Management Angelo Kinicki 9th Edition- Test Bank

 

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Sample Test

Management, 9e (Kinicki)

Chapter 3   The Manager’s Changing Work Environment and Ethical Responsibilities:

                       Doing the Right Thing

 

1) Over half of millennials believe that companies operate to meet society’s needs first and their own agenda second.

 

Answer:  FALSE

Explanation:  “More than any other previous generation,” reports Forbes, “millennials are concerned about business ethics, motives and methods. According to a Deloitte study of millennials, 58 percent of respondents indicated they believed corporations, in general, are moving in a more ethical direction, yet 64 percent still believed companies operate according to their own agenda first and society’s needs second.

Difficulty: 1 Easy

Topic:  Ethical Behavior

Learning Objective:  03-01 Describe the triple bottom line of people, planet, and profit.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

2) “Good” boards have balanced gender representation.

 

Answer:  TRUE

Explanation:  Some experts further speculate that balanced gender representation on boards was an important characteristic of a “good” board.

Difficulty: 1 Easy

Topic:  Internal Stakeholders

Learning Objective:  03-02 Identify important stakeholders inside the organization.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

3) The employees of a production facility that produce parts for boats are meeting to discuss ways to control rising costs, which are affecting their bonus (incentive pay). The employees are internal stakeholders of the factory.

 

Answer:  TRUE

Explanation:  Internal stakeholders include employees, owners, and the board of directors, if any. Some of the directors on the board (inside directors) may be top executives of the firm.

Difficulty: 1 Easy

Topic:  Internal Stakeholders

Learning Objective:  03-02 Identify important stakeholders inside the organization.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

4) The task environment of Eye of the Needle Costume Designers consists of just two groups, customers and stockholders, who give the employees and management of Eye of the Needle the daily tasks that the company’s employees will handle.

 

Answer:  FALSE

Explanation:  The task environment consists of 10 groups that present employees with daily tasks to handle. The 10 groups are customers, competitors, suppliers, distributors, strategic allies, employee organizations, local communities, financial institutions, government regulators, and special-interest groups.

Difficulty: 2 Medium

Topic:  External Stakeholders

Learning Objective:  03-03 Identify important stakeholders outside the organization.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

5) Sunset Resort, a successful 100-year-old hotel and resort, entered into a co-marketing arrangement with Sleepytime Hotels, a five-star hotel chain. Both companies benefit from the new relationship. Pleasant is now able to market its facility and services through Sleepytime’s marketing team, and Sleepytime Hotels now offers access to an upscale resort that it can recommend to its customers who are looking for a resort experience. Sleepytime Hotels and Sunset Resort can be considered strategic allies.

 

Answer:  TRUE

Explanation:  Companies, and even nonprofit organizations, frequently link up with other organizations (even competing ones) to realize strategic advantages. The term strategic allies describes the relationship of two organizations that join forces to achieve advantages neither can perform as well alone.

Difficulty: 2 Medium

Topic:  External Stakeholders

Learning Objective:  03-03 Identify important stakeholders outside the organization.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

6) The general environment, or macroenvironment, includes six forces: economic, technological, sociocultural, demographic, political-legal, and international.

 

Answer:  TRUE

Explanation:  The general environment, or macroenvironment, includes six forces: economic, technological, sociocultural, demographic, political-legal, and international.

Difficulty: 1 Easy

Topic:  External Stakeholders

Learning Objective:  03-03 Identify important stakeholders outside the organization.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

7) When the Young Minds Child Care Center looks at the recent increase in the number of working mothers in its neighborhood to determine how many employees to hire, its managers are studying demographic forces.

 

Answer:  TRUE

Explanation:  Demographic forces are influences on an organization arising from changes in the characteristics of a population, such as age, gender, or ethnic origin.

Difficulty: 2 Medium

Topic:  External Stakeholders

Learning Objective:  03-03 Identify important stakeholders outside the organization.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

8) Despite recent pressure from stockholders to increase profits, Global Oil., a global petroleum organization, has maintained a practice of consistently acting ethically by being a good global corporate citizen, taking host-country and global standards into consideration when making decisions, and obeying the laws of host countries as well as international law. Global Oil. provides an example of a company acting in a socially responsible way.

 

Answer:  TRUE

Explanation:  According to University of Georgia business scholar Archie B. Carroll, corporate social responsibility rests at the top of a pyramid of a corporation’s obligations, right up there with economic, legal, and ethical obligations. Carroll suggests the responsibilities of an organization in the global economy should take the following priorities, with profit being the most fundamental (base of the pyramid) and corporate citizenship at the top: (1) Be a good global corporate citizen, as defined by the host country’s expectations; (2) be ethical in practices, taking host-country and global standards into consideration; (3) obey the law of host countries as well as international law; and (4) make a profit consistent with expectations for international business.

Difficulty: 2 Medium

Topic:  Corporate Social Responsibility

Learning Objective:  03-05 Describe the concept of social responsibility and its role in today’s organizations.

Bloom’s:  Apply

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

9) Ashish comes to work looking exhausted almost every day. He is a new father and the baby is not sleeping well. James, his manager, asks Ashish to change the number of documents that the team has processed for the month so that the report shows the quota was met. Ashish agrees without putting up much of fight. James takes advantage of the fact that Ashish is sleep-deprived and will be more likely to engage in unethical behavior.

 

Answer:  TRUE

Explanation:  Research shows that people are more likely to succumb to temptation to engage in unethical behavior when they are sleep-deprived.

Difficulty: 2 Medium

Topic:  Core Competency

Learning Objective:  03-07 Describe how to develop the career readiness competency of professionalism/work ethic.

Bloom’s:  Understand

AACSB:  Ethics

Accessibility:  Keyboard Navigation

 

 

 

10) After the scandals at WorldCom, Tyco, Adelphia, and Enron, in which company employees lost millions of dollars and their nest eggs, U.S. companies showed less concern for corporate governance and more interest in the development of corporate social responsibility.

 

Answer:  FALSE

Explanation:  Corporate governance is the system of governing a company so that the interests of corporate owners and other stakeholders are protected. After the Enron and other scandals, there was a renewed interest in corporate governance.

Difficulty: 2 Medium

Topic:  Corporate Social Responsibility

Learning Objective:  03-06 Discuss the role of corporate governance in assessing management performance.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

11) Shane, a sales manager, remarked that typically her employees are resentful when the CEO announces bonuses because the employees know that the bonuses will not be given out based on

1.   A) an employee’s punctuality.

2.   B) an appreciation for one’s work.

3.   C) fairness.

4.   D) defined criteria.

5.   E) respect for longevity.

 

Answer:  C

Explanation:  Fairness can often be a hot issue. For instance, many employees are loudly resentful when a corporation’s CEO is paid a salary and bonuses worth hundreds of times more than what they receive—even when the company performs poorly—and when fired is then given a “golden parachute,” or extravagant package of separation pay and benefits.

