International Business (Hill) Chapter 5

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

FALSE

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

TRUE

In an international business setting, the most common ethical issues involve employment practices, human rights, environmental regulations, corruption, and the moral obligation of multinational companies.
True False

TRUE

Basic human rights are respected by almost all nations.
True False

FALSE

Rights that are taken for granted in developed nations, such as freedom of association, freedom of speech, freedom of assembly, and so on, are universally accepted.
True False

FALSE

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

FALSE

Myanmar has one of the worst human rights records in the world.
True False

TRUE

Nearly all developing nations have substantial regulations governing the emission of pollutants, the dumping of toxic chemicals, the use of toxic materials in the workplace, and so on.
True False

FALSE

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 False

TRUE

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

FALSE

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

FALSE

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

TRUE

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

FALSE

Facilitating payments are also known as speed money or grease payments.
True False

TRUE

The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions obliges member states to make the bribery of foreign public officials a criminal offense.
True False

TRUE

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

FALSE

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 c

TRUE

When multinationals use their power in a positive way to increase social welfare, it is ethical.
True False

TRUE

The ethical obligations of a multinational corporation toward employment conditions, human rights, environmental pollution, and the use of power are always clear-cut.
True False

FALSE

Ethical dilemmas are situations in which none of the available alternatives seems ethically acceptable.
True False

TRUE

An individual with a strong sense of personal ethics is less likely to behave in an unethical manner in a business setting.
True False

TRUE

Expatriate managers may experience more than the usual degree of pressure to violate their personal ethics.
True False

TRUE

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

TRUE

The Enron debacle indicates that an organizational culture can legitimize behavior that a society would judge as unethical.
True False

TRUE

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 False

TRUE

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.
True False

FALSE

Cultural relativism 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.
True False

TRUE

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.
True False

FALSE

The naive immoralist claims that a multinational's home country standards of ethics are the appropriate ones for companies to follow in foreign countries.
True False

FALSE

Most moral philosophers see value in utilitarian and Kantian approaches to business ethics.
True False

TRUE

The utilitarian approaches to ethics hold that the moral worth of actions or practices is determined by their consequences.
True False

TRUE

. It typically is fairly easy to measure the benefits, costs, and risks of a course of action.
True False

FALSE

An advantage of utilitarianism is that the philosophy allows for the consideration of justice.
True False

FALSE

Rights theories recognize that human beings have fundamental rights and privileges that transcend national boundaries and cultures.
True False

TRUE

A just distribution is one that is considered fair and equitable.
True False

TRUE

According to Rawls, inequalities can be just if the system that produces inequalities is to the advantage of everyone.
True False

TRUE

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

TRUE

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

TRUE

A firm's stakeholders are individuals or groups that have an interest, claim, or stake in the company, what it does, and how well it performs.
True False

TRUE

Companies can strengthen the moral courage of employees by committing themselves to retaliate against employees who exercise moral courage, say no to superiors, or otherwise complain about unethical actions.
True False

FALSE

Identify the incorrect statement regarding ethical issues in international business.
A. They are often rooted in the fact that political systems, law, economic development, and culture of nations vary significantly.
B. Human rights and environmental regul

C

To guard against abuse of employment practices in other nations, multinationals should do all of the following except:
A. establish minimal acceptable standards that safeguard the basic rights and dignity of employees.
B. adhere to working conditions of t

B

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. The righteous moral system
B. Sullivan principles
C. Noblesse oblige
D. Cul

B

Identify the incorrect statement pertaining to foreign multinationals doing business in countries with repressive regimes.
A. Inward investment by multinationals can be a force for economic, political, and social progress that ultimately improves the righ

B

. Identify the incorrect statement about environmental regulations.
A. Environmental regulations are often lacking in developing nations.
B. Environmental regulations are similar across developed and developing nations.
C. Developed nations have substanti

B

The _____ occurs when a resource is shared by all, but owned by no one, is overused by individuals, resulting in its degradation.
A. tragedy of the commons
B. noblesse oblige
C. ethical dilemma
D. Friedman system

A

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.S. firms at a competitive disadvantag

