Business in Action, 6e (Bovee/Thill)

Chapter 4 Business Ethics and Corporate Social Responsibility

1) Ethics are principles and standards of moral behavior that are
accepted by society as "right" or "wrong."
2) All businesses have the capacity to cause harm to employees,
customers, other companies, their communities, and investors.
3) The degree to which information flows freely within an organization
is termed as insider trading.
4) Culture is not a determinant of ethical behavior.
5) Whistle-blowing is illegal.
6) Making a morally wrong decision is not the same thing as an ethical
lapse.
7) A situation in which an individual makes a decision that is morally
wrong or illegal is an ethical dilemma.
8) Conflicts of interest involve business decisions that might be
influenced by the potential for personal gain.
9) Seeking the greatest good for the most people is utilitarianism.
10) The concept that a business has obligations to society beyond the
pursuit of profit is called corporate social responsibility (CSR).
11) Philanthropy involves social contributions that are directly aligned
with a company's business strategy.
12) Business and society are mutually dependent, therefore choices that
weaken one or the other will ultimately weaken both.
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13) According to what might be termed the minimalist view, businesses

should be involved in making social policy and spending the public's
money.
14) NGOs are nonprofit groups that provide charitable services or
promote causes such as workers' rights and environmental protection.
15) Companies that engage in cynical CSR believe that the only social
responsibility of business is to pay taxes and obey the law.
16) A company accused of irresponsible behavior that promotes itself as
being socially responsible without improving its business practices is
said to have a cynical CSR.
17) In proactive CSR, company leaders believe they have
responsibilities beyond making a profit, and they back up their beliefs
and proclamations with actions taken on their own initiative.
18) "Environmental" causes are often as much about human health and
safety as they are about forests, rivers, and wildlife.
19) Widespread concern for the environment dates to the 1960s when
ecology entered mainstream discussion.
20) Cap and trade programs try to balance free-market economics with
government intervention.
21) President John F. Kennedy announced a "bill of rights" for
consumers, laying the foundation for a wave of consumer-oriented
legislation.
22) One of the fundamental consumer rights that form the basis of much
of the consumer-related legislation in the United States is the right to
know the lowest available price of a good in the local market.
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23) In 1965, the Federal Cigarette Labeling and Advertising Act was
passed, requiring all cigarette packs to carry the Surgeon General's
warnings.
24) The term "disability," as used in the federal Americans with
Disabilities Act, means only those people with physical handicaps, such
as hearing or vision loss or loss of mobility.
25) The Occupational Safety and Health Act of 1970 set mandatory
standards for safety and health and established the Occupational Safety
and Health Administration (OSHA) to enforce them.
26) ________ are the principles and standards of moral behavior that are
accepted by society as right versus wrong.
A) Mandates
B) Ethics
C) Business mindset
D) Etiquette
E) Philanthropy
27) ________ refers to the degree to which information flows freely
within an organization, among managers and employees, and outward to
stakeholders.
A) Philanthropy
B) Materialism
C) Whistle-blowing
D) Transparency
E) Utilitarianism
28) A leading pharmaceutical company found that a newly launched,
over-the-counter drug might have certain negative side effects such as
mood changes, that were not identified during the clinical trials. To
avoid unnecessary losses, the company does not inform public about the
probable side effects. In this example, the company ________.
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A) was involved in insider trading

B) lacked transparency
C) had a consumerist approach
D) had a utilitarian approach
E) failed to take affirmative action
29) Facebook was criticized for a behind-the-scenes attempt to generate
public outrage regarding alleged privacy violations by Google. The
company used a public relations agency to encourage bloggers and the
news media to write critical stories about Google. In this example,
Facebook was criticized because ________.
A) it was involved in insider trading
B) it lacked transparency
C) of its consumerist approach
D) of its utilitarian approach
E) it failed to take affirmative action
30) The use of unpublicized information that an individual gains from
the course of his or her job to benefit from fluctuations in the stock
market is called ________.
A) a code of ethics
B) whistle-blowing
C) insider trading
D) utilitarianism
E) strategic CSR
31) The CEO of a pharmaceutical firm learns that the FDA is going to
deny approval for one of the company's drugs. He knows this will have a
negative effect on the company's stock, so he quickly tells his broker to
sell all of his shares of stock in the company before the news is
announced. This is an example of ________.
A) strategic CSR
B) whistle-blowing
C) utilitarianism
D) a code of ethics
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E) insider trading
32) Which of the following is an example of insider trading?
A) The marketing manager of a company is accused of using company
resources for personal use.
B) An executive receives a compensation comprising of cash, paid
expenses, and shares of the company.
C) An employee hacks the firm's computer networks, systems, and
databases to obtain customer records so that he can sell the information
to rival firms.
D) The chief executive officer of an IT company purchases shares in the
company as he learns that the company is being taken over by a leading,
global IT firm.
E) A firm disseminates fraudulent information in chat rooms, forums,
Internet boards, and via email, with the purpose of causing a dramatic
price increase in thinly traded stocks of the company.
33) ________ refers to a written statement setting forth the principles
that guide an organization's decisions.
A) Code of ethics
B) Limited liability agreement
C) Employee procedure policy
D) Statement of sustainable development
E) Statement of corporate opportunity
34) A company insider's disclosure that exposes illegal or unethical
behavior by others within the organization is ________.
A) illegal
B) insider trading
C) unethical
D) philanthropic
E) whistle-blowing
35) Which of the following statements is true regarding whistleblowing?
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A) Whistle-blowing is the normal channel through which employees can

