Enables managers to walk away from a decision that is profitable but unethical

True / False Questions

1. Ethical strategies are the accepted principles of right or wrong governing the conduct of businesspeople.

FALSE An ethical strategy is a strategy, or course of action, that does not violate the accepted principles of right or wrong governing the conduct of businesspeople.

1. What is considered normal business practice in one country may be considered unethical in other countries.

TRUE Many of the ethical issues in international business are rooted in the fact that political systems, law, economic development, and culture vary significantly from nation to nation. What is considered normal practice in one nation may be considered unethical in another.

1. The Sullivan principles mandated that GM could operate in South Africa as long as the company complied with the apartheid laws.

FALSE GM adopted the Sullivan principles. Sullivan argued that it was ethically justified for GM to operate in South Africa so long as two conditions were fulfilled. First, the company should not obey the apartheid laws in its own South African operations. Second, the company should do everything within its power to promote the abolition of apartheid laws.

1. The tragedy of the commons occurs when a resource held in common by all, but owned by no one, is overused by individuals, resulting in its degradation.

TRUE The tragedy of the commons occurs when a resource held in common by all, but owned by no one, is overused by individuals, resulting in its degradation. The phenomenon was first named by Garrett Hardin when describing a particular problem in sixteenth-century England.

1. Corporations can contribute to the global tragedy of the commons by not pumping pollutants into the atmosphere or dumping them in oceans or rivers.

FALSE In the modern world, corporations can contribute to the global tragedy of the commons by moving production to locations where they are free to pump pollutants into the atmosphere or dump them in oceans or rivers, thereby harming these valuable global commons.

1. International businesses cannot gain economic advantages by making payments to corrupt government officials.

FALSE There always have been and always will be corrupt government officials. International businesses can and have gained economic advantages by making payments to those officials.

1. The Foreign Corrupt Practices Act outlawed the paying of bribes to foreign government officials to gain business.

TRUE The Lockheed case was the impetus for the 1977 passage of the Foreign Corrupt Practices Act in the United States. The act outlawed the paying of bribes to foreign government officials to gain business.

1. The Foreign Corrupt Practices Act originally allowed "facilitating payments" to secure contracts that would not otherwise be secured.

FALSE The Foreign Corrupt Practices Act was subsequently amended to allow for "facilitating payments." Sometimes known as speed money or grease payments, facilitating payments are not payments to secure contracts that would not otherwise be secured and nor are they payments to obtain exclusive preferential treatment.

1. Facilitating payments are also known as speed money or grease payments.

TRUE Sometimes known as speed money or grease payments, facilitating payments are not payments to secure contracts that would not otherwise be secured and nor are they payments to obtain exclusive preferential treatment.

1. Noblesse oblige refers to payments that ensure receiving the standard treatment that a business ought to receive from a foreign government.

FALSE Noblesse oblige is a French term that refers to honorable and benevolent behavior considered the responsibility of people of high (noble) birth.

1. In a business setting, noblesse oblige is taken to mean benevolent behavior that is the responsibility of successful enterprises.

TRUE Noblesse oblige is a French term that refers to honorable and benevolent behavior considered the responsibility of people of high (noble) birth. In a business setting, it is taken to mean benevolent behavior that is the responsibility of successful enterprises.

1. A firm's organizational culture refers to the values and norms that are shared among employees of an organization.

TRUE The term organization culture refers to the values and norms that are shared among employees of an organization.

1. Employees in a business often take their cue from business leaders, and if those leaders do not behave in an ethical manner, they might not either.

TRUE Leaders help to establish the culture of an organization, and they set the example that others follow. Other employees in a business often take their cue from business leaders, and if those leaders do not behave in an ethical manner, they might not either.

1. Straw men approaches to business ethics offer appropriate guidelines for ethical decision making in a multinational enterprise.

FALSE Straw men approaches to business ethics are raised by business ethics scholars primarily to demonstrate that they offer inappropriate guidelines for ethical decision making in a multinational enterprise.

1. The utilitarian approach to ethics is a straw men approach to business ethics that has some inherent value, but is unsatisfactory in important ways.

FALSE Straw men approaches to business ethics can be characterized as the Friedman doctrine, cultural relativism, the righteous moralist, and the naive immoralist.

1. Milton Friedman's basic position is that the only social responsibility of business is to increase profits, so long as the company stays within the rules of law.

TRUE The Nobel Prize-winning economist Milton Friedman wrote an article in 1970 that has since become a classic straw man that business ethics scholars outline only to then tear down. Friedman's basic position is that the only social responsibility of business is to increase profits, so long as the company stays within the rules of law.

