Test Bank For Business Ethics Case Studies and Selected Readings 9th Edition Marianne M Jennings

Test Bank for Business Ethics: Case Studies and Selected Readings, 9th Edition, Marianne M.
Test Bank for Business Ethics: Case Studies and

Selected Readings, 9th Edition, Marianne M.
Jennings
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True / False
1. A living wage is not necessarily a part of human rights issues in labor practices.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
QUESTION TYPE: True / False
HAS VARIABLES: False
TOPICS: Conflicts Between the Corporation's Ethics and Business Practices in Foreign Countries
KEYWORDS: Bloom's: Understand
DATE CREATED: 9/5/2017 6:26 PM
DATE MODIFIED: 9/5/2017 6:30 PM
2. The penalties imposed for FCPA violations have been increasing.

a. True
b. False
ANSWER: True
POINTS: 1
TOPICS: Bribes, Grease Payments, and "When in Rome..."
3. Freedom from physical abuse is a basic fair employment practice.

a. True
b. False
ANSWER: True
POINTS: 1
4. Equal treatment and opportunity is generally a part of labor policies and principles.
a. True
b. False
ANSWER: True
POINTS: 1
Copyright Cengage Learning. Powered by Cognero. Page 1
5. Sweatshops are not an issue of human rights.

a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
6. Sweatshops are ethical so long as they are in compliance with the laws of the country in which they are located.
a. True
b. False
ANSWER: False
POINTS: 1
7. There are not ethical issues in the use of child labor if the children’s families approve of their jobs.
a. True
b. False
ANSWER: False
POINTS: 1

8. Most companies do not have international labor and human rights policies.
a. True
b. False
ANSWER: False
POINTS: 1
9. Chiquita stopped its mercenary payments in Colombia immediately after officials met with the Justice Department.
a. True
b. False
ANSWER: False
POINTS: 1
KEYWORDS: Bloom's: Remember
10. No officers at Chiquita can be held criminally responsible for the Chiquita payments to mercenary groups.
a. True
b. False
ANSWER: False
POINTS: 1
11. FIFA was a money-laundering case.

a. True
b. False
ANSWER: False
POINTS: 1
12. FIFA officials were not subject to U.S. laws and prosecution.
a. True
b. False
ANSWER: True
POINTS: 1
13. Product dumping does not present ethical problems in those countries without product liability recovery systems.
a. True
b. False
ANSWER: False
POINTS: 1
14. FIFA’s ethical and legal issues involved television rights and the award of the World Cup.
a. True
b. False
ANSWER: True
POINTS: 1

15. “Grease” or “facilitation payments,” which are legal under the Foreign Corrupt Practices Act can be considered ethical.
a. True
b. False
ANSWER: False
POINTS: 1
16. If I worked in purchasing in my company, it would be unethical for me to accept season tickets for my city's NBA team
from the company that has supplied catering for the company's training sessions.
a. True
b. False
ANSWER: True
POINTS: 1
KEYWORDS: Bloom's: Apply
17. Selling products banned from sale in the United States in other countries is not an ethical violation.
a. True
b. False
ANSWER: False
POINTS: 1
18. Ethical codes for companies cannot apply internationally.

a. True
b. False
ANSWER: False
POINTS: 1
19. Bribes to government officials are only unethical if the culture of a country does not believe they are unethical.
a. True
b. False
ANSWER: False
POINTS: 1
20. Dumping a product that has been outlawed in the U.S. in other countries is legal.
a. True
b. False
ANSWER: True
POINTS: 1
21. Dumping a product that has been outlawed in the U.S. in other countries is ethical.
a. True
b. False
ANSWER: False
POINTS: 1

22. Guanxi is an example of a facilitation payment.

a. True
b. False
ANSWER: True
POINTS: 1
23. Facilitation and grease payments are two different things.

a. True
b. False
ANSWER: False
POINTS: 1
24. Bribery of foreign officials is prohibited by U.S. companies.

