Professionalism and Ethics Answers

1. (p. 48) In a pluralistic society, one institution is completely independent of the others. FALSE 2. (p. 49) Organizations must identify their stakeholders to obtain their resources and maintain their legitimacy. TRUE 3. (p. 48) A stakeholder is an individual, or group, who can influence and/or is influenced by the achievement of an organization's purpose. TRUE 4. (p. 49) Corporations must understand how their activities influence stakeholders but not how stakeholders can influence their activities. FALSE 5. (p. 49) It is the responsibility of the stakeholders to identify themselves to the organization. The organization does not need to identify stakeholders. FALSE 6. (p. 49) Owners always have a lot of influence over an organization. FALSE 7. (p. 50) The role of the board of directors is to determine the corporation's strategic direction, monitor and review performance, and hire and fire the top executives. TRUE 8. (p. 50) Every board of directors plays a substantial role in the organization and is considered insiders. FALSE 9. (p. 50) Employees are often considered the most obvious and, sometimes, the most important stakeholder. TRUE 10. (p. 50-51) Although customers are the source of revenue and should be treated carefully, corporations that are a monopoly do not need to focus on this stakeholder. TRUE 11. (p. 51) Lenders and Creditors are stakeholders that can be taken for granted because their influence is small as there are many lending institutions. FALSE 12. (p. 51) When an organization is able to obtain a particular material from several suppliers they are not dependent on that supplier. TRUE 13. (p. 52) Management consultants are not stakeholders because they are not employees of the company. FALSE 14. (p. 53) Competitors include organizations that produce substitute products and therefore should be monitored. TRUE 15. (p. 53) Joint-venture participants can also be called Lenders. TRUE 16. (p. 55) Service, Fraternal, Cultural, and Ethnic Associations can provide business contacts through volunteerism. TRUE 17. (p. 55-56) Government may play several roles as a stakeholder, such as media and lender. TRUE 18. (p. 53) Non-Governmental Organizations (NGOs) are those organizations, such as charities, run by the volunteer sector. FALSE 19. (p. 56) The concept of a stakeholder has broadened in time to include individuals or groups other than owners, government and labour. TRUE 20. (p. 56) Categorizing stakeholders into various groups, such as internal and external, is desirable because it helps managers strategize accommodations. FALSE 21. (p. 57-58) Derivative stakeholders are those from whom the corporation has not accepted benefits, but they hold power over the corporation and may exert either a beneficial or harmful influence. TRUE 22. (p. 58) Different stakeholders have different sources and expressions of power. When one stakeholder becomes too powerful, another stakeholder may act to counterbalance and restrict this power. TRUE 23. (p. 58) It is the responsibility of the board of directors, not the manager, to determine how to respond to stakeholders' power and pressures. FALSE 24. (p. 58) The Board of Directors determines the corporation's social responsibility initiatives. FALSE 25. (p. 60) Opponents to the stakeholder concept argue, in part, that considering broader social issues is not the mandate of a business in the capitalist system. TRUE 26. (p. 59) There is a tremendous amount of opposition to the stakeholder concept. FALSE 27. (p. 60) The "social market" lacks a clear corporate purpose necessary to meet corporate objectives. TRUE 28. (p. 60) An issue is a point in question where different views are held of what ought to be done by the corporation, based on stakeholder or management expectations. TRUE 29. (p. 61) Issues management refers not to social change, but to a process by which the organization responds to economic, social, and environmental issues. TRUE 30. (p. 61) One of the main issues pertaining to the automotive industry in Canada is Green Manufacturing. TRUE 31. (p. 61) One of the main issues in the banking industry today is executive compensation. TRUE 32. (p. 61) One of the main issues in the pharmaceutical industry today is unionization. FALSE 33. (p. 61) In order for the successful implementation of issues management there must be support from top management and broad participation at the staff levels. TRUE 34. (p. 61-62) Ideally, the issues management approach should be implemented quickly with a forceful, concentrated effort by senior level management leading the way. FALSE 35. (p. 62) Once an issue has progressed through the issue life cycle to the decline stage, it is considered to be resolved. FALSE 36. (p. 62) Early identification of an emerging issue that deals with conflicting value and interest is important. TRUE 37. (p. 63) Identifying issues can be done in many ways, for example, environmental scanning, social forecasting and public issues scanning. TRUE 38. (p. 64) The issues management process, while helpful, does not ensure that the most salient or critical issues are addressed. FALSE 39. (p. 65) An example of a crisis for management can be seen in the situation of XL Foods, operating in Brooks, Alberta, when it was discovered that E.coli was present in beef, but the plant was allowed to continue to operate for about ten days after that discovery. TRUE 40. (p. 65) One of the issues which resulted from the E.coli crisis at XL Foods was that the cattle industry was concerned about their future as consumers may purchase less beef, and that there may be damage to international markets. TRUE 41. (p. 64) In Fink's "Anatomy of a Crisis" it is argued that the outcome is not necessarily always negative, and that positive outcomes may result from a crisis. TRUE 42. (p. 66) The acute crisis stage is the point at which the situation resolves itself. 