Chapter 3A

 Strategic Management and Business Policy, 14e (Wheelen) Chapter 3 Ethics and Social Responsibility in Strategic Management

1.

The The theor theory y of vital vital resp respon onsi sibi bili lity ty prop propos oses es that that a priva private te corp corpor orat atio ion n has resp respon onsi sibi bili liti ties es to society that extend beyond making a profit. Answer: FASE 2.

Frie Friedm dman an refer referre red d to the soci social al respo respons nsib ibil ilit ity y of busin busines esss as a “fun “funda dame ment ntal ally ly subve subvers rsiv ivee doctrine.” Answer: !R"E 3. rch rchie ie !ar !arro roll cont conten ends ds tha thatt the the prim primary ary goal goal of of busi busine ness ss is pro profi fitt maxi maximi mi"at "atio ion. n. Answer: FASE FASE #. rchie rchie !arrol !arrolll prop propose osess that that manage managers rs in compani companies es have only only a discre discretio tionary nary respon responsib sibil ility ity.. Answer: FASE $.

%egal %egal resp respons onsibi ibili litie tiess are are define defined d by govern governmen ments ts in la&s la&s that that manage management ment is expect expected ed to to obey obey..

Answer: FASE

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The The diffe differe renc ncee bet&e bet&een en ethi ethical cal and and discr discret etio ionar nary y respo respons nsib ibil ilit itie iess is that that fe& peop people le expec expectt an organi"ation to fulfill ethical responsibilities. Answer: FASE (.

)ein )eing g kno&n kno&n as a socia sociall lly y respo respons nsib ible le firm firm may may provi provide de a compa company ny &ith &ith soci social al capi capita tal* l* the the good&ill of key stakeholders* that can be used used for competitive competitive advantage. Answer: !R"E +. ,isc ,iscre reti tion onar ary y respo respons nsib ibil ilit itie iess are vol volun unta tary ry obli obliga gati tion onss a corpor corporat atio ion n assum assumes es.. Answer: !R"E -.

 study concerning social responsibility indicates that sociallyresponsible firms are more likely to be &elcomed into another country. Answer: !R"E 1/.

!orp !orpor orat atio ion n stak stakeho ehold lder erss are all const constit itue uenci ncies es that that are affec affecte ted d by the achie achievem vement ent of the firm0s obectives. Answer: !R"E 11. 11.

n any one one strat strategi egicc decisio decision* n* the inte interes rests ts of one one stakeh stakehold older er group group can can conflic conflictt &ith &ith another another.. !opyright  2/1$ 4 2/1' 5earson 6ducation* nc.

Answer: !R"E

12.

The first step in stakeholder analysis is identifying those &ho have only an indirect stake in the corporation. Answer: FASE 13.

5rimary stakeholders have a direct connection &ith the corporation and have sufficient  bargaining to directly affect corporate activities. Answer: !R"E 1#.  company may have some stakeholders of &hich it is only marginally a&are. Answer: !R"E 1$. There is no truth to the comment that “business ethics” is an oxymoron. Answer: !R"E 1'. !ultural norms and values can guide ethical behavior. Answer: !R"E 1(. “%et the buyer be&are” is a traditional saying in free market capitalism. Answer: !R"E 1+.

7elationshipbased countries tend to be more transparent and have a lo&er degree of corruption than do rulebased countries. Answer: FASE 1-.

!ultural relativism states that morality is relative to some personal* social* and cultural standard. Answer: FASE 2/.

8ohlberg0s preconventional level is characteri"ed by a person0s adherence to an internal moral code. Answer: FASE 21.

9oral relativism could enable a person to ustify almost any sort of decision or action* so long as it is not declared illegal. Answer: !R"E 22.

ccording to 8ohlberg0s levels of moral development* the conventional level is characteri"ed  by considerations of society0s la&s and norms. Answer: !R"E !opyright  2/1$ 4 2/1' 5earson 6ducation* nc.