1. The Friedman doctrine is the belief that ethics are nothing more than a reflection of culture and therefore, a firm should adopt the ethics of the culture in which it is operating.

FALSE Friedman's basic position is that the only social responsibility of business is to increase profits, so long as the company stays within the rules of law. He explicitly rejects the idea that businesses should undertake social expenditures beyond those mandated by the law and required for the efficient running of a business.

1. Friedman's arguments suggest that improving working conditions beyond the level required by the law and necessary to maximize employee productivity will reduce profits and are therefore not appropriate.

TRUE Friedman explicitly rejects the idea that businesses should undertake social expenditures beyond those mandated by the law and required for the efficient running of a business.

1. According to the cultural relativism point-of-view, a firm should adopt the ethics of the culture in which it is operating.

TRUE Cultural relativism is the belief that ethics are nothing more than the reflection of a culture—all ethics are culturally determined—and that accordingly, a firm should adopt the ethics of the culture in which it is operating.

1. Cultural relativism suggests that even if slavery is culturally acceptable in a country, a foreign firm operating in that country should avoid using slave labor.

FALSE At its extreme, cultural relativism suggests that if a culture supports slavery, it is OK to use slave labor in a country.

1. According to the righteous moralist, if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either.

FALSE A righteous moralist claims that a multinational's home-country standards of ethics are the appropriate ones for companies to follow in foreign countries.

1. The righteous moralist approach to ethics is typically associated with managers from developing and under-developed nations.

FALSE A righteous moralist claims that a multinational's home-country standards of ethics are the appropriate ones for companies to follow in foreign countries. This approach is typically associated with managers from developed nations.

1. According to Rawls, inequalities are unjust even if the system that produces inequalities is to the advantage of everyone.

FALSE Rawls accepts that inequalities can be just if the system that produces inequalities is to the advantage of everyone. More precisely, he formulates what he calls the difference principle, which is that inequalities are justified if they benefit the position of the least-advantaged person.

1. Talking with prior employers regarding someone's reputation is a good way to discern a potential employee's ethical predisposition.

TRUE Businesses can give potential employees psychological tests to try to discern their ethical predisposition, and they can check with prior employees regarding someone's reputation (e., by asking for letters of reference and talking to people who have worked with the prospective employee). The latter is common and does influence the hiring process.

1. Building an organization culture that places a high value on ethical behavior requires incentive and reward systems.

TRUE Building an organization culture that places a high value on ethical behavior requires incentive and reward systems, including promotions that reward people who engage in ethical behavior and sanction those who do not.

1. A firm's internal stakeholders include customers, suppliers, and lenders.

FALSE Internal stakeholders are individuals or groups who work for or own the business. External stakeholders are all other individuals and groups that have some claim on the firm. Typically, this group comprises customers, suppliers, lenders, governments, unions, local communities, and the general public.

1. To establish moral intent, managers need to stand in the shoes of a stakeholder and ask how a proposed decision might impact that stakeholder.

FALSE Managers need to establish moral intent, to be able to think through ethical problems. This means the business must resolve to place moral concerns ahead of other concerns in cases where either the fundamental rights of stakeholders or key moral principles have been violated.

1. Moral courage enables managers to walk away from a decision that is profitable but unethical.

TRUE It is important to recognize that employees in an international business may need significant moral courage. Moral courage enables managers to walk away from a decision that is profitable but unethical.

1. Companies can strengthen the moral courage of employees by committing themselves to not retaliate against employees who exercise moral courage.

TRUE Companies can strengthen the moral courage of employees by committing themselves to not retaliate against employees who exercise moral courage, say no to superiors, or otherwise complain about unethical actions.

Multiple Choice Questions

1. Which of the following was designed to allow GM to operate ethically in South Africa as long as the company did not obey the apartheid laws in its own South African operations?

A. Sullivan principles B. The righteous moral system C. Noblesse oblige D. Cultural relativism GM adopted what came to be called the Sullivan principles, named after Leon Sullivan, a black Baptist minister and a member of GM's board of directors. Sullivan argued that it was ethically justified for GM to operate in South Africa so long as certain conditions were fulfilled.

1. Which of the following observations about the Foreign Corrupt Practices Act is true?

A. The act outlawed the paying of bribes to foreign government officials to gain business. B. There is enough evidence that it put U. firms at a competitive disadvantage. C. The act originally allowed for "facilitating payments." D. The Nike case was the impetus for the 1977 passage of this act. The Lockheed case was the impetus for the 1977 passage of the Foreign Corrupt Practices Act in the United States. The act outlawed the paying of bribes to foreign government officials to gain business.

