Chapter 02 the Ethical Basis of Law and Business Management

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Chapter 02

The Ethical Basis of Law and Business Management

True / False Questions

1.Today over 20% of big companies have ethics officers.
TrueFalse

2.Diverse societies promote shared ethical values that guide behavior.
TrueFalse

3.Because of the news media, it has become increasingly difficult for businesses to hide questionable behavior.
TrueFalse

4.Kant's emphasis on consistency is called the categorical imperative.
TrueFalse

5.Growing diversity in the workplace has reduced concerns over ethical values.
TrueFalse

6.The terms legal and ethical have the same meaning.
TrueFalse

7.Ultimately, the commitment to ethical values is superior to mere observance of the law in ensuring responsible business behavior.
TrueFalse

8.Formalism says that certain behaviors are always wrong and can't be justified.
TrueFalse

9.A formalist would conclude that secret monitoring of employees is ethical because if the employee is cheating the company or otherwise acting unethically, the employee is clearly wrong and deserves to be stopped.
TrueFalse

10.Business ethics reflects elements of both formalism and consequentialism but tends to focus more heavily on consequentialism.
TrueFalse

11.Social contract theory has its origin in formalism.
TrueFalse

12.Formalism focuses on individual rights and consequentialism focuses on the common good.
TrueFalse

13.For utilitarians, the end justifies the means.
TrueFalse

14.The Protestant ethic was rooted in a formalist approach, meaning that honesty and keeping promises is intrinsically good.
TrueFalse

15.It is common and acceptable to use the terms morality and ethics to mean the same thing.
TrueFalse

16.According to the 2007 National Business Ethics Survey, most employees do not believe that their fellow employees are committed to ethics.
TrueFalse

17.The social contract theory recognizes that it is ethical for social and economic inequities to exist based of what a person does.
TrueFalse

18.Plato wrote that immoral behavior often flows from thoughtlessness.
TrueFalse

19.Federal law reduces criminal penalties for companies that take steps to control their ethical conduct.
TrueFalse

20.Of the world's 100 largest economies, 49 are countries and 51 are companies.
TrueFalse

Multiple Choice Questions

21.What percentage of big companies have ethics officers?
A.Over 20%.
B.Over 30%.
C.Over 40%.
D.Over 50%.

22.Which of the following is not a job of an ethics officer:
A.Develop ethics policies.
B.Listen to complaints concerning ethics violations.
C.Investigate ethics abuses.
D.Counter-sign corporate checks.

23.The rising concern over business ethics responds to all of the following except:
A.A decline in public education.
B.A decline in two-parent families.
C.An increase in international cartels.
D.An increase in both parents working.

24.Federal law:
A.Requires that all companies establish a written code of ethics.
B.Encourages self regulation by companies.
C.Requires that all ethics related matters be referred to the federal government giving the federal government exclusive jurisdiction regarding ethics and ethics violation enforcement.
D.Establishes regulators in all areas of industry to establish and enforce ethical standards.

25.Which statement is true:
A.Ethics is a formal system for deciding right and wrong decisions.
B.Law and ethics are the same thing.
C.The motivation to observe moral rules comes from society.
D.Ultimately, adhering to laws is superior to abiding by moral principles.

26.The legal requirement of honoring confidences reflects elements of:
A.Formalist ethics.
B.Consequentialist ethics.
C.Both of the above.
D.None of the above, this is common law and not based on ethics.

27.The ______has an emphasis on consistency and compels you to act as you believe everyone should act.
A.Formalist Theory.
B.Deontological Imperative.
C.Categorical Imperative.
D.Contractualist Imperative.

28.Who developed the categorical imperative?
A.Socrates.
B.Plato.
C.Rawls.
D.Kant.

29.Who developed the social contract theory?
A.Rawls.
B.Kant.
C.Locke.
D.Plato.

30.The social contract theory concerns itself with how to construct a just society given the many inequalities of all of the following except:
A.Wealth.
B.Social status.
C.Height.
D.Knowledge.

31.According to Rawls:
A.No one is entitled to the right of personal security.
B.Social and economic inequalities that exist must be based on what a person does, not on who a person is.
C.Everyone is entitled to equal opportunity in all pursuits.
D.Individuals have the right to an equal place at the finish line in society.

32.Value based management:
A.Teaches ethical values to management and supervisory personnel that enhances the profitability of the company.
B.Teaches ethical values to all employees that enhances the profitability of the company.
C.Teaches ethical values to management and supervisory personnel with the aim of avoiding ethical issues whether profitability is affected or not.
D.Teaches ethical values to all employees with the aim of avoiding ethical issues whether profitability is affected or not.

