Defining And Prioritizing Stakeholders Answer Key

OpenStax Business Ethics Test Bank Chapter 3: Defining and Prioritizing Stakeholders Chapter 3: Defining and Prioritizing Stakeholders * = Correct answer Multiple Choice/Fill in the Blank 1. Which of the following are Starbucks’ stakeholders? (Select all that apply.) A. milk producers* B. urban and suburban communities* C. coffee and tea growers* D. plastic-cover manufacturers Difficulty: Easy Blooms: Understand AACSB: Ethics 2. Which are some types of stakeholder relationships that a local chamber of commerce would have? (Select all that apply.) A. minority- and women-owned small business owners* B. local and regional governments* C. environmental agencies D. pet owners Difficulty: Easy Blooms: Apply AACSB: Analytical 3. Which of the following is considered the most important internal stakeholder of a corporation? A. marketing directors B. board of directors* C. executive management D. governmental affairs office Difficulty: Easy Blooms: Remember AACSB: Ethics 4. Which of the following are the duties of the board of directors? (Select all that apply.) A. Managing and executing the strategy of a company B. Supervising middle and senior management C. Defining a company’s ongoing mission* D. Evaluating the salary and benefits of senior management* Difficulty: Moderate Blooms: Understand Page 1 of 13 OpenStax Business Ethics Test Bank Chapter 3: Defining and Prioritizing Stakeholders AACSB: Application, Real-world 5. Which of the following is not a stakeholder of a nonprofit business? A. community B. competitors* C. media D. public policy Difficulty: Easy Blooms: Application AACSB: Real-world 6. Which employee typically reports directly to a board of directors? A. chief legal officer B. government liaison/lobbying director C. chief executive officer* D. chief privacy officer Difficulty: Easy Blooms: Remember AACSB: Application 7. In which functional areas of business does the CEO hire management? (Select all that apply.) A. finance* B. marketing* C. legal compliance* D. dining/food service Difficulty: Easy Blooms: Apply AACSB: Application 8. Which of the following best describes the interplay of promises of businesses to stakeholders and vice versa? A. promise of quality that is greater than advertised B. only accepting cash and not credit C. supporting offshore philanthropy D. on-time delivery and responsiveness* Difficulty: Difficult Blooms: Apply AACSB: Application 9. Which of the following are stakeholders? A. entities and people invested and influential in the success of an organization* B. entities and people with one role at one time to care for a business Page 2 of 13 OpenStax Business Ethics Test Bank Chapter 3: Defining and Prioritizing Stakeholders C. delivering high-quality products and services on time D. demands to patronize environmental interests Difficulty: Easy Blooms: Remember AACSB: Application 10. Which of the following examples best demonstrates the burden of the social contract that companies have with stakeholders? A. Samsung’s washers had a spin-cycle problem in 2017. B. Samsung warned customers that the machines could tip over. C. Samsung assumed the risk of exposure and picked up the washers. D. Samsung’s recall paid refunds and limited potential lawsuits.* Difficulty: Difficult Blooms: Apply AACSB: Application 11. Which of the following is the most ethical action a company can take if a product does not live up to manufacturing claims? A. The company needs to correct the problem to regain consumer trust.* B. The company must meet the ethical minimum. C. The company must meet the ethical maximum. D. The company must issue a warning to consumers. Difficulty: Moderate Blooms: Apply AACSB: Ethics 12. Which does a company listed on the Dow Jones Sustainability Indices exemplify? A. being the most sustainable company for investment purposes B. being a benchmark company to compare against other companies for investment profit C. operating and preserving resources in an ecologically responsible manner* D. endowing worthwhile philanthropies and contributing to underprivileged communities Difficulty: Difficult Blooms: Apply AACSB: Application 13. Which of the following describes the efficacy of legislation like the California Transparency in Supply Chains Act? A. It is ineffective because it only requires disclosure of information about suppliers’ working conditions and does not govern those suppliers* B. It is effective because it requires disclosure of information about suppliers’ working conditions and does not govern those suppliers. Page 3 of 13 OpenStax Business Ethics Test Bank Chapter 3: Defining and Prioritizing Stakeholders C. It is ineffective because it uses consumer stakeholders to pressure suppliers and make changes. D. It is effective because it expects NGOs, state governments, and political action committees to influence suppliers’ working conditions. Difficulty: Difficult Blooms: Analyze AACSB: Application, Analytical 14. Which example from the text best exemplifies how a stakeholder can effect a change that, in turn, affects other stakeholders? A. the strong ethical stance taken by Johnson & Johnson executives B. an NGO raising concern about unequal pay of laborers* C. Ford’s introduction of the Edsel to compete with other cars D. Whole Foods’ assertion of social responsibility for companies Difficulty: Moderate Blooms: Apply AACSB: Real-world 15. What do peers and competitors as normative stakeholders influence? (Select all that apply.) A. industry norms* B. shareholders C. legislatures D. rules* Difficulty: Moderate Blooms: Understand AACSB: Application 16. Which of the following is not an example of a diffused shareholder? A. NGOs B. voters C. mass media D. competitors* Difficulty: Easy Blooms: Remember AACSB: Application 17. What was the reason for Scarlett Johansson’s withdrawal from a recent movie? A. her portrayal of the character was insincere B. her portrayal of the character was not approved C. her portrayal of the character offended shareholders D. her portrayal of the character offended stakeholders* Page 4 of 13 OpenStax Business Ethics Test Bank Chapter 3: Defining and Prioritizing Stakeholders Difficulty: Easy Blooms: Understand AACSB: Application 18. Which of the following is a resource made available to employees, in addition to salary? A. wages B. amenities* C. remuneration D. compensation Difficulty: Moderate Blooms: Remember AACSB: Real-world 19. Which of the following is the lesson learned from the Edsel story? A. It is not necessary to conduct extensive market research. B. Car design should focus on being competitive on the road. C. Stakeholder perceptions have a large impact on success.