Business Ethics

Vidyalankar Institute of Technology (MMS)

Academic Year 2016-2017
Topic

Questions & Answers

15 questions and answers
Case studies & Case lets
25 MCQ

Group Members

Roll Numbers

Nainisha Sawant

48

Sanchita Dhande

50

Vishal Jain

52

Nandini Rajendran

54

Surabhi Sadvilkar

56

Rajeshwari Kallyaperumal

58

Khushbu Shah

60

Arjun Mehra

62

Question on Maharashtra call center scam

The Mira Road call center scam had robbed US citizens of Rs 500 crore in the last one
year. The three call centers were collectively pocketing around Rs 1 to 1.5 crore daily.
How the money was grabbed:

Victims told to share 16-digit code of the preloaded cash card with the call center
employee, who helps debit the decided amount that could be from $500 to 10,000

Through the online payment mode, the amount debited by the victim in the cash card
would be redeemed by the fraudsters

Ethical perspective: morally behave illegally

How the US citizens were targeted:

Some of the accused are based in the US; they acquired the contact numbers in the
black market and forwarded them to the Mira Road call center

In the Dark Web, the netherworld of the internet, hackers offers details of US citizens
in bulk. Sources said the data could have cost about `1Lakh for 10,000 contacts

How the callers were paid

The US gang members transfer 70% of the money grabbed to the call center management
through suspected hawala channels. The employees paid in cash.
Mira road call center scam can be classified as overt action or covert action? As Business
need to function as responsible citizens as it operates within society they need to follow a
certain code of conduct, but these companies were created on the verge of robbing money
and doing the scam.
How can you correlate it with the Test of ethics or any theories?
Answer-

Mira road call center scam can be classified as covert action as it is operation planned and
executed so accurately as the people in the United States whose money were getting
stolen could not identify the scandal.1.As concept of business ethics is very vague,
abstract and unstructured it depends on moral standards and there is need of business
ethics in business decision. Unethical behavior will shorten the life of a business as in the
above case we can notice that these BPOs were started approximately one year ago and
it could not survive as it started on the basis of unethical practice, on the verge of doing

fraud.
It can be correlated with the Test of Agreement with Evidence because in the above case
the companies were operating on the basis of unethical behavior and at the time of these
came out in public there were evidence found against these companies which proved that
the practice that were carried out in business were unethical.

2. How can we classify Sexual harassment as Individual level ethics or Organizational level
ethics? What is the nature of ethical strategy can apply in the case of sexual harassment?
Answers
-

In case of sexual harassment it is organizational level decision making as the

organizations name is attached to that individual. The goodwill of that company can go
down with unfair activity such as Sexual Harassment or Involvement in any kind of scam

could bring down the overall reputation of the entire organization.

It has to be Due Company decides the policy what is morally correct and what is
justifiable. Mostly in all reputed companies, there is Zero tolerance for such activities

which might bring down the reputation of the company.

It should be Right Decision- The decision is not only required to be honest, but also
due which is right, Therefore, proper action were taken place in the case of Gopal

Kanda and Ashok Kumar Ganguly.

Some examples of Sexual harassment as below:
1. Phaneesh Murthy: One of Indias best known software executives and a rising star
at the time, Phaneesh Murthy had to resign from Infosys in 2002 after his secretary
Reka Maximovitch accused him of sexual harassment.
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Status: Infosys settled for $3 million outside court. Murthy was also sacked by an
American IT firm in 2013 on sexual harassment charges.
2. Tarun Tejpal: Possibly the most notorious case of them all. The former Tehelka chief
was accused of sexual assault and rape during a Goa event by a former colleague. The
case grabbed international headlines after allegations that staffers at Tehelka had tried
to bury the complaint.
Status: The case is being heard in a Goa court.
3. Shiamak Davar: The Bollywood choreographer was sued by two Vancouver-based
former students of his dance school for sexual harassment in Canada last year. The
two men accused Davar of controlling them through a spiritual organization and
grooming them into sexual submission.
Status: Hearings on in Canada.

