Chapter 03

Business Essentials, Canadian Edition, 9e (Ebert)
Chapter 3 Conducting Business Ethically and Responsibly
3.1 Multiple Choice Questions
1) The term "ethics" refers to

A) standards or moral values regarding what is right and wrong.
B) avoiding doing things that, if everyone did it, we would have a real mess.
C) believing what's right for one person is wrong for another.
D) conflicts of interest that develop between two co-workers.
E) bad behaviour by top managers in a company.
Answer: A
Diff: 1 Type: MC Page Ref: 42
Skill: Knowledge
Objective: 3.1
2) What is the difference between "ethics" and "business ethics"?

A) The former refers to beliefs about what is right and wrong, while the latter doesn't deal with
right and wrong, only with economic issues.
B) The former refers to a restricted range of acceptable behaviours, while the latter refers to a
much broader range of acceptable behaviours.
C) There are no differences between the two terms.
D) The former refers to beliefs about what is right or wrong, while the latter refers to behaviours
by managers or employees.
E) The former refers to the actions of government employees, while the latter refers to the
actions of employees in private-sector firms.
Answer: D
Skill: Comprehension
Objective: 3.1
3) Behaviour that conforms to individual beliefs and social norms about what is right and good is
referred to as
A) social reaction behaviour.
B) ethical behaviour.
C) generally accepted behaviour.
D) collusion
E) motivational behaviour.
Answer: B
Skill: Knowledge
Objective: 3.1
1
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4) ________ refers to ethical or unethical behaviours by a manager or employee of an
organization.
A) Social ethics
B) Social responsibility
C) Business ethics
D) Collusion
E) Cartelling
Answer: C
Skill: Knowledge
Objective: 3.1
5) Ethical and unethical behaviour is determined partly by the ________ and partly by
________.
A) society; culture
B) society; values
C) individual; culture
D) person; religion
E) culture; society
Answer: C
Skill: Knowledge
Objective: 3.1
6) With regard to the distinction between unethical and illegal behaviour, it is correct to say that
A) something that is illegal is also unethical.
B) a given act can be ethical, yet illegal.
C) the distinction between unethical and illegal behaviour has no practical significance.
D) it is impossible for something to be unethical and legal at the same time.
E) all of these are correct.
Answer: B
Objective: 3.1
7) "Cooking the books" to make a company's financial situation look better than it really is
illustrates a behaviour that is
A) ethical but illegal.
B) ethical and illegal.
C) unethical but legal.
D) unethical and illegal.
E) There is no consensus on how this behaviour should be classified.
Answer: D
Objective: 3.1
2
8) Breaking the law in a totalitarian regime in order to carry out humanitarian efforts would
probably be seen by most people as
Answer: A
Objective: 3.1
9) John is a salesperson who feels that he is not paid nearly enough money for the work that he
does. He therefore "pads" his expense account in order to receive increased financial benefits.
John's behaviour would be ethical according to which criterion?
A) Rights
B) Justice
C) Utility
D) Caring
E) None of these
Answer: E
Objective: 3.1
10) The Personal Information Protection and Electronic Documents Act (PIPEDA)
A) is designed to protect electronic documents from computer hackers.
B) requires organizations to obtain consent before they collect, use, or disclose information about
individuals.
C) has been declared unconstitutional.
D) prohibits organizations from using personal information about their employees.
E) applies almost exclusively to universities.
Answer: B
Objective: 3.1
3
11) Marlene is a shoe buyer for a large department store. Six months ago, she accepted a free trip
to Barbados from one of the companies that she buys shoes from. Now, the company is strongly
hinting that it wants Marlene to increase the size of her next order, and Marlene feels some
obligation to do so because of the free trip she received. Marlene is involved in
A) illegal behaviour.
B) a conflict of interest.
C) collusion.
D) illegal and unethical behaviour.
E) unethical behaviour.
Answer: B
Objective: 3.1
12) A manager who discriminates against any ethnic minority in hiring exhibits behaviour that is
Answer: D
Objective: 3.1
13) The practice of jeitinho is an element of business activity in which country?

A) Canada
B) Japan
C) Indonesia
D) Brazil
E) Czech Republic
Answer: D
Skill: Knowledge
Objective: 3.1
4
14) Which of the following statements is correct with regard to the conflict of interest idea in
business?
A) Conflicts of interest exist only in people's minds.
B) A conflict of interest occurs when an activity benefits an individual at the expense of the
employer.
C) A conflict of interest occurs when employees of equal rank have a disagreement.
D) A conflict of interest occurs when a boss and a subordinate have a disagreement.
E) All of the statements are correct.
Answer: B
Objective: 3.1
15) A survey of global managers found that an average of ________ percent of managers felt
that corruption was widespread in their country.
A) 10
B) 30
C) 40
D) 60
E) 70
Answer: C
Skill: Knowledge
Objective: 3.1
16) Which of the following behaviours is illegal?

A) Company executives encourage employees to invest in company stock.
B) An employee accepts a gift from a supplier in return for a large order.
C) A manager refuses to hire or promote a qualified visible minority despite company policy.
D) A manager underpays an employee, knowing that the employee can't afford to quit.
E) All of these actions are illegal.
Answer: C
Objective: 3.1
17) What is the difference between illegal behaviour and unethical behaviour?
A) What is illegal varies from country to country, but what is unethical does not.
B) Illegal behaviour is that which breaks a country's laws, but unethical behaviour may not break
any laws.
C) It is not possible to say what the difference is between illegal and unethical behaviour.
D) Illegal behaviour covers a broader range of issues than unethical behaviour.
E) There is no real difference between illegal and unethical behaviour.
Answer: B
Objective: 3.1
5
18) Joe paid his subordinate John less than John deserved because Joe knew that John needed the
job badly. Joe's behaviour is
A) illegal but not unethical.
B) unethical but not illegal.
C) both illegal and unethical.
D) neither illegal nor unethical.
E) It is not possible to say without determining how John feels about his pay.
Answer: B
Objective: 3.1
19) Jennifer is about to start her first job. Which of the following is least likely to be an influence
on her ethics and behaviour?
A) Her past experiences
B) The code of ethics in that firm
C) Her family and friends
D) Her peers at school
E) Religious teaching she may have received
Answer: B
Objective: 3.1
20) Georgia wants to make sure that her employees behave in a highly ethical fashion. What
should she avoid doing?
A) Emphasizing the importance of ethics to all employees
B) Helping employees to follow the company's ethical standards
C) Modelling behaviour that employees should adopt
D) Relying on managers to report ethics violations
E) Ensuring that a strict code of ethics is in place
Answer: D
Skill: Application
Objective: 3.1
6
21) The first step in the simplified three-step model for applying ethical judgments to situations
that may arise during the course of business activities is to
A) determine the norms that relate to the situation.
B) determine the most appropriate moral values.
C) determine the implications of breaching the activity or policy.
D) gather the relevant factual information.
E) make an ethical judgment based on the rightness or wrongness of the proposed activity or
policy.
Answer: D
Diff: 1 Type: MC Page Ref: 43-44
Objective: 3.1
22) While on a business trip, a manager takes some friends to dinner for a social evening and
then charges the dinner to his company's expense account. The ________ norm would ask "Is
this fair"?
A) utility
B) rights
C) justice
D) caring
E) reciprocity
Answer: C
Objective: 3.1
23) Miranda has decided to evaluate a decision she made based on the ethical norm of rights.
What questions should she ask?
A) Does the decision optimize the satisfaction of all constituencies?
B) Is the decision consistent with what we regard as fair?
C) Does the decision respect the rights of the individuals involved?
D) Is the decision consistent with people's responsibilities to each other?
E) How much will the decision cost if it is wrong?
Answer: C
Skill: Application
Objective: 3.1
7
24) Bernard has decided to evaluate a decision he made based on the ethical norm of utility.
What question should he ask?
Answer: A
Skill: Application
Objective: 3.1
25) Belinda has decided to evaluate a decision she made based on the ethical norm of justice.
What question should she ask?
Answer: B
Skill: Application
Objective: 3.1
26) Barrie has decided to evaluate a decision he made based on the ethical norm of caring.
Which of the following questions does he need to ask?
Answer: D
Skill: Application
Objective: 3.1
27) Sam has decided to apply the three-step model to help him decide whether a business
decision he is thinking about making is ethical or unethical. What should he do first?
A) Reflect on his own ethical standards as background for the decision
B) Gather the relevant factual information
C) Consult with his boss about the situation
D) Make an ethical judgment about the rightness or wrongness of the situation
E) Determine the most appropriate moral values
Answer: B
Skill: Application
Objective: 3.1
8
28) All things considered, what is generally the best ethical norm to use when a person is trying
to determine whether a decision is ethical?
A) Rights
B) Caring
C) Justice
D) Utility
E) None of these
Answer: E
Skill: Application
Objective: 3.1
29) Marilyn has decided to use the three-step model to decide whether a business decision is
ethical or unethical. She has already gathered the relevant factual information about the situation.
What should she do next?
A) Reflect on her own ethical standards as background for the decision
B) Gather the relevant factual information
C) Consult with her boss about the situation
D) Make an ethical judgment about the rightness or wrongness of the situation
E) Determine the most appropriate moral values
Answer: E
Objective: 3.1
30) Peter, the president of a small company, wants his employees to be aware that they should
act ethically. Which of the following has proven most effective in improving ethical behaviour in
a business firm?
A) Reward managers who have secured an advantage for the firm, even if their behaviour might
be seen by some people as unethical
B) Demonstrate top management commitment to high ethical standards
C) Do not publicly bring attention to unethical behaviour, instead deal with it privately
D) Fire all unethical employees
E) Do nothing to reinforce the undesirable behaviour and it will not be repeated
Answer: B
Objective: 3.1
9
31) Which of the following is correct with regard to managerial ethics?
A) A manager who discriminates against any ethnic minority in hiring is exhibiting illegal, but
not unethical, behaviour.
B) If a manager pays an employee less than he deserves because the manager knows the
employee can't afford to quit, the manager is clearly behaving unethically.
C) Ethics are not usually an issue when a firm deals with customers.
D) It is difficult to deal with ethical issues because there is a lot of global variation in business
practices.
E) All of the statements are correct.
Answer: D
Objective: 3.1
32) When a Canadian company is operating in a country where bribes are legal, the Canadian
government expects the company to
A) use their judgment, since Canadian laws are not applicable.
B) not pay any bribes at all.
C) notify Canadian authorities that they may have to pay a bribe in order to do business in the
foreign country.
D) match the bribes that other competitive firms are paying so they can get the business.
E) None of the statements are accurate.
Answer: B
Objective: 3.1
33) To show the company's desire for employee ethical behaviour, many business firms have
established
A) an ethical review board.
B) an office of ethical affairs.
C) a whistle-blower reward system.
D) random ethical audits.
E) codes of conduct.
Answer: E
Skill: Knowledge
Objective: 3.1
10
34) Due to his formal position, John has access to certain information. If John uses this
information to facilitate unethical behaviour and to keep it secret, he is illustrating which of the
following reasons for unethical behaviour?
A) Pressure
B) Opportunity
C) Rationalization
D) Manipulation
E) None of these
Answer: B
Skill: Knowledge
Objective: 3.1
35) The three general factors that have been identified as important in causing individuals to
behave in unethical ways are
A) pressure, opportunity, and rationalization.
B) the chance for financial gain, increased status, and poor control systems.
C) the chance for financial gain, status, and power.
D) pressure from peers, subordinates, and superiors.
E) pressure from external competitors, bosses, and investors.
Answer: A
Objective: 3.1
36) All of the following are functions of codes of ethics except

A) they increase public confidence in a firm or its industry.
B) they ensure that unethical behaviour will not occur in the firm.
C) they may help stem the tide of government regulation.
D) they improve internal operations by providing consistent ethical standards.
E) they help management respond to problems that arise as a result of unethical behaviour.
Answer: B
Objective: 3.1
37) Approximately ________ of Canadian firms have codes of ethics, while approximately
________ of U.S. firms have them.
A) one-third; two-thirds
B) two-thirds; nine-tenths
C) one-fifth; one-fourth
D) one-half; one-half
E) one-half; three-quarters
Answer: B
Skill: Knowledge
Objective: 3.1
11
38) John wants his employees to be aware that they should act ethically. He should
A) fire anyone who behaves unethically.
B) not draw public attention to any employee's unethical behaviour, but instead deal with it
privately.
C) publicly reward ethical behaviour and ignore unethical behaviour.
D) publicly discipline employees who behave unethically, but don't fire them.
E) adopt a written code of ethics.
Answer: E
Skill: Application
Objective: 3.1
39) Which of the following statements is most likely to be included in a company's code of
ethics?
A) We reward high achievers.
B) We strive for domination in the market.
C) We achieve our objective by raising capital.
D) We believe in our company brand.
E) We reward all valuable contributions.
Answer: E
Skill: Application
Objective: 3.1
40) ________ is the view that a company's only social responsibility is to make as much money
as possible for its shareholders.
A) Free market capitalism
B) Managerial capitalism
C) Globalization
D) Mixed economy capitalism
E) None of these
Answer: B
Skill: Knowledge
Objective: 3.2
12
41) The view that business should balance its commitments to important individuals and groups
in its environment is known as
A) managerial capitalism.
B) social auditing.
C) social responsibility.
D) business ethics.
E) stakeholder theory.
Answer: C
Skill: Knowledge
Objective: 3.2
42) All of the following groups are organizational stakeholders except

A) employees.
B) investors.
C) customers.
D) competitors.
E) All of these groups are organizational stakeholders.
Answer: D
Skill: Knowledge
Objective: 3.2
43) Social return on investment (SROI) helps companies to

A) improve their financial return on investment.
B) increase employee satisfaction.
C) understand, manage, and communicate the social value of their activities for stakeholders.
D) respond to required government regulations on social responsibility.
E) improve the level of ethics within the company.
Answer: C
Objective: 3.2
44) Why did the fair-trade movement develop?

