International Business Quiz

Chapter 04 - Ethics in International Business

Chapter 04Ethics in International Business

True / False Questions

1. (p. 124) The term ethics refers to accepted principles of right or wrong that govern the conduct of a person, the members of a profession or the actions of an organization. TRUE

Difficulty: Easy

2. (p. 124) Ethical strategies are the accepted principles of right or wrong governing the conduct of businesspeople. FALSE

Difficulty: Easy

3. (p. 124) Business ethics are the accepted principles of right or wrong governing the conduct of businesspeople. TRUE

Difficulty: Easy

4. (p. 124) What is considered normal business practice in one country may be considered unethical in others. TRUE

Difficulty: Medium

4-1


5. (p. 124) In an international business setting, the most common ethical issues involve employment practices, human rights, environmental regulations, corruption and the moral obligation of multinational companies. TRUE

Difficulty: Medium

6. (p. 125) The Sullivan principles mandated that GM could operate in South Africa as long as the company complied with the apartheid laws. FALSE

Difficulty: Hard

7. (p. 126) Myanmar has one of the worst human rights records in the world. TRUE

Difficulty: Easy

8. (p. 127) Nearly all developing nations have substantial regulations governing the emission of pollutants, the dumping of toxic chemicals, the use of toxic materials in the workplace and so on. FALSE

Difficulty: Medium

9. (p. 128) The tragedy of the commons occurs when a resource held in common by all, but owned by no one is overused by individuals, resulting in its degradation. TRUE

Difficulty: Medium

4-2


10. (p. 128) Corporations can contribute to the global tragedy of the commons by not pumping pollutants into the atmosphere or dumping them in oceans or rivers. FALSE

Difficulty: Medium

11. (p. 128) International businesses cannot gain economic advantages by making payments to corrupt government officials. FALSE

Difficulty: Medium

12. (p. 129) The foreign corrupt practices act outlawed the paying of bribes to foreign government officials to gain business. TRUE

Difficulty: Medium

13. (p. 129) The Foreign corrupt practices act originally allowed, "facilitating payments" to secure contracts that would not otherwise be secured. FALSE

Difficulty: Medium

14. (p. 129) Facilitating payments are also known as speed money or grease money. TRUE

Difficulty: Medium

4-3


15. (p. 129) The convention on combating bribery of foreign public officials in international business transactions obliges member states to make the bribery of foreign public officials a criminal offense. TRUE

Difficulty: Medium

16. (p. 130) Noblesse oblige refers to payments that ensure receiving the standard treatment that a business ought to receive from a foreign government. FALSE

Difficulty: Easy

17. (p. 130) Social responsibility refers to the idea that businesspeople should consider the social consequences of economic actions when making business decisions and that there should be a presumption in favor of decisions that have both good economic and social consequences. TRUE

Difficulty: Medium

18. (p. 130) When multinationals use their power in a positive way to increase social welfare, it is ethical. TRUE

Difficulty: Medium

19. (p. 131) The ethical obligations of a multinational corporation toward employment conditions, human rights, environmental pollution and the use of power are always clear cut. FALSE

Difficulty: Medium

4-4


20. (p. 132) Ethical dilemmas are situations in which none of the available alternatives seems ethically acceptable. TRUE

Difficulty: Easy

21. (p. 132-133) An individual with a strong sense of personal ethics is less likely to behave in an unethical manner in a business setting. TRUE

Difficulty: Medium

22. (p. 133) Expatriate managers may experience more than the usual degree of pressure to violate their personal ethics. TRUE

Difficulty: Medium

23. (p. 134) A firm's organizational culture refers to the values and norms that are shared among employees of an organization. TRUE

Difficulty: Easy

24. (p. 135) The Enron debacle indicates that an organizational culture can legitimize behavior that a society would judge as unethical. TRUE

Difficulty: Medium

4-5


25. (p. 136) According to the Friedman doctrine, the only social responsibility of business is to increase profits, so long as the company stays within the rules of law. TRUE

Difficulty: Medium

26. (p. 137) The Friedman doctrine is the belief that ethics are nothing more than a reflection of culture and therefore, a firm should adopt the ethics of the culture in which it is operating. FALSE