1. Facilitating payments are:

A. a direct violation of the Foreign Corrupt Practices Act. B. permitted so long as they designed only to gain exclusive preferential treatment. C. used to secure contracts that would otherwise not be secured. D. permitted under the amended Foreign Corrupt Practices Act. Sometimes known as speed money or grease payments, facilitating payments are payments to ensure receiving the standard treatment that a business ought to receive from a foreign government, but might not due to the obstruction of a foreign official.

1. The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions excludes:

A. bribes made to secure contracts that would otherwise not be secured. B. grease payments to gain exclusive preferential treatment. C. facilitating payments made to expedite routine government action. D. payments to government officials for special privileges. The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions excludes facilitating payments made to expedite routine government action from the convention.

1. The idea that businesspeople should consider the social consequences of economic actions when making business decisions and that there should be a presumption in favor of decisions that have both good economic and social consequences is known as:

A. moral relativism. B. noblesse oblige. C. ethical dilemma. D. social responsibility. The concept of social responsibility refers to the idea that businesspeople should consider the social consequences of economic actions when making business decisions, and that there should be a presumption in favor of decisions that have both good economic and social consequences.

1. Which of the following, in a business setting, is taken to mean benevolent behavior that is the responsibility of successful enterprises?

A. Sullivan's principles B. Ethical dilemma C. Tragedy of the commons D. Noblesse oblige Noblesse oblige is a French term that refers to honorable and benevolent behavior considered the responsibility of people of high (noble) birth. In a business setting, it is taken to mean benevolent behavior that is the responsibility of successful enterprises.

1. Which of the following refers to the values and norms that the employees of an organization share?

A. Vision statement B. Cultural relativism C. Organization culture D. Power orientation The term organization culture refers to the values and norms that are shared among employees of an organization.

1. According to _____, the social responsibility of business is to increase profits, so long as the company stays within the rules of law.

A. the naive immoralist B. the righteous moralist C. cultural relativism D. the Friedman doctrine Friedman's basic position is that the only social responsibility of business is to increase profits, so long as the company stays within the rules of law. He explicitly rejects the idea that businesses should undertake social expenditures beyond those mandated by the law and required for the efficient running of a business.

1. According to the Friedman doctrine:

A. ethics are nothing more than the reflection of culture. B. a multinational's home-country standards of ethics are inappropriate to follow in foreign countries. C. businesses should not undertake social expenditures beyond those mandated by the law and required for the efficient running of a business. D. if a manager of a multinational sees that firms from other nations are not following environmental legislation in a host nation, that manager should not either. Friedman explicitly rejects the idea that businesses should undertake social expenditures beyond those mandated by the law and required for the efficient running of a business.

1. Cultural relativism suggests that:

A. a firm should adopt the ethics of the culture in which it is operating. B. the only social responsibility of a firm is to increase profits. C. a firm's ethical policies should remain the same in all cultures. D. a multinational should follow its home-country cultural practices in all the host- countries where it has operations. Cultural relativism is the belief that ethics are nothing more than the reflection of a culture—all ethics are culturally determined—and that accordingly, a firm should adopt the ethics of the culture in which it is operating.

1. Child labor is permitted and widely employed in Country X. A multinational company entering Country X decides to employ minors in its subsidiary, even though it is against the multinational's home-country ethics. Which of the following approaches to business ethics would justify the actions of the multinational company?

A. Righteous moralist B. Cultural relativism C. The justice theory D. The rights theory Cultural relativism is the belief that ethics are nothing more than the reflection of a culture—all ethics are culturally determined—and that accordingly, a firm should adopt the ethics of the culture in which it is operating.

1. According to the naive immoralist,:

A. a multinational's home-country standards of ethics are the appropriate ones for companies to follow in foreign countries. B. the social responsibility of business is to increase profits, so long as the company stays within the rules of law. C. ethics are nothing more than the reflection of a culture. D. if firms in a host nation do not follow ethical norms then the manager of a multinational should also not follow ethical norms there. A naive immoralist asserts that if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either.

1. An American manager in Colombia routinely pays off the local drug lord to guarantee that his plant will not be bombed and that none of his employees will be kidnapped. The manager argues that such payments are ethically defensible because everyone is doing it. The manager's argument exemplifies which of the following ethical approaches?

A. Naive immoralist B. Kantian ethics C. Righteous moralist D. Noblesse oblige A naive immoralist asserts that if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either. The classic example to illustrate the approach is known as the drug lord problem.

