned about pollution?
ANSWER: Even though environmentalists have been warning society about the dangers of
industrial pollution for several decades, it has only been fairly recently that citizens
have witnessed that pollution can be a threat to life and health. If businesses do not
think it’s their civil and social responsibility to act responsibly in regard to pollution,
federal agencies such as the Environmental Protection Agency will take legal action
to force firms to conform to pollution standards and requirements.
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: pp. 54-55
LEARNING OBJECTIVES: FOBU.PRIDE.15.2-9
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: Concern for the Environment
KEYWORDS: Bloom's: Comprehension
20. Describe the four types of pollution. Who should pay for a clean environment?
ANSWER: The four types of pollution include water, air, land, and noise pollution. Many business
leaders advocate for tax money to be used to clean up the environment and to keep it
clean. They reason behind this is that businesses are not the only polluters and,
therefore, government should be involved in cleanup costs.
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: pp. 55-57
LEARNING OBJECTIVES: FOBU.PRIDE.15.2-9
NATIONAL STANDARDS: United States - AACSB: Reflective Thinking
TOPICS: Concern for the Environment
KEYWORDS: Bloom's: Analysis
21. What sort of information should be included in a social audit? Who would prepare the audit? How would such a
document be used?
ANSWER: A social audit typically includes human resources, community involvement, the quality
and safety of products, business practices, and efforts to reduce pollution and improve
the environment. A program director often prepares a social audit for the firm. A
social audit should be used to evaluate what a business is doing with regard to social
issues and to revise its social responsibility program.
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: p. 58
LEARNING OBJECTIVES: FOBU.PRIDE.15.2-10
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: Implementing a Program of Social Responsibility
KEYWORDS: Bloom's: Comprehension
22. How should social responsibility programs be funded? Explain your answer.
ANSWER: Funding may likely come from one of three sources: (1) pass the cost on to
consumers in the form of higher prices; (2) absorb the cost of the program; or (3) find
government funding through tax reductions or other incentives.
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: p. 59
LEARNING OBJECTIVES: FOBU.PRIDE.15.2-10
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: Implementing a Program of Social Responsibility
KEYWORDS: Bloom's: Comprehension
Excellent Air Incorporated (EAI)
Excellent Air Inc. is a well-known establishment in the airline business. It is currently one of the top firms in the
industry. The company prides itself on good customer service and being concerned with the broader societal good.
EAI management is not only concerned with doing things right, but also with doing the right things. Many of their
decisions reflect this philosophy. Initially, the company had a problem with employees reporting their suspicions
about unethical behavior to the press instead of to EAI management. As a result, the company made sure its
employees knew the firm's guidelines on fixing ethical issues. EAI also developed a code of conduct based on
standards that continue to be upheld within the company. Since the code of conduct has been put in place, there
have been fewer ethical violations.
Although employee salaries at EAI are not as high as those at competing firms, the company experiences very low
employee turnover. The firm has created a corporate culture that not only makes its employees want to stay, but
that also results in higher profits. If EAI can maintain the relationship it has built with its employees and customers,
it will have little difficulty keeping up its remarkable success.
23. Refer to Excellent Air Incorporated. The principles that EAI choose to pride itself on show that the company has
a. a moral minority.
b. cultural diversity.
c. social responsibility.
d. caveat emptor.
e. a social audit.
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: p. 42
LEARNING OBJECTIVES: FOBU.PRIDE.15.2-4
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: Social Responsibility
KEYWORDS: Bloom's: Comprehension
24. Refer to Excellent Air Incorporated. Initially, employees were not willing to go to EAI management with ethical
issues but would instead report them to the press. This is an example of
a. whistle-blowing.
b. a social audit.
c. poor employees.
d. opportunity emptor.
e. a narc.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
REFERENCES: p. 41
LEARNING OBJECTIVES: FOBU.PRIDE.15.2-4
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: Encouraging Ethical Behavior
KEYWORDS: Bloom's: Comprehension
25. Refer to Excellent Air Incorporated. To fix the ethical issue problems, EAI management should have implemented
all of the following guidelines for making ethical decisions except which one?
a. Listen and learn.
b. Identify the ethical issue.
c. Create and analyze options.
d. Create an industry benchmark.
e. Explain your decision and resolve any differences that arise.