A) Because large industrialized countries were using unfair trading practices with developing
countries
B) Because pollution was increasing too rapidly in developing countries as a result of excessive
investment in mining operations
C) Because workers involved in producing commodities like coffee were not receiving fair
payment for their products
D) Because free trade agreements were hurting smaller producers
E) Because there was a surplus of cotton as a result of highly efficient U.S. production
Answer: C
Objective: 3.2
13
45) Which of the following is the greatest challenge in meeting a firm's social responsibility?
A) Determining when to conduct ethical training
B) Determining the contents of the code of ethics
C) Determining when to conduct a social audit
D) Knowing what social responsibility is
E) Determining how to respond to the interests of one part of society (e.g., investors) which
conflict with the needs of another part of society (e.g., customers)
Answer: E
Objective: 3.2
46) Which of the following questions would a company dedicated to increasing its level of
corporate social responsibility be least likely to ask?
A) "How can we afford to pay our employees more?"
B) "Should we offer more sales in order to better serve our customers?"
C) "Can we purchase better quality ingredients while still making a profit?"
D) "Which charitable donations will make our investors most happy?"
E) "If our profits go up, can we lay off some of our employees?"
Answer: E
Skill: Application
Objective: 3.2
47) The CEO of Perry's Pizzeria, a rapidly growing restaurant chain, is committed to a high level
of corporate social responsibility along with continued business success. Which action by the
CEO would most enhance the company's reputation for social responsibility?
A) Using more nutritious but more expensive, ingredients
B) Cutting employees' wages and benefits to boost the company's stock price
C) Using marketing or advertising methods that would allow the company to discreetly reduce
pizza size without also reducing the price
D) Packaging products in material that costs less, even if customers object to the change
E) Taking steps that would cause competitors to close their doors
Answer: A
Objective: 3.2
14
48) Jana and Kate are the owners of an upscale jewelry boutique that offers unique and much-
desired accessories in a wealthy neighborhood. Jana and Kate are concerned, however, that the
company's commitment to social responsibility has begun to diminish in various respects. How
would this most likely be evident?
A) Other local businesses may be forced to close their doors.
B) The health of employees and their children is starting to suffer.
C) Local investors and stakeholders seek to invest their money elsewhere.
D) The boutique's customer base may decrease sharply due to moderate increases in price.
E) Employees may begin making fewer charitable personal donations.
Answer: B
Skill: Application
Objective: 3.2
49) Jordan is a recent college graduate with a degree in computer programming. He has just
begun his first full-time job and is excited to apply the skills that he worked so hard to acquire.
Though he excelled as a student, Jordan is anxious about how successful he will be as an
employee. When an opportunity unexpectedly presents itself to take credit for a brilliant software
program that someone else wrote, Jordan does not resist and claims the program as his own.
Which of the following would least likely also happen along with Jordan's decision?
A) Other recently hired employees who learn of Jordan's dishonesty are hesitant to report him
because they think he is the boss's favourite new employee.
B) After thinking deeply about his behaviour, Jordan becomes better equipped to act ethically in
the future.
C) Without recognizing his behaviour as unethical, Jordan steals office supplies and reports more
hours on his time sheet than he has actually worked.
D) The company's ethics committee agrees that employees should not be expected to tell the
truth if honesty is not part of their personal ethics.
E) An employee who reports Jordan's dishonesty consequently suffers from psychological and
emotional stress.
Answer: D
Skill: Application
Objective: 3.2
15
50) Ian is the president of a medium-sized manufacturing company. He wants to ensure that his
company behaves in a socially responsible way. Which of the following is the greatest challenge
facing Ian?
A) Determining how to respond to the interests of one part of society which conflicts with the
needs of another part of society
B) Determining the contents of the code of ethics and what takes priority
C) Determining when to conduct a social audit
D) Knowing what social responsibility is
E) Determining when to conduct ethical training for employees
Answer: A
Objective: 3.2
51) A chocolate company with a primary emphasis on ethical sourcing and procurement would
most likely avoid which of the following?
A) Neglecting the welfare of the farmers who grow cacao beans
B) Reducing the size of their marketing department
C) Developing new fat-free products
D) Hosting a holiday party for all employees
E) Reducing the funds allocated to the company health care program for employees
Answer: A
Skill: Application
Objective: 3.3
52) Consumerism is
A) the group of laws dealing with retail commercial transactions.
B) the movement that seeks to protect and expand the rights of consumers in their dealings with
businesses.
C) the right to be informed about all aspects of a product.
D) the right to choose the product.
E) the right to safe products.
Answer: B
Objective: 3.3
16
53) Which of the following illustrates consumers' rights to safe products?
A) Clothing must be labelled with information about its proper care.
B) A new vacuum cleaner must be free of electrical hazards while in use cleaning a consumer's
home.
C) There must be open competition in the marketplace.
D) Procter & Gamble provides a toll-free telephone number for consumers to use for complaints
or questions.
E) Food products must list their ingredients.
Answer: B
Objective: 3.3
54) When a food company lists the ingredients that make up their products, which consumer
right is it addressing?
A) Right to choose
B) Right to safe products
C) Right to courteous service
D) Right to be informed
E) Right to be heard
Answer: D
Objective: 3.3
55) Social activism dedicated to protecting the rights of consumers in their dealings with
businesses is called
A) whistle-blowing.
B) kiting.
C) price gouging.
D) consumerism.
E) collusion.
Answer: D
Skill: Knowledge
Objective: 3.3
56) When two or more firms agree to collaborate on wrongful acts, it is referred to as
A) consumerism.
B) collusion.
C) market segmentation.
D) oligopoly.
E) monopoly.
Answer: B
Skill: Knowledge
Objective: 3.3
17
57) The Canadian Competition Bureau investigated possible ________ of bread by Loblaws,
Sobeys and Metro.
A) unit pricing
B) demand pricing
C) price fixing
D) price gouging
E) price leadership
Answer: C
Skill: Knowledge
Objective: 3.3
58) With respect to the issue of counterfeit brands, it is correct to say that
A) counterfeit brands used to be a big problem, but new legislation in various countries has
reduced the problem considerably.
B) counterfeit brands are a big problem in products like perfume and designer clothing, but less
of a problem in pharmaceuticals and expensive wines.
C) consumers benefit from counterfeit goods because they can get good products for lower
prices.
D) it is generally easy to tell the difference between counterfeit goods and the real thing.
E) none of these.
Answer: E
Objective: 3.3
59) Which consumer right is violated by a company that restricts and interferes with
competition?
A) Right to be heard
B) Right to choose what they buy
C) Right to good prices
D) Right to safe products
E) Right to be informed
Answer: B
Objective: 3.3
18
60) Atlas Corp. offers a money back guarantee on products and provides complaint hot lines for
its customers. This is an example of which of the following consumer rights?
A) Right to be informed
B) Right to choose
C) Right to be heard
D) Right to health and safety
E) Right to low prices
Answer: C
Objective: 3.3
61) The recent surge of products being called "light" led to an investigation by government
agencies. This illustrates concerns about which of the basic consumer rights?
A) Right to low prices
B) Right to choose what they buy
C) Right to safe products
D) Right to be informed
E) Right to be heard
Answer: D
Objective: 3.3
62) When the Alberta securities regulator brought charges against several executives at Grand
Cache Coal Corp. because those executives sold company stock just before the company publicly
disclosed negative news about its sales, this was an example of
A) cheque kiting.
B) insider trading.
C) misrepresentation of finances.
D) improper financial management.
E) whistle-blowing.
Answer: B
Objective: 3.3
19
63) Because it was the initial year of production, only 3000 units of a new model car were built.
Some auto dealers got together and agreed that they would sell the cars only if the customer was
willing to pay several thousand dollars over the sticker price. This is an example of
A) price gouging.
B) smart business practice.
C) price fixing.
D) collusion.
E) price lining.
Answer: D
Objective: 3.3
64) Bristol Corp. plans to introduce an inexpensive line of shoes to the Canadian market. It has
found a manufacturer in Asia that can produce the shoes at a cost that will be cheaper than other
brands of the same quality. Which of the following is a potential ethical implication that the
company should consider before beginning production?
A) The country's existing labour laws and the factory working conditions
B) The average exchange rate of the country's currency over a ten-year period
C) The challenges of doing business in a country with a nonconvertible currency
D) The energy demands of the manufacturer's facility
E) The basic international business strategy it will use
Answer: A
Skill: Analysis
Objective: 3.3
65) Paramount Pizza wants to be a socially responsibility company. It can support its claim of
being a socially responsible company by
A) using more nutritious ingredients even if they are more expensive.
B) cutting employees' wages and benefits in order to boost the company's stock price.
C) reducing pizza size while holding the price constant.
D) packaging products in material that costs less, even if customers object to the change.
E) taking actions to force competitors into bankruptcy.
Answer: A
Objective: 3.3
20
66) Martha is the owner of a business that regularly imports certain agricultural commodities
from countries with poor economic conditions. If she wants to help the citizens of those
countries, how can she best do that?
A) By including labels on her products indicating where the commodities come from
B) By hiring people who have visited these countries and are familiar with the conditions there
C) By opening an outlet in these countries and creating jobs for the people there
D) By purchasing more of the commodities
E) By shipping free products to these nations
Answer: C
Skill: Analysis
Objective: 3.3
67) Carl and Kelly have opened a gymnastics center. If they want to behave in a socially
responsible fashion, which action should they definitely avoid?
A) Purchasing substandard gym equipment
B) Advertising methods that are intended to increase profit
C) Initiatives that decrease the satisfaction of investors
D) Doubling enrollment fees for the program
E) Providing attractive salaries for employees
Answer: A
Skill: Application
Objective: 3.3
68) Which of the following illustrates consumers' rights to safe products?

A) Food products must list their ingredients
B) Open competition in the marketplace
C) A new vacuum cleaner must be free of electrical hazards
D) Procter & Gamble provides a toll-free telephone number for consumers to use for complaints
or questions
E) Clothing must be labelled with information about its proper care
Answer: C
Objective: 3.3
21
69) By adding labels on spray cans indicating that the contents are flammable and instructions on
how to use it correctly, which consumer right is being met?
A) Right to fair treatment
B) Right to safe products
C) Right to be heard
D) Right to choose
E) No consumer right is being satisfied.
Answer: B
Objective: 3.3
70) When Procter & Gamble puts a toll-free number on its products so that consumers can call if
they have questions or complaints, this is an example of
A) the right to choose.
B) the right to be informed.
C) the right to health and safety.
D) the right to be heard.
E) the right to everyday low prices.
Answer: D
Objective: 3.3
71) In the past, "gentlemen's agreements" were often used to avoid competition or to divide up a
market so that firms did not have to truly compete against each other. Which consumer right is
being violated when companies block competition?
A) Right to be heard
B) Right to choose
C) Right of consumers
D) Right to safety
E) Right to competition
Answer: B
Objective: 3.3
22
72) There are four areas of concern regarding ethics in advertising. They are
A) truth-in-advertising, misleading pricing, bait-and-switch advertising, stealth advertising.
B) advertising of counterfeit brands, stealth advertising, morally objectionable advertising, and
truth-in-advertising.
C) bait-and-switch advertising, advertising of counterfeit brands, stealth advertising, and morally
objectionable advertising.
D) truth-in-advertising, misleading price advertising, celebrity advertising, and morally
objectionable advertising.
E) misleading price advertising, truth-in-advertising, celebrity advertising, and advertising claims
about product performance that are not true.
Answer: B
Skill: Knowledge
Objective: 3.3
73) When Procter & Gamble claimed that its Pantene shampoo made hair "10 times stronger,"
the Chinese government decided that this constituted
A) advertising of a counterfeit brand.
B) morally objectionable advertising.
C) lack of truth-in-advertising.
D) misleading price advertising.
E) stealth advertising.
Answer: C
Objective: 3.3
74) When Sony Ericsson hired models to pose as "tourists" who asked real tourists if they would
take their picture with Sony's new camera cellphone, this was an example of
A) advertising of a counterfeit brand.
B) morally objectionable advertising.
C) lack of truth-in-advertising.
D) misleading price advertising.
E) stealth advertising.
Answer: E
Objective: 3.3
23
75) Sam has noticed that the safety mechanism on the piece of equipment that he operates is not
working. After repeatedly telling management about the defect but getting no response, he
decides to report it to the provincial agency responsible for workplace safety. This is an example
of
A) collusion.
B) insider trading.
C) stealth advertising.
D) violating the line of reporting.
E) whistle-blowing.
Answer: E
Objective: 3.3
76) Which of the following is the best means of showing responsibility toward employees?
A) Provide employees with equal opportunities without regard to race, sex, or other irrelevant
factors
B) Provide rewards for employees who go beyond the call of duty
C) Provide a stock ownership plan for employees
D) Provide a grievance system for employees
E) Recruit employees from minority groups
Answer: A
Objective: 3.3
77) Even if management is behaving irresponsibly toward investors, stockholders may be