a. True
b. False
ANSWER: True
POINTS: 1
25. The Foreign Corrupt Practices Act does not apply to U.S. companies when they have operations outside the United
States.
a. True
b. False
ANSWER: False
POINTS: 1
26. Nike is not named in the FIFA indictment.

a. True
b. False
ANSWER: True
POINTS: 1
27. Walmart self-reported its issues with payments in Mexico.

a. True
b. False
ANSWER: True
POINTS: 1
28. Walmart executives had no prior knowledge of FCPA issues in Mexico.

a. True
b. False
ANSWER: False
POINTS: 1

29. Italy's freeway system has not been completed despite billions in funding.
a. True
b. False
ANSWER: True
POINTS: 1
30. Bribery is a cultural issue and generally not regulated by law.

a. True
b. False
ANSWER: False
POINTS: 1
31. Circumventing rules in order to get products imported is not covered under the FCPA.
a. True
b. False
ANSWER: False
POINTS: 1
32. Extension of drilling contracts is covered under the FCPA.

a. True
b. False
ANSWER: True
POINTS: 1
33. Gaining access to non-public bid information is not covered under the FCPA.
a. True
b. False
ANSWER: False
POINTS: 1
34. Only one Siemens employee was involved in paying bribes.

a. True
b. False
ANSWER: False
POINTS: 1
35. Walmart used gestores in Mexico.

a. True
b. False
ANSWER: True
POINTS: 1

36. GlaxoSmithKline paid bribes directly to government officials.

a. True
b. False
ANSWER: False
POINTS: 1
37. GlaxoSmithKline had no managers involved in the criminal charges brought against the company for its
Chinese operations.
a. True
b. False
ANSWER: False
POINTS: 1
Multiple Choice
38. Which of the following is not one of the components of the four-legged stool of interrelationships in economic
systems?
a. Government
b. Customers
c. Business
d. Stakeholders
ANSWER: d
POINTS: 1
QUESTION TYPE: Multiple Choice

39. Why is Transparency International’s Corruption Perception Index important for economic systems?
a. Because it shows economic systems function perfectly well without any attention to ethical issues.
b. Because it shows that bribery and corruption are a necessary part of economic growth.
c. Because it shows that economic growth increases at the same pace as political corruption.
d. Because it shows that economic growth requires a level playing system for all risk-takers.
ANSWER: d
POINTS: 1
40. On April 1, 2008, about 20,000 workers in Vietnamese factories that make Nike shoes walked off the job. The
workers at the plants (managed by a Taiwanese company) were demanding higher wages. At the time of the strike, the
Nike workers were being paid 14% above the minimum wage for Vietnam. However, consumer prices in Vietnam have
risen 19% in one year. The inflation rate has been the impetus for a number of labor strikes over the past year. By April
2, 2008, the strike was settled. The workers were given a 10 percent raise to their $5 hourly wage. If Nike’s wages that it
was paying were legal, why did it settle the strike by agreeing to pay more?
a. Nike had an ethical dilemma that fit into the category of organizational abuse.
b. Nike was considering its stakeholders in resolving ethical dilemmas.
c. Nike was exercising social responsibility.
d. All of the above are correct.
ANSWER: d
POINTS: 1
KEYWORDS: Bloom's: Analyze
41. Ikea’s solution to obtain electrical power for the grand opening of its flagship store in Russia was:
a. To pay the bribes demanded by the government officials running the electric company because it was a
facilitation payment.
b. To lease generators.
c. To shut down its operations in Russia.
d. To use an agent to pay the officials so that it was not violating the law.
ANSWER: b
POINTS: 1
42. AES’s solution to the increasing demands of the Kazakh government was:
a. To lease generators.
b. To make facilitation payments to government officials.
c. To offer political donations instead of bribes.
d. To shut down its operations there.
ANSWER: d
POINTS: 1
43. How did Siemens accomplish its long history of paying bribes to government officials in exchange for obtaining
contracts from those governments?
a. It used business consulting arrangements in all of the countries.
b. Siemens was not involved in any bribery activities but it was found to have been involved in useful
expenditures.
c. Siemens is not subject to the FCPA because it is a German company.
d. Siemens used NGOs to funnel the money into the various countries.
ANSWER: a
POINTS: 1
44. Suppose that AmTrain, a U.S.-based company, is submitting bids for the construction of a high-speed rail system in
India by the Indian government. AmTrain has met with and wants to hire Josh Griffin, an international consultant who has
worked with many Fortune 100 companies in their foreign business operations. AmTrain requires all of its agents,
consultants, and contractors who work with it on its international operations to sign a statement in which they promise to
comply with the FCPA. Griffin has refused to sign the AmTrain FCPA form. Which of the following best describes
AmTrain’s position when it receives the refusal?
a. The refusal is a red flag that would require AmTrain to at least do additional due diligence on Griffin.
b. AmTrain has not violated the FCPA if it hires Griffin and he does something its agreement prohibits.

