Deck 2: Stakeholders, Managers, and Ethics

Question 1

"Self-dealing" is the term used to describe the conduct of managers who take advantage of their position to act in their own interests rather than in the interests of other stakeholders.

Answer 1

True

Question 2

Shareholders are important inside stakeholders.

Answer 2

True

Question 3

Stock-based compensation schemes help solve the agency problem by aligning individual behaviors with corporate strategy.

Answer 3

True

Question 4

A promotion tournament is a vehicle by which managers can help employees focus on long-term, rather than short-term objectives.

Question 5

Customers are usually the largest outside stakeholder group.

Question 6

The unethical practices of Westland/Hallmark Meat Co. resulted in numerous deaths due to the consumption of contaminated beef.

Question 7

All stakeholder groups are equally important.

Question 8

Because stakeholder goals conflict, an organization should just attempt to minimally satisfy the majority of stakeholders.

Question 9

Moral hazard is a condition that exists when managers must make quick decisions that may go against their ethical principles.

Question 10

Outside stakeholders include shareholders, managers, and the workforce.

Question 11

The subprime mortgage meltdown has resulted in an increased emphasis on large institutional investment companies to protect consumer interests.

Question 12

The board of directors selects the organization's top-management team.

Question 13

The concept of stockholder rights has become increasingly important in the 2000s.

Question 14

The hierarchy can be defined as the vertical ordering of organizational roles according to their relative authority.

Question 15

The stakeholder group with the ultimate authority over the organization's resources is the employees.

Question 16

Because humans have free will, the law has very little impact on ethical behavior.

Question 17

When employees feel that contributions exceed inducements, they are likely to withdraw their support for the organization.

Question 18

Neither laws nor ethics are fixed principles that remain constant over time.

Question 19

The CEO selects the organization's top-management team.

Question 20

Contributions are defined as what the organization gives back to society.

Question 21

The rewards that stakeholders receive for participating in an organization are called ________.

A) kickbacks
B) inducements
C) payoffs
D) contributions

Question 22

One problem with the utilitarian model is that it leaves managers to determine the relative importance of each stakeholder group.

Question 23

Which of the following inside stakeholders contributes money and capital?

A) The workforce
B) Shareholders
C) Trade unions
D) Managers

Question 24

A manager following the justice model when faced with a moral decision would most likely examine how fair the decision would be to affected stakeholders.

Question 25

The "Tragedy of the Commons" example refers to the ethical dilemmas faced when individuals pursue their own self interests.

Question 26

Behaving ethically can reduce transaction costs through the reputation effect.

Question 27

________ are people who have an interest or claim in an organization, in what it does, and in how well it performs.

A) Organizers
B) Technicians
C) Stakeholders
D) Foreign officials

Question 28

Gillette has been touted as a highly ethical organization due to its refusal to test cosmetics on animals.

Question 29

Which of the following is an inducement?

A) Social and economic infrastructure
B) Stock appreciation
C) High-quality inputs
D) Free and fair collective bargaining

Question 30

Stakeholders will generally participate in an organization if:

A) payments exceed contributions.
B) inducements exceed kickbacks.
C) inducements exceed contributions.
D) contributions exceed inducements.

Question 31

A manager following the utilitarian model when faced with a moral decision would most likely examine what produces the greatest good for the greatest number of people.

Question 32

Ethical rules often develop to slow the pursuit of self-interest.

Question 33

A manager following the utilitarian model when faced with a moral decision would most likely examine the fundamental rights and privileges of the people affected by the decision.

Question 34

Which of the following is an inside stakeholder group?

A) Trade unions
B) Shareholders
C) Suppliers
D) Customers

Question 35

The unethical practices at Westland/Hallmark Meat Co. resulted in what?

A) The untimely deaths of 3 citizens who consumed bad beef
B) A restructuring of the entire company
C) Criminal prosecution and imprisonment of those directly implicated in the production of unsafe meat
D) The creation of a new FDA governing board

Question 36

The skills that organizations require to perform tasks are called ________.

A) dividends
B) inducements
C) payments
D) contributions

Question 37

The justice model tends to be the one that effective managers rely upon the most in making decisions.

Question 38

Which of the following is a contribution?

A) One's knowledge
B) Gaining organizational power
C) Dividends
D) Salaries

Question 39

An organization's mission statement can be used to guide ethical behavior.