3. How can you relate the case of not paying bonuses to the contract laborers? Is it Ethical
performance on the part of the Organization?

-According to the ethics standards the companies are supposed to be ethical on their part
as they operate within the society they need to follow certain norms and standards.

-The policies should be equitable as similar benefits are applicable to all and similarly the
policies are applicable to all. There are some companies whose policies are equitable to
all. Where employees from lower level Executive to Chief Executive officer has to follow
similar rules and regulations.

-This kind of Ethical performance call for judgment, i.e. Judgment between specific
interest and rights of all the parties as these companies is not paying the contract laborers
the bonus which they are paid to other permanent employees. But these Contract laborers
were part of the revenue generation the factory. Thus, they should have right to get the
bonus for their efforts.
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Case:
Thailand a country case study: (good governance and preventing corruption)
Background: In 1997, Thailand was in economic crisis with the devaluation of the Thai Baht.
Hospitals under the Ministry of Public Health, providing 70-80% of health and medical services,
were projected to be bankrupt within two years.
In addition, medicine prices were increasing, hospitals were purchasing medicines at different
prices from the same companies; pharmaceutical companies offered incentives to physicians for
prescribing their products; and physicians often prescribed medicines by trade name rather than
generic name.
Response: pharmaceutical management reform
In response, the government introduced pharmaceutical management reform: limiting the type
and amount of medicines hospitals stocked, establishing provincial group medicines purchasing
schemes and setting up a pharmacy information centre to share information among hospitals. In
2004, Thailand decided that the WHO Good Governance for Medicines programme (GGM)
would support their goals of increasing transparency and ensuring access to medicines while
saving precious resources.
Positive effect beyond the ministry
The biggest change experienced by the Ministry of Public Health is co-operation within
Thailand, between universities and the Food and Drug Administration of Thailand, as well as
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internationally with other GGM participating countries. A joint Thailand WHO programme has
success tackling corruption in the pharmaceutical sector and reducing the prices of medicines
Progress after five years
Thailand is in the final phase of the three-phase WHO Good Governance for Medicines
programme (GGM) and there are already a number of significant achievements.
Lower costs for quality medicine procurement: the number of hospitals with best practices in
medicines procurement has increased, a pooled medicine purchasing scheme by hospitals has
been established, with an agreed list of medicines and suppliers.
National attention focused on the problem: national pharmaceutical laws and regulations have
been reviewed, a national database on good governance in drug systems containing publications
and articles on corruption, unethical practices and corrupt cases has been developed.
Outcome from the ethical decision taken: Awareness was created among public through media.
The minutes from national medicine meetings are publicly available and the topic of "good
governance" has been added to the curriculum of 15 Faculties of Pharmacy.
Questions:
1) Relate the decision taken to ethical policies
Answer :
a) The decision taken was just: the decision taken by the government was not only done
but was ensured that it is done as good governance had been added to the curriculum of 15
Faculties of pharmacy
b) The decision was a right decision as it was not only an honest decision but also due
C) Policy was equitable as it developed transparency of the rates of medicine to the government
as well as the customers
D) The decision is ethical as the net benefit is more than the cost as due to the decision the
number of hospitals with best practices in medicines procurement has increased, a pooled
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medicines purchasing scheme by hospitals has been established, with an agreed list of medicines
and suppliers

Q2 ) What factors influence ethical behaviour in an organization ?

Ans: INFLUENCES ON ETHICAL BEHAVIOR

PRIOR DEVELOPMENT OF INDIVIDUAL AS ETHICAL PERSON.

THE ORGANIZATION AS AN ETHICAL ENVIRONMENT.

PROCEDURES THAT ENCOURAGE ETHICAL BEHAVIOR.