Difficulty: Easy

27. (p. 137) Cultural relativism is the belief that ethics are nothing more than a reflection of culture and therefore, a firm should adopt the ethics of the culture in which it is operating. TRUE

Difficulty: Easy

28. (p. 137) According to the righteous moralist if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either. FALSE

Difficulty: Easy

29. (p. 138) The naive immoralist claims that a multinational's home country standards of ethics are the appropriate ones for companies to follow in foreign countries. FALSE

Difficulty: Easy

4-6


30. (p. 138) Most moral philosophers see value in utilitarian and Kantian approaches to business ethics. TRUE

Difficulty: Medium

31. (p. 138) The utilitarian approaches to ethics hold that the moral worth of actions or practices is determined by their consequences. TRUE

Difficulty: Easy

32. (p. 139) It, typically is fairly easy to measure the benefits, costs and risks of a course of action. FALSE

Difficulty: Medium

33. (p. 139) An advantage of utilitarianism is that the philosophy allows for the consideration of justice. FALSE

Difficulty: Medium

34. (p. 139) Rights theories recognize that human beings have fundamental rights and privileges that transcend national boundaries and cultures. TRUE

Difficulty: Medium

4-7


35. (p. 140) A just distribution is one that is considered fair and equitable. TRUE

Difficulty: Medium

36. (p. 141) According to Rawls, inequalities can be just if the system that produces inequalities is to the advantage of everyone. TRUE

Difficulty: Medium

37. (p. 142) Talking with prior employers regarding someone's reputation is a good way to discern a potential employee's ethical predisposition. TRUE

Difficulty: Medium

38. (p. 143) Building an organization culture that places a high value on ethical behavior requires incentive and reward systems. TRUE

Difficulty: Easy

39. (p. 144) A firm's stakeholders are individuals or groups that have an interest, claim or stake in the company, what it does and how well it performs. TRUE

Difficulty: Easy

4-8


40. (p. 145-146) Companies can strengthen the moral courage of employees by committing themselves to retaliate against employees who exercise moral courage, say no to superiors or otherwise complain about unethical actions. FALSE

Difficulty: Easy

Multiple Choice Questions

41. (p. 124) The accepted principles of right or wrong governing the conduct of businesspeople are best known as A. Business measuresB. Business ethicsC. Business attitudesD. Business standards

Difficulty: Easy

42. (p. 124) Identify the incorrect statement regarding ethical issues in international business. A. They are often rooted in the fact that political systems, law, economic development and culture of nations vary significantlyB. Human rights and environmental regulations are some of the common ethical issuesC. Ethical practices of all nations are similar in natureD. Managers in multinational firms need to be particularly sensitive to differences in business practices because they work across national borders

Difficulty: Medium

4-9


43. (p. 125) To guard against abuse of employment practices in other nations, multinationals should do all of the following except A. Establish minimal acceptable standards that safeguard the basic rights and dignity of employeesB. Adhere to working conditions of the host country if they are clearly inferior to those in a multinational's home nationC. Audit foreign subsidiaries and subcontractors on a regular basis to make sure established standards are metD. Take action to correct unacceptable behavior

Difficulty: Medium

44. (p. 125) This denied basic political rights to the majority nonwhite population of South Africa until 1994. A. Noblesse obligeB. Kantian approachC. Apartheid systemD. Friedman doctrine

Difficulty: Easy

45. (p. 125) The _____ was designed to allow GM to operate ethically in South Africa as long as the company did not obey the apartheid laws in its own South African operations. A. Righteous moral systemB. Sullivan principleC. Noblesse obligeD. Cultural relativism

Difficulty: Medium

4-10


46. (p. 126) Identify the incorrect statement pertaining to foreign multinationals doing business in countries with repressive regimes. A. Inward investment by multinationals can be a force for economic, political and social progress that ultimately improves the rights of people in repressive regimesB. No multinational does business with nations that lack the democratic structures and human rights records of developed nationsC. Multinational investment cannot be justified on ethical grounds in some regimes due to their extreme human rights violationsD. Multinationals adopting an ethical stance can, at times, improve human rights in repressive regimes