Difficulty: 2 Medium

Topic:  Code of Ethics

Learning Objective:  03-04 Explain the importance of ethics and values in effective management.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

12) Alonzo, the president of his high school’s senior class and honor society, has been very busy and did not study for an important history test. Although Alonzo is very confident, he realizes that he probably will not do well on the test. He has talked himself into cheating because he believes that cheating will help him maintain his strong GPA, which he will need to be accepted by a good college. He tells his friend, “I don’t usually cheat, but I really have to do it.” His friend talks him out of it. Kohlberg would say that his friend is in which stage or moral development?

1.   A) preconventional

2.   B) conventional

3.   C) moral-rights

4.   D) postconventional

5.   E) utilitarian

 

Answer:  A

Explanation:  Level 1, preconventional—follows rules. People who have achieved this level tend to follow rules and to obey authority to avoid unpleasant consequences. Managers of the Level 1 sort tend to be autocratic or coercive, expecting employees to be obedient for obedience’s sake.

Difficulty: 1 Easy

Topic:  Code of Ethics

Learning Objective:  03-04 Explain the importance of ethics and values in effective management.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

13) Julian, the owner of a t-shirt shop, attended an entrepreneurship workshop that discussed the triple bottom line, which measures an organization’s ________ performance.

1.   A) social, environmental, and financial

2.   B) financial, diversity, and environmental

3.   C) social, synergy, and overall

4.   D) marketing, profit, and efficiency

5.   E) social, sustainability and financial

 

Answer:  A

Explanation:  The triple bottom line—representing people, planet, and profit (the 3 Ps)—measures an organization’s social, environmental, and financial performance.

Difficulty: 1 Easy

Topic:  Triple Bottom Line

Learning Objective:  03-01 Describe the triple bottom line of people, planet, and profit.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

14) What mechanism is used to provide a systematic assessment of an organization’s performance in implementing socially responsible programs, often based on predefined goals?

1.   A) sustainability program

2.   B) code of ethics

3.   C) diversity training program

4.   D) financial audit

5.   E) social audit

 

Answer:  E

Explanation:  A social audit is a systematic assessment of a company’s performance in implementing socially responsible programs, often based on predefined goals.

Difficulty: 1 Easy

Topic:  Triple Bottom Line

Learning Objective:  03-01 Describe the triple bottom line of people, planet, and profit.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

15) An organization’s internal stakeholders consist of

1.   A) the board of directors, employees, and suppliers.

2.   B) the board of directors, customers, and owners.

3.   C) customers, families of employees, and employees.

4.   D) the board of directors, employees, and owners.

5.   E) competitors, the community, and suppliers.

 

Answer:  D

Explanation:  A company’s internal stakeholders consist of employees, owners, and the board of directors.

Difficulty: 1 Easy

Topic:  Internal Stakeholders

Learning Objective:  03-02 Identify important stakeholders inside the organization.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

16) The marketing director for GForce Games, a video game company, has informed his employees that he feels the company needs to improve its relationship with the distributors of the company’s products because the distributors are part of the ________ environment for GForce Games. He believes that a stronger relationship with distributors will lead to more market share, and higher profits, for both GForce Games and its distributors.

1.   A) strategic

2.   B) external

3.   C) outlying

4.   D) internal

5.   E) task

 

Answer:  E

Explanation:  Distributors are part of an organization’s task environment, and therefore one of its external stakeholders.

Difficulty: 2 Medium

Topic:  External Stakeholders

Learning Objective:  03-03 Identify important stakeholders outside the organization.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

17) Penelope, a registered nurse, has decided to start a home healthcare service to assist with the medical, meal preparation, and light housecleaning needs of older adults. To grow her business, Penelope is focusing her marketing efforts on the older adult population; in these efforts, she is involved with the ________ environment.

1.   A) task

2.   B) general

3.   C) internal

4.   D) external

5.   E) strategic alliance

 

Answer:  B

Explanation:  Age is one of the demographic forces, and demographic forces are part of an organization’s general environment.

Difficulty: 2 Medium

Topic:  External Stakeholders

Learning Objective:  03-03 Identify important stakeholders outside the organization.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

18) Roberto was recently promoted, and his salary increase includes retirement investment options, so he has decided to take part in an ESOP. This means that Roberto

1.   A) will soon be added to the company’s board of directors.

2.   B) will participate in an Externship Supervisors’ Oversight Plan.

3.   C) will be buying or receiving shares of his company’s stock.

4.   D) is now one of the company’s external stakeholders.

5.   E) is in charge of an investment group.

 

Answer:  C

Explanation:  If you work for a company that is more than half owned by its employees, you are one of the joint owners – you’re part of an Employee Stock Ownership Plan (ESOP).

Difficulty: 1 Easy

Topic:  Internal Stakeholders

Learning Objective:  03-02 Identify important stakeholders inside the organization.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

19) Arielle, a successful banker and educator, has decided to retire, but she is very interested in staying involved with a company “that cares.” So when asked to serve on its board of directors, she gladly accepted the invitation. As a member of the board, Arielle will be involved with the organization’s

1.   A) overall strategic goals and approval of major decisions.

2.   B) daily company management and employee supervision.

3.   C) overall strategic goals and global HR management.

4.   D) daily and specific company goals and management of specific departments.

5.   E) oversight of sales and marketing.

 

Answer:  A

Explanation:  Members of the board of directors are very important in setting the organization’s overall strategic goals and in approving the major decisions and salaries of top management.

Difficulty: 1 Easy

Topic:  Internal Stakeholders

Learning Objective:  03-02 Identify important stakeholders inside the organization.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

20) Soul Soup is a nonprofit organization that brings warm meals to older adults and runs errands for its clients; the board of Soul Soup is called the

1.   A) board of directors.

2.   B) board of ethics.

3.   C) strategic board.

4.   D) daily oversight committee.

5.   E) board of regents.

 

Answer:  E

Explanation:  In nonprofit organizations, such as universities or hospitals, the board may be called the board of trustees or the board of regents.

Difficulty: 1 Easy

Topic:  Internal Stakeholders

Learning Objective:  03-02 Identify important stakeholders inside the organization.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

21) Tia and Sam are partners who solely own T and S Florist. As owners, they can

1.   A) claim only limited liability.

2.   B) avoid taking any legal responsibility for T and S.

3.   C) sell stock in their company.

4.   D) claim the organization as their legal property.

5.   E) decide not to pay a dividend to their stockholders.

 

Answer:  D

Explanation:  The owners of an organization consist of all those who can claim it as their legal property. A partnership is a form of business ownership.