A

Facilitating payments are:
A. permitted under the amended Foreign Corrupt Practices Act.
B. a direct violation of the Foreign Corrupt Practices Act.
C. permitted so long as they designed only to gain exclusive preferential treatment.
D. used to secure con

A

The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions excludes:
A. speed payments to secure contracts that would otherwise not be secured.
B. grease payments to gain exclusive preferential treatment.
C. fac

C

Grease payments:
A. are not the same as facilitating payments or speed money.
B. are facilitating payments made to expedite routine government action.
C. are payments to gain exclusive preferential treatments.
D. can be used to secure contracts that would

B

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. busin

D

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

D

Ethical dilemmas exist because of all of the following reasons except:
A. many real-world decisions are complex and difficult to frame.
B. decisions may involve first, second, and third-order consequences that are hard to quantify.
C. doing the right thin

C

Which of the following is not likely to lead to unethical behavior?
A. An organizational culture that deemphasizes business ethics.
B. A process that does not incorporate ethical considerations into business decision making.
C. A strong personal ethical c

C

Expatriate managers may experience more than the usual degree of pressure to violate their personal ethics because of all of the following reasons except:
A. they are away from their ordinary social context and supporting culture.
B. they are psychologica

B

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

C

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

D

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 b

C

Cultural relativism suggests that:
A. ethics are nothing more than the reflection of culture and that a firm should adopt the ethics of the culture in which it is operating.
B. the only social responsibility of business is to increase profits.
C. managers

A

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 busin

B

The idea that universal notions of morality transcend different cultures is implicitly rejected by:
A. the righteous moralist.
B. the naive immoralist.
C. the Friedman doctrine.
D. cultural relativism.

D

The righteous moralist suggests that:
A. ethics are nothing more than the reflection of culture.
B. a multinational's home-country standards of ethics are the appropriate ones for companies to follow in foreign countries.
C. the social responsibility of b

B

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 w

D

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

B

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. utilitarian
D. Kantian

C

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 an

C

Identify the correct statement about the rights theories.
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 treate

A

The United Nations' Universal Declaration of Human Rights, related to employment, upholds all of the following except:
A. just and favorable work conditions.
B. equal pay for equal work.
C. prohibition of trade unions.
D. protection against unemployment.

C

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

D

Any person or institution that is capable of moral action such as a government or corporation is a(n):
A. moral agent.
B. utilitarian.
C. righteous moralist.
D. naive immoralist.

A

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 a just distribution o

D

Under the veil of ignorance, everyone is imagined to be ignorant of:
A. all of his/her particular characteristics.
B. fundamental rights and privileges.
C. the moral worth of actions or practices.
D. the minimum levels of morally acceptable behavior.

A

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 libe

A

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. indifference principle.

C

Managers of international business can do all of the following to make sure ethical issues are considered in business decisions except:
A. favor hiring and promoting people with a well-grounded sense of personal ethics.
B. build an organizational culture

c

External stakeholders:
A. are individuals or groups who own the business.
B. include all employees, the board of directors, and stockholders.
C. typically comprise customers, suppliers, lenders, etc.
D. are individuals or groups who work for the business.

C

. Internal stakeholders:
A. are individuals or groups who work for or own the business.
B. do not have any claim on a firm or its activities.
C. typically comprise customers, suppliers, lenders, governments, unions, etc.
D. are individuals, except employe

A

_____ means standing in the shoes of a stakeholder and asking how a proposed decision might impact that stakeholder.
A. Veil of ignorance
B. Difference principle
C. Moral imagination
D. Noblesse oblige

C

Establishing _____ involves a business' 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.
A. a veil of ignorance
B. a difference principle
C. mo

D

Which of the following enables managers to walk away from a decision that is profitable, but unethical?
A. Noblesse oblige
B. Moral courage
C. The difference principle
D. The Friedman doctrine

B

What are business ethics? What is the relationship between business ethics and an ethical strategy?

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

What is considered normal practice in one country may be considered unethical in others. Discuss.

