Understanding Canadian Business Canadian 8th Edition Nickels Test Bank 1

Understanding Canadian Business Canadian 8th
Edition Nickels Test Bank
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05
Student: ___________________________________________________________________________
1. Ethical behaviour requires more than following the law.

True False
2. Legal behaviour and ethical behaviour are basically the same.

True False
3. Many immoral and unethical acts fall well within our laws.
True False
4. Ethical behaviour refers to the standards that are accepted by society as right or wrong.
True False
5. Ethical behaviour requires individuals to decide for themselves what is right and wrong in each situation they
face.
True False
6. Given the level of diversity within Canada, agreement on common standards of ethical behaviour is
unachievable.
True False
7. Unethical behavior is restricted to for-profit businesses only.

True False
8. Ethical behaviour involves the clear and easy choice of right and wrong actions toward others.
True False
9. The question "Is it legal"? establishes ethical behaviour.

True False
10. Ethics are the standards of moral behaviour.

True False
11. Trying to make decisions that will benefit all parties involved is consistent with the question "How will it
make me feel about myself"?
True False
12. The most basic question in business ethics is, "Is it legal"?
True False
13. Legal behaviour includes more aspects of our relationships with others than does ethical behaviour.
True False
14. Legal behaviour is a first step toward ethical behaviour.
True False
15. Ethical behaviour looks at treating others fairly.

True False
16. An ethical manager's decisions are based on the following questions: "Is it legal"? and "Is it profitable"?
True False
17. Behaviour that is in conflict with your values and sense of right and wrong can damage your self-esteem.
True False
18. Barney extends his lunch break beyond the allotted time. Wilma uses the office telephone for an
unauthorized personal phone call. Fred misrepresents his product to a potential customer. All of these are
examples of unethical behaviour.
True False
19. Business behaviour determines the ethics of society. We can improve society's moral and ethical behaviour
by first making a commitment to improving business' moral and ethical behaviour.
True False
20. In reality, ethical behaviour depends on the situation. For example, in negotiating a contract with your
employees, the way they win higher wages is by you losing the fight to hold down labour costs. Often, it is a
win-lose relationship.
True False
21. Trust between workers and managers must be based on a foundation of fairness, honesty, openness, and
moral integrity.
True False
22. A growing number of people feel that an employee's ethics are a personal matter, and have nothing to do
with management.
True False
23. The majority of CEOs believe that employee misconduct results from a failure in organizational leadership
in establishing ethical standards.
True False
24. Management can create an environment in which unethical behaviour can develop.
True False
25. Corporate values, like personal values, are learned by observing what others do.
True False
26. Effective corporate values start with employees and develop throughout the organization to include top
management.
True False
27. Corporate standards can lead to unethical behaviour.

True False
28. Integrity-based ethics codes are based on avoiding legal punishment.

True False
29. More and more companies have written codes of conduct.

True False
30. Businesses with a formal code of ethics are less common now than in the past.
True False
31. Compliance-based ethics codes focus on preventing unlawful behaviour by increasing control and by
penalizing wrongdoers.
True False
32. A code of ethics designed to avoid criminal misconduct is an example of a compliance-based ethics code.
True False
33. An integrity-based ethics code moves beyond legal compliance in order to create a "do-the-right-thing"
climate.
True False
34. Dewy Cheatum encourages his employees to create and use legal loopholes to gain a competitive advantage.
This is both legal and consistent with the compliance-based code of ethics.
True False
35. The brewers of Molson beer encourage their customers to drink responsibly and "know when to say when".
This reflects a compliance-based approach to ethics.
True False
36. Cigarette producers label their products with warnings of potential health hazards. This is an example of a
compliance-based code of ethics.
True False
37. The purpose of the Sarbanes-Oxley Act is to provide financial rewards for whistle-blowers.
True False
38. As a manager you are responsible for the unethical behaviour of your employees.
True False
39. Avoiding lawsuits is one reason to manage a firm ethically.

True False
40. Written ethics codes influence employees more than management's tolerance or intolerance of ethical
misconduct.
True False
41. In order to be successful, efforts to improve the ethical behaviour of businesses must begin with top
management's support of a corporate code of conduct.
True False
42. Businesses recognize that pressure to violate ethical standards can come from either inside or outside of the
firm.
True False
43. People who report illegal or unethical behaviour are known as whistleblowers.
True False
44. An ethics officer serves both as a counselor and as an investigator.

True False
45. Individuals who can set a positive tone, relate well to others and communicate effectively make the most
effective ethics officers.
True False
46. Enforcement is perhaps the most important step in an effective code of ethics.
True False
47. To be effective, an organization's code of ethics needs to be communicated to outsiders such as suppliers,
subcontractors, and customers.
True False
48. Businesses can avoid ethical dilemmas by requiring written contracts with their employees, customers, and
owners.
True False
49. Corporate social responsibility refers to the concern businesses have for their employees.
True False
50. Corporate philanthropy refers to the position a firm takes on issues that affect society.
True False
51. A charitable donation by a corporation is an example of corporate philanthropy.

True False
52. Ethical behaviour will allow a firm to meet its corporate social responsibility.
True False
53. Minority hiring practices and pollution control are both areas of corporate responsibility.
True False
54. Corporate philanthropy refers to the position a firm takes on social and political issues.
True False
55. Businesses can have either a positive or negative impact on society, although the news coverage tends to
focus on the negative.
True False
56. A business that takes a public position on a political issue is exercising corporate social responsibility.
True False
57. Defining a socially responsible company is complicated. We can't seem to agree on what being socially
responsible involves.
True False
58. "My only social responsibility is to make a profit. I will show my concern for society by providing my
customers with a product that they need and desire". These statements are consistent with the concept of
corporate social responsibility.
True False
59. At a recent town hall meeting, citizens expressed concern regarding the impact of a proposed new gambling
casino. The owner of the proposed casino responds, "I don't know what all of this fuss is about. I'm just a
businessman trying to earn a profit, provide new jobs, and pay taxes". His response reflects a commitment to
True False
60. A new law requiring businesses to give 90 day notice of their plans to close an office or factory was recently
enacted. This action indicates the public's desire for businesses to behave in a socially responsible manner.
True False
61. Choosing to hire a minority worker, when this applicant is equally qualified as a white male job applicant, is
an example of a corporate social initiative.
True False
62. Being responsible to your customers may require your firm to provide more information regarding your
product than the law demands.
True False
63. Ethical behaviour comes at the expense of stockholder wealth.

True False
64. In the discussion of corporate social responsibility, stakeholders and stockholders refer to the same group.
True False
65. One responsibility of business is to satisfy customers by offering them goods and services of real value.
True False
66. Studies show that consumers are not concerned about the socially conscious behaviour of the firms with
which they do business.
True False
67. Investors can profit from choosing to invest their money in companies whose goods and services benefit the
community and the environment.
True False
68. Insider trading occurs when employees of a company use private company information to profit in the stock
market.
True False
69. Insider trading provides the information needed for the securities market to operate fairly and efficiently.
True False
70. Businesses have a social responsibility to create jobs.

True False
71. Promoting social justice is a responsibility of society, but not businesses.