address issues involving unethical or illegal behavior within their
companies.
B) Whistle-blowing refers to the use of unpublicized information that an
individual gains from the course of his or her job to benefit from
fluctuations in the stock market.
C) Whistle-blowing occurs when employees share confidential company
information with external agents for personal gain.
D) The federal and state laws governing whistle-blowing are simple and
clear, so that they can be easily used by employees and employers to
navigate through.
E) Although whistle-blowing is sometimes characterized as "ratting on"
colleagues or managers, it has an essential function.
36) An employee at Cleveland Medical Center informs the media of
certain health law violations and negligence that lead to documented
illness and even death in certain cases. This is an example of ________.
A) insider trading
B) whistle-blowing
C) affirmative action
D) consumerism
E) strategic CSR
37) Which of the following is an example of whistle-blowing?
A) An employee discloses confidential information about the company
to a rival firm for personal gain.
B) An employee suggests some process changes to his manager, that he
claims will increase the productivity of the team.
C) An employee avoids taking ownership of his mistakes by blaming it
on his co-workers.
D) An employee informs the manager that some of his team members
are misusing confidential customer details from the company database.
E) An employee who is unsatisfied with his performance appraisal
requests his manager for a re-evaluation of his performance.
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38) Which of the following statements is true regarding ethical decision

making?
A) When an employee is unable to make a decision because more than
one side of an issue can be supported with valid arguments, it is called
an ethical lapse.
B) The disclosure of information by a company insider that exposes
unethical behavior by others within the organization is called an ethical
lapse.
C) Stakeholders' needs often conflict, requiring managers to make tough
decisions about resource allocation.
D) Making objective decisions will lead to ethical lapses.
E) When the question of what is right and what is wrong is clear, ethical
decisions are easy to implement.
39) A situation in which you must choose between two conflicting but
arguably valid alternatives would be known as a(n) ________.
A) insider trading
B) ethical lapse
C) corporate opportunity
D) ethical dilemma
E) conflict of interest
40) The CEO of a company considers offshoring some of its production
to another country with lower labor costs. This decision would favor the
company's customers who will benefit from lower prices. The
shareholders also stand to benefit from lower production costs, which
could increase sales, profits, or both, probably leading to increases in
share prices. However, some employees will lose their jobs, and morale
is likely to suffer among those employees who keep theirs. In this
situation, the CEO faces a(n) ________.
A) ethical dilemma
B) ethical lapse
C) strategic CSR
D) defensive CSR
E) cognitive dissonance
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41) The manager of a golf course awards a landscaping contract to his

