Business Ethics – Practice Test Questions and Answers

Chap 4
16. Which of the following is true about corporate cultures?
a. Corporate cultures are not influenced by the people comprising that organization.
b. Corporate cultures are not subject to changes over time.
c. Corporate cultures can hinder individuals in making the “right” decisions.
d. Corporate cultures in a global firm differ significantly across different countries.
Answer: c

  1. Corporate culture:
    a. is fashioned by a shared pattern of beliefs, expectations, and meanings that influence and guide the thinking and behaviors of the members of that organization.
    b. shapes the people who are members of the organization, but it is not shaped by the people who comprise that organization.
    c. is not influenced by unspoken standards and expectations.
    d. is generally easy to modify.
    Answer: a
  2. Which of the following is true about culture?
    a. The specific culture within an organization can be defined easily and objectively.
    b. The incentives an organization employs do not help in determining the organization’s specific culture.
    c. Attitude and behavior are the biggest fraction of the elements that determine culture.
    d. Perception may actually impact the culture in a circular way.
    Answer: d
  3. Which of the following situations could result in the business culture becoming a determining factor in ethical decision making?
    a. Lack of competition
    b. Law providing incomplete answers
    c. Lack of strong leadership
    d. Stagnant or decreasing profits
    Answer: b
    20. Which of the following statements is true of ethical cultures?
    a. Workplace ethical cultures have no impact on decision making.
    b. Subordinates are expected not to act unless directed by superior authorities.
    c. Decisions are expected to be taken based on laws and not on ethical values.
    d. Employees are expected to act in responsible ways, even if the law does not require it.
  4. According to the _____ ethics tradition, people act out of habit than out of deliberations.
    a. Kantian
    b. virtue
    c. utilitarian
    d. principle-based
    Answer: b
  5. Which of the following is a traditional approach to corporate culture?
    a. Values-based
    b. Integrity-based
    c. Customer-based
    d. Compliance-based
    Answer: d
  6. Which of the following is true about value-based cultures?
    a. They emphasize obedience to the rules as the primary responsibility of ethics.
    b. They are only as strong and as precise as the rules with which workers are expected to comply.
    c. They reflect the traditional approach of classifying corporate culture.
    d. These cultures are perceived to be more flexible and far-sighted corporate environments.
    Answer: d
  7. Which of the following is emphasized by a compliance-based culture?
    a. Reliance on personal integrity of employees for decision making
    b. Use of values as the principle for decision making
    c. Obedience to rules as the primary responsibility of ethics
    d. Reinforcement of a set of values rather than a set of rules
    Answer: c
  8. Which of the following cultures will empower legal counsel and audit offices to mandate and to monitor conformity with the law and with internal codes?
    a. Customer-based culture
    b. Integrity-based culture
    c. Values-based culture
    d. Compliance-based culture
    Answer: d
  9. Which of the following is true about an integrity-based culture?
    a. It reinforces a particular set of rules.
    b. It reinforces a particular set of values.
    c. It empowers legal bodies to monitor compliance.
    d. It emphasizes rules as the primary responsibility of ethics.
    Answer: b