Difficulty: 2 Medium

Topic:  Internal Stakeholders

Learning Objective:  03-02 Identify important stakeholders inside the organization.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

22) To focus on improving company customer service this year, the CEO of a home goods manufacturing company outlined a list of stakeholders to concentrate on: distributors, local communities, and special-interest groups. These three groups are

1.   A) external stakeholders.

2.   B) general stakeholders.

3.   C) internal stakeholders.

4.   D) preferred stockholders.

5.   E) interest groups.

 

Answer:  A

Explanation:  External stakeholders are people or groups in the organization’s external environment that are affected by it. The external task environment consists of 10 groups that present the organization with daily tasks to handle: customers, competitors, suppliers, distributors, strategic allies, employee organizations, local communities, financial institutions, government regulators, and special-interest groups.

Difficulty: 2 Medium

Topic:  External Stakeholders

Learning Objective:  03-03 Identify important stakeholders outside the organization.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

23) Rosemarie and Dominique, owners of Sugarplum Coffee and Pastry Shop, are concerned because Panera Bread is opening a new store just one mile from their shop. Rosemarie and Dominique know that Panera will be offering similar products; therefore, Panera Bread will be a(n) ________ of Rosemarie and Dominique.

1.   A) competitor

2.   B) competitive ally

3.   C) strategic ally

4.   D) distributor

5.   E) internal stakeholder

 

Answer:  A

Explanation:  Competitors are people or organizations that compete for customers or resources.

Difficulty: 2 Medium

Topic:  External Stakeholders

Learning Objective:  03-03 Identify important stakeholders outside the organization.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

24) A supplier is an external stakeholder that

1.   A) competes for customers or resources.

2.   B) helps a company sell its goods and services to customers.

3.   C) joins forces with another company to achieve advantages that neither can achieve on its own.

4.   D) rescinds tax breaks when firms don’t deliver promised jobs.

5.   E) provides raw materials, services, equipment, labor, or energy.

 

Answer:  E

Explanation:  A supplier is a person or an organization that provides supplies like raw materials, services, equipment, labor, or energy to other organizations.

Difficulty: 1 Easy

Topic:  External Stakeholders

Learning Objective:  03-03 Identify important stakeholders outside the organization.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

25) Every Saturday Mrs. Luo and hundreds of other shoppers visit Zion Market, a grocery store, to buy food for their home or business. These shoppers are ________ of Zion.

1.   A) suppliers

2.   B) community allies

3.   C) competitors

4.   D) customers

5.   E) partners

 

Answer:  D

Explanation:  Customers are those who pay to use an organization’s goods or services.

Difficulty: 1 Easy

Topic:  External Stakeholders

Learning Objective:  03-03 Identify important stakeholders outside the organization.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

26) Blue Brothers’ cleaning products and equipment are sold to consumers and commercial cleaning companies in Clean Supply’s janitorial supply and equipment store. Blue Brothers’ relies heavily on Clean Supply to help sell its goods and services to customers. Clean Supply is a(n) ________ of Blue Brothers’ products.

1.   A) competitor

2.   B) distributor

3.   C) customer

4.   D) subsidiary

5.   E) account ally

 

Answer:  B

Explanation:  A distributor is a person or an organization that helps another organization sell its goods and services to customers.

Difficulty: 1 Easy

Topic:  External Stakeholders

Learning Objective:  03-03 Identify important stakeholders outside the organization.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

27) Kentucky Derby, a successful farm equipment supply company in the South, has joined forces with Hammer and Nail, a national hardware and home retailer. As a result of this new relationship, Kentucky Derby can open stores in other regions and Hammer and Nail can now offer a high-quality product in the farm community. Kentucky Derby and Hammer and Nail are now

1.   A) distributors.

2.   B) competitors.

3.   C) customers.

4.   D) suppliers.

5.   E) strategic allies.

 

Answer:  E

Explanation:  The term strategic allies describes the relationship of two organizations who join forces to achieve advantages neither can perform as well alone.

Difficulty: 2 Medium

Topic:  External Stakeholders

Learning Objective:  03-03 Identify important stakeholders outside the organization.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

28) Since the 1950s, the percentage of the U.S. labor force represented by unions has

1.   A) rapidly increased.

2.   B) steadily increased.

3.   C) fallen to nearly zero.

4.   D) steadily declined.

5.   E) remained unchanged.

 

Answer:  D

Explanation:  In recent years, the percentage of the labor force represented by unions has steadily declined (from 35 percent in the 1950s to 10.7 percent in 2017).

Difficulty: 1 Easy

Topic:  External Stakeholders

Learning Objective:  03-03 Identify important stakeholders outside the organization.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

29) Local communities are stakeholders of organizations because communities

1.   A) rely on the products the companies produce.

2.   B) rely on the tax base from companies and the jobs the company provides.

3.   C) wish to join forces with organizations to create strategic alliances.

4.   D) need a major corporate presence to maintain federal funding of the local highway system.

5.   E) prefer products made by large multinational organizations over locally made products.

 

Answer:  B

Explanation:  Local communities are important stakeholders. Schools and municipal governments rely on the organization for their tax base. Families and merchants depend on its employee payroll for their livelihoods. In addition, everyone from the United Way to the Little League may rely on it for some financial support.

Difficulty: 1 Easy

Topic:  External Stakeholders

Learning Objective:  03-03 Identify important stakeholders outside the organization.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

30) The city government of Frostville promised significant tax breaks to a large retailer if it opened a store in Frostville, which would result in nearly 200 new local jobs. However, the retailer decided that it would staff the new Frostville store with employees from its other stores, meaning no new jobs were created. As a result, the city of Frostville instituted clawbacks by

1.   A) increasing the tax breaks offered to the retailer.

2.   B) forcing the retailer to pay large fines.

3.   C) rescinding the tax breaks given to the retailer.

4.   D) rescinding its building permits.

5.   E) forcing the retailer to unionize.

 

Answer:  C

Explanation:  If a community gives a company tax breaks in return for the promise of new jobs and the firm fails to deliver on its promises, the community may institute clawbacks, which means rescinding the tax breaks when firms don’t deliver promised jobs.

Difficulty: 2 Medium

Topic:  External Stakeholders

Learning Objective:  03-03 Identify important stakeholders outside the organization.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

31) Which type of funding raises small amounts of money from many people to finance a new venture?

1.   A) crowdfunding

2.   B) multifunding

3.   C) duplicating

4.   D) venture-funding

5.   E) angel-financing

 

Answer:  A

Explanation:  Crowdfunding means raising money for a project or venture by obtaining many small amounts of money from many people (“the crowd”).

Difficulty: 1 Easy

Topic:  External Stakeholders

Learning Objective:  03-03 Identify important stakeholders outside the organization.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

32) ________ are regulatory agencies, such as the SEC (Securities and Exchange Commission), that establish ground rules under which organizations may operate.

1.   A) Whistle-blowers

2.   B) Government moderators

3.   C) Government regulators

4.   D) Interest groups

5.   E) Watchdogs

 

Answer:  C

Explanation:  Government regulators establish ground rules under which organizations may operate. Regulators include the World Trade Organization and the Federal Aviation Administration.