23. 8ohlberg places +/ percent of :.;. adults in the principled level of development. Answer: FASE 2#.  code of ethics denotes ho& employees should behave on the ob. Answer: !R"E 2$. 7esearch indicates that &hen faced &ith a
%a& refers to formal codes that permit or forbid certain behaviors and may or may not enforce ethics or morality. Answer: !R"E 2(.

The ustice approach to ethics proposes that actions and plans should be udged by their  conse
 problem &ith the utilitarian approach to ethics is the difficulty in recogni"ing all the benefits and the costs of any particular decision. Answer: FASE 2-.

The =olden 7ule is the essence of one of mmanuel 8ant0s approaches to resolving ethical dilemmas. Answer: !R"E 3/.

The concept that proposes corporations have responsibilities to society that extend beyond making a profit is kno&n as a. flexible responsibility. b# social responsibility# c. social flexibility. d. managerial responsibility. e. 5rofit maximi"ation

31.

>hich one of the follo&ing is ?@T one of the arguments against social responsibility as used  by economist 9ilton FriedmanA a. b#

;pending money for social responsibility is spending the stockholderBs money for a general social interest. $%sinesses can act%ally do &ery little in terms o' social responsibility . !opyright  2/1$ 4 2/1' 5earson 6ducation* nc.

c. d.

e.

;pending money on social responsibility is acting from motives other than economic and may* in the longrun* cause harm to the very society the firm is trying to help. There is one and only one social responsibility of business  to use its resources and engage in activities designed to increase its profits so long as it stays &ithin the rules of  the game. Through taking on the burden of social costs* the organi"ation becomes less efficient* causing price increases or postponement of gro&th.

32.

>ho said that the social responsibility of business is a Cfundamentally subversive doctrineC and that the one social responsibility of business is Cto use its resources and engage in activities designed to increase its profits so long as it stays &ith the rules of the game...CA a. dam ;mith  b. 6d&ard Freeman c. rchie !arroll d. >illiam !. ?orris e# Milton Friedman

33.

6conomist 9ilton Friedman has argued that a businessBs only responsibility is to a# maimie pro'its and stay within the r%les o' the game#  b. sustain its market share. c. promote the &elfare of society. d. satisfy its employees. e. satisfy its customers.

3#.

ccording to !arroll* the responsibility that management of a business organi"ation has to  produce goods and services of value to society so that the firm may repay its creditors and stockholders is called a. legal responsibilities.  b. ethical responsibilities. c. financial responsibilities. d# economic responsibilities# e. discretionary responsibilities.

3$.

ccording to !arroll* the responsibilities defined by government in la&s for management to obey are a# legal responsibilities#  b. ethical responsibilities. c. financial responsibilities. d. economic responsibilities. e. discretionary responsibilities. !opyright  2/1$ 4 2/1' 5earson 6ducation* nc.

3'.

ccording to !arroll* the responsibility that management of a business organi"ation assumes &hich are purely voluntary obligations are a. legal responsibilities.  b. ethical responsibilities. c. financial responsibilities. d. economic responsibilities. e# discretionary responsibilities#

3(.

The term Csocial responsibilityC can be vie&ed as a combination of an a# organiation*s ethical and discretionary responsibilities#  b. organi"ationBs legal and ethical responsibilities. c. organi"ationBs economic and ethical responsibilities. d. organi"ationBs financial and economic responsibilities. e. organi"ationBs legal and discretionary responsibilities.

3+.

>hich of the follo&ing is ?@T one of the examples provided as an organi"ational benefit received from being socially responsibleA a. They can attract outstanding employees &ho prefer &orking for a responsible firm.  b. They are more likely to be &elcomed into a foreign country. c. They are more likely to attract capital infusions from investors &ho vie&  reputable companies as desirable longterm investment. d# !hey are g%aranteed to maimie reso%rce prod%cti&ity and red%ce the a&erage paybac+ period o' in&estment# e. Their environmental concerns may enable them to charge premium prices and gain brand loyalty.

3-.

ccording to a recent Darris 5oll &hat percentage of :.;. adults believe that :.;. corporations o&e something to their &orkers and the communities in &hich they operate and that they should sometimes sacrifice some profit for making things better for their &orkers and communitiesA a# ,-.#  b. $E. c. $/E. d. ($E. e. 2$E.