True False
72. In the long run, a firm's loyalty to their employees can pay off financially.
True False
73. Getting even is one of the most powerful incentives for good people to do bad things.
True False
74. A recent study revealed that employee theft has increased dramatically, but is still less than shoplifting.
True False
75. We are seeing more efforts made to reverse years of neglect to the environment.
True False
76. A firm's triple-bottom line looks at a company's positive economic contributions, as well as the
environmental and social value they add and destroy.
True False
77. A public good is one that everyone gets to enjoy regardless of who pays for it.
True False
78. Many corporations are publishing reports that document their net social contribution.
True False
79. A social audit attempts to measure a firm's progress in the area of worker-management relations.
True False
80. A problem with conducting a social audit is establishing procedures for measuring a firm's activities and its
effects on society.
True False
81. As a response to the federal government sponsorship scandal, the federal government now requires social
audits of all Canadian businesses.
True False
82. Out-Tel, a computer chip manufacturer, knowingly sold defective chips and failed to notify customers of the
potential problems. When the problem became public knowledge, the firm's stock price fell dramatically. This
illustrates the value that investors place on the ethical behaviour of businesses.
True False
83. Sustainable development is the process where companies stay in business and keep growing and developing
over time.
True False
84. Both the strategic and pluralist approaches recognize the responsibility of management to optimize profits.
True False
85. Charges of unethical business practices are common outside Canada.
True False
86. The ethical standards by which international political leaders are judged are less strict today than they were
in years past.
True False
87. Many Canadian companies are demanding socially responsible behaviour from their international suppliers.
True False
88. Canadian businesses are not socially responsible for the activities of a foreign supplier.
True False
89. The economic power of large multinational firms allows them to ignore the ethical standards of a society
without consequences.
True False
90. Canadian businesses and consumers have little influence over the behaviour of businesses from other
countries.
True False
91. Applying the ethical standards of Canada to foreign firms is more difficult than judging the behaviour of
Canadian firms.
True False
92. "Hear no evil, see no evil, speak no evil" is the best policy for Canadian firms to follow in their dealings
with corrupt foreign suppliers.
True False
93. While "doing the right thing" is an admirable code of ethics, there are no international organizations dealing
with global ethics and corruption.
True False
94. A product with the FAIRTRADE mark means that it can be sold in foreign countries.
True False
95. The federal government sponsorship scandal revealed ________ corporate behaviour.
A. legal but unethical
B. predictable
C. illegal
D. ethical
96. Obeying the law is ________ ethical behaviour.

A. essentially the same as
B. the first step toward
C. the opposite of
D. unlikely to lead to
97. ________ refers to the standards of moral behaviour.

A. Legality
B. Responsibility
C. Integrity
D. Ethics
98. Ethics and legality are:

A. essentially the same.
B. exactly the same
C. two different things.
D. the only two steps to consider during any business action.
99. Legality is
A. narrower than ethical behavior.
B. broader than ethical behaviour.
C. the same as ethical behaviour.
D. the only consideration for ethical behaviour.
100. Three questions often help individuals and organizations in deciding if their decisions are ethical. All of
the following are ethics check questions except:
A. Is it legal?
B. Is it balanced?
C. Has it been done before?
D. How will it make me feel about myself?
101. When discussing moral and ethical issues, it is helpful to remember that ethical behaviour begins with:
A. schools.
B. religious institutions.
C. law enforcement officers.
D. each of us.
102. The first step when facing an ethical dilemma is to ask:

A. "Is it legal"?
B. "Is it balanced"?
C. "How will it make me feel about myself"?
D. "Is it ethical"?
103. Which of the following reflects the desire of an ethical manager to achieve a "win-win" relationship with
others?
A. Is it legal?
B. Is it balanced?
C. How will it make me feel about myself?
D. How can I benefit at the expense of others?
104. Which of these questions can help us avoid a decision that would injure our self-esteem?
A. Is it legal?
B. Is it balanced?
D. How can I avoid taking the blame?
105. Considering the potential impact on others prior to making a decision is consistent with ________
behaviour.
A. legal
B. anti-social
C. ethical
D. self-motivated
106. Treating others unfairly can result in retaliation from the injured party. This will likely create a:
A. lose-win situation.
B. win-win situation.
C. lose-lose situation.
D. Golden Rule application.
107. Purposefully understating your firm's income to avoid paying higher taxes is an example of:
A. an accepted business practice.
B. tax accountants doing their job.
C. illegal behaviour.
D. a firm's responsibility to its owners.
108. While it is easy to criticize business for moral and ethical shortcomings, it is important to remember that:
A. when in Rome, do what the Romans do.
B. each of us have moral shortcomings as well.
C. values must sometimes be compromised to satisfy investors' demand for profits.
D. the ends justify the means.
109. An ethical dilemma refers to a situation where you must:

A. treat someone unfairly.
B. choose between equally unsatisfactory alternatives.
C. choose between a correct and an incorrect option.
D. balance the concerns of profit and legality.
110. A Canadian government official has indicated that for a generous contribution to his reelection fund, he
would ignore your firm's apparent violation of several anti-pollution laws. Which of the following "ethics check
questions" would you consider first?
A. Is it legal?
B. Is it fair?
D. How much do you want?
111. A friend offers to share with you a term paper she prepared for her "Introduction to Business" class last
semester. When you tell her that it wouldn't be fair, she reminds you of your habit of reading an entire Harry
Potter book at the local bookstore without paying for the book. Which ethics-based question would be the most
helpful in evaluating these situations?
A. Is it legal?
B. Am I acting fairly?
C. Who wins and who loses?
D. Will I get caught?
112. The majority of CEOs blame unethical employee conduct on:

A. the breakdown of traditional religious institutions.
B. a failure of leadership to establish ethical standards.
C. the increase in lawsuits used to avoid personal responsibility.
D. the nation's business schools that tolerate unethical behaviour in students.
113. Ethical behaviour will result in all of the following except:

A. greater trust and cooperation between employees and managers.
B. balanced, fair agreements that create benefits for all involved.
C. negative publicity from the news media.
D. improved self-esteem.
114. Organizational ethics are learned by:

A. attending corporate responsibility seminars.
B. tracking the failures of those who are caught in business scandals.
C. attending business classes and regularly taking notes.
D. observing the actions of others.
115. All of the following are reasons why a business should be managed ethically except:
A. because it is the right thing to do.
B. because strict global regulations require it.
C. to attract new customers and retain existing customers.
D. to please customers, employees, and society.
116. A competitive corporate environment:

A. can encourage employees to deceive customers.
B. should focus on improving corporate profit.
C. must be ignored when corporate ethics are developed.
D. can best define ethical behaviour based on current circumstances.
117. The Hummer Corporation has recently instituted a corporate ethics code. The president of the company
realizes that ethical relationships are based on:
A. trust and cooperation.
B. strict penalties for illegal activities.
C. a well-developed corporate code of ethics.
D. watchdogs and whistleblowers.
118. Establishing a formal code of ethics is:

A. more common with small businesses than large businesses.
B. unnecessary given the level of government regulation.
C. growing in popularity.
D. mandated by the Corporate and Criminal Fraud Accountability Act.
119. A(n) ________-based ethics code emphasizes the prevention of unlawful behaviour by increasing control
and penalizing wrongdoers.
A. legal
B. corporate responsibility
C. compliance
D. integrity
120. A(n) ________-based ethics code defines corporate values, creates a supportive environment, and stresses
shared accountability among employees.
A. social
C. compliance
D. integrity
121. After developing a code of ethics, it should be communicated to:

A. everyone with whom the business has dealings.
B. the police in jurisdictions where the business has operations.
C. all levels of management.
D. stockholders.
122. The purpose of the Federal Accountability Act is to:

A. ensure that whistle-blowers within the government receive due recognition and reward.
B. protect government employees from reprisal for making good faith allegations of wrongdoing.
C. restrict the investigation of any wrongdoing that occurs within the public sector.
D. ensure that any corporate whistle-blower in Canada is reimbursed for lost wages if they are fired by their
employers.
123. Which of the following is not part of a compliance-based ethics code?
A. increased control over employee actions.
B. shared accountability among employees.
C. penalties for wrongdoers.
D. awareness of the relevant laws.
124. Which of the following would be a unique focus of an integrity-based ethics code?
A. Increased control over employee actions.
B. Shared accountability among employees.
C. Increased penalties for code violators.
D. Improved awareness of the relevant laws.
125. As a new employee, Vanessa has heard her boss say, "Do whatever it takes to meet your sales quota.
However, anyone caught violating a law will be immediately fired". Vanessa recognizes this as a(n) ________-
based code of ethics.
A. Internet
B. personal responsibility
C. compliance
D. integrity
126. In an effort to help employees resist the pressure to make an unethical decision, the Johnston Petroleum
Company has communicated their code of ethics statement to their suppliers, subcontractors, distributors, and
customers. This approach is consistent with a(n):
A. integrity-based ethics code.
B. compliance-based ethics code.
C. response to a government mandate.
D. personal responsibility commitment.
127. Which of the following terms describes someone who reports illegal or unethical behaviour?
A. Whistleblower
B. Horn blower
C. Watch tower sentinel
D. Integrity watchdog
128. All of the following are characteristics of an effective ethics officer except:
A. a background in human resource management.
B. ability to relate with employees at every level of the company.
C. capacity to serve as a counselor and an investigator.
D. good communication skills.
129. Which of the following is the most important step to help improve Canada's business ethics?
A. Middle management support.
B. Training.
C. Enforcement.
D. Identification of the organizational ethics officer.
130. A phone call to a government official by an employee of the XYZ Corporation disclosed the deception and
dishonesty of the firm's accounting records. This employee played the role of a:
A. whistleblower.
B. horn blower.
C. cheerleader.
D. moral policeman.
131. Integrity-based ethics codes are similar to compliance-based ethics codes. Which of the following is an
objective of compliance-based codes?
A. avoid criminal misconduct
B. conform to chosen internal standards
C. enable responsible employee conduct
D. accountability
132. Which step is the most critical to help improve business ethics?
A. Top management must adopt and support a corporate code of conduct.
B. The ethics code must be enforced.
C. An ethics office must be set up.
D. Outsiders must be told about the ethics program.
133. Corporate social responsibility describes the firm's:

A. responsibility to their stockholders.
B. ability to plan for the unexpected.
C. commitment to a management training program.
D. concern for the welfare of society.
134. Which of the following describes charitable donations by corporations to nonprofit organizations?
A. Corporate philanthropy
B. Corporate responsibility
C. Corporate strategy
D. Structural commitment
135. The position a firm takes on issues that affect the corporation as well as society is known as its:
A. political philanthropy.
B. corporate policy.
C. target posturing.
D. structural positioning.
136. Corporate ________ encompasses various issues such as setting minority hiring practices, manufacturing
safe products, and minimizing pollution.
A. responsibility
B. philanthropy
C. diversity
D. structure and strategy
137. Determining what is involved for a firm to be socially responsible:

A. is easy.
B. varies even among those who are interested in corporate responsibility.
C. helps government officials develop appropriate legislation.
D. varies from industry to industry.
138. Top management at Lancer Distributing is convinced that they have a social responsibility to their
community. They believe that they can have the greatest impact in this area through cash contributions to
nonprofit organizations. This is an example of corporate:
A. guilt payments.
B. philanthropy.
C. structure and strategy.
D. short run profit maximization.
139. Those who argue in favor of corporate social responsibility suggest that:
A. you need to justify socially responsible behavior from an investor's standpoint only.
B. being socially responsible is all about being ethical.
C. business exists only to make money for shareholders.
D. companies who are perceived as being socially responsible will attract and retain better employees and draw
more customers.
140. Management and employees at Boyer Enterprises are given time off each year to work in local charities.
This firm clearly practices:
A. corporate philanthropy.
B. social irresponsibility.
C. community mediation services.
D. participative funding.
141. Corporate ___________ is the concern businesses have for the welfare of society.
A. philanthropy
B. responsibility
C. policy
D. social responsibility
142. One strategy guaranteed to displease your customers is to:

A. delight them with a quality product at a fair price.
B. focus on cost and quality control systems within your organization.
C. practice deception regarding product safety issues.
D. shift the production of goods to foreign facilities and layoff Canadian workers.
143. According to Milton Friedman, businesses can best meet their responsibility to society by:
A. creating markets for domestic products.
B. shifting the blame for product liability cases onto the legal system.
C. supporting their preferred government officials.
D. creating wealth for their stockholders.
144. Insider trading involves:

A. an Internet activity that establishes a barter exchange system between businesses.
B. investors using private company information to further their own fortunes.
C. the exchange of assets between companies in the same industry.
D. a payment or reward for socially conscious behaviour.
145. If a business fails in meeting its responsibilities to its employees, all of the following are likely to occur
except:
A. reduced employee turnover.
B. disgruntled workers manipulating budgets and expenses.
C. a loss of employee commitment and trust in the company and its management.
D. employee retaliation by doing the minimum needed to get by.
146. The triple-bottom line measures:
A. social audit performance.
B. profits, people, and places.
C. economic, social, and environmental parameters.
D. public private partnerships.
147. The purpose of a(n) ________ is to evaluate an organization's progress toward implementing programs to
achieve social responsibility.
A. accountability review
B. social audit
C. federal disclosure statement
D. annual report
148. Business is under pressure from society to be more socially responsible. However, even the strongest
advocates for corporate responsibility can't seem to agree:
A. on what social responsibility involves.
B. who should be the watchdog to police business behaviour.
C. if all businesses, large and small, should be held to the same standards.
D. if politicians should be held to the same standards of behaviour.
149. When it comes to social responsibility, some people feel that "before you can do good, you must do well".
This reflects a firm's primary responsibility is to their:
A. customers.
B. investors.
C. employees.
D. community.
150. A recent survey reveals that employee theft is _______ customer shoplifting.
A. greater than
B. less than
C. about the same as
D. less troublesome than
151. Environmental quality is considered to be a public good. This means that:

A. ultimately it is the public that pays for environmental clean-up.
B. businesses have a responsibility to minimize their environmental pollution.
C. everyone enjoys a cleaner environment regardless of who pays for it.
D. society places a higher value on private goods and services.
152. Which of the following activities would generally not be included in the social audit of a business?
A. Support for higher education, the arts, and nonprofit groups.
B. Employee-related activities.
C. Comparisons of profits versus the profits of other firms.
D. Consumer activities such as product safety, honest advertising, and fair pricing.
153. Many businesses have developed internal procedures to enforce their ethical policies. Which of the
following is an example of an outside group urging ethical behaviour in businesses?
A. management teams
B. union officials
C. suppliers
D. foreign trade representatives
154. Sustainable development means:

A. using processes to sustain a business through good times and bad.
B. implementing a social audit.
C. selling your product in the developing world.
D. implementing environmental, economic and social considerations into decision making.
155. One problem of conducting a social audit is:

A. that most businesses are really not very concerned with these issues.
B. determining what should be measured and how to calculate the effect on society.
C. the primary focus of management is on the interests of stakeholders.
D. governmental "red-tape".
156. One factor causing businesses to vigorously enforce ethical standards is the:
A. desire to eliminate employee turnover.
B. fear of negative publicity.
C. focus on criminal penalties.
D. evasion of social audit measurements.
157. Doogid Corporation would like its employees, customers, and the general public to be aware of the
activities and programs they have done for the community over the past year. The company might consider
doing a:
A. contributory analysis.
B. responsibility review.
C. social audit.
D. annual payment report.
158. Several outside groups regularly monitor the activities of Metro Chemical Corporation. These groups are
interested in the firm's involvement and enforcement of their ethical and social responsibility policies. Who of
the following is the least likely to be among the "watchdog" groups?
A. The financial officer of a church with funds invested in the chemical company.
B. Overseers from the World Trade Organization (WTO).
C. A student of environmental engineering attending a local college.
D. The president of the union representing the workers at the chemical company.
159. The vice president of human resources at Ato Enterprises feels strongly that workers need to realize the
benefits of their hard work. This reveals the firm's responsibility to:
A. customers.
B. investors.
C. society.
D. employees.
160. Ethical problems and issues of social responsibility are:

A. unique to firms involved in global trade.
B. unique to Canada.
C. not unique to Canada.
D. less important now than in the past.
161. When working with international firms, Canadian businesses:

A. tend to ignore the ethics of their international partners.
B. expect socially responsible behaviour from their business partners.
C. feel that their responsibility is limited to Canada.
D. try to avoid judging their international business partners by Canadian standards.
162. Top leaders in government and business today are:

A. held to higher ethical standards than in the past.
B. held to less strict moral standards than in the past.
C. less interested in social responsibility than in the past.
D. at odds with the general public in regard to ethical issues.
163. Issues of social responsibility and ethical behaviour are:

A. the result of greed found in capitalist countries.
B. found primarily in countries with a low standard of living.
C. a concern only of business professors.
D. found in many different countries.
164. The FAIRTRADE mark on a package means what?
A. the company must not be involved in weapons or tobacco businesses.
B. the company has contributed to the development of disadvantaged producers and workers.
C. the company must behave ethically.
D. the company cannot participate in insider trading.
165. __________ has been accused by human rights and labour groups of treating its workers poorly while
lavishing millions of dollars on star athletes to endorse its products.
A. McDonald's
B. Sears
C. Phillips-Van Heusen
D. Nike
166. Stories of political leaders accepting bribes in return for their influence have occurred worldwide. Unlike
the past, these leaders have been forced to resign under intense pubic pressure. This indicates that:
A. politicians and religious leaders are above the law.
B. people are demanding higher standards of their leaders.
C. it is important not to get caught accepting a bribe.
D. the WTO has established global standards.
167. Given the ethical lapses that are so prevalent today, what can be done to restore trust in the free-market and
leaders in general?
168. Identify and discuss the three questions that an ethics-based manager should ask when facing a potentially
unethical action.
169. When faced with an ethical dilemma it might be helpful to ask yourself, is it legal? Give an example of a
situation where you could ask yourself, am I violating any law or company policy?
170. Explain the difference between a compliance-based ethics code and an integrity-based ethics code.
171. Identify the six-step approach to achieve a long-term improvement of business ethics.
172. Why should a business be managed ethically?
173. Identify and discuss the social responsibilities of a firm to three stakeholder groups.
174. Identify and discuss the four types of groups that serve as "watchdogs" regarding how well companies
enforce their ethical and social responsibility policies.
175. Businesses demonstrate corporate responsibility towards what four types of stakeholders?
176. Give an example of where the Canadian government has gotten involved with business in environmental
issues.
05 Key
1. (p. 142) Ethical behaviour requires more than following the law.
TRUE
Difficulty: 1
Learning Objective: 05-01 Explain why obeying the law is only the first step in behaving ethically.
Nickels - Chapter 05 #1
2. (p. 142) Legal behaviour and ethical behaviour are basically the same.
FALSE
Difficulty: 1
3. (p. 142) Many immoral and unethical acts fall well within our laws.
TRUE
Difficulty: 1
4. (p. 143) Ethical behaviour refers to the standards that are accepted by society as right or wrong.
TRUE
Difficulty: 1
5. (p. 143) Ethical behaviour requires individuals to decide for themselves what is right and wrong in each
situation they face.
FALSE
Difficulty: 1
6. (p. 143) Given the level of diversity within Canada, agreement on common standards of ethical behaviour is
unachievable.
FALSE
Difficulty: 1
7. (p. 142) Unethical behavior is restricted to for-profit businesses only.

FALSE
Difficulty: 1
8. (p. 143) Ethical behaviour involves the clear and easy choice of right and wrong actions toward others.
FALSE
Difficulty: 1
9. (p. 142) The question "Is it legal"? establishes ethical behaviour.

FALSE
Difficulty: 1
10. (p. 143) Ethics are the standards of moral behaviour.

TRUE
Difficulty: 1
11. (p. 145) Trying to make decisions that will benefit all parties involved is consistent with the question "How
will it make me feel about myself"?
FALSE
Difficulty: 1
Learning Objective: 05-02 Ask the three questions to answer when faced with a potentially unethical action.
12. (p. 144) The most basic question in business ethics is, "Is it legal"?
TRUE
Difficulty: 2
13. (p. 144, 145) Legal behaviour includes more aspects of our relationships with others than does ethical
behaviour.
FALSE
Difficulty: 2
14. (p. 144) Legal behaviour is a first step toward ethical behaviour.
TRUE
Difficulty: 2
15. (p. 142) Ethical behaviour looks at treating others fairly.

TRUE
Difficulty: 2
16. (p. 144, 145) An ethical manager's decisions are based on the following questions: "Is it legal"? and "Is it
profitable"?
FALSE
Difficulty: 2
17. (p. 145) Behaviour that is in conflict with your values and sense of right and wrong can damage your self-
esteem.
FALSE
Difficulty: 2
18. (p. 144, 145) Barney extends his lunch break beyond the allotted time. Wilma uses the office telephone for an
unauthorized personal phone call. Fred misrepresents his product to a potential customer. All of these are
examples of unethical behaviour.
TRUE
Difficulty: 2
19. (p. 144) Business behaviour determines the ethics of society. We can improve society's moral and ethical
behaviour by first making a commitment to improving business' moral and ethical behaviour.
FALSE
Difficulty: 3
20. (p. 144, 145) In reality, ethical behaviour depends on the situation. For example, in negotiating a contract with
your employees, the way they win higher wages is by you losing the fight to hold down labour costs. Often, it is
a win-lose relationship.
FALSE
Difficulty: 3
21. (p. 147) Trust between workers and managers must be based on a foundation of fairness, honesty, openness,
and moral integrity.
TRUE
Difficulty: 1
Learning Objective: 05-03 "Describe managements role in setting ethical standards".
22. (p. 147) A growing number of people feel that an employee's ethics are a personal matter, and have nothing to
do with management.
FALSE
Difficulty: 1
23. (p. 147) The majority of CEOs believe that employee misconduct results from a failure in organizational
leadership in establishing ethical standards.
TRUE
Difficulty: 1
24. (p. 147) Management can create an environment in which unethical behaviour can develop.
TRUE
Difficulty: 1
25. (p. 147) Corporate values, like personal values, are learned by observing what others do.
TRUE
Difficulty: 1
26. (p. 147) Effective corporate values start with employees and develop throughout the organization to include
top management.
FALSE
Difficulty: 1
27. (p. 147) Corporate standards can lead to unethical behaviour.
TRUE
Difficulty: 1
28. (p. 148) Integrity-based ethics codes are based on avoiding legal punishment.
FALSE
Difficulty: 1
Learning Objective: 05-04 "Distinguish between compliancebased and integrity-based ethics codes; and list the six steps that can be considered when setting up a
corporate ethics code".
29. (p. 147) More and more companies have written codes of conduct.
TRUE
Difficulty: 1
30. (p. 147) Businesses with a formal code of ethics are less common now than in the past.
FALSE
Difficulty: 1
31. (p. 148) Compliance-based ethics codes focus on preventing unlawful behaviour by increasing control and by
penalizing wrongdoers.
TRUE
Difficulty: 1
32. (p. 148) A code of ethics designed to avoid criminal misconduct is an example of a compliance-based ethics
code.
TRUE
Difficulty: 2
33. (p. 148) An integrity-based ethics code moves beyond legal compliance in order to create a "do-the-right-
thing" climate.
TRUE
Difficulty: 2
34. (p. 148) Dewy Cheatum encourages his employees to create and use legal loopholes to gain a competitive
advantage. This is both legal and consistent with the compliance-based code of ethics.
TRUE
Difficulty: 2
35. (p. 148) The brewers of Molson beer encourage their customers to drink responsibly and "know when to say
when". This reflects a compliance-based approach to ethics.
FALSE
Difficulty: 2
36. (p. 148) Cigarette producers label their products with warnings of potential health hazards. This is an example
of a compliance-based code of ethics.
TRUE
Difficulty: 2
37. (p. 149) The purpose of the Sarbanes-Oxley Act is to provide financial rewards for whistle-blowers.
FALSE
Difficulty: 2
38. (p. 149) As a manager you are responsible for the unethical behaviour of your employees.
TRUE
Difficulty: 2
39. (p. 148) Avoiding lawsuits is one reason to manage a firm ethically.
TRUE
Difficulty: 2
40. (p. 148) Written ethics codes influence employees more than management's tolerance or intolerance of ethical
misconduct.
FALSE
Difficulty: 3
41. (p. 148) In order to be successful, efforts to improve the ethical behaviour of businesses must begin with top
management's support of a corporate code of conduct.
TRUE
Difficulty: 1
42. (p. 148) Businesses recognize that pressure to violate ethical standards can come from either inside or outside
of the firm.
TRUE
Difficulty: 1
43. (p. 148) People who report illegal or unethical behaviour are known as whistleblowers.
TRUE
Difficulty: 1
44. (p. 149) An ethics officer serves both as a counselor and as an investigator.
TRUE
Difficulty: 1
45. (p. 149) Individuals who can set a positive tone, relate well to others and communicate effectively make the
most effective ethics officers.
TRUE
Difficulty: 3
46. (p. 148) Enforcement is perhaps the most important step in an effective code of ethics.
TRUE
Difficulty: 1
47. (p. 148) To be effective, an organization's code of ethics needs to be communicated to outsiders such as
suppliers, subcontractors, and customers.
TRUE
Difficulty: 2
48. (p. 148-150) Businesses can avoid ethical dilemmas by requiring written contracts with their employees,
customers, and owners.
FALSE
Difficulty: 3
Learning Objective: 05-05 "Define corporate social responsibility and compare corporations responsibilities to various stakeholders".
49. (p. 150) Corporate social responsibility refers to the concern businesses have for their employees.
FALSE
Difficulty: 1
50. (p. 151) Corporate philanthropy refers to the position a firm takes on issues that affect society.
FALSE
Difficulty: 1
51. (p. 151) A charitable donation by a corporation is an example of corporate philanthropy.

