61. 62. True/False 63. 1. Telemarketing and selling on the Internet are both example of direct marketing. 64. 2. An advantage of a “S” corporation over a conventional corporation is that the profits of the business are taxed as regular personal income of the owners, thus avoiding the problem of double taxation. 65. 3. Today, franchising accounts for about 40 percent of the national retail sales in the United States. 66. 4. Although entrepreneurs frequently earn huge profits for themselves, their effect on society as a whole is quite small. 67. 5. In general, entrepreneurs are more interested in personal achievement than in power. 68. 6. To be classified as a small business, a firm must have fewer than 100 employees. 69. 7. Because it is written before the business even begins to operate, a business plan by its very nature is vague. 70. 8. ISO 9000 refers to a set of international standards for quality management and assurance. 71. 9. Efforts by the Federal Reserve System to control the money supply and interest rates are known as monetary policy. 72. 10. The intent of the Sherman Antitrust Act of 1890 was to encourage the growth of large business organizations in the United States in order to compete with the more established firms in Europe. 73. 74. Multiple Choice 75. 11. The basic difference between businesses and organizations such as charities and government agencies is that businesses 76. a. Seek to earn a profit 77. b. Produce tangible goods rather than providing services 78. c. Have a limited life 79. d. Must have a Board of Directors 80. 12. In the United States, the level of taxes and government regulations 81. a. Influences where entrepreneurs locate their businesses 82. b. Is the same in all areas of the country 83. c. Seems to have no effect on the creation of wealth 84. d. Is so high that the American economy is now classified as pure socialism 85. 13. Which of the statements about demography is most accurate? Demographic studies 86. a. Are important for the government, but not for private businesses. 87. b. Suggest that the number of two-income families will decline in the future. 88. c. Provide businesses and individuals key insight into business and career opportunities of the future. 89. d. Are an important source of information about weather and climate. 90. 14. Given the current state of global competition 91. a. U.S. firms that produce quality products are able to charge premium prices for their products 92. b. Consumers now expect high-quality products and good service at low prices 93. c. The U.S. government must subsidize American farmers and manufacturers, as well as foreign producers, if they are to survive. 94. d. U.S. firms should be able to dominate most foreign markets because the United States is the only nation where high quality is achieved in most industries. 95. 15. The quantity of a good or service that manufacturers or owners are willing to sell at different prices during a specific time period is known as the 96. a. Supply of that product 97. b. Demand for that product 98. c. Equilibrium function for that product 99. d. Production possibilities curve for that product 100. 101. 102. 16. Pepsi Cola has entered into a long-term contract with a South African beverage business. The contract calls for the South African firm to produce and market Pepsi Cola in South Africa. Pepsi will receive a royalty on each case of soda sold. This is an example of 103. a. Licensing 104. b. A joint venture 105. c. A foreign subsidiary 106. d. Countertrading 107. 17. Which theory states that a nation should produce and sell goods that it produces most efficiently to other countries, and buy goods produced more efficiently by other countries? 108. a. Comparative advantage 109. b. Absolute advantage 110. c. Factor advantage 111. d. Bilateral advantage 112. 18. Obeying the law is _______________ ethical behavior 113. a. The same as 114. b. The first step towards 115. c. The opposite of 116. d. The last step towards 117. 19. Studies have shown that entrepreneurs in the United States 118. a. Often have created great personal wealth for themselves, but have had a minor effect on the U.S. economy as a whole 119. b. Have started many small firms that late became major corporations employing thousands of workers 120. c. Have been successful only when they worked in partnership with the federal government 121. d. Played an important role in the United States when the economy was small but are less important now that the United States is the world’s dominant economic power. 122. 20. The social movement designed to increase and strengthen the rights and powers of buyers in business transactions is called 123. a. Environmentalism 124. b. Capitalism 125. c. Socialism 126. d. Consumerism 127. 