c. AmTrain is not subject to the FCPA when contracts are with government agencies and not private foreign
companies.
d. AmTrain has violated the FCPA by attempting to deal with Griffin.
ANSWER: a
POINTS: 1
45. PwC, one of the “Big 4” accounting firms, was involved in a scuffle with Russia’s Federal Tax Service over one of its
clients, Yukos. PwC did not want to turn over confidential information about its client. However, the failure to cooperate
with the Federal Tax Service could result in the loss of its license to do business in Russia. What questions should other
companies consider before expanding their operations into countries in which they have never done business?
a. Companies should consider the legal and cultural backdrops and customs in a country before undertaking
expansion into that country.
b. Companies need to adapt to differing legal systems and simply comply with government requests.
c. Companies should turn to the International Court of Justice when country leaders and agencies are violating
professional standards.
d. Companies should realize that doing business without engaging in bribery in certain countries is not possible.
ANSWER: a
POINTS: 1
46. Robert J. Stein was hired as the CFO for the American occupation effort in Iraq. As someone who had the authority to
award lucrative contracts to companies seeking portions of the reconstruction efforts there, Mr. Stein wielded a great deal
of power. Mr. Stein had served time for felony fraud in the 1990s, but either the background check was not completed or
his criminal activity was deemed irrelevant for this position of power.
Mr. Stein and his wife have been accused of being involved in the following transactions:
• Philip H. Bloom, the owner of several U.S.-based construction companies seeking Iraqi business wired $140,000
to allow Mr. Stein to purchase real estate in North Carolina.
• Other contractors spent $65,762.63 to purchase cars for Mr. Stein and his wife (a Chevrolet and a Toyota).
• One contractor gave $44,471 for home improvements for the Steins’ home.
• $48,073 for jewelry paid for from funds totaling $258,000 that had been transferred into the Bragg Mutual Federal
Credit Union account begun by the Steins.
• A donation of $7,151.58 to the Steins that was used by Mr. Stein’s wife to purchase a “towing service”.
• Ironically, $200 of the credit union fund was transferred to the clerk of a Federal District court for restitution
payment for his earlier conviction.
Mr. Bloom was awarded a significant number of contracts in Iraq. Which of the following best describes the conduct of
Mr. Bloom and Mr. and Mrs. Stein?
a. The conduct is not a violation of the FCPA because Mr. Stein is a U.S. government official and Mr. Bloom
owns a U.S. company, but the two may have violated U.S. laws that prohibit bribery.
b. The conduct is a violation of the FCPA because the money and gifts were given with the idea of being
awarded contracts.
c. The conduct is a violation of the FCPA because the money and gifts related to transactions in international
operations.
d. The conduct, while ethically dubious, is perfectly legal.
ANSWER: a
POINTS: 1
KEYWORDS: Bloom's: Evaluate
47. When Ikea was poised to open a flagship store outside Moscow in 2001, its executives were approached by
employees of the public local utility. If Ikea wanted electricity for its planned grand opening, the public utility officials
needed individual cash payments.
a. Ikea could pay the money as a facilitation payment and not violate any anti-bribery laws.
b. Ikea and other companies from Sweden do not follow the OECD requirements on bribery so Ikea could pay
the officials and not violate any laws.
c. The payment to the public officials would be a bribe and would violate Swedish law.
d. The anti-bribery provisions apply only when a company offers to pay them, not when public officials request
payments.
ANSWER: c
POINTS: 1
48. What happened to the Union Carbide plant in Bhopal?