Difficulty: 1 Easy

Topic:  External Stakeholders

Learning Objective:  03-03 Identify important stakeholders outside the organization.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

33) Jose, a lobbyist who represents the oil industry, is meeting with several members of Congress to try to exert political influence by contributing funds to the lawmakers’ election campaigns. Jose also is involved in a letter-writing campaign to promote his cause. Jose is working on behalf of a

1.   A) government regulator.

2.   B) task force.

3.   C) political action committee

4.   D) strategic alliance.

5.   E) special-interest group.

 

Answer:  E

Explanation:  Special-interest groups are groups whose members try to influence specific issues. Special-interest groups may try to exert political influence, as in contributing funds to lawmakers’ election campaigns or in launching letter-writing efforts to officials. Or they may organize picketing and boycotts—holding back their patronage—of certain companies or events (such as the Golden Globes).

Difficulty: 2 Medium

Topic:  External Stakeholders

Learning Objective:  03-03 Identify important stakeholders outside the organization.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

34) Maryanne was looking over her son’s school supply list and saw that he needed three 2-inch binders, a pack of copy paper, and a box of staples. Knowing that her company had all of this in the supply closet, she planned to just bring them home with her the next day. This would be considered

1.   A) unethical behavior.

2.   B) employee theft.

3.   C) workplace cheating.

4.   D) value system conflict.

5.   E) misuse of company property

 

Answer:  B

Explanation:  Estimates suggest that 75% of employees have stolen from an employer at least once, and such theft costs U.S. businesses about $50 billion annually.

Difficulty: 2 Medium

Topic:  Ethical Behavior

Learning Objective:  03-04 Explain the importance of ethics and values in effective management.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

35) Which forces are part of the macroenvironment?

1.   A) Economic, technological, sociocultural, and diversity

2.   B) Diversity, microenvironment, sociocultural, demographic, and political-legal

3.   C) Globalism, technological, sociocultural, demographic, and microenvironment

4.   D) Economic, technological, sociocultural, demographic, political-legal, and international

5.   E) International, demographic, diversity, family, culture, and technology

 

Answer:  D

Explanation:  Beyond the task environment is the general environment, or macroenvironment, which includes six forces: economic, technological, sociocultural, demographic, political-legal, and international.

Difficulty: 1 Easy

Topic:  External Stakeholders

Learning Objective:  03-03 Identify important stakeholders outside the organization.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

36) The macroenvironment, also known as the ________ includes six forces.

1.   A) economic environment

2.   B) ethical environment

3.   C) microenvironment

4.   D) task environment

5.   E) general environment

 

Answer:  E

Explanation:  The macroenvironment is also known as the general environment, and it includes six forces: economic, technological, sociocultural, demographic, political-legal, and international.

Difficulty: 1 Easy

Topic:  External Stakeholders

Learning Objective:  03-03 Identify important stakeholders outside the organization.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

37) Simon and his managers are discussing the unemployment, inflation, and interest-rate trends that might affect their chain of sandwich shops over the next 12 months and the projected growth in the areas where the stores are located. The managers are studying the ________ forces in their organization’s general environment.

1.   A) technological

2.   B) sociocultural

3.   C) political

4.   D) economic

5.   E) international

 

Answer:  D

Explanation:  Economic forces consist of the general economic conditions and trends like unemployment, inflation, interest rates, and economic growth that may affect an organization’s performance.

Difficulty: 2 Medium

Topic:  External Stakeholders

Learning Objective:  03-03 Identify important stakeholders outside the organization.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

38) Fewer children are interested in learning how to play a musical instrument, and young people have less interest in owning cars. These two trends are examples of ________ forces at work.

1.   A) developmental

2.   B) financial

3.   C) political

4.   D) sociocultural

5.   E) legal

 

Answer:  D

Explanation:  Sociocultural forces are influences and trends originating in a country’s, a society’s, or a culture’s human relationships and values that may affect an organization or industry.

Difficulty: 2 Medium

Topic:  External Stakeholders

Learning Objective:  03-03 Identify important stakeholders outside the organization.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

39) ________ forces lead to new developments in methods for transforming resources into goods or services. For example, a new technique called hydraulic fracturing (or fracking) has been developed to harvest natural gas trapped below the earth’s surface.

1.   A) Sociocultural

2.   B) Technological

3.   C) Demographic

4.   D) Political-legal

5.   E) Economic

 

Answer:  B

Explanation:  Technological forces lead to new developments in methods for transforming resources into goods or services.

Difficulty: 1 Easy

Topic:  External Stakeholders

Learning Objective:  03-03 Identify important stakeholders outside the organization.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

40) When a food distributor considers changing the products it markets in the southern states because of an increasing percentage of customers from Central and South America, it is examining the ________ forces at work in the southern United States.

1.   A) economic

2.   B) demographic

3.   C) technological

4.   D) political

5.   E) legal

 

Answer:  B

Explanation:  Demographic forces are influences on an organization arising from changes in the characteristics of a population, such as age, gender, or ethnic origin.

Difficulty: 2 Medium

Topic:  External Stakeholders

Learning Objective:  03-03 Identify important stakeholders outside the organization.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

41) ________ forces affect the way politics shape laws and the way laws shape the opportunities for and threats to an organization. For example, some cities in the United States (including New York and San Francisco) have set the minimum wage far above the federally mandated minimum wage.

1.   A) Political-legal

2.   B) Demographic

3.   C) Economic

4.   D) Sociocultural

5.   E) Technological

 

Answer:  A

Explanation:  Political-legal forces may lead to changes in the way politics shape laws and the way laws shape the opportunities for and threats to an organization. As for legal forces, some countries have more fully developed legal systems than others. American companies may be willing to use the legal system to advance their interests, as in suing competitors to gain competitive advantage, but they must also be aware that other companies may do the same to them.

Difficulty: 1 Easy

Topic:  External Stakeholders

Learning Objective:  03-03 Identify important stakeholders outside the organization.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

42) Changes in the economic, political, legal, and technological global system that may affect an organization are ________ forces. For example, stresses within the European Union (including the United Kingdom’s recent decision to exit the EU) may have global ramifications.

1.   A) local

2.   B) demographic

3.   C) international

4.   D) technological

5.   E) external stakeholder

 

Answer:  C

Explanation:  International forces are changes in the economic, political, legal, and technological global system that may affect an organization.

Difficulty: 1 Easy

Topic:  External Stakeholders

Learning Objective:  03-03 Identify important stakeholders outside the organization.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

43) Bob, the owner of Orthopedic Supply, just discovered that his trusted friend Ruth, his accountant for over 30 years, has been mishandling the company books and stealing from the company bank account. Bob must decide whether to ignore his friend’s actions and avoid bad publicity for Orthopedic Supply, or to have Ruth arrested for embezzlement. Bob is facing

1.   A) a whistle-blower.

2.   B) a moral courage decision

3.   C) an issue of corporate governance.

4.   D) a social audit.

5.   E) an ethical dilemma.

 

Answer:  E

Explanation:  An ethical dilemma is a situation in which you have to decide whether to pursue a course of action that may benefit you or your organization, but that is unethical or even illegal.