33.The principal systems of ethics are:
I. Formalism
II. Consequentialism
III. Utilitarianism
A.I, II, and III.
B.I and II.
C.II and III.
D.I and III.

34.Since the primary goal of business is to make a profit, this orientation mainly involves:
A.Deontology.
B.Formalism.
C.Consequentialism.
D.The lack of ethics.

35.The Protestant Ethic is rooted in:
A.Utilitarianism.
B.Consequentialism.
C.Deontology.
D.Formalism.

36.Jackall's organizational ethic has all but which of the following:
A.Administrative hierarchies.
B.Standardized work procedures.
C.Uniform policies.
D.Democratic control.

37.Adam Smith's book, The Wealth of Nations, recognized that:
A.There is a moral element in human nature that goes beyond self interest.
B.Greed is good.
C.Self regulation cannot succeed because of man's inherent self interests.
D.Overregulation cannot succeed because of man's inherent distrust of government.

38.Approximately how much money does the tobacco industry spend annually on tobacco advertising?
A.$110 million.
B.$113 million.
C.$10 billion.
D.$13 billion.

39.Which of the following is a source of values for business ethics:
A.Legal regulation.
B.Professional codes of ethics.
C.Individual values.
D.All of the above.

40.Which of the following is not an ethical rule of legal regulation:
A.Respect for the liberty and rights of others.
B.Exercising due care.
C.You are your brother's keeper.
D.Acting in good faith.

41.Economists urge that retail price increases after product shortages caused by catastrophic events such as the gas shortage after hurricane Katrina:
A.Should be capped to prevent gouging.
B.Is short term so it is an event not worth discussing.
C.Must be followed with a similar period of below cost sales to even out costs and provide fairness to the public.
D.Helps to ensure that those drivers who need and want gasoline the most will be able to get it during the shortage.

42.Mike is driving 15 miles over the posted speed limit and is pulled over by Trooper Tom. When Trooper Tom approaches the car he hears Kathy in the front seat moaning in pain. Mike tells Trooper Tom that Kathy is in labor and that he's rushing to the hospital. Trooper Tom never-the-less issues a ticket. Trooper Tom's ethical approach in this matter is:
A.Utilitarianism.
B.Relativism.
C.The Protestant Work Ethic
D.Formalism.

43.Who, among the following, does not have a duty of confidentiality:
A.An attorney.
B.A real estate broker.
C.A physician.
D.A mechanic.

44.In which situation is there a conflict of interest:
A.A judge who occasionally shops in a store that is involved in a case before the judge.
B.A real estate agent representing the buyer and seller of a house with permission from the buyer and seller.
C.An agent working for a competitor of the agent's principal.
D.A bank regulator using a credit union.

45.Stakeholder theory suggests that through its managers, an ethical corporation will do each of the following except:
A.Adopt communication methods appropriate to the sophistication levels of the various stakeholders.
B.Work actively and cooperatively to reduce the risk of corporate harm to stakeholders and compensate them when harm occurs.
C.Take unacceptable risks only when the risk has a reasonable likelihood of enriching the stakeholders net worth substantially.
D.Allow stakeholders to communicate with decision makers and inform stakeholders about risks that may arise from corporate action.

46.Who said, "It is the preoccupation with possession, more than anything else, that prevents men from living freely":
A.Bertrand A. Russell.
B.Karl Marx.
C.Samuel Adams.
D.Justice Potter Stewart.

47.The "veil of ignorance" means to think ethically you must:
A.Lose the assumption that what you personally want or need is necessarily morally correct.
B.Recognize that one cannot make valid ethical decisions unless they are totally unaware of the other parties involved so as to eliminate bias.
C.Recognize that one cannot make valid ethical decisions unless they are totally unaware of the circumstances leading to the ethical dilemma so as not to be influenced by unchangeable history.
D.Put yourself in the position of those affected by your decision and act as you'd have wanted them to act.

48.The legal requirement of honoring confidences by professionals contains:
A.Formalist ethical values.
B.Consequentialist ethical values.
C.Both A and B.
D.None of the above, legal requirements have no overlap with ethical values.

49.The ultimate source of ethical values for business decision making comes from:
A.Legislation.
B.The corporate code of ethics.
C.The individual.
D.The example set by top executives.