TRUE
Difficulty: 1
52. (p. 150) Ethical behaviour will allow a firm to meet its corporate social responsibility.
FALSE
Difficulty: 1
53. (p. 151) Minority hiring practices and pollution control are both areas of corporate responsibility.
TRUE
Difficulty: 1
54. (p. 151) Corporate philanthropy refers to the position a firm takes on social and political issues.
FALSE
Difficulty: 1
55. (p. 151) Businesses can have either a positive or negative impact on society, although the news coverage tends
to focus on the negative.
TRUE
Difficulty: 1
56. (p. 151) A business that takes a public position on a political issue is exercising corporate social responsibility.
TRUE
Difficulty: 2
57. (p. 152) Defining a socially responsible company is complicated. We can't seem to agree on what being
socially responsible involves.
TRUE
Difficulty: 2
58. (p. 151) "My only social responsibility is to make a profit. I will show my concern for society by providing my
customers with a product that they need and desire". These statements are consistent with the concept of
FALSE
Difficulty: 2
59. (p. 151) At a recent town hall meeting, citizens expressed concern regarding the impact of a proposed new
gambling casino. The owner of the proposed casino responds, "I don't know what all of this fuss is about. I'm
just a businessman trying to earn a profit, provide new jobs, and pay taxes". His response reflects a commitment
to corporate social responsibility.
FALSE
Difficulty: 2
60. (p. 151) A new law requiring businesses to give 90 day notice of their plans to close an office or factory was
recently enacted. This action indicates the public's desire for businesses to behave in a socially responsible
manner.
TRUE
Difficulty: 2
61. (p. 151) Choosing to hire a minority worker, when this applicant is equally qualified as a white male job
applicant, is an example of a corporate social initiative.
FALSE
Difficulty: 3
62. (p. 153) Being responsible to your customers may require your firm to provide more information regarding
your product than the law demands.
TRUE
Difficulty: 1
63. (p. 153, 154) Ethical behaviour comes at the expense of stockholder wealth.
FALSE
Difficulty: 1
64. (p. 153) In the discussion of corporate social responsibility, stakeholders and stockholders refer to the same
group.
FALSE
Difficulty: 1
65. (p. 153) One responsibility of business is to satisfy customers by offering them goods and services of real
value.
TRUE
Difficulty: 1
66. (p. 153) Studies show that consumers are not concerned about the socially conscious behaviour of the firms
with which they do business.
FALSE
Difficulty: 1
67. (p. 153, 154) Investors can profit from choosing to invest their money in companies whose goods and services
benefit the community and the environment.
TRUE
Difficulty: 1
68. (p. 154) Insider trading occurs when employees of a company use private company information to profit in the
stock market.
TRUE
Difficulty: 1
69. (p. 154) Insider trading provides the information needed for the securities market to operate fairly and
efficiently.
FALSE
Difficulty: 1
70. (p. 154) Businesses have a social responsibility to create jobs.

TRUE
Difficulty: 1
71. (p. 155) Promoting social justice is a responsibility of society, but not businesses.
FALSE
Difficulty: 1
72. (p. 155) In the long run, a firm's loyalty to their employees can pay off financially.
TRUE
Difficulty: 1
73. (p. 155) Getting even is one of the most powerful incentives for good people to do bad things.
TRUE
Difficulty: 1
74. (p. 155) A recent study revealed that employee theft has increased dramatically, but is still less than
shoplifting.
FALSE
Difficulty: 1
75. (p. 156) We are seeing more efforts made to reverse years of neglect to the environment.
TRUE
Difficulty: 1
76. (p. 158) A firm's triple-bottom line looks at a company's positive economic contributions, as well as the
environmental and social value they add and destroy.
TRUE
Difficulty: 1
77. (p. 158) A public good is one that everyone gets to enjoy regardless of who pays for it.
TRUE
Difficulty: 1
78. (p. 158) Many corporations are publishing reports that document their net social contribution.
TRUE
Difficulty: 1
79. (p. 158) A social audit attempts to measure a firm's progress in the area of worker-management relations.
FALSE
Difficulty: 1
80. (p. 158) A problem with conducting a social audit is establishing procedures for measuring a firm's activities
and its effects on society.
TRUE
Difficulty: 2
81. (p. 158) As a response to the federal government sponsorship scandal, the federal government now requires
social audits of all Canadian businesses.
FALSE
Difficulty: 2
82. (p. 153-154) Out-Tel, a computer chip manufacturer, knowingly sold defective chips and failed to notify
customers of the potential problems. When the problem became public knowledge, the firm's stock price fell
dramatically. This illustrates the value that investors place on the ethical behaviour of businesses.
TRUE
Difficulty: 2
83. (p. 159) Sustainable development is the process where companies stay in business and keep growing and
developing over time.
FALSE
Difficulty: 2
84. (p. 152) Both the strategic and pluralist approaches recognize the responsibility of management to optimize
profits.
TRUE
Difficulty: 3
85. (p. 160) Charges of unethical business practices are common outside Canada.
TRUE
Difficulty: 2
Learning Objective: 05-06 Discuss the importance of ethical behaviour and social responsibility in global markets.
86. (p. 161) The ethical standards by which international political leaders are judged are less strict today than they
were in years past.
FALSE
Difficulty: 2
87. (p. 161) Many Canadian companies are demanding socially responsible behaviour from their international
suppliers.
TRUE
Difficulty: 2
88. (p. 160-161) Canadian businesses are not socially responsible for the activities of a foreign supplier.
FALSE
Difficulty: 2
89. (p. 161) The economic power of large multinational firms allows them to ignore the ethical standards of a
society without consequences.
FALSE
Difficulty: 2
90. (p. 161) Canadian businesses and consumers have little influence over the behaviour of businesses from other
countries.
FALSE
Difficulty: 2
91. (p. 161) Applying the ethical standards of Canada to foreign firms is more difficult than judging the behaviour
of Canadian firms.
TRUE
Difficulty: 3
92. (p. 161) "Hear no evil, see no evil, speak no evil" is the best policy for Canadian firms to follow in their
dealings with corrupt foreign suppliers.
FALSE
Difficulty: 3
93. (p. 161) While "doing the right thing" is an admirable code of ethics, there are no international organizations
dealing with global ethics and corruption.
FALSE
Difficulty: 3
94. (p. 161) A product with the FAIRTRADE mark means that it can be sold in foreign countries.
FALSE
Difficulty: 3
95. (p. 143, Figure 5.1) The federal government sponsorship scandal revealed ________ corporate behaviour.
A. legal but unethical
B. predictable
C. illegal
D. ethical
Difficulty: 1
96. (p. 142) Obeying the law is ________ ethical behaviour.

A. essentially the same as
B. the first step toward
C. the opposite of
D. unlikely to lead to
Difficulty: 1
97. (p. 143) ________ refers to the standards of moral behaviour.