ANSWER: d
POINTS: 1
DIFFICULTY: Challenging
REFERENCES: p. 41
LEARNING OBJECTIVES: FOBU.PRIDE.15.2-4
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: Encouraging Ethical Behavior
KEYWORDS: Bloom's: Comprehension
26. Refer to Excellent Air Incorporated. Since the company created its code of conduct, employees have limited ,
or amount of freedom to perform an unethical act.
a. time
b. responsibility
c. moral dilemmas
d. unethical options
e. opportunity
ANSWER: e
POINTS: 1
DIFFICULTY: Challenging
REFERENCES: pp. 39; 41
LEARNING OBJECTIVES: FOBU.PRIDE.15.2-4
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: Encouraging Ethical Behavior
KEYWORDS: Bloom's: Comprehension
27. Refer to Excellent Air Incorporated. EAI's creation of its code of conduct demonstrated its application of moral
standards to business situations, which is also known as
a. moral responsibility.
b. social consciousness.
c. social responsibility.
d. moral consciousness.
e. business ethics.
ANSWER: e
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: p. 34
LEARNING OBJECTIVES: FOBU.PRIDE.15.2-1
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: Business Ethics Defined
KEYWORDS: Bloom's: Knowledge
XYZ Coffee
Nancy is a highly respected person within her community. She is Hispanic in a largely Caucasian-populated area.
Since Nancy was looking for a new job, she went to a new company in the area called XYZ Coffee, where she
applied for a position. After the interview, Nancy felt confident that she would be hired because of her
qualifications. However, she did not get a call back. Initially, Nancy did not think twice about it, but she felt
differently when she visited the same coffee store later to purchase something for a friend. The company had hired
an inexperienced Caucasian male with a history of unemployment. At this point, Nancy was quite aggravated, but
she left the issue alone.
She ended up asking an associate for an espresso machine. The employee informed Nancy where the machine was
located and retrieved it for her. Nancy asked if there were any other espresso machines of higher quality. When
the associate said no, Nancy purchased the item and left. After she gave the gift to her friend, she noticed a much
better quality espresso machine that someone else had given her. Nancy asked where they had purchased it, and
they responded, "XYZ Coffee."
28. Refer to XYZ Coffee. Nancy is a(n) within her community.
a. outcast
b. active member
c. minority
d. bad influence
e. unethical person
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
REFERENCES: p. 52
LEARNING OBJECTIVES: FOBU.PRIDE.15.2-8
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: Employment Practices
KEYWORDS: Bloom's: Comprehension
29. Refer to XYZ Coffee. If Nancy were Caucasian and the company employees were mostly Hispanic, the way she
was treated would be referred to as
a. affirmative action.
b. legal discrimination.
c. simply unethical.
d. reverse discrimination.
e. a perfect match.
ANSWER: d
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: pp. 52-53
LEARNING OBJECTIVES: FOBU.PRIDE.15.2-8
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: Employment Practices
KEYWORDS: Bloom's: Comprehension
30. Refer to XYZ Coffee. Before he got his job, another description for the employee who was hired over Nancy
would be
a. hard-core unemployed.
b. minority.
c. whistle-blower.
d. caveat emptor.
e. consumerist.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
REFERENCES: pp. 50-52
LEARNING OBJECTIVES: FOBU.PRIDE.15.2-8
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: Employment Practices
KEYWORDS: Bloom's: Comprehension
31. Refer to XYZ Coffee. Which basic consumer right was infringed when Nancy bought the espresso machine?
a. The right to safety
b. The right to be heard
c. The right to service
d. The right to respect
e. The right to choose
ANSWER: e
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: p. 49
LEARNING OBJECTIVES: FOBU.PRIDE.15.2-7
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: Consumerism
KEYWORDS: Bloom's: Comprehension
32. Refer to XYZ Coffee. Nancy's right to product options in buying an espresso machine is known as
a. caveat emptor.
b. consumerism.
c. affirmative action.
d. social audit.
e. business ethics.
ANSWER: b
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: p. 48
LEARNING OBJECTIVES: FOBU.PRIDE.15.2-7
NATIONAL STANDARDS: United States - AACSB: Reflective Thinking
TOPICS: Consumerism
KEYWORDS: Bloom's: Application
33. The Jackson Springs Coal Mine recently discovered that the mine was contaminating the local drinking water.
Cleaning up the mine and the surrounding areas would probably bankrupt the mine, causing the loss of hundreds of
local jobs, but doing nothing would endanger the health of the community. The mine faces a serious decision.
a. business
b. ethical
c. environmental
d. social responsibility
e. cost
ANSWER: b
POINTS: 1
DIFFICULTY: Moderate
REFERENCES: p. 34
LEARNING OBJECTIVES: FOBU.PRIDE.15.2-1
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: Business Ethics Defined
KEYWORDS: Bloom's: Comprehension
34. Business ethics
a. is laws and regulations that govern business.
b. is the application of moral standards to business situations.
c. do not vary from one person to another.
d. is most important for advertising agencies.
e. is well-defined rules for appropriate business behavior.
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
REFERENCES: p. 34
LEARNING OBJECTIVES: FOBU.PRIDE.15.2-1
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: Business Ethics Defined
KEYWORDS: Bloom's: Knowledge [Show Less]