Difficulty: Hard

47. (p. 127) Identify the incorrect statement about environmental regulations. A. Environmental regulations are often lacking in developing nationsB. Environmental regulations are similar across developed and developing nationsC. Developed nations have substantial regulations governing the emission of pollutants, the dumping of toxic chemicals, etcD. Inferior environmental regulations in host nations, as compared to home nation, can lead to ethical issues

Difficulty: Medium

48. (p. 128) Everyone benefits from the atmosphere and oceans but no one is specifically responsible for them. In this sense, the atmosphere and oceans can be referred to as a(n) A. GreenhouseB. Global commonsC. Joint assetD. Global reserve

Difficulty: Medium

4-11


49. (p. 128) The _____ occurs when a resource is shared by all, but owned by no one is overused by individuals, resulting in its degradation. A. Tragedy of the commonsB. Noblesse obligeC. Ethical dilemmaD. Friedman system

Difficulty: Medium

50. (p. 129) Which of the following observations is true of the Foreign Corrupt Practices Act? A. The act outlawed the paying of bribes to foreign government officials to gain businessB. There is enough evidence that it put U.S. firms at a competitive disadvantageC. The act originally allowed for "facilitating payments."D. The Nike case was the impetus for the 1977 passage of this act

Difficulty: Medium

51. (p. 129) The Convention on Combating Bribery of Foreign Public Officials in International Business Transactions excludes A. Speed payments to secure contracts that would otherwise not be securedB. Grease payments to gain exclusive preferential treatmentC. Facilitating payments made to expedite routine government actionD. Payments to government officials for special privileges

Difficulty: Medium

52. (p. 129) Grease payments A. Are not the same as facilitating payments or speed moneyB. are facilitating payments made to expedite routine government actionC. Are payments to gain exclusive preferential treatmentsD. Can be used to secure contracts that would otherwise not be secured

Difficulty: Medium

4-12


53. (p. 129) Facilitating payments are A. Permitted under the amended Foreign Corrupt Practices ActB. A direct violation of the Foreign Corrupt Practices ActC. Permitted so long as they designed only to gain exclusive preferential treatmentD. Used to secure contracts that would otherwise not be secured

Difficulty: Medium

54. (p. 130) The idea that businesspeople should consider the social consequences of economic actions when making business decisions and that there should be a presumption in favor of decisions that have both good economic and social consequences is known as A. Business ethicsB. Noblesse obligeC. Ethical dilemmaD. Social responsibility

Difficulty: Easy

55. (p. 130) Which of the following, in a business setting is taken to mean benevolent behavior that is the responsibility of successful enterprises. A. Sullivan's principlesB. Ethical dilemmaC. Tragedy of the commonsD. Noblesse oblige

Difficulty: Hard

56. (p. 132) A(n) _____ is a situation in which none of the available alternatives seems ethically acceptable. A. Value conflictB. Ethical dilemmaC. Noblesse obligeD. Moral error

Difficulty: Easy

4-13


57. (p. 132) _____ are generally accepted principles of right and wrong governing the conduct of individuals. A. Ethical dilemmasB. Noblesse obligesC. Personal ethicsD. Business measures

Difficulty: Easy

58. (p. 132) Ethical dilemmas exist because of all of the following reasons except A. Many real-world decisions are complex and difficult to frameB. Decisions may involve first, second and third-order consequences that are hard to quantifyC. Doing the right thing or knowing what the right thing might be is often far too easyD. They are situations in which none of the available alternatives seem ethically acceptable

Difficulty: Hard

59. (p. 132) Which of the following is not likely to lead to unethical behavior? A. An organizational culture that de-emphasizes business ethicsB. A process that does not incorporate ethical considerations into business decision-makingC. A strong personal ethical code governing the conduct of an individualD. Pressure from the parent company to meet unrealistic performance goals

Difficulty: Medium

60. (p. 133) Ethical behavior is likely to be determined by all of the following, except A. Decision making processesB. Organization cultureC. LeadershipD. Realistic performance goals