Difficulty: 2 Medium

Topic:  Ethical Dilemma

Learning Objective:  03-04 Explain the importance of ethics and values in effective management.

Bloom’s:  Understand

AACSB:  Ethics

Accessibility:  Keyboard Navigation

 

 

 

44) Ethics are defined as

1.   A) influences arising from changes in the characteristics of a population.

2.   B) an organization’s written code of social responsibility.

3.   C) standards of right and wrong that influence behavior.

4.   D) a set of behaviors accepted as “right” or “good.”

5.   E) rules to be enforced in an organization.

 

Answer:  C

Explanation:  Ethics are the standards of right and wrong that influence behavior.

Difficulty: 1 Easy

Topic:  Ethical Behavior

Learning Objective:  03-04 Explain the importance of ethics and values in effective management.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

45) ________ are the relatively permanent and deeply held underlying beliefs and attitudes that help determine a person’s behavior. These beliefs may include the idea that employees should be promoted solely on the basis of merit, that no bribes will be paid to foreign officials to obtain business licenses, and that companies should offer extended maternity leave upon the employee’s request.

1.   A) Morals

2.   B) Norms

3.   C) Ethical advantages

4.   D) Values

5.   E) Fairness factors

 

Answer:  D

Explanation:  Values are the relatively permanent and deeply held underlying beliefs and attitudes that help determine a person’s behavior, such as the belief that fairness means hiring according to ability, not family background.

Difficulty: 1 Easy

Topic:  Ethical Behavior

Learning Objective:  03-04 Explain the importance of ethics and values in effective management.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

46) To increase profitability, top management of a national retailer needs to decide if it will close several stores. Management knows that by closing the locations, it will save the company millions of dollars and benefit many stockholder groups and individuals. The benefits of closing the stores outweigh the benefits of keeping them open. Keeping the stores open would be advantageous for many fewer people than closing the stores. This logic is an example of the ________ approach to deciding ethical dilemmas.

1.   A) individual

2.   B) deontological

3.   C) utilitarian

4.   D) procedural justice

5.   E) moral-rights

 

Answer:  C

Explanation:  Ethical behavior in the utilitarian approach is guided by what will result in the greatest good for the greatest number of people. Managers often take the utilitarian approach, using financial performance such as efficiency and profit as the best definition of what constitutes “the greatest good for the greatest number.”

Difficulty: 2 Medium

Topic:  Utilitarian Approach

Learning Objective:  03-04 Explain the importance of ethics and values in effective management.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

47) Consider the following situation: Local livestock farmers could allow the runoff of manure nutrients into a stream that feeds a local lake because polluting the stream helps farmers in the short term. However, farmers will act ethically in the short run to avoid harming others in the long run because doing so is also in the farmer’s best long-term interests. This type of thinking reflects the ________ approach to deciding ethical dilemmas.

1.   A) individual

2.   B) group

3.   C) moral-rights

4.   D) utilitarian

5.   E) procedural justice

 

Answer:  A

Explanation:  Ethical behavior in the individual approach is guided by what will result in the individual’s best long-term interests, which ultimately are in everyone’s self-interest. The assumption here is that you will act ethically in the short run to avoid others harming you in the long run.

Difficulty: 2 Medium

Topic:  Ethical Behavior

Learning Objective:  03-04 Explain the importance of ethics and values in effective management.

Bloom’s:  Understand

AACSB:  Ethics

Accessibility:  Keyboard Navigation

 

48) With recent reports of identity theft, Mr. Adams, the CEO of a construction company, is concerned about his employees’ privacy, and because of recent accidents on the job, he is also worried about the safety of his workers. Mr. Adams’ concerns with privacy and health and safety are key elements in the ________ approach to deciding ethical dilemmas.

1.   A) individual rights

2.   B) procedural justice

3.   C) impartial

4.   D) utilitarian

5.   E) moral-rights

 

Answer:  E

Explanation:  Ethical behavior in the moral-rights approach is guided by respect for the fundamental rights of human beings, such as those expressed in the U.S. Constitution’s Bill of Rights. We would all tend to agree that denying people the right to life, liberty, privacy, health and safety, and due process is unethical.

Difficulty: 2 Medium

Topic:  Ethical Behavior

Learning Objective:  03-04 Explain the importance of ethics and values in effective management.

Bloom’s:  Understand

AACSB:  Ethics

Accessibility:  Keyboard Navigation

 

49) ________ guides the justice approach to deciding ethical dilemmas.

1.   A) Increasing profits and workplace diversity

2.   B) Respect for the fundamental rights of human beings

3.   C) Respect for impartial standards of fairness and equity

4.   D) Respect for society and the environment

5.   E) An individual’s moral compass

 

Answer:  C

Explanation:  The justice approach is guided by respect for impartial standards of fairness and equity.

Difficulty: 1 Easy

Topic:  Justice Approach

Learning Objective:  03-04 Explain the importance of ethics and values in effective management.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

50) Josiah was unhappy with how his boss was promoting individuals on his team. He felt like was being overlooked because of his race and the fact that he had reported an incident to management a year before. Instead of speaking to his boss and human resources about his hunch, he posted about it on Facebook. When confronted, he claimed he was protected as a(n) ________, even though he posted on Facebook.

1.   A) external stakeholder

2.   B) special-interest group member

3.   C) internal stakeholder

4.   D) whistle-blower

5.   E) insider trader

 

Answer:  D

Explanation:  A whistle-blower is an employee, or even an outside consultant, who reports organizational misconduct to the public, such as health and safety matters, waste, corruption, or overcharging of customers. In exposing unethical behavior, then, it’s important to be clear why you’re doing it (trying to help the company or just get someone in trouble), not report something for the wrong reason (discuss your concerns with someone who has similar values), and follow proper channels (like addressing the supervisor of the supposed culprit). Don’t try to report externally (lashing out on Facebook, for instance) without speaking to those who might resolve the problem.

Difficulty: 2 Medium

Topic:  Ethical Behavior

Learning Objective:  03-04 Explain the importance of ethics and values in effective management.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

51) Charles, the president of an IT company, is friends with Levi, the CEO of Cyber Industries, a company that develops and manufactures computer hardware. Levi tells Charles that Cyber Industries is about to announce the creation of a revolutionary new computer processor that will quadruple processing capacity and cause Cyber Industries’ sales and profits to skyrocket. Charles then purchases a large number of shares of Cyber Industries company stock before the news of the new computer processor is made public. In which illegal activity has Charles engaged?