reluctant to act because
A) a management change may drive the stock price down.
B) it's too much trouble.
C) the creditors probably wouldn't support them.
D) the board of directors will overrule them.
E) company management will retaliate.
Answer: A
Objective: 3.3
24
78) The president of a company has paid himself a large salary, a handsome bonus, received a
large number of lucrative stock options, and hired his family members at high salaries. The
president is probably guilty of
A) collusion.
B) improper financial management.
C) cheque kiting.
D) misrepresentation of finances.
E) insider trading.
Answer: B
Objective: 3.3
79) The illegal practice of writing cheques against money that has not yet arrived at the bank on
which the cheque has been drawn is called
A) insider trading.
B) whistle blowing.
C) managing the monetary float.
D) kickbacks.
E) cheque kiting.
Answer: E
Skill: Knowledge
Objective: 3.3
80) Which term describes the process of using confidential information to gain from the purchase
or sale of stocks?
A) Generally accepted investment practice (GAIP)
B) Cheque kiting
C) Whistle blowing
D) Insider trading
E) General consensus on unethical business behaviour (GCUBB)
Answer: D
Skill: Knowledge
Objective: 3.3
25
81) Bob Crawford sold his shares in Texon Company after finding out from Texon's CEO that its
stock was about to drop in price because its soon-to-be-released quarterly financial update was
going to show that earnings were lower than expected. Bob engaged in
A) whistle-blowing.
B) misrepresentation of finances.
C) insider trading.
D) an obstructionist stance to social responsibility.
E) cheque kiting.
Answer: C
Objective: 3.3
82) Which of the following is an example of a company acting irresponsibly toward its
investors?
A) The board of directors does not declare a dividend.
B) Retained earnings are used to expand research and development instead of paying a dividend.
C) Top management misrepresents the firm's financial situation.
D) The firm does not allow insider trading.
E) The firm uses retained earnings to finance growth.
Answer: C
Objective: 3.3
83) Which of the following illustrates how a company could be irresponsible with respect to its
investors?
A) The company uses profits to fund research and development.
B) The president overstates the positive impact of a new contract.
C) The board of directors declares a stock split.
D) Management accepts a takeover bid from another company.
E) No dividends are declared even though the company made a profit.
Answer: B
Objective: 3.3
84) Which three countries are the worst greenhouse gas emitters per capita?
A) China, India, and Russia
B) Australia, the United States, and Canada
C) China, Russia, and the Australia
D) India, the United States, and Canada
E) Japan, China, and Russia
Answer: B
Skill: Knowledge
Objective: 3.3
26
85) What are carbon credits?
A) Credits given to countries that produce more oil than they consume
B) Credits given to countries that install the most pollution equipment per capita
C) Credits which are purchased by countries that give them the right to pollute the atmosphere
D) Credits which must be purchased by countries after they have been found guilty of polluting
the atmosphere
E) Credits that are given to countries for producing the carbon that is needed to make oil
Answer: C
Objective: 3.3
86) With regard to the "cap and trade" system for trading carbon credits, it is correct to say that
A) very little fraud has been uncovered in the system.
B) the system has proven to be very effective.
C) studies show that countries in Asia are not interested in the system.
D) companies in developing countries buy credits which they sell to companies in industrialized
countries.
E) carbon credits essentially give companies the right to pollute the environment.
Answer: E
Objective: 3.3
87) Which of the following is correct regarding global warming?

A) The idea is a hoax.
B) Global warming is occurring, but the rate is so slow that it will be hundreds of years before
any significant problems arise.
C) There is agreement that global warming is caused by increased air pollution that is a result of
human activity.
D) There is agreement that global warming is happening, but there is a debate about whether the
warming is natural or caused by human activity.
E) Global warming will have a negative effect on everyone.
Answer: D
Objective: 3.3
27
88) Ensyn Corp. converts sawdust into liquid fuel by blasting wood waste with a sand-like
substance that is heated. This use of plant waste to produce energy is known as
A) recycling.
B) biomass.
C) green power.
D) toxic waste conversion.
E) exajoules.
Answer: B
Objective: 3.3
89) Under the Canadian and Ontario Environmental Protection Act, liability for a business firm
can run as high as ________ per day.
A) $10 000
B) $500 000
C) $25 000
D) $2 000 000
E) $5 000 000
Answer: D
Skill: Knowledge
Objective: 3.3
90) A poll of 12 000 people in 11 different countries revealed that ________ percent of those
polled were willing to spend extra money to fight climate change.
A) 90
B) 75
C) 65
D) 45
E) 20
Answer: E
Skill: Knowledge
Objective: 3.3
91) The conversion of waste materials into useful products is called

A) recycling.
B) solid waste recovery.
C) acid rain.
D) biomass.
E) toxic waste disposal.
Answer: A
Skill: Knowledge
Objective: 3.3
28
92) Dangerous chemical and/or radioactive by-products of various manufacturing processes are
called
A) solid waste.
B) acid rain.
C) toxic waste.
D) incineration waste.
E) biomass.
Answer: C
Skill: Knowledge
Objective: 3.3
93) Which of the following is not an argument against a socially responsible role by a business
firm?
A) Some individuals believe that business involvement will increase business control and power
in addressing solutions for problems.
B) Business should help solve the problems because business contributed to the problem.
C) Some people oppose any business activity that cuts into profits to investors.
D) Companies lack the expertise to deal with many of the problems in society; therefore,
business should let experts handle those matters.
E) Many businesses have been able to influence government agencies that are supposed to
regulate their industries.
Answer: B
Objective: 3.4
94) Which statement would people in favour of socially responsible business most likely
advocate?
A) Maximizing profits is the core goal of the corporation.
B) The corporation is part of the civic world.
C) Other agencies have the skill to develop social programs.
D) Vast corporate resources are being overused.
E) Civic responsibility needs to be centralized.
Answer: B
Objective: 3.4
29
95) Which of the following illustrates the defensive stance to social responsibility?
A) A local clothing store supports artists and performers.
B) Many firms sponsor youth athletic teams.
C) Tobacco companies place health warning labels on their products because they are required to
do so by the government.
D) Many organizations respond to requests for donations to community hockey teams, Girl
Guides, and youth soccer programs.
E) Many companies match employee contributions to approved causes.
Answer: C
Objective: 3.4
96) In Canada and the United States, tobacco companies are required to include warnings to
smokers on their products and to limit advertising to prescribed media. Within Canada and the
United States, they follow these rules but often use more aggressive methods in countries with no
such rules. As such, tobacco companies typically adopt a(n) ________ stance to social
responsibility in marketing their products.
A) accommodative
B) obstructionist
C) proactive
D) defensive
E) none of these
Answer: D
Objective: 3.4
97) IBP, a large meat processing firm, has a record of violating environmental regulations,
labour laws, and food processing laws, and then trying to cover up its offenses. IBP has adopted
a(n) ________ stance to social responsibility.
A) accommodative
B) obstructionist
C) proactive
D) defensive
E) financial maximization
Answer: B
Objective: 3.4
30
98) Hi-Fly, Inc. was accused of discharging residue from its production processes into a nearby
pond on the company's premises. When challenged about this, the owner said, "We own the
pond, and we can do whatever we want on our private property." Which of the following
approaches to social responsibility does this attitude indicate?
A) Obstructionist
B) Accommodative
C) Defensive
D) Proactive
E) Private property rights
Answer: A
Objective: 3.4
99) Wilson Products installed a low-quality fire alarm in its facility in compliance with local
regulations. The owner stated, "We've never had a fire and we don't actually need such a system,
but I am forced to install it because of local regulations. I therefore didn't want to pay too much
for the system." Which of the following stances toward social responsibility is evident here?
A) Obstructionist
B) Accommodative
C) Defensive
D) Proactive
E) Conservative financial management
Answer: C
Objective: 3.4
100) Acme Inc. meets its legal and ethical requirements. In addition, Acme donates $50 000 each
year to local charities, but only when a request is made. Which of the following approaches to
social responsibility is evident here?
A) Obstructionist
B) Accommodative
C) Defensive
D) Proactive
E) It is not possible to tell from the information that is provided.
Answer: B
Objective: 3.4
31
101) Allex Corp. has received a request from a charitable organization for a donation of
$100,000 to help fund its activities. The CEO knows that the Board of Directors of Allex has
made it clear that the company will adhere to a "defensive" strategy in terms of its social
responsibility posture. How should the CEO respond to the request from the charitable
organization?
A) Grant the request for $100 000.
B) Grant the request, but provide only $50 000.
C) Do not grant the request.
D) Tell the charitable organization that the Allex will study the issue further and will get back to
them with a decision.
E) None of these
Answer: C
Skill: Application
Objective: 3.4
102) McDonald's established Ronald McDonald House to provide lodging for families of
children who are hospitalized away from home. This approach to social responsibility would best
be classified as a(n)
A) defensive stance.
B) obstructionist stance.
C) accommodative stance.
D) charitable stance.
E) proactive stance.
Answer: E
Objective: 3.4
103) Yorkton Electric has taken an accommodative stance towards social responsibility. This
means that
A) it will focus only on its profitability, even if it means breaking the law.
B) it will seek out opportunities to contribute to the well-being of society.
C) it will take a proactive position on social issues.
D) it will respond to social concerns beyond the bare minimum if specifically asked.
E) it will take on only the minimal amount of responsibility required by law and standard
business practice.
Answer: D
Objective: 3.4
32
104) Mandex Corporation has a history of covering up mistakes that are made by its employees
rather than fixing the mistakes. This company is taking a(n) ________ approach to social
responsibility.
A) accommodative
B) social audit
C) proactive
D) defensive
E) obstructionist
Answer: E
Objective: 3.4
105) Biggar Foods wants to take a proactive stance towards social responsibility. This means that
A) it should cover up any wrongdoing by its employees.
B) it should focus on its profitability, even if that means breaking the law.
C) it should seek out opportunities to contribute to the well-being of society.
D) it should respond to social concerns if it is asked.
E) it should take on only the minimal amount of responsibility required by law and standard
business practice.
Answer: C
Objective: 3.4
106) Jays Inc. dumped toxic chemicals in the river next to their factory. Upon being caught, Jays
Inc. not only denied their wrongdoings, they went to great lengths to hide their behaviour. Jays
Inc. is taking a(n) ________ stance to social responsibility.
A) defensive
B) accommodative
C) proactive
D) obstructionist
E) reactive
Answer: D
Objective: 3.4
33
107) Battleford Corp. is in the processes of setting up a system to manage its social responsibility
program. What should they do first?
A) Conduct a social audit.
B) Ask the government to identify specific things the company is doing that need to be corrected.
C) Make sure that support is evident from top management.
D) Appoint a director of the firm's social agenda.
E) A committee of top managers must develop a strategic plan for social responsibility.
Answer: C
Skill: Application
Objective: 3.4
108) The top management level at Brown Corp. has already publicly stated its commitment to
being socially responsible. What is the next action that Brown Corp. needs to take?
A) A social audit must be conducted.
B) The government must identify specific things the company is doing that need to be corrected.
C) Make sure that support must is evident from top management.
D) A specific executive must be given the authority to act as the director of the firm's social
agenda.
E) A committee of top managers must develop a strategic plan for social responsibility.
Answer: D
Skill: Application
Objective: 3.4
109) The ________ describes the systematic analysis of a firm's success in using funds that it has
set aside for its social responsibility goals.
A) charitable giving summary
B) social audit
C) social responsibility policy
D) whistle-blowing summary
E) strategic planning summary
Answer: B
Skill: Knowledge
Objective: 3.4
34
110) What is triple bottom line reporting?
A) Measuring the social responsibility impact of decisions made in the production, marketing,
and finance areas of a business firm
B) Measuring the social, environmental, and economic performance of a company
C) Measuring the social responsibility impact of decisions that are made by top, middle, and
lower-level managers
D) Measuring the efficiency, effectiveness, and profitability of a business
E) Measuring the social responsibility impact of managers' technical skills, human relations
skills, and conceptual skills
Answer: B
Skill: Knowledge
Objective: 3.4
111) In the 2017 Global 100 list of the most sustainable corporations in the world, which
company ranked first?
A) Imperial Oil (Canada)
B) Siemens AG (Germany)
C) Novo Nordisk (Norway)
D) Natura Cosmeticos (Brazil)
E) Statoil (Norway)
Answer: B
Skill: Knowledge
Objective: 3.4
112) Sustainable development

