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Strategic Management Practice Test: Ethical Business Strategies, Social Responsibility, and Environmental Sustainability

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Strategic Management Practice Test: Ethical Business Strategies, Social Responsibility, and Environmental Sustainability

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1. Notions of right and wrong, fair and unfair, moral and immoral, ethical and unethical

ultimately depend on the circumstances—nothing is really black or white when it comes to ethical standards.are present in all societies, organizations, and individuals; some of the most important concepts (for example, being truthful) of what is right and what is wrong resonate with people of most cultures, and are thus universal.ultimately depend on a person’s own values and beliefs.are governed mainly by the thinking and writings of religious clerics at the School of Morally Correct Thinking and Behavior in Geneva, Switzerland.vary enormously from religion to religion and country to country across the world.

2. The moral case for why a company should actively promote the betterment of society and act in a manner benefitting all its stakeholders

is based on the principle of treating people fairly and with respect.rests on the principle that a business is duty bound to fulfill its social contract to serve the interests of all stakeholders in a business enterprise.boils down to “it’s the right thing to do.”is based on the conviction that improving the well-being of society ranks higher in priority and is certainly more noble than making a profit and serving the interests of shareholders.is based on the principle that business activities lack real legitimacy and have few socially redeeming qualities unless and until a company exerts a significant and sincere effort to give something back to the community.

3. Which one of the following is false as concerns the merits of why acting in a socially responsible manner is “good business”?

To the extent that a company’s socially responsible behavior wins applause from consumers and fortifies its reputation, a company may win additional patronage.Some employees feel better about working for a company committed to improving society—a condition that can contribute to lower turnover and better worker productivity.Companies with deservedly good reputations for contributing time and money to the betterment of society are better able to attract and retain employees compared to companies with tarnished reputations.Acting in a socially responsible manner nearly always results in higher profits and a higher stock price for shareholders.The higher the public profile of a company or brand, the greater the scrutiny of its activities and the higher the potential for it to become a target for pressure group action.

4. Which of the following statements is false as concerns the various approaches company managers can take in dealing with or managing ethical conduct?

Companies using the unconcerned or non-issue approach ascribe to the view that ethics has no place in the conduct of business and that companies should not be morally accountable for their actions.Companies that adopt a compliance mode usually do such things as making the company’s code of ethics a visible and regular part of communications with employees, having ethics training programs, appointing a chief ethics officer or ethics ombudsperson, inThe main objective of the compliance approach is to protect against adverse publicity and any damaging consequences brought on by headlines in the media, outside investigation, threats of litigation, punitive government action, or angry or vocal shareholders.One of the weaknesses of the compliance approach is that moral control resides in the company’s code of ethics and in the ethics compliance system rather than in an individual’s own moral responsibility for ethical behavior and in strong peer pressures foCompanies using the damage control approach usually make some concession to window-dressing ethics, going so far as to adopt a code of ethics (so their executives can point to it as evidence of their ethical commitment should any ethical lapses on the com

5. Which of the following is not a particularly sound or valid reason why a company’s strategy should be ethical?

An unethical strategy reflects badly on the character of the company personnel involved.A strategy that is unethical in whole or in part is morally wrong.Most all shareholders believe it is honorable for their company to pursue an ethical strategy (even though it usually entails making less profit) and are turned off by company efforts to make greater profits via unethical means.Customers shun companies known for their shady behavior and ethically upstanding company personnel are repulsed by a work environment where unethical behavior is condoned. An ethical strategy is in the self-interest of shareholders, partly because an unethical strategy can damage a company’s reputation and partly because unethical behavior can be very costly in terms of fines and penalties, legal and investigative costs, cu

6. One of the big difficulties and challenges that a company encounters in using the “compliance” approach to managing ethics-related issues and ethics conduct is

that the locus of moral control is shifted to individual employees and away from top management.being clever in signaling employees that the company’s code of ethics is mere window-dressing and that employees should not expect that top executives will “walk the talk” and actually practice what they preach. writing compliance procedures that look strong but really are pretty weak in terms of pushing people to observe the espoused ethical standards.inability to deter inherently immoral company personnel from breaking the rules.a proliferation of ethical rules and guidelines and an environment where employees come to rely on the existing rules for moral guidance—a condition that fosters a mentality of what is not forbidden is allowed.

7. An intentionally amoral manager is one who

believes business and ethics are not to be mixed because different rules apply in business as compared to other realms of life.is ethically-principled most of the time but who knowingly and willingly stoops to unethical behavior if there’s low risk of discovery and the action or decision has a sizable positive effect on company profitability.views the observance of high ethical standards (doing more than what is required by law) as too Sunday-schoolish for the tough competitive world of business, even though observing some higher ethical considerations may be appropriate in life outside of business.strongly believes that whatever is legal is also ethical.deliberately and maliciously violates ethical principles on a regular basis.