43. (p. 66) Norman Augustine formulated an alternative to Fink's anatomy using only three stages: avoidance, preparation, and resolution. FALSE 44. (p. 48) Government in Canada is very influential over corporate decision-making. ABC Corporation is negotiating with aboriginal groups regarding forestry practices in their region and the government is facilitating the process. Influence and power, in this case, is not held by any one institution and is dispersed. This example reflects the operation of a(n) __________ society. A. pluralist B. stakeholder C. issues-oriented D. business-oriented E. collective 45. (p. 49) The government of Canada recently sold off its remaining shares in Petro Canada. The government, in regards to this decision, is considered which type of stakeholder? A. Government B. Director C. Owner D. Consumer E. All of the answers are accurate. 46. (p. 50) Which of the following statements regarding employees as stakeholders is NOT true? A. Employees are individuals who work for the corporation. B. Managers are considered employees. C. Part time employment is becoming a more common strategy to hiring employees. D. Employees are considered one of the more obvious and, perhaps, most important stakeholders. E. All primary stakeholders can be considered employees. 47. (p. 49-55) When a news report came out in Saskatchewan that the beef supplier for Burgers R Us was not implementing hygienic practices, which of the following stakeholders may its approach to purchasing meat? A. The Current Supplier B. The Owners, Lenders, and Creditors C. The Customers and the General Public D. The Media E. The Government 48. (p. 51) Cathy drinks a lot of coffee to help her stay awake during midterms. She, however, will only purchase coffee that is produced under conditions that guarantee good working conditions for the labourers and respect for human rights and environmental protection. Cathy is a consumer of ______. A. Whole Foods Market B. Fairtrade products C. Product Red brand D. Boycotted products E. Green products 49. (p. 50) Janet is on the board of directors for SPT Corporation. Which of the following assumptions about Janet's involvement with SPT Corporation is not correct? A. Janet was elected by the shareholders to this role. B. Janet is not a shareholder of SPT Corporation. C. In her role as a board member, Janet is responsible for the functioning of SPT Corporation. D. Janet is a competitor of SPT Corporation. E. Janet's position on the board is not permanent. 50. (p. 56-57) Samuel has been asked by the manager of his department to compile a list of all the stakeholders relevant to the industry so that they can ensure that in the future all stakeholder interests are appropriately considered. Samuel spends the entire weekend on the task, but it looks like he will never finish the task. Which of the following is not a reason why Samuel is having difficulty? A. You cannot list all the stakeholders. B. Stakeholders influence shifts over time. C. New stakeholders emerge all the time. D. Their involvement varies between corporations. E. He is not on the best position to do the task. 51. (p. 56-57) Examples of primary stakeholders include all of the following, except: A. Creditors B. Customers C. Communities D. Competitors E. Unions 52. (p. 55) In determining where to locate a factory, BCS Corporation develops a list of stakeholders. Francois encourages the management to locate in a community with high unemployment because it will help a community become more economically stable. Mark states that it is important to consider whether the company will be able to arrange for raw materials to be shipped to the factory for production. Sarah notes that by relocating the firm should consider the environmental group, STOP, that used to picket the company, even though it hasn't been heard from for years. Which stakeholders should the company not necessarily consider in their decision? A. The environmental group, STOP B. Community in which they may locate C. Suppliers D. Media E. Government 53. (p. 56-57) In terms of categorizing stakeholders, primary interaction occurs with all of the following, except: A. Unions B. Creditors C. Media D. Suppliers E. Owners 54. (p. 57) Secondary interactions do not include: A. government B. the general public C. local communities D. business support groups E. investors 55. (p. 57) Normative stakeholders include all of the