Difficulty: Medium

4-14


61. (p. 133) Expatriate managers may experience more than the usual degree of pressure to violate their personal ethics because of all of the following reasons except A. They are away from their ordinary social context and supporting cultureB. They are psychologically and geographically closer to the parent companyC. They may be based in a culture that does not place the same value on ethical norms important in the manager's home countryD. They may be surrounded by local employees who have less rigorous ethical standards

Difficulty: Medium

62. (p. 134) Which term refers to the values and norms that employees of an organization share? A. Vision statementB. Cultural relativismC. Organization cultureD. Power orientation

Difficulty: Easy

63. (p. 136) All of the following approaches to business ethics are discussed by scholars primarily to demonstrate that they offer inappropriate guidelines for ethical decision making in a multinational enterprise except A. Friedman doctrineB. Cultural relativismC. Kantian ethicsD. Naive moralist

Difficulty: Easy

64. (p. 136) According to _____ the social responsibility of business is to increase profits, so long as the company stays within the rules of law. A. The naive immoralistB. The righteous moralistC. Cultural relativismD. The Friedman doctrine

Difficulty: Easy

4-15


65. (p. 136) The Friedman doctrine suggests that A. Ethics are nothing more than the reflection of cultureB. A multinational's home-country standards of ethics are inappropriate to follow in foreign countriesC. Businesses should not undertake social expenditures beyond those mandated by the law and required for the efficient running of a businessD. If a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either

Difficulty: Medium

66. (p. 136) Identify the incorrect statement pertaining to the Friedman doctrine. A. It states that the only social responsibility of business is to increase profits, so long as the company stays within the rules of lawB. It argues that businesses should undertake social expenditures beyond those mandated by the lawC. It believes that maximizing profits is the way to maximize the returns that accrue to firms stockholdersD. Managers of the firm should not make decisions regarding social investments on behalf of the stockholders

Difficulty: Hard

67. (p. 137) Cultural relativism suggests that A. Ethics are nothing more than the reflection of culture and that a firm should adopt the ethics of the culture in which it is operatingB. The only social responsibility of business is to increase profitsC. Managers of a firm should not make decisions regarding social investmentsD. A multinational's home-country standards of ethics are always appropriate to follow in foreign countries

Difficulty: Medium

4-16


68. (p. 137) Identify the incorrect statement pertaining to cultural relativism. A. It argues that a firm should adopt the ethics of the culture in which it is operatingB. At its extreme, it suggests that if a culture supports slavery, it is OK to use slave labor in a countryC. It embraces the idea that universal notions of morality transcend different culturesD. It believes that ethics are nothing more than the reflection of a culture

Difficulty: Hard

69. (p. 137) Child labor is permitted and widely employed in Country X. A multinational company entering Country X decides to employ minors in its subsidiary, even though it is against the multinational's home country ethics. Which of the following approaches to business ethics would justify the actions of the multinational company? A. Righteous moralistB. Cultural relativismC. The justice theoryD. The rights theory

Difficulty: Hard

70. (p. 137) The idea that universal notions of morality transcend different cultures is implicitly rejected by A. The righteous moralistB. The naive immoralistC. The Friedman doctrineD. Cultural relativism

Difficulty: Medium

4-17


71. (p. 137) The righteous moralist suggests that A. Ethics are nothing more than the reflection of cultureB. A multinational's home-country standards of ethics are the appropriate ones for companies to follow in foreign countriesC. The social responsibility of business is to increase profits, so long as the company stays within the rules of lawD. If a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either

Difficulty: Medium

72. (p. 137) Which of the following statement about the righteous moralist approach is not true? A. It claims that a multinational's home-country standards of ethics are the appropriate ones for companies to follow in foreign countriesB. It is typically associated with managers from developing nationsC. Its proponents often go too far in advocating that the appropriate thing to do is adopt home-country standardsD. It can create practical problems

Difficulty: Medium

73. (p. 137) The righteous moralist approach to business ethics is typically associated with managers from A. Third world nationsB. Underdeveloped nationsC. Developing nationsD. Developed nations