1.   A) A Ponzi scheme

2.   B) Short selling

3.   C) Issuing a call

4.   D) Information abuse

5.   E) Insider trading

 

Answer:  E

Explanation:  Insider trading is the illegal trading of a company’s stock by people using confidential company information.

Difficulty: 2 Medium

Topic:  Ethical Behavior

Learning Objective:  03-04 Explain the importance of ethics and values in effective management.

Bloom’s:  Understand

AACSB:  Ethics

Accessibility:  Keyboard Navigation

 

52) The Sarbanes-Oxley Act of 2002 established requirements for ________. Noncompliance can result in penalties of

1.   A) proper financial record keeping for private companies; as much as 20 years in prison.

2.   B) proper financial record keeping for government organizations; as much as 25 years in prison.

3.   C) codes of ethics guidelines for organizations; as much as $2 million.

4.   D) proper financial record keeping for public companies; as much as 25 years in prison.

5.   E) all corporate financial records to be made public; as much as $5 million.

 

Answer:  D

Explanation:  The Sarbanes-Oxley Act of 2002 established requirements for proper financial record keeping for public companies and penalties of as much as 25 years in prison for noncompliance.

Difficulty: 1 Easy

Topic:  Sarbanes-Oxley

Learning Objective:  03-04 Explain the importance of ethics and values in effective management.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

53) Mackenzie, a successful store manager, leads her employees by encouraging them and showing that she genuinely believes in them. She also encourages group and team efforts. Mackenzie manages at Kohlberg’s ________ level of personal moral development.

1.   A) second

2.   B) nonconventional

3.   C) conventional

4.   D) acceptable

5.   E) first

 

Answer:  C

Explanation:  Kohlberg proposed three levels of personal moral development: preconventional, conventional, and postconventional. At Level 2 (the conventional level), people follow the expectations of others. People whose moral development has reached this level are conformist but not slavish, generally adhering to the expectations of others in their lives. Level 2 managers lead by encouragement and cooperation and are more group and team oriented. Most managers are at this level.

Difficulty: 2 Medium

Topic:  Kohlberg’s Model

Learning Objective:  03-04 Explain the importance of ethics and values in effective management.

Bloom’s:  Understand

AACSB:  Ethics

Accessibility:  Keyboard Navigation

 

54) Blake has managed several restaurants for over 50 years and is close to retirement. With his maturity and business experience, his decisions are sound, based on solid, proven values. Blake tends to be an independent thinker who focuses on empowering his employees. Blake manages at Kohlberg’s ________ level of personal moral development.

1.   A) first

2.   B) nonconventional

3.   C) second

4.   D) acceptable

5.   E) postconventional

 

Answer:  E

Explanation:  Kohlberg proposed three levels of personal moral development: preconventional, conventional, and postconventional. Only about a fifth of American managers reach Level 3, the postconventional level, when managers are guided by internal values. It is the farthest along in moral development, and Level 3 managers are independent souls who follow their own values and standards, focusing on the needs of their employees and trying to lead by empowering those working for them.

Difficulty: 2 Medium

Topic:  Kohlberg’s Model

Learning Objective:  03-04 Explain the importance of ethics and values in effective management.

Bloom’s:  Understand

AACSB:  Ethics

Accessibility:  Keyboard Navigation

 

55) The employees of Pi’s Pizza, a local pizza restaurant, feel that the owners and managers really try to follow the ethical policies outlined in their company’s code of ethics. Curtis, a cook, said that “Just today, Rob, our manager, called our supplier to let them know we received an extra case of tomatoes that we did not pay for. And they do this type of thing almost every day.” Pi’s Pizza maintains a(n)

1.   A) procedurally sound atmosphere.

2.   B) profitable climate.

3.   C) ethical climate.

4.   D) holier-than-thou atmosphere.

5.   E) honest environment.

 

Answer:  C

Explanation:  An ethical climate represents employees’ perceptions about the extent to which work environments support ethical behavior. It is important for managers to foster ethical climates because they significantly affect the frequency of ethical behavior.

Difficulty: 2 Medium

Topic:  Ethical Climate

Learning Objective:  03-01 Describe the triple bottom line of people, planet, and profit.

Bloom’s:  Understand

AACSB:  Ethics

Accessibility:  Keyboard Navigation

 

56) A(n) ________ is a formal written set of ethical standards guiding an organization’s actions.

1.   A) moral compass

2.   B) business plan

3.   C) dilemma document

4.   D) ethical plan

5.   E) code of ethics

 

Answer:  E

Explanation:  A code of ethics consists of a formal written set of ethical standards guiding an organization’s actions. Most codes offer guidance on how to treat customers, suppliers, competitors, and other stakeholders. The purpose is to clearly state top management’s expectations for all employees. Most codes prohibit bribes.

Difficulty: 1 Easy

Topic:  Code of Ethics

Learning Objective:  03-04 Explain the importance of ethics and values in effective management.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

57) Beau said to a close friend, “I am fed up with my company’s continual disregard for the environment. They secretly dispose of hazardous chemicals into a nearby stream constantly. I don’t know how they get away with it! I am going to call a reporter at the local newspaper and reveal what my company is doing.” Beau’s decision to tell somebody about his company’s actions is an example of

1.   A) moral courage.

2.   B) violating a code of ethics.

3.   C) backstabbing his manager.

4.   D) being guided by the invisible hand.

5.   E) whistle-blowing.

 

Answer:  E

Explanation:  A whistle-blower is an employee who reports organizational misconduct to the public, such as health and safety matters, waste, corruption, or overcharging of customers.

Difficulty: 2 Medium

Topic:  Ethical Behavior

Learning Objective:  03-04 Explain the importance of ethics and values in effective management.

Bloom’s:  Understand

AACSB:  Ethics

Accessibility:  Keyboard Navigation

 

58) As the CEO of a company that produces products for schools, Amber believes that her company needs not only to produce a profit but also to do things that benefit society. ________ guides Amber’s beliefs.

1.   A) Individual responsibility

2.   B) The desire for sustainability

3.   C) Social responsibility

4.   D) A sense of moral rights

5.   E) Corporate lobbying

 

Answer:  C

Explanation:  Social responsibility is a manager’s duty to take actions that will benefit society’s interests as well as the company’s interests.

Difficulty: 2 Medium

Topic:  Corporate Social Responsibility

Learning Objective:  03-05 Describe the concept of social responsibility and its role in today’s organizations.

Bloom’s:  Understand

AACSB:  Ethics

Accessibility:  Keyboard Navigation

 

 

 

59) The company that Layton owns, the Music Box, is a family-owned company that has been in business for more than 100 years. Layton wants to give back to the people of the community to acknowledge their role in the store’s success. He decides to donate a significant portion of the store’s profits to a charity every year. Layton’s decision is an example of ________ in action.

1.   A) corporate social responsibility

2.   B) corporate governance

3.   C) a code of ethics

4.   D) economic responsibility

5.   E) legal responsibility

 

Answer:  A

Explanation:  Corporate social responsibility (CSR) is the notion that corporations are expected to go above and beyond the law and profit to help society.