50.Are not believed that immoral behavior was often the result of:
A.Apathy.
B.Ignorance.
C.Thoughtlessness.
D.Selfishness.

51.Making decisions to promote the common good is a significant principle of ethical:
A.Existentialism.
B.Daoism.
C.Utilitarianism.
D.Self-promotion.

52.Ethical formalists maintain that:
A.Harm to an individual is allowable as long as it serves a greater good.
B.Values are situational and change is based on circumstance.
C.Harm to individual rights is never justified by an increase in organizational or common good.
D.The good of the many always supersedes the good of the few.

53.When facing an ethical dilemma, all but which of the following questions should you ask yourself:
A.Have I thought about whether the action I take is right or wrong?
B.Will I be proud to tell of my actions to my family?
C.Am I willing for everyone to act as I am thinking of acting?
D.Will my decision cause harm to myself?

54.Potential harm you may cause to individuals and society will best be deterred by:
A.The threat of legal punishment.
B.The sanctions of professional or corporate codes.
C.Social relativism.
D.A and B.

55.Opponents of the Civil Rights Act of 1964, in an attempt to prevent its passing, inserted a prohibition against ______discrimination in employment, thinking that such discrimination was acceptable and that many others agreed with them:
A.Age.
B.Religious.
C.Sex.
D.Race.

56.Business ethics reflects elements of:
A.Formalism only.
B.Consequentialism only.
C.Both fundamentalism and consequentialism with a focus on formalism.
D.Both fundamentalism and consequentialism with a focus on consequentialism.

57.In many corporations, the responsibility for profit making is:
A.Centralized.
B.Structured.
C.Decentralized.
D.Monopolistic.

58.Ethical problems that arise in corporate life:
A.Are the same concerns present in one's individual experience.
B.Always overlap with personal dilemmas.
C.Are not always present in one's individual experience.
D.Are the result of a lack of leadership.

59.Openness in communication is promoted by:
A.Role models provided by top management.
B.Periodic small group meetings to discuss ethical issues.
C.A shared corporate commitment to the ideal of ethical decision making.
D.All of the above.

60.The dominant form of consequentialism is:
A.Utilitarianism.
B.Social contract theory
C.The categorical imperative.
D.The Protestant ethic.

Short Answer Questions

61.Placing himself behind a wall of self-ignorance, Rawls proposed what ethical principles?

62.How would a formalist and a consequentialist view an employer secretly monitoring an employee's e-mail messages?

63.How could a utilitarian view the tobacco industry as a positive part of society?

64.Peter is an 84 year old man with a heart condition. He has no family and minimal health insurance. He is on a fixed income and barely has enough money to survive. His doctor tells him that he needs to take a particular medicine for three months or his condition will severely worsen. The medicine will cost $450.00 and only $150.00 of the cost is covered by insurance. Peter goes to the bank and hands the teller a note saying, "give me $300.00 or I'll detonate a bomb." When Peter is later apprehended, he told the police that he stole the money to buy needed medicine. Understanding that bank robbery is a crime, is there an ethical theory that can serve to justify Peter's actions?

65.When facing an ethical dilemma, what questions should you ask yourself before making a personal or business decision?

66.Achieving and maintaining an ethical business corporation is a laudable but difficult task. What are some of the obstacles that a corporation faces, by its very nature, in seeking an ethical culture?

67.Civil rights leaders in their quest to promote civil rights and equality often held peaceful marches and non-violent sit-ins that they understood to be at times illegal. Their justification for their actions was to promote and give focus to inequities with the ultimate aim of reducing discrimination and establishing equal rights for all. Were these leaders acting ethically? Fully explain your answer citing the ethical theory you believe to apply.

68.Even with a code of ethics, why is it important for top management in a corporation to set an example for ethical conduct?

69.What is meant by stakeholder theory and who are the stakeholders of a corporation?

70.What were the four observations made by the Spanish journal, Boletin Circulo, about business ethics?