A. Legality
B. Responsibility
C. Integrity
D. Ethics
Difficulty: 1
98. (p. 142) Ethics and legality are:

A. essentially the same.
B. exactly the same
C. two different things.
D. the only two steps to consider during any business action.
Difficulty: 1
99. (p. 142) Legality is
A. narrower than ethical behavior.
B. broader than ethical behaviour.
C. the same as ethical behaviour.
D. the only consideration for ethical behaviour.
Difficulty: 1
100. (p. 144, 145) Three questions often help individuals and organizations in deciding if their decisions are ethical.
All of the following are ethics check questions except:
A. Is it legal?
B. Is it balanced?
C. Has it been done before?
D. How will it make me feel about myself?
Difficulty: 1
101. (p. 144) When discussing moral and ethical issues, it is helpful to remember that ethical behaviour begins
with:
A. schools.
B. religious institutions.
C. law enforcement officers.
D. each of us.
Difficulty: 1
102. (p. 144) The first step when facing an ethical dilemma is to ask:
A. "Is it legal"?
B. "Is it balanced"?
C. "How will it make me feel about myself"?
D. "Is it ethical"?
Difficulty: 1
103. (p. 144) Which of the following reflects the desire of an ethical manager to achieve a "win-win" relationship
with others?
A. Is it legal?
B. Is it balanced?
D. How can I benefit at the expense of others?
Difficulty: 1
104. (p. 145) Which of these questions can help us avoid a decision that would injure our self-esteem?
A. Is it legal?
B. Is it balanced?
D. How can I avoid taking the blame?
Difficulty: 1
105. (p. 144, 145) Considering the potential impact on others prior to making a decision is consistent with ________
behaviour.
A. legal
B. anti-social
C. ethical
D. self-motivated
Difficulty: 2
106. (p. 144, 145) Treating others unfairly can result in retaliation from the injured party. This will likely create a:
A. lose-win situation.
B. win-win situation.
C. lose-lose situation.
D. Golden Rule application.
Difficulty: 2
107. (p. 144) Purposefully understating your firm's income to avoid paying higher taxes is an example of:
A. an accepted business practice.
B. tax accountants doing their job.
C. illegal behaviour.
D. a firm's responsibility to its owners.
Difficulty: 3
108. (p. 144) While it is easy to criticize business for moral and ethical shortcomings, it is important to remember
that:
A. when in Rome, do what the Romans do.
B. each of us have moral shortcomings as well.
C. values must sometimes be compromised to satisfy investors' demand for profits.
D. the ends justify the means.
Difficulty: 3
109. (p. 144) An ethical dilemma refers to a situation where you must:
A. treat someone unfairly.
B. choose between equally unsatisfactory alternatives.
C. choose between a correct and an incorrect option.
D. balance the concerns of profit and legality.
Difficulty: 3
110. (p. 144) A Canadian government official has indicated that for a generous contribution to his reelection fund,
he would ignore your firm's apparent violation of several anti-pollution laws. Which of the following "ethics
check questions" would you consider first?
A. Is it legal?
B. Is it fair?
D. How much do you want?
Difficulty: 4
111. (p. 144, 145) A friend offers to share with you a term paper she prepared for her "Introduction to Business"
class last semester. When you tell her that it wouldn't be fair, she reminds you of your habit of reading an entire
Harry Potter book at the local bookstore without paying for the book. Which ethics-based question would be the
most helpful in evaluating these situations?
A. Is it legal?
B. Am I acting fairly?
C. Who wins and who loses?
D. Will I get caught?
Difficulty: 4
112. (p. 147) The majority of CEOs blame unethical employee conduct on:
A. the breakdown of traditional religious institutions.
B. a failure of leadership to establish ethical standards.
C. the increase in lawsuits used to avoid personal responsibility.
D. the nation's business schools that tolerate unethical behaviour in students.
Difficulty: 1
113. (p. 147) Ethical behaviour will result in all of the following except:
A. greater trust and cooperation between employees and managers.
B. balanced, fair agreements that create benefits for all involved.
C. negative publicity from the news media.
D. improved self-esteem.
Difficulty: 2
114. (p. 147) Organizational ethics are learned by:

A. attending corporate responsibility seminars.
B. tracking the failures of those who are caught in business scandals.
C. attending business classes and regularly taking notes.
D. observing the actions of others.
Difficulty: 1
115. (p. 147) All of the following are reasons why a business should be managed ethically except:
A. because it is the right thing to do.
B. because strict global regulations require it.
C. to attract new customers and retain existing customers.
D. to please customers, employees, and society.
Difficulty: 1
116. (p. 147) A competitive corporate environment:

A. can encourage employees to deceive customers.
B. should focus on improving corporate profit.
C. must be ignored when corporate ethics are developed.
D. can best define ethical behaviour based on current circumstances.
Difficulty: 2
117. (p. 147) The Hummer Corporation has recently instituted a corporate ethics code. The president of the
company realizes that ethical relationships are based on:
A. trust and cooperation.
B. strict penalties for illegal activities.
C. a well-developed corporate code of ethics.
D. watchdogs and whistleblowers.
Difficulty: 3
118. (p. 147) Establishing a formal code of ethics is:

A. more common with small businesses than large businesses.
B. unnecessary given the level of government regulation.
C. growing in popularity.
D. mandated by the Corporate and Criminal Fraud Accountability Act.
Difficulty: 1
119. (p. 148) A(n) ________-based ethics code emphasizes the prevention of unlawful behaviour by increasing
control and penalizing wrongdoers.
A. legal
C. compliance
D. integrity
Difficulty: 1
120. (p. 148) A(n) ________-based ethics code defines corporate values, creates a supportive environment, and
stresses shared accountability among employees.
A. social
C. compliance
D. integrity
Difficulty: 1
121. (p. 148, 149) After developing a code of ethics, it should be communicated to:
A. everyone with whom the business has dealings.
B. the police in jurisdictions where the business has operations.
C. all levels of management.
D. stockholders.
Difficulty: 3
122. (p. 149) The purpose of the Federal Accountability Act is to:
A. ensure that whistle-blowers within the government receive due recognition and reward.
B. protect government employees from reprisal for making good faith allegations of wrongdoing.
C. restrict the investigation of any wrongdoing that occurs within the public sector.
D. ensure that any corporate whistle-blower in Canada is reimbursed for lost wages if they are fired by their
employers.
Difficulty: 2
123. (p. 148) Which of the following is not part of a compliance-based ethics code?
A. increased control over employee actions.
B. shared accountability among employees.
C. penalties for wrongdoers.
D. awareness of the relevant laws.
Difficulty: 2
124. (p. 148) Which of the following would be a unique focus of an integrity-based ethics code?
A. Increased control over employee actions.
B. Shared accountability among employees.
C. Increased penalties for code violators.
D. Improved awareness of the relevant laws.
Difficulty: 2
125. (p. 148) As a new employee, Vanessa has heard her boss say, "Do whatever it takes to meet your sales quota.
However, anyone caught violating a law will be immediately fired". Vanessa recognizes this as a(n) ________-
based code of ethics.
A. Internet
B. personal responsibility
C. compliance
D. integrity
Difficulty: 3
126. (p. 148) In an effort to help employees resist the pressure to make an unethical decision, the Johnston
Petroleum Company has communicated their code of ethics statement to their suppliers, subcontractors,
distributors, and customers. This approach is consistent with a(n):
A. integrity-based ethics code.
B. compliance-based ethics code.
C. response to a government mandate.
D. personal responsibility commitment.
Difficulty: 3
127. (p. 148) Which of the following terms describes someone who reports illegal or unethical behaviour?
A. Whistleblower
B. Horn blower
C. Watch tower sentinel
D. Integrity watchdog
Difficulty: 1
128. (p. 149) All of the following are characteristics of an effective ethics officer except:
A. a background in human resource management.
B. ability to relate with employees at every level of the company.
C. capacity to serve as a counselor and an investigator.
D. good communication skills.
Difficulty: 1
129. (p. 148) Which of the following is the most important step to help improve Canada's business ethics?
A. Middle management support.
B. Training.
C. Enforcement.
D. Identification of the organizational ethics officer.
Difficulty: 2
130. (p. 148) A phone call to a government official by an employee of the XYZ Corporation disclosed the
deception and dishonesty of the firm's accounting records. This employee played the role of a:
A. whistleblower.
B. horn blower.
C. cheerleader.
D. moral policeman.
Difficulty: 3
131. (p. 148) Integrity-based ethics codes are similar to compliance-based ethics codes. Which of the following is
an objective of compliance-based codes?
A. avoid criminal misconduct
B. conform to chosen internal standards
C. enable responsible employee conduct
D. accountability
Difficulty: 4
132. (p. 148) Which step is the most critical to help improve business ethics?
A. Top management must adopt and support a corporate code of conduct.
B. The ethics code must be enforced.
C. An ethics office must be set up.
D. Outsiders must be told about the ethics program.
Difficulty: 4
133. (p. 150) Corporate social responsibility describes the firm's:

A. responsibility to their stockholders.
B. ability to plan for the unexpected.
C. commitment to a management training program.
D. concern for the welfare of society.
Difficulty: 1
134. (p. 151) Which of the following describes charitable donations by corporations to nonprofit organizations?
A. Corporate philanthropy
B. Corporate responsibility
C. Corporate strategy
D. Structural commitment
Difficulty: 1
135. (p. 151) The position a firm takes on issues that affect the corporation as well as society is known as its:
A. political philanthropy.
B. corporate policy.
C. target posturing.
D. structural positioning.
Difficulty: 1
136. (p. 151) Corporate ________ encompasses various issues such as setting minority hiring practices,
manufacturing safe products, and minimizing pollution.
A. responsibility
B. philanthropy
C. diversity
D. structure and strategy
Difficulty: 1
137. (p. 150, 151) Determining what is involved for a firm to be socially responsible:
A. is easy.
B. varies even among those who are interested in corporate responsibility.
C. helps government officials develop appropriate legislation.
D. varies from industry to industry.
Difficulty: 3
138. (p. 151) Top management at Lancer Distributing is convinced that they have a social responsibility to their
community. They believe that they can have the greatest impact in this area through cash contributions to
nonprofit organizations. This is an example of corporate:
A. guilt payments.
B. philanthropy.
C. structure and strategy.
D. short run profit maximization.
Difficulty: 2
139. (p. 151) Those who argue in favor of corporate social responsibility suggest that:
A. you need to justify socially responsible behavior from an investor's standpoint only.
B. being socially responsible is all about being ethical.
C. business exists only to make money for shareholders.
D. companies who are perceived as being socially responsible will attract and retain better employees and draw
more customers.
Difficulty: 2
140. (p. 151) Management and employees at Boyer Enterprises are given time off each year to work in local
charities. This firm clearly practices:
A. corporate philanthropy.
B. social irresponsibility.
C. community mediation services.
D. participative funding.
Difficulty: 3
141. (p. 150) Corporate ___________ is the concern businesses have for the welfare of society.
A. philanthropy
B. responsibility
C. policy
D. social responsibility
Difficulty: 4
142. (p. 153) One strategy guaranteed to displease your customers is to:
A. delight them with a quality product at a fair price.
B. focus on cost and quality control systems within your organization.
C. practice deception regarding product safety issues.
D. shift the production of goods to foreign facilities and layoff Canadian workers.
Difficulty: 1
143. (p. 151) According to Milton Friedman, businesses can best meet their responsibility to society by:
A. creating markets for domestic products.
B. shifting the blame for product liability cases onto the legal system.
C. supporting their preferred government officials.
D. creating wealth for their stockholders.
Difficulty: 1
144. (p. 154) Insider trading involves:

A. an Internet activity that establishes a barter exchange system between businesses.
B. investors using private company information to further their own fortunes.
C. the exchange of assets between companies in the same industry.
D. a payment or reward for socially conscious behaviour.
Difficulty: 1
145. (p. 154, 155) If a business fails in meeting its responsibilities to its employees, all of the following are likely to
occur except:
A. reduced employee turnover.
B. disgruntled workers manipulating budgets and expenses.
C. a loss of employee commitment and trust in the company and its management.
D. employee retaliation by doing the minimum needed to get by.
Difficulty: 1
146. (p. 158) The triple-bottom line measures:

A. social audit performance.
B. profits, people, and places.
C. economic, social, and environmental parameters.
D. public private partnerships.
Difficulty: 1
147. (p. 158) The purpose of a(n) ________ is to evaluate an organization's progress toward implementing
programs to achieve social responsibility.
A. accountability review
B. social audit
C. federal disclosure statement
D. annual report
Difficulty: 1
148. (p. 155, 156) Business is under pressure from society to be more socially responsible. However, even the
strongest advocates for corporate responsibility can't seem to agree:
A. on what social responsibility involves.
B. who should be the watchdog to police business behaviour.
C. if all businesses, large and small, should be held to the same standards.
D. if politicians should be held to the same standards of behaviour.
Difficulty: 3
149. (p. 153) When it comes to social responsibility, some people feel that "before you can do good, you must do
well". This reflects a firm's primary responsibility is to their:
A. customers.
B. investors.
C. employees.
D. community.
Difficulty: 2
150. (p. 155) A recent survey reveals that employee theft is _______ customer shoplifting.
A. greater than
B. less than
C. about the same as
D. less troublesome than
Difficulty: 2
151. (p. 158) Environmental quality is considered to be a public good. This means that:
A. ultimately it is the public that pays for environmental clean-up.
B. businesses have a responsibility to minimize their environmental pollution.
C. everyone enjoys a cleaner environment regardless of who pays for it.
D. society places a higher value on private goods and services.
Difficulty: 2
152. (p. 158, Figure 5.5) Which of the following activities would generally not be included in the social audit of a
business?
A. Support for higher education, the arts, and nonprofit groups.
B. Employee-related activities.
C. Comparisons of profits versus the profits of other firms.
D. Consumer activities such as product safety, honest advertising, and fair pricing.
Difficulty: 2
153. (p. 159) Many businesses have developed internal procedures to enforce their ethical policies. Which of the
following is an example of an outside group urging ethical behaviour in businesses?
A. management teams
B. union officials
C. suppliers
D. foreign trade representatives
Difficulty: 2
154. (p. 159) Sustainable development means:

A. using processes to sustain a business through good times and bad.
B. implementing a social audit.
C. selling your product in the developing world.
D. implementing environmental, economic and social considerations into decision making.
Difficulty: 2
155. (p. 158) One problem of conducting a social audit is:
A. that most businesses are really not very concerned with these issues.
B. determining what should be measured and how to calculate the effect on society.
C. the primary focus of management is on the interests of stakeholders.
D. governmental "red-tape".
Difficulty: 2
156. (p. 151) One factor causing businesses to vigorously enforce ethical standards is the:
A. desire to eliminate employee turnover.
B. fear of negative publicity.
C. focus on criminal penalties.
D. evasion of social audit measurements.
Difficulty: 3
157. (p. 158) Doogid Corporation would like its employees, customers, and the general public to be aware of the
activities and programs they have done for the community over the past year. The company might consider
doing a:
A. contributory analysis.
B. responsibility review.
C. social audit.
D. annual payment report.
Difficulty: 3
158. (p. 159) Several outside groups regularly monitor the activities of Metro Chemical Corporation. These groups
are interested in the firm's involvement and enforcement of their ethical and social responsibility policies. Who
of the following is the least likely to be among the "watchdog" groups?
A. The financial officer of a church with funds invested in the chemical company.
B. Overseers from the World Trade Organization (WTO).
C. A student of environmental engineering attending a local college.
D. The president of the union representing the workers at the chemical company.
Difficulty: 3
159. (p. 154, 155) The vice president of human resources at Ato Enterprises feels strongly that workers need to
realize the benefits of their hard work. This reveals the firm's responsibility to:
A. customers.
B. investors.
C. society.
D. employees.
Difficulty: 3
160. (p. 160) Ethical problems and issues of social responsibility are:
A. unique to firms involved in global trade.
B. unique to Canada.
C. not unique to Canada.
D. less important now than in the past.
Difficulty: 3
161. (p. 161) When working with international firms, Canadian businesses:
A. tend to ignore the ethics of their international partners.
B. expect socially responsible behaviour from their business partners.
C. feel that their responsibility is limited to Canada.
D. try to avoid judging their international business partners by Canadian standards.
Difficulty: 3
162. (p. 161) Top leaders in government and business today are:
A. held to higher ethical standards than in the past.
B. held to less strict moral standards than in the past.
C. less interested in social responsibility than in the past.
D. at odds with the general public in regard to ethical issues.
Difficulty: 3
163. (p. 160-161) Issues of social responsibility and ethical behaviour are:
A. the result of greed found in capitalist countries.
B. found primarily in countries with a low standard of living.
C. a concern only of business professors.
D. found in many different countries.
Difficulty: 3
164. (p. 161) The FAIRTRADE mark on a package means what?

