Chapter 3B

 Strategic Management & Business Policy, 14e (Wheelen)

Chapter 3 Ethics and Social Responsibility in Strategic Management

1) The theory of vital responsibility proposes that a private corporation has responsibilities to society that extend beyond making a profit. Answer: FASE 2) Friedman referred to the social responsibility of bsiness as a !fndamentally sbversive doctrine.! Answer: !R"E ") Archie #arroll contends that the primary goal of bsiness is profit maximi$ation. Answer: FASE %) Archie #arroll proposes that managers in companies have only a discretionary responsibility. Answer: FASE &) According to #arroll' legal responsibilities are defined by governments in laws that management is expected to obey. Answer: !R"E () The difference between ethical and discretionary responsibilities is that few people expect an organi$ation to flfill ethical responsibilities. Answer: FASE ) *iscretionary responsibilities are volntary obligations a corporation assmes. Answer: !R"E +) ,eing known as a socially responsible firm may provide a company with social capital' the goodwill of key stakeholders' that can be sed for competitive advantage. Answer: !R"E -) A stdy concerning social responsibi responsibility lity indicates indicates that sociallyrespon sociallyresponsibl siblee firms firms are more likely likely to be welcomed into another contry. Answer: !R"E 1/) The broader concept concep t of sstainability is closely aligned a ligned with Friedman0s view of social responsibility. Answer: FASE 11) #orporation stakeholders are all constitencies that are affected by the achievement of the firm0s obectives. Answer: !R"E 12) n any one strategic decision' the interests of one stakeholder grop can conflict with another. Answer: !R"E 1 #opyright 3 2/1& 4 2/1( 5earson 6dcation' nc.

1") The first step in stakeholder analysis is identifying those who have only an indirect stake in the corporation. Answer: FASE 1%) 5rimary stakeholders have a direct connection with the corporation and have sfficient bargaining to directly affect corporate activities. Answer: !R"E 1&) A company may have some stakeholders of which it is only marginally aware. Answer: !R"E 1() There is no trth to the comment that !bsiness ethics! is an oxymoron. Answer: !R"E 1) #ltral norms and vales can gide ethical behavior. Answer: !R"E 1+) !7et the byer beware! is a traditional saying in free market capitalism. Answer: !R"E 1-) 8elationshipbased contries tend to be more transparent and have a lower degree of corrption than do rlebased contries. Answer: FASE 2/) #ltral relativism is reflected in the statement' !9hen in 8ome' do as the 8omans do.! Answer: FASE 21) ohlberg0s preconventional level is characteri$ed by a person0s adherence to an internal moral code. Answer: FASE 22) ;oral relativism cold enable a person to stify almost any sort of decision or action' so long as it is not declared illegal. Answer: !R"E 2") According to ohlberg0s levels of moral development' the conventional level is characteri$ed by considerations of society0s laws and norms. Answer: !R"E 2%) ohlberg places +/ percent of <.=. adlts in the principled level of development. Answer: FASE 2&) A code of ethics denotes how employees shold behave on the ob. Answer: !R"E