21. All of the following would be considered unethical manners in a business, EXCEPT 128. a. Overstating an expense report 129. b. Forecasting sales for the next year 130. c. Withholding product safety information 131. d. Ignoring unsafe working conditions 132. 22. One advertising strategy used by McDonald’s is to convince potential buyers that their products are different from those of their competitors. The goal of this strategy is to achieve 133. a. Product differentiation 134. b. An equilibrium price 135. c. A perfectly competitive market 136. d. Quantity supplied that is greater than the quantity demanded 137. 23. Kwantum Computers attempts, where possibly, to communicate the same promotional message about their product everywhere in the world their product is sold. This is an example of 138. a. International foolishness 139. b. Global marketing 140. c. Multinational selling 141. d. Countertrading 142. 143. 144. 24. The U.S. government has announced a 5 million-pound annual limit on been imported from the country of Argentina. This type of trade restriction is called a/an 145. a. Embargo 146. b. Revenue tariff 147. c. Import quota 148. d. Export cap 149. 25. Attempting to misrepresent your income when calculating your tax liability is an example of 150. a. A good business practice 151. b. Tax accountants at their best 152. c. Illegal behavior 153. d. Profit maximization 154. 26. The position a firm takes on issues that affect the corporation as well as society is known as its 155. a. Corporate philanthropy 156. b. Corporate policy 157. c. Corporate ethnicity 158. d. Corporate philosophy 159. 27. People who can affect or are affected by the achievement of an organization’s objectives are referred to as 160. a. Lienholders 161. b. Stockholders 162. c. Stakeholders 163. d. Leaseholders 164. 28. The NBC peacock and the Golden Arches of McDonald’s are examples of a 165. a. Trademark 166. b. Submarine patent 167. c. Copyright 168. d. Copy protection 169. 29. Enterprise zones are areas that 170. a. The government has set aside for use by major corporations that promise to spend at least $10 million to create new jobs 171. b. Feature low taxes and government support in an effort to encourage entrepreneurship 172. c. The government has recognized as having the fastest growth rates in the country 173. d. Are characterized by government ownership of small businesses 174. 30. The warranty you receive in the box with a new toaster or VCR is a/an 175. a. Implied warranty 176. b. Express warranty 177. c. Uniform warranty 178. d. Commercial warranty 179. 31. A _____________ is the share of profits or percentage of a franchisee pays to a franchiser 180. a. Royalty 181. b. Dividend 182. c. Premium 183. d. Co-pay 184. 32. Johnson Products charges larger firms a lower price for goods than it charges small firms. This practice is called price 185. a. Discrimination 186. b. Reversal 187. c. Cutting 188. d. Maintenance 189. 190. 191. 33. A business organization that is owned, and usually managed, by one person is a 192. a. Closed corporation 193. b. Subchapter S corporation 194. c. Sole proprietorship 195. d. Limited partnership 196. 34. Any debts or damages incurred by a firm organized as a sole proprietorship are 197. a. The sole responsibility of the owner 198. b. Limited to the amount the owner has invested in the firm 199. c. Paid for our of a reserve contingency fund that sole proprietors are required by law to set up 200. d. Normally covered by liability insurance 201. 35. A partner who invests money in a business, but who does NOT take an active role in the management or assume liability for the firm’s losses is known as a/an 202. a. Implied partner 203. b. Limited partner 204. c. Partial partner 205. d. Corporate partner 206. 36. When comparing partnerships to sole proprietorships, an ADVANTAGE of partnerships is that they 207. a. Are less risky, because each partner is responsible for only a specified fraction of the firm’s debts 208. b. Are easier to terminate 209. c. Cost less to organize 210. d. Give the firm a stronger financial foundation 211. 37. Marie Lively recently invested $4,000 that her aunt had left her in a stock in the McBun Development Corporation. Marie has become a/an ________ of McBun Corporation 212. a. Owner 213. b. Manager 214. c. Creditor 215. d. Partner 216. 38. When one company buys the property and obligations of another company, the purchase is known as a/an 217. a. Cooperative 218. b. Hostile takeover 219. c. Leveraged buyout 220. d. Acquisition 221. 