Most of an individual's ethical development occurs before entering an organization. The

influence of family, church, community, and school will determine individual values. The
organization, to a large extent, is dealing with individuals whose value base has been established.
This might imply that ethical organizations are those fortunate enough to bring in ethical
individuals, while unethical organizations brought in unethical people. But it is not that simple.
While the internalized values of individuals are important, the organization has a major impact
on the behavior of its members, and can have a positive or negative influence on their values.
One example of the development of ethical individuals is the service academies. In their
admissions processes, the academies attempt to get individuals of good character with the values
integral to the military profession. However, the academies also recognize that their core values
may be different than those prevalent in society, and they devote considerable effort to the
development and internalization of their core values. As is evident from periodic breaches of
integrity at the academies, e.g., cheating scandals, these attempts to instill core values do not
always succeed.
There are three qualities individuals must possess to make ethical decisions. The first is the
ability to recognize ethical issues and to reason through the ethical consequences of decisions.
The ability to see second and third order effects, one of the elements of strategic thinking, is very
important. The second is the ability to look at alternative points of view, deciding what is right in
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a particular set of circumstances. This is similar to the ability to reframe. And the third is the
ability to deal with ambiguity and uncertainty; making a decision on the best information
available.

Case let:
Might Makes Right
Topic: Taking Credit for Work
Characters: Janice, chief of research and development John, Janices underpaid assistant
Janice is a highly educated top executive in charge of research and development. John is her
underpaid assistant, struggling to support his family. His performance evaluations have always
been more than adequate.
As one of his research projects, John designs a creative software package that addresses major
concerns within the company. He shares this program with Janice, hoping it will bring him a
much-needed promotion and raise. Janices boss has asked her to design an innovative and
efficient program. But pressures of her position keep her from setting aside sufficient time to do
the requested work.
Janice, eager to successfully complete the job her boss assigned, is thinking of presenting Johns
program to her boss and passing it off as her own. If John objects, she can threaten to lower his
performance evaluations or possibly even fire him. If he agrees to go along with the scheme, she
can give him a raise and a promotion.
Q) Should Janice present John's program to the boss and submit it as her own work, should
Janice inform John of this action? Also, relate ethical theories in this case.
Ans: It is best for Janice to create her own ideas and programs since she is more knowledgeable
and skilled than her assistant, however if time and mind unable to permit her in doing so, she can
present John's idea and give credit to him. She needs to inform John beforehand so that he could
understand it and mutually agrees to the plan. It is just right to provide or promote a positive
feedback that can possibly lead to a raise for John since what he did was beyond his role of
assistance.
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In this case the balance of power is in favour of the boss since manager often control the fate of
subordinate through performance appraisals, work assignments and promotion opportunities.
However, it is still the right thing to do for a manager to provide the credit to whom the credit is
due.
Relation with ethical theories are as follows:
Covert: we can relate this case as covert as there is no evidence that John has completed this
project and Janice can easily present it to her boss.
It is an individual level problem in decision making: as it is up to Janice whether to submit the
assignment as her own or give credits to John for his work.
Competitive pressure: Ethical problem in this case is raised due to competitive pressure because
Janice is under pressure

VIDEO: Relate the video to ethical theories

Ans for 1st part:
Overt: It is an overt action because the boss caught his employee watching movies with
evidence.
Right: The decision taken by the boss to terminate his employee is right as other employee
should not get influenced.
Test of agreement with evidence: Boss has evidence of employee watching video which supports
bosss explanation.
2nd part:
Proper policy: In this video the policies explained to the employee that not to use fakebook in
office which in turn would improve performance is proper and it as also acceptable.
Test of compatibility: Generally using fakebook is not wrong but using fakebook in office hours
with office resources is unethical according to organization point of view.
Test of internal coherence: The explanation given to not use fakebook in office hours would
affect performance is agreed by the employee.

Case lets:
1.
XYZ Company the largest coffee chain in the world generated 4 billion single-serve cups as
waste each year that ended up in landfills or as litter. The company had to work overtime to solve
this problem as its customers and other stakeholders wanted it to do something about the problem.
In 2008, XYZ took up the target of serving 25% of the beverages in its company-operated stores in
reusable cups by 2015. It also committed itself to making 100% of its paper cups in companyoperated stores in North America recyclable by 2015. However, tackling the problem was anything
but easy and straightforward.
According to you which characteristics of ethical behavior fits in the scenario? What steps should
be taken by XYZ company to overcome the problem? And should the actions taken be overt or
covert?