brother-in-law's company, even though another company was willing to
do the same work for less money. This is an example of ________.
A) defensive CSR
B) code of ethics
C) conflict of interest
D) strategic CSR
E) ethical dilemma
42) Which of the following approaches to resolving ethical dilemmas
advocates choosing the option that delivers the most good for the most
people?
A) individual rights
B) utilitarianism
C) strategic CSR
D) sustainable development
E) Kantian ethics
43) The products of Sports Center, an international sports footwear and
apparel chain, are manufactured in sweat factories in China. According
to the company president, using sweatshop labor is justified because it
delivers the most good for the most people. He mentions that it offers a
means of livelihood to children and young adults, as well as supplies
good quality apparel to customers at a lower cost. In this example, the
president of Sports Center uses which of the following ethical
approaches to decision making?
A) affirmative action
B) Kantian ethics
C) individual rights
D) utilitarianism
E) deontological ethics
44) Which of the following ethical approaches emphasizes desirable
character traits such as integrity and compassion?
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A) utilitarianism
B) Kantian ethics
C) deontological ethics
D) affirmative action
E) virtue
45) Which of the following is true regarding the justice approach to
ethics?
A) It refers to treating people equally, or at least fairly, in a way that
makes rational and moral sense.
B) It refers to choosing the option that delivers the most good for the
most people.
C) It involves making social contributions that are directly aligned with
a company's overall business strategy.
D) It emphasizes qualities and conditions that benefit the community as
a whole, such as peace and public safety.
E) It refers to the movement that pressures businesses to consider
consumer needs and interests.
46) Corporate social responsibility refers to ________.
A) the rules or standards governing the conduct of a person or group
B) a written statement setting forth the principles that guide an
organization's decisions
C) the notion that business has obligations to society beyond the pursuit
of profits
D) business that operates in a manner that minimizes pollution and
resource depletion, ensuring that future generations will have vital
resources
E) the movement that pressures businesses to consider consumer needs
and interests
47) The idea that a business has obligations to society beyond the pursuit
of profits is ________.
A) corporate social responsibility
B) utilitarianism
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C) philanthropic sustainability
D) ethical minimization
E) opportunistic responsibility
48) ________ involves donating money, employee time, or other
resources to various causes without regard for any direct business
benefits for the company.
A) Philanthropy
B) Strategic CSR
C) Cap and trade
D) Sustainable development
E) Affirmative action
49) LK Manufacturing Group, a company that manufactures home
appliances, supports a community sports center to nurture the city's
athletic talent as well as promote fitness activities, without regard for
any direct business benefits. This exemplifies ________.
A) strategic CSR
B) cap and trade
C) sustainable development
D) philanthropy
E) affirmative action
50) Which of the following is an example of philanthropy?
A) An IT company donates money to an orphanage without expecting
any business benefits.
B) A niche gourmet retail store holds free-for-all bakery classes by
celebrity chefs in its store.
C) A bookstore arranges free-for-all book reading and autograph session
with authors of newly published books in stores.
D) A sporting goods retail store holds a sports competition in the
neighborhood community center to generate interest in athletics.
E) A pharmaceutical company sponsors a blood donation camp, where it
also advertises some of its products.
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51) A company helps develop the workforce by supporting job training

efforts. This is an example of ________.
A) strategic CSR
B) cap and trade
C) sustainable development
D) philanthropy
E) affirmative action
52) Which of the following is true about strategic CSR?
A) It involves donating money, employee time, or other resources to
various causes without regard for any direct business benefits for the
company.
B) It is an attempt to balance free-market economics with government
intervention.
C) It refers to organizational growth that meets the needs of the present
without compromising the ability of future generations to meet their own
needs.
D) It involves social contributions that are directly aligned with a
company's overall business plans.
E) It refers to the argument that firms should indulge in philanthropy
only when there is no conflicts of interest with the profitability of the
firm.
53) Unlike general philanthropy, strategic CSR ________.
A) promotes an antagonistic business-versus-society mindset
B) leads to weakening of both the business and the society
C) refers to CSR activities that are mandatory according to law
D) is aimed at specific sections of the society that have been historically
discriminated against
E) is more likely to be sustained over time
54) The British firm Thames Water helped develop markets for its goods
and services by assisting groups trying to improve water supplies in
Africa. This is an example of ________.
A) cap and trade
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B) the minimalistic view

C) strategic CSR
D) philanthropy
E) affirmative action
55) Aston Products Inc., a cosmetic research, development, and
manufacturing firm, conducts a cost-benefit analysis that identifies an
underdeveloped area which has cheap labor and low land costs. The firm
decides to set up a factory in that area to take advantage of the lower
land and labor costs. While setting up the factory, the company also
develops infrastructure such as building roads, hospitals, and primary
schools. This is an example of ________.
A) philanthropy
B) the minimalistic view
C) affirmative action
D) strategic CSR
E) cap and trade
56) According to the ________ view, the only social responsibility of
business is to pay taxes and obey the law.
A) defensive
B) minimalist
C) cynical
D) proactive
E) strategic
57) John, a business owner, refuses to contribute to social causes. He
argues that he is an honest, law abiding businessman who never evades
his taxes. He states that by providing good quality products at a fair
price, he has fulfilled his company's obligation to society. John would be
said to have a ________ approach to CSR.
A) defensive
B) minimalist
C) cynical
D) proactive
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E) strategic
58) Nongovernmental organizations are ________.
A) publicly traded and owned entities
B) firms that apply sustainable business strategies to achieve their
business goals
C) nonprofit groups that provide charitable services or promote causes
D) firms that derive a substantial portion of their income from trade
E) composed primarily of sovereign states (referred to as member
states), or of other intergovernmental organizations
59) A ________ CSR is one in which a company accused of
irresponsible behavior promotes itself as being socially responsible
without making significant improvements in its business practices.
A) minimalist
B) philanthropic
C) strategic
D) proactive
E) cynical
60) A company that takes positive steps to address a particular issue, but
only because it has been embarrassed into action by negative publicity,
has a ________ CSR.
A) minimalist
B) defensive
C) strategic
D) proactive
E) cynical
61) Shopper's Paradise, a department store chain, was accused of
working with contractors who use sweatshop labor in their
manufacturing units. The company was labeled as promoting unethical
business policies. To deal with these criticisms, the company decides to
make a large donation to a cancer research foundation, as well as
sponsor a health awareness program in the community. Shopper's
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Paradise would be said to have a ________ approach to CSR.