39. An event where many marketers set up displays to be seen by potential customers is called a 222. a. Promotional event 223. b. Direct marketing show 224. c. Public relations event 225. d. Trade show 226. 40. A detailed written statement that describes the nature of the business, the target market, the advantages of the business will have in relation to the competition, and the resources and qualifications of the owners is referred to as the 227. a. Business plan 228. b. Ratio analysis 229. c. Profit and loss statement 230. d. Professional plan 231. 232. Answer Key 233. 1. T 234. 2. T 235. 3. T 236. 4. F 237. 5. T 238. 6. F 239. 7. F 240. 8. T 241. 9. T 242. 10. F 243. 244. 11. A 245. 12. A 246. 13. C 247. 14. B 248. 15. A 249. 16. A 250. 17. A 251. 18. B 252. 19. B 253. 20. D 254. 255. 21. B 256. 22. A 257. 23. B 258. 24. C 259. 25. C 260. 26. B 261. 27. C 262. 28. A 263. 29. B 264. 30. B 265. 266. 31. A 267. 32. A 268. 33. C 269. 34. A 270. 35. B 271. 36. D 272. 37. A 273. 38. D 274. 39. D 275. 40. A 276. Chapter 4: Demonstrating Ethical Behavior and Social Responsibility 277. I. ETHICS IS MORE THAN LEGALITY. 278. LEARNING GOAL 1 279. Explain why legality is only the first step in behaving ethically. 280. A. Recent scandals at Enron, Arthur Andersen, WorldCom, Tyco, and ImClone have focused attention on the subject of ETHICS. 281. 1. What can be done to restore trust in the free-market system? 282. a. Those who have broken the law need to be PUNISHED ACCORDINGLY. 283. b. Also helpful: New laws making ACCOUNTING RECORDS MORE TRANSPARENT and more laws making BUSINESSPEOPLE MORE ACCOUNTABLE. 284. 2. Moral and ethical behavior are not the same as following the law. 285. a. Moral and ethical behavior goes BEYOND the law. 286. b. Ethics deals with the proper relations with and responsibilities toward other people. 287. c. LEGALITY deals with much narrower issues. 288. d. It only refers to laws we have written to protect ourselvesCmany immoral acts fall within our laws. 289. B. ETHICAL STANDARDS ARE FUNDAMENTAL. 290. 1. ETHICS refers to the standards of moral behavior; that is, behavior that is accepted by society as right versus wrong. 291. 2. Many Americans have few moral absolutes and make DECISIONS SITUATIONALLY. 292. 3. Historically, there have been moral truths that have guided leaders. 293. 4. Even in today’s diverse culture, there are still COMMON STANDARDS OF ETHICAL BEHAVIOR. 294. 5. All major religions support a version of the GOLDEN RULE. 295. C. ETHICS BEGINS WITH EACH OF US. 296. 1. Americans are not always honest and honorable. 297. a. A recent survey revealed that two-thirds of the population NEVER GAVE TIME to their communities. 298. b. Nearly one-third said they NEVER CONTRIBUTED to a charity. 299. c. Half of college students said that they had CHEATED ON AN EXAM in the last year. 300. 2. ETHICAL BEHAVIOR BEGINS WITH YOU AND ME. 301. a. We cannot expect “society” to become more moral and ethical unless we as individuals commit to becoming more moral and ethical ourselves. 302. 3. It is important to KEEP ETHICS IN MIND when making a business decision. 303. a. There is not always an easy choice. 304. b. Sometimes the obvious solution from an ethical point of view has drawbacks from a personal or professional point of view. 305. c. Sometimes there is no desirable alternative, a situation referred to as ETHICAL DILEMMAS. 306. LEARNING GOAL 2 307. Ask the three questions one should answer when faced with a potentially unethical action. 308. 4. Three “ETHICS CHECK QUESTIONS” can help individuals and organizations be sure their decisions are ethical: 309. a. Is it LEGAL? 310. b. Is it BALANCED? 311. c. How will it make me FEEL ABOUT MYSELF? 312. 5. Individuals and companies that develop a STRONG ETHICS CODE have a better chance than most of behaving ethically. 313. 314. II. MANAGING BUSINESS ETHICALLY AND RESPONSIBILY. 315. A. ORGANIZATIONAL ETHICS BEGINS AT THE TOP. 316. LEARNING GOAL 3 317. Describe management’s role in setting ethical standards. 318. 1. People learn their standards and values from OBSERVING WHAT OTHERS DO, not what they say. 319. 2. Corporate values are INSTILLED BY THE LEADERSHIP and example of strong top managers. 320. 3. CEOs surveyed recently attributed unethical employee conducted to the “failure of the organization’s leadership in establishing ethical standards and culture.” 321. 4. Any trust and cooperation between workers and managers must be based on FAIRNESS, HONESTY, OPENNESS, AND MORAL INTEGRITY. 322. 5. A business should be managed ethically for many reasons: 323. a. To maintain a good reputation. 324. b. To keep existing customers. 325. c. To avoid lawsuits. 326. d. To reduce employee turnover. 327. e. To avoid government intervention. 