#/.

>hich of the follo&ing statements is true concerning secondary stakeholderA a. ;econdary stakeholders are those &ho have only an indirect stake in the corporation*  but &ho are affected by corporate activities. !opyright  2/1$ 4 2/1' 5earson 6ducation* nc.

 b. c. d. e#

;econdary stakeholders usually include nongovernmental organi"ations like =reenpeaceG and trade associations. )ecause the corporation0s relationship &ith each of these stakeholders is usually not covered by any &ritten or verbal agreement* there is room for misunderstanding. side from competitors* secondary stakeholders are not usually monitored by the corporation in any systematic fashion. All o' the abo&e#

#1.

>hich of the follo&ing companies &as cited by the text as an example of a company* &hich does its best to consider its responsibilities to its primary and secondary stakeholders &hen making strategic decisionsA a. 9c,onald0s b# /ohnson 0 /ohnson c. 9aytag d. 9icrosoft e. 6nron

#2.

The 6thics 7esource !enter found that the percentage of employees &ho had engaged in one or  more unethical andHor illegal actions during the past year &as a. less than 1E.  b. 21E. c# 12.# d. ('E. e. over -+E.

#3.

ccording to a survey by the 6thics 7esource !enter* &hich &as not cited as one of the most common
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@f the six values measured by the llpotIernon%ind"ey ;tudy of Ialues test* both :.;. and )ritish executives consistently score highest on JJJJJJJJJJJ values and lo&est on JJJJJJJJJ  values. a. religious and theoreticalK economic and social  b. religious and economicK political and social c# economic and political social and religio%s d. social and religiousK aesthetic and political e. religiousK economic !opyright  2/1$ 4 2/1' 5earson 6ducation* nc.

#$.

>hich of the follo&ing is one of the most common reasons given by surveyed executives for   bending the rules to attain their obectivesA a. organi"ational performance re
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Iice 5resident ;herron >atkins used the JJJJJJJJ analogy to explain &hy executives at 6nron engaged in unethical and illegal actions. a. borro&ing earnings  b. ?apoleon complex c. 9oral relativism d# Frogs in boiling water e. ll of the above

#(.

;ome people claim that morality is relative to some personal* social* or cultural standard and that there is no method for deciding &hether one decision is better than another. This is call a. ethical relativity.  b. moral philosophy. c. comparative ethics. d. cultural imperialism. e# moral relati&ism#

#+. ll of the follo&ing reasons provide rationale for unethical behavior 6L!65T a. the impact of cultural norms and values.  b. differences in values bet&een business people and key stakeholders. c. relativity &ith regard to morality. d# agreement among sta+eholders and b%siness people abo%t what is ethical# e. difficulty of one group to understand another0s actions. #-. ccording to 8ohlberg* the first level of moral development* characteri"ed by concern for self* is called a. principled.  b. conventional. c. essential. d# precon&entional# e. fundamental.

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$/.

ccording to 8ohlberg* the second level of moral development* characteri"ed by considerations of societyBs la&s and norms* is called a. principled. b# con&entional# c. essential. d. preconventional. e. fundamental.

$1.

ccording to 8ohlberg* the third level of moral development* characteri"ed by a personBs adherence to an internal moral code* is called a# principled#  b. conventional. c. essential. d. preconventional. e. fundamental.

$2.

ccording to 8ohlberg* in &hat stage of moral development do the maority of people in the :.;. occupyA a. principled stage b# con&entional stage c. essential stage d. preconventional stage e. fundamental stage

$3.

 code of ethics &as important for t&o reasons. The first reason is that it clarifies company expectations of employee conduct in various situations* and the second reason is a. to reduce the burden on the udicial system. b# that it ma+es clear that the company epects its people to recognie the ethical dimensions in decision and actions# c. to promote a high level of societal norms. d. that it encourages individuals to strive for good citi"enship and corporations to contribute positively to society. e. that it minimi"es the possibility of mandatory regulations.

