Chapter 10—Globalization of Ethical Decision Making

MULTIPLE CHOICE

1. Business transactions across national boundaries are called

a. a multinational corporation.
b. culture.
c. business ethics.
d. global business.
e. national business.
ANS: D PTS: 1

2. Desirable ____, such as integrity, honesty and unselfishness are shared across most cultures.
a. country cultural values
b. amakudari
c. multinational corporations
d. global common values
e. products
ANS: A PTS: 1

3. The practice of ____ is common in the Japanese banking industry, in which businesspeople
demonstrate trust by hiring retired Japanese bureaucrats to become auditors, directors, executives, and
presidents.
a. trust
b. respect for one's elders
c. poaching competitors' employees
d. amakudari
e. secrecy
ANS: D PTS: 1

4. ____ assumes that humans may not act rationally because of genetics, learned behavior, and heuristics.
a. Rational economics
b. Culture
c. Multinational corporation
d. Country cultural values
e. Behavioral economics
ANS: E PTS: 1

5. Which of the following statements about multinational corporations (MNCs) is false?

a. MNCs are corporate organizations that operate on a global scale without significant ties to
any one nation or region.
b. MNCs are inherently unethical.
c. MNCs are characterized by a global strategy of focusing on opportunities throughout the
world.
d. Some MNCs are so large and powerful that their revenues are greater than the gross
domestic products of some countries.
e. Because of their size and power, MNCs have been the subject of much ethical criticism
1
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 and the source of a number of ethical issues.
ANS: B PTS: 1

6. Increasing the wealth gap between nations and misusing and misallocating scarce resources are ethical
issues related to
a. cultural differences.
b. multinational corporations.
c. racial differences.
d. legal differences.
e. international negotiations.
ANS: B PTS: 1

7. Which of the following is not a criticism of or charge against multinational corporations (MNCs)?
a. They transfer jobs overseas, where wage rates are lower.
b. They increase the gap between rich and poor nations.
c. They pay high taxes everywhere.
d. They exploit the labor market of host countries.
e. They have an unfair advantage when competing with local businesses.
ANS: C PTS: 1

8. Which of the following is a measure taken to curtail MNC practices that create ethical issues?
a. MNCs are trying to prevent the formation of labor unions.
b. MNCs are trying to halt the establishment of minimum wage laws.
c. MNCs are trying to avoid the United Nations' efforts to monitor them.
d. Host governments have levied import taxes to lower the prices MNCs charge for their
products.
e. Host governments have levied export taxes to force MNCs to share more of their profits.
ANS: E PTS: 1

9. ____ occurs when the middle class shrinks, resulting in highly concentrated wealth amongst the rich,
and a large number of poor people with very few resources.
a. Communism
b. Socialism
c. Bimodal wealth distribution
d. A two-class social structure
ANS: C PTS: 1

10. An unconscious reference to one's own cultural values, experiences, and knowledge is referred to as
the
a. cultural reference criterion.
b. unconscious cultural criterion.
c. cultural-self criterion.
d. self-reference criterion.
e. unconscious cultural-self criterion.
ANS: D PTS: 1

2
© 2011 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different
from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
11. When in Rome, do as the Romans do, or you must adapt to the cultural practices of the country in
which you are operating are rationalizations businesspeople sometimes offer for straying from their
own ethical values when doing business abroad. This practice is called
a. self-reference criterion.
b. country cultural values.
c. global common values.
d. cultural relativism.
e. dumping.
ANS: D PTS: 1

12. ____, which is related to behavioral economics, states that how information is presented to consumers
will affect their choices.
a. A framing effect
b. Dumping
c. Bi-modal wealth distribution
d. Culture
e. Social democracy
ANS: A PTS: 1
13. What concept refers to economic theories advocating the creation of a society where wealth and power
are distributed evenly, relative to the amount of work expended in product?
a. Rational economics
b. Socialism
c. Capitalism
d. Rational capitalism
e. Facism
ANS: B PTS: 1