1. The utilitarian approach to business ethics suggests that:

A. people should be treated as ends and never purely as means to the ends of others. B. the moral worth of actions or practices is determined by their consequences. C. people have dignity and need to be treated as such. D. human beings have fundamental rights and privileges that transcend national cultures. Utilitarian approaches to ethics hold that the moral worth of actions or practices is determined by their consequences. An action is judged desirable if it leads to the best possible balance of good consequences over bad consequences.

1. According to the _____ approach, the best decisions are those that produce the greatest good for the greatest number of people.

A. naive immoralist B. Friedman doctrine C. Kantian ethics D. utilitari an The best decisions, from a utilitarian perspective, are those that produce the greatest good for the greatest number of people.

1. The products of Carmen Stores, an international sports apparel chain, are manufactured in sweat factories in China. According to the company president, using sweatshop labor offers a means of livelihood to children and young adults, as well as supplies good quality apparel to customers at a lower cost. She asserts that the actions of the company are justified because it results in the benefit of the maximum number of people. The company president's argument is based on which of the following ethical viewpoints?

A. The righteous moralist B. The Friedman doctrine C. Kantian approach to business ethics D. Utilitarian approach to business ethics As a philosophy for business ethics, utilitarianism focuses attention on the need to weigh carefully all of the social benefits and costs of a business action and to pursue only those actions where the benefits outweigh the costs. The best decisions, from a utilitarian perspective, are those that produce the greatest good for the greatest number of people.

1. The Kantian approach to ethics suggests that:

A. human beings have fundamental rights and privileges that transcend national boundaries. B. the moral worth of actions or practices is determined by their consequences. C. people should be treated as ends and never purely as means to the ends of others. D. ethics are nothing more than the reflection of culture. Kantian ethics hold that people should be treated as ends and never purely as means to the ends of others.

1. Article 1 of the United Nations Universal Declaration of Human Rights states: All human beings are born free and equal in dignity and rights. This best echoes:

A. cultural relativism. B. Friedman doctrine. C. the righteous moralist approach. D. Kantian ethics. Echoing Kantian ethics, Article 1 of the United Nations Universal Declaration of Human Rights states: All human beings are born free and equal in dignity and rights. They are endowed with reason and conscience and should act towards one another in a spirit of brotherhood.

1. Which of the following statements is true about the United Nations Universal Declaration of Human Rights?

A. It transcends national borders. B. It states that human rights are culturally determined. C. It states that an action is judged desirable if it leads to the best possible balance of good consequences over bad consequences. D. It states that the only social responsibility of business is to increase profits, so long as the company stays within the rules of law. The notion that there are fundamental rights that transcend national borders and cultures was the underlying motivation for the United Nations Universal Declaration of Human Rights, which has been ratified by almost every country on the planet and lays down basic principles that should always be adhered to irrespective of the culture in which one is doing business.

1. Justice theories of business ethics focus on:

A. the moral worth of actions or practices. B. minimum levels of morally acceptable behavior. C. fundamental rights and privileges that transcend national boundaries. D. the attainment of an equitable distribution of goods and services. A just distribution is one that is considered fair and equitable. Rawls argues that all economic goods and services should be distributed equally except when an unequal distribution would work to everyone's advantage.

1. According to John Rawls:

A. each person should be permitted the maximum amount of basic liberty compatible with a similar liberty for others. B. freedom of speech and assembly is the single most important component in a justice system. C. equal basic liberty is impossible in a pure market economy. D. ethics is culturally determined. According to Rawls, valid principles of justice are those with which all persons would agree if they could freely and impartially consider the situation. One such principle is that each person be permitted the maximum amount of basic liberty compatible with a similar liberty for others.

1. Rawls' philosophy that inequalities are justified if they benefit the position of the least-advantaged person is known as the:

A. inequality principle. B. equity principle. C. difference principle. D. ignorance veil principle. John Rawls formulated what he called the difference principle, which is that inequalities are justified if they benefit the position of the least-advantaged person.

1. According to John Rawl's difference principle,:

A. certain people or institutions are obligated to provide benefits or services that secure the rights of others. B. fundamental human rights should transcend national borders and cultures. C. the best decisions are those that produce the greatest good for the greatest number of people. D. inequalities are justified if they benefit the position of the least- advantaged person. John Rawls formulated what he called the difference principle, which is that inequalities are justified if they benefit the position of the least-advantaged person.

Which of the following enables managers to walk away from a decision that is profitable?

What situation is most likely to lead to unethical behavior in a business setting?

What are four determinants of ethical behavior?

Why might managers working abroad in multinational firms behave in a manner that is unethical?