Question 40

Whole Foods has been successful in part because it realizes that the most important stakeholders are the team members and investors.

Question 41

Who usually ensures that an organization's internal operations match strategic objectives?

A) The executive vice president of production
B) The president
C) The CEO
D) The production manager

Question 42

Determining management's rewards and incentives is primarily the responsibility of ________.

A) the board of directors
B) the shareholders
C) the CEO
D) corporate management

Question 43

Which of the following is an outside stakeholder group?

A) Shareholders
B) The workforce
C) Managers
D) Unions

Question 44

Which of the following managers has a line role?

A) Sales manager
B) R&D manager
C) Executive vice president of finance
D) Production manager

Question 45

Which of the following statements about the CEO is false?

A) He or she determines top management's rewards and incentives.
B) He or she influences stakeholders.
C) He or she is the chief operating officer.
D) He or she allocates resources to subunits.

Question 46

What was Tom LaSora's impact on the union-management relationship at Chrysler?

A) The more conciliatory dealings has resulted in more agreements, and better work practices.
B) His hard line approach has made dealings much more hostile than either Ford or GM have experienced.
C) His anti-union stance has resulted in overall lower automobile costs for the consumer.
D) His "customer first" approach has resulted in a superior dealer network.

Question 47

The problem of doctors owning stock in hospitals is one of:

A) organizational structure.
B) potentially competing goals.
C) the conversion process.
D) organizational design.

Question 48

The primary goal of capitalistic organizations is to:

A) satisfy customers.
B) satisfy employees.
C) maximize shareholder wealth.
D) form long-term relationships with suppliers.

Question 49

The chain of command in a large organization is as follows:

A) Board, CEO, executive vice presidents, presidents.
B) CEO, president, executive vice presidents, vice presidents.
C) CEO, president, senior vice presidents, executive vice presidents.
D) President, divisional managers, executive vice presidents, vice presidents.

Question 50

Which of the following managers has a staff role?

A) Production manager
B) Assembly line supervisor
C) R&D manager
D) Divisional manager

Question 51

Balancing short-term and long-term goals is hard because:

A) stakeholder groups have different preferences for the time frame an organization should use to pursue goals.
B) official goals focus on the short-term and operative goals focus on the long-term.
C) official goals focus on the long-term and operative goals focus on the short-term.
D) organizations do not place enough emphasis on operative goals.

Question 52

When an organization tries to satisfy stakeholders, it faces all of the following problems except:

A) balancing short-term and long-term goals.
B) losing the ability to innovate.
C) deciding how to allocate organizational rewards to different stakeholder groups.
D) choosing which stakeholder goals to satisfy.

Question 53

Which of the following outside stakeholders contributes high-quality inputs?

A) The general public
B) Customers
C) Suppliers
D) Trade unions

Question 54

Which of the following employees would be considered to have a line role?

A) Vice President of Production
B) Executive Vice President of Finance
C) R&D director
D) Sales manager
E) All are line roles.

Question 55

Who is the chief operating officer (COO) of an organization?

A) The executive vice president of operations
B) The chairman of the board
C) The president
D) The CEO

Question 56

A company's top-management team consists of:

A) functional and divisional managers.
B) senior vice presidents and divisional managers.
C) executive vice presidents and vice presidents.
D) the president and executive vice president.

Question 57

Divisional managers will most likely report to which member of the top-management team?

A) Executive vice presidents
B) Vice presidents
C) The board of directors
D) Senior vice presidents

Question 58

Which of the following would be considered to be the lowest level of management?

A) Functional managers
B) Divisional managers
C) Line managers
D) Vice presidents

Question 59

Which of the following would be considered to have a staff role?

A) R&D director
B) Executive Vice President of Finance
C) Vice President of Accounting
D) Sales manager
E) All are staff roles.

Question 60

Vice presidents are part of ________ management.

A) line
B) functional
C) corporate
D) divisional

Question 61

What does the "Tragedy of the Commons" illustrate?

A) That the rational pursuit of individual self interest results in disaster
B) That common men and women don't have the resources to make ethical decisions
C) That individuals tend to pursue the collective goals if they are clear what they are
D) That moral hazard is a real issue that managers need to deal with

Question 62

Which of the following is not one of the benefits of the "Reputation Effect"?