following, except: A. financers B. employees C. consumers D. suppliers E. competitors 56. (p. 57-58) Derivative stakeholders are all of the following, except: A. may exert harmful influences B. are those from whom the corporation has not accepted benefits C. are those to whom the organization has no obligation D. are typically financers E. have power over the corporation 57. (p. 48-58) ABC Corporation is a forestry company that is attempting to develop more sustainable approaches to forestry in order to preserve the land for use by future generations. They receive considerable support from mainstream environmental groups. Eco-terrorists, who will sabotage trees in such a way as to injure the forestry worker who is cutting the tree, do not believe that ABC Corporation is doing enough. Which of the following stakeholders should ABC consider in its decisions about forestry? A. Employees B. Mainstream environmental groups C. Eco-terrorism environmental groups D. Media E. All stakeholders should potentially be considered. 58. (p. 58) The manager is a unique stakeholder because she or he _____. A. can affect the organization B. can be a manager and shareholder C. is affected by the organization D. deals with the other stakeholders E. cannot be an employee 59. (p. 59) There is opposition to the stakeholder concept for all of the following reasons, except: A. They are difficult to categorize B. Each of them have different expectations C. Stakeholders often have contrary objectives D. Practicality of shared governance E. Dilution of top management focus 60. (p. 60) Frank thinks that it is inappropriate for his company, BSD Corporation, to spend valuable company time and resources on meeting with stakeholder groups. He, and others who oppose stakeholder involvement, identify the following rationale(s): A. Managing so many stakeholders diverts management's attention away from the business. B. Responding to stakeholders' interest does not produce loyalty. C. Corporations are not designed to benefit shareholders. D. It is necessary for business success. E. There is an agreement on priorities. 61. (p. 60) Advocates of the stakeholder concept: A. argue that an appreciation for stakeholders is fundamental to understanding how to make money. B. believe that responding to stakeholders is simply good business. C. feel it is necessary to not only recognize the interests of all stakeholders but also to promote the loyalty of other individuals and groups. D. believe that shareholders are a principal stakeholder. E. All of the above are true. 62. (p. 60-61) Following a media report highlighting a lack of hygienic meat handling practices by its suppliers, Burgers R Us realized they should have been engaged in _____________, a process to respond to the economic, social, and environmental problems that they might face in the future. A. stakeholder management B. issues management C. environmental management D. media control E. strategy 63. (p. 61) All of the following are main issues in the banking industry, except: A. executive compensation B. government regulation C. issues management D. service charges E. credit card charges 64. (p. 61) The purposes of issues management include all of the following, except: A. It is more systematic in dealing with concerns. B. It serves as an early warning system. C. It provides a framework for assessment. D. It provides a mechanism for coordination. E. It can prepare managers for most issues that can arise. 65. (p. 61) The benefits of issues management include all of the following, except: A. Reduces the firm's competitive advantage B. Corporate behaviour is more consistent with societal expectations C. Enables corporations to identify issues earlier D. Corporation's vulnerability is decreased E. Corporation's credibility is enhanced 66. (p. 62) The issue life cycle outlines stages through which an issue progresses. Those stages are: A. Introduction, growth, maturity, and decline B. Awareness, growth, prominent, threatening, and decline C. None or little, increasing, prominent, peak, and declining D. None or little, awareness, increasing, prominent, peak, and declining E. Introduction, growth, maturity, decline, and resolution 67. (p. 62) A furniture store has just discovered that the lumber used to make its furniture is from an ancient forest. Later that week they received a letter from an environmental group stating that all furniture stores using lumber from ancient forests are receiving this letter as a warning to find alternate sources for their lumber or the store will be picketed. This furniture store is in what stage of the issue life cycle? A. Peak B. Prominent C. Growth D. Increasing E. Awareness 68. (p. 62) Sable is excited about her new job. As marketing manager for NMO Corporation, she is hoping to help the company adopt more environmentally friendly packaging. She brings up the issue with the management team, who state that they had never given the issue much thought. NMO Corporation is at what stage in the issue life cycle? A. None or little B. Increasing C. Prominent D. Peak E. Declining 69. (p. 62) Jack recently purchased a small furniture store that specializes