Answer:
Characteristics :
Morally correct : The decision taken by XYZ is morally correct and was required in the given

situation i.e. it was due and required

It must be just : The decision taken by XYZ was morally correct but it need to make sure that the

decision taken is also implemented and ensure that it is done .

It must be proper : The decision taken needs by XYZ along with being morally correct should

also be appropriate as well as acceptable by the stakeholders

It should be a right decision : Decision taken by XYZ was not only honest but also due in the

given scenario and was also must.

It needs to be good : Decision taken must be good i.e. it must be in favour of the stakeholders

and must also be acceptable.

Steps taken :
In 2008, we rolled out a new plastic cup that has less of an environmental impact than our

original plastic cups.

In 2009, we hosted a Cup Summit in Seattle, bringing together all facets of our paper and

plastic cup value chain to find agreement on criteria for a comprehensive recyclable cup solution.
In 2010, we participated in the United States Conference of Mayors to find support for
increased or improved commercial recycling opportunities across the country. We are excited about

the opportunity to work with leading Mayors in solving the recycling challenge at a local level.
In 2013 we introduced US $1 reusable cup in its stores in US and Canada and later on in
UK

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2.

ABC was the fourth-largest automaker in the world based on the number of vehicles sold in the
year 2009. Since the early 1990s, the company had started taking efforts to reduce the impact of its
operations on the environment. The company established targets to achieve reduction in the usage
of energy, water and Green House Gas (GHG) emissions. It also pledged to invest in developing
environmentally friendly vehicle technologies including hybrids, diesels, bio-diesels, advanced
engines, etc. However, in spite of its environmental initiatives, ABC attracted criticisms.
For ABC to arrive at ethical performance, How the set of ethical objectives will get translated to
policies which would lead to performance?

Answer :
Study the human behaviour : ABC needs to study the behaviour of human beings as human being
react differently in different situation , ABC need to study it and the necessary steps accordingly so

as to improve the performance

Establish norms : Proper norms should be establish along with moral standards which must be

followed by each and every employee orelse should be liable for punishment.
Proper stimulation : Proper study of cause and effect relationship must be established to analyse

what will be the effect, when the policy is implemented and the deciding what steps need to taken.
Prescribe standard goals : Thereafter, in the implemented policies or strategies ABC should prescribe
morale behaviour and standard goals which needs to achieved.

1. What will you do if you are in this situation?

2. What is the consequences if he don't lie and report his boss or he lie?

He Dont Lie & He Report His Boss

Consequences:11

Company might be fire your boss

Possible company wide investigation

Could be recognize for responding ethically or considered a snitch

Worst case scenario: the company side with his boss & fired him

He Lie
Consequence:

Company spend money on an unrelated business expense

He preserve his relationship with his boss and in turn increase his chances to being
promoted one day

If there is ever an investigation he could be accused of fraud

3. How you correlate this with the theory of ethics?

Overt action:
The word Overt means done or shown openly. Overt means it can be clearly proved by
evidence and one need not check the intention of the party. Here accountant need evidence to
prove himself or his boss doing fraud
Individual level
He found that His boss is doing fraud. Now this is his decision that dont lie and complaint
against boss or support boss in fraud
Organization level
People like his boss are working in an organization then this is a problem of organization level
Justice
Due
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It must be due Due means the decision and strategies should be morally Correct.
When person is given with the facility of reimbursement (The expense which occurs on the
business Activity should be reimbursed by the company) But in the above cases The Boss is
using this facility in incorrect or unethical manner as He did put the bill on companies name
which actually is personal expenses. This is not Morally Correct or Due

Q1) Economics and Ethics clearly in this case didnt go hand in hand. If you were in place of
Suresh Kalmadi, explain what steps you would have taken for ethical business decision
making? Also tell which of the test/tests you will apply in this case?