A. the company must not be involved in weapons or tobacco businesses.
B. the company has contributed to the development of disadvantaged producers and workers.
C. the company must behave ethically.
D. the company cannot participate in insider trading.
Difficulty: 4
165. (p. 161) __________ has been accused by human rights and labour groups of treating its workers poorly
while lavishing millions of dollars on star athletes to endorse its products.
A. McDonald's
B. Sears
C. Phillips-Van Heusen
D. Nike
Difficulty: 4
166. (p. 161) Stories of political leaders accepting bribes in return for their influence have occurred worldwide.
Unlike the past, these leaders have been forced to resign under intense pubic pressure. This indicates that:
A. politicians and religious leaders are above the law.
B. people are demanding higher standards of their leaders.
C. it is important not to get caught accepting a bribe.
D. the WTO has established global standards.
Difficulty: 4
167. (p. 142) Given the ethical lapses that are so prevalent today, what can be done to restore trust in the free-
market and leaders in general?
Those who have broken the law need to be punished accordingly. Arrest business leaders, put them in handcuffs
and take them to jail. This will show the public that it is time to get serious about legal and ethical behaviour in
business. Write new laws making accounting records more transparent and more laws making businesspeople
and others more accountable.
Difficulty: 4
168. (p. 144, 145) Identify and discuss the three questions that an ethics-based manager should ask when facing a
potentially unethical action.
A) Is it legal? Am I violating any law or company policy? Regardless of the situation, this is the most basic step
in an ethics-based management system.
B) Is it balanced? Am I acting fairly? Would I want to be treated this way? If a situation arises where one party
wins everything at the expense of another party, the future may bring retaliation from the loser. While every
situation cannot be completely balanced, it is important for the health of business relationships that we avoid
major imbalances over time. An ethics-based manager maintains a win-win attitude.
C) How will it make me feel about myself? Will I feel proud when my family learns of my decision? Decisions
that go against our sense of right and wrong make us feel bad and cause us to lose our self-esteem.
Difficulty: 1
169. (p. 144) When faced with an ethical dilemma it might be helpful to ask yourself, is it legal? Give an example
of a situation where you could ask yourself, am I violating any law or company policy?
Whether you are thinking about having a drink and then driving home, gathering marketing intelligence,
designing a product, hiring or firing employees, etc.
Difficulty: 4
170. (p. 148) Explain the difference between a compliance-based ethics code and an integrity-based ethics code.
A. Compliance-based ethics codes emphasize preventing unlawful behaviour by increasing control and
penalizing wrongdoers. The primary focus is to conform to outside standards, (laws and regulations), and avoid
criminal misconduct.
B. An integrity-based code of ethics defines the organization's guiding values, creates an environment that
supports ethically sound behaviour, and stresses a shared accountability among employees. There is still a
requirement to conform to outside standards, but that is just a starting point. Integrity-based ethics codes move
beyond legal compliance to create a "do-it-right" climate that emphasizes core values, such as honesty and fair
play.
Difficulty: 1
171. (p. 146) Identify the six-step approach to achieve a long-term improvement of business ethics.
1) Top management must adopt and unconditionally support an explicit corporate code of conduct.
2) Employees must understand that expectations for ethical behaviour begin at the top and that senior
management expects all employees to act accordingly.
3) Managers and others must be trained to consider the ethical implications of all business decisions.
4) An ethics office must be set up with phone lines to allow employees to report questionable activities.
5) Suppliers, subcontractors, distributors, and customers must be told about the ethics program. Often pressure
to put aside ethical considerations comes from outsiders, and it helps employees resist such pressure when
everyone knows what the ethical standards are.
6) The ethics must be strictly enforced with timely action if any rules are broken.
Difficulty: 1
172. (p. 150-157) Why should a business be managed ethically?
To maintain a good reputation; to keep existing customers; to attract new customers; to avoid lawsuits; to
reduce employee turnover; to avoid government intervention; to please customers, employees, and society; to
do the right thing.
Difficulty: 4
173. (p. 153-157) Identify and discuss the social responsibilities of a firm to three stakeholder groups.
Customers Businesses are responsible to satisfy customers by offering them goods and services of real value.
Investors According to Milton Friedman, businesses are responsible to generate profits for their owners and
investors. Some people believe that before "you can do good, you must do well".
Employees Firms have the responsibility to create jobs in which hard work and talent are respected and fairly
rewarded.
Society and the Environment Business organizations are responsible to create new wealth, promote social
justice, and to improve the quality of the environment.
Difficulty: 1
174. (p. 159) Identify and discuss the four types of groups that serve as "watchdogs" regarding how well
companies enforce their ethical and social responsibility policies.
1) Socially conscious investors who insist that companies extend the firm's own high standards to all their
suppliers.
2) Environmentalists who apply pressure by naming names of companies that don't abide by the
environmentalists' standards.
3) Union officials who hunt down violations and force companies to comply to avoid negative publicity.
4) Customers who take their business elsewhere if a company demonstrates unethical and socially irresponsible
practices.
Difficulty: 1
175. (p. 153-157) Businesses demonstrate corporate responsibility towards what four types of stakeholders?
Customers, investors, employees, society and the environment.
Difficulty: 4
176. (p. 156) Give an example of where the Canadian government has gotten involved with business in
environmental issues.
Syncrude and ducks, Sydney Tar Ponds
Difficulty: 4
05 Summary
Category # of Quest
ions
Difficulty: 1 85
Difficulty: 2 48
Difficulty: 3 30
Difficulty: 4 13
Learning Objective: 05-01 Explain why obeying the law is only the first step in behaving ethically. 16
Learning Objective: 05-02 Ask the three questions to answer when faced with a potentially unethical action. 24
Learning Objective: 05-03 "Describe managements role in setting ethical standards". 13
Learning Objective: 05-04 "Distinguish between compliancebased and integrity- 37
based ethics codes; and list the six steps that can be considered when setting up a corporate ethics code".
Learning Objective: 05-05 "Define corporate social responsibility and compare corporations responsibilities to various stakeholders". 69
Learning Objective: 05-06 Discuss the importance of ethical behaviour and social responsibility in global markets. 17
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Understanding Canadian Business Canadian 8th Edition Nickels Test Bank 1

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1. Ethical behaviour requires more than following the law.

2. Legal behaviour and ethical behaviour are basically the same.

7. Unethical behavior is restricted to for-profit businesses only.

9. The question "Is it legal"? establishes ethical behaviour.

10. Ethics are the standards of moral behaviour.

15. Ethical behaviour looks at treating others fairly.

27. Corporate standards can lead to unethical behaviour.

28. Integrity-based ethics codes are based on avoiding legal punishment.

29. More and more companies have written codes of conduct.

39. Avoiding lawsuits is one reason to manage a firm ethically.

44. An ethics officer serves both as a counselor and as an investigator.

51. A charitable donation by a corporation is an example of corporate philanthropy.

63. Ethical behaviour comes at the expense of stockholder wealth.

70. Businesses have a social responsibility to create jobs.

71. Promoting social justice is a responsibility of society, but not businesses.

96. Obeying the law is ________ ethical behaviour.

97. ________ refers to the standards of moral behaviour.

98. Ethics and legality are:

102. The first step when facing an ethical dilemma is to ask:

109. An ethical dilemma refers to a situation where you must:

112. The majority of CEOs blame unethical employee conduct on:

113. Ethical behaviour will result in all of the following except:

114. Organizational ethics are learned by:

116. A competitive corporate environment:

118. Establishing a formal code of ethics is:

121. After developing a code of ethics, it should be communicated to:

122. The purpose of the Federal Accountability Act is to:

133. Corporate social responsibility describes the firm's:

137. Determining what is involved for a firm to be socially responsible:

142. One strategy guaranteed to displease your customers is to:

144. Insider trading involves:

151. Environmental quality is considered to be a public good. This means that:

154. Sustainable development means:

155. One problem of conducting a social audit is:

160. Ethical problems and issues of social responsibility are:

161. When working with international firms, Canadian businesses:

162. Top leaders in government and business today are:

163. Issues of social responsibility and ethical behaviour are:

172. Why should a business be managed ethically?

7. (p. 142) Unethical behavior is restricted to for-profit businesses only.

9. (p. 142) The question "Is it legal"? establishes ethical behaviour.

10. (p. 143) Ethics are the standards of moral behaviour.

15. (p. 142) Ethical behaviour looks at treating others fairly.

51. (p. 151) A charitable donation by a corporation is an example of corporate philanthropy.

70. (p. 154) Businesses have a social responsibility to create jobs.

96. (p. 142) Obeying the law is ________ ethical behaviour.

97. (p. 143) ________ refers to the standards of moral behaviour.

98. (p. 142) Ethics and legality are:

114. (p. 147) Organizational ethics are learned by:

116. (p. 147) A competitive corporate environment:

118. (p. 147) Establishing a formal code of ethics is:

133. (p. 150) Corporate social responsibility describes the firm's:

144. (p. 154) Insider trading involves:

146. (p. 158) The triple-bottom line measures:

154. (p. 159) Sustainable development means:

164. (p. 161) The FAIRTRADE mark on a package means what?

172. (p. 150-157) Why should a business be managed ethically?

Customers, investors, employees, society and the environment.

Syncrude and ducks, Sydney Tar Ponds

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