A) refers to the systematic analyses of how a firm is using funds earmarked for its social
responsibility goals.
B) refers to the pursuit of activities that meet current needs, but which will not put future
generations at a disadvantage when they attempt to meet their needs.
C) is not as popular as it was a decade ago because the program is too costly for businesses to
support.
D) involves measuring the social, environmental, and economic performance of a company.
E) means that companies view themselves as good citizens of society and they proactively seek
opportunities to contribute to consumer well-being.
Answer: B
Objective: 3.4
35
113) Tiffany's Taffy Shop is known for its commitment to corporate social responsibility.
However, Tiffany has learned that an employee has been unknowingly ordering candy wrappers
that are harmful to the environment. How could she best recover from this ethical lapse?
A) By firing the employee immediately
B) By seeking ways to remedy any harm that may have been caused
C) By considering ethics training for all employees
D) By starting to use candy wrappers that are not harmful to the environment
E) By decreasing the amount of taffy sold
Answer: B
Objective: 3.5
114) Owners of small business firms face the same type of social concerns as larger firms, but
A) with more demands on the owner.
B) on a smaller scale.
C) with more regulation.
D) with less regulation.
E) with more complexity.
Answer: B
Objective: 3.5
115) Beliefs about what is right and wrong or good and bad are which of the following?
A) Values
B) Morals
C) Ethics
D) Standards
E) Ideals
Answer: C
Skill: Knowledge
Objective: 3.1
ESL: Alternate/ESL
36
116) Behaviour that individuals and social norms define as wrong or bad is considered which of
the following?
A) Unethical
B) Dishonourable
C) Immoral
D) Improper
E) Indecent
Answer: A
Skill: Knowledge
Objective: 3.1
ESL: Alternate/ESL
117) What is ethical or unethical behaviours by a business's manager or employee referred to as?
A) Corporate culture
B) Corporate integrity
C) Corporate values
D) Business standards
E) Business ethics
Answer: E
Skill: Knowledge
Objective: 3.1
ESL: Alternate/ESL
118) Standards of behaviour that guide individual managers in their work are referred to as
which of the following?
A) Corporate culture
B) Managerial standards
C) Corporate values
D) Managerial ethics
E) Employers principles
Answer: D
Skill: Knowledge
Objective: 3.1
ESL: Alternate/ESL
37
119) Which of the following occurs when an activity benefits the employee at the expense of the
employer?
A) Employee perks
B) Fringe benefits
C) Conflict of interest
D) Ethical struggle
E) Personal profiting
Answer: C
Skill: Knowledge
Objective: 3.1
ESL: Alternate/ESL
120) Where does a company state its intentions to do business in an ethical manner?
A) Mission statement
B) Corporate values statement
C) Company principles manual
D) Training manuals
E) Code of ethics
Answer: E
Skill: Knowledge
Objective: 3.1
ESL: Alternate/ESL
121) The idea that a business should balance its commitments to individuals and groups that are
directly affected by the organization's activities is referred to as which of the following?
A) Corporate accountability
B) Corporate social responsibility
C) Corporate engagement
D) Corporate obligation balance
E) Proper corporate behaviour
Answer: B
Skill: Knowledge
Objective: 3.2
ESL: Alternate/ESL
38
122) The movement designed to help workers in developing countries receive fair payments for
their work is referred to as which of the following?
A) Ethical sourcing
B) Crowd funding
C) Reciprocal trade
D) Fair-trade
E) Equitable development
Answer: D
Skill: Knowledge
Objective: 3.2
ESL: Alternate/ESL
123) Who are groups, individuals and organizations that are directly affected by the practices of
an organization and that therefore have an interest in its performance?
A) Company shareholders
B) Community groups
C) Organizational stakeholders
D) Local government associations
E) Vested interested parties
Answer: C
Skill: Knowledge
Objective: 3.3
ESL: Alternate/ESL
124) Which of the following is not an organizational stakeholder?

A) Suppliers
B) Employees
C) Customers
D) Investors
E) Competitors
Answer: E
Skill: Knowledge
Objective: 3.3
ESL: Alternate/ESL
39
125) Which of the following is a social movement that seeks to protect and expand the rights of
consumers in their dealings with businesses?
A) Consumerism
B) Purchasing protection
C) Customer awareness
D) Shopper activism
E) Buyer rights enlargement
Answer: A
Skill: Knowledge
Objective: 3.3
ESL: Alternate/ESL
126) Which of the following is not one of the rights that consumers have?
A) Right to safe products
B) Right to be heard
C) Right to fair pricing
D) Right to courteous service
E) Right to choose what they buy
Answer: C
Skill: Knowledge
Objective: 3.3
ESL: Alternate/ESL
127) When companies get together to fix prices, this is illegal and is called which of the
following?
A) Bait and switch
B) Collusion
C) Shell game
D) Price deception
E) Conspiracy
Answer: B
Skill: Knowledge
Objective: 3.2
ESL: Alternate/ESL
40
128) Who is an individual who calls attention to an unethical, illegal and/or socially irresponsible
practice on the part of a business or other organization?
A) Awareness advocate
B) Ethics referee
C) Whistle-blower
D) Corporate crusader
E) Outsider
Answer: C
Skill: Knowledge
Objective: 3.3
ESL: Alternate/ESL
129) Which of the following is not one of the forms of financial mismanagement?
A) Insider trading
B) Cheque kiting
C) Misrepresentation of finances
D) Improper financial management
E) Expense account abuse
Answer: E
Skill: Knowledge
Objective: 3.3
ESL: Alternate/ESL
130) What is writing a cheque from one account, depositing it in a second account and then
immediately spending money from the second account while the money from the first account is
still in transit called?
A) Account manipulation
B) Cheque kiting
C) Deposit timing
D) Arbitrage
E) Withdrawal bridging
Answer: B
Skill: Knowledge
Objective: 3.3
ESL: Alternate/ESL
41
131) What is using confidential information to gain from the purchase of a stock is called?
A) Insider trading
B) Stock scam
C) Pump and dump
D) Market manipulation
E) Improper profiting
Answer: A
Skill: Knowledge
Objective: 3.3
ESL: Alternate/ESL
132) What is the introduction of harmful substances into the environment called?
A) Pollution
B) Dumping
C) Environmental spoiling
D) Contamination
E) Runoff
Answer: A
Skill: Knowledge
Objective: 3.3
ESL: Alternate/ESL
133) What are dangerous chemical and/or radioactive by-products of various manufacturing
processes that are harmful to humans and animals called?
A) Deadly disposals
B) Infectious garbage
C) Septic runoff
D) Toxic wastes
E) Harmful contaminants
Answer: D
Skill: Knowledge
Objective: 3.3
ESL: Alternate/ESL
42
134) Which of the following is the reconversion of waste materials into useful products?
A) Recycling
B) Salvaging
C) Reclamation
D) Restoration
E) Recovering
Answer: A
Skill: Knowledge
Objective: 3.3
ESL: Alternate/ESL
135) What is the stance of businesses that do as little as possible to solve social or environmental
problems?
A) Minimalist stance
B) Defensive stance
C) Accommodative stance
D) Proactive stance
E) Obstructionist stance
Answer: E
Skill: Knowledge
Objective: 3.4
ESL: Alternate/ESL
136) Which of the following is the stance of a firm that meets their legal and ethical
requirements and will go further in certain cases if they are asked?
A) Defensive stance
B) Obstructionist stance
C) Accommodative stance
D) Proactive stance
E) Minimalist stance
Answer: C
Skill: Knowledge
Objective: 3.4
ESL: Alternate/ESL
43
137) Corporate social responsibility will not succeed without which of the following?
A) Adequate funding
B) Employee buy in
C) Support of top management
D) Board of directors' approval
E) Executive acknowledgement
Answer: C
Skill: Knowledge
Objective: 3.4
ESL: Alternate/ESL
138) What are activities that meet current needs, but will not put future generations at a
disadvantage when they try to meet their needs?
A) Continuous improvement
B) Ethical growth
C) Sustainable development
D) Environmental awareness
E) Greening process
Answer: C
Skill: Knowledge
Objective: 3.4
ESL: Alternate/ESL
139) Which of the following is a systematic analysis of how a firm is using funds earmarked for
social-responsibility and how effective these expenditures have been?
A) Social audit
B) Environmental examination
C) Green investigation
D) Sustainability review
E) Charitable verification
Answer: A
Skill: Knowledge
Objective: 3.4
ESL: Alternate/ESL
44
3.2 Critical Thinking Questions
1) Steve Beatty is the head salesperson of a computer company that has a contract with a supplier
to provide technical equipment and support. Just before the winter holiday, a greeting card comes
to his home address from the president of the supplier. In it, he finds a Best Buy gift card worth
$500, with a note that says, "Go buy some toys for the kids." His children are excited, because
they had been looking forward to getting some newly released game console.
Beatty looks at his firm's formal code of ethics and finds that employees are cautioned not to
accept gifts from suppliers for their own personal use. It does not specifically say that gifts for
family members are included. He decides to keep the card.
Which of the following, if true, strengthens Beatty's ethical position?
A) The gift card has no expiration date, so he can wait to use it later, when he has moved to
another position in his company where no conflict of interest exists.
B) The greeting and the gift card were received at his home residence, not at his place of work.
C) The salesman has just spent $500 of his own money on video game equipment for his
children at Best Buy, so he has no immediate reason to use the gift card.
D) The president of the supplier is Beatty's father-in-law, so the gift is a personal one for his
grandchildren.
E) On checking, Beatty learns that the supplier sent gift cards of lower value to other
salespersons in his company.
Answer: D
Diff: 3 Type: MC
Skill: Analysis
2) Steve Beatty is the head salesperson of a computer company that has a contract with a supplier
to provide technical equipment and support. Just before the winter holiday, a greeting card comes
to his home address from the president of the supplier. In it, he finds a Best Buy gift card worth
$500, with a note that says, "Go buy some toys for the kids." His children are excited, because
they had been looking forward to getting some newly released game console.
Beatty looks at his firm's formal code of ethics and finds that employees are cautioned not to
accept gifts from suppliers for their own personal use. It does not specifically say that gifts for
family members are included. He decides to keep the card.
Which of the following, if true, most clearly makes Beatty's action professionally unsupportable?
A) The supplier's low prices have helped the computer company remain competitive with rival
companies in its local market.
B) The supplier needs continued business from the computer company to remain financially
viable.
C) Beatty is not the only person responsible for recommending which bids to accept from
suppliers.
D) Beatty's work contract states that employees must report all gifts from people associated with
firms with which they do business.
E) Rumour has it that other employees also received similar gift cards from the supplier and did
not report them.
Answer: D
Diff: 3 Type: MC
Skill: Analysis
45
3) The Lexington Corporation's mission statement shows a primary commitment to
compassionately improve the lives of elderly citizens.
Which of the following is least likely to be true with respect to the company's ethical code?
A) The well-being of others is valued.
B) All people have worth.
C) Age discrimination is prohibited when hiring employees.
D) Elderly citizens are expected and required to contribute to society.
E) All human beings should be treated fairly.
Answer: D
Diff: 3 Type: MC
Skill: Analysis
4) At the end of an especially good year, a company decides to give bonuses to its sales
employees. Two salespeople are included: Tracy shows a better-than-average sales record,
whereas Colin was only an average salesperson. Colin has a reputation for being a straight
shooter who complies strictly with the company's ethical code. On the other hand, Tracy made
some deals that, as co-workers confided to middle managers, were "on the edge" of dishonesty.
When the company's ethics panel reviewed one such deal, it was found to have been compliant
with the letter of the stated code. Nevertheless, the financial officer recommends that both
employees be given the same bonus.
Which of the following, if true, most strongly supports the financial officer's position?
A) The employees had received and duly signed a statement agreeing to uphold the company's
code of ethics.
B) The co-workers who reported the alleged shady deals had ethical incidents in their own
personnel files.
C) The firm recently conducted a social audit, which revealed concern about the firm's tolerance
of predatory practices by sales personnel and their impact on workplace morale.
D) The company's code gives very detailed definitions of what separates a responsible business
transaction from one that includes dishonesty.
E) The strong sales performance of this department was a major factor in improving the firm's
viability during an economic downturn.
Answer: C
Diff: 3 Type: MC
Skill: Analysis
46
5) At the end of an especially good year, a company decides to give bonuses to its sales
employees. Two salespeople are included: Tracy shows a better-than-average sales record,
whereas Colin was only an average salesperson. Colin has a reputation for being a straight
shooter who complies strictly with the company's ethical code. On the other hand, Tracy made
some deals that, as co-workers confided to middle managers, were "on the edge" of dishonesty.
When the company's ethics panel reviewed one such deal, it was found to have been compliant
with the letter of the stated code. Nevertheless, the financial officer recommends that both
employees be given the same bonus.
Which of the following, if true, might strengthen the ethical case for giving a larger bonus for
Tracy?
A) Asked to explain his tactics, Tracy said that sales work is an intrinsically competitive field,
and co-workers should expect him to act in self-interest.
B) One of the company's key policies involves tying bonuses strictly to sales records, to ensure
fairness to all personnel.
C) The entire sales staff had recently undergone a thorough refresher course in ethical behaviour
in sales.
D) Middle managers felt that most of the complaints were based on jealousy over Tracy's
increased success rate.
E) Providing a larger bonus to Tracy would give co-workers added incentive to increase their
own sales records.
Answer: B
Diff: 3 Type: MC
Skill: Analysis
47
6) A firm is considering opening a new plant in an existing building at a business park. It is
located in the middle of a coal-producing region, which remains visibly contaminated by the
effects of strip mining. The plant's heating system is based on coal heat, which is locally
produced and relatively cheap, reducing the plant's operating expenses significantly.
Company engineers note that the plant's roof is ideal for solar panels, which would reduce the
firm's future dependence on coal, nuclear, and other conventional sources of energy. However,
the cost of installing the panels is considerable and would mean that the new plant would not
return a profit to the company for several years. The CEO feels that the panels should be
installed.
Which of the following, if true, strengthens the ethical standing of the CEO's position?
A) Due to new federal "cap and trade" controls, the cost of coal is likely to increase sharply in
the next decade, along with that of electricity generated by burning coal.
B) The commitment to "green" and sustainable energy use would lower the company's emissions
locally as well as support the development of an alternative power industry.
C) Regulations require mining firms in the region to restore natural landscaping after operations
are completed, including sections stripped before the new standards were adopted.
D) Projections made by the firm's long-range planning team indicate that the market will support
full use of the new location for at least twenty years, enough time to see savings accrue from the
solar panels.
E) The most economical source for purchasing the solar panel equipment is owned by the same
corporation responsible for strip mining in the new location.
Answer: B
Diff: 3 Type: MC
Skill: Analysis
7) A firm is considering opening a new plant in an existing building at a business park. It is