Difficulty: 2 Medium

Topic:  Corporate Social Responsibility

Learning Objective:  03-05 Describe the concept of social responsibility and its role in today’s organizations.

Bloom’s:  Understand

AACSB:  Ethics

Accessibility:  Keyboard Navigation

 

60) Sustainable economic development

1.   A) meets future needs without compromising present needs.

2.   B) always generates greater profitability.

3.   C) is the goal of most corporations.

4.   D) meets present needs without compromising the ability of future generations to meet their needs.

5.   E) is an idea proposed by Frank and Lillian Gilbreth to cut costs and increase efficiency.

 

Answer:  D

Explanation:  Sustainability is meeting the needs of the present without compromising the ability of future generations to meet their own needs.

Difficulty: 1 Easy

Topic:  Corporate Social Responsibility

Learning Objective:  03-05 Describe the concept of social responsibility and its role in today’s organizations.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

61) Business scholar Archie Carroll suggested that ________ is the first and primary responsibility of an organization in the global economy.

1.   A) to be a good global corporate citizen, as defined by the host country’s expectations,

2.   B) to make a profit consistent with expectations for international business

3.   C) to be ethical in all of its business practices

4.   D) to obey the law of host countries as well as international law

5.   E) to have a written code of ethics

 

Answer:  B

Explanation:  Making a profit consistent with expectations for international business is at the bottom of Carroll’s global corporate social responsibility pyramid. These priorities are illustrated in the pyramid in Figure 3.3.

Difficulty: 1 Easy

Topic:  Corporate Social Responsibility

Learning Objective:  03-05 Describe the concept of social responsibility and its role in today’s organizations.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

62) Mr. Liang, a wealthy businessman who made his fortune in the oil industry, understands the importance of a college education, so he has donated over $10 million over the last several years to colleges and universities. Mr. Liang’s actions are an example of

1.   A) philanthropy.

2.   B) sustainability.

3.   C) servant leadership.

4.   D) social responsibility.

5.   E) corporate governance.

 

Answer:  A

Explanation:  Philanthropy is defined as making charitable donations to benefit humankind.

Difficulty: 2 Medium

Topic:  Corporate Social Responsibility

Learning Objective:  03-05 Describe the concept of social responsibility and its role in today’s organizations.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

63) Which of the following is an example of a green policy or action?

1.   A) A local factory pollutes the atmosphere via smokestacks that belch out carbon dioxide.

2.   B) The owner of a sole proprietorship announces that she is taking on a business partner.

3.   C) A major publisher donates 10,000 books a year to national literacy groups.

4.   D) 3M encourages employees to experiment with creating new products.

5.   E) Coca-Cola has pledged to replenish (return to nature) all the water it uses to make its beverages.

 

Answer:  E

Explanation:  Green policies and actions benefit the environment. Coca-Cola’s promise to replenish water has an environmental goal.

Difficulty: 2 Medium

Topic:  Ethical Climate

Learning Objective:  03-05 Describe the concept of social responsibility and its role in today’s organizations.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

64) Which of the following describes the system of corporate governance?

1.   A) governing an industry, such as the trucking industry, to protect customers

2.   B) protecting citizens against unethical state and national governments

3.   C) governing a company so that the interests of corporate owners and other stakeholders are protected

4.   D) monitoring an industry, such as law firms, to ensure ethical practices

5.   E) monitoring and limiting corporate political donations

 

Answer:  C

Explanation:  Corporate governance is the system of governing a company so that the interests of corporate owners and other stakeholders are protected.

Difficulty: 1 Easy

Topic:  Corporate Governance

Learning Objective:  03-06 Discuss the role of corporate governance in assessing management performance.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

65) On an organization’s board of directors, inside directors

1.   A) are supposed to be elected from outside the organization and outside directors may be members of the firm.

2.   B) must work for the company and outside directors are also members of the firm.

3.   C) may be members of the firm and outside directors are supposed to be elected from outside the firm.

4.   D) are always retired executives and outside directors typically are employees.

5.   E) must work for the organization and outside directors are paid members of the organization.

 

Answer:  C

Explanation:  Inside directors may be members of the firm; outside directors are supposed to be elected from outside the firm.

Difficulty: 1 Easy

Topic:  Corporate Governance

Learning Objective:  03-06 Discuss the role of corporate governance in assessing management performance.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

66) Outside directors are supposed to be elected yet many are handpicked by the CEO, creating the directors’ lack of

1.   A) interest in company matters.

2.   B) corporate social responsibility.

3.   C) focus on profits.

4.   D) independence from the CEO.

5.   E) a written ethical code.

 

Answer:  D

Explanation:  The biggest complaint concerns the independence of the directors. Inside directors may be members of the firm, but outside directors are supposed to be elected from outside the firm. However, in some companies, the outside directors have been handpicked by the CEO, making oversight difficult.

Difficulty: 2 Medium

Topic:  Corporate Governance

Learning Objective:  03-06 Discuss the role of corporate governance in assessing management performance.

Bloom’s:  Understand

AACSB:  Ethics

Accessibility:  Keyboard Navigation

 

 

 

67) Katelyn, a millennial, is conducting her job search. She wants to work for a company that cares not only about its people, but about the planet too. In reviewing different company portfolios, where in the company would you guide her to be successful with her research?

1.   A) its LinkedIn page

2.   B) its financial reports

3.   C) its social audit documents

4.   D) reports from the Better Business Bureau

5.   E) its retention rate of employees

 

Answer:  C

Explanation:  Success in the triple bottom line can be measured through a social audit, a systematic assessment of a company’s performance in implementing socially responsible programs, often based on predefined goals.

Difficulty: 2 Medium

Topic:  Ethical Behavior

Learning Objective:  03-01 Describe the triple bottom line of people, planet, and profit.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

68) Kendra decided to leave her job in the city and move to the country where she plans to start her own business selling homemade preserves, soaps, lotions, and candles. Kendra’s business would be

1.   A) a sole proprietorship.

2.   B) a partnership.

3.   C) a private investment.

4.   D) employee owned.

5.   E) owned by stockholders.

 

Answer:  A

Explanation:  In the for-profit world, if you’re running a one-person graphic design firm, the owner is just you—you’re what is known as a sole proprietorship.

Difficulty: 2 Medium

Topic:  Internal Stakeholders

Learning Objective:  03-02 Identify important stakeholders inside the organization.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

69) The Parvizians own several oriental rug stores in and around the Washington, DC, metropolitan area. It is expected that as each of the brothers have children they will grow up and take part in the business too. The members of the family are considered

1.   A) sole proprietors.

2.   B) partners.

3.   C) private investors.

4.   D) employee owners.

5.   E) stockholders.

 

Answer:  C

Explanation:  If you’re a member of a family running a car dealership, you’re all owners—you are investors in a privately owned company.