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2() 8esearch indicates that when faced with a >estion of ethics' managers tend to ignore codes of ethics and try to solve their dilemma on their own. Answer: !R"E 2) 7aw refers to formal codes that permit or forbid certain behaviors and may or may not enforce ethics or  morality. Answer: !R"E 2+) The stice approach to ethics proposes that actions and plans shold be dged by their conse>ences. Answer: FASE 2-) A problem with the tilitarian approach to ethics is the difficlty in recogni$ing all the benefits and the costs of any particlar decision. Answer: FASE "/) The ?olden 8le is the essence of one of mmanel ant0s approaches to resolving ethical dilemmas. Answer: !R"E "1) The concept that proposes private corporations have responsibilities to society that extend beyond making a  profit is known as #) social responsibility$ "2) 9hich one of the following is @T one of the argments against social responsibility as sed by economist ;ilton FriedmanB #) #%sinesses can act%ally do &ery little in terms o' social responsibility$ "") 9ho said that the social responsibility of bsiness is a !fndamentally sbversive doctrine! and that the one social responsibility of bsiness is !to se its resorces and engage in activities designed to increase its profits so long as it stays with the rles of the game...!B E) Milton Friedman "%) 6conomist ;ilton Friedman has arged that a bsiness0s only responsibility is to A) maimie pro'its and stay *ithin the r%les o' the game$ "&) According to #arroll' the responsibility that management of a bsiness organi$ation has to prodce goods and services of vale to society so that the firm may repay its creditors and stockholders is called +) economic responsibilities$ "() According to #arroll' the responsibilities defined by government in laws for management to obey are A) legal responsibilities$ ") According to #arroll' the responsibility that management of a bsiness organi$ation assmes which are E) discretionary responsibilities$ " #opyright 3 2/1& 4 2/1( 5earson 6dcation' nc.

"+) The term !social responsibility! ' according to #arroll' can be viewed as a combination of an A) organiation,s ethical and discretionary responsibilities$ "-) #arroll0s for responsibilities listed in order o f priority are C) economic- legal- ethical- and discretionary$ %/) =ociety generally expects firms to work with employees and the company to plan for layoffs. This is an example of which of #arroll0s responsibilitiesB +) ethical %1) 5roviding daycare centers to employees is an example of which of #arroll0s responsibilitiesB E) discretionary %2) Friedman0s position on social responsibility #) appears to be losing traction *ith b%siness eec%ti&es$ %") As societal vales evolve' it is likely that the CCCCCCCCC responsibilities of today may become the  CCCCCCCCC responsibilities to tomorrow. C) discretionary. ethical$ %%) ,eing socially responsibility A) provides a company with a more positive overall reptation. ,) has opened doors in local commnities. #) has enhanced the company0s reptation with consmers. *) has reslted in cost savings to firms. E) all o' the abo&e$ %&) 9hich of the following is @T one of the examples provided as an organi$ational benefit received from  being socially responsibleB +) !hey are g%aranteed to maimie reso%rce prod%cti&ity and red%ce the a&erage paybac/  period o' in&estment$ %() According to a recent Darris 5oll what percentage of <.=. adlts believe that <.=. corporations owe something to their workers and the commnities in which they operate and that they shold sometimes sacrifice some profit for making things better for their workers and commnitiesB A) 02 %) n order for a bsiness to be sstainable' it mst satisfy which of #arroll0s responsibilitiesB E) all o' the abo&e %+) The *ow Eones =stainability ndex incldes C) en&ironmental- economic- and social s%stainability$ %-) The first step in stakeholder analysis is to % #opyright 3 2/1& 4 2/1( 5earson 6dcation' nc.

A) identi'y primary sta/eholders$

&/) All of the following are considered primary stakeholders 6#65T #) go&ernments$ &1) All of the following are considered secondary stakeholders 6#65T C) s%ppliers$ &2) 9hich of the following statements is tre concerning secondary stakeholdersB A) =econdary stakeholders are those who have only an indirect stake in the corporation' bt who are affected by corporate activities. ,) =econdary stakeholders sally inclde nongovernmental organi$ations Glike ?reenpeace) and trade associations. #) ,ecase the corporation0s relationship with each of these stakeholders is sally not covered  by any written or verbal agreement' there is room for misnderstanding. *) Aside from competitors' secondary stakeholders are not sally monitored by the corporation in any systematic fashion. E) all o' the abo&e &") 9hich of the following companies was cited by the text as an example of a company which does its best to consider its responsibilities to its primary and secondary stakeholders when making strategic decisionsB #) ohnson  ohnson &%) The 6thics 8esorce #enter fond that the percentage of employees who had engaged in one or more nethical andHor illegal actions dring the past year was C) 452$ &&) According to a srvey by the 6thics 8esorce #enter' which was not cited as one of the most common >estionable behaviors that employees engage inB +) s%r'ing the *eb on company time &() As opposed to rlebased contries' relationshipbased contries tend to +) be less transparent and ha&e a higher degree o' corr%ption$ &) f the six vales measred by the AllpotIernon7ind$ey =tdy of Iales test' both <.=. and ,ritish exectives consistently score highest on CCCCCCCC vales and lowest on CCCCCCCC vales. C) economic and political. social and religio%s &+) 8lebased governance #) relies on p%blicly &eri'iable in'ormation$ &-) 9hich of the following is one of the most common reasons given by srveyed exectives for bending the rles to attain their obectivesB A) organi$ational performance re>ired it ,) rles were ambigos or ot of date & #opyright 3 2/1& 4 2/1( 5earson 6dcation' nc.