Difficulty: Easy

4-18


74. (p. 138) The _____ approach asserts that if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either. A. Cultural relativismB. Friedman doctrineC. Righteous moralistD. Naive immoralist

Difficulty: Easy

75. (p. 138) The naive immoralist suggests that A. Ethics are nothing more than the reflection of cultureB. A multinational's home-country standards of ethics are the appropriate ones for companies to follow in foreign countriesC. The social responsibility of business is to increase profits, so long as the company stays within the rules of lawD. If firms in a host nation do not follow ethical norms then the manager of a multinational should also not follow ethical norms there

Difficulty: Medium

76. (p. 138) According to the _____ approach to business ethics, the moral worth of actions or practices is determined by their consequences. A. UtilitarianB. Cultural relativismC. Friedman doctrineD. Naive immoralist

Difficulty: Easy

77. (p. 138) The utilitarian approach to business ethics suggests that A. People should be treated as ends and never purely as means to the ends of othersB. The moral worth of actions or practices is determined by their consequencesC. People have dignity and need to be treated as suchD. Human beings have fundamental rights and privileges that transcend national cultures

Difficulty: Medium

4-19


78. (p. 138) Which of the following approaches is committed to the maximization of good and the minimization of harm? A. The righteous moralistB. Cultural relativismC. Friedman doctrineD. Utilitarianism

Difficulty: Easy

79. (p. 139) Tools to assess actions such as cost-benefit analysis and risk assessment are rooted in the _____ philosophy. A. Utilitarian approachB. Kantian approachC. Friedman doctrineD. Naive immoralist

Difficulty: Medium

80. (p. 139) According to the _____ approach, the best decisions are those that produce the greatest good for the greatest number of people. A. Naive immoralistB. Friedman doctrineC. UtilitarianD. Kantian

Difficulty: Medium

81. (p. 139) The Kantian approach to ethics suggests that A. Human beings have fundamental rights and privileges that transcend national boundariesB. The moral worth of actions or practices is determined by their consequencesC. People should be treated as ends and never purely as means to the ends of othersD. Ethics are nothing more than the reflection of culture

Difficulty: Medium

4-20


82. (p. 139) The utilitarian approach to business ethics has been criticized because of all of the following reasons, except A. The measurement of benefits, costs and risks is often not possible due to limited knowledgeB. The philosophy omits the consideration of justiceC. The philosophy advocates the greatest good for the greatest number of people, but such actions may result in the unjustified treatment of a minorityD. It holds that the moral worth of actions or practices is determined by their consequences

Difficulty: Medium

83. (p. 139) Rights theories suggest that A. Human beings have fundamental rights and privileges that transcend national boundariesB. The moral worth of actions or practices is determined by their consequencesC. People should be treated as ends never purely as means to the ends of othersD. Minimum levels of morally acceptable behavior should be established

Difficulty: Medium

84. (p. 140) Identify the approach that most moral philosophers favor and that forms the basis for current models of ethical behavior in international businesses. A. Friedman doctrineB. Cultural relativismC. The righteous moralistD. Rights theory

Difficulty: Medium

85. (p. 140) The Universal Declaration of Human Rights, related to employment, upholds all of the following, except A. Just and favorable work conditionsB. Equal pay for equal workC. Prohibition of trade unionsD. Protection against unemployment

Difficulty: Medium

4-21


86. (p. 140) Article 1 of the United Nations' Universal Declaration of Human Rights states: "All human beings are born free and equal in dignity and rights." This best echoes A. Cultural relativismB. Friedman doctrineC. The righteous moralist approachD. Kantian ethics

Difficulty: Hard

87. (p. 140) A(n) _____ is any person or institution that is capable of moral action such as a government or corporation. A. Moral agentB. UtilitarianC. Righteous moralistD. Naive immoralist

Difficulty: Hard

88. (p. 140) Justice theories of business ethics focus on A. The moral worth of actions or practicesB. Minimum levels of morally acceptable behaviorC. Fundamental rights and privileges that transcend national boundariesD. The attainment of a just distribution of economic goods and services