Difficulty: 2 Medium

Topic:  Internal Stakeholders

Learning Objective:  03-02 Identify important stakeholders inside the organization.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

70) When a pharmaceutical company wants to sell a newly tested drug to the public, it must first meet the ground rules established by

1.   A) its strategic allies.

2.   B) the employee unions.

3.   C) special-interest groups.

4.   D) financial institutions.

5.   E) government regulators.

 

Answer:  E

Explanation:  Government regulators are regulatory agencies that establish ground rules under which organizations may operate.

Difficulty: 1 Easy

Topic:  External Stakeholders

Learning Objective:  03-03 Identify important stakeholders outside the organization.

Bloom’s:  Remember

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

71) Angela wants to sell her business. Sadie has expressed an interest in purchasing it, but is worried about whether or not she will qualify a loan with the interest rates going up. Sadie is worried about a(n)

1.   A) economic force.

2.   B) technological force.

3.   C) demographic force.

4.   D) political-legal force.

5.   E) international force.

 

Answer:  A

Explanation:  Economic forces consist of the general economic conditions and trends—unemployment, inflation, interest rates, economic growth—that may affect an organization’s performance.

Difficulty: 2 Medium

Topic:  External Stakeholders

Learning Objective:  03-03 Identify important stakeholders outside the organization.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

72) Which of the following is NOT considered a sociocultural force?

1.   A) LGBTQ restrooms

2.   B) Smoking marijuana laws

3.   C) Millennials choosing Netflix over cable TV

4.   D) Religious exemptions for vaccines

5.   E) Multigenerational households on the rise

 

Answer:  E

Explanation:  Sociocultural forces are influences and trends originating in a country’s, a society’s, or a culture’s human relationships and values that may affect an organization or industry.

Difficulty: 2 Medium

Topic:  External Stakeholders

Learning Objective:  03-03 Identify important stakeholders outside the organization.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

73) Cherries on Top, a national ice cream shop, is struggling financially to keep up with the bigger chains. The top executives have decided to close all the stores in the Northeast and Texas, as that will give them an additional one million dollars to put into marketing. This executive is practicing the

1.   A) individual approach.

2.   B) utilitarian approach.

3.   C) moral-rights approach.

4.   D) justice approach.

5.   E) value system approach.

 

Answer:  B

Explanation:  Ethical behavior in the utilitarian approach is guided by what will result in the greatest good for the greatest number of people. Managers often take the utilitarian approach, using financial performance—such as efficiency and profit—as the best definition of what constitutes “the greatest good for the greatest number.” Thus, a utilitarian “cost–benefit” analysis might show that in the short run the firing of thousands of employees may improve a company’s bottom line and provide immediate benefits for the stockholders.

Difficulty: 2 Medium

Topic:  Ethical Behavior

Learning Objective:  03-04 Explain the importance of ethics and values in effective management.

Bloom’s:  Understand

AACSB:  Ethics

Accessibility:  Keyboard Navigation

 

74) Laura turns off lights when she leaves a room, brings her water bottle from home and refills it throughout the day, and walks to work. Laura is

1.   A) reducing her carbon footprint.

2.   B) increasing her level of exercise.

3.   C) expanding her awareness of social realities.

4.   D) spending time in nature.

5.   E) avoiding people who lack integrity.

 

Answer:  A

Explanation:  To reduce your carbon footprint, engage in activities such as walking or using public transportation more frequently, turning off lights when you leave a room, unplugging devices that are not in use, purchasing a reusable water bottle, reducing your use of air conditioning, reusing glass jars, and annually servicing your air-conditioning/heating units.

Difficulty: 2 Medium

Topic:  Core Competency

Learning Objective:  03-07 Describe how to develop the career readiness competency of professionalism/work ethic.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

 

 

75) North West Jacket Company has a policy that each employee volunteer at the local elementary school reading or helping with math for 2 hours a month. They also donate coats for all children who need them in the winter and give a financial contribution to the school. North West is demonstrating its social responsibility through

1.   A) operating with integrity.

2.   B) 1/1/1 charitable giving.

3.   C) fostering employee success.

4.   D) a journey toward sustainability.

5.   E) natural capital.

 

Answer:  B

Explanation:  The concept of “1/1/1” charitable giving includes donating 1 percent of resources, 1 percent of employees’ time, and 1 percent of the firm’s product to improving communities around the world.

Difficulty: 2 Medium

Topic:  Ethical Climate

Learning Objective:  03-05 Describe the concept of social responsibility and its role in today’s organizations.

Bloom’s:  Understand

AACSB:  Knowledge Application

Accessibility:  Keyboard Navigation

 

76) Olympia Marketing has instituted new policies around misappropriation of assets, conflicts of interests, and kickbacks. Also with the local elections just around the corner, management sent out reminders about political contributions and confidentiality of company information. All of these policies can be found in Olympia Marketing’s

1.   A) employee handbook.

2.   B) policies and procedures manual.

3.   C) moral rights approach.

4.   D) code of ethics.

5.   E) value system.

 

Answer:  D

Explanation:  A code of ethics consists of a formal written set of ethical standards guiding an organization’s actions. Most codes offer guidance on how to treat customers, suppliers, competitors, and other stakeholders. The purpose is to clearly state top management’s expectations for all employees. As you might expect, most codes prohibit bribes, kickbacks, misappropriation of corporate assets, conflicts of interest, and “cooking the books”—making false accounting statements and other records. Other areas frequently covered in ethics codes are political contributions, workforce diversity, and confidentiality of corporate information.

Difficulty: 2 Medium

Topic:  Ethical Behavior

Learning Objective:  03-04 Explain the importance of ethics and values in effective management.

Bloom’s:  Understand

AACSB:  Ethics

Accessibility:  Keyboard Navigation

 

77) Sunset Oil is a large oil drilling company off the Gulf Coast. They want to expand their drilling area and are receiving a great deal of push back from the local community. It will now be on the ballot at the next election. Sunset Oil is concerned about how all of this will impact their bottom line. Which of the following should be a consideration for Sunset Oil?

1.   A) task environment

2.   B) social audit

3.   C) triple bottom line

4.   D) clawbacks

5.   E) crowdfunding

 

Answer:  C

Explanation:  The triple bottom line—representing people, planet, and profit (the 3 Ps)—measures an organization’s social, environmental, and financial performance. In this view of corporate performance, an organization has a responsibility to its employees and to the wider community (people); is committed to sustainable (green) environmental practices (planet); and includes the costs of pollution, worker displacement, and other factors in its financial calculations (profit), matters high in the minds of many of today’s consumers.

Difficulty: 3 Hard

Topic:  Ethical Behavior

Learning Objective:  03-01 Describe the triple bottom line of people, planet, and profit.

Bloom’s:  Analyze

AACSB:  Analytical Thinking

Accessibility:  Keyboard Navigation