Before taking any decision you have to consider the following questions and their
outcomes like

What is the outcome you want ?

To make India proud and conduct the CWG successfully.

What will be the means?

All the ethical means required taking previous CWG into consideration.

What should be the motive?

To make CWG a grand success and show the world that India can host other games as well, like
Olympics.

What are the foreseeable consequences?

The actual consequences and impact was that the labour laws were violated, child labour was
involved, environment was affected including urban change. Avoid all the above consequences
should have been foreseeable consequences.
Therefore, Balance between outcomes, Ethics and Economics should have been done.

In the above famous scandal of common wealth games, 2010, the actions done by the
Suresh Kalmadi led to humiliation of INDIA in front of whole world.

In relation to this case all the Tests could be applied:-

The Test of agreement with evidence- The maintenance of the venues were delayed and
program management had a flop show. Not only it impacted society and environment but also
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violated labour laws, promoted prostitution and child labour was involved. All the measures
adopted to conduct CWG were unethical which completely showed the behavior was also
unethical.
The test of Internal coherence - Adopting unfair means to make CWG a hit for INDIA

showed that the behavior was totally contradictory to the motives.

The test of Compatibility- Since whole of the INDIA was under the impression that

CWG which is to be held will help contribute to the economy by providing employment and
funds to the people of INDIA, it questioned the general belief of people, when the scam was
exposed due to failure of corporate governance.
Q2) Reading the above caselet, explain whether the policy made by Bank of America

justifiable in such case? Would the banks actions have been any more reasonable, fair,
caring, kind and responsible if there was no law? Comment with respect to nature of
ethical questions and strategies.
Ans- The policy in the above case could not be applied in that situation, since it was

unjustly causing inconvenience and humiliation to another human being because of Mr. Steve
Valdez handicap situation. The teller should have asked for sufficient identification to satisfy
himself that Valdez has a valid check. Valdez had it: he had his driver's license with an address
matching his wife's on the check. Thats what they would have wanted, reasonably, if he was the
one with no arms. And there was absolutely no reason not to bend the rules.
Here the question of ethics arises is whether Bank of America suspend its policy then or

not.

Here is has nothing to do with being nice, Policy on its part was correct and cannot be
suspended but the policy has to be morally correct and due to serve its all kinds of customers.

The policy here should be Proper that means it should not be only appropriate but it
should be acceptable also for everyone.

The policy on ethics ground has to be good, that means good for all the concerned
stakeholders including customers with special needs like Mr. Steve Valdez in above case.

It has to be Just, meaning it has to be ensured that it is followed as well by everyone.

It should be Right decision that means the policy made by Bank of America in above
case should be honest and due.
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Q) Ineffective balance between economics and ethics could shake the confidence in the
stakeholders. Explain the needs of business ethics in business decisions with reference to the
video shown.
Ans- Since business operates within the society, bigger the corporation, bigger is the

responsibility.

Unethical behavior like selling the pesticide water will shorten the life span of the
business.

As a corporate citizen, it is the duty of the business to be as much responsible as possible.

As individual values and organizational goals could differ. It may tempt business
manager to opt for unethical routes. Thus there should be specific ethical norms to avoid
such practices.

This is a case of Organizational level problem since the unethical decision of top level
management will affect the whole organization and question the work place ethics and
standards also hampering the confidence in the stakeholders.

It was an overt action for the top level management since the product launch was done
with the consent of the top managers.

The test of internal coherence comes into the place since to make the public issue
successful and avoid loss of Rs4000 crores with companys reputation the product with
pesticides was launched.