328. f. To please customers, employees, and society. 329. g. Simply to do the right thing. 330. 6. Some managers think ETHICS IS A PERSONAL MATTERCthat they are not responsible for an individual’s misdeeds. 331. a. Individuals do not usually act aloneCthey need the implied, if not the direct, COOPERATION OF OTHERS to behave unethically in a corporation. 332. b. After the disastrous 1992 experience of Sears Automotive Services, Sears replaced 23,000 pages of policies and procedures with a simple booklet called “Freedoms & Obligations.” 333. 7. However, in some corporations, such as Sears in the example above, corporate standards may work the other way. 334. B. SETTING CORPORATE ETHICAL STANDARDS. 335. LEARNING GOAL 4 336. Distinguish between compliance based and integrity based ethics codes, and list the six steps in setting up a corporate ethics code. 337. 1. Eighty percent of corporations have WRITTEN CODES OF ETHICS. 338. 2. Although ethics codes vary greatly, they can be classified into TWO MAJOR CATEGORIES: compliance based and integrity based. 339. a. COMPLIANCE BASED ETHICS CODES are ethical standards that emphasize preventing unlawful behavior by increasing control and by penalizing wrongdoers. 340. b. INTEGRITY BASED ETHICS CODES are ethical standards that define the organization’s guiding values, create an environment that supports ethically sound behavior, and stress a shared accountability among employees. 341. 3. A 6-STEP PROCESS can help improve America’s business ethics. 342. a. TOP MANAGEMENT must adopt and unconditionally support an explicit code of conduct. 343. b. EMPLOYEES must understand that expectations for ethical behavior begin at the top and that senior management expects all employees to act accordingly. 344. c. MANAGERS and others must be trained to consider the ethical implications of all business decisions. 345. d. AN ETHICS OFFICE MUST BE SET UP. 346. i. PHONE LINES should be established so that employees who don’t want to be seen with an ethics officer can inquire about ethical matters anonymously. 347. ii. WHISTLEBLOWERS (people who report illegal or unethical behavior) must feel protected from retaliation. 348. iii. The CORPORATE AND CRIMINAL FRAUD ACCOUNTABILITY ACT (2002) contains protections for corporate whistleblowers. 349. e. OUTSIDERS such as suppliers, subcontractors, distributors, and customers must be told about the ethics program. 350. i. Often pressure to put aside ethical considerations comes from the outside. 351. ii. It helps employees resist such pressure when everyone knows what the ethical standards are. 352. f. THE ETHICS CODE MUST BE ENFORCED. 353. i. If rules are broken, CONSEQUENCES should follow quickly. 354. ii. This will communicate to employees that the code is serious and cannot be broken. 355. 4. The selection of AN ETHICS OFFICER is another important factor to encourage ethical behavior. 356. 357. III. CORPORATE SOCIAL RESPONSIBILITY. 358. LEARNING GOAL 5 359. Define and examine corporate responsibility to various stakeholders. 360. A. DEFINITIONS. 361. 1. CORPORATE SOCIAL RESPONSIBILITY is a business’s concern for welfare of society. 362. 2. SOCIAL PERFORMANCE of a company has several dimensions: 363. a. CORPORATE PHILANTHROPY is the dimension of social responsibility that includes charitable donations to nonprofit organizations. 364. b. CORPORATE RESPONSIBILITY is the dimension of social responsibility that includes everything from hiring minority workers to making safe products. 365. c. CORPORATE POLICY refers to the position a firm takes on social and political issues. 366. 3. IMPACT OF CORPORATIONS ON SOCIETY. 367. a. Many people get a one-sided view of the impact that companies have on society. 368. b. Few people see the POSITIVE IMPACTS, such as the commitments of many companies to volunteerism, such as Xerox’s Social Service Leave program. 369. c. The federal USA Freedom Corps was created to oversee Citizen Corps, a program designed to strengthen homeland security efforts. 370. d. In a recent survey, two-thirds of the MBA students surveyed said that they would take a lower salary to WORK FOR A SOCIALLY RESPONSIBLE COMPANY. 371. e. Social responsibility is seen differently through the eyes of various stakeholders to whom businesses are responsible. 372. B. RESPONSIBILITY TO CUSTOMERS. 373. 1. Business is responsible to SATISFY CUSTOMERS with goods and services of real value. 374. 2. Pleasing the customer is not as easy as it seems. 375. 3. Three out of five new businesses failCperhaps because their owners failed to please their customers.
Posted on: Sat, 14 Sep 2013 05:20:50 +0000
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