located in the middle of a coal-producing region, which remains visibly contaminated by the
effects of strip mining. The plant's heating system is based on coal heat, which is locally
produced and relatively cheap, reducing the plant's operating expenses significantly.
Company engineers note that the plant's roof is ideal for solar panels, which would reduce the
firm's future dependence on coal, nuclear, and other conventional sources of energy. However,
the cost of installing the panels is considerable and would mean that the new plant would not
return a profit to the company for several years. The CEO feels that the panels should be
installed.
Which of the following, if true, tends to compromise the ethical standing of the CEO's position?
A) The CEO was born and raised in the community where the new plant will be located.
B) The CEO plans to purchase the solar energy panels for the new plant from an alternative
energy business just started up by her grandson.
C) The plant is located near a small lake that is heavily polluted by residue from strip mining.
D) The firm recently instituted a policy of bonuses for environmentally responsible actions,
which the managers assigned to the new plant would be certain to get.
E) The CEO expects to sell some of the power generated by the solar panels back to the local
energy grid, enhancing corporate profits.
Answer: B
Diff: 3 Type: MC
Skill: Analysis
48
8) Robert, a CEO, is trying to decide whether to cut a budget item that is allocated to help
construct shelters for the homeless. After getting advice from workers and considering his own
ethical views, Robert decides to not cut these funds, even though the decision meant that the
company would likely make less profit as a result.
What is the most likely reason Robert made this decision?
A) Robert's concern for the company's profitability did not figure into the decision.
B) When he asked several workers what they would do if they were in his shoes, he received
mixed responses.
C) His values and morals were not helpful to him as he made the decision.
D) If someone asks Robert to make a similar budget cut in the future, he won't have to think
about it much.
E) Robert does not care about his company's success.
Answer: B
Diff: 3 Type: MC
Skill: Analysis
9) Pandora Products is a national company that produces a line of hot breakfast cereals, mainly
featuring flavored instant oatmeal. Its products are sold in grocery stores across the country, but
the company has faced stiff competition from larger, well established companies.
The public relations department of Pandora has recommended to the CEO that Pandora become
involved in cause-related marketing to increase its positive brand image and goodwill for the
company. The PR department recommends that the National Heart Association would be a good
tie-in for the oatmeal line, and it could emphasize the heart-healthy aspects of the products. The
CEO argues that aligning the products with the Heart Association would not be good for
Pandora. Which of the following consumer survey results, if true, would support the argument
made by the CEO?
A) Fifty-nine percent indicate that too much publicity about a company's alignment with a
charity leads to increased concerns about commercial gain.
B) Fifty-four percent say they are willing to pay more for a brand that is associated with a cause.
C) Sixty-six percent indicate they would switch brands to support a particular cause.
D) Seventy-eight percent state they are more likely to purchase a brand associated with a cause
that they care about.
E) Eighty-four percent say that cause-related marketing increases the positive image of a
company.
Answer: A
Diff: 3 Type: MC
Skill: Analysis
49
Aligning the Pandora brand with a national non-profit has many benefits. However, the CEO is
still not convinced. Which of the following statements, if true, would support the argument made
by the CEO to not tie sales of Pandora's breakfast oatmeal to the American Heart Association?
A) The move might inspire competitors to seek similar such associations.
B) Federal regulation of health-related claims has decreased in recent years.
C) Pandora would garner public goodwill for the future.
D) Associating with a non-profit would lead to better relations with governmental agencies.
E) If the non-profit received negative publicity over something, the consumer reaction could
have a spillover effect on Pandora.
Answer: E
Diff: 3 Type: MC
Skill: Analysis
The marketing department of Pandora is recommending to the CEO that Pandora focus future
advertising on green marketing and emphasize its pro-environmental approach and natural
product ingredients. The CEO does not agree and argues that it is not a good idea to focus on
green marketing. Which of the following statements, if true, would support the argument made
by the marketing department?
A) Studies indicate that most consumers' actual purchases of "green" products occur only when
other factors (such as price, quality, and amount) are equal.
B) Some 4 percent of the consumers of Pandora's breakfast oatmeal are considered True Blue
Greens, or active environmentalists.
C) Company reputation can be damaged if the company is considered to be "greenwashing," or
faking being green.
D) Pandora's breakfast oatmeal, while made of a natural product (oatmeal), also contains
additives that are not organic or considered truly natural.
E) Green marketing would differentiate the oatmeal from the competition and could provide an
advantage that would increase sales.
Answer: E
Diff: 3 Type: MC
Skill: Analysis
50
12) Smooth is a bar soap for women that is produced by Beautymax Products. Smooth has
recently been reformulated because previous product ingredients had become quite expensive.
However, the reformulation has caused some major problems, as some 12 percent of the recent
consumers have reported developing a rash accompanied by itching and peeling skin.
The CEO of Beautymax Products is horrified by the negative publicity and wants immediate
crisis management performed by the public relations department. The public relations
department provides a list of strategic options for the CEO to deal with the bad publicity. Which
of the following statements, if true, would not be a strategic option for the CEO?
A) Beautymax can accept blame for the rashes and assure the public they will correct the
problem immediately.
B) Beautymax can ignore the problem and just wait for it to go away.
C) Beautymax can offer an apology for the rashes it caused and offer to recall the product.
D) Beautymax can deny that Smooth caused any of the rashes but pull it from the market
anyway.
E) Beautymax can monitor the Internet for any negative publicity and intervene on a case-by-
case basis as soon as anything negative shows up.
Answer: B
Diff: 3 Type: MC
Skill: Analysis
Beautymax's in-house public relations department has been given the task of crisis management
for the negative publicity resulting from the skin rashes. The PR department is advocating using
impression management strategies to protect the company's image. However, the CEO is arguing
for an apology strategy. Which of the following statements, if true, would support the CEO's
argument?
A) An expression of innocence, such as "someone else added something to our soap" would be
believed by 16 percent of the consumers.
B) An excuse, such as "this was a random act committed by a disgruntled employee," would be
C) "We assume full responsibility and will change our soap formula immediately" would be
D) "These rashes are exceptions to our high-quality standards" would be believed by 21 percent
of the consumers.
E) A justification, such as "the rashes are minor and resulted from a new addition to our
product," would be believed by 17 percent of the consumers.
Answer: C
Diff: 3 Type: MC
Skill: Analysis
51
After Beautymax dealt with the negative publicity from the rashes caused by Smooth, the public
relations department proposed developing some proactive prevention plans. The vice president
argues that such plans are a waste of time and not necessary. Which of the following statements,
if true, would not support the public relations department's argument for using proactive
prevention crisis management plans?
A) Proactive prevention crisis management would anticipate problems, such as potential recalls,
and have plans in place to deal with them.
B) Proactive prevention crisis management would prepare plans to deal with emergencies, such
as their soap plant catching on fire, and designate a disaster-management center, along with
media and employee contact people.
C) Proactive prevention crisis management would publicize Smooth's connections to the gold-
medal-winning women's gymnastics team.
D) Proactive prevention crisis management would use enhancements to increase desirable
outcomes in the public eye by characterizing Smooth as eco-friendly because of the packaging.
E) Proactive prevention crisis management would protect the company from legal action due to
false advertising.
Answer: E
Diff: 3 Type: MC
Skill: Analysis
15) A plumbing supply firm can win a contract with a home-building business by promising to
get 500 faucet assemblies of a certain make by Tuesday morning. Actually, the customer
representative finalizing the deal knows that their supplier normally takes an extra day to get
them to the firm. But lately, due to the housing slowdown, shipments have been arriving a day
earlier.
The customer representative therefore promises Tuesday delivery to the home-building business,
reasoning that if the faucets do come a day later, as they often do, he can come up with a
reasonable excuse.
Which of the following, if true, undermines the customer representative's ethical position?
A) The representative knows that a snowstorm has disrupted travel at the hub through which the
faucets will be shipped, so there is no way they will arrive by Tuesday.
B) The contract with the home-building company is important to win, as the plumbing supply
firm is short on cash and needs the proceeds of the deal to pay off some pressing debts.
C) The home-building firm is notorious for finishing its units well after the scheduled date, so a
delay in the faucets will not make that much difference.
D) The housing slowdown seems likely to go on in the firm's area, so it's probable that shipments
will continue to come in a day early.
E) The customer representative and the head engineer for the home-building business play golf
together regularly.
Answer: A
Diff: 3 Type: MC
Skill: Analysis
52
16) A plumbing supply firm can win a contract with a home-building business by promising to
get 500 faucet assemblies of a certain make by Tuesday morning. Actually, the customer
representative finalizing the deal knows that their supplier normally takes an extra day to get
them to the firm. But lately, due to the housing slowdown, shipments have been arriving a day
earlier.
The customer representative therefore promises Tuesday delivery to the home-building business,
reasoning that if the faucets do come a day later, as they often do, he can come up with a
plausible excuse.
Which of the following, if true, would justify the customer representative's ethical position?
A) The home-building firm sometimes picks up shipments of supplies several days after they
arrive.
B) The customer rep knows that if the faucets do come in early, the home-building firm will
choose to do business with them more often.
C) The home-building firm has a brief written code of ethics that has no statement that applies
specifically to this situation.
D) When phoned for advice, the plumbing supply firm's CEO told the customer rep that it was
OK to "fib a little" to get a contract like this.
E) The faucet shipment comes with a tracking number and goes to a distribution center within
driving distance, so that, if necessary, the plumbing firm can expedite its arrival.
Answer: E
Diff: 3 Type: MC
Skill: Analysis
17) Moia is a successful entrepreneur who owns several popular pastry shops. She often imports
macadamia nuts from countries with poor economic conditions, which has furthered her desire to
help improve the lives of the people living there. How can Moia best exhibit corporate social
responsibility to the citizens of these nations?
A) By including labels on her products indicating where the nuts come from
B) By hiring people who have travelled to these nations
C) By opening pastry shops in these countries that would create jobs for the citizens there
D) By purchasing the nuts more regularly
E) By shipping free pastries to these nations
Answer: C
Diff: 3 Type: MC
Skill: Analysis
53
18) Moia is a successful entrepreneur who owns several popular pastry shops. She often imports
macadamia nuts from countries with poor economic conditions, which has furthered her desire to
help improve the lives of the people living there. Which of the following challenges would Moia
likely find to be most central in seeking to run both a socially responsible and successful
business?
A) How to engage in fair marketing practices that are cost-effective
B) How to pay her overseas workers fair wages, sell her pastries for less there, and still make the
necessary profit
C) How to obtain the best quality macadamia nuts at a much lower price than they are worth
D) How to decrease employee benefits without experiencing subsequent complaints
E) How to perform a social audit without taking up too much valuable work time
Answer: B
Diff: 3 Type: MC
Skill: Analysis
19) Carla's Collegiate Exchange, a popular bookseller among university students, has just drafted
its mission statement. The company seeks to sell books on a sliding scale based on a student's
available income. What does this most likely reveal about the company's ethical code?
A) The company believes financially challenged students should not be hindered from
succeeding educationally.
B) The company believes that poor individuals should be given a greater chance at success than
are wealthy individuals.
C) The company is indifferent to people's financial well-being.
D) The company is not concerned with fostering the success of others.
E) The company is most motivated by a desire for greater profits.
Answer: A
Diff: 3 Type: MC
Skill: Analysis
20) A university has filed a formal complaint against a local hospital for failing to be socially
responsible in its treatment of university students completing internships there. Which of the
following would most likely be a valid response by a hospital that was not guilty of this charge?
A) "The responsibility to take disciplinary action against the supervisor who physically
threatened the student interns lies with someone else."
B) "Because sanitary conditions are very important, floors are mopped regularly and are
sometimes left wet. We cannot be held responsible if student interns unfamiliar with this practice
slip and injure themselves."
C) "All student interns are clearly instructed to wear gloves and protective covering when
handling blood samples that may endanger the interns' health."
D) "We expect our student interns to work double shifts after a day of classes so that they will be
well prepared for a career in the health professions."
E) "Unforeseen budget cuts have forced us to revoke our contracts with student interns regarding
hourly compensation."
Answer: C
Diff: 3 Type: MC
Skill: Analysis
54
3.3 True/False Questions
1) Ethical behaviour is behaviour that conforms to individual beliefs and social norms about
what is right and good.
Answer: TRUE
Diff: 1 Type: TF Page Ref: 42
Skill: Knowledge
Objective: 3.1
2) Ethics are both individually and culturally defined.