Corporate governance
Q1) What role does corporate governance plays in the organization ? How does it benefit the
stakeholders?
Meaning
Corporate governance is the system of rules, practices and processes by which a company is
directed and controlled. Corporate governance essentially involves balancing the interests of a
company's many stakeholders, such as shareholders, management, customers, suppliers,
financiers, government and the community. Corporate governance is the way a corporation
polices itself. In short, it is a method of governing the company like a sovereign state, instating
its own customs, policies and laws to its employees from the highest to the lowest levels.
Corporate governance is intended to increase the accountability of your company and to avoid
massive disasters before they occur.
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Principles of corporate governance

The fundamental or key principles of corporate governance are described below:
Transparency
The Company shall provide timely disclosure of credible information on all the important facts
related to its activities, including information on its financial condition, social and environmental
measures, results of activities, ownership and management structures; the Company shall provide
free access to such information for all interested parties.
For example, a cashier making change after a point of sale transaction by offering a record of the
items purchased (e.g., a receipt) as well as counting out the customer's change on the counter
demonstrates one type of transparency.
Transparency can be correlated with overt action. The word Overt means done or shown
openly. Overt means it can be clearly proved by evidence and one need not check the intention of
the party
Accountability
Accountability is the practice of improving overall personal and organizational performance by
developing and promoting responsible tools and professional expertise, and by advocating an
effective enabling environment for people and organizations to embrace a culture of sustainable
development. It is unethical to plan an action for social change without excavating the
knowledge and wisdom of the people who are responsible for implementing the plans of action
and the people whose lives will be affected. The Board should communicate to the companys
shareholders and other stakeholders, at regular intervals, a fair, balanced and understandable
assessment of how the company is achieving its business purpose and meeting its other
responsibilities
Accountability can be correlated with right decision. The word accountability means
responsibility. If the policy or decision is right it is not only honest but also required by that time
Fairness
The fairness or justice approach to ethics has its roots in the teachings of the ancient Greek
philosopher Aristotle, who said that "equals should be treated equally and unequal unequally."
The basic moral question in this approach is: How fair is an action? Does it treat everyone in the
same way, or does it show favoritism and discrimination?
Favoritism gives benefits to some people without a justifiable reason for singling them out;
discrimination imposes burdens on people who are no different from those on whom burdens are
not imposed. Both favoritism and discrimination are unjust and wrong.
The Company undertakes to protect the rights of its shareholders and treat all shareholders on an
equal basis. The Board of Directors enables its shareholders to receive efficient protection if their
rights are violated.
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Fairness can be correlated with one of the Principle of ethics that it must be equitable .it is an
obligation of company to treat all people equally, fairly, and impartially.
Responsibility
Responsibility is the duty to follow a morally correct path. But small business owners also
have ethical responsibilities to the many people who count on them to do the right thing.
Businesses have ethical responsibilities to their employees, customers and society as a whole.
For example, a small business owner has a responsibility to be honest with his employees so they
can make informed decisions about their careers; a responsibility to respect his customers, who
expect to receive exactly what they are paying for; a responsibility to invest in the community
upon which his companys well-being depends.
Responsibility can be correlated with process of ethical reasoning. Respected rights are to be
respected and acknowledge. It will be ethical when it respects the rights of stakeholders. Rest all
is the matter of balancing between economics and ethics.

Importance
It is the worth of right and wrong things from business point of view. Corporate governance
streamline the process and given people accountability. The point of corporate governance is to
help the decision making process. As mentioned above in the principles of corporate governance,
one of the main goal is to clearly explain to the board, the stakeholders, and the shareholders
what their duties and responsibilities are within the company.
With knowing those roles and responsibilities, the people within the corporation can understand
what they are held accountable for. For example, the board has responsibility of properly
evaluation the management in the company if the company has poor management, then it is the
fault of the boards for non properly evaluating the manager
Strong corporate governance maintains investors confidence, whose support can help to finance
further growth. Companies who implement the principles of good corporate governance into
working environment life will ensure corporate success and economic growth. They are the basis
on which companies can grow. Thats why the corporate governance is follow

On the scale of fairness how will you way and balance between economics and ethics?
Business ethics are applicable not only to the manner the business relates to a customer but also
to the society at large. It is the worth of right and wrong things from business point of view.
Economics