* D. Car manufacturers need to be quicker to the market. Difficulty: Moderate Blooms: Apply AACSB: Real-world 20. Which of the following are steps in the MITRE stakeholder process? (Select all that apply.) A. Establish trust.* B. Identify shareholders. C. Gather and analyze appropriate data.* D. Present information to the board of directors. Difficulty: Moderate Blooms: Understand AACSB: Application 21. Which of the following best relates to prioritizing stakeholders? A. Customers are not considered high-priority stakeholders. B. Corporations need to maintain initial priority of stakeholders. C. Customers are considered high-priority stakeholders.* D. Corporations need to manage expectations of customers. Difficulty: Moderate Blooms: Understand AACSB: Application 22. What are some amenities companies offer employees that go beyond a legal minimum or even perhaps industry standards? (Select all that apply.) Page 5 of 13 OpenStax Business Ethics Test Bank Chapter 3: Defining and Prioritizing Stakeholders A. discounted company stock* B. salary C. health insurance D. company discounts* Difficulty: Easy Blooms: Remember AACSB: Application 23. Which of the following are the opposing views of how large, publicly held corporations should approach social responsibility and ethics? A. Business should behave ethically, focusing only on environmentalism. B. Business should behave ethically, focusing exclusively on shareholders/investors. C. Business should behave ethically, being responsible to all stakeholders.* D. Business should behave ethically, fulfilling a strategic mission. Difficulty: Moderate Blooms: Evaluate AACSB: Reflection 24. Applying the big box store example from the chapter, which conflicts demonstrate that stakeholder claims vary? (Select all that apply.) A. Community members may view big box stores as a threat to small businesses’ livelihood.* B. Consumers support big box stores that offer quality goods and reasonable prices.* C. Big box stores are looking for a profit margin and to expand competitively. D. Local governments are seeking to institute tax advantages to attract business competition. Difficulty: Difficult Blooms: Apply AACSB: Application, Real-world 25. According to Donaldson and Preston, what are the three theoretical approaches to considering stakeholder claims? A. normative, descriptive, and decision-making approaches B. stakeholder, decision-making, and descriptive approaches C. normative, descriptive, and instrumental approaches* D. ideological, stakeholder, and environmental approaches Difficulty: Moderate Blooms: Understand AACSB: Ethics, Application 26. What is a measure that accounts for an organization’s results in terms of its effects on profits, planet, and people? A. corporate social responsibility B. triple bottom line* Page 6 of 13 OpenStax Business Ethics Test Bank Chapter 3: Defining and Prioritizing Stakeholders C. greenwashing D. stakeholder prioritization Difficulty: Easy Blooms: Understand AACSB: Application True/False 27. True or false? Laws dictate all ethical responsibilities that a company may owe key stakeholders. Answer: False Difficulty: Easy Blooms: Remember AACSB: Ethics, Application 28. True or false? Rachel Carson’s 1962 book, Silent Spring, first brought attention to chemical poisoning of waterways by corporations. Answer: True Difficulty: Easy Blooms: Remember AACSB: Application 29. True or false? All stakeholders must be treated the same. Answer: False Difficulty: Easy Blooms: Understand AACSB: Application 30. True or false? The most important function of the board of directors is to hire the president or chief executive officer. Answer: True Difficulty: Moderate Blooms: Remember AACSB: Analytical 31. True or false? All companies must have a board of directors. Answer: False Difficulty: Moderate Blooms: Understand AACSB: Application Page 7 of 13 OpenStax Business Ethics Test Bank Chapter 3: Defining and Prioritizing Stakeholders 32. True or false? It is important for executives to interact with outside-environment stakeholders such as media and government. Answer: True Difficulty: Moderate Blooms: Analyze AACSB: Reflection 33. True or false? A trade secret is a form of intellectual property protection and is easier to protect than a trademark or patent. Answer: False Difficulty: Difficult Blooms: Apply AACSB: Application, Real-world 34. True or false? CSR and greenwashing are the same concepts. Answer: False Difficulty: Moderate Blooms: Understand AACSB: Application Short Answer 35. What CSR lesson did Starbucks convey when it closed its stores for a day? Sample Answer: In May 2018, Starbucks closed its stores after an incident in which two African American men were arrested while waiting for a friend at a Starbucks. Those men later settled with Starbucks in lieu of a civil action against the corporation. This incident caused a global uproar. Starbucks then took the step to close its thousands of US stores to conduct racial bias training. It also changed its policy of allowing noncustomers to visit its stores and use restrooms. Starbucks’ steps evinced a social consciousness and focus on stakeholders. The emphasis was on making sure the stores’ employees and the company policies were sensitive toward identifying and avoiding bias. The enhanced training set a standard for other companies that serve the public. Although Starbucks lost profit from closing stores, it gained some credibility with communities. Difficulty: Moderate Blooms: Understand, Apply AACSB: Application, Real-world 36. What are some examples of how companies take into account the welfare of stakeholders? Sample Answer: Companies must take into account the welfare of stakeholders because it is good for business and the right thing to do from an ethical standpoint. Large corporations such as Kroger take into account their suppliers, which include farmers. The California Transparency in Supply Chains Act also implicates the welfare of stakeholders. For that law, companies are Page 8 of 13 OpenStax Business Ethics Test Bank Chapter 3: Defining and Prioritizing Stakeholders expected to disclose the working conditions of their suppliers. The underlying stakeholders there are the suppliers’ workers. This transparency also solidifies the relationship between suppliers and the companies they supply, fulfilling service-level expectations. Difficulty: Difficult Blooms: Evaluate AACSB: Ethics, Reflection 37. Name the four groups of stakeholders and provide a few examples of each. Why is this grouping important? Sample Answer: Enabling stakeholders include boards of directors, government regulators (e.g., the Securities and Exchange Commission), legislatures (i.e., law-making bodies), and stockholders. Normative stakeholders include professional associations (e.g., the Chamber of Commerce), peers, and competitors. Diffused stakeholders include the mass media, voters, and nongovernmental organizations, such as the Red Cross. Functional stakeholders are retailers, distributors, suppliers, employees, unions, and customers. Grouping stakeholders into relationship types allows companies to prioritize stakeholder claims. Enabling, functional, and normative linkages are constant and integral to the firm’s operations. All the stakeholders have a significant impact on the company, because they exert control. They can exercise their power or, in the case of boards of directors, their fiduciary duty to influence an organization. Difficulty: Difficult Blooms: Apply AACSB: Real-world 38. Explain the organizational linkage model and provide examples of how stakeholders are analyzed. Sample Answer: This is the organizational linkage model developed by Todd Hunt and James Grunig, in which the relationships of stakeholders are viewed through four lenses. These are four cohorts or publics: the active, the nonpublic, the latent, and the aware. They are distinguished by their awareness of and ability to do something about a problem. For the nonpublic cohort, problems are neither recognized nor do they exist. The latent public has a problem but does not recognize it. An aware public is aware a problem exists. The active public recognizes and responds to a problem. Organizations can base their approach on the public to which it applies. The textbook gives the example of the Tylenol tampering. When seven people died as a result of ingesting cyanide-laced Tylenol, the public was outraged. The Johnson & Johnson response to the Tylenol tampering was public focused. It aimed to regain the public’s trust through its constituent groups by increasing packaging safety. Difficulty: Moderate Blooms: Apply AACSB: Communication 39. Define and explain an indirect stakeholder claim. Sample Answer: A stakeholder claim that is voiceless is considered indirect. This is typically a smaller stakeholder group or a single stakeholder that has limited or no impactful influence on Page 9 of 13 OpenStax Business Ethics Test Bank Chapter 3: Defining and Prioritizing Stakeholders companies. This can be a consumer who is unable to express their discontent with a product or service, for example. Maybe complaining online or in customer service reviews would be insufficient. Another example is a future stakeholder, whose status will arise during later generations, such as the case with pollution. Environmentalists raise the issue of species and nature as stakeholders. The entitlement of the environment to legal status is a long-argued premise by lawyers and legal-aid groups. Difficulty: Moderate Blooms: Apply AACSB: Application, Ethics 40. Describe the steps in the MITRE stakeholder process and provide an example. Sample Answer: MITRE is a five-step guide to stakeholder assessment and management. It stresses that a company must sustain trust with stakeholders. A company must identify and reidentify stakeholders. Their concerns are identified through data gathering and analysis, including surveys or social media, for example. Once data are validated, managers present the results to decision makers in management. Also, it is crucial that the company inform stakeholders that their concern was taken into consideration and will continue to be valued. Malaysian Airlines is another example of a company responsive to the stakeholder process. After mysterious plane crashes, the Malaysian government (a stakeholder) and private investors hired a new CEO with a tourism background. The airline is now focused on promoting Muslim pilgrimages in response to passenger stakeholder interests in making such trips. Difficulty: Difficult Blooms: Apply AACSB: Application, Real-world 41. Explain how Ikea has had to adapt its business model in different countries. Sample Answer: Ikea is a multinational furniture store. It has had success in the United States and China, for example, by adapting to local cultural norms. In the United States, Ikea displays beds to show customers the available bed sizes. In China, Ikea allows its visitors to take naps on beds, which is acceptable in that culture. Thus, Ikea changed in response to consumer stakeholder needs. Difficulty: Moderate Blooms: Evaluate AACSB: Analytical