Answer: TRUE
Skill: Knowledge
Objective: 3.1
3) Individuals can rationalize almost any behaviour as ethical.

Answer: TRUE
Diff: 2 Type: TF Page Ref: 42-43
Skill: Knowledge
Objective: 3.1
4) An individual may feel that his behaviour is ethical, however, that behaviour may be seen as
unethical if social norms are considered.
Answer: TRUE
Objective: 3.1
5) All things considered, the utility norm is probably the best one to use when making decisions
about ethics.
Answer: FALSE
Objective: 3.1
6) An individual's peers have only limited influence on the development of that person's ethical
values.
Answer: FALSE
Skill: Knowledge
Objective: 3.1
55
7) A business firm's influence on the ethical behaviour of its employees is very limited because
family and friends influenced employee beliefs about right and wrong long before the employees
joined the business firm.
Answer: FALSE
Objective: 3.1
8) In Canada, a manager who discriminates against minorities in hiring exhibits both unethical
and illegal behaviour.
Answer: TRUE
Objective: 3.1
9) In Venezuela, the term "jeitinho" refers to strict adherence to bureaucratic rules so that a
person does not get in trouble with the government.
Answer: FALSE
Skill: Knowledge
Objective: 3.1
10) Some actions, such as stealing food during a famine, may be illegal yet considered by some
people to be ethical.
Answer: TRUE
Skill: Knowledge
Objective: 3.1
11) A behaviour cannot be both ethical and illegal at the same time.
Answer: FALSE
Objective: 3.1
12) Behaviour that is deemed unethical is usually also illegal.

Answer: FALSE
Objective: 3.1
13) Ethical standards relating to business practices are consistent around the world.
Answer: FALSE
Skill: Knowledge
Objective: 3.1
56
14) Jerry wants to use the ethical norm of utility when making decisions. To do this, he should
ask "Is this decision fair to everyone?"
Answer: FALSE
Objective: 3.1
15) Marlene wants to use the ethical norm of justice when making decisions. To do this, she
should ask "Is this decision consistent with what we regard as fair"?
Answer: TRUE
Objective: 3.1
16) Suman wants to use the ethical norm of caring when making decisions. To do this, she
should ask "Is this consistent with peoples' responsibilities toward each other?"
Answer: TRUE
Objective: 3.1
17) The Personal Information Protection and Electronic Documents Act (PIPEDA) requires
organizations to collect certain information about employees and report that information to the
federal government.
Answer: FALSE
Objective: 3.1
18) A conflict of interest occurs when two employees disagree about what course of action is
best for the company.
Answer: FALSE
Objective: 3.1
19) If we apply the ethical standard of utility, it may be acceptable to allow inflated expense
reports.
Answer: FALSE
Objective: 3.1
57
20) When trying to determine whether a specific action is ethical or unethical, even minor
changes in information about the context may create uncertainty about the correct answer.
Answer: FALSE
Objective: 3.1
21) A business firm can influence an individual's ethical behaviour through development of a
written code of ethics.
Answer: TRUE
Objective: 3.1
22) The first step in assessing whether a decision is ethical is to determine the most appropriate
moral values.
Answer: FALSE
Objective: 3.1
23) Jeremiah wants to determine whether an action taken by one of his subordinates is ethical or
unethical. He has already gathered the relevant facts about the case. The next thing he should do
is to determine the most appropriate moral values.
Answer: FALSE
Objective: 3.1
24) Publication of a company's code of ethics ensures that employees will perform their duties in
an ethical manner.
Answer: FALSE
Objective: 3.1
25) The three general factors have been identified as important in causing individuals to behave
in unethical ways are pressure, opportunity, and rationalization.
Answer: TRUE
Skill: Knowledge
Objective: 3.1
58
26) Marilyn padded her expense account. When confronted by her boss, she defended her actions
on the grounds that she was not paid enough for her work, so she had to supplement her salary by
padding her expense account. This is an example of the "opportunity" factor that has been found
to be important in explaining why unethical behaviour occurs.
Answer: FALSE
Objective: 3.1
27) Bruce padded his expense account. When confronted by his boss, he defended his actions on
the grounds that the company's system for reimbursing expenses did not recognize all the
expenses that salespeople incurred, and he was solving that problem by asking for expenses that
he actually incurred. This is an example of the "pressure" factor that has been found to be
important in explaining why unethical behaviour occurs.
Answer: FALSE
Objective: 3.1
28) Social responsibility refers to a business's obligation to make decisions that benefit
consumers.
Answer: FALSE
Objective: 3.2
29) Social responsibility is an attempt by a business to balance its commitments to groups and
individuals in its environment, including customers, other businesses, employees, and investors.
Answer: TRUE
Objective: 3.2
30) Organizational stakeholders are those groups, individuals, and organizations that are directly
affected by the practices of an organization and that therefore have a stake in its performance.
Answer: TRUE
Objective: 3.2
31) Most companies that strive to be responsible to their stakeholders concentrate on five main
groups: customers, employees, investors, suppliers, and creditors.
Answer: FALSE
Skill: Knowledge
Objective: 3.2
59
32) There is a consensus in Canada that social responsibility should take precedence over profits.
Answer: FALSE
Objective: 3.2
33) The fair-trade movement has as its main goal the improvement of working conditions for
factory workers in developing countries.
Answer: FALSE
Objective: 3.2
34) The fair-trade movement is designed to level the playing field with respect to trade between
developing and developed countries.
Answer: FALSE
Objective: 3.2
35) Janet is the CEO of Xanadu Corp. She believes very strongly that the purpose of a business
firm is to make as much money as possible as long as the business doesn't break the law while
doing so. Janet is reflecting the view called managerial capitalism.
Answer: TRUE
Objective: 3.2
36) Consumer rights include the right to safe products, the right to be informed, the right to be
heard, and the right to a refund.
Answer: FALSE
Objective: 3.3
37) The right to low prices is the most fundamental consumer right.
Answer: FALSE
Objective: 3.3
38) Back in 2010, new laws came into effect that, unfortunately, made it more difficult for the
Competition Bureau to convict price-fixers.
Answer: FALSE
Objective: 3.3
60
39) Stealth advertising is unethical and illegal.
Answer: FALSE
Objective: 3.3
40) Counterfeit goods are a problem mainly for products like luggage, pharmaceuticals, designer
clothing, and watches, but not much of a problem for products like fine wines.
Answer: FALSE
Skill: Knowledge
Objective: 3.3
41) Counterfeit goods are harmful to companies that have spent a lot of time and money
developing brand name goods for sale, but counterfeit products are beneficial for consumers
because they get lower prices for expensive products like counterfeit motorcycles and
pharmaceuticals.
Answer: FALSE
Objective: 3.3
42) Collusion occurs when two or more firms agree to collaborate on wrongful acts such as price
fixing.
Answer: TRUE
Objective: 3.3
43) Business firms can show their social responsibility toward employees by providing a safe
workplace that provides equal employment opportunities and is free of harassment.
Answer: TRUE
Objective: 3.3
44) Unlike the United States, Canada has no federal legislation that protects whistle-blowers.
Answer: FALSE
Objective: 3.3
61
45) In a socially responsible company, whistle-blowers can report their findings to higher level
managers without fear of retaliation by other members of the organization.
Answer: TRUE
Objective: 3.3
46) There is general agreement that workers shouldn't damage the reputation of the company
they work for, and there is consensus about what constitutes going "too far" when posting
criticisms of the company on social media.
Answer: FALSE
Objective: 3.3
47) It is illegal to misrepresent a company's finances, but the situation regarding improper
financial mismanagement is not so clear.
Answer: TRUE
Objective: 3.3
48) Business firms which engage in cheque kiting are acting in a socially responsible manner
because such financial techniques result in higher profits, higher dividends, and higher stock
prices, and these benefit stockholders.
Answer: FALSE
Objective: 3.3
49) Australia, Canada, and the United States are the world's largest greenhouse gas emitters on a
per capita basis.
Answer: TRUE
Skill: Knowledge
Objective: 3.3
50) The United Nations "cap and trade" system gives certain companies (i.e., those that have
bought carbon credits) the right to pollute the atmosphere.
Answer: TRUE
Objective: 3.3
62
51) Europol's Criminal Finances and Technology section estimates that up to 90 percent of all
carbon market volume in certain EU nations is fraudulent.
Answer: TRUE
Skill: Knowledge
Objective: 3.3
52) The defensive stance to social responsibility rejects the idea that business has contributed to
many of society's problems and, therefore, business has a social obligation to correct those
problems.
Answer: TRUE
Objective: 3.4
53) The proactive social responsibility stance is used by firms who actively seek opportunities to
contribute to the well-being of society.
Answer: TRUE
Objective: 3.4
54) Branson Corp. will do everything that is legally required, but it will not go beyond that. This
means that Branson has adopted the defensive approach to social responsibility.
Answer: TRUE
Objective: 3.4
55) Xanex Corp. will often respond positively to requests for donations from certain charitable
organizations, but it will not seek them out. Xanex has adopted a defensive stance to social
responsibility.
Answer: FALSE
Objective: 3.4
56) Sustainable development means pursuing activities that meet current needs, but which will
not put future generations at a disadvantage when they attempt to meet their needs.
Answer: TRUE
Objective: 3.4
63
57) Triple bottom line reporting means measuring the finance, marketing, and production
performance of a company.
Answer: FALSE
Objective: 3.4
58) A major concern for the small business owner is whether he or she can afford to have a
social agenda.
Answer: TRUE
Objective: 3.5
59) Because Joan owns a small company, the concept of socially responsible behaviour does not
apply to her.
Answer: FALSE
Objective: 3.5
60) Ethics are beliefs about what is right and wrong or good and bad.
Answer: TRUE
Skill: Knowledge
Objective: 3.1
ESL: Alternate/ESL
61) Conflict of interest occurs when an activity benefits the employee at the expense of the
employer.
Answer: TRUE
Skill: Knowledge
Objective: 3.1
ESL: Alternate/ESL
62) Corporate social responsibility (CSR) refers to the way in which a business tries to balance
its commitments to individuals and groups that are directly affected by the organization's
activities.
Answer: TRUE
Skill: Knowledge
Objective: 3.2
ESL: Alternate/ESL
64
63) The fair-trade movement is a movement designed to help workers in developed countries
receive fair payments for their work.
Answer: FALSE
Skill: Knowledge
Objective: 3.2
ESL: Alternate/ESL
64) Groups, individuals, and organizations that are directly affected by the practices of an
organization and therefore have a stake in its performance are referred to as shareholders.
Answer: FALSE
Skill: Knowledge
Objective: 3.3
ESL: Alternate/ESL
65) Companies getting together to "fix" prices, is against the law and is called a conspiracy.
Answer: FALSE
Skill: Knowledge
Objective: 3.3
ESL: Alternate/ESL
66) An individual who calls attention to an unethical, illegal, or socially irresponsible practice on
the part of a business or other organization is called a whistle-blower.
Answer: TRUE
Skill: Knowledge
Objective: 3.3
ESL: Alternate/ESL
67) The use of confidential information to gain from the purchase or sale of stock is called
insider trading.
Answer: TRUE
Skill: Knowledge
Objective: 3.3
ESL: Alternate/ESL
68) Businesses that take a defensive stance to social responsibility do as little as possible to solve
social or environmental problems.
Answer: FALSE
Skill: Knowledge
Objective: 3.4
ESL: Alternate/ESL
65
69) Sustainable development are activities that meet current needs but will not put future
generations at a disadvantage when they try to meet their needs.
Answer: TRUE
Skill: Knowledge
Objective: 3.4
ESL: Alternate/ESL
3.4 Short Answer Questions
1) What is the difference between ethical behaviour and unethical behaviour?