Difficulty: Medium

89. (p. 141) The notion that all economic goods and services should be distributed equally except when an unequal distribution would work to everyone's advantage was developed by A. David HumeB. John RawlsC. Jeremy BenthamD. John Stuart Mill

Difficulty: Hard

4-22


90. (p. 141) Under the veil of ignorance, everyone is imagined to be ignorant of A. All of his or her particular characteristicsB. Fundamental rights and privilegesC. The moral worth of actions or practicesD. The minimum levels of morally acceptable behavior

Difficulty: Medium

91. (p. 141) According to John Rawls, A. Each person be permitted the maximum amount of basic liberty compatible with a similar liberty for othersB. Freedom of speech and assembly is the single most important component in a justice systemC. Equal basic liberty is only possible in a pure market economyD. Inequalities in a justice system are not to be tolerated under any circumstance

Difficulty: Medium

92. (p. 141) Rawls' philosophy that inequalities are justified if they benefit the position of the least-advantaged person is known as the A. Inequality principleB. Equity principleC. Difference principleD. Indifference principle

Difficulty: Medium

93. (p. 142) Managers of international business can do all of the following to make sure ethical issues are considered in business decisions, except A. Favor hiring and promoting people with a well-grounded sense of personal ethicsB. Build an organizational culture that places a high value on ethical behaviorC. Make sure that leaders within the business do not articulate the rhetoric of ethical behaviorD. Develop moral courage

Difficulty: Medium

4-23


94. (p. 142) The UN Universal Declaration of Human Rights is grounded in A. Utilitarian and justice theoriesB. Kantian and rights based theories of moral philosophyC. Ethics and utilitarian theoriesD. Kantian and justice theories

Difficulty: Medium

95. (p. 143) To build an organization culture that values ethical behavior, a company should do all of the following, except A. Not sanction people who do not engage in ethical behaviorB. Articulate values that emphasize ethical valuesC. Make sure that key business decisions not only make good economic sense, but are also ethicalD. Place a high value on ethical behavior by providing incentives and reward systems

Difficulty: Easy

96. (p. 144) External stakeholders A. Are individuals or groups who own the businessB. Include all employees, the board of directors and stockholdersC. Typically, comprises customers, suppliers, lenders, etcD. Are individuals or groups who work for the business

Difficulty: Medium

97. (p. 144) Internal stakeholders A. Are individuals or groups who work for or own the businessB. Do not have any claim on a firm or its activitiesC. Typically comprises customers, suppliers, lenders, governments, unions, etcD. Are individuals, except employees, board of directors and stockholders that have some claim on the firm

Difficulty: Easy

4-24


98. (p. 144) _____ means standing in the shoes of a stakeholder and asking how a proposed decision might impact that stakeholder. A. Veil of ignoranceB. Difference principleC. Moral imaginationD. Noblesse oblige

Difficulty: Easy

99. (p. 145) Establishing _____ involves a business' resolve to place moral concerns ahead of other concerns in cases where either the fundamental rights of stakeholders or key moral principles have been violated. A. A veil of ignoranceB. A difference principleC. Moral imaginationD. Moral intent

Difficulty: Medium

100. (p. 145) _____ enables managers to walk away from a decision that is profitable, but unethical. A. Noblesse obligeB. Moral courageC. Difference principleD. Friedman doctrine

Difficulty: Medium

4-25


Essay Questions

101. (p. 124) What are business ethics? What is the relationship between business ethics and an ethical strategy?

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

Difficulty: Easy

102. (p. 124-13) What is considered normal practice in one country may be considered unethical in others. Discuss.

Many of the ethical issues and dilemmas in international business are rooted in the fact that political systems, law, economic development and culture vary significantly from nation to nation. Therefore, what might be considered a normal business practice in one country may constitute unethical behavior in another country. Managers in a multinational company need to be sensitive to these differences and choose the ethical action in those circumstances where variation across societies creates the potential for ethical problems. In the international business setting, the most common ethical issues involve employment practices, human rights, environmental regulations, corruption and the moral obligation of multinational corporations.