a. Union Carbide still operates it.
b. Dow acquired Union Carbide and now operates the plant.
c. The plant has been mothballed.
d. The Indian government now owns the plant and produces dry-cell batteries.
ANSWER: d
POINTS: 1

49. What are the risks of marketing infant formula in third-world countries?
a. Customers cannot afford the formula.
b. Customers may mix the powdered formula with bad water.
c. Customers may water down the formula.
d. All of the above
ANSWER: d
POINTS: 1
50. Which of the following practices best helps prevent sweatshop conditions in factories?
a. Company training
b. Independent monitoring
c. Exclusion of outsiders
d. Varying country standards
e. None of the above
ANSWER: b
POINTS: 1
51. The Fair Labor Association:

a. Is a group of companies with international labor pools.
b. Is a group of colleges and universities dedicated to human rights issues in employment.
c. Is a federal agency in the United States.
d. Does not count Nike as a member.
e. None of the above
ANSWER: b
POINTS: 1

52. Chiquita Banana was required to pay a $25 million fine to the U.S. government because:
a. It violated the Foreign Corrupt Practices Act.
b. It made grease payments to customs officials by declaring extra weight on its banana shipments.
c. It made security payments to a terrorist organization.
d. None of the above
ANSWER: c
POINTS: 1
53. Which of the following were charged in the FIFA indictment?

a. Members of the FIFA executive committee
b. Nike
c. Adidas
d. All of the above
ANSWER: a
POINTS: 1
54. Which of the following would be both legal and ethical acts in an international operations?
a. Offering to pay a regulator for a favorable inspection report.
b. Offering to pay a police officer for not writing a ticket.
c. Offering to pay a government employee extra to speed up phone service connections.
ANSWER: d
POINTS: 1

55. Nike is changing its interaction with international suppliers by:

a. Ceasing to outsource its production.
b. Using third parties to negotiate labor contracts so that it can distance itself from issues.
c. Not having sudden design changes that can affect plant working hours and conditions.
d. Forming coalitions with other retail clothing manufacturers.
ANSWER: c
POINTS: 1
56. Which of the following is true about the Union Carbide Bhopal plant?
a. It met Indian safety standards.
b. It was operated by Union Carbide technicians from the United States.
c. It never met government regulations.
d. It met both U.S. and Indian safety standards.
ANSWER: a
POINTS: 1
57. Global Factors, a NYSE company, wanted to obtain an extension to its contract with Somalia for the sale of its
government bonds. Global hired seven interns who were children of Somalian government officials. Global:
a. Has not violated the FCPA unless it was obtaining an exception to a rule.
b. Has not violated the FCPA unless it was evading customs and duties.
c. Has violated the FCPA.
d. Is not subject to the FCPA.
ANSWER: c
POINTS: 1
58. Once Walmart executives became aware of the payments in Mexico:

a. It self-reported the problems to the U.S. Justice Department.
b. It issued a press release.
c. It conducted an investigation.
d. It stopped the payments.
ANSWER: c
POINTS: 1
59. What has been the impact of corruption in Brazil?

a. The country has been able to expand its economy.
b. The country has become an amoral society.
c. The country has been able to do more business with the United States.
d. Both a and c
ANSWER: b
POINTS: 1
60. Which of the following applied to the FIFA indictment?

a. It was primarily for money-laundering charges.
b. It involved an NGO.
c. The FCPA did not apply because there were no government officials involved.
ANSWER: b
POINTS: 1