Answer: Ethical behaviour is behaviour that conforms to individual beliefs and social norms
about what is right and good. Unethical behaviour is behaviour that individual beliefs and social
norms define as being wrong and bad.
Diff: 2 Type: SA Page Ref: 42
Objective: 3.1
2) What is the difference between unethical behaviour and illegal behaviour?

Answer: Ethics are based on both individual beliefs and social concepts, so what is considered
unethical varies from person to person and from culture to culture. But the laws of a given
country determine if something is illegal, and the law applies to everyone in that country. Given
these realities, a given behaviour may be both ethical and legal (e.g., providing high quality
products to consumers), ethical, but illegal (e.g., breaking the law in a totalitarian regime in order
to carry out humanitarian efforts), unethical, but legal (e.g., paying low wages to workers at a
company facility in a foreign country), and both unethical and illegal (e.g., "cooking the books"
to make a company's financial situation look better than it really is).
Objective: 3.1
3) What requirement does the Personal Information Protection and Electronic Documents Act
(PIPEDA) impose on companies?
Answer: PIPEDA requires organizations to obtain consent before they collect, use, or disclose
information about employees.
Skill: Knowledge
Objective: 3.1
4) What are managerial ethics?

Answer: Managerial ethics are the standards of behaviour that guide individual managers at
work.
Objective: 3.1
66
5) Identify an issue of managerial ethics relating to behaviour toward employees.
Answer: Issues may include matters such as hiring, firing, wages, working conditions, privacy,
and respect. For example, a manager may refuse to give a wage increase to an employee, even
though the employee has a good performance record. The manager refuses because the manager
knows the employee isn't likely to find a higher paying job elsewhere.
Objective: 3.1
6) What would constitute a conflict of interest in a business setting?

Answer: A conflict of interest occurs when an activity that benefits the individual is detrimental
to the individual's employer.
Objective: 3.1
7) What is the first step in making ethical judgments?

Answer: The first step in making ethical judgments is to gather the relevant factual information.
Objective: 3.1
8) List four ethical norms.

Answer: Utility, rights, justice, and caring
Skill: Knowledge
Objective: 3.1
9) List two ways that a company can formalize top management commitment to ethical business
practices.
Answer: Companies can formalize their commitment to ethical business practices through
adopting written codes of ethics and ethics training programs.
Objective: 3.1
10) What is the purpose of a written code of ethics?

Answer: A written code of ethics formally announces a company's intent to do business in an
ethical manner. A company's commitment to ethical business practices is formalized through a
written code of ethics.
Objective: 3.1
67
11) What is collusion?
Answer: Collusion occurs when two or more firms agree to collaborate on such wrongful acts as
price fixing (controlling supplies and prices of products).
Objective: 3.1
12) What is social responsibility?

Answer: Social responsibility is the attempt of a business to balance its commitments to groups
and individuals in its environment, including customers, other businesses, employees, investors,
and local communities.
Objective: 3.2
13) What is the difference between ethics and social responsibility?

Answer: Ethics are beliefs about what is right and wrong or good and bad. Ethics affect
individual behaviour in the workplace. Social responsibility refers to the way in which a business
tries to balance its commitments to groups and individuals in its social environment.
Diff: 2 Type: SA Page Ref: 42-46
Objective: 3.2
14) List five general categories of organizational stakeholders.

Answer: Customers, employees, investors, suppliers, and local communities
Skill: Knowledge
Objective: 3.2
15) What is price fixing?

Answer: Price fixing is the illegal practice of collusion between two or more firms in the setting
of prices.
Objective: 3.3
16) Identify four issues of ethics in advertising.

Answer: Truth-in-advertising, advertising of counterfeit brands, stealth advertising, and morally
objectionable advertising
Skill: Knowledge
Objective: 3.3
68
17) What is a whistle-blower?
Answer: A whistle-blower is an employee who detects and tries to put an end to a company's
unethical, illegal, or socially irresponsible actions by publicizing them.
Objective: 3.3
18) What is cheque kiting?

Answer: Cheque kiting is the illegal practice of writing a cheque against money that has not yet
been credited at the bank on which the cheques are drawn.
Objective: 3.3
19) What is insider trading?

Answer: Insider trading is the illegal practice of using confidential information to gain from the
purchase or sale of stocks.
Objective: 3.3
20) In one sentence, summarize the debate about global warming.

Answer: There is a fairly strong consensus that global warming is occurring, but there is a
debate about whether human activity is causing it.
Objective: 3.3
21) What are carbon credits?

Answer: Carbon credits, when purchased by companies, essentially give them the right to
pollute the atmosphere. The money that is collected is then used to help fund clean-air projects in
developing countries.
Objective: 3.3
22) What are the three major types of pollution? Give an example of each.
Answer: Air pollution: acid rain, smog; water pollution: chemical and waste dumping; land
pollution: toxic wastes
Diff: 1 Type: SA Page Ref: 52-53
Objective: 3.3
69
23) What is recycling?
Answer: It is the conversion of certain waste materials into useful products.
Objective: 3.3
24) List the four general approaches to social responsibility.

Answer: Obstructionist, defensive, accommodative, and proactive
Skill: Knowledge
Objective: 3.4
25) What is a social audit?

Answer: A social audit is a systematic analysis of a firm's success in using funds earmarked for
meeting its social responsibility goals.
Objective: 3.4
26) What is sustainability?

Answer: Sustainability means pursuing activities that meet current needs, but which will not put
future generations at a disadvantage when they attempt to meet their needs.
Objective: 3.4
27) What is triple bottom line reporting?

Answer: Triple bottom line reporting means measuring the social, environmental, and economic
performance of a company.
Objective: 3.4
28) How do issues of social responsibility and ethics affect small business?
Answer: Small businesses must address more or less the same issues as big businesses. The
differences are primarily differences of scale.
Objective: 3.5
70
3.5 Essay Questions
1) What are ethics? What influences the development of ethics? How can ethical values vary
significantly from one person to another?
Answer:
- Ethics are the individual standards or moral values regarding what is right and wrong or good
and bad
- Most common influences include family, which have the first chance to influence a child's
ethics, and the work ethic (the belief and practice that hard work brings rewards), which is
learned in the home
- Peers who influence ethical behaviour later in life and experiences can increase or decrease
certain types of ethical behaviour
- Ethical values vary significantly based on the degrees of influence in a person's life
Diff: 2 Type: ES Page Ref: 42
Objective: 3.1
2) Are ethics influenced by a business firm's policies? Are business firms influenced by a
person's ethical values? Explain.
Answer:
- Yes, ethics are influenced by a business firm's policies
- The most significant thing a company can do is to demonstrate top management's support for
ethical behaviour
- Most companies adopt written codes of ethics and two-thirds of Canada's largest corporations
have codes of ethics
- As well, a firm can be influenced by a person's ethical value if he or she is top management and
therefore makes decisions that will affect the company
Objective: 3.1
3) Is downloading music ethical or unethical?

Answer: Answers will vary because different individuals have different beliefs about what is
right or wrong. The fact that individuals have different beliefs about practices such as
downloading music makes it very difficult to get agreement on whether a given behaviour is
ethical or unethical.
Diff: 3 Type: ES Page Ref: 42-43
Skill: Analysis
Objective: 3.1
4) You are managing a company that is being asked to pay a bribe. If you do not pay the bribe
you will have to lay off 500 people and risk a chance of going out of business. What do you do
and why?
Answer: Answers will vary, depending on individual beliefs.
Skill: Analysis
Objective: 3.1
71
5) You are managing a company that either must cut the dividend or cut 10% of the company's
workforce. What do you do? Why?
Answer: Answers will vary, depending on individual values and beliefs. For example, one
person might argue that cutting the dividend is the right decision because people can probably
get along with a cut in their dividends, but the workers cannot go without having a job. Another
person might argue the opposite and say that investors should have a higher priority than
workers.
Skill: Analysis
Objective: 3.2
6) MKD Transportation operates a fleet of container ships and tankers that transport goods
around the globe. Company executives have just been contacted by the media with a credible
report that one of their ships is leaking an oily substance off the coast of Belize, but the captain
of the ship in question has not notified the company of any problem. Environmental groups and
the government of Belize have demanded that the company admit responsibility and immediately
begin cleanup. Managers at MKD claim to treat their employees in an ethical fashion. What
matters might this behaviour cover?
Answer: Issues such as hiring, firing, wages, working conditions, privacy, respect, and honesty
in dealing with employees are all important here.
Objective: 3.1
7) Explain the simplified three-step model for applying ethical judgments to situations that may
arise during the course of business activities.
Answer: Three-step model involves the following steps:
- Gather the relevant factual information
- Determine the most appropriate moral values
- Make an ethical judgment based on the rightness or wrongness of the proposed activity or
policy
Skill: Knowledge
Objective: 3.1
8) What are the four ethical norms and the issues that they deal with?
Answer:
- Utility: Does a particular act optimize what is best for those who are affected by it?
- Rights: Does it respect the rights of the individuals involved?
- Justice: Is it consistent with what we regard to be fair?
- Caring: Is it consistent with people's responsibilities to each other?
Objective: 3.1
72
9) "The purpose of any company is to make a good product, provide good jobs, and make a
profit. Any social responsibilities that take away from that are not the role of business." Agree or
disagree with this statement and support your position.
Answer: Answers will vary. An example of the "disagree" arguments:
- Consumers support businesses that implement social responsibility programs more often
- Consumers support businesses that take special care of the environment
- Suppliers who pollute attract a large amount of negative media attention
Objective: 3.2
10) What is the motivation behind the fair-trade movement? How has it affected the way some
companies operate?
Answer: The fair-trade movement is motivated by concerns that workers in developing countries
who produce commodities like coffee are not receiving fair payment for their products.
Companies in developed countries who are concerned about this problem work with non-profit
organizations like the Fairtrade Foundation and the Rainforest Alliance. Those non-profit
organizations certify that farming cooperatives are paying workers fairly and not damaging the
environment.
Objective: 3.2
11) MKD Transportation operates a fleet of container ships and tankers that transport goods
around the globe. Company executives have just been contacted by the media with a report that
one of their ships is leaking an oily substance off the coast of Belize. Who are MKD's
stakeholders in this instance?
Answer: Stakeholders are those groups, individuals, and organizations that are directly affected
by the practices of an organization and who, therefore, have a stake in its performance. MKD's
stakeholders are its employees, investors, suppliers, customers, and the communities and
countries in which it operates. In this case, the nation of Belize is a stakeholder, as are
environmental groups who are concerned with the impact of the company's operations on the
environment.
Objective: 3.2
12) What is the relationship between social responsibility and ethics?

