CHAPTER 4

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

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 regulations are some of the common ethical issues.
C. Ethical practices of all nations are similar in nature.
D. Managers in multinational firms need to be particularly sensitive to differences in
business practices because they work across national borders.

Which is not an area where multinational firms are concerned about ethics?

a) Human rights
b) Trade regulations
c) Environmental regulations
d) Corruption

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

Basic human rights are respected by almost all nations. FALSE

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

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

International businesses cannot gain economic advantages by making payments to

corrupt government officials.FALSE

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

Which is not an area where multinational

firms are concerned about ethics?

a) Human rights
b) Trade regulations
c) Environmental regulations
d) Corruption
Ethical dilemmas are situations in which none of the available alternatives seems
ethically acceptable.TRUE

An individual with a strong sense of personal ethics is less likely to behave in an

unethical manner in a business setting.TRUE

Expatriate managers (managers who are sent abroad) may experience more than the
usual degree of pressure to violate their personal ethics. TRUE

All of the following except ____ contribute to unethical behavior by international

managers.

a) Decision-making processes
b) Leadership
c) Personal ethics
d) National culture

According to ________, a company's home-country standards of ethics are the

appropriate ones to follow in foreign countries.

a) the righteous moralist

b) the naïve immoralist
c) the Friedman doctrine
d) cultural relativism

________ recognize that human beings have fundamental rights and privileges which
transcend national boundaries and cultures.

a) Kantian ethics
b) Utilitarian approaches
c) Straw men
d) Rights theories

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. FALSE

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

TRUE or FALSE
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.

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

CHAPTER 5
All of the following theories advocated free trade except

a. Mercantilism
b. Absolute Advantage
c. Comparative Advantage
d. Heckscher-Ohlin
a. Mercantilism
Which theory suggested that comparative advantage arises from differences in national
factor endowments?

a. Mercantilism
b. Heckscher-Ohlin
c. Absolute Advantage
d. Comparative Advantage
b. Heckscher-Ohlin
Which theory suggests that as products mature the optimal production location will
change?

a. Mercantilism
b. Absolute Advantage
c. Comparative Advantage
d. Product life-cycle
d. Productive life-cycle
Economies of scale and first mover advantages are important to which trade theory?

a. Mercantilism
b. Product life cycle
c. New trade theory
d. Comparative advantage
c. New trade theory
Porter's diamond of competitive advantage includes all of the following except
a. Factor endowments
b. Demand conditions
c. First-mover advantages
d. Firm strategy, structure, and rivalry
c. First-mover advantages
______________ refer to the nature of home demand for the industry's product or
service.

a. Demand conditions
b. Factor endowments
c. Firm strategy, structure, and rivalry
d. Related and supporting industries
a. Demand condition