61. Greta Thompson is the head of the Gresham Companies office in Qatar. Greta and her staff have submitted a bid to
the central government of Qatar for a consulting project to install a new phone system that will revamp the government’s
phone system and call answering methods. Greta has just hired six summer interns for the offices in Qatar. All six of the
interns have at least one parent who works for the Qatar central government. Which of the following statements is
correct?
a. As long as the interns were hired on their qualifications and merits, there are no legal issues for Greta or
Gresham.
b. The internships could be a violation of the FCPA.
c. Because the interns are not government officials there is not an FCPA violation.
d. Both a and c
ANSWER: b
POINTS: 1
62. What difficulties did Ikea encounter in its expansion into Russia?
a. The expectation of payments for obtaining utility services.
b. The inability to pay the high taxes imposed in Russia.
c. The need to pay for protection of employees.
d. All of the above
ANSWER: a
POINTS: 1
63. Dennis Heap has been placed in charge of his company’s operations in Benghazi. Dennis needs electricity turned on
at the offices he has just rented. The electric utility explains that it will not be able to get the electricity turned on for 3
weeks. Dennis offers to pay $500 to have the electricity turned on in 24 hours. Which of the following statements is
correct?
a. Dennis has violated the FCPA.
b. Dennis has violated the anti-money laundering provisions of U.S. law.
c. Dennis has not violated the FCPA.
d. Both a and b
ANSWER: c
POINTS: 1
64. What did PwC not anticipate in deciding to do business in Russia?

a. The problems with bribes.
b. The difficulty of many attempting to use it for money-laundering purposes.
c. The power of government officials to get information and results.
d. Both a and b
ANSWER: c
POINTS: 1
Essay
65. Explain the correlation between the amount of corruption in a country and economic development.
ANSWER: The countries with the most corruption have trouble with economic development. Corruption
impedes transactions and the smooth flow of commerce. Also, no one is sure whether they can
gain approval of the government and if that approval will last.
POINTS: 1
QUESTION TYPE: Essay
66. Discuss the following statement:

“There’s a difference between being very competitive and can-do, and winning at all costs. All costs is costly.”
ANSWER: The students should discuss the importance of having lines in trying to be successful. The
statement indicates that in trying to win without parameters, you can cross legal lines and end up
losing a great deal.
POINTS: 1
67. Describe the damage to Nestle’s reputation following the decision to market infant formula in third-world countries.
ANSWER: The boycott of the company crossed over into other products and its reputation was affected for
decades following the incident. Earnings dipped and the company had trouble re-establishing itself
in the infant formula market.
POINTS: 1
68. UBS, a bank based in Switzerland, has received a subpoena from the IRS for the bank records of 52,000 U.S.
citizens. The IRS alleges that the U.S. taxpayers hid money in UBS accounts for the purpose of avoiding paying taxes.
UBS had created a program that recruited tax advisers and their clients under the guise that they could protect their funds
from the IRS.
Swiss law prohibits banks, under privacy rights, from disclosing information about their customers and their accounts.
However, the IRS has obtained a subpoena for the records and a federal judge has issued it because UBS is soliciting
business in the United States. One banking minister in Switzerland has indicated, however, that Swiss privacy laws do
not apply when there has been fraud.
Evaluate the ethics of UBS as well as their customers. If you worked for the bank, would you release the information?
Would you place your money in Swiss accounts?
ANSWER: Students should return to the "What if everyone behaved like this?” They could also raise the
utilitarian aspect of transferring money in this way to avoid taxes and the avoidance of taxes in the
context of the “good of the whole.” International law is different from U.S. laws and there are plenty
of areas in which businesses (and here, individuals) can take advantage of the laws and regulations
in other countries. The students should reflect the realization that they often demand of companies'
behavior in other countries that meets U.S. standards (as with the labor cases), but in this situation
individuals choose to take advantage of no taxes via international operations. Few see the parallels
in behavior between what they indict companies for, but for which they give individual taxpayers an
“atta boy” or “atta girl.”
POINTS: 1