Answer: Ethics affect individual behaviour in the workplace, while social responsibility refers to
the overall way in which a business attempts to balance its commitments to relevant groups and
individuals in its social environment.
Diff: 3 Type: ES Page Ref: 42-43, 46
Objective: 3.2
73
13) Describe the stakeholder model of social responsibility.
Answer: Companies that strive to be responsible to their stakeholders concentrate on five main
groups: customers, employees, investors, suppliers, and the local communities where they do
business. To be responsible toward their customers, businesses strive to be fair in their pricing,
honour warranties, meet delivery commitments, and stand behind the quality of their products.
Businesses that are socially responsible toward their employees treat them fairly, make them a
part of the team, and respect their dignity and basic human needs. To be responsible toward
investors, businesses follow proper accounting procedures, provide appropriate information to
shareholders about financial performance, and manage the organization to protect shareholders'
rights and investments. Businesses are responsible toward suppliers when they provide realistic
delivery schedules and reduced profit margins; many businesses keep their suppliers informed
about future plans and work to partner with them. To be responsible toward communities,
businesses often give back through charitable programs and local causes.
Objective: 3.2
14) What are the arguments for and against business behaving in a socially responsible manner?
Answer:
- In favour: corporations need to help improve our lives; corporations should help alleviate the
problems they create; social responsibility pays off for the firm; and high financial performance
- Against: cost and loss of profit; businesses may gain too much control over how social concerns
are addressed; they lack the expertise needed; and dilution of their primary mission
Objective: 3.2
15) What are the six major areas of social responsibility? Provide an example of each.
Answer: The six areas of social responsibility are an organization's responsibility toward:
a. Customers (recognize the rights of customers, avoid unfair pricing)
b. Employees (ensure fair and equitable practices with recruiting, hiring, training, promoting, and
compensating)
c. Investors (avoid improper financial management, insider trading, and misrepresentation of
finances)
Objective: 3.3
16) Identify two examples of unethical practices in advertising.

Answer: Answers may include controversies surrounding the potential misinterpretation of
words and phrases such as light, reduced calorie, diet, and low fat; misleading advertising; and
advertising of products such as tobacco and alcohol to young people.
Objective: 3.3
74
17) What is consumerism?
Answer: Consumerism is a movement dedicated to protecting the rights of consumers in their
dealings with businesses. Consumers have the right (1) to safe products, (2) to be informed about
all relevant aspects of a product, (3) to be heard, (4) to choose what they buy, (5) to be educated
about purchases, and (6) to courteous service.
Objective: 3.3
18) Identify and explain the rights of consumers. How did these rights originate? What can
business firms do to deal with these rights?
Answer: Rights of consumers are:
- Right to safe products
- Right to be informed
- Right to be heard
- Right to choose what they buy
- Right to be educated about purchases
- Right to courteous service
These rights originated from unfair pricing and companies breaking the laws regarding consumer
rights such as food products not labelled properly, therefore consumers would get sick.
Business firms can deal with these rights by providing instructions on how to use their products,
listing ingredients, and providing a toll-free number that consumers can call if they have
questions or complaints.
Objective: 3.3
19) How may a business firm show that it is socially responsible in dealing with its employees?
Explain your response.
Answer: A business firm can:
- Make sure that the workplace is safe, both physically and emotionally
- The management would no more tolerate an abusive manager than they would a gas leak
- A company can also provide its employees with equal opportunities for rewards and
advancements without regard to race, sex, or other relevant factors
- Firms have a responsibility to respect the privacy of their employees
- Respecting employees as people means encouraging ethical behaviour
Objective: 3.3
75
20) How do organizations exercise social responsibility toward customers?
Answer: Much of what organizations do to act responsibly toward customers is driven by the
laws that protect consumers. Consumers have the right to safe products, a right to be informed
about relevant aspects of a product, a right to be heard, a right to choose what they buy, a right to
be educated about purchases, and a right to courteous service. Businesses acting responsibly
prevent unfair pricing, which comes in the form of price fixing and/or price gouging. In addition,
businesses work to promote ethics in advertising. Increased attention is given to proper wording
in advertisements, to whom ads are directed, contents of packages, proper labelling, as well as to
avoiding morally objectionable advertisements.
Objective: 3.3
21) Explain why the counterfeiting of products is harmful to both consumers and to the
legitimate companies whose products are counterfeited.
Answer: Counterfeit goods are a problem in many different product lines, including perfume,
luggage, pharmaceuticals, designer clothing, shoes, cigarettes, watches, sports memorabilia, golf
clubs, and fine wines, to name just a few. Although consumers may be attracted to counterfeit
products because they can get fake name-brand products for very low prices, the practice is
unacceptable because both consumers and companies are harmed by it. Counterfeiting is harmful
to the legitimate companies that have spent a lot of time and money developing brand name
goods for sale. While it may seem that consumers benefit because they get low prices for goods
that look like the real thing, in fact consumers often pay far too much for counterfeit goods
because those goods have very low quality. As well, some counterfeit goods are downright
dangerous to use. While a fake handbag simply costs money, fake pharmaceuticals, electrical
products, and motorcycles can kill the people who use them.
Objective: 3.3
22) What practical dilemma is evident with the practice of monitoring employees while they are
at work?
Answer: Software programs allow bosses to see things like employees' Facebook comments.
Social Sentry, a tracking system developed by Social Logix, records employee social media
activity from work or home. The program looks for workers who leak sensitive company
information or who bad-mouth the company. The dilemma is this: workers shouldn't damage the
reputation of the company they work for, but there is no consensus on what constitutes going
"too far."
Objective: 3.3
76
23) Describe some examples of socially irresponsible behaviour by business firms with regard to
investors.
Answer:
- Improper financial management (making bad financial decisions)
- Cheque kiting (writing cheques against money that has not yet arrived at the bank on which the
cheque has been written, and then using that money before the cheque clears)
- Insider trading (using confidential information to gain from the purchase or sale of stock)
- Misrepresentation of finances (providing information purporting to show that the company is
financially better off than it really is)
Objective: 3.3
24) Shareholders are owners of the company. How can a company act irresponsibly toward its
owners?
Answer: There are four areas where a company can act irresponsibly toward owners:
(1) Improper financial management (including executives making bad financial decisions, paying
executives outlandish salaries and bonuses, or sending them on extravagant "retreats" to exotic
resorts); (2) misrepresenting a company's financial condition (e.g., claiming it is better than it is);
(3) cheque kiting (writing a cheque from one account, depositing it in a second account, and then
immediately spending money from the second account while the money from the first account is
still in transit); and (4) insider trading (using confidential information to gain from the purchase
or sale of stock).
Objective: 3.3
25) How does insider trading benefit the person who does it?
Answer: Confidential information is information that is not available to the general public but
that is available to a few people because of their position within a company. Individuals with
insider information can sell a stock at a high price just before a piece of negative information
becomes public and the price plummets, thus preventing a big loss. Similarly, an individual with
insider information may buy stock at a low price just before a piece of favourable information
becomes public and the price of the stock increases. The individual can then sell the stock at a
profit.
Objective: 3.3
77
26) How do organizations exercise social responsibility toward the environment?
Answer: Many organizations adopt methods that will reduce greenhouse emissions and control
pollution. Although noise pollution is now attracting increased concern, air, water, and land
pollution remain the greatest problems in need of solutions from businesses. Companies often
install pollution-controlling devices that prevent eventual buildup of acid rain. Businesses are
also taking advantage of new forms of solid-waste disposal; further, they are working to limit
toxic wastes left over from their production processes. Recycling has received increased
attention from businesses in recent years; some controversy exists regarding proper recycling
since some materials and products do not recycle well.
Objective: 3.3
27) Discuss the problem of land pollution. Include in your response the sources of land pollution
and a recommended solution for dealing with that problem.
Answer: Two key issues are how to restore the quality of land damaged and abused in the past
and how to prevent such problems in the future:
- Sources of land pollution include mining, solid waste disposal, toxic waste
- New solutions include recycling/reconversion of waste materials into useful products and toxic
waste disposal
Objective: 3.3
28) "The only way recycling will ever work is if customers demand it and are willing to pay the
higher prices for it." Agree or disagree with this statement and support your position.
Answer: Answers will vary. An example of the "agree" argument: Consumers who have a
concern for the environment will be willing to put up with the increased time and money they
must spend to make recycling work
Skill: Analysis
Objective: 3.3
29) Give examples of the types of actions a business can take to meet its social responsibility.
Answer: Possible answers:
- Training disadvantaged employees
- Subsidizing day care
- Installing anti-pollution equipment
- Reducing waste
- Opening plants in poverty-stricken areas
- Financial assistance to the arts and schools
- Effective utilization of natural resources
Objective: 3.4
78
30) List and describe the four stances an organization can take concerning its obligations to
society.
Answer:
- Obstructionist stance: a company does as little as possible to solve social or environmental
problems
- Defensive stance: an organization does only what is legally required and nothing more
- Accommodative stance: a company meets all of its legal and ethical requirements, and in some
cases even goes beyond what is required
- Proactive stance: an organization actively seeks opportunities to be socially responsible (e.g.,
McDonald's with children's hospitals)
Objective: 3.4
31) What is the relationship between a social audit and the concept of sustainability?
Answer: A social audit is a systematic analysis of how a firm is using funds earmarked for its
social-responsibility goals, and how effective these expenditures have been. A related element in
a social responsibility program is the idea of sustainable development, which means pursuing
activities that meet current needs, but which will not put future generations at a disadvantage
when they attempt to meet their needs. Canadian businesses publish both social audits and
sustainability reports that explain how the company is performing on issues such as the
environment, employee relations, workplace diversity, and business ethics.
Objective: 3.4
32) Executives at MKD Transportation have just been contacted by the media with a report that
one of their ships is leaking an oily substance off the coast of Belize. If MKD adopts an
obstructionist stance, how will the company respond to this media report?
Answer: If MKD uses this approach, executives will likely deny any responsibility when
responding to media reports. If possible, they will likely contact the ship's captain and advise him
to try to move the ship as soon as possible. It is very unlikely that they will comply with the
demands of the government of Belize or environmental groups.
Objective: 3.4
one of their ships is leaking an oily substance off the coast of Belize. If MKD adopts a defensive
stance, how will the company respond to this situation?
Answer: MKD will file the necessary reports and perform any cleanup that is legally required.
However, they will not do anything beyond that which is required by law.
Objective: 3.4
79
one of their ships is leaking an oily substance off the coast of Belize. If MKD adopts an
accommodative stance, how will the company respond to the media and demands by the
government of Belize and environmental groups?
Answer: MKD will likely admit responsibility for the spill and immediately initiate the cleanup.
MKD may even make a donation to the local tourist bureau or environmental groups.
Objective: 3.4
35) What steps should be taken when a firm decides that it wants to become socially responsible?
Explain.
Answer: Four steps to becoming socially responsible include:
- Social responsibility must start at the top with top management support in which they develop a
policy statement outlining their commitment
- A strategic plan to view the level of support to be directed towards social responsibility
- One specific executive needs to be given the authority to act as director of the firm's social
agenda
- The organization needs to conduct social audits
Objective: 3.4
36) How does social responsibility fit with the mission of a typical small business?
Answer: Like any business, it depends on the priorities and values of the owners and managers.
Some small businesses may pay almost no attention to social responsibility claiming that they
simply are trying to keep their business afloat. Other small businesses set social responsibility as
a priority and weave into the fabric of their activities. Of course, small businesses have limited
resources, but they can help with local organizations (a kid's hockey team) or make donations to
charities.
Objective: 3.5
80

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Business Essentials, Canadian Edition, 9e (Ebert)

Chapter 3 Conducting Business Ethically and Responsibly

3.1 Multiple Choice Questions

1) The term "ethics" refers to

2) What is the difference between "ethics" and "business ethics"?

13) The practice of jeitinho is an element of business activity in which country?

16) Which of the following behaviours is illegal?

36) All of the following are functions of codes of ethics except

42) All of the following groups are organizational stakeholders except

43) Social return on investment (SROI) helps companies to

44) Why did the fair-trade movement develop?

68) Which of the following illustrates consumers' rights to safe products?

77) Even if management is behaving irresponsibly toward investors, stockholders may be

87) Which of the following is correct regarding global warming?

91) The conversion of waste materials into useful products is called

112) Sustainable development

124) Which of the following is not an organizational stakeholder?

7) A firm is considering opening a new plant in an existing building at a business park. It is

2) Ethics are both individually and culturally defined.

3) Individuals can rationalize almost any behaviour as ethical.

12) Behaviour that is deemed unethical is usually also illegal.

3.4 Short Answer Questions

1) What is the difference between ethical behaviour and unethical behaviour?

2) What is the difference between unethical behaviour and illegal behaviour?

4) What are managerial ethics?

6) What would constitute a conflict of interest in a business setting?

7) What is the first step in making ethical judgments?

8) List four ethical norms.

10) What is the purpose of a written code of ethics?

12) What is social responsibility?

13) What is the difference between ethics and social responsibility?

14) List five general categories of organizational stakeholders.

15) What is price fixing?

16) Identify four issues of ethics in advertising.

18) What is cheque kiting?

19) What is insider trading?

20) In one sentence, summarize the debate about global warming.

21) What are carbon credits?

24) List the four general approaches to social responsibility.

25) What is a social audit?

26) What is sustainability?

27) What is triple bottom line reporting?

3) Is downloading music ethical or unethical?

12) What is the relationship between social responsibility and ethics?

16) Identify two examples of unethical practices in advertising.

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