#) everyone does it *) pressre from others E) all o' the abo&e (/) Iice 5resident =herron 9atkins sed the CCCCCCCC analogy to explain why exectives at 6nron engaged in nethical and illegal actions. +) Frogs in boiling *ater (1) =ome people claim that morality is relative to some personal' social' or cltral standard and that there is no method for deciding whether one decision is better than another. This is called +) c%lt%ral imperialism$ (2) All of the following reasons provide rationale for nethical behavior 6#65T +) agreement among sta/eholders and b%siness people abo%t *hat is ethical$ (") All of the following are one of the for types of moral relativism 6#65T #) principled relati&ism$ (%) 8ole relativism is based on the belief that C) social roles carry *ith them certain obligations$ (&) !9hen in 8ome' do as the 8omans do! reflects which type of moral relativismB +) c%lt%ral relati&ism (() ,lindly following orders reflects which type of moral relativismB #) role relati&ism () According to ohlberg' the first level of moral development' characteri$ed by concern for self' is called +) precon&entional$ (+) According to ohlberg' the second level of moral development' characteri$ed by considerations of society0s laws and norms' is called #) con&entional$ (-) According to ohlberg' the third level of moral development' characteri$ed by a person0s adherence to an internal moral code' is called A) principled$ /) According to ohlberg' in what stage of moral development do the maority of people in the <.=. occpyB #) con&entional stage 1) A code of ethics was important for two reasons. The first reason is that it clarifies company expectations of  employee condct in varios sitations' and the second reason is ( #opyright 3 2/1& 4 2/1( 5earson 6dcation' nc.

#) that it ma/es clear that the company epects its people to recognie the ethical dimensions in decision and actions$

2) ;anagers who want to improve ethical behavior shold take actions sch as A) commnicate the code of ethics in training programs. ,) emphasi$e the code of ethics in performance appraisal systems. #) follow a code of ethical behavior themselves. *) commnicate the code of ethics in policies and procedres. E) all o' the abo&e ") =pecific changes reported by #6s in a srvey by the ,siness 8ondtable nstitte for #orporate 6thics inclded all of the following 6#65T +) decreased n%mber o' *histleblo*ers$ %) 6thics is defined as C) consens%ally accepted standards o' beha&ior 'or an occ%pation- trade- or pro'ession$ &) 6mployees who report illegal or nethical behavior on the part of others are known as #) *histleblo*ers$ () 9hich company cancelled contracts with 2" factories that did not meet its childlabor standards for  sppliersB #) 6ap 7nternational ) ;orality is defined as #) a general r%le o' cond%ct o' personal beha&ior- based on religio%s or philosophical gro%nds$ +) 7aw is defined as A) 'ormal codes that permit or 'orbid certain beha&iors$ -) The approach to ethical behavior which proposes that actions and plans shold be dged by their  conse>ences' ths prodcing the greatest benefit to society with the least harm or the lowest cost is called C) %tilitarian approach$ +/) The approach to ethical behavior which proposes that hman beings have certain fndamental rights that shold be respected in all decisions' ths avoiding interfering with the rights of others is called A) indi&id%al rights approach$ +1) According to the tilitarian approach' the ability to affect the company is known as A) po*er$ +2) According to the tilitarian approach' legal or moral claim on company resorces can stand for #) legitimacy$  #opyright 3 2/1& 4 2/1( 5earson 6dcation' nc.