  10. When would a values-based culture rely on the personal integrity of its workforce for making decisions?
    a. In situations where the rules of the organization do not apply
    b. When legal bodies are empowered to monitor compliance
    c. In situations where rules are applicable to make decisions
    d. In situations where a set of principles should be enforced
    Answer: a
    28. Which of the following is true about a compliance-based culture and/or a value-based culture?
    a. A compliance-based culture recognizes that where a rule does not apply the firm must rely on the personal integrity of its workforce when decisions need to be made.
    b. A values-based culture is one that reinforces a particular set of rules rather than a particular set of values.
    c. Values-based organizations include a compliance structure.
    d. Value-based organizations do not have codes of conduct.
    Answer: c
  11. As compared to a traditional compliance-oriented program, an evolved and inclusive ethics program:
    a. focuses on meeting regulatory requirements.
    b. entails helping to unify a firm’s global operations.
    c. strives to minimize risks of litigation and indictment.
    d. works mainly toward improving accountability mechanisms.
    Answer: b
  12. What is the role of an ethical leader in corporate cultures?
    a. A leader should be ethical within the confines of the top management team.
    b. An ethical leader must shrink his or her duties in the corporate structure.
    c. An ethical leader should not place her or his own ethical behavior above any other consideration.
    d. A leader must clearly advocate and model ethical behavior.
    Answer: d
  13. Which of the following is true about ethical leaders?
    a. Ethical business leaders do not need to talk about ethics and act ethically on a personal level.
    b. They do not say “no” to conduct that would be inconsistent with their organization’s and their own personal values.
    c. If an executive is “quietly ethical” within the confines of the top management team, but more distant employees do not know about her or his ethical stance, they are more likely to be perceived as an ethical leader.
    d. They expect others to say no to them.
    Answer: d
  14. Identify the correct statement about ethical leaders.
    a. Individuals perceived as ethical leaders avoid doing things that “traditional leaders” do.
    b. A “quietly ethical” executive is likely to be perceived as an ethical leader.
    c. An ethical leader’s traits and behaviors must be socially visible.
    d. Ethical leaders are not people-oriented leaders.
    Answer: c
  15. How is an ethical, effective leader different from an effective leader?
    a. An ethical leader will take decisions based only on a set of rules.
    b. An ethical leader will follow a set of rules regardless of consequences.
    c. An ethical leader will empower the employees in decision making.
    d. An ethical leader will achieve his or her goals through intimidation.
    Answer: c
  16. The means used to motivate others and achieve one’s goals plays a key role in distinguishing between:
    a. silent leaders and visible leaders.
    b. effective leaders and ethical leaders.
    c. informal leaders and formal leaders.
    d. silent leaders and ethical leaders.
    Answer: b
  17. Which of the following is an essential element in establishing an ethical leadership?
    a. The end or objective toward which the leader leads
    b. The prevailing culture in the external environment
    c. The ethical nature of the team members
    d. The personality traits of the team members
    Answer: a
  18. If we judge a leader solely by the results produced, we are following the _____ ethical tradition.
    a. deontological
    b. virtual
    c. Kantian
    d. utilitarian
    Answer: d