in handmade, high quality products. The company, when he purchased it, relied almost exclusively on wood from old growth forests. He temporarily closes the business until a supplier of sustainable wood products can be found. The company is at what stage of the issue life cycle? A. Peak B. Prominent C. Growth D. Increasing E. Awareness 70. (p. 63) When an organization is in the process of describing and evaluating an issue so that consensus is achieved among managers it is in which step of the issues management process? A. Identification of issues B. Analysis of issues C. Ranking or prioritizing of issues D. Formulating issue response E. Implementing issue response 71. (p. 64) When the available choices to the corporation are identified and evaluated they are in which step of the issues management process? A. Identification of issues B. Analysis of issues C. Ranking or prioritizing of issues D. Formulating issue response E. Monitoring and evaluating issue response 72. (p. 64) TMB Corporation has chosen to engage stakeholders in the decisions regarding plant expansion. The company has identified that stakeholders are concerned about many issues, so a team of employees spoke to multiple stakeholders to clarify the concerns. They determined which issues were most important to the stakeholders and a specific plan was formulated to act on the key issue. Once the specific plan is put into action from the available choices, the corporation is in the _____________ step of the issues management process. A. identification of issues B. ranking or prioritizing of issues C. formulating issue response D. implementing issue response E. monitoring and evaluating issue response 73. (p. 64) Who is the author of "Anatomy of a Crisis"? A. Adam Augustine B. Johnathan Berstein C. Adam Smith D. Steven Fink E. Norman Augustine 74. (p. 64) The four stages proposed in the Anatomy of a Crisis are: A. Prodromal, acute, chronic, and resolution B. Pre-crisis, mid-crisis, post-crisis, and peak-crisis C. Prodromal, peak, acute, and continuous D. Pre-acute, acute, pre-chronic, and chronic E. Prodromal, resolved, crisis, and peak 75. (p. 64) In which stage of the Anatomy of a Crisis does the corporation receive some warning, however subtle, that a crisis is lurking? A. Prodromal B. Peak C. Chronic D. Pre-chronic E. Resolution 76. (p. 66) An alternative to the Anatomy of a Crisis, called the Six Stages of Crisis Management, was developed by: A. Adam Augustine B. Johnathan Berstein C. Adam Smith D. Steven Fink E. Norman Augustine 77. (p. 66) Describe the acute crisis stage of the Anatomy of a Crisis. The acute crisis stage is the point at which the crisis has occurred and the damage has resulted. If the corporation is prepared, it is easier to control the response but this stage is often one where there are rapid developments which may be hard to control. 78. (p. 66) What are the six stages of crisis management as formulated by Norman Augustine? The six stages include: 1. Avoiding the Crisis, 2. Preparing to Manage the Crisis, 3. Recognizing the Crisis, 4. Containing the Crisis, 5. Resolving the Crisis, 6. Profiting from the Crisis. 79. (p. 63) List the six steps of the typical issues management process. The typical issues management process, broken into six steps: identification, analysis, ranking, response formulation, implementation, and monitoring and evaluating. 80. (p. 61) Outline the benefits to practicing issues management. Corporations are more likely to maintain a competitive advantage over rivals; corporate behaviour is more likely to be consistent with societal expectations; and the corporation is less likely to make a serious social or ethical mistake. Issues management enables the corporation to detect issues earlier and develop appropriate responses much sooner, sometimes even when the issues are emerging. The corporation's vulnerability is reduced and its credibility enhanced. 81. (p. 61) List the main ethical issues in the automotive industry. The dominant ethical issues affecting the automotive industry are Green manufacturing, emissions, union wage concessions, and electric cars. 82. (p. 59) What are the main arguments from those who oppose the stakeholder concept? The case against the stakeholder concept can be summarized by four main points: problems of categorization, challenges in meeting expectations, dilution of top management focus, and the impracticality of shared governance. 83. (p. 56) What are the arguments for and against the recognition of the environment as a stakeholder? Some stakeholder theorists argue that the environment should be a stakeholder. Their main point is that this would give the natural environment prominence, or make it a priority, with management and stakeholders. Others disagree saying that stakeholders must have a voice, that is, the capability to speak for themselves. The natural environment is unable to do this, but its well-being is certainly the concern of others. Furthermore, the environment does not meet the definition of a stakeholder upon which the theory is based. In this book, the natural environment is considered and taken into account, but not as a stakeholder.