14. Risk compartmentalization occurs when

a. companies separate their most problematic employees into separate profit centers so that
they cannot influence one another to act unethically.
b. all profit centers within a corporation are aware of the code of ethics.
c. all profit centers within an organization become aware of the consequences of competitors'
actions.
d. various profit centers within an organization become unaware of the consequences of their
actions on the firm as a whole.
ANS: D PTS: 1

15. ____ has been codified in a United Nations document and is defined as an inherent dignity with equal
and inalienable rights as the foundation of freedom, justice, and peace in the world.
a. Cultural relativism
b. Human rights
c. Consumerism
d. Dumping
e. Health care
ANS: B PTS: 1

16. Adam Smith encouraged ____, or the invisible hand, in which markets keep commerce in equilibrium.
3
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from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
 a. laissex-faire economics
b. socialism
c. multinational corporations
d. stability
e. bribery
ANS: A PTS: 1

17. During the 1930s, ____ argued that the state could stimulate economic growth and improve stability in
the private sector.
a. Adam Smith
b. John Maynard Keynes
c. Milton Friedman
d. Herbert Hoover
ANS: B PTS: 1
18. The practice of charging high prices for products sold in home markets while selling the same products
in foreign markets at low prices, which do not cover all costs of exporting, is known as
a. price discrimination.
b. price gouging.
c. dumping.
d. skimming.
e. loading.
ANS: C PTS: 1
19. ____ assume(s) that a the market, through its own inherent mechanisms, will keep commerce in
equilibrium.
a. Amakudari
b. Laissez-faire
c. Economics
d. Multinational corporations
e. Socialism
ANS: B PTS: 1

20. Those who ascribe to consumerism

a. believe that consumers have the right to purchase anything they want.
b. do not believe in taxes on locally made products.
c. believe that consumers should own the means of production.
d. believe that consumers, not producers, should dictate the economic structure of a society.
e. believe government should run the economy.
ANS: D PTS: 1
21. ____ is based upon the assumption that people are predictable and will maximize the utility of their
choices relative to their needs and wants.
a. Rational economics
b. Socialism
c. Capitalism
d. Rational capitalism
e. Facism
ANS: A PTS: 1

4
© 2011 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different
from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
22. ____ allows for private ownership of property and also features a large government equipped to offer
such services as education and health care to its citizens
a. Democracy
b. Communism
c. Socialism
d. Capitalism
e. Social democracy.
ANS: E PTS: 1

23. ____ states that the way something is presented to a consumer can affect the choices he or she makes.
a. Rational economics
b. Socialism
c. Capitalism
d. Rational capitalism
e. Behavioral economics
ANS: E PTS: 1

24. Culture is defined as

a. everything in our surroundings made by people.
b. tangible items.
c. intangible concepts.
d. intangible values.
e. All of these make up culture.
ANS: E PTS: 1

25. The ____ formed in 1995 and administers its own trade agreements, facilitates future trade
negotiations, settles trade disputes, and monitors the trade policies of member nations
a. International Monetary Fund
b. United Nations
c. World Trade Organization
d. North American Free Trade Act
e. European Union
ANS: C PTS: 1

26. Which of the following is not an issue raised by the debate over the pros and cons of capitalism?
a. Should governments be more protectionist in order to aid domestic industries?
b. Is western-style capitalism, with minimal government intervention, the best kind?
c. Is minimal government intervention best in terms of encouraging the free flow of goods
and services?
d. Does capitalism encourage the formation of cartels?
e. Do enough corporations take into account social responsibility?
ANS: D PTS: 1

27. Which of the following emerged from the Bretton Woods agreement of 1944, where a group of
international leaders decided that the primary responsibility for the regulation of monetary
relationships among national economies should rest in an extra-national body?
a. International Monetary Fund
5
© 2011 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different
from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
 b. United Nations
c. World Trade Organization
d. North American Free Trade Act
e. European Union
ANS: A PTS: 1

28. These principles were developed by a reverend and the UN Secretary General. They express support
for universal human rights.
a. The Global Sullivan Principles
b. Sarbanes-Oxley Act
c. FSGO
d. Global common values
e. Social democracy
ANS: A PTS: 1