8. A company’s social responsibility strategy is typically comprised of all but which one of the following elements?

Actions to enhance workforce diversity and make the company a great place to workConscious efforts to ensure that all elements of the company’s strategy are ethical and actions to protect or enhance the environment (beyond what is legally required)Actions to keep prices low enough that the company’s profits will not be viewed by the general public as obscenely high or exorbitantMaking charitable contributions and donating money and the time of company personnel to community service endeavorsActions to protect or enhance the environment

9. The business case for an ethical strategy

starts with managers who understand there is big difference between adopting values statements and codes of ethics that serve merely as window dressing and those that truly paint the white lines for a company’s actual strategy and business conduct.begins with ethical guidelines that help send the message that management takes the observance of ethical norms seriously and that behavior falling outside ethical boundaries will have negative consequences.emphasizes that pursuing unethical strategies not only damages a company’s reputation but can also have costly consequences that are wide ranging.starts with numerous ethical rules and guidelines and an environment where employees rely on these rules for moral guidance.focuses primarily on costs that are difficult to quantify (for example, customer defections and adverse effects on employee productivity) but can often be the most devastating.

10. Which one of the following is not part of the moral case for why a company should actively promote the betterment of society?

Acting in a socially responsible manner is in the overall best interest of shareholders. In return for society granting a business a “license to operate” and not be unreasonably restrained in its pursuit of a fair profit, a business is obligated to act as a responsible citizen and do its fair share to promote the general welfare. Every business has a moral duty to take corporate citizenship into consideration and to do what’s best for shareholders within the confines of discharging its duties to operate honorably, provide good working conditions to employees, be a good environmentMost business leaders can be expected to acknowledge that socially responsible actions and environmental sustainability are important and that businesses have a duty to be good corporate citizens.“It’s the right thing to do.”

11. Which of the following is not generally on a company’s menu of actions to consider in crafting a strategy of social responsibility?

Making charitable contributions, donating money and the time of company personnel to community service endeavors, supporting various worthy organizational causes, and reaching out to make a difference in the lives of the disadvantagedActions to look out exclusively for the best interests of shareholders Actions to create a work environment that enhances employee well-being and makes the company a great place to workActions to ensure that the company’s strategy is ethical and that ethical principles will be observed in operating the businessActions to protect or enhance the environment (apart from what is required by governmental authorities)

12. The damage control approach to dealing with or managing ethical conduct

is favored at companies whose managers are intentionally amoral, but who are wary of scandal and adverse public relations fallout that could cost them their jobs or tarnish their careers.is prevalent at companies whose executives are moral and want to put on a public face of being ethically-principled. is appropriate for companies whose managers are highly concerned about having ethically upstanding reputations.is perfectly suited for ethically-principled companies where company personnel are highly accustomed to behaving in an ethical fashion (because at such companies any ethical lapses are easily subject to damage control).is well-suited for companies with no history of ethical problems.

13. Companies that adopt the principle of ethical relativism in providing ethical guidance to company personnel

quickly find themselves on a slippery slope with no higher order moral compass if they operate in countries where ethical standards vary considerably from country to country.base their standards of what is ethical and what is unethical on the Global Code of Ethical Conduct first developed in 1935 and since subscribed to by the governments of 180 countries.end up allowing each company employee to determine what set of ethical standards to observe.have no fair way to judge the ethical correctness of the conduct of company personnel.have a one-size-fits-all set of ethical standards.

14. Ethical principles in business

are not materially different from ethical principles in general.are generally more stringent than the ethical principles for society at large. deal chiefly with the rules each company’s top management and board of directors make about “what is right” and “what is wrong.”are generally less stringent than the ethical principles for society at large.deal chiefly with the actions and behaviors required to operate companies in a socially responsible manner.

15. The major drivers of unethical managerial behavior include

widespread managerial belief in the ethical relativism school of thinking. intense competitive pressures.ethically corrupt corporate cultures, heavy pressures on company managers to meet or beat performance targets, and overzealous pursuit of personal gain, wealth, and other self interests.an aversion to ethical correctness on the part of top executives and a belief that unethical behavior is unimportant and probably won’t be discovered.greed, atheism, pervasive managerial immorality, and a general lack of scruples on the part of top executives regarding how customers and suppliers should be treated.

16. Which of the following represents a justifiable reason for why a company’s strategy should be ethical?

Pursuing an unethical strategy damages a company’s reputation and can have costly consequences.A strategy that is unethical in whole or in part is morally wrong.An unethical strategy reflects badly on the character of the company personnel involved.All of these.An ethical strategy is good business and is in the best interest of shareholders.