$#. 9anagers &ho &ant to improve ethical behavior should take actions such as a. communicate the code of ethics in training programs.  b. emphasi"e the code of ethics in performance appraisal systems. c. follo& a code of ethical behavior themselves. d. communicate the code of ethics in policies and procedures. e# all o' the abo&e !opyright  2/1$ 4 2/1' 5earson 6ducation* nc.

$$. 6thics is defined as a. formal codes that permit or forbid certain behaviors.  b. a general rule of conduct of personal behavior* based on religious or philosophical grounds. c# consens%ally accepted standards o' beha&ior 'or an occ%pation4 trade4 or pro'ession# d. imposing oneBs morality upon another. e. voluntary obligations assumed by an individual or organi"ation. $'.

9orality is defined as a. formal codes that permit or forbid certain behaviors. b# a general r%le o' cond%ct o' personal beha&ior4 based on religio%s or philosophical gro%nds# c. consensually accepted standards of behavior for an occupation* trade* or profession. d. imposing oneBs morality upon another. e. voluntary obligations assumed by an individual or organi"ation.

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%a& is defined as a# 'ormal codes that permit or 'orbid certain beha&iors#  b. a general rule of conduct of personal behavior* based on religious or philosophical grounds. c. consensually accepted standards of behavior for an occupation* trade* or profession. d. imposing oneBs morality upon another. e. voluntary obligations assumed by an individual or organi"ation.

$+.

The approach to ethical behavior &hich proposes that actions and plans should be udged by their conse
$-.

The approach to ethical behavior &hich proposes that human beings have certain fundamental rights that should be respected in all decisions* thus avoiding interfering &ith the rights of  others &ho might be affected by a particular decision or behavior is called a# indi&id%al rights approach#  b. mercantilism approach. c. utilitarian approach. !opyright  2/1$ 4 2/1' 5earson 6ducation* nc.

d. e.

ustice approach. moral imperialism approach.

'/.

ccording to the utilitarian approach* the ability to affect the company is kno&n as a# power#  b. legitimacy. c. urgency. d. stability. e. utility.

'1.

ccording to the utilitarian approach* legal or moral claim on company resources can stand for  a. po&er. b# legitimacy# c. urgency. d. utility. e. stability.

'2.

The approach to ethical behavior &hich proposes that decision makers be e
'3.

 problem &ith the utilitarian approach is a. that it assumes all countries subscribe to the same definition of Cfundamental rights.C  b. that it imposes a set of mandatory values and behaviors on all entities in society. c. that it encourages selfish behavior. d. that it imposes oneBs morality upon others and udges them by standards they may or  may not accept. e# that it is di''ic%lt to recognie all the bene'its and costs o' any partic%lar decision#

'#.

5eople &ho are similar on relevant dimensions such as ob seniority should be treated in the same &ay* is an example of a. compensatory ustice.  b. retributive ustice. c. relevant ustice. d# distrib%ti&e 5%stice# e. punitive ustice. !opyright  2/1$ 4 2/1' 5earson 6ducation* nc.

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The principle &hich proposes that punishment should be determined on a proportional basis to the CcrimeC is called a. compensatory ustice. b# retrib%ti&e 5%stice# c. relevant ustice. d. distributive ustice. e. punitive ustice.

''.

The principle &hich argues that &rongs should be compensated in proportion to the offense suffered is called a# compensatory 5%stice#  b. retributive ustice. c. relevant ustice. d. distributive ustice. e. punitive ustice.

'(.

ssues in affirmative action such as reverse discrimination are examples of conflicts bet&een a. compensatory and punitive ustice.  b. retributive and distributive ustice. c# distrib%ti&e and compensatory 5%stice# d. retributive and compensatory ustice. e. punitive and retributive ustice.

'+.

ccording to !avanagh* using the JJJJJJJJJJJ criterion* to determine if padding an expense account is ethical or not one &ould ask if it optimi"es the satisfactions of all stakeholders. a. morality b# %tility c. rights d. ustice e. relativism

'-.