Chapter 02 The Ethical Basis of Law and Business Management AnswerKey

True / False Questions

1.(p.28)Today over 20% of big companies have ethics officers.
TRUE

Level: Medium
Objective: 4

2.(p.29)Diverse societies promote shared ethical values that guide behavior.
FALSE

Level: Hard
Objective: 1, 3

3.(p.29)Because of the news media, it has become increasingly difficult for businesses to hide questionable behavior.
TRUE

Level: Easy
Objective: 3, 4

4.(p.34)Kant's emphasis on consistency is called the categorical imperative.
TRUE

Level: Medium
Objective: 2

5.(p.28)Growing diversity in the workplace has reduced concerns over ethical values.
FALSE

Level: Medium
Objective: 3, 4

6.(p.32)The terms legal and ethical have the same meaning.
FALSE

Level: Easy
Objective: 1

7.(p.33)Ultimately, the commitment to ethical values is superior to mere observance of the law in ensuring responsible business behavior.
TRUE

Level: Medium
Objective: 1, 3, 4

8.(p.34)Formalism says that certain behaviors are always wrong and can't be justified.
TRUE

Level: Medium
Objective: 2

9.(p.38)A formalist would conclude that secret monitoring of employees is ethical because if the employee is cheating the company or otherwise acting unethically, the employee is clearly wrong and deserves to be stopped.
FALSE

Level: Hard
Objective: 2

10.(p.36)Business ethics reflects elements of both formalism and consequentialism but tends to focus more heavily on consequentialism.
TRUE

Level: Medium
Objective: 2

11.(p.35)Social contract theory has its origin in formalism.
TRUE

Level: Hard
Objective: 2

12.(p.35)Formalism focuses on individual rights and consequentialism focuses on the common good.
TRUE

Level: Hard
Objective: 2

13.(p.35)For utilitarians, the end justifies the means.
TRUE

Level: Easy
Objective: 2, 3

14.(p.37)The Protestant ethic was rooted in a formalist approach, meaning that honesty and keeping promises is intrinsically good.
TRUE

Level: Medium
Objective: 2, 3

15.(p.32)It is common and acceptable to use the terms morality and ethics to mean the same thing.
TRUE

Level: Medium
Objective: 1, 3

16.(p.28)According to the 2007 National Business Ethics Survey, most employees do not believe that their fellow employees are committed to ethics.
FALSE

Level: Hard
Objective: 4

17.(p.35)The social contract theory recognizes that it is ethical for social and economic inequities to exist based of what a person does.
TRUE

Level: Hard
Objective: 2, 3

18.(p.47)Plato wrote that immoral behavior often flows from thoughtlessness.
FALSE

Level: Hard
Objective: 3

19.(p.30)Federal law reduces criminal penalties for companies that take steps to control their ethical conduct.
TRUE

Level: Medium
Objective: 3, 4

20.(p.54)Of the world's 100 largest economies, 49 are countries and 51 are companies.
TRUE

Level: Hard
Objective: 4

Multiple Choice Questions

21.(p.28)What percentage of big companies have ethics officers?
A.Over 20%.
B.Over 30%.
C.Over 40%.
D.Over 50%.

Level: Medium
Objective: 4

22.(p.30)Which of the following is not a job of an ethics officer:
A.Develop ethics policies.
B.Listen to complaints concerning ethics violations.
C.Investigate ethics abuses.
D.Counter-sign corporate checks.

Level: Medium
Objective: 4

23.(p.29)The rising concern over business ethics responds to all of the following except:
A.A decline in public education.
B.A decline in two-parent families.
C.An increase in international cartels.
D.An increase in both parents working.

Level: Easy
Objective: 4

24.(p.30)Federal law:
A.Requires that all companies establish a written code of ethics.
B.Encourages self regulation by companies.
C.Requires that all ethics related matters be referred to the federal government giving the federal government exclusive jurisdiction regarding ethics and ethics violation enforcement.
D.Establishes regulators in all areas of industry to establish and enforce ethical standards.

Level: Medium
Objective: 4

25.(p.31-32)Which statement is true:
A.Ethics is a formal system for deciding right and wrong decisions.
B.Law and ethics are the same thing.
C.The motivation to observe moral rules comes from society.
D.Ultimately, adhering to laws is superior to abiding by moral principles.

Level: Medium
Objective: 1, 3

26.(p.41)The legal requirement of honoring confidences reflects elements of:
A.Formalist ethics.
B.Consequentialist ethics.
C.Both of the above.
D.None of the above, this is common law and not based on ethics.

Level: Medium
Objective: 2, 3

27.(p.34)The ______has an emphasis on consistency and compels you to act as you believe everyone should act.
A.Formalist Theory.
B.Deontological Imperative.
C.Categorical Imperative.
D.Contractualist Imperative.

Level: Easy
Objective: 2

28.(p.34)Who developed the categorical imperative?
A.Socrates.
B.Plato.
C.Rawls.
D.Kant.

Level: Easy
Objective: 3