Difficulty: Hard

103. (p. 125-126) Discuss how companies such as Exxon, Kodak and IBM helped improve human rights in South Africa.

During the 1980s, many American companies doing business in South Africa realized that following the Sullivan principles of not obeying apartheid laws and trying to promote their abolition was not a sufficiently ethical strategy. Consequently, many companies divested their holdings in the nation. At the same time, the U.S. government and other nations imposed economic sanctions on the country. Together, these actions helped bring about democratic elections in the nation in 1994 and an end to white minority rule.

Difficulty: Medium

4-26


104. (p. 127-128) Should a multinational feel free to pollute in a developing nation?

This question is designed to stimulate classroom discussion or the personal opinion of the student. Issues that might emerge include whether there is any danger that amoral management might move production to a developing nation precisely because costly pollution controls are not required, the notion that the environment is public good that no one owns, but that anyone can despoil and legality of various actions.

Difficulty: Medium

105. (p. 129) What is the Foreign Corrupt Practices Act? What is its purpose?

The Foreign Corrupt Practices Act was passed in 1977 in the U.S. The act outlawed the paying of bribes to foreign government officials to gain business. The act was later amended to allow for facilitating payments or grease money that enabled companies to make payments to ensure that they receive the standard that a business ought to receive from a government.

Difficulty: Medium

106. (p. 129) What is the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions?

In 1997, the OECD adopted the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. The convention obliges member states to make it a criminal offense to make the bribery of foreign public officials a criminal offense. The convention excludes facilitating payments made to expedite routine government action from the convention.

Difficulty: Easy

4-27


107. (p. 129) In your opinion, are bribes ever acceptable? Why or why not?

This question is designed to allow the students to explore the idea of bribery as possibly resulting in a positive rather than a negative outcome. Some economists have suggested that corruption might in fact improve efficiency and help growth. Others however, argue that corruption simply reduces the returns on business investment and leads to low economic growth.

Difficulty: Medium

108. (p. 130) Discuss the notion of social responsibility. What does it mean for corporations?

The concept of social responsibility refers to the idea that businesspeople should consider the social consequences of economic actions when making business decisions and that there should be a presumption in favor of decisions that have both good economic and social consequences. In a business setting, social responsibility means that benevolent behavior is the responsibility of successful enterprises.

Difficulty: Medium

109. (p. 132) What are ethical dilemmas? Why do they exist?

Ethical dilemmas are situations in which none of the available alternatives seems ethically acceptable. Ethical dilemmas exist because many real-world decisions are complex, difficult to frame and involve first, second and third order consequences that are hard to quantify. To deal with these situations, managers need a moral compass to guide them through the dilemma to find an acceptable solution.

Difficulty: Medium

4-28


110. (p. 132-135) Why do managers behave in a manner that is unethical?

There is no easy answer to this question, but a few generalizations can be made. First, business ethics are not divorced from personal ethics. Second, some businesspeople do not realize they are behaving unethically. Third, an organization may not emphasize business ethics and instead simply focus on the economic outcome of a business decision. Fourth sometimes there is pressure from the parent company to meet unrealistic performance goals that can be attained only by cutting corners or acting in an unethical manner. A fifth, root cause of unethical behavior is often seen to be as leadership or leaders who do not behave in an ethical manner.

Difficulty: Medium

111. (p. 133) What are the determinants of ethical behavior?

The determinants of ethical behavior include decision-making processes, leadership, unrealistic performance goals, organization culture and personal ethics. Together these factors help determine whether a manager behave in an ethically responsible manner or not.

Difficulty: Easy

112. (p. 136) Explain the Friedman doctrine. Who developed the philosophy? How well does this approach hold up ethically?

In 1970, Milton Friedman suggested that the only social responsibility of business is to increase profits, so long as the company stays within the rules of law. He explicitly rejects the idea that business should undertake social expenditures beyond those mandated by the law and required for the efficient running of a business. Friedman does state that businesses should behave in an ethical manner and not engage in deception and fraud, however, most economists believe that his approach to ethics does not hold up well. For example, even though child labor may not be against the law in a particular country, it is still unethical to use child labor.