A) minimalist
B) strategic
C) proactive
D) defensive
E) philanthropic
62) Publicity efforts that portray a company as being environmentally
friendly when its actions speak otherwise are called ________.
A) environmental minimalism
B) quasi-environmentalism
C) greenwashing
D) collectivism
E) proactivism
63) Toy Land Inc. was criticized for selling toys that had lead paint and
were proven to be harmful for children. The company recalled several
batches of toys. It responded to these accusations by changing its logo to
include a recycle theme, using advertisements that promoted waste
management and recycling, and providing Toy Land Inc. branded
reusable shopping bags at their store. However, the firm did not
undertake any specific measures to avoid using toxic materials in its
products. This is an example of ________.
A) proactive CSR
B) cynical CSR
C) minimalistic CSR
D) primary CSR
E) philanthropic CSR
64) An eco-friendly health resort claims to be environment friendly, and
markets itself as an eco-resort. However, it engages in irresponsible
activities such as wastage of water, disposal of plastic and other
untreated wastes into the water bodies, and cutting trees in protected
areas to expand its facilities. This is an example of ________.
A) environmental minimalism
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B) quasi-environmentalism
C) greenwashing
D) collectivism
E) proactivism
65) In ________ CSR, company leaders believe they have
responsibilities beyond making a profit, and they back up their beliefs
and proclamations with actions taken on their own initiative.
A) proactive
B) cynical
C) minimalistic
D) primary
E) philanthropic
66) Since its inception, Whole Foods Market has contributed 5% of its
profits to charitable endeavors. At Whole Foods Market, company
leaders believe they have responsibilities beyond making a profit. The
firm has a ________ approach to CSR.
A) cynical
B) minimalistic
C) primary
D) philanthropic
E) proactive
67) Most of the electricity generated in the United States is produced by
________.
A) burning fossil fuels
B) from nuclear power
C) from hydroelectric power
D) from solar power
E) harnessing wind power
68) Which of the following statements is true?
A) The creation, delivery, use, and disposal of products that society
values can be carried out without generating any pollution and
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consuming any natural resources.

B) Web-based businesses are "clean" because there is no pollution
associated with them.
C) Environmental issues are easy and simple, and companies can easily
make decisions when faced with such issues.
D) Environmental issues faced by businesses are about forests, rivers,
and wildlife; and not about human health and safety.
E) Dealing with environmental issues often requires tough trade-offs,
occasional sacrifice, and disruptive change.
69) ________ is the study of the relationship between organisms and the
natural environment.
A) Environmentalism
B) Ecology
C) Energy conservation
D) Ergonomics
E) Sustainability
70) The ________ establishes procedures for creating geologic
repositories of radioactive waste.
A) Clean Air Act
B) Solid Waste Disposal Act
C) Toxic Substances Control Act
D) Nuclear Waste Policy Act
E) Resource Recovery Act
71) The Resource Recovery Act (1970) ________.
A) subsidizes pilot recycling plants
B) regulates treatment, storage, transportation, and disposal of hazardous
waste
C) establishes a structure for coordinating all federal environmental
programs
D) authorizes grants to states for water-pollution control
E) prohibits ocean dumping that could threaten human health or the
marine environment
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72) Under ________, lawmakers establish maximum allowable amounts

of a pollutant that an industry is allowed to emit and distribute individual
allowances to all companies in that industry.
A) sustainable development
B) cap and trade
C) ecological barter
D) environmental control
E) carbon offset projects
73) Which of the following statements is true about cap and trade
programs?
A) They promote an anti-business perspective.
B) They provide technological solutions to reduce pollution and resource
consumption.
C) They force companies to choose the highest-cost means of taking
responsibility for their emissions.
D) They try to balance free-market economics with government
intervention.
E) They put pressure on businesses to consider consumer needs and
interests.
74) ________ is defined as meeting the needs of the present without
compromising the ability of future generations to meet their own needs.
A) Greenwashing
B) Consumerism
C) Materialism
D) Sustainable development
E) Cap and trade
75) American Housing Inc., a construction firm, uses innovative home
designs that use insulating building materials aimed at reducing the
energy consumption of the apartments and homes it builds. This gives it
an edge over other businesses, and is environment friendly as well. This
is an example of ________.
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A) cap and trade