:sing the =olden 7ule and never treating another human being simply as a means but al&ays as an end are the categorical imperatives of  a. rchie !arroll  b. %. 8ohlberg c. Moseph )adaracco d# 6mman%el 7ant e. ll of the above

(/.

6xplain the difference bet&een 9ilton Friedman0s and rchie !arroll0s approaches to the responsibilities of business. !opyright  2/1$ 4 2/1' 5earson 6ducation* nc.

$oth Milton Friedman and Archie Carroll arg%e their positions based on the impact o'  socially responsible actions on a 'irm8s pro'its# Friedman says that socially responsible actions h%rt a 'irm8s e''iciency# Carroll proposes that a lac+ o' social responsibility res%lts in increased go&ernment reg%lations4 which red%ce a 'irm8s e''iciency# Friedman arg%es that pro'it maimiation is the 'irm8s primary responsibility# Carroll arg%es that 'irms ha&e economic4 legal4 ethical4 and discretionary responsibilities#

(1.

>hat is stakeholder analysisA %ist the threestep process. Sta+eholder analysis is the identi'ication and e&al%ation o' corporate sta+eholders# !he 'irst step o' the process is to identi'y the primary sta+eholders (those who ha&e a direct connection with the corporation and who ha&e s%''icient bargaining power to directly a''ect corporate acti&ities)# !he second step is to identi'y the secondary sta+eholders (those who ha&e only an indirect sta+e in the corporation4 b%t who are also a''ected by corporate acti&ities)# !he third step is to estimate the e''ect on each sta+eholder gro%p 'rom any partic%lar strategic decision#

(2.

,iscuss some reasons for unethical behavior by business people. !here are a n%mber o' reasons proposed 'or the %nethical beha&ior by b%siness people# 6t may be that the in&ol&ed people are not e&en aware that they are doing something 9%estionable# !here is no worldwide standard o' cond%ct 'or b%siness people# C%lt%ral norms and &al%es &ary between co%ntries and e&en between di''erent geographic regions and ethnic gro%ps within a co%ntry# Another possible reason 'or what is o'ten percei&ed to be %nethical beha&ior lies in di''erences in &al%es between b%siness people and +ey sta+eholders# Some b%siness people may belie&e pro'it maimiation is the +ey goal o' their 'irm4 whereas concerned interest gro%ps may ha&e other priorities# !his di''erence in &al%es can ma+e it di''ic%lt 'or one gro%p o' people to %nderstand another8s actions#

(3.

>hat is moral relativismA Moral relati&ism claims that morality is relati&e to some personal4 social4 or c%lt%ral standard and that there is no method 'or deciding whether one decision is better than another# Moral relati&ism co%ld enable a person to 5%sti'y almost any sort o' decision or action4 so long as it is not declared illegal#

(#.

,iscuss 8ohlberg0s levels of moral development. !opyright  2/1$ 4 2/1' 5earson 6ducation* nc.

7ohlberg proposes that a person progresses thro%gh three le&els o' moral de&elopment# !he 'irst le&el is precon&entional# !his le&el is characteried by a concern 'or sel'# !he second le&el is the con&entional which is characteried by consideration o' society8s laws and norms# !he principled le&el is the third# !his le&el is characteried by a person8s adherence to an internal moral code# !he indi&id%al at this le&el loo+s beyond norms or laws to 'ind %ni&ersal &al%es or principles#

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,iscuss the three basic approaches to ethical behavior. !he three basic approaches to ethical beha&ior are the %tilitarian approach4 the indi&id%al rights approach4 and the 5%stice approach# !he %tilitarian approach proposes that actions and plans sho%ld be 5%dged by their conse9%ences# eople sho%ld there'ore beha&e in s%ch a way that will prod%ce the greatest bene'it to society and prod%ce the least harm or the lowest cost# !he indi&id%al rights approach proposes that h%man beings ha&e certain '%ndamental rights that sho%ld be respected in all decisions# !he 5%stice approach proposes that decision ma+ers be e9%itable4 'air4 and impartial in the distrib%tion o' costs and bene'its to indi&id%als and gro%ps#

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