Ethics
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Kingfisher given importance to expansion

Kingfisher only provides business class not an

economics class.
Kingfisher providing prestiges

Kingfisher was blind towards the work of

expansion in facts they know that they are
making the loss.
Kingfisher not able to repay bank loan
Kingfisher not paying salary to the workers the
workers was not able to recognize the financial
flow of the company

This case is a critical matter in airline sectors. In this case, there is no balance between
economics and ethics. Kingfisher making loss but they are simply ignoring this. Company not
able to pay loan EMI, Because of this things company close down
Why should corporate governance be there in business ?
It is the worth of right and wrong things from business point of view. Corporate governance
streamline the process and given people accountability. The point of corporate governance is to
help the decision making process. As mentioned above in the principles of corporate governance,
one of the main goal is to clearly explain to the board, the stakeholders, and the shareholders
what their duties and responsibilities are within the company. A Corporation is an entity having a
legal status different from that of the persons who have created it
Need Of Corporate Governance
Wide Spread of Shareholders:
Today a company has a very large number of shareholders spread all over the nation and even the
world; and a majority of shareholders being unorganized and having an indifferent attitude
towards corporate affairs. The idea of shareholders democracy remains confined only to the law
and the Articles of Association; which requires a practical implementation through a code of
conduct of corporate governance.
Changing Ownership Structure:
The pattern of corporate ownership has changed considerably, in the present-day-times; with
institutional investors (foreign as well Indian) and mutual funds becoming largest shareholders in
large corporate private sector. These investors have become the greatest challenge to corporate
managements, forcing the latter to abide by some established code of corporate governance to
build up its image in society.
Corporate Scams or Scandals:
Corporate scams (or frauds) in the recent years of the past have shaken public confidence in
corporate management. The event of Harshad Mehta scandal, which is perhaps, one biggest
scandal, is in the heart and mind of all, connected with corporate shareholding or otherwise being
educated and socially conscious.
The need for corporate governance is, then, imperative for reviving investors confidence in the
corporate sector towards the economic development of society.
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Greater Expectations of Society of the Corporate Sector:

Society of today holds greater expectations of the corporate sector in terms of reasonable price,
better quality, pollution control, best utilisation of resources etc. To meet social expectations,
there is a need for a code of corporate governance, for the best management of company in
economic
and social terms.
Hostile Take-Overs:
Hostile take-overs of corporations witnessed in several countries, put a question mark on the
efficiency of managements of take-over companies. This factors also points out to the need for
corporate governance, in the form of an efficient code of conduct for corporate managements.
Huge Increase in Top Management Compensation:
It has been observed in both developing and developed economies that there has been a great
increase in the monetary payments (compensation) packages of top level corporate executives.
There is no justification for exorbitant payments to top ranking managers, out of corporate funds,
which are a property of shareholders and society.
This factor necessitates corporate governance to contain the ill-practices of top managements of
companies.
Globalization
Desire of more and more Indian companies to get listed on international stock exchanges also
focuses on a need for corporate governance. In fact, corporate governance has become a
buzzword in the corporate sector. There is no doubt that international capital market recognises
only companies well-managed according to standard codes of corporate governance.

MCQ's

Q.1) Which of the following factors shapes the ethical behaviour of the members of an
organization?
o The supervisors behaviour
o Organizational culture
o Code of ethics
o All of the above

Q.2) When communicating a code of conduct

Focus on values that should guide decision making
Provide the same code of conduct to all departments regardless of its length
Refrain from changing the code of conduct regularly
Fewer employees will read the code if it is short
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An alternative for the organization to provide formal means that protect employees who
face ethical dilemmas so that they can do what is right without fear of reprimand would

be _________
Ethical training session
Informal behaviour modification
Formal protective mechanisms
Independent social audits

________ is a code of conduct that an individual or a group has about right and wrong
Morality
Ethics
Business ethics
Personal ethics

Who is responsible for payment to a person employed by him in a Factory

under the Payment of wages Act 1936

Accounts Manager
HR manage
Manager
Owner

A company's ___________ are potentially the most effective instrument of good

corporate governance.

common stake holders

board of directors

top executive officers

none of these

answer) b

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A firm is said to have good corporate social performance when

o stockholders invest in socially responsible causes.
o charitable deductions are automatically deducted from pay without the consent of
employees.
o the company has not been convicted of ethical violations for five consecutive
years.
o stakeholders are satisfied with its level of social responsibility.

