File: ch08, Chapter 8, Ethical Problems of Organizations



File: ch10.rtf, Chapter 10, Ethical Problems of Organizations

Matching

Reference: Matching Key Terms and Definitions

a) Stake

b) Primary stakeholder

c) Secondary stakeholder

1. Business partners, customers, and employees.

Ans: b

Response: See page 356.

Difficulty: Easy

2. An interest, claim, or right to something.

Ans: a

Response: See page 355.

Difficulty: Easy

3. Opinion formers, community, and authorities.

Ans: c

Response: See page 356.

Difficulty: Easy

Reference: Matching Key Stakeholders and Regulatory Agencies

a) Guard rights of shareholders

b) Guard rights of consumers

c) Guard rights of employees

d) Guard rights of the community

4. Occupational Safety and Health Administration (OSHA)

Ans: c

Response: See page 374.

Difficulty: Easy

5. The Federal Trade Commission

Ans: b

Response: See page 388.

Difficulty: Easy

6. The Federal Reserve Board

Ans: a

Response: See page 388.

Difficulty: Easy

7. The Environmental Protection Agency (EPA)

Ans: d

Response: See page 386.

Difficulty: Easy

8. The Federal Communication Commission (FCC)

Ans: b

Response: See page 388.

Difficulty: Easy

True/False

9. Before the beginning of the twentieth century, consumers did not have the right to sue manufacturers for a defective product.

Ans: True

Response: See pages 356-357.

Difficulty: Easy

10. One of the most common faults in ethical decision making is to ignore the long-term consequences of a decision.

Ans: True

Response: See page 381.

Difficulty: Medium

11. In the past five-to-ten years, most lawsuits filed against pharmaceuticals are related to the companies’ advertising and marketing practices.

Ans: True

Response: See page 372.

Difficulty: Medium

12. Because stakeholders’ interests frequently do not overlap, an organization is able to focus on one stakeholder at a time.

Ans: False

Response: See pages 355 ; 389.

Difficulty: Easy

13. Only since Enron’s collapse have ethicists and business professionals really been concerned about the increasing focus on “short-term” earnings.

Ans: False

Response: See page 354.

Difficulty: Easy

14. The real proportion of wrong-doers is probably quite small.

Ans: True

Response: See page 355.

Difficulty: Easy

17. Ethical disasters in corporations often start as small issues and it is either denial or mismanagement that cause seemingly minor situations to mushroom into huge legal, ethical, and public relations nightmares.

Ans.: True

Response: See page 355

Difficulty : Medium

18. Conflicts involving organizations are more damaging than those who involve individuals.

Ans. True

Response: See page 357

Difficulty: Easy

19. The definition of conflict for an organization is similar to that for an individual ; that is, if a stakeholder thinks that an organization’s judgment is biased because of a relationship it has with another firm, a conflict could exist.

Ans.: True

Response: See page 364

Difficulty: Easy

20. Nothing will put a company out of business faster than offering a product that is dangerous, poorly produced, or of inferior quality.

Ans.: True

Response: See page 365

Difficulty: Easy

21. Despite Johnson & Johnson’s best efforts to respond to its customers by pulling Tylenol off shelves, the product has never regained its market share.

Ans.: False

Response: See page 366

Difficulty : Medium

22. Toyota, like Johnson & Johnson, halted production in response to its concerns for its customers.

Ans. False

Response: See page 368

Difficulty: Medium

29. In ethical decision-making and particularly in cases dealing with product safety, firms are best served when they consider the long-term consequences of a decision.

Ans.: True

Response: See page 369

Difficulty : Medium

30. The pharmaceutical industry has found that advertising directly to the consumer minimizes problems experienced earlier with consumers regarding their confidence in products.

Ans.: False

Response: See page 372

Difficulty : Difficult

Multiple Choice

31. The idea that consumers have the right to safety, right to be heard, right to choose, and right to be informed came from ____________ in ________.

a) Theodore Roosevelt; 1930.

b) The Food and Drug Act; 1906.

c) John F. Kennedy; 1962.

d) George W. Bush; 2004.

Ans: c

Response: See page 357.

Difficulty: Medium

32. In this example of a conflict of interest, ________ conducted a series of off-the-books partnerships that were used to hide the organization’s debt and inflate its stock price. The partnerships were managed by the company’s executives who stood to profit the most from the transactions.

a) Merrill Lynch

b) Enron

c) Citicorp

d) Adelphia

Ans: b

Response: See page 358.

Difficulty: Medium

33. In a classic example of failing to protect its employees, ___________ knew asbestos caused cancer as early as 1930. However, the company lied to its employees and used several tactics to cover-up the product’s effects.

a) Johnson & Johnson

b) A.H. Robbins

c) Manville Corporation

d) McWane, Inc.

Ans: c

Response: See pages 374-376.

Difficulty: Medium

34. In this classic example of a company treating its employees responsibly, ____________ was the first company to offer company-paid vacations, stock ownership plans, employee suggestion program, and the guaranteed employment plan. This company has not laid off employees in the United States since 1948.

a) McWane, Inc.

b) Lincoln Electric

c) Scott Paper Company

d) Manville Corporation

Ans: b

Response: See page 380.

Difficulty: Medium

35. In a 2002 poll, _________ ranked last on the “who do you trust scale.”

a) Lawyers

b) Politicians

c) Chief executive officers

d) Accountants

Ans: c

Response: See page 364.

Difficulty: Easy

36. Organizations have many ethical obligations to their employees including

a. right to privacy, right to a safe workplace, right to promotional opportunities

b. right to privacy, right to a safe workplace, right to freedom of speech

c. right to a safe workplace, right to freedom of speech, right to promotional opportunities

d. right to a safe workplace, right to freedom of speech, right to three weeks vacation

e. right to fair treatment, right of privacy, right to c-level opportunities if they earned their MBA

Ans.: b

Response: See page 374

Difficulté: Difficult

37. For the public, the top three factors in corporate reputation are :

a. transparent and honest practices, trustworthiness, and high-quality products and services

b. transparent and honest practices, community philanthropy, and high quality products and services

c. trustworthiness, high-quality products, and a no-layoff policy

d. trustworthiness, high-quality products, and a 90-day customer return policy

Ans.: a

Response: See page 389

Difficulty : Medium

38. The due care theory involves at least the elements set out below.

a. products and services meet all government regulations and specifications

b. ability to return the product if dissatisfied for any reason

c. products should be inspected regularly for quality

d. manufacturers should institute a system to recall products that prove dangerous after distribution

e. a & b

f. a, c, & d

g. all of the above

Ans.: f

Response: See page 357

Difficulty: Difficult

Short Answer

39. Companies face a myriad of stakeholders that often have conflicting interests. Briefly describe a company or an incident that demonstrates how stakeholders’ conflicting interests can lead to unethical behavior.

Ans: For example, students may describe how shareholders and stock analysts demand strong performance and can punish a company severely who does not meet these expectations. On the other hand, to meet the shareholder’s expectations, a company may need to sacrifice other stakeholders’ rights (such as product safety, truth in advertising, etc.).

Response: see pages 355-357

Difficulty: Difficult

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