Difficulty: Medium

4-29


113. (p. 137) Discuss the cultural relativism approach to business ethics. What is the connection between this approach and the phrase when in Rome do as the Romans? How well does this approach hold up ethically?

The cultural relativism approach is the belief that ethics are nothing more than the reflection of a culture and accordingly, a firm should adopt the ethics of the culture in which it is operating. This approach is often summarized by the maxim when in Rome do as the Romans. Cultural relativism does not stand up well to business ethics because it suggests that if a culture allows slavery, then it is acceptable for a firm to use slaves as well.

Difficulty: Medium

114. (p. 137-138) How does the righteous moralist approach business ethics? Who is likely to favor this approach?

The righteous moralist claims that a multinational's home-country standards of ethics are the appropriate ones for companies to following foreign countries. This approach is typically associated with managers from developed counties. The main criticism of this approach is that it goes too far. While there are some universal moral principles that should not be violated, it does not always follow that the appropriate thing is to adopt home-country standards.

Difficulty: Medium

115. (p. 138) Discuss the naive immoralist's approach to business ethics. What are the criticisms of this approach?

The naive immoralist asserts that if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either. This approach has been criticized with the argument that simply accepting an action as being ethically justified just because everyone is doing it is not sufficient. Moreover, the multinational company does have the ability to change the prevailing practice in the country.

Difficulty: Medium

4-30


116. (p. 138-139) Discuss the utilitarian approach to business ethics. When was this approach developed? What are its drawbacks?

The utilitarian to business ethics was developed in the 18th and 19th centuries by philosophers such as David Hume, Jeremy Bentham and John Stuart Mill. The utilitarian approach to ethics holds that the moral worth of actions or practices is determined by their consequences. An action is judged to be desirable if it leads to the best possible balance of good consequences over bad consequences. The best decisions are those that produce the greatest good for the greatest number of people.However, the approach has its limits. One serious drawback of the utilitarian approach is that it is difficult to measure the benefits, costs and risks of a course of action. A second problem is that the philosophy omits the consideration of justice.

Difficulty: Medium

117. (p. 138-139) Consider the Kantian approach to ethics. Who is responsible for the philosophy?

Kantian ethics are based on the philosophy of Immanuel Kant and hold that people should be treated as ends and never purely as means to the ends of others. Employing people in sweatshops, making them work long hours for low pay in poor work conditions is a violation ethics according to the Kantian philosophy because it treats people as mere cogs in a machine and not as conscious moral beings that have dignity.

Difficulty: Medium

118. (p. 139-140) What are rights theories? What is the connection between rights theories and the United Nations?

Rights theories recognize that human beings have fundamental rights and privileges that transcend national borders and cultures. Rights establish a minimum level of morally acceptable behavior. This philosophy formed the basis for the UN Universal Declaration of Human Rights, which has been ratified by almost every country in the world and lays down basic principles that should always be adhered to irrespective of the culture in which one is doing business.

Difficulty: Medium

4-31


119. (p. 140-141) Describe justice theories. What is John Rawls position on ethics?

Justice theories focus on the attainment of a just distribution of economic goods and services. One theory that is particularly important was developed by Rawls. Rawls argues that all economic goods and services should be distributed equally except when an unequal distribution would work to everyone's advantage. Rawls developed the veil of ignorance as a conceptual tool that contributes to the moral compass that helps managers assess ethical dilemmas.

Difficulty: Medium

120. (p. 141) What is the veil of ignorance? Why is it important to business?

The veil of ignorance was developed by John Rawls as part of his approach to justice theory. According to Rawls, valid principles of justice are those with which all persons would agree if they could freely and impartially consider the situation. Impartiality is guaranteed by the veil of ignorance. Under the veil of ignorance, everyone is imagined to be ignorant of all of his or her particular characteristics. Under these conditions everyone would agree that (1) each person be permitted the maximum amount of basic liberty compatible with a similar liberty for others and (2) once basic liberty is assured, inequality in basic social goods is to be allowed only if such inequalities benefit everyone.

Difficulty: Medium

4-32

Documents

International Business Quiz