69. Discuss what business and strategic issues PwC and Chiquita missed in making their decisions on foreign operations.
ANSWER: The companies did not realize the extent of the political instability in the countries in which they
were expanding and what impact that instability would have on their ability to just conduct business
there. They did not anticipate the risk or the day-to-day ethical issues that would arise that put their
operations in jeopardy.
POINTS: 1
70. List three effects the Bhopal disaster had on Union Carbide.
ANSWER: The loss of value in the company stock price
Increase in the cost of capital
Loss of reputation
Ongoing litigation
Leadership of the company decimated
Plant shut down
Future expansion limited
POINTS: 1
71. Explain the ethical and economic implications of paying above-market wages to factory workers in developing
countries.
ANSWER: There are the human rights issues. The workers deserve to be treated with dignity and, under any
of the tests for ethics, should be paid a fair wage. However, if a company pays above-market
wages in the country, the market wages are skewed and the result is that, for example, doctors
might begin to work in factories for the higher wages US companies pay. The students should
focus on the various ethical models to discuss how they would want to be treated as well as, based
on the Nike experience, the implications for companies that outsource to foreign factories but do not
have good conditions or have wages that result in boycotts and international attention.
POINTS: 1
72. What does the statement “Americans focus on wages paid, not what standard of living those wages relate to” mean in
the context of human rights?
ANSWER: The statement is one that companies offer when confronted with the issues of paying $1.00 per
hour to workers when they are making shoes that will sell for $80. The companies are asking
Americans to consider the wage in relation to the economy of the country and what $1.00 will buy.
In other words, in the United States, the $1.00 per hour is an unreasonable and unfair wage.
However, in a country in which the average income is $1,000 per year, the wage of $1.00 per hour
is actually a very good wage.
POINTS: 1
73. Leslie Fay Companies was a clothing conglomerate that produced lines of women’s clothing and lingerie under the
brand names Leslie Fay, Joan Leslie, Albert Nipon, Theo Miles, Kasper, Le Suit, Nolan Miller, Castleberry, and
Castlebrook. In early 1993, it was discovered that senior Leslie Fay executives, in an effort to inflate profits and to mask
an actual loss of $13.7 million, had perpetrated an accounting fraud. Paul Polishan, Leslie Fay’s chief operating officer,
was placed on leave without pay in January 1993, along with Donald F. Kenia, the corporate controller. Mr. Kenia had first
alerted the company to the accounting manipulations and worked with auditors to untangle the books.
By April 1993, Leslie Fay, under intense pressure from creditors, filed for Chapter 11 bankruptcy (reorganization) in
Manhattan. Both Mr. Polishan and Mr. Kenia were fired. Mr. Kenia, charged with two counts of filing false statements with
the SEC, has entered into a plea bargain with the U.S. Attorney in exchange for his cooperation in the continuing
investigation of the Leslie Fay accounting improprieties.
Also in April 1993, two new outside directors were named to the Leslie Fay board. The audit committee of the board
discovered, through continuing investigation, that accounting irregularities had inflated the company’s profits for at least
five quarters beginning in the fall of 1990.
As Leslie Fay continued its climb from bankruptcy, it was discovered that its law firm, Weil Gotshall & Manges, had failed
to disclose its close ties to two board audit committee members. A federal bankruptcy judge ordered the law firm to pay
fines totaling $800,000, which was the cost of having an independent review of the law firm’s representation and conduct
in the case.
In March 1995, Leslie Fay placed its flagship dress and retail business up for sale and offered its CEO a success fee of
$1.5 million if those businesses were sold.
Also in March 1995, a report detailing accounting improprieties was released by the audit committee of the Leslie Fay
board. The board found that when executives realized they would not meet pre-established goals, they would ship goods
out to a Wilkes-Barre, Pennsylvania, facility to inflate sales. The executives also forged inventory tags, multiplied the value
of inventory, developed phantom inventory and altered records to meet sales target. Some goods were invoiced to be
shipped in the final day of a quarter even though they were not actually shipped until the next quarter. Numerous
shareholders have filed suit against the Leslie Fay board and BDO Seidman, the company’s auditor during this period.
John Pomerantz continued as CEO from 1993 onward. The company has tried to find a buyer but has remained
unsuccessful in doing so.
a. What signals about the importance of earnings at Leslie Fay were sent to the officers who committed the
accounting improprieties?
b. Wouldn’t employees have been aware of the financial fraud? Why didn’t they speak up? Why didn’t they tell
someone?
c. How might Leslie Fay have prevented what happened?
d. If you were the new chief financial officer, what message would you most want to impress upon all Leslie Fay
employees?
e. Of what significance are the law firm’s ties to the board’s audit committee members? Did these ties set a poor tone
at the top?
ANSWER: a. The pressure to make quarterly earnings was so intense that the officers were willing to
engage in deception, fabrication, shifting of sales, etc. to meet the earnings figures.
b. Employees may very well have been aware of the fraud, but with an ethical culture in which
the officers were involved, it wouldn’t have done any good to speak up. In a culture such as this
one, employees would be afraid to bring such matters to anyone’s attention.
c. Changing the signals to officers would have helped. The intense focus on earnings and
pressure to meet goals set the stage for the deception.
d. The message would be:
Earnings the Right Way