B) greenwashing
C) consumerism
D) affirmative action
E) sustainable development
76) What is the meaning of the term "consumerism"?
A) overspending by customers
B) overspending by corporations
C) pressuring businesses to consider consumer needs
D) pressuring consumers to consider business needs
E) unexpected demand by buyers
77) Which of the following federal legislations limits cardholder liability
for unauthorized use?
A) Magnuson-Moss Warranty Act (1975)
B) Fair Credit Reporting Act (1970)
C) Truth in Lending Act (Consumer Protection Credit Act) (1968)
D) Deceptive Mail Prevention and Enforcement Act (1999)
E) Fair Packaging and Labeling Act (1966, 1972)
78) The Magnuson-Moss Warranty Act (1975) requires complete written
warranties in ordinary language and requires warranties to be ________.
A) applicable for minimum one year
B) supported by the manufacturer
C) supported by the retailer
D) available before purchase
E) contained on package labeling
79) Mark hacks into the database of an e-commerce firm and steals the
social security numbers of many of its customers. He then uses these
numbers to take loans. This is an example of ________.
A) phishing
B) identity theft
C) spamming
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D) brandjacking
E) cybersquatting
80) Which of the following regulatory agencies is responsible for
monitoring the hiring practices of companies and can require them to
compensate individuals who have been victimized by unfair hiring
practices.
A) Federal Employment Commission (FEC)
B) Civil Rights Commission (CRC)
C) Employee Protection Commission (EPC)
D) Employment Regulatory Commission (ERC)
E) Equal Employment Opportunity Commission (EEOC)
81) Activities undertaken by businesses to recruit and promote members
of groups whose economic progress had been hindered through either
legal barriers or established practices are known as ________.
A) greenwashing
B) sustainable development
C) multiculturism
D) affirmative action
E) selective recruiting
82) The Civil Rights Act of 1991 amended the original act, and
________.
A) provided for unlimited amount of damage awards
B) made it mandatory for private firms to employ persons from minority
groups
C) made it tougher to sue for discrimination
D) gave employees the right to have a trial by jury in discrimination
cases
E) made it mandatory for the government to subsidize programs based
on race
83) Which of the following is true about the Americans with Disabilities
Act (ADA)?
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A) It allows employers to ask job applicants to pass a physical

examination as a condition of employment.
B) It protects only those individuals who have physical handicaps.
C) It guarantees equal opportunities in housing, transportation,
education, employment, and other areas for people with disabilities.
D) It excludes people with drug addiction, alcoholism, emotional illness,
and other conditions.
E) It subsidizes modifications to work stations or schedules undertaken
by firms to make the workplace more accessible to people with
disabilities.
84) ________ is the study of how people interact with computers and
other machines.
A) Consumerism
B) Ergonomics
C) Systems psychology
D) Environmental design
E) Anthropometry
85) Production facilities that treat workers poorly are referred to as
________.
A) ergonomic units
B) maquiladora
C) contingent work
D) warehouses
E) sweatshops
86) What is ethics? List the components of good business ethics?
87) Compare and contrast insider trading and whistle-blowing.
88) Compare and contrast ethical lapse and ethical dilemma?
89) What is a conflict of interest? How is it related to ethical decision
making?
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90) Compare and contrast the various approaches used to resolve ethical
dilemmas.
91) Compare and contrast philanthropy and strategic CSR.
92) Compare and contrast the minimalist and the purely cynical
perspective on corporate social responsibility.
93) What is defensive CSR? How is it different from proactive CSR?
94) Discuss the two-tiered approach to CSR.
95) What are cap and trade programs?
96) Compare and contrast cap and trade programs and sustainable
development.
97) What is consumerism? List the fundamental consumer rights.
98) Compare and contrast discrimination and affirmative action.
99) Discuss some of the key responsibilities that employers have
regarding employees. Compare them with the responsibility they have
toward consumers.
100) Discuss the functions of the Equal Employment Opportunity
Commission (EEOC).

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