.37. Which of the following is a value that will impact the culture of an organization in the absence of any other established values?
a. Profit—at any cost
b. Ethical behavior
c. Legal compliance
d. Customer satisfaction
Answer: a

  1. A(n) _____ provides concrete guidance for internal decision making creating a built-in risk management system.
    a. code of conduct
    b. organization vision
    c. income statement
    d. ombudsman
    Answer: a
  2. The _____ serves as an articulation of the fundamental principles at the heart of the organization and should guide all decisions without abridgment.
    a. annual report
    b. vision statement
    c. mission statement
    d. income statement
    Answer: c
    Difficulty: Easy

.40. The first step in constructing a personal code or mission for a firm is to:
a. articulate a clear vision regarding the firm’s direction.
b. ask oneself what one stands for or what the firm stands for.
c. believe that the culture is actually possible, achievable.
d. identify clear steps as to how the cultural shift will occur.
Answer: b

  1. The second step in the development of guiding principles for a firm is to:
    a. ask oneself what one stands for or what the company stands for.
    b. articulate a clear vision regarding the firm’s direction.
    c. identify clear steps as to how the cultural shift will occur.
    d. believe that the culture is actually possible, achievable.
    Answer: b
  2. Identify the most determinative element in integration, without which, there is no clarity of purpose, priorities, or process.
    a. Ethics
    b. Leadership
    c. Tradition
    d. Communication
    Answer: d
  3. Which of the following is true about communicating unethical behavior in a corporate structure?
    a. Reporting ethically suspect behavior is a simple thing to do.
    b. Employees are always comfortable in raising questions against superiors.
    c. Reporting individuals can face retaliation from superiors.
    d. Whistleblowing is the most preferred mechanism for communicating ethical behavior.
    Answer: c
  4. Which of the following involves the disclosure of unethical or illegal activities to someone who is in a position to take action to prevent or punish the wrongdoing?
    a. Whistleblowing
    b. Redlining
    c. Gentrification
    d. Flyposting
    Answer: a
  5. An effective internal mechanism of whistleblowing:
    a. occurs when employees report wrongdoing to legal authorities.
    b. must expose unethical behaviors to the press.
    c. should not protect the rights of the accused.
    d. must allow confidentiality, if not anonymity.
    Answer: d
  6. Which of the following statements is true about whistleblowing?
    a. It involves the disclosure of ethical activities.
    b. It may seem disloyal, but it does not harm the business.
    c. It can occur both internally and externally.
    d. It does not cause any harm to the whistleblower.
    Answer: c
  7. Which of the following mechanisms allows employees to report wrongdoing and to create mechanisms for follow-up and enforcement?
    a. Accountability
    b. Ombudsman
    c. Appraisals
    d. Code of conduct
    Answer: b
  8. Which of the following is an effective way of creating clear and successful reporting schemes?
    a. Leaders empowering subordinates to take decisions without providing guidance
    b. Managers ignoring the risk and taking a wait-and-see attitude
    c. Consistent and continuous communication of the firm’s values to all stakeholders
    d. Subordinates staying away from reporting unethical behaviors of superiors
    Answer: c
  9. Which of the following allows organizations to uncover silent vulnerabilities that could pose challenges later to the firm, serving as a vital element in risk assessment and prevention?
    a. Code of conduct
    b. Ongoing ethics audit
    c. Whistleblowing
    d. Ombudsman
    Answer: b
  10. What is the term used to describe a potentially damaging or ethically challenged corporate culture?
    a. “Caustic” culture
    b. “Pyrophoric” culture
    c. “Corrosive” culture
    d. “Toxic” culture
    Answer: d
  11. Which of the following statements is true about the Federal Sentencing Guidelines for Organizations?
    a. They provide uniformity and fairness to the judiciary system.
    b. They are used to provide arbitrary punishments.
    c. They are applicable only to organizations and not to individuals.
    d. They assign most federal crimes to one of 5 “offense levels.”.
    Answer: a
  12. The Supreme Court separated the “mandatory” element of the Federal Sentencing Guidelines for Organizations from their advisory role, holding that their mandatory nature:
    a. was only applicable to individuals and not to organizations.
    b. provided arbitrary punishments.
    c. violated the Sixth Amendment right to a jury trial.
    d. encouraged internal whistleblowing.
    Answer: c
    Difficulty: Easy
  13. Which of the following directed the USSC to consider and to review its guidelines for fraud relating to securities and accounting, as well as to obstruction of justice, and specifically asked for severe and aggressive deterrents in sentencing recommendations?
    a. Bank Secrecy Act
    b. Sarbanes-Oxley Act
    c. Gramm-Leach-Bliley Act
    d. Fair Credit Reporting Act.
    Answer: b
  14. Which of the following is true about the Sarbanes-Oxley Act?
    a. It specifically asked for lenient penalties in sentencing recommendations.
    b. It required public companies to establish a code of conduct for top executives and, if they did not have one, to explain why it did not exist.
    c. Its mandatory nature violated the Sixth Amendment right to a jury trial.
    d. It did not support the United States Sentencing Commission’s guidelines to create both a legal and an ethical corporate environment.
    Answer: b
  15. Which of the following should an organization do in order to have an effective compliance and ethics program?
    a. It should do a public display of an employee’s report on an unethical behavior.
    b. It should ensure that people who have previously engaged in unethical activities are placed in charge of programs.
    c. The organization should communicate its standards and procedures to all members.
    d. Low-level personnel must be assigned to have responsibility for the program.

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