Earnings Through Sales and Satisfaction
Integrity Without Compromise
e. There are conflicts of interest. Legal counsel for a business (which owes its business and
account to the company) is not a good source for audit committee members. The ties suggest
“good ol’ pal network” and “you scratch my back...”.
Note: At the time of the discovery of the earnings misrepresentation, Leslie Fay’s stock was at
$13 per share. In June, 1995, the price had dropped to 13/22. Leslie Fay continues to attempt to
struggle out of bankruptcy.
POINTS: 1
74. Chiquita officials said that they either had to make payments to a mercenary and terrorist group or its employees were
in danger. Evaluate the company’s reasoning.
ANSWER: The students should point out that there was another choice, the eventual choice that the company
made for other reasons: not to do business in that country. In fact, by the time Chiquita pulled out
of Colombia, the country had such unrest that it cut into profits to try and stay there in such an
unstable environment. Chiquita used the either/or conundrum to justify its conduct. However, it did
not consider all who were affected by its decisions to make payments, including those who were
harmed by the activities that were funded by Chiquita’s payments.
POINTS: 1
75. Price Waterhouse Coopers’ situation with the Russian government’s request for release of client information presents
an ethical dilemma for PwC. However, apply the Laura Nash question: How did they get into this situation in the first
place? And discuss your observations about PwC.
ANSWER: Students should focus on the fact that the decision to do business in a country in which there is
instability or differing views on laws and ethics is a critical one that requires companies to ask, “Are
we prepared to . . . ?” Students should consider the Yahoo cases and the company’s failure to
understand the levels (human life at risk) of moral dilemmas that can come about because of their
presence in a country and doing business there. In short, PwC got into this either/or situation
because of its failure to anticipate how difficult it can be to do business in a country in which political
power is exercised corruptly.
POINTS: 1
76. Apply the various schools of social responsibility to product dumping.

ANSWER: The students should discuss that dumping products that are outlawed in the U.S. into other
countries is perfectly legal. Friedman would say that absent fraud or illegality, go forward.
However, there may be an impact to the company bottom line, so the enlightened self-interest
group would have the company consider the impact if customers in other nations are harmed by
their products when the product has been recalled in the U.S. If we go back to the various schools
of ethical thought, there is the normative and divine view of human life and that crossing that line
with the sale of a dangerous product (even though it is legal) is neither socially responsible nor
good for the company. Drucker’s “above all do no harm” is particularly apt here.
POINTS: 1
77. What recommendations would you offer to companies to avoid violations of the FCPA?
ANSWER: The following tips would help curb bribery:
a. Do careful audits of all expenditures in other countries.