Many of the ethical issues and dilemmas in international business are rooted in the fact that political systems, law, economic development, and culture vary significantly from nation to nation. Therefore, what might be considered a normal business practic

Discuss how companies such as Exxon, Kodak, and IBM helped improve human rights in South Africa.

During the 1980s, many American companies doing business in South Africa realized that following the Sullivan principles of not obeying apartheid laws and trying to promote their abolition was not a sufficiently ethical strategy. Consequently, many compan

Should a multinational feel free to pollute in a developing nation?

This question is designed to stimulate classroom discussion or the personal opinion of the student. Issues that might emerge include whether there is any danger that amoral management might move production to a developing nation precisely because costly p

What is the Foreign Corrupt Practices Act? What is its purpose?

The Foreign Corrupt Practices Act was passed in 1977 in United States. The act outlawed the paying of bribes to foreign government officials to gain business. The act was later amended to allow for facilitating payments or grease money that enabled compan

What is the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions?

In 1997, the OECD adopted the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. The convention obliges member states to make it a criminal offense to make the bribery of foreign public officials a criminal

In your opinion, are bribes ever acceptable? Why or why not?

This question is designed to allow the students to explore the idea of bribery as possibly resulting in a positive rather than a negative outcome. Some economists have suggested that corruption might in fact improve efficiency and help growth. Others howe

Discuss the notion of social responsibility. What does it mean for corporations?

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 econom

What are ethical dilemmas? Why do they exist?

Ethical dilemmas are situations in which none of the available alternatives seems ethically acceptable. Ethical dilemmas exist because many real-world decisions are complex, difficult to frame, and involve first-, second-, and third-order consequences tha

Why do managers behave in a manner that is unethical?

There is no easy answer to this question, but a few generalizations can be made. First, business ethics are not divorced from personal ethics. Second, some businesspeople do not realize they are behaving unethically. Third, an organization may not emphasi

What are the determinants of ethical behavior?

The determinants of ethical behavior include decision-making processes, leadership, unrealistic performance goals, organization culture, and personal ethics. Together these factors help determine whether a manager behave in an ethically responsible manner

Explain the Friedman doctrine. Who developed the philosophy? How well does this approach hold up ethically?

In 1970, Milton Friedman suggested 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 business should undertake social expenditures beyond those

Discuss the cultural relativism approach to business ethics. What is the connection between this approach and the phrase "When in Rome do as the Romans do"? How well does this approach hold up ethically?

The cultural relativism approach is the belief that ethics are nothing more than the reflection of a culture and accordingly, a firm should adopt the ethics of the culture in which it is operating. This approach is often summarized by the maxim "When in R

How does the righteous moralist approach business ethics? Who is likely to favor this approach?

The 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 counties. The main criticism of

Discuss the naive immoralist's approach to business ethics. What are the criticisms of this approach?

The 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. This approach has been criticized with the argument that simply acceptin

Discuss the utilitarian approach to business ethics. When was this approach developed? What are its drawbacks?

The utilitarian to business ethics was developed in the 18th and 19th centuries by philosophers such as David Hume, Jeremy Bentham, and John Stuart Mill. The utilitarian approach to ethics holds that the moral worth of actions or practices is determined b

Consider the Kantian approach to ethics. Who is responsible for the philosophy?

Kantian ethics are based on the philosophy of Immanuel Kant, and hold that people should be treated as ends and never purely as means to the ends of others. Employing people in sweatshops, making them work long hours for low pay in poor work conditions, i

What are rights theories? What is the connection between rights theories and the United Nations?

Rights theories recognize that human beings have fundamental rights and privileges that transcend national borders and cultures. Rights establish a minimum level of morally acceptable behavior. This philosophy formed the basis for the UN Universal Declara

Describe justice theories. What is John Rawls' position on ethics?

Justice theories focus on the attainment of a just distribution of economic goods and services. One theory that is particularly important was developed by John Rawls. Rawls argues that all economic goods and services should be distributed equally except w

What is the veil of ignorance? Why is it important to business?

The veil of ignorance was developed by John Rawls as part of his approach to justice theories. According to Rawls, valid principles of justice are those with which all persons would agree if they could freely and impartially consider the situation. Impart