ANSWER: D

Which of the following is not a way for management to reduce unethical behaviour?
o Select individuals with high ethical standards
o Establish codes of conduct
o Provide ethics training
o Monitor employees telephone calls

Answer: D

An activity is probably ethical if __________

o A., It is approved of by most individuals in the organization and is customary in the

industry.
o B. It is approved of by most individuals in the organization.
o C. It is customary in the industry.

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o It is legal.

ANSWER: D

Dimensions of good governance are :

o Political stability and lack of violence

o Government effectiveness
o Control of corruption
o All of the above

.Building a sustainable environment includes ____________

o Developing a green supply chain
o Omitting hazardous emissions
o Both a & b
o Writing a code of ethics
ANSWER: C

When a firm advertises that it only uses recycled paper products, it is

________________.
o meeting its social obligation
o being socially responsive
o meeting social responsibilities
o paying attention to the bottom line
ANSWER: B

Under what approach do organizations exhibit little environmental sensitivity, obey rules
and regulations willingly without legal challenge, and even try to use these rules to their
own advantage?
o stakeholder approach
o market approach
o legal approach
o activist approach
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ANSWER: C

Under what approach does the organization look for ways to respect and preserve the

earth and its natural resources?

o stakeholder approach
o market approach
o legal approach
o activist approach
ANSWER: A

Which US company was responsible for the explosion of chemical plant in Bhopal in

1984?
A Union Carbide
B. Shell
C.BP
o Anglo American
Answer : D

A.
B.
C.
D.

In Ethical Decision Making Which Statement Is Acceptable:

Economics never has a part to play
Economics is always a consideration
Economics should be prime
Only in serious cases should economics play a part

A.
B.
C.
D.

The Rules Of Meeting Is Important For:

Corporate governance
Wider understanding of formal process
To manipulate people
To ensure fair hearings

Which Of The Following Is Not One The Underlying Principles Of The Corporate

Governance Combined Code Of Practice?

A) Accountability
B) Acceptability
C) Integrity
D) Openness

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The Framework For Establishing Good Corporate Governance And Accounting Was
Originally Set Up By The

A) Nestle Committee
B) Thornton Committee
C) Rowntree Committee
D) Cadbury Committee

A _____________ is a formal statement of an organization primary values and the ethical

rules it expects its employees to followo mission statement
o Statement of purpose
o code of ethics
o vision statement

Why should managers communicate to employees what they believe about ethics and
values?
o To provide ethical leadership.
o To be good whistleblowers.
o To offer social impact management.
o To provide formal mechanisms to protect employees who face ethical dilemmas.

Ethical issues in business typically arise because of conflicts between an individuals

personal moral philosophies and values and
o The values and attitudes of the organization in which he or she works.
o The values and attitudes of the society in which he or she lives.
o The values and attitudes of the organization in which he or she works and the
society
o The laws and regulations of the country in which he or she lives.
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 The governance Model Positions management as accountable

o solely to investors
OR
o The responsibility of the corporate management lies
o towards its shareholders

State whether the above statements are

o First statement is correct

o Second statement is correct
o both correct
o both incorrect

o
o
o
o
o
o

Which is not a reason a business engages in business ethics?

To recover a companys image after a notorious business scandal.
To avoid the loss of a good corporate image or being sued for misconduct.
To enhance global relationships.
To enhance stakeholder relationships.
To act with real commitment.
To build corporate reputation.

Answers to MULTIPLE CHOICE QUESTIONS

1) C
2) A
3) A
4) D
5) C

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