b. Verify the identity and existence of parties/companies to whom payment is made.
c. Verify the types of services or goods being provided by companies to whom there are
payments, especially when there are ongoing payments.
d. Work to build relationships with government officials that go beyond the shallow approach
of bribery.
e. Contact higher authorities when there are demands for payment of bribes.
f. Closely monitor bidding processes and contacts of agents and employees during the
process with government officials.
g. Carefully screen agents hired to help in other countries.
h. Monitor payments to agents hired to help in other countries.
i. Check flow of cash through bank accounts.
POINTS: 1
KEYWORDS: Bloom's: Create
78. Outline the benefits and risks of the use of international suppliers.
ANSWER: The benefits are reduced costs. However, the risks are that there can be backlash and brand
damage from low wages or reporting of poor conditions. There is an underlying risk that you cannot
always be there and don’t know what is going on – requires reliable monitoring, contract terms, and
surprise visits to be sure that the operations are clean. Seems like no company has been able to
do it without incident.
POINTS: 1
79. Explain how GlaxoSmithKline was able to conceal payments to government officials.
ANSWER: GSK had worked out relationships with travel agencies so that it could provide trips, seminars, and
entertainment to doctors who had decision-making authority on which drugs were available in
hospitals and clinics. There were different travel agencies and the funds seemed to be business
expenses, but there were perks going to the doctors all over China. The scheme had so many
threads and companies that it was difficult for audits to pick up on what was happening. Also, the
set-up had the support of managers there so that no one was really asking questions because the
program was part of an accepted strategy.
POINTS: 1
80. Make a list of all of the challenges businesses face in doing business internationally based on all of the cases studied
in Unit 6.
ANSWER:
a. Bribery demands
b. Grease payment demands
c. Inefficient economic systems due to corruption
d. The need to pay for protection of the business and employees
e. Restrictions on doing business with certain entities because of connection to terrorist
groups
f. Pirates!
g. Government officials changing rules, regulations, tax rates

Test Bank for Business Ethics: Case Studies and Selected Readings, 9th Edition, Marianne M.
h. Price instability
i. Labor force
j. Labor conditions
k. Compensation for employees
l. Third-party operation of manufacturing plants
m. Differing safety standards
n. Backlash for doing business in certain countries or with certain countries because of human
rights issues
o. Child labor attitudes
p. Lack of training in employees
q. Cultural differences and suitability of products
POINTS: 1
Bribes, Grease Payments, and "When in Rome.."
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2. The penalties imposed for FCPA violations have been increasing.

3. Freedom from physical abuse is a basic fair employment practice.

5. Sweatshops are not an issue of human rights.

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11. FIFA was a money-laundering case.

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18. Ethical codes for companies cannot apply internationally.

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22. Guanxi is an example of a facilitation payment.

23. Facilitation and grease payments are two different things.

24. Bribery of foreign officials is prohibited by U.S. companies.

26. Nike is not named in the FIFA indictment.

27. Walmart self-reported its issues with payments in Mexico.

28. Walmart executives had no prior knowledge of FCPA issues in Mexico.

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30. Bribery is a cultural issue and generally not regulated by law.

32. Extension of drilling contracts is covered under the FCPA.

34. Only one Siemens employee was involved in paying bribes.

35. Walmart used gestores in Mexico.

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36. GlaxoSmithKline paid bribes directly to government officials.

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48. What happened to the Union Carbide plant in Bhopal?

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51. The Fair Labor Association:

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53. Which of the following were charged in the FIFA indictment?

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55. Nike is changing its interaction with international suppliers by:

58. Once Walmart executives became aware of the payments in Mexico:

59. What has been the impact of corruption in Brazil?

60. Which of the following applied to the FIFA indictment?

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64. What did PwC not anticipate in deciding to do business in Russia?

66. Discuss the following statement:

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c. How might Leslie Fay have prevented what happened?

d. The message would be:

Earnings the Right Way

76. Apply the various schools of social responsibility to product dumping.

a. Do careful audits of all expenditures in other countries.

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