17. Which one of the following statements about the ethical relativism school of thinking is false?

There are few absolutes when it comes to business ethics and thus few ethical absolutes for consistently judging a company’s conduct in various countries and markets.According to the ethical relativism school of thinking, a “one-size-fits-all” template for judging the ethical appropriateness of business actions and the behaviors of company personnel does not exist. In a multinational company, application of ethical relativism equates to multiple sets of ethical standards.A company that adopts the principle of ethical relativism and holds company personnel to local ethical standards necessarily assumes that what prevails as local morality is an adequate guide to ethical behavior—this assumption is ethically dangerous.The best and fairest way for a multinational company to approach the enforcement of ethical standards companywide is to reject ethical universalism and pursue ethical relativism.

18. The business case for why companies should act in a socially responsible manner includes such reasons as

it reduces the risk of reputation-damaging incidents.it is in the best interest of shareholders.it can lead to increased buyer patronage.All of these.it generates internal benefits (as concerns employee recruiting, workforce retention, employee morale, and training costs).

19. Which of the following is not a stance a company can take in dealing with or managing ethical conduct at any given point in time?

The compliance approachThe socially responsible approachThe ethical culture approach The unconcerned or non-issue approach The damage control approach

20. Ethical principles as they apply to business conduct and business decisions

are not materially different from ethical principles in general.deal chiefly with standards a company has (and that are elaborated in its code of ethics) about what is right and wrong insofar as the conduct of its business is concerned and about what behaviors are expected of company personnel.are generally less stringent than the ethical principles for society at large because it is well understood that businesses should not be expected to operate any differently than what the law requires of them.involve the rules a company’s top management and board of directors make about “what is right” and “what is wrong.”deal chiefly with the behaviors that a company’s board of directors expects of all company personnel in both their conduct on-the-job and their conduct off-the-job.

21. One of the big difficulties or challenges that a company encounters in using the “ethical culture” approach managing ethics-related issues and ethics conduct is

the lack of strong compliance procedures to deter morally corrupt company personnel from deliberately flaunting cultural norms and engaging in unethical behavior.greater susceptibility to ethical scandal. relying too heavily on peer pressures and cultural norms to enforce the espoused ethical standards and underutilizing compliance enforcement procedures.overemphasizing the creation of a work climate where everyone is an ethics watchdog and whistle-blowing is required. that the locus of moral control is the company’s code of ethics.

22. Which one of the following is not a key trait of the ethical culture approach to dealing with or managing ethical conduct?

Compliance procedures need to be an integral part of the ethical culture approach to help send the message that management takes the observance of ethical norms seriously and that behavior that fall outside ethical boundaries will have negative consequencThe ethical culture approach makes little use of either a code of ethics or ethics compliance procedures.There are strong peer pressures from coworkers to observe ethical norms.The ethical culture approach is favored at companies where top managers are very concerned about gaining employee buy-in to the company’s ethical standards, business principles, and corporate values and see the company’s code of ethics and/or its statemenThe integrity of the ethical culture approach depends heavily on the ethical integrity of the executives who create and nurture the culture.

23. Which of the following should be on a company’s menu of actions to consider in crafting a strategy of social responsibility?

Actions (over and above what is required) to protect or enhance the environment, including both those environmental problems stemming from the company’s own business activities and those problems outside the company’s immediate sphere of operationsActions to ensure that the company’s strategy is ethical and that ethical principles will be observed in operating the businessActions to create a work environment that enhances employee well-being and makes the company a great place to workAll of these.How much and what kinds of resources it will allocate to charitable contributions, community service endeavors, various worthy causes, and helping the disadvantaged

24. The litmus test of a company’s code of ethics is

the extent to which it is embraced in crafting strategy and in the day-to-day operations of the business.the extent to which a company’s approach to ethical behavior mirrors the ethical principles for society at large.based on the rules a company’s top management and board of directors make about “what is right” and “what is wrong.”determined by the ethical behaviors expected of company personnel in the course of doing their jobs.the degree to which it is connected to a company’s statement of core values.

25. Which one of the following is not a part of the business case for why companies should act in a socially responsible manner?

Acting in a socially responsible manner is in the overall best interest of shareholders.To the extent that a company’s socially responsible behavior wins applause from consumers and fortifies its reputation, a company may win additional patronage.Acting in a socially responsible manner reduces the risk of reputation-damaging incidents.Acting in a socially responsible manner can generate internal benefits (as concerns employee recruiting, workforce retention, employee morale, and training costs).Every business has a moral duty to be a good corporate citizen.

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25 Questions

❤ If you liked Fatskills, consider supporting us by checking out The Life Manuals You Never Got.

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All trademarks, logos and brand names are the property of their respective owners. All company, product and service names used in this website are for identification purposes only. Use of these names, trademarks and brands does not imply endorsement.

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Without work one finishes nothing. - Ralph Waldo Emerson
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