+") The approach to ethical behavior which proposes that decision makers be e>itable' fair' and impartial in the distribtion of costs and benefits to individals and grops is called +) 8%stice approach$ +%) A problem with the tilitarian approach is E) that it is di''ic%lt to recognie all the bene'its and costs o' any partic%lar decision$ +&) 9hich approach to ethical behavior can encorage selfish behavior when a person defines a personal need or want as a !right!B #) indi&id%al rights +() 5eople who are similar on relevant dimensions sch as ob seniority shold be treated in the same way' is an example of +) distrib%ti&e 8%stice$ +) The principle which proposes that pnishment shold be determined on a proportional basis to the !crime! is called #) retrib%ti&e 8%stice$ ++) The principle which arges that wrongs shold be compensated in proportion to the offense sffered is called A) compensatory 8%stice$ +-) sses in affirmative action sch as reverse discrimination are examples of conflicts between C) distrib%ti&e and compensatory 8%stice$ -/) According to #avanagh' sing the CCCCCCCC criterion' to determine if padding an expense accont is ethical or not one wold ask if it optimi$es the satisfactions of all stakeholders. #) %tility -1)
-") 9hat is stakeholder analysisB 7ist the threestep process. Sta/eholder analysis is the identi'ication and e&al%ation o' corporate sta/eholders$ !he 'irst step o' the process is to identi'y the primary sta/eholders (those *ho ha&e a direct connection *ith the corporation and *ho ha&e s%''icient bargaining po*er to directly a''ect corporate acti&ities)$ !he second step is to identi'y the secondary sta/eholders (those *ho ha&e only an indirect sta/e in the corporation- b%t *ho 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$

-%) *iscss some reasons for nethical behavior by bsiness people. !here are a n%mber o' reasons proposed 'or the %nethical beha&ior by b%siness people$ 7t may be that the in&ol&ed people are not e&en a*are that they are doing something ;%estionable$ !here is no *orld*ide standard o' cond%ct 'or b%siness people$ C%lt%ral norms and &al%es &ary bet*een co%ntries and e&en bet*een di''erent geographic regions and ethnic gro%ps *ithin a co%ntry$ Another possible reason 'or *hat is o'ten percei&ed to be %nethical beha&ior lies in di''erences in &al%es bet*een 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 'irm- *hereas 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 another:s actions$

-&) 9hat is moral relativismB Moral relati&ism claims that morality is relati&e to some personal- social- or c%lt%ral standard and that there is no method 'or deciding *hether one decision is better than another$ Moral relati&ism co%ld enable a person to 8%sti'y almost any sort o' decision or action- so long as it is not declared illegal$

-() *iscss ohlbergJs levels of moral development. 9ohlberg 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 *hich is characteried by consideration o' society:s la*s and norms$ !he principled le&el is the third$ !his le&el is characteried by a person:s adherence to an internal moral code$ !he indi&id%al at this le&el loo/s beyond norms or la*s to 'ind %ni&ersal &al%es or principles$

-) *iscss the three basic approaches to ethical b ehavior. !he three basic approaches to ethical beha&ior are the %tilitarian approach- the indi&id%al rights approach- and the 8%stice approach$ !he %tilitarian approach proposes that actions and plans sho%ld be 8%dged by their conse;%ences$
sho%ld be respected in all decisions$ !he 8%stice approach proposes that decision ma/ers be e;%itable- 'air- and impartial in the distrib%tion o' costs and bene'its to indi&id%als and gro%ps$

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