29. What is the purpose of the UN Global Compact?

a. Support free trade unions
b. Abolish child labor
c. Protect the natural environment
d. To allow international corporations to indicate their commitment to social responsibility
and ethics
e. All of these are purposes of the UN Global Compact.
ANS: E PTS: 1
30. Which of the following is not a step in forming an effective global code of conduct?
a. Set clear objectives.
b. Hold focus groups.
c. Translate the code.
d. Use the same code of conduct you would for a domestic firm.
e. Have knowledge about graphic design.
ANS: D PTS: 1

31. According to the text, as business facilitates exchanges, consumption will increase globally. The
important issues related to consumerism include all but which of the following?
a. The impact of production on the environment.
b. The impact of differing forms of consumption on society
c. How much of what we deem necessary for consumption is influenced by corporations?
d. What are necessities and luxuries?
e. What is the impact of poor countries' consumption patterns on wealthy countries?
ANS: E PTS: 1

32. Which two developing countries are expected to generate ever-greater rates of consumption in the
future?
a. U.S. and Russia
b. Russia and China
c. China and U.S.
d. Brazil and Russia
e. China and India
6
© 2011 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different
from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
 ANS: E PTS: 1

33. Human rights

a. are defined as an inherent dignity.
b. is not a new concept.
c. include inalienable rights like freedom and justice.
d. was not a consideration of firms several decades ago.
e. All of these statements are true.
ANS: E PTS: 1
34. Which of the following is not an article in the UN Human Rights Declaration that was highlighted in
your text?
a. Freedom of religion
b. The right to work in favorable conditions
c. The right to electricity and running water
d. The right to a home adequate for health and well-being
e. Mothers and children being entitled to a special level of care
ANS: C PTS: 1
35. The growth of the Internet and differing laws between countries has led to an increase in concern for
the human right of
a. religion.
b. a secure job.
c. healthcare.
d. privacy.
e. freedom.
ANS: D PTS: 1

36. Globally, one billion people lack access to ____

systems and approximately 11 million children under the age of 5 die from malnutrition and mostly
preventable diseases each year.
a. community
b. education
c. healthcare
d. political
ANS: C PTS: 1

37. According to the text, one of the most pressing international issues related to the UN Human Rights
Declaration is
a. privacy and the Internet.
b. equal pay.
c. the hostile work environment.
d. sexual harassment.
e. maternal leave.
ANS: A PTS: 1
38. Benefits such as healthcare are being debated as to whether it is a right or privilege. Which of the
following countries does not consider health care to be a right?
a. The United States
b. China
7
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from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
 c. Sweden
d. Germany
e. Canada
ANS: A PTS: 1
39. ____ is an issue growing in urgency among lawmakers and businesses as the effects of climate change
grow more extreme.
a. Labor rights
b. Sustainable development
c. How to extract maximum resources
d. Education
e. Religious freedom
ANS: B PTS: 1
40. The IMF
a. originated from the Bretton Woods agreement.
b. plunged Latin America into a decade of decline in the 1980s.
c. suggests that governments adopt a binding code of conduct across nations.
d. has the responsibility for the regulation of monetary relationships.
e. All of these statements are true.
ANS: E PTS: 1

41. Which of the following has the power to enact legally binding ground rules for international commerce
and trade policy?
a. Caux Roundtable
b. World Trade Organization
c. Global Sullivan Organization
d. Federal Trade Commission
e. Global Commerce Association
ANS: B PTS: 1

ESSAY

42. Why are many international business ethics issues different from ethical issues arising in business in
one's own country?

ANS:
Students can draw from the entire chapter to answer this question.

PTS: 1

43. How can differences in two countries' cultures create ethical issues in business?

ANS:
Page 418

PTS: 1
44. Discuss the ethical issues associated with multinational corporations.

8
© 2011 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different
from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
 ANS:
Pages 427-429

PTS: 1

45. What are the roles of the IMF and the WTO in encouraging, monitoring, and regulating international
trade?

ANS:
Pages 427-429

PTS: 1

46. What is dumping and why is it considered anticompetitive? Does the U.S. allow for dumping?

ANS:
Page 418

PTS: 1

9
© 2011 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different
from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.