A) It helps managers follow ethical rules and guidelines.
B) Customers have a positive view of the organization.
C) It allows employees to feel good about the decisions they make.
D) It reduces transaction costs.
E) All are benefits of the reputation effect.

Question 63

"Self-dealing" is defined as ________.

A) a cash bonus distributed privately amongst the top management team
B) another term for "golden parachute"
C) a manager promoting family members at the expense of others
D) a manager acting in his own best interest, as opposed to the interests of the other stakeholders

Question 64

What does Gillette do when it receives a protest letter regarding animal testing?

A) They turn them over to the ethics committee for further study.
B) They ignore it since they get very few of them.
C) They have the CEO telephone the sender.
D) They respond to each one of them so that the public can better understand their position.

Question 65

Moral hazard:

A) is when the principle has too much authority over the agent.
B) is when the agent is motivated to pursue their own self-interest.
C) is when the principle behaves unethically.
D) is when the agent has the opportunity to unfairly influence the principle.

Question 66

At Sears, management created a reward system that had the effect of making employees act unethically and overcharge customers. This was caused by:

A) the Moral Rights model of ethics.
B) societal ethics.
C) bad individual ethics.
D) outside pressure.

Question 67

A manager decides to locate a manufacturing plant in a location that maximizes the overall benefits to the stakeholders. Which model of ethics is he/she using?

A) Utilitarian
B) Moral Rights
C) Justice
D) None of the above

Question 68

A manager chooses to tell affected employees about an impending layoff, despite the damage this causes to the stock price of the organization. She did this because it was "the right thing to do." Which model of ethics is she using?

A) Justice
B) Utilitarian
C) Moral Rights
D) None of the above

Question 69

________ evolve(s) through negotiation and compromise between stakeholders.

A) Organizational ethics
B) Social responsibility
C) Rites of passage
D) Socialization tactics

Question 70

A doctor was banned from practicing medicine because he consistently prescribed unnecessary procedures. This doctor:

A) violated individual ethics.
B) violated professional ethics.
C) took a narrow stance on social responsibility.
D) took a broad stance on social responsibility.

Question 71

Which of the following are generally used to solve agency problems?

A) Ethics Credo's
B) Principles not susceptible to moral hazard
C) A more authoritarian management structure
D) Governance mechanisms

Question 72

When delegating authority, the agency problem arises because:

A) the agent does not want to give up power.
B) the principle tends to have less information than the agent.
C) the principle does not desire more duties.
D) the agent tends to have less information than the principle.

Question 73

A manager decides to distribute the pool of bonus money equally among all of the subordinates, even though some performed better than others. He is using which ethical model in making this decision?

A) Justice
B) Utilitarian
C) Moral Rights
D) None of the above

Question 74

Societal ethics:

A) include unwritten norms and values.
B) encourage companies to adopt a broad stance on social responsibility.
C) encourage companies to use tactics that lead to an institutionalized role orientation.
D) encourage companies to use tactics that lead to an individualized role orientation.

Question 75

To create an ethical organization:

A) a company should use a bottom-up approach.
B) top management should promote moral values and behave ethically.
C) a company should offer employees lifetime employment.
D) a company should use socialization tactics that lead to an institutionalized role orientation.

Question 76

Roger observed his manager charging personal long distance calls to the company. Roger sent an anonymous letter about the incident to an outside board. Roger:

A) is on an ethics committee.
B) was behaving unethically.
C) is a whistle-blower.
D) is an ethics officer.

Question 77

Why is Johnson & Johnson considered to have a higher standard of ethics than Dow Corning?

A) J&J's whistle-blowing program
B) J&J's managers are better trained in ethical principles.
C) J&J's use of a promotion tournament
D) J&J's clear ethics credo

Question 78

Suppose you are the son or daughter of a mobster, and you believe that it is OK to steal if it is in the best interest of your family. This view comes from:

A) societal ethics.
B) the reputation effect.
C) your individual ethical beliefs.
D) the Justice model of ethics.

Question 79

Managers are sometimes able to pursue their own interests at the expense of other stakeholders because managers:

A) are the most powerful outside stakeholders.
B) have control over organizational resources.
C) own the organization.
D) have the ability to initiate a takeover.

Question 80

Which of the following is not one of the reasons that unethical behavior occurs?

A) Pursuit of self-interest
B) Unrealistic